Saturday, December 10, 2016

Post Story On Russian Hacking Makes Comey's Actions More Egregious

A couple of quick comments on the Washington Post story that Russia's hacking efforts during the campaign were designed to get Donald Trump elected. I don't think that particular finding is news to anyone. What is more interesting is that in early October, the intelligence community briefed Congressional leaders in an attempt to get a bipartisan consensus to advise state and local election authorities to use federal help in protecting against intrusions by Russian hackers. One of the attendees at that meeting was none other than James Comey. In that meeting, Democrats were united in supporting the idea as were other Republicans. But Mitch McConnell did not think the evidence warranted such a move and essentially threatened to call any action to challenge the Russians publicly on their hacking on act of pure partisanship. No bipartisan statement was ever made. And, despite pressure from the Clinton campaign and Congressional Democrats, Obama held off on any public characterization of the Russian hacking as being specifically designed to help Trump, specifically not releasing the conclusions of certain intelligence agencies.

A number of points need to made on this issue. First, it once again shows that McConnell will pretty much do anything to help Republicans get elected. And it once again shows that Democrats refuse to play the same kind of hardball the GOP is playing and, once again, it has cost them dearly as Republicans will control all three branches of government. Obama and the Democrats could have gone forward with a bipartisan statement that included the Republican members who agreed with the need for a statement and left McConnell to hang out there on his own. But instead they caved. Lastly, and most importantly, it clearly shows the total duplicity and partisanship of James Comey. Well before he sent that infamous letter about Huma Abedin's email, he was in a meeting of Congressional leaders where a decision was made to keep intelligence information hidden from the American public in order to avoid the appearance of influencing the election. He was advised by his superiors in the DOJ that his letter would be a clear violation of policy and would, in fact, be interfering in the election. Even, so, with the full knowledge that the Obama administration was withholding intelligence information that indicated the Russians were hacking the US election in order to help Donald Trump exactly because that information might look partisan, he unilaterally decided that he would violate the principle and influence the election FOR Donald Trump. Knowing this now makes Comey's actions even more egregious than they already were.

Lastly, the Trump transition team responded to this article by saying, "These are the same people that said Saddam Hussein had weapons of mass destruction. The election ended a long time ago in one of the biggest Electoral College victories in history. It’s now time to move on and ‘Make America Great Again,’ ". I really don't think it is a good idea to be publicly insulting the intelligence community when you are the President and especially if you are Donald Trump. Because, while the media and the public may be in no position to find out what kind of deals Trump might be making to line his own pockets while President, those same intelligence agencies are probably the only ones who can.  And even when you don't have the massive conflicts that Trump has as President, the intelligence community can still make life difficult for a President they are not too happy with.

Natural Weekends - Clouds And Light










Senate Democrats Cave Again; Will They Ever Learn To Fight Under The New Rules?

Senate Democrats once again caved and passed a stopgap spending bill that would keep the government running until next April. Democrats had talked about forcing a government shutdown over an extension to a miners' pension plan. Republicans included an extension until April but Democrats had been holding out for an extension at least through the end of next year. Besides a worthless promise from Mitch McConnell that he pledged to work to make sure miners' benefits would be extended next year, Democrats really got nothing out of this except a minor bit of PR for those Senators in coal country to use in their 2018 elections. President-elect Trump has made no comment on the issue despite his professed love of miners during the campaign. Just before midnight, when the government would run out of money, Democrats let the procedural vote to reach cloture pass 61-38 and the spending bill was subsequently passed 63-36.

Said incoming Senate Minority leader Chuck Schumer, "We never intended to shut down the government. I think we've made our point." Actually, I think Schumer missed the point entirely. Nobody is going to read or care about Democrats holding out for miners' benefits but then not having the courage of their convictions to follow through. In fact, the whole incident is probably a net negative as it once again shows that Democrats aren't "tough enough" to win important political battles. Republicans used government shutdowns and the refusal to raise the national debt as a way to signal voters the issues that mattered to them. Without crossing the threshold to delay government funding, most of the country would have never paid real attention to what the GOP was doing and the press would have treated it exactly like they treated what Democrats did today, burying the story deep in the paper rather than front page news.

Believe me, I have been absolutely opposed to this kind of legislative shenanigans. But Republicans have been destroying the norms of governance and democracy for the last couple of decades and it is hard to see that they have paid any significant electoral price for their transgressions. They created government shutdowns way back in the 1990's so the country has 20 years of experience with this kind of event. Holding firm and shutting down the government, even for just a few days, would have sent a number of important signals to the country. First, it would show that Democrats take the plight of those workers in coal country seriously and that Republicans are not necessarily as interested in protecting those workers as they claim to be. Second, it would have put Trump on the spot about how seriously he takes his campaign promises to those miners. Lastly, and most importantly, it would have shown GOP leaders in Congress that the Democrats were able to finally be a unified caucus and will stand as a true opposition party.

Schumer also added this comment after Democrats had caved, "We’re going to win this fight. We can’t predict the exact path, but we are going to win this fight, because we’re right." If there is anything that the election of Donald Trump has shown, being "right" may make you feel good but it counts for nothing in political battles. Democrats continue to play by the pre-1990 rules while Republicans have been playing for keeps for the last 20 years. Last night, as has happened far too often on the last two decades, Democrats brought a water pistol to a gun fight.


Prudential Now Looks To Be Complicit In Wells Fargo's Massive Fraud

Wells Fargo fraud scandal now includes life insurance policies offered through Prudential and sold by Wells Fargo bankers. Apparently, Wells Fargo coordinated with Prudential to offer the Prudential MyTerm life insurance to Wells Fargo customers. The MyTerm policies were easy to sign up for as they required no medical exam, just a few questions that could be answered online. Bankers are not usually licensed to also sell life insurance so the Wells employees would steer customers to either a website or a kiosk inside the bank where the insurance could be purchased. The employees would then get some credit toward their sales goals, the same high pressure sales goals that led to the opening of thousands of fraudulent accounts without customer authorization. In the same way, Wells bankers also began purchasing these MyTerm life insurance policies for their customers without authorization for more than a decade. And the attempts were brazen. Some bankers would sign up their friends and relatives and even pay the first month's premium in order to get credit toward their sales goals before cancelling the insurance. Others were apparently less concerned with anomalies in their bogus applications such as have cell phone numbers as email addresses, the email address clearly not matching the name of the insured, sometimes even using a bogus Wells Fargo email address. The bulk of these sham policies were apparently sold to Hispanics is Southern California, Arizona, Texas, and South Florida.

It also is beginning to look like Prudential was at least complicit in this fraud as well. Over 70% of the MyTerm policies that Wells Fargo sold in the first year of this collaboration lapsed within the year, some without any premiums being collected at all. In addition, some "buyers" purchased and then cancelled the insurance multiple times. There is no doubt that someone somewhere at Prudential had to see these metrics as they are an enormous red flag. But Prudential took no action. It was not until the other Wells Fargo account fraud came to light that Prudential began an internal investigation. That investigation revealed exactly what had been going on. But the three investigators working on the issue were summarily fired just before Thanksgiving for apparently texting each other a year earlier and complaining about other members of their group. That certainly sounds like a pretty thin reason for firing someone, especially in the financial industry. The three investigators have now filed a wrongful termination suit against Prudential claiming that they were actually fired for pressing for a more thorough investigation as well as reporting their findings to the regulators. Their belief is that Prudential is attempting to "sweep this under the rug". It is only through this wrongful termination suit that we even know about these fraudulent insurance companies. And this suit also shows that Wells Fargo has once again been less than forthcoming about the extent of the fraud it has perpetuated.

I continue to rant and rave about the consistent pattern of illegal activity in the financial industry. It is long past time for prosecutors, rather than regulators, to take some action against these serial offenders. With Trump's cabinet chock full of Goldman Sachs alumni, it is hard to see the already pathetic regulators doing anything substantial. It is time for state Attorneys General to step up to the plate and right now there are only two who look like they can take on these financial behemoths - Eric Schneiderman in New York and the newly appointed Xavier Becerra in California. These two will probably be battling with the Trump administration in a number of areas, especially the presence of unauthorized immigrants. Let's hope they don't lose sight of the largely poorer and unsuspecting citizens that these financial giants continually rip off.

Friday, December 9, 2016

The Alternate Reality Of Trump Voters Highlights Failure Of The Media

Prior to the election, the New Yorker had an article that interviewed twenty first time voters. The people chosen for the article represented a broad range, from old to young, from different areas of the country, different ethnicities, and all supporting different candidates. And all of them spoke of their various reasons for why they supported the candidate that they were going to vote for. But one thing in particular struck me as I read these opinions. Many of the people voting for Trump referred to something that was factually incorrect when they provided their rationale for voting. One hunter who relied on meat that he killed during the year proclaimed that Hillary was going to take away his guns and therefore his ability to hunt. Hillary made no such claim. Her position on gun control was to keep guns away from terrorists and the mentally ill.  Another would not vote for Hillary because she was a liar, saying, "You see the whole e-mail scandal, and she’s been caught in multiple lies about it". Yet another believed that "terrorism has come to our shores... and it scares me to death". The truth is that you have more than a 50 times greater chance of being killed by a police officer than you do by a terrorist in the United States. Two others simply were voting for Trump because he said whatever was on his mind.

Last night, Rachel Maddow released the results of the most recent PPP poll and it again highlighted this same type of phenomenon among Trump voters. The poll found that nearly 40% of Trump voters believed that the stock market had fallen while Obama had been President. The reality is that is up by over 250%. Two thirds of Trump voters believed that unemployment had actually risen during Obama's terms. The reality is that it has dropped over 3% and is actually now near historic lows. The majority of supporters of the other three candidates all knew what the reality was. In addition, among Trump voters, 40% believe he won the popular vote while 60% believe that millions of illegals voted for Hillary. Incredibly, nearly 30% of Trump voters do not believe that California's votes should count in the election, I'm assuming primarily because of all those illegal votes.

Obviously, the explosion of technology now allows for the dissemination of propaganda on a scale never before seen. The credibility of the national press has suffered the same fate as most of our other institutions and is not trusted. There is no national arbiter that can present the facts as newspapers and television news did when I was growing up. This is a problem that has been building for decades. I should think it would bother the mainstream media that such a significant bloc of the population could be so badly misinformed. They do, after all, have a number of constitutional protections and in return for that they are supposed to be keeping the citizens informed. But we have seen this failure to inform the public time and time again over the last few decades and the media's response is to basically say it's not their fault. Rather than doing nothing or, worse, enabling the propaganda, maybe the media could think about developing better strategies for countering the propaganda and informing us - less focus on personalities and horse races, continual articles and shows that drum certain core facts about what is happening in this country, and abandoning the "both-siderism" on certain subjects where the fact are indisputable. And, despite what Trump and his supporters want us to believe, there are still facts, there is still "truth". Certainly, most every nightly news show has some air time filled with human interest stories that could be put to better use by actually informing us. It may not be the money-maker that the owners would want, but it at least would be performing their quasi-constitutional duty, which the PPP poll show they are clearly failing at now. I don't have all the answers, but I do know that without a set of agreed upon facts, especially important facts about our economy and our government, it is difficult to see how you can have a functioning democracy.

Obama Orders Review Of Russian Hacking But It's Really Nothing New

Today, President Obama ordered the intelligence agencies to conduct a full scale investigation into Russia's attempt to influence the most recent election by hacking into the emails of Democratic and former national security officials and then leaking that material at opportune times during the campaign. The review will be completed before Obama leaves office but it is unclear whether the results will actually be made public. Now that Trump has won the election even some Republicans in Congress seem to want to get on board with the probe, including John McCain and the chairman of the House Homeland Security Committee.

It was long past time for Obama to do this and there is a certain belief that he did not broach this subject during the election campaign for fear of influencing this result, something that James Comey should have done as well. And while I think this kind of investigation is important, especially if we are to stop this kind of thing from happening in the future, it is kind of hard to blame the Russians for this activity. After all, this is the kind of thing America has been doing to foreign countries pretty much my entire lifetime, in one form or another, as has Russia. Of course, it would be a whole different story if the investigation proved that the Trump campaign was colluding with the Russians. Eventually, and it may be a long time later, but eventually, there is always some blowback from these kinds of activities. And there will probably be a time further down the road, where Putin will feel the effects of the blowback from his own foreign adventures. The only thing new about the attempts to influence this election is that the US was the target this time.

Apprentice Fee Another Indication Of Possible Weakness In Trump's Finances

Yesterday, I tweeted about the revelation that NBC had signed up for 8 more episodes of The Apprentice and that Donald Trump was going to still remain involved in the show as Executive Producer. The conflicts of interest here are enormous. There is the serious ethical and perhaps legal problem of the President getting paid by a company while supposedly working for the American people. And there is the serious ethical problem of a media company with a news organization paying an individual it is tasked with covering. There is once again the destruction of another one of the norms of democracy. But it also raises some interesting an disturbing questions about the finances of Donald Trump that he feels compelled to take what I'm assuming is not really a significant amount of money from NBC for someone who claims to be a billionaire.

Josh Marshall has an interesting post up today that posits that Trump needs every dime he can get because he is basically insolvent. The reason he must ensure that either he or his children continue to run the Trump Organization is because it relies on a constant flow of new money simply to keep on going. Marshall also points out that Trump had apparently sold all his stock way back in June, at approximately the same time he finally forgave the $50 million loan he had given his own campaign. He was almost forced to forgive the loan because donors refused to give his campaign money in the belief that Trump would just use it to pay himself back. Trump says that he sold his stock to eliminate conflicts of interest which is hardly believable since he continues to actually create new conflicts as this Apprentice deal shows. And, as an aside, it shows that he isn't a great dealmaker as his stock portfolio would be soaring right now as the market rallies in anticipation of his business-friendly policies. The more plausible explanation is that, having forgiven the loan, he needed additional liquidity. Marshall says, "A heavily leveraged business, one that is indebted and heavily dependent on cash flow to keep everything moving forward, can be kind of like a shark. It has to keep moving forward or it dies...It is certainly plausible that if Trump simply sold off his company in toto, he'd be in debt. Maybe there wouldn't be anything left to put in a blind trust." If Marshall's theory is true, the corruption and potential for outright bribery of Trump will be beyond our worst fears.

Economic Theory Run Amok

There were two unrelated stories yesterday that highlighted how badly our country has gone off the rails due to primacy we have bestowed on corporations and their owners and the supposed "job creators". Goldman Sachs put out research report that detailed some of the impacts of the expected actions, if there are such things, of the Trump administration. But there was one point in the report that simply staggered me. In discussing the possible repeal of Obamacare, the report states, "The effect of Obamacare 'repeal and replace' is less clear, but seems likely to provide a modest net stimulus in the near term—potentially as soon as Q2 2017—as a result of the likely repeal of the taxes used to pay for some of the program."  The problems with this statement are profound. First, we have been waiting for the "replace" part of "repeal and replace" for seven years now and there is still no plan in sight. More importantly, estimates show that, depending on what "repeal" actually takes place, somewhere between 17 and 37 million Americans will lose their health insurance. The idea that millions of Americans losing their health insurance would be a net stimulus to our economy seems to be beyond credulity. My guess is what the report really means is that the repeal of Obamacare will be a net positive to corporations' bottom line as a result of the decrease in taxes firms will have to pay. For the country, on the other hand, the monetary cost will be enormous as millions of people will forgo medical treatment until their condition becomes so serious it requires much more expensive treatment that the preventive care would have cost in the first place. Other will simply use the emergency room, the most expensive kind of care, for their regular health needs. Of course, all these extra costs will fall on the federal, state, and local governments and end up costing all the taxpayers much more money in the long run. But shifting costs off of business and onto the government is a two-for - corporations can make more money and the increasing government debt means not only that government doesn't work but that we will have to cut services even more. The myopia on corporate profits to the exclusion of all else is one of the reasons Goldman is called the "vampire squid".

The second item was an article that addressed the impact of that hoax called global warming. This piece accepts the universal scientific wisdom that global warming is real and points out how more affluent communities will be protected from its impact. And that is by design. Cedar Rapids, Iowa and Manville, New Jersey are two towns that couldn't be more different. Cedar Rapids is a big city in a rural state. Manville is a suburb of New York City. But both towns have suffered multiple serious flooding incidents in the last decade. And both have suffered a similar fate when it comes to protecting themselves against further flooding. Essentially both communities do not have high enough property values to make them worth saving, at least according to the Army Corps of Engineers.

Both communities asked the Corps for help in building defenses against further flooding And both were turned down by the Corps. And the Corps rationale sounds perfectly reasonable. Cost-benefit analysis of any plan the Corps could have undertaken to reduce flooding did not get above 1. In essence, the Corps would have spent more money than the structures they were protecting were worth, so, by law, the Corps could do nothing to help these communities. As the article points out, if the flooding had occurred in a wealthy community like Star Island in Miami which has houses worth tens of millions, the cost benefit analysis would probably be above 1 and the protection would be provided. This process, then, just locks in a geographical bias as to who will be protected from flooding simply because of property values. Richer communities will be saved. Poorer ones will be left to wash away. As the Mayor of Manville noted, "It is simply not fair to penalize Manville residents because their homes are more modest, especially after repeated flooding has cut the values of their homes in half." The head of Cedar Rapids flood prevention program was equally explicit saying the Corps' policies are "skewed against the Midwest", primarily because of the generally lower property values there. It was especially ironic to hear Iowa's two Republican Senators also berate the Corps for using a strict cost-benefit analysis in deciding what areas can and will be protected. Perhaps they should speak to their GOP colleague Jim Inhofe about global warming and most of their other honorable friends about strictly using a cost benefit analysis on most government projects.

Both these items emphasize the disturbing pattern that specific economic benefits trump virtually all other considerations these days, including the well-being of our fellow citizens. Of course, it was forever thus and of course the economic costs are an important consideration. But they should not always be the overriding factor that they seem to be today.


Thursday, December 8, 2016

Trump's Labor Secretary Is A Misogynist And Abuser Like Trump

It's becoming easier to understand why Trump picked Andy Puzder as his Labor Secretary. Besides Puzder's disgust for Obamacare, the minimum wage, and actually paying people for the overtime they work, Puzder is also a fellow misogynist and domestic abuser as well. Police were called to his home twice, once when neighbors called the police because a loud and heated argument between Puzder and his wife had devolved into plate throwing. In her divorce papers, Puzder's wife described how Puzder hit her, knocked her to the floor, and then ripped out the phone to prevent her from calling the police. Puzder claimed he had merely "grabbed her by the shoulders and pushed her back", but this was solely intended to keep her from hurting herself. In another incident, his wife claimed he punched her in a car. Puzder's excuse this time was that he had driven up on a curb essentially because he was drunk. This certainly seems typical of an abuser - there is always an excuse or they were merely trying to "protect" the very people they are abusing.

Of course, Puzder is also horrendous in other ways as well. As owner of Carls Jr. fast food chain, he opposes raising the minimum wage at all, much less to $15 dollars and he opposes the Labor Department's new overtime rules as well. And he certainly likes to objectify women with his ads featuring scantily-clad women suggestively eating burgers, saying, "I like beautiful women eating burgers in bikinis. I think it's very American". All in all, he really sounds like Trump's kind of guy. It will be interesting to see if the transition team throws Puzder overboard or, like Trump usually does, simply doubles down. If they decide to stick with him, will there be any Republican in Congress who will show the spine to object to Puzder?

Dems Threaten Government Shutdown Over Miners' Benefits

I'm wondering if coal country is going to notice that neither the President-elect or Republicans in Congress seem very interested in making sure miners get the pensions and health care that they deserve. In fact, the only ones seemingly standing up for the miners today are two Democrats, Joe Manchin and Sherrod Brown. The government will shut down on Friday unless Congress passes a new spending bill and the current bill being considered only extends health care benefits for retired miners until April. Democrats want to ensure that the funding at least extends through the end of next year and does not become part of the budget battle that is certain to take place in April. According to Brown, Democrats have determined to stand firm against a bill that does not do that, although it is still unclear whether they can hold their caucus together and keep the Senate from reaching the 60 vote threshold for cloture. If Democrats do hold the line, Republicans would have to find a way to compromise or risk another government shutdown. And it would be difficult for Republicans to blame the shutdown on Democrats who are only standing up for benefits for miners. And maybe then the voters in coal country would see who really has their interests at heart.

This Is Who Trump Is And Always Will Be

Donald Trump is a serial sexual predator. He is an abuser. He is a compulsive liar. He has the temperament of a child. He is ignorant and has no patience for details, especially the details required for governance. And he is a salesman who loves to make deals, especially deals that will line his own pockets. This is who he is. At 70, this is what he always will be. And this is how he will be as President of the United States. And all of these attributes were on full display yesterday.

Trump started off the day being interviewed by Matt Lauer on the Today show as they presented Trump as Time magazine's Man Of The Year. To paraphrase one clever pundit, this breaks a streak of 78 years of Time not have a white, nationalist, racist as Man Of The Year. Besides reiterating his determination to keep using his Twitter feed to keep us all up to date on his latest abuse and bypassing the "liars" in the press, Trump also promised to keep on making deals like Carrier and Softbank and abusing companies that might actually have the temerity to criticize our dear leader, because that's what he does. I cannot find a video of the interview or a transcript (please let me know if you find one), but I believe the specific comment that Trump made was something like, "I'll continue to make deals like that because that's what I do". So we can expect more of the same in this regard.

That was followed by a brief appearance in the lobby of Trump Tower after a meeting with Masayoshi Son, the CEO of Softbank. Trump announced that Softbank had agreed to invest $50 billion in the US and create a further 50,000 jobs. He then took to his Twitter feed to say that "Masa[Yoshi Son] said he would never do this had we (Trump) not won the election!" The reality, of course is slightly different. The $50 billion was already part of an investment that a fund set up by Softbank and the Government of Saudi Arabia had already decided to put into the US. The number of 50,000 jobs is also apparently pulled out of thin air. In addition, documents that Son flashed to the media in the lobby seemed to indicate part of the investment might also involve the Chinese firm Foxconn, a company that has a history of worker abuse that was uncovered during their work on manufacturing the Apple iPhone. You can be sure that any Foxconn factory in the US will be in a right-to-work state and that no union activity will be tolerated. Other investments from Softbank, which is really a technology firm, will probably be focused on Silicon Valley and other high tech areas, which is hardly going to bring jobs to the large swath of the country that voted for Trump. Finally, the real benefit to Softbank will probably come in the telecom industry. The company already owns Sprint and has already proposed a merger with T-Mobile. That merger was rightfully rejected an antitrust grounds. I'm pretty sure that the merger will now go ahead after the meeting with Trump. Sprint and T-Mobile employ over 75,000 people combined. How many of those jobs do you think will disappear when the merger is actually completed. It will certainly be a large enough number to offset 10% or 20% of those 50,000 jobs that have been "promised".

Later in the afternoon, Trump nominated General John Kelly to head the Department of Homeland Security (DHS). This would be the third general in Trump's cabinet. As one pundit noted, right now the Situation Room in the Trump administration would be composed of a representative from the Joint Chiefs of Staff, another general as National Security Adviser, another general as Secretary of Defense, and another general as head of the DHS. We are still waiting for the Secretary of State, but another military officer in that spot would mean that the only civilian presence in the room would presumably Mike Pence and perhaps Donald Trump if he could be bothered to show up. The preponderance of generals in Trump's cabinet seemingly reflects a fascination that Trump never left behind from his checkered period at the New York Military Academy, where he apparently honed his talent for abuse and not playing by the rules.

Trump ended the day by taking to his Twitter feed once again and attacking Chuck Jones, the head of the union representing the Carrier workers whose jobs Trump had "saved". Jones made the unfortunate mistake of pointing out that Trump "lied his ass off" when he told those Carrier workers that 1,100 jobs would be saved. Jones noted that the real number of jobs saved was a little over 700, while over 500 others would lose their jobs. Whereupon Trump accused Jones and his union of being responsible for the lost jobs that Trump had just claimed he saved because of...union dues.

Meanwhile, reports indicate that Trump has blown off intelligence briefings, leaving that to Mike Pence. We all know what happened the last time an inexperienced President ignored intelligence briefings and it did not end well. In addition, one of the top priorities of both Republicans and the Trump administration is the repeal of Obamacare but figuring out how to repeal it without seeing tens of millions of people lose their insurance has proven rather difficult, primarily because it's impossible. But when GOP Congressional leaders needed to meet with the incoming administration to map out a way forward, Trump was nowhere to be seen. It was again left to Pence to attend that meeting. His cabinet picks have shown that he only has interest in loyalty and ideology and that experience is not really necessary.

Despite some in the media still clinging to the hope that Trump will become Presidential, it's just not coming to happen. And those in the media who have clung to that belief are slowly beginning to admit the error of their ways. He will still be out there selling his latest deal and lying about the details. He will never be interested in the details of governing and he will leave that all to Pence. When Trump offered Pence the VP slot, he reportedly told Pence that he would be the most powerful VP in history, more powerful than even Cheney. That may be one promise Trump will actually keep. And he will still abuse anyone and everyone who slights him even in the most minimal way. He is an abuser by instinct. And, as Josh Marshall has noted, he will spend the next four years abusing the American people. Part of the fear that abusers create in the people they abuse is due to the fact that they are totally unpredictable so that the abused will never know what will set the abuser off. And that will be the fear that all of us will live with during a Trump presidency. We will never know when we will wake up and find that Trump has possibly started a real war or thankfully just a trade one. We will never know when some factual correction of what Trump said will prompt a tweetstorm that will cause you to fear for your life. And it is all of a piece of Trump feeding his own insecurities and exerting his power over all of us, while destroying the norms that we all have previously lived under.

Wells Fargo Continues To Try To Avoid Responsibility For Its Massive Fraud

I know we are all shocked to see that Wells Fargo lied to us all again. When the massive fraud perpetrated by the bank, which involved opening thousands of accounts for customers without authorization and spanned almost a decade, was uncovered, management originally blamed it all on unethical low-level employees. Subsequent investigation revealed that management was well aware of what was going on and actively got rid of whistleblowers or others who would not go along with the bank's high-pressure sales program.

In contentious congressional hearings, Wells Fargo CEO John Stumpf, who was subsequently sent packing with his golden parachute, promised to make whole all the bank's customers who had paid unnecessary fees associated with these bogus accounts. It turns out that it was yet another empty promise from a corporate executive. The New York Times is reporting today that Wells Fargo is trying to force as many of these customers that it stole from into arbitration, using the standard clause in the legal document that every bank uses when a customer opens an account. For thousands of Wells Fargo's customers whose fees on unauthorized accounts amount to a hundred dollars or less, arbitration would be a time-consuming process and hiring representation for that process would end up costing the customer more money than they would recoup. In addition, a study in California showed that companies that forced customers into arbitration won those cases 95% of the time. By forcing customers into arbitration, Wells Fargo is once again trying to make it as difficult as possible for customers to get compensation for what they have lost so that the bank can avoid paying for the consequences of its massive fraud.

Wells Fargo's attempt to force arbitration has met with some success but some courts are rejecting the bank's arguments. Customers have argued that the arbitration clause can not possibly cover accounts that they did not authorize to set up. Others have argued that these unauthorized accounts are really identity thefts and are therefore not covered by the arbitration clause. Some courts have bought these arguments from customers while other have not. It is also my belief, from my own experience, that these fraudulent accounts represent a serious violation of anti-money laundering (AML) statutes. It would be nice to see some regulator go after the bank in that regard.

Earlier this year, the Consumer Financial Protection Agency (CFPB) implemented a new rule that forbid the use of these forced arbitration clauses in contracts for financial services. Of course, that was immediately challenged in court and two federal circuit courts reached opposite conclusions about the legality of the rule. It will eventually have to be decided by the Supreme Court. If Clinton had won the Presidency and assuming the GOP would never confirm her nominee, it was possible that 4-4 split in the Court would have left us with this bizarre situation where arbitration clauses were legal in some states but not in others. And if Clinton had won, she would have extended the restriction on these clauses to most mundane contracts. With Trump's victory and the resulting appointment to the Supreme Court, along with the Republicans' long-held desire to eliminate the CFPB, it looks like forced arbitration will continue, much to the detriment of all consumers.

Last week the Leonard Lopate show on WNYC had on Eugene Soltes who is the Jakurski Family Associate Professor of Business Administration at Harvard Business School and has written a book on white collar criminals called "Why They Do It: Inside The Mind Of The White Collar Criminal". He pointed out that so many white collar criminals do not believe they have done anything seriously wrong or even illegal. He mentions that law firms that specialize in defending white collar criminals have special rooms, painted in soft colors designed by psychologists, where they take white collar criminals in order to get them to truly understand the seriousness of their crimes. He points out that the acceptable norms of business these days are now far different from society at large. Executives feel they are well within the norms of society as long as they follow the technical rules even as it is clear they are egregiously violating the spirit of those rules. And even when they get caught violating those technical rules, they really don't believe they have committed a crime. Says Soltes, "They're shocked...Because no one thinks, within these prominent positions, that they're the kind of person that could go to prison, that they're the kind of person a prosecutor would go after. They're the good guy. It's those bad guys that they see in the paper that are different and deserve to go to prison." There's a perfect description of privilege and entitlement, if I've ever heard one. And the sad thing is, they are more likely than not correct - no prosecutor will go after them.

There are two important lessons here. First, start treating white collar criminals like the criminals they really are. Second, eliminate forced arbitration clauses in the mundane contracts for basic services such as banking, financial services, employment.

Wednesday, December 7, 2016

Trump Blames Workers For Losing Jobs Trump Claims He Saved

Tonight Donald Trump blamed the union for losing the jobs that Trump "saved". Yes, I know that statement does not make any sense, but we are now living in Trump world, where nothing makes sense. Earlier in the day, the head of the union representing the Carrier workers, Chuck Jones, pointed out that Trump came to his factory earlier this week saying he had saved 1,100 jobs, when in fact only a little more than 700 jobs would be saved and more than 500 workers would still lose there jobs. Earlier in the week, Jones had said that Trump came to the factory and "lied his ass off".

As Boeing found out yesterday, our dear leader must not be criticized. Trump responded to the union leader in a couple of tweets tonight that said, "Chuck Jones, who is President of United Steelworkers 1999, has done a terrible job representing workers. No wonder companies flee country! If United Steelworkers 1999 was any good, they would have kept those jobs in Indiana. Spend more time working-less time talking. Reduce dues." Of course, union dues have nothing to do with why Carrier wants to move those jobs to Mexico. It is $6/hour labor and the chance to reap even more profits that is driving the offshoring of these jobs.

So now we have the spectacle of Trump blaming the workers for losing the jobs that Trump claimed he alone "saved". That's really standing up for the working class. You can't make it up.

Update: Within minutes after Trump's tweets, Jones started getting threatening calls saying things like "What kind of car do you drive"? and "We're coming for you". "Nothing that says they’re gonna kill me, but, you know, you better keep your eye on your kids," Jones said later on MSNBC. "We know what car you drive. Things along those lines." Trump's brownshirts are flexing their muscles...


GOP Having Difficulty Funding Government; Dems Should Not Help

The Republicans may have grandiose plans for what they will do when Donald Trump becomes President but they can't seem to put a budget together despite running both the House and the Senate. The government will run out of money on Friday unless Congress can agree on a spending bill. Right now the proposed bill is a hybrid between a pure continuing resolution (CR) and an omnibus spending bill as it looks like a CR but has a number of changes to current budget items which are normally contained in an omnibus bill. The House is expected to vote on the bill tomorrow and the Senate will follow shortly thereafter or on Friday.

The Freedom Caucus in the House has always been adamantly opposed to an omnibus spending bill in this lame duck session so it will be interesting to see how they react. The new leader of the Freedom Caucus, Mark Meadows, did not show a lot of spine when he said, "I think there’s a lot of people who believe we’ve just got to vote and get on with it". However, Representative Thomas Massie from Kentucky said, "It’s an omnibus. It’s an omnibus that lasts until April 28. They call them ‘anomalies’ in the CR. It’s like ‘The Matrix.’" That's what happens when you think you can create your own reality. Among the "anomalies", or changes in spending, is an additional $10 billion for the Defense and State Departments and $4 billion for natural disasters. There are other smaller sticking points such as a no money for a miner pension shortfall that is angering Senator Joe Manchin, the refusal to lower the quorum threshold so that the Export-Import Bank can make larger loans, and the insertion of a clause limiting debate over a waiver for James Mattis to 10 hours, the latter two angering a range of Democrats. Democrats in both houses seem to echo Meadows feeling to just sign something and get out of town but I think they should think long and hard about holding back their support and see if Republicans can succeed or fail on their own. If they fail, a government shutdown looms. But it is long past time for Democrats to stop saving Republicans from themselves.

A separate matter that was also supposed to pass Congress this week was finally taking action on the Safe Drinking Water State Revolving Fund. Apparently, Republicans stripped out a "Buy America" provision in this bill during the conference to reconcile the House and Senate versions and Democrat Sherrod Brown is going ballistic. The provision required American-made steel and iron to be used in the Fund's infrastructure projects. Says Brown, "By stripping meaningful Buy America rules from the water infrastructure bill, Washington leadership is choosing China and Russia over Ohio, Pennsylvania and Wisconsin. This was the first major test of whether Washington establishment Republicans would live up to President-elect Trump’s promises to put American products and American workers first – they failed, and American iron and steel workers will pay the price." Brown and Democratic Senators from Wisconsin and Pennsylvania are trying to get the provision inserted back in the bill.

I'm afraid this will be standard operating procedure for the Republican Congress for the next two years. Lots of chaos with Democrats being excluded from the process and lots of action happening in secret especially in the conferences to reconcile House and Senate bills. It will take eternal vigilance from Democrats to bring these details into the light, just like Sherrod Brown did with this Buy America provision.


The Dangers Of A Minority That Believes It's A Majority And Deserves To Be So

Josh Marshall has hit upon something very important that we all need to understand about the coalition behind Trump's success. Marshall points to a truly heinous article by Michael Barone in which he declares the Electoral College as the only thing standing in the way of America becoming California's colonial empire. Says Barone, "White middle class families have been pretty well priced out of the state by high taxes and housing costs, and the Hispanic and Asian immigrants who have replaced them vote far more Democratic...California’s 21st century veer to the left makes [the Electoral College] a live issue again. In a popular vote system, the voters of this geographically distant and culturally distinct state, whose contempt for heartland Christians resembles imperial London’s disdain for the 'lesser breeds' it governed, could impose something like colonial rule over the rest of the nation. Sounds exactly like what the Framers strove to prevent." Barone's solution, of course, is to have Democrats abandon the extreme left ideology represented by the state of California. Says Barone, "If California continues to occupy one extreme of the national political spectrum, there may well be more such splits [between the Electoral College and the popular vote]. At least unless and until the Democratic Party figures it needs more to make a case with more appeal beyond California if it wants to win 270 electoral votes." Apparently, "one man, one vote" is just a quaint concept for Barone.

Marshall's larger point is that Barone's article reflects the true realization the current Republican "majority" can not long survive in a real democracy. It is a recognition that they truly are a minority party and they resent being disdained as "lesser breeds", as Barone puts it, by the real majority in this country. Of course, the simple thought they are considered as such just shows how insecure Republicans are about their position, even as they control all the levers of government. As Marshall puts it, "This is the mindset of a person and I think a political movement that fears that their power cannot be maintained in the context of majoritarian democracy. It's of a piece with voter suppression, voter ID checks, expulsion of undocumented immigrants - the nationalist surge that drove the outcome of this election." I have made this point time and time again over the last year and this recognition of potential of almost permanent minority status has driven the GOP to become a party that no longer believes in democracy. And I touched on it again briefly yesterday in discussing the continuing surge in hate crimes long after the "euphoria" of the election should have subsided and when emotions would normally have expected to calm. It speaks to a deep-seated insecurity despite having won the election and all the levers of power.

Earlier this summer, I had posted about an interview that conservative scholar Samuel Goldman had with Zach Beauchamp on Vox. In that interview, Goldman proposed that the Republican party had become a white, Christian nationalist party that really had nothing in common with traditional Republican conservatives and that, sooner rather than later, principled conservatives, assuming there are any remaining, would have to leave the party and find or build a new home. But he accurately describes the Trump coalition as a large minority that is large enough that it allows them to believe they are a majority. Says Goldman, "One of the difficulties is what you might call the Trump bloc. I'm using this to refer to a silent majority that isn't a majority and is not particularly silent: whites, generally older, generally less educated, although of course with exemptions for all of those generalizations. [This group] is a very, very awkward size. It seems to be somewhere between 30 and 40 percent of the electorate, which is big enough that it feels like a majority but small enough that it isn't actually a majority. That's a very uncomfortable place to be, politically, because smaller groups come, I think, to appreciate that they have to compromise and form coalitions. Larger groups can just win. But this group doesn't seem small enough to compromise or big enough to win. That makes people very angry. I think some of that anger is reflected not just in Trump's campaign but in the sort of rhetoric you see around the rallies. And everyone has seen the footage of people who are just hopping mad in a way that I suspect is alien not just to the journalists that cover them but also to movement conservatives who have claimed to speak for them in the past." The only thing I would add to Goldman's analysis is that the perceived loss of white privilege is an additional driving factor in their anger. Please read the whole interview because Goldman has some interesting insights into the our current political environment.

Unfortunately, Goldman was wrong about the Trump bloc not being big enough to win but that was only due to the un-democratic nature of the Electoral College and the heavy hand of James Comey. And he was close to his 40% threshold of Trump voters as Trump only garnered 46% of the popular vote. I believe that Trump is actually the first President in history who will have received a minority of both the primary and popular vote. But there is a recognition by Republicans that the chances that they will not be overwhelmed by the changing demographics of this country are getting slimmer and slimmer. By the 2020 election, whites will probably make up less than 50% of the population. And that is what makes the coming Trump administration so incredibly dangerous. The Republican party realizes that this may be its last chance to roll back the elements of the New Deal that they have been fighting for nearly three-quarters of a century. There is no chance of compromise because the party will only be weaker as time moves on. There is no chance for moderation because their supporters are angry and have no willingness to moderate. Any sign of weakness will be met by a challenge from even further to the right. There is a reason there are so few, if any, "reasonable Republicans" left, especially among those with elected positions. And, with time running out, their supporters filled with rage, and at the full height of their powers, the mantra of the party has really become "by any means necessary". That led to the refusal to even give Merrick Garland a hearing. And it will mean the destruction of even more norms of governance and a further erosion, if not destruction, of democracy in this country. There are dangerous days ahead.

In Silicon Valley, "Disruptive" Is Another Word For Regulatory Arbitrage

Amazon initially built its business by driving mom-and-pop booksellers out of the retail business and then destroying the big chain book stores. From there it expanded into retailing just about anything and everything. There is no doubt that we all enjoy the ease and service that Amazon provides. But the company had plenty of help in becoming the retailing behemoth that it is.

A recent study by the non-profit Institute for Local Self Reliance (ILSR) has released a study that Amazon received a minimum of over three quarters of a billion dollars in tax breaks from 2005 to 2014. That amounts to over 15% of the firm's profits during that period. Admittedly, Amazon spent many of those years unconcerned about profits as it tried to build near monopoly control of online retailing.

Initially, Amazon located its distribution centers in remote rural locations which allowed its customers in denser, more affluent states to avoid paying sales taxes on their purchases, creating a competitive advantage over local retailers, whether online or not. The company was fixated on tax avoidance as that was its greatest advantage, reducing costs between 7% and 10%. In the mid-2000s, having driven much of the local competition out of business, Amazon changed its strategy and began moving its distribution centers closer to major cities. Amazon demanded that the in-state sales tax be waived when it built new warehouses in these states and sometimes also received an additional tax incentive for building those warehouses and the resulting jobs as well. And it was constantly flirting with sales tax avoidance. In 2008, it had to pay a fine of over $250 million to the state of Texas for running a warehouse under the name of a subsidiary in order to avoid paying the in-state sales tax. In 2013, sales tax avoidance by online retailers cost states around $23 billion. Money like that would have certainly helped many states that were struggling to balance their budgets in the wake of the Great Recession. And just imagine how many jobs were lost as states lost the brick and mortar stores that Amazon drove out of business. For example, in 2014, Amazon sold over $2 billion worth of goods in the state of Illinois without employing a single person and without paying a dime in sales tax.

Ever since the success of Amazon, many other Silicon Valley companies have essentially tried to duplicate their success and use Amazon's tactics to do so. Take a look at Uber, a company that I readily admit I have no love for. In 2015, Uber reported an operating loss of over $2 billion. But, like Amazon in its early days, the point is not to make money now. The point is to drive as many competitors as it can out of the business and, when it has a near monopoly presence, the profits will come. In Uber's case, that means that customers currently pay only 41% of the true cost of the ride. In addition, the company continually flouts local government rules that cover taxis and other livery services and avoids the costs associated with a traditional employee by calling its drivers "contractors". In addition, they are already trying to squeeze those "contractors" by shrinking the percentage they receive. All this is designed to drive out as many competitors as Uber can and hope that monopoly and profitability will follow.

Airbnb follows a similar playbook which relies on ignoring or avoiding the rules and regulations that normally cover hotels, bed and breakfasts, and other similar establishments. In this case, it may be that the hotel industry has just too much power for Airbnb to dislodge. Cities in this country are cracking down on the company and restricting what units can actually be rented. In New York City, it is illegal to rent an apartment for under 30 days, a law that Airbnb originally flouted. The state eventually passed a law that would impose a fine of $7,500 for the illegal rental of an apartment using Airbnb or another online rental agency. Airbnb went to court to fight that law but eventually agreed to drop the suit in return for New York City agreeing to enforce the fine against the host listing the rental and not Airbnb itself. That shows how much the company cares about the hosts who drive its business.

These days, when Silicon Valley talks about a "disruptive" new business, it usually does not mean that there is any breakthrough technology or idea. It merely means the company has found new way to avoid the rules and regulations that cover an existing business and will exploit that loophole to gain a competitive advantage, drive the competitors out of the space even if it means running at a loss for an extended period, and then hoping that resulting near monopoly or highly scaled business will turn a profit. In my day, this was called regulatory arbitrage; these days, it's called innovation.

Astronomy Adventure - The Pleiades

Let's take a quick break from the insanity that is the Trump administration and escape from the Earth altogether. It has been a pretty dreadful month or so for any astronomy as the sky is continually overcast and the few clear nights we've had have always conflicted with other responsibilities. But I finally did get out there for a couple of hours earlier this week before the clouds rolled in again.

Here is a photo of the Pleiades, easily the easiest and most recognizable open cluster to view with the naked eye and identified by cultures all over the world since antiquity and beyond. The name of the cluster as well as the names of nine individual stars within it comes down to us from the Greeks. In 1771, Charles Messier included it as the 45th object in his catalog of comet-like objects, hence the alternative title for the cluster of Messier 45 or, simply, M45.



Here are the technical details for those handful who might be interested:
Scope: Starblast 4.5; tracking on, but clearly not perfectly polar aligned
Magnification: 20x
Camera: iPhone6 using NightCapPro app; ISO 1600
Processing: 5x15 sec. images stacked in Deep Sky Stacker; no flats or darks; adjusted curves using GIMP

Tuesday, December 6, 2016

GOP Makes U-Turn Regarding Retribution Against Offshoring Companies

Kevin Drum at Mother Jones points us to an article in the Washington Post by Jim Tankersley that highlights the typical double standard that Republicans have for retribution against corporations that move jobs overseas. Every single budget that President Obama proposed since 2009 included changes that in the tax code to penalize those companies that moved jobs overseas and reward companies that created jobs in the US. For the last four years, he has also offered tax credits for those companies that move jobs into the US and proposed eliminating tax breaks for moving expenses associated with offshoring. As Tankersley notes, "Congress ignored nearly all those proposals." When the administration proposed cracking down on corporate inversions that were merely a way to avoid paying US taxes, House Republican whip Steve Scalise declared, "The president’s answer is to go punish the companies" and the proposal, like most Democratic proposals to help working Americans, died a death in the Republican Congress.

Today, of course, Republicans are applauding Trump's deal with Carrier and even his bizarre threat to cancel two Boeing airplanes. Admittedly, there are a few lone voices of disapproval from the GOP and there is certainly a reluctance within the party to adopt the 35% tariff that Trump keeps promoting. As Tankersley points out, Republicans currently believe that Trump will suddenly "discover" that the tariff will hurt American workers, just like he "discovered" torture doesn't work, and the GOP will just end up with the corporate tax rate reduced from 35% to 15%, which is what they really, really want. But, as Masha Gessen noted, the oligarchs thought they could control and contain Putin too.

So Many Things Wrong With Trump's Boeing Tweet

Trump's latest tweet about Boeing raises another opportunity for massive corruption by the Trump family and the members of and hangers on to the Trump administration. There is a reason that Presidents usually do not call out specific companies except in generic, and usual, positive terms, much less threaten a specific company over an individual contract. The immediate aftermath of Trump's tweet caused Boeing shareholders to lose over half a billion dollars. Of course, the opportunity for corruption for those who have some idea what Trump is thinking with regards to these individual companies is enormous.

Needless to say, Trump's tweet is also factually incorrect as the estimated cost for the two new planes is only about $1.5 billion and there currently is only one existing contract for $170 million to investigate the requirements for the planes. But ignoring facts is just another way for Trump to display his power and destroy the norms of governance.

On MSNBC, Republican strategist Noelle Nikpour offered the theory that Trump views his election as essentially a takeover of another company, in this case the businesses of the United States. He is looking at these businesses and deciding what parts are unessential and need to be cut and what parts he will keep. Of course, this is not how American democracy is supposed to work. Another theory was floated by Josh Marshall who points out the Boeing currently relies heavily on exports to China. Perhaps Boeing made their discomfort about Trump's actions with Taiwan known to the incoming administration and this is the response they got. Of course, this also just provides the latest shiny object that the press can move on to and Trump's diplomatic incident over Taiwan will fade into the past.

Hate Crimes Continue With No Comment From Our President-Elect

We are now almost one month out from the Presidential election that was won by a racist xenophobic bully. In the immediate aftermath of the election, it was hardly surprising, although certainly disturbing, to see an outbreak of hate crimes as the winners "celebrated" their victory. But, rather than subsiding as election euphoria wore off, the hatred and violence actually seems to be increasing. Just off the top of my head I can list a handful of hate crimes that occurred in the last few days. An off-duty Muslim police officer was threatened by a man with his pit bull and told to "go back to your country". A transit police officer was pushed down a staircase and accused of being a terrorist. Both were women and both were simply wearing hijabs. Even more shocking, these attacks both occurred in New York City, one of the most diverse cities in the country. In North Carolina, the Ku Klux Klan held a motorized "victory" parade through the town of Roxboro, shouting "white power!" and displaying Confederate battle flags. In New York City alone, there has been a 35% increase in hate crimes over the last year and, since the election, the number of hate crimes is double the same period last year. In 2015, the FBI reported that hate crimes against Muslims surged 67%.

The silence on this subject from the President-elect and his transition has been pretty deafening. Other than one interview a week after the election where he claimed not to know that there was surge in hate crimes, something quite probably true considering his broad ignorance, he simply said, "stop it." But it is also true that Obama has also been relatively silent on the matter, although that may be because any statement from him will probably only increase the violence. Somewhere in the blogosphere, and I unfortunately can't find the reference now, I read an interesting take on the continued resentment of Trump voters despite having won the election. I think that is playing itself out in these incidents where Trump voters essentially need to lord their victory over others, fed by his campaign of racism and xenophobia. That is also why his tweet about how the votes of millions of illegals allowed Hillary to win the popular vote had such resonance with his supporters - they are tired of having their views considered in the "minority" and the election was a way to show the elites and the liberals they need to be "respected". Yes, it is most definitely racism and xenophobia but, to paraphrase the insight from Professor Samuel Goldman, it is also a reflection of the insecurity of a minority that is just big enough and powerful enough to believe it is a majority.


UK Supreme Court To Hear Arguments On Invoking Article 50

Yesterday, Britain's Supreme Court began a four day hearing on the question of whether Parliament is required to vote before the government an invoke Article 50 and officially begin the negotiations the exit the European Union. The specific legal question involves the fact that the original law passed by Parliament that brought Britain into the EU conferred certain rights on British citizens and that the invocation of Article 50 would revoke those rights, thus Parliamentary approval was needed. Last month, the High Court ruled that a vote by Parliament was needed which prompted this appeal to the Supreme Court.

In addition, the Court will also be looking at whether the invocation of Article 50 will effect the current constitutional arrangements that Britain has with Scotland, Wales, and Northern Ireland. If the Court were to rule those arrangements are effected, it could possibly mean that the governments in each of those areas would also need to approve the invocation of Article 50. Considering that Scotland and Northern Ireland both solidly voted to remain in the EU, the chances for their approval seem slim. That would only infuriate the majority who voted to leave as the will of the majority would be effectively thwarted.

Another, less likely possibility, that the Times' article raises is that the Court could ask whether Article 50 is legally reversible. Since Article 50 is European law, the ultimate arbiter of that question would ironically be the European Court of Justice, meaning that a European court could actually be deciding on how Britain could exit the EU. Again, that would certainly infuriate those who voted to leave specifically to get out from under rulings from Europe.

A decision from the Supreme Court will probably come shortly after the start of the New Year. Requiring Parliament to vote would force Theresa May's government to provide some clarity on what its negotiating strategy with the EU would be. Unfortunately, that would also provide that same clarity to the Europeans, weakening Britain's negotiating position. A possible compromise position would be for Parliament to pass legislation that would allow Article 50 to be invoked but with a requirement that Parliament also be able to vote on whether to accept the final negotiated agreement with the EU. That vote would essentially be "Brexit II" which would also probably again infuriate those who voted to leave.

All this just shows what a poor decision David Cameron made in holding this ill-considered referendum in the first place. And it is clear that neither the government who supported remaining in the EU nor those who wished to leave were in any way prepared for the actual possibility that the country would vote to exit the EU and have still not come up with a real plan to move forward.


Monday, December 5, 2016

Italy's Government Falls Posing More Danger For EU

In another blow that could lead to the collapse of the European Union, the government of Matteo Renzi in Italy has fallen after the large defeat of a constitutional reform referendum upon which Renzi had staked his leadership. Renzi's resignation will likely lead to national elections early next year which will probably become a referendum on Italy's place in the European Union. Renzi's pro-EU Democratic Party will be opposed by the 5 Star Movement which advocates withdrawing from the currency union. Right now polls show the two running neck and neck.

In the meantime, economists and the world's central bankers are keeping a close eye on Italian banks that are still enormously over-leveraged and in danger of collapse. Italy's third largest bank, Monte dei Paschi di Siena, needs to raise over $5 billion on the coming days to avoid collapse. The chaos and instability from Renzi's loss has already raised borrowing costs in Italy by over an eighth of a basis point and makes it more unlikely that the bank will be unable to raise the money it needs from outside investors. That could likely mean another government bailout which will only fuel the anger among those still suffering from austerity and the economic straightjacket imposed by being a member of the Euro.

Another potential side-effect could be the Fed's decision to raise interest rates, which is priced in and expected in just another week or so. With Italian banks teetering, the Fed may think twice before moving interest rates up only to face possible financial contagion from a collapse of an Italian bank. If they do delay, this will be the second time this year that the Fed has been forced to back away from an almost sure interest rate hike because of events in Europe, the first being Brexit back in May.

Trump, Republicans Destroy Another Democratic Norm - The Transition Of Power

I'm not sure that this has been pointed out strongly enough in the mainstream press but it strikes me as completely unprecedented that, rather than simply gathering his cabinet and forming a new government, Trump has actually been engaging in distinct economic and foreign policy before he has even been certified by the Electoral College much less been sworn in as President. The announcement of the Carrier deal may have only detailed Indiana state tax breaks for the company but most people are under the impression that Trump also made specific promises to United Technologies in that deal as well. In addition, Trump's now admittedly well planned call with the President of Taiwan, followed by a tweet-storm about China's trade and currency practices, indicates he is also leading a major shift in foreign policy. All this is being done without the consultation or even input of the existing structures of the American democracy.

Trump is certainly within his rights to change our policy toward China and Taiwan once he becomes President. And, even when he is President, he needs authorization from Congress to offer specific tax breaks to individual companies; and, even there, the language of that legislation has to be carefully framed to pass legal muster. Now, you can argue his promises to Carrier and United Technologies are not binding until that legislation is passed. But you can't say something similar about the situation with China and Taiwan. Trump may be President-elect but he is still just a normal US citizen until his inauguration. And it has been the tradition that US citizens do not interfere in the foreign policy adopted by the United States Government.

This is yet another example of Trump exerting an authoritarian power and daring anyone to stop him. And Republicans are happy to play along with him. If the shoe was on the other foot and Obama was interfering in Bush's Afghanistan foreign policy before he was inaugurated, I'm pretty sure Republicans would be calling for impeachment on day one. It has always been the tradition for the President-elect to lay low during this transition period while the current President provided some deference to the President-elect's policies and positions. This is yet another norm that Republicans and Trump are destroying. It does not take a lot of imagination to think of a scenario similar to 2000 where the winner of the Presidential election is in doubt, but the candidate leading the election simply declares himself the winner and then begins to exercise economic and foreign policy as "President-elect". Even today, it is not impossible that China could have easily overreacted to Trump's actions and begun to militarily threaten Taiwan for which it has enormous nationalist feelings. Obama, as President, would then be responsible for a war that Trump started. What Trump is doing today is breaking another constitutional and democratic norm and setting a dangerous precedent for the future.

More Post-Election Analysis Provides Conflicting Information

Each side in the diagnosis of the Democrat's electoral failure can marshal some new studies in defense of their point of view. For those who believe in the theory that the Democratic economic message was misguided and failed in reaching white working class voters, a new study shows that those counties whose industries were subjected to the most competition from Chinese imports voted far more heavily for Trump than they did in the 2000 election before China entered the WTO and became a dominant exporter. Countering this viewpoint are the results of exit polling that shows that a majority of voters across the nation and, more importantly, in the Rust Belt chose Hillary Clinton if they believed the economy was the most important issue.

There can be no denying that certain areas of the country are experiencing a profound decline in the standard of living and are seeing the same signs of societal breakdown such as rising crime and drug addiction that has been associated with the inner cities during and since their similar decline. As the history of those inner cities has shown, the solutions to these problems driven primarily by wage and job loss have proven to be politically intractable. Much of the problem is that the benefits that have been gained as these jobs have disappeared and moved offshore have flowed to consumers and the top 1% who control these companies directly or through shareholdings. Republicans have no interest in redistributing that income back to those disadvantaged communities and Democrats only attempt to do so at the margins. That has created a vacuum into which the easy answer of restricting trade and blaming immigration becomes an attractive alternative. And Trump filled that void accordingly.

Republicans, Unreality, And Democracy

Perhaps it is because they are really a minority party, having lost the popular vote in six out of the last seven national elections, but Republicans seem to have a penchant for believing they can create an alternate reality. And, because they won the Presidency in two of those elections where they lost the majority vote, it is understandable to see why they might hold that belief. Sure, there has always been an element of obfuscation in all political rhetoric, but, starting in the 1980s, the GOP started taking it to real extremes. "Voodoo economics" was the correct analysis of supply-side economic theory, but that theory is still a mainstay of the Republican platform. Frank Luntz introduced Republicans to "framing" and the inheritance tax that broke up the legacy power of plutocratic families became the "death tax" that kept poor farmers from passing their land on to their children, despite the fact that the tax only ever effected a handful farms. In the 1990s, Newt Gingrich took this attitude toward framing even further with his adoption of apocalyptic rhetoric on virtually every issue, constantly denouncing Democrats as "traitors" and in 1994 even saying, "People like me are what stand between us and Auschwitz".

Masha Gessen, who recently wrote the six rules for surviving autocracy, was on "On the Media" over the weekend and she made an important point that constant lies are an expression of power and designed to undermine our ability to counter that power with facts. Please listen to the whole interview here, it is definitely worth it. She quotes Gary Kasparov, the famed Russian chess champion who quit the game in order to politically oppose Putin and provided the metaphor that playing chess with Putin would be like playing chess with a person who simply just knocks all the pieces off the board. The details of your individual move are irrelevant because your opponent is not even playing the game. And, in knocking the pieces off the board, they are expressing not only contempt for the game but their power over it.

This attitude became clear with the Republican party when it began to simply abandon the traditional norms of democracy in the 1990s. There were the government shutdowns, essentially an attempt at blackmail or extortion, and then the impeachment of a President over what was essentially an extra-marital affair. With the anointment of George Bush as President in 2000 by the Supreme Court despite his loss of the popular vote in addition to the likelihood of his not getting the most votes in Florida, Republicans belief in their ability to create their own reality became stronger and more explicit. Karl Rove challenged reporter Ron Suskind on living in a reality-based world, saying, "That's not the way the world works anymore. We're an empire now, and when we act, we create our own reality. And while you're studying that reality - judisciously, as you will - we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors...and you, all of you, will be left to just study what we do." This attitude, of course, led the Bush administration to lie to the American people in order to "create" the disastrous war in Iraq. It led to the unconstitutional spying on US citizens and the use of torture in contravention of international norms and US law. Republicans also began engaging in radical gerrymandering techniques for purely political gain and, in Texas, even used a mid-term gerrymander, breaking a long-held governing norm, in order to take control of the state's House of Representatives. All these actions further eroded the standards and norms of American democracy.

Under Obama, Republican obstruction continued to defy the norms of governance. GOP Senators refused to act on Obama's judicial appointments, leaving one vacancy open for over a decade now, and culminating in the refusal to give Obama's Supreme Court nominee, Merrick Garland, even a hearing. Republicans also destroyed another norm in American foreign policy with their decision to invite Netanyahu to address Congress over the President's objections. With aggressive actions to restrict the voting rights of certain Americans, the GOP broke another long-time norm of expanding the franchise and showed a lack of belief in actual democracy. And, of course, there was the constant drumbeat to delegitimize Obama with the racist "birther" issue and the idea that Obama is a closet Muslim who is plotting with Islamic terrorists to take over America.

Every step of the way, the Republican party has set about destroying the norms of governance or, at best, been willing to be complicit with it. As President Obama noted, Donald Trump is merely the logical progression of the Republican party for the last quarter century. With the enormous focus on Trump's provocations and lies, yet another norm that required a presidential candidate to release their taxes was destroyed. Republicans were absolutely on board with a foreign government interfering in our election, simply because it favored their candidate. Toward the end of the campaign, there was talk among Republicans about not even accepting the results of the election. And, once again, Republicans are again talking about creating their own reality.  Steve Bannon is echoing Karl Rove with his infrequent rhetoric, saying, "Dick Cheney, Darth Vader, Satan, that's power it only helps us when they get it wrong, when they're blind to who we are and what we're doing." Trump surrogate Scottie Nell Hughes just declared, "There’s no such thing, unfortunately, anymore as facts." In her interview, Gessen analyzed Trump's continual lies as an important component of his power, saying, "His constant contradictions are a message in itself, and that message is part of my power lies in my ability to control reality...He is going to be creating this cacophony of nonsense precisely to undermine our ability to exist in a fact-based reality." Without a fact based reality, it is difficult to provide a meaningful opposition. But the Republican party is quite happy to play along with Trump. Just look at the way Mike Pence dodged the questions about Trump's fictitious claim that millions voted illegally, saying "Well, it's his right to express his opinion as president-elect of the United States. I think one of the things that's refreshing about our president-elect and one of the reasons why I think he made such an incredible connection with people all across this country is because he tells you what's on his mind." Not only does Pence deny Trump is lying, he calls his lies refreshing. All these statements are basically a display of power that says we can do what we want and you can not stop us.

Today's New York Times Op-Ed page has three articles that focus on the dangers that the Trump administration poses. Evan McMullin writes about the dangers to the constitution, Charles Blow writes about staring into the abyss of "the potential abrogation of fundamental American ideals", and Krugman writes about a "government by bait and switch". McMullin's article does not mention Republicans; Blow's cites Trump political advisers Conway, Lewandowski, and the aforementioned Hughes. Krugman focuses on how the GOP will avoid the political costs surrounding Obamacare. So, while accurately describing the dangers facing the country, all of these commentators avoid mentioning the complicity of the Republican party in the damage that has already been done to American democracy and potential damage that Trump and his administration can do to that democracy and its ideals. (As an aside, it is also interesting to note that the editorial page is running a series entitled "What's At Stake" which "discusses how America might change during the Trump administration". It might have been nice if the Times had focused on these issues before the election.)

For far too long, the media and, yes, even the Democrats have focused on the individual elements of GOP lies and obstruction but have simply refused to acknowledge that the Republican party has ceased to believe in the norms of our democracy but is solely focused on gaining and maintaining its own power. Much of that is driven by the fact the party represents a minority that still believes it is a majority. Another drive is that most of the Republican policies are not popular with the American people, so it requires deception to implement. To use Kasparov's analogy, Republicans have been knocking pieces off the chessboard of American democracy for decades. In Trump, they have found their grandmaster.



Sunday, December 4, 2016

Mattis, Democrats, And Civilan Control Of The Military

General James Mattis, Trump's nominee for Secretary of Defense, is an unusual guy. First, he is someone who Trump seems to respect, listen to, and perhaps even fear. But more importantly, he is a man who has relatively sane ideas about America and its role in the world. He is opposed to the use of torture and does not believe in reneging on the Iran nuclear deal. Although he was reportedly sent in to early retirement by the Obama administration because of lack of support for the Iran deal, the reality seems to have been that he supported the deal itself but was asking hard and difficult questions about what our military stance vis-à-vis Iran would be after the deal was in place. Now, he didn't get the moniker "Mad Dog" for no reason as he has also been known to fly off the handle at times. And his dedication to the changes in the military regarding gays and women is also questionable.

Robert Bateman worked with Mattis in the Pentagon and grew to like and respect him. And Bateman has an interesting take on why Mattis even took this job. He certainly believes Mattis will hate the job, especially having to deal with all the civilian flaks Trump will force him to work with in the Department of Defense. But he believes that Mattis is living up to the code of his 40 years in the US Marine Corp. He is essentially doing everything in his power to protect those serving under him. Bateman believes that eventually Mattis will get to a point where he tells Trump some truths he is unprepared to accept. Says Bateman, "He [Mattis] knows that this will not end well, but he's doing it in order to preserve what he can of the military for the long-term, despite Trump. And he knows that he scares Trump. And so, he is essentially offering himself up as a shield. He knows his history, and he believes in civil control of the military. But in this case, and I suspect in only such a unique case as that of Trump, Mattis may have reached the conclusion that the nation's armed forces need protection from their own commander." That's a pretty sobering comment.

That leads us to New York Senator Kirsten Gillibrand's decision to stand on the principle of civilian control of the military. In order to served as SECDEF, Mattis will need a waiver from Congress in order to hold that post, as military personnel are now currently barred from serving in that role for seven years after they leave military service. Mattis only retired three years ago. Gillibrand has stated, "While I deeply respect General Mattis’s service, I will oppose a waiver. Civilian control of our military is a fundamental principle of American democracy, and I will not vote for an exception to this rule." Gillibrand currently sits on the Armed Services committee. With the GOP in control of the Senate, cabinet secretaries will have no problem getting confirmed as those positions are not subject to the filibuster. The waiver for Mattis, on the other hand, is subject to a filibuster, meaning united opposition from Democrats could derail his nomination.

While I respect and understand Gillibrand's concern about Trump and the Republicans once again destroying another governing norm, especially one as important as civilian control of the military, Democrats should be leery about blocking the waiver for Mattis and therefore his nomination. Mattis appears to be someone who has relatively sane viewpoints about the use of American military might. He is a man who it appears Trump listens to and perhaps even fears a little. And he will certainly be willing to speak truth to Trump, whatever the consequences for his own career. America will need as many of these kinds of people near Trump as we can possibly get. And you can be sure that someone far worse will be nominated if Mattis does not get the job. Hopefully, Gillibrand is staking out this early position of opposition in an attempt to get some clarity or even concessions from Mattis on supporting the recent changes in makeup of the military and especially on getting military leaders to combat sexual assault in the services. Gillibrand has been leading that cause for years and her bill to move sexual assault prosecutions to military lawyers failed earlier this year.

Chuck Schumer has been notably silent on Mattis, which leads me to believe he will not be supporting a filibuster. Democrats will have plenty of need to use the filibuster early and often during the Trump administration and civilian control of the military is an important principle to enforce. But, in this case, discretion may be the better part of valor for Democrats.