Saturday, December 24, 2016

Natural Weekends - Christmas Eve With Venus And Mars

Christmas Eve on the creek. Venus is the bright object in the center right; Mars is the fainter object up and to the left; and the faint star on the lower left is Fomalhaut.

Natural Weekends - Light And Clouds

Friday, December 23, 2016

America Has Become A Banana Republic, Heading Toward Kleptocracy

I am certainly not the first one to say it, but America these days looking more and more like a banana republic, if not an outright kleptocracy. Just take a look at the most recent posts I've put up in the last two days:
This is all that I could put together in the last two days. But there are plenty of other examples, such as the Trump family continually trying to sell access to the President. I'm sure you all have some of your own, so please go ahead and add them in comments.

NY Times Provides Infantile Analysis Of Trump's Electoral College Victory

Earlier this week, the NY Times had a piece that, in the print edition, was titled "How To Explain Split Between Popular Vote And Electoral College". The piece explored three possibilities. First it looked at a regional bias noting that Clinton won an overwhelming victory in California but that was offset by Trump's margins in what the Times calls "Appalaciafornia", the states of  West Virginia, Kentucky, Tennessee, Arkansas, Alabama, Oklahoma, Kansas, Nebraska, Wyoming, Montana, Idaho, North Dakota and South Dakota. Clinton won the remainder of the country by a two point margin. The authors cite an argument in favor of the Electoral College as the fact that it doesn't reward regionalism in the sense that racking up huge victories in particular areas of the country just means you end up with a lot of "wasted" votes. They say that Clinton's big win in California is offset by Trump's huge win in Appalachiafornia". From this they some reach the conclusion that regionalism isn't a factor in explaining the large difference between the results of the popular vote and the Electoral College. To my mind, however, the fact that you win Wyoming by 60% doesn't really offset the fact that you lost California by 20%. The number of votes between the two can't be compared.

Next the article takes on what's called the "small state bias" - that small states have disproportionate power in the Electoral College. They summarily dismiss this argument by saying Clinton won a lot of small states and Trump won a number of big states. Ergo, no problem. This kind of argument seems a little basic to me but it is hard to argue with.

Finally they take on the argument that the battleground states we demographically more inclined toward Trump. To quote, "Most of the traditional battleground states are much whiter, less educated and particularly less Hispanic than the rest of the country. But the demographics alone don’t quite do justice to Mr. Trump’s victory in the Electoral College. In the end, he won the battleground states by just a one-point margin — but claimed three-fourths of their Electoral College votes. He won four of the five closest states, winning 75 of 79 votes at stake." Their conclusion from this: "Mr. Trump had some very good luck." Thanks for that incisive analysis.

From here the article veers into the more bizarre, discussing how the accidents of history could have changed the outcome of this election. If Congress had agreed to Michigan's claim on what is now the city of Toledo way back in 1837, Clinton would have won Michigan. If the Florida Panhandle had just been allowed to join Alabama like it always wanted to, Clinton would have won Florida. The arguments here are infantile. Their conclusion: "The point is that the main bias of the Electoral College isn’t against big states or regionalism; it’s just toward the big battleground states. If they break overwhelmingly one way, that’s who wins. This is not exactly a high-minded Hamiltonian argument. There aren’t many justifications for letting a few close states decide a close national election. But that’s basically what the system does, and there’s nothing about those states that ensures they provide a representative outcome."

It is incredible that an article this silly and irrelevant could be written. There is no discussion of the concept of "one man, one vote". There is no mention that this is the second time in 15 years that the popular vote and the Electoral College have diverged so badly that the President did not in the popular vote, after only happening a couple of times in the prior 200 years. Thankfully, they do at least note that this by far and away the biggest divergence in history. But to examine this issue and not even discuss the divergence between urban and rural areas, both within state and across the country, and its impact on this election just shows willful blindness. As urban centers continue to grow and rural areas continue to lose population, we will continue to see situations where the popular vote winner does not win the presidency. The effect of that continually happening will only further erode faith in democracy. We are truly done for if this is the best level of analysis we can get from a major newspaper.

World War I As A Lesson For Recognizing The Dangers Today

The assassination of the Russian Ambassador in Turkey prompted Josh Marshall over at TPM to think of the assassination of Archduke Ferdinand in Sarajevo which is widely recognized as the event that set off World War I. The history of that war which I grew up with was that the European powers blundered into war due to the various alliances that the major and minor powers had with each other. It was a war that the Europeans did not want but somehow did not manage to avoid. That was a comforting and instructive thought in the emerging nuclear age and the precariousness of the Cold War. The lesson was that better diplomacy and more open lines of communication could prevent an unintended conflict from spiraling into nuclear Armageddon. And that lesson seemed to be born out with the resolution of the Cuban missile crisis.

Unfortunately, that history is entirely incorrect. In fact, there was clear evidence back in the post World War II era which has been bolstered by more recent research that the European powers fully anticipated a coming war and that Germany was intent on instigating it. According to Marshall, "[The German government and general staff believed that a European war would eventually come, that such a war was essential to its territorial ambitions and - most importantly - that time was not on Germany's side. The Germans believed they were better prepared for war in 1914 that the Entente powers of Britain, France, and Russia. But over time they believed their position would weaken." This was largely due to the serious decline in Germany's biggest ally, Austria-Hungary.

Marshall draws the lesson that there is "immense danger when one power believes it is running out of time to secure the advantages it believes it can secure...". And, although Marshall does not draw this specific comparison, I believe that is the situation that faces us with the current makeup and attitude of the Republican party. This is a party that sees the rapidly changing demographic shifts taking place in our country and, because of that, believes its power will only be diminishing over the near term. We can see it in the fundamentally undemocratic actions of Republicans in North Carolina who did everything in their power to suppress votes, restrict the powers of the incoming Democratic governor in a post-election special session, and have now reneged on a deal with the city of Charlotte over LBGTQ rights. (After this disgrace, we should force companies to continue the boycott of the state for a period of time even after they change the law.) We see it the increasingly undemocratic actions of the national party, from government shutdowns to the refusal to give Merrick Garland a hearing.

Republicans know they will never have more power than in the next two to four years. With the 2020 census and mandatory redistricting, their power will become even more fragile and even more extreme gerrymandering will be required to keep their majority. Under these conditions, we can only expect the worst.  World War I resulted in about 17 million deaths and 20 million wounded. The next four years will thankfully not be as bad as that. But make no mistake, they will still be terrible.

Thursday, December 22, 2016

More FBI Agents Going Rogue; Agency Is Out Of Control

The FBI has become, or perhaps always was, a total disaster. A major insider trading case brought by US Attorney Preet Bharara has basically been tossed out of court because an FBI agent was leaking like sieve to reporters about the case. You may remember that golfer Phil Mickelson was implicated but never charged in an insider trading scheme run by gambler William Walters. Mickelson was apparently the recipient of one of Walters' tips in order to help the golfer pay off a gambling debt. Walters is now on trial for insider trading for using illegal tips to profit to the tune of over $40 million. But the judge has instructed the defense to file a motion to dismiss the case because a rogue FBI agent was admittedly "a significant source of confidential information" to reporters for the New York Times and the Wall Street Journal which used that material for articles published in 2014.

It is already notoriously difficult for prosecutors to win insider trading cases under current law and current court rulings. All along the chain, prosecutors must prove that the individuals involved knew the tip was improperly obtained and that the person who passed on the tip must receive something of value for it. What this essentially means is that the only persons perhaps legally liable are the original tipper and tippee. Everyone else who profits downstream can claim ignorance and escape justice. And it make even actions against original insiders more difficult. As hard as these cases are to prosecute, then, it really doesn't help when rogue FBI agents submarine the case. The agent apparently leaked the information to the press because he believed that the case was stalled and hoped that the news media might "rattle the cage" and see what fell out. What fell was the whole case in its entirety.

The FBI seems to have no control over their agents at all these days. Rogue elements in the NY field office were responsible for leaking to the press that Hillary Clinton was going to be indicted, in a blatant attempt to influence the election. The name of this agent is, for now, being withheld for "medical reasons" which seems outrageous in its own right. I think, as citizens, we have aright to know who is sinking prosecutions brought on our behalf. So right now we have no idea whether this agent might also be part of that New York cabal.

For the readers who are golf fans, you might want to read up on Mickelson's unsavory relationships with gamblers and his clear connections to multiple criminal defendants. Somehow he has avoided being charged in any of these cases. I wonder if that has to do with his celebrity and presumed wealth.

Comey Must Answer For His Actions

Every new detail that emerges about James Comey's actions on the eve of the election make him look worse and worse, if that is still possible. I believe that is at least the third time I have written that statement. Yesterday's unsealing of the warrant that the FBI received to search Huma Abedin's emails has been attacked by various legal scholars as not providing any basis that criminal activity had taken place and that the warrant, in fact, never should have been issued.

The highly redacted warrant states that "Because it has been determined by relevant original classification authorities that many emails were exchanged between [redacted] using [redacted] and/or [redacted] accounts, and Clinton that contained classified information, there is also probable cause to believe that the correspondence between them located on the Subject Laptop contains classified information which was produced by and is owned by the U.S. Government. The Subject Laptop was never authorized for the storage or transmission of classified or national defense information."

Law professor Ken Katkin summarized the warrant this way, saying, "The warrant application seems to reflect a belief that any email sent by Hillary Clinton from a private email server is probably evidence of a crime." Other legal minds pointed out that the FBI had already concluded that Clinton had never intentionally disclosed classified information and therefore could not recommend prosecution. The fact that these emails may have included classified information, which was purely speculation at the point the warrant was written, would not necessarily change that original conclusion about Clinton's intent. The fact that the laptop was not authorized to store classified material was not a problem for Clinton, it was a problem for Abedin as this was her computer.

Clinton lawyer David Kendall said the warrant showed the FBI "had no basis to conclude whether these e-mails were even pertinent to that closed investigation, were significant, or whether they had, in fact, already been reviewed prior to the closing of the investigation. What does become unassailably clear, however, is that as the sole basis for this warrant, the FBI put forward the same evidence the Bureau concluded in July was not sufficient to bring a case ― the affidavit offered no additional evidence to support any different conclusion."

Legal scholars can agree or disagree whether there was enough probable cause to allow the warrant and we all know that law enforcement is usually give wide, probably overly wide, latitude by judges in these cases. But there is no doubt that the rationale for the warrant was weak. And it doesn't address another issue that was brought up at the time of Comey's letter and that is whether the discovery of these emails during an investigation into Weiner violated Abedin's Fourth Amendment rights. The fact that the FBI "stumbled across" these emails during Weiner's investigation when the warrants for that investigation were solely focused on Weiner's sexting shows that their search had broadened beyond the scope of that warrant. Although there is an exception for evidence that is in "plain view" during a search, the fact that they discovered a bunch of emails from Weiner's wife would not be out of the ordinary and, on its face, gives no indication that a crime has been committed. To the use the mere existence of those emails as a basis for getting a new warrant to search them does not absolve the FBI from possibly violating Abedin's constitutional rights through the initial Weiner search. That is, of course, unless you assume that any email that Abedin and Clinton exchange with each other indicates a crime. As law professor Orin Kerr said just days after the Comey letter, "The Fourth Amendment plain view standard doesn’t allow a seizure of emails based on a mere we-hope-to-later-determine standard. The government can’t seize the emails just because the Clinton investigation is extra important and any possible evidence is worth considering. Rather, the Fourth Amendment requires the initial look at the emails to generate 'immediate' probable cause that they are evidence of a crime first, before their seizure is permitted and used to get a second warrant."

The warrant indicates that the FBI had already examined the metadata of the Abedin emails and determined that there was correspondence between Clinton and Abedin which is hardly surprising. But, if it was later determined that the discovery of the emails violated Abedin's constitutional rights as described above, the emails would be useless in any legal case because they were the result of an illegal search. In addition, the metadata would also indicate the time frame of the correspondence. If that matched with the time frame of emails already investigated, it would also indicate that those emails had probably already been examined. To think otherwise would be to essentially be going on a fishing expedition.

But the warrant also makes clear that, besides the analysis of the metadata, no real examination of the emails had taken place, which is what makes Comey's letter so egregious. Comey described the Abedin emails as "pertinent to the [Clinton] investigation". In fact, Comey had no idea at the time whether the emails were pertinent or not since they had not been examined. He could have phrased it much more equivocally by saying "they may or may not be pertinent", but he chose not to do so. In addition, Comey's letter publicly characterized the information that the FBI then used to get a warrant. It would be pretty bold for any magistrate to deny the FBI's warrant after Comey went public with the information and characterized the emails as "pertinent". His statement was, of course, prejudicial to Clinton, but it also prejudiced the granting of the warrant.

The Russian hacking in this election was serious and a grave threat to our security and it needs to be investigated thoroughly. But, once again, Democrats have allowed their eye to be taken off the ball when it comes to Comey. There are tons of unanswered questions when it comes to the FBI during the election campaign and Democrats seem unable or unwilling to pursue the answers. I'm not sure why Democrats have not sent a letter to Comey with questions that need answering already. He will certainly be testifying at some point about the Russian hacking and Democrats should hijack at least part of those hearings to focus on the FBI's actions during this election. There remain questions about how long the FBI knew about Abedin's emails before any action was taken. There have been rumors that the FBI knew of the existence of these emails for two or three weeks before Comey's letter.

Based on those rumors, here's a theory about what really happened that prompted Comey's letter. During the investigation of Weiner's texting, the existence of Abedin's email became known. That information was passed along to the team assigned to investigate Clinton. Either out of caution of effecting the election or a real belief that these emails would turn up nothing new and would certainly not change the results of the investigation, that team did nothing. The rogue element within the New York FBI also had knowledge of the existence of these emails and, prompted by James Kallstrom and Rudy Giuliani, they essentially blackmailed Comey by saying they will go public if he doesn't. This prompted Comey's letter and was also probably responsible for its poor wording. It's quite possible that the rogue element mischaracterized the nature of the emails to Comey. That rogue element then feeds the media frenzy by leaking that Hillary will be indicted.

Kevin Drum points to a panel by the Institute for the Study of Citizens and Politics that showed Comey's letter moved the electorate by four percentage points in Trump's favor. Hillary lost voters to Trump and, more importantly, third parties, while Trump gained support. After Comey's second letter, the electorate hardly moved at all, despite his letter once again clearing Clinton. Both campaigns have declared that Comey's letter was the critical inflection point in the election. So here are the questions I have that Comey must answer:
  • How long did the FBI know about the existence of Abedin's emails before your letter?
  • What was the FBI doing in that interim period?
  • Has there been any investigation of the leaks out of the NY field office?
  • Has anyone been disciplined for those leaks?
  • Was the NY field office involved in the investigation of Weiner's sexting?
  • Did the NY field office know of the existence of Abedin's emails?
  • Who briefed you on Abedin's emails?
  • Why did you consider Abedin's emails "pertinent" when you had no knowledge of what was in them?
  • If new emails with classified information had been found in those emails, would that have changed anything in your inappropriate July statement absolving Clinton?
  • When the FBI discovers an important company or institution has been hacked, do they usually just call that company's or institution's IT help desk?
  • Does the FBI provide any formal notification via a letter to or a face-to-face meeting with senior executives when they discover a hack?
  • If not, why not?
  • How do you explain spending thousands of man hours on the Clinton email investigation while only making a few perfunctory phone calls to the DNC to inform them they had been hacked?
  • Did you contact the RNC and, if so, how?
  • Did you realize that your letter was prejudicing the warrant you were about to ask for?
  • Why did you inappropriately comment on the resolution of the email case in your July statement?
  • Did you have any concerns that the Abedin's emails had been obtained illegally? If not, why not?
The answers to all these questions will probably spur even more questions. And I would only be too happy for readers to add more of their own. Democrats should not let the focus on Russian hacking get in the way of demanding answers from Comey. Some pundits have said that it is better that Comey keep his job, because his replacement will be worse. That is probably true. Others believe that he will be more vigilant about the investigating the corruption that is certain to come in the Trump administration. That, I believe, is wishful thinking and blinds us to the fact that Comey is already seriously compromised, especially if he is so easily manipulated by rogue elements within his own agency. Relying on Comey to be a bulwark against Trump administration abuses will be as big a mistake as relying on Comey to obey the rules and not influence an election. Which is why he must answer these outstanding questions.

Conspiracy Between Pharma, Doctors, And Govt Fuels WV Opioid Crisis

The Charleston (West Virginia) Gazette-Mail has a fascinating two part series on the opioid epidemic that has swept through the state in recent years. The report shows that in six years, pharmaceutical companies flooded the state with over 780 million hydrocodone and oxycodone pills. That comes to 130 million pills per year. The town of Kermit, West Virginia, has a population of 932 but a single pharmacy in that town received over 4.5 million pills per year over a two year period. In the town of Oceana, a pharmacy received 600 times more oxycodone pills as another pharmacy literally just down the street. The population of the entire state of West Virginia is about 1.83 million and the number of pills delivered to the state amount to over 430 for every single individual in the state.

The three big prescription drug wholesalers, the oligopoly of McKesson Corporation, Cardinal Health, and AmerisourceBergen Drug Company, accounted for over half of the pills delivered to the state. Of course, these companies obviously had willing accomplices in the pharmacies and doctors in West Virginia. And the drug wholesalers use that fact to absolve themselves from any responsibility for the resulting opioid epidemic in the state. According to McKesson General Counsel John Saia, "The two roles that interface directly with the patient — the doctors who write the prescriptions and the pharmacists who fill them — are in a better position to identify and prevent the abuse and diversion of potentially addictive controlled substance." Of course, the drug wholesalers made billions from these sales and their salespeople and CEOs were handsomely rewarded. Even more damning is the fact that the potency of the pills provide by these companies increased as time went on, as the people they had managed to get addicted required more and more potent doses to get their high. The company had to see the pattern of addiction they were feeding. By law, they were required to report suspicious orders to the state Board of Pharmacy, but the drug companies simply ignored that requirement. When the West Virginia Attorney General finally filed lawsuits forcing the companies to report these obviously excessive orders, the Board of Pharmacy simply did nothing with them, allowing the pills to keep flooding into the state.

The drug companies had plenty of willing and greedy accomplices in the pharmacies and doctors in the state, as well as from the state regulators that were supposed to monitor them. According to the article, the Board of Pharmacy gave "spotless inspection reviews to small-town pharmacies in the southern counties that ordered more pills than could possibly be taken by people who really needed medicine for pain." Of course, every one of the prescriptions that were filled at these pharmacies were written by a doctor.

Many of you are too young to remember the days when the CIA was accused of running drugs into the United States in order to fund its illegal wars in Central America under Ronald Reagan. Although it has never been "proved", there is substantial evidence that supports that claim. A controversial series in the San Jose Mercury News further alleged that the CIA was complicit in the introduction of crack cocaine in the United States as part of the operation to support those wars in Central America. For many Americans, these allegation seemed beyond belief. They seem much more believable now when you see the drug companies, pharmacists, doctors, and the state bureaucracy all complicit in creating a addiction epidemic in West Virginia. The cost of that addiction and the deaths from overdosing is incalculable. But none of the powers involved cared one whit about the people of West Virginia. Every one involved in what is essentially a massive criminal enterprise was only interested in lining their own pocket. And you can be sure that there are plenty of other states where a similar pattern of abuse has occurred.

West Virginia Senator Joe Manchin's response to these events was to say, "We need to declare a war on drugs." Yes, that has worked so well for the last 40 years. Rather than sticking all those poor souls who have become addicted due to a conspiracy among the government and the medical establishment in jail, we really ought to be looking to prosecute the people responsible for getting them addicted in the first place. We really ought to be declaring "war on the drug companies and their accomplices" like Mylan, headed by Manchin's daughter, that exploits its monopoly position to price gouge people who desperately need the life-saving drug it provides. It is hard to imagine how many people are in jail today for marijuana infractions and then look at the fact that virtually everyone involved in this massive crime not only walks around freely today but are also handsomely rewarded for their crime. Please read both parts of the Gazette-Mail's report. You will be shocked and disgusted.

Michigan Steals Millions From Its Workers In Unemployment Insurance Scam

Steven Attewell over at Lawyers, Guns, and Money details the state of Michigan's theft of millions of dollars from unemployed workers in the state. The theft was deceptively simple. After Michigan's governor Rick Snyder's tax cuts for corporations and the wealthy blew a hole in the state budget in 2011, Snyder paid a technology firm $47 million to develop the MIDAS program, an acronym for Michigan Integrated Data Automated System. The MIDAS system took over the investigation of unemployment claims in the state and, remarkably, the state's Unemployment Insurance Contingent Fund started to grow from $3 million in 2011 to $155 million this year. The beauty of the Contingent Fund, as opposed to the actual Unemployment Insurance Trust Fund, is that the money can be used for other purposes, such as helping to balance the budget after devastating tax cuts. The reason Michigan was able to build this remarkable next egg in the Contingent Fund was because very little was actually being paid out of the Trust Fund. The MIDAS program was accusing 93% of cases investigated as fraudulent, a number that beggars credulity. In essence the state was making sure that it paid out as little as possible and used the MIDAS system to deny worker the unemployment insurance they were due. Already, over 2,500 workers have received over $5 million dollars in back compensation. There are an additional 22,000 cases outstanding and another 30,000 cases that still require investigation. This is criminal theft on a massive scale. Of course, so far, no charges have been brought and there is no indication that any local, state, or federal prosecutor is looking into the case. Attewell kindly provides the number of the US Attorney's office in Detroit if you would like to encourage them to take some action.

Attewell goes on to describe the pathetic state of Unemployment Insurance across the country. Basically, average unemployment compensation is just barely above the poverty level for a family of two across this country and, in high-rent areas such as major cities, it is not nearly enough to survive on. States across the country "abuse their UI systems in any number of ways: restricting eligibility such that a minority of workers can actually get access to benefits, keeping benefit levels as low as possible, but especially deliberately underfunding their Reserve Funds." The idea is to keep costs down in order to attract business by having a lower payroll tax which is what funds unemployment insurance. Of course, underfunding turns out to be a real problem when a downturn hits because costs go up while revenue decreases and the states are required to run balanced budgets. In 2014, 23 states were still underfunded to the tune of $28 billion due to the financial crisis that began in 2008.

Attewell has three ideas for fixing the problems with unemployment insurance. First is to nationalize "by simply eliminating the offset of Federal Unemployment Tax by state UI taxes, by eliminating the wage cap on unemployment taxes (currently, we pay UI taxes only on the first $7,000 in wages)." Next is to universalize. Right now, because of part-time workers and "contractors", only about 48% of workers are actually covered. Lastly, implement a mandatory minimum payment to unemployed workers that is indexed to inflation.

Please read the whole article as it is eye-opening. Sadly, it is highly doubtful that any of Attewell's excellent suggestions will be implemented by the incoming Trump administration and Republican Congress. Rather, I think we can expect more state theft along the lines of what happened in Michigan.

Wednesday, December 21, 2016

Taxpayers Fund The Research; Pharmaceuticals Reap The Profits

Yesterday's NY Times had a front page story on the development of new cancer immunotherapy treatments. Most of these have been developed over the years by the National Cancer Institute (NCI), a part of the National Institutes for Health (NIH). The NIH is a taxpayer funded institution and, by the mid-1990s the NCI was responsible for the development of nearly two-thirds of all anti-cancer drugs approved by the FDA. Now Kite Pharmaceuticals is paying the NCI several million dollars a year as part of a public-private partnership to continue development and, eventually, delivery of a new treatment for certain blood cancers like non-Hodgkin's lymphoma.

Kite Pharmaceuticals was co-founded by Dr. Arie Belldegrun who was a research fellow under the lead of an NCI legend in the field of cancer research, Dr. Steven Rosenberg. Dr. Rosenberg has no financial interest in Kite. In 2012, Kite signed the first of many deals with NCI to help with the development of a treatment for certain blood cancers that it calls KTE-C19 which relies on a treatment developed by NCI. If the treatment proves to be successful, it could generate billions per year in profit for Kite. Kite has spent over $200 million on R&D, trials, and construction of a factory that will create KTE-C19 for over 5,000 patients a year, so the company is certainly taking a financial risk. According to Dr. Rosenberg, NCI spent about $10 million dollars on the research that Kite is currently leveraging.

The real question is whether the taxpayer who has essentially funded the underlying research that led to the development of KTE-C19 will be adequately compensated if it does become a success. The NCI and the NIH are pure research facilities that are not allowed to be investors in for-profit companies, although they can secure patents and other technologies that can be licensed. So how will the economic benefits if KTE-C19 flow back to the taxpayer.

One option is to make sure the cost of the therapies developed in conjunction with NIH are reduced. Since KTE-C19 requires only one treatment for a cure, as opposed to ongoing treatment, estimates are that it may cost at least $200,000. Current law allows the NIH to force companies in these partnerships to restrict prices, but the NIH does not use that power because they believe it limits interest in these kinds of partnerships. History has borne this out as partnerships increased by 300% after pricing restrictions were lifted. On the other hand, we don't have too look too hard to see how many of these pharmaceutical companies exploit the monopoly position that having access to these treatments usually gives them. Others argue that the taxpayer reaps the benefit from the mere delivery of the therapy and that NIH and NCI would not be able to deliver these cures without a private partner. That claim is somewhat debatable as it is clear the government could control the process end to end but chooses not to. So, other than whatever licensing and patent agreements NIH has in place and the institution of price controls that the NIH is loathe to use, there is really no payback for the taxpayer.

If KTE-C19 is successful, Kite stands to make billions and they would have been able to get this far by essentially purchasing years of research from NCI, most of which was funded by taxpayers. With an estimated cost of $200,000, taxpayers will actually be paying for the therapy twice - once to help develop the treatment and then again to use it. As law professor Rachel Sachs says, "The public is paying for the research and to the extent that many people, if not most, will pay through public insurance, we’re paying again." James Love, leader of an advocacy group for access to medicines says, "If this was not a government-funded cancer treatment — if it was for a new solar technology, for example — it would be scandalous to think that some private investors are reaping massive profits off a taxpayer-funded invention."

This is yet another classic example of the current state of affairs in the US economy. The costs are always socialized and the profits always privatized. We see that with the financial community and other negative externalities such as pollution. And we see it again with the drugs and treatments that rely on taxpayer funded research.

Platinum Partners Is Latest Wall Street Criminal

Today's edition in financial crime comes to us via Platinum Partners, a New York based hedge fund that boasted outsized returns for over a decade. What a sleazeball company this was. It first came to the attention of regulators in the mid-2000s when the firm used a rabbi to get personal details from terminally ill patients and then used that information to buy insurance to profit from their deaths. Exploiting and profiting from the deaths of the terminally ill is a pretty sickening and grotesque way to make some money. Apparently, these guys didn't care. In 2012, the fund overstated the value of an oil and gas firm that it controlled by not reporting the fact that an offshore rig the company owned had exploded and caused the deaths of three workers, multiple injuries, and an oil spill. 2013 was the beginning of the end for the fund as withdrawals starting increasing. In order to pay off current investors, the firm turned to the tried and true method of becoming a massive Ponzi scheme, using new investors' money and loans to pay off the old investors. Unfortunately, Platinum Partners did not have the power and connections to keep their Ponzi scheme going as long as Bernie Madoff, but they did manage to hold off the inevitable for a few years. The main fund has already liquidated so we shall see how the defrauded investors will be compensated. Hopefully, the executives at Platinum Partners can join Madoff in prison and perhaps get some pointers on keeping a Ponzi scheme going for at least a decade.

Uber Flouts Law In California After Demands From DMV And AG To Cease Testing

Uber really and truly does not believe that the laws should not apply to them. After at least two of their autonomous vehicles drove through stop lights in San Francisco, the California State Department of Motor Vehicles ordered Uber to cease these test drives as the vehicles did not have an autonomous driving permit from the state. Other makers of self-driving vehicles like Google, Tesla, and Mercedes have all sought and received these permits but Uber maintains their test vehicles do not need it because the cars always have human oversight that allows the "driver" to take control. As the tests have clearly shown, the "driver" may not have time to react when the autonomous vehicle makes a mistake but Uber apparently could care less about that. The California Attorney General's office reiterated the DMV's call for Uber to cease testing or face unnamed consequences, but even that has not deterred the serial offending company. An Uber vice president responded by saying, "This rule just doesn’t apply to us." That pretty much sums up Uber's attitude in one sentence. For people who drive without a license or insurance, this particular approach usually gets you a serious fine or jail time. It's time for similar punishment for Uber. Let's hope that one prosecutor in this country finds a way to shut this corporate criminal down.

Tuesday, December 20, 2016

Gingrich Says Traditional Laws Don't Apply To Trump

Newt Gingrich has a brilliant idea for solving the conflict of interest and nepotism problems that Trump's family poses. According to Gingrich, "In the case of the president, he has a broad ability to organize the White House the way he wants to. He also has, frankly, the power of the pardon. It is a totally open power, and he could simply say, ‘Look, I want them to be my advisers. I pardon them if anyone finds them to have behaved against the rules. Period.' Technically, under the Constitution, he has that level of authority."

Sure, if Trump wants to appoint Ivanka and Jared as advisers or roving "business ambassadors" so they can go out on the taxpayer's dime and round up business for the Trump organization, why should that bother anyone. After all, Trump is so rich and has so many business interests that the rules for everyone else shouldn't apply.

You may think that's sarcasm, but it is exactly what Newt thinks. Although he acknowledged Trump's massive conflicts of interests, he said that Trump's great wealth meant that "traditional rules don't apply...You can’t say that Trump Tower is not the Trump Tower or that Trump Hotel is not the Trump Hotel, and you can’t say that the kids who run it aren’t his children. These are facts and they’re obvious." Indeed they are. Which is why we have these anti-nepotism laws in the first place and also why we have conflict of interest laws and traditionally forced Presidents to divest themselves from the business when, as President, they supposedly start working for the American people and not themselves. Gingrich's answer to Trump's conflicts of interests is to set up committee to warn Trump when he might be getting "too close to the edge". Close to the edge of what, Gingrich doesn't say. But, considering that Trump and his family will technically be in violation of the Emoluments Clause and the STOCK Act on day one of his presidency, I would say close to the edge would be around January 18th. And I wonder how this "committee" would even know what the Trump Organization is doing, considering much of what we've learned about its activities overseas after his election has come from the foreign press rather than the Trump Organization itself.

This attitude that it is OK to have more than one master has become fashionable among the financial elite these days. It is prevalent in the boardrooms of Wall Street where executives at on large bank often sit on the board of another large bank. This is one method of making sure that the oligopoly that dominates the financial industry doesn't compete too heavily with each other. Trump is just taking that approach to the Trump Organization and the Presidency. There's really no conflict because he will always be working for the best interests of both. He also has a bridge to sell you.

As Richard Painter, George W Bush's ethics lawyer and a constant critic of Trump's conflicts of interests, says, "There is no billionaire exception in the Constitution of the United States...The pardon power can not be used by the president to pardon himself, or to cause other members of his administration to engage in illegal conduct or unconstitutional conduct and then simply use the pardon power in that way. If the pardon power allows that, the pardon power allows the president to become a dictator." Painter doesn't seem to understand those are just "traditional rules" that shouldn't apply to Trump. Welcome to the GOP version of a democracy.

Devos Evasion Of PAC Fine Shows Blatant Disregard For The Law

Betsy Devos, Trump's nominee for Secretary of Education, headed a PAC called All Children Matter that was ruled by the Ohio Elections Commission of violating the state's campaign finance law and order the PAC to pay a record $5.2 million fine relating to actions the PAC took in 2006. It is hard to overstate just how egregious the violation was in this instance. The national PAC, located in Virginia where there were no limits on contributions, asked the Ohio Elections Commission for a ruling on how much they would be allowed to donate to the PAC's Ohio affiliate. The Commission ruled that Ohio law restricted the PAC to $10,000. Having received that opinion, the PAC blatantly ignored it and gave its affiliate in Ohio 870,000 in an attempt to pass a pro-school voucher plan in the state. After the original $5.2 million was upheld, the PAC pursued the case through the courts which also ruled against the PAC and imposed late fees on the fine, pushing it up to $5.3 million. At that point, the PAC simply dissolved and refused to pay the fine.

Democrats have demanded that Devos pay the fine but her spokesman said, "Betsy was not a party to the suit, a trial court judge ruled none of ACM’s officers or board members can be held liable for the fine." The Trump transition team tried an even different tack saying that the Supreme Court's Citizens United decision essentially made the issue moot. Since Devos' violation took place well before that ruling, Trump officials are now acting like that decision was retroactive for any prior violations, which is something the Supreme Court would probably be surprised to hear but might also be no problem for them after Trump get his appointment to the Court.

This seems to be par for the course for what we can expect from the Trump administration. Blatantly violate the law, hide behind some technicalities, and refuse to face the punishment. They will have enough power and money to get away with it. Devos essentially did up until now.

Trump Organization Pressuring Foreign Delegations To Hold Events At DC Hotel

The Trump Organization, which is currently inseparable from the Trump administration, is apparently pressuring foreign delegations to now hold events at the new Trump International Hotel in Washington DC. ThinkProgress is reporting that the government of Kuwait was pressured by a member of the Trump Organization to move its National Day celebration originally scheduled for the Four Seasons in DC to Trump's hotel. According to ThinkProgress, "A source tells ThinkProgress that the Kuwaiti embassy, which has regularly held the event at the Four Seasons in Georgetown, abruptly canceled its reservation after members of the Trump Organization pressured the ambassador to hold the event at the hotel owned by the president-elect...ThinkProgress was also able to review documentary evidence confirming the source’s account."

This follows on decisions by Bahrain and Azerbajan to hold events that has been previously scheduled elsewhere at Trump's hotel. This is probably one of the few ways that smaller countries can find an easy way to buy influence with the Trump administration. Of course, just offering Trump the cash would probably also work, but they might get outbid. As long as Trump or his family have any connection to his current hotel holdings, expect this kind of low-grade graft to be constant.

Trump's Hedge Fund Investments Will Drive More Corruption

Donald Trump claims that he sold all his stocks earlier this summer but, of course, we have no independent way to confirm that since Trump refuses to release his taxes or even a summary of his holdings. One theory that has been offered as a rationale for selling his stocks was his decision to forgive the approximately $50 million loan he "gave" his campaign as other donors worried he would just use their money to pay himself back. But, pointedly, Trump has made no mention of giving up his hedge fund investments, which are guessed to be about $85 million according to a disclosure in May of this year. His largest hedge fund investment is with Blackrock and Blackrock's CEO is now on Trump's economic advisory team.

Another significant hedge fund investment is with John Paulson who has bet heavily by purchasing the stocks of the Federal National Mortgage Agency (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), the two institutions responsible for guaranteeing a majority of the mortgages in this country. Both institutions were essentially bailed out during the financial crisis and most of their profits now flow to the US treasury. But Wall Street firms were able to pick up their stock incredibly cheaply as the financial crisis unfolded and the owners of the stock, especially hedge funds like Paulson's that bet heavily on the stocks, have been pushing hard for the last few years to fully privatize both of them. This, of course, would mean that the profits would start flowing to the shareholders once again. Additionally, we would be right back where we were in 2007 where the government would be forced to subsidize the losses should the two institutions fail again, while the profits would be privatized.

Trump's nominee for Treasury Secretary, Steve Mnuchin, was recently on Fox News and said, "We've got to get them out of government control." The prices of both FNMA and FHLMC jumped on that statement, immediately boosting Paulson's profits and, presumably Trump' returns. According to a director of a watchdog group, Mnuchin has had a close connection with Paulson and they have even been business partners.

This kind of thing will just be the tip of the iceberg of the coming corruption in the Trump administration. And it will not be just Trump, but also the cronies of the Wall Street tycoons that Trump has filled his cabinet with.

Monday, December 19, 2016

Trump Seems Intent On Helping To Break Up The EU

Thanks to Josh Marshall for pointing this out but Trump has a plan to help break up the EU. According to reports, Trump is planning to work out a letter of interest and intent regarding a trade deal with the UK as part of the new administration's first 200 days. This desire was part of the reason why Trump was pushing to get his pal Nigel Farage appointed British Ambassador to Washington, causing another minor diplomatic tiff with one of our allies. Of course, as long as it is part of the EU, Britain is forbidden from negotiating separate trade deals. In addition, the Transatlantic Trade and Investors Partnership (TTIP), a massive new trade deal between the US and EU is still being discussed but Trump has already signaled his opposition to that deal and EU officials have come to accept that reality.

Trump and the UK seem to feel that seeing a potential US-UK trade deal will put the UK in a better bargaining position with Europe. I'm not sure I follow the logic of that. It would seem that the Europeans would be more than a little pissed off that Trump has not only deep-sixed the trade deal with EU but that he is also interfering with the Brexit negotiations on the side of the UK. How that will make the Europeans more predisposed in their negotiations with the Britain is beyond me. Even if the Europeans do end up allowing the UK access to their common market, I'm not sure that they could restrict Britain from negotiating a separate trade deal with the US or that Britain would accept that restriction. So it is hard to see that this does anything but make the Brexit negotiations even more difficult and contentious. In addition, Trump has also indicated a desire to make individual trade deals with Germany and France, again in total contravention to the structure of the EU.

A memo that CNN has revealed shows that Trump wants to withdraw from NAFTA and "replace" that with a trade deal that would include Canada and the UK. I guess this is an attempt to restore the glory of the former British Empire, but it certainly will reduce the overall amount of trade American engages in considerably, especially when you factor in the transportation costs to and from the UK. I'm also guessing that there will be strong opposition from a large segment of US businesses to pulling out of Mexico and the cheap labor supply that it offers.

All these reports are not even solid proposals yet so it remains to be seen whether any of these ideas will really see the light of day. But Trump's bromance with Putin and his attacks on NATO have already unsettled our European allies. Interfering in the Brexit negotiations is likely to anger them even more.

Demographic Desperation Is What Makes Trump Presidency A Threat To Democracy

The New York Times Op-Ed page today has a couple of pieces devoted to exploring the unique danger that Donald Trump poses to American democracy. Charles Blow gives us the blow-by-blow on the specific dangers that Trump presents - the Russian hacking, Trump's foreign conflicts of interests, especially with Russia, and the possibility Trump may be "Moscow's mule"; Trump's selection of "a rogue’s gallery of white supremacy sympathizers, anti-Muslim extremists, devout conspiracy theorists, anti-science doctrinaires and climate-change denier"; and that Trump is an "unstable, unqualified, undignified demagogue".

Paul Krugman pursues a different tack, looking at the fall of the Roman Empire and how institutions can fail us. Krugman says, "Republican institutions don’t protect against tyranny when powerful people start defying political norms. And tyranny, when it comes, can flourish even while maintaining a republican fa├žade". He continues, "Famously, on paper the transformation of Rome from republic to empire never happened. Officially, imperial Rome was still ruled by a Senate that just happened to defer to the emperor, whose title originally just meant “commander,” on everything that mattered. We may not go down exactly the same route — although are we even sure of that? — but the process of destroying democratic substance while preserving forms is already underway". He points to what just happened in North Carolina and we could add Merrick Garland, the abuse of the filibuster, and many others.  Krugman makes no bones about where the breakdown of democracy is occurring, saying, "My question, instead, is why one party’s politicians and officials no longer seem to care about what we used to think were essential American values. And let’s be clear: This is a Republican story, not a case of 'both sides do it'."

Although Krugman touches on it, I think neither he nor Blow understands that the real danger is much greater than they imagine and it lies with the outlook that the Republican party has on the future. I wrote about this in an earlier post, saying, "[T]hat 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'."

David Atkins, over at Political Animal, has done a much more succinct and incisive piece on exactly the phenomenon that I was trying to describe above. According to Atkins, "Republicans have significant advantages due mostly to gerrymandered districts and political segregation, but it will be much harder for Republicans to maintain those district advantages after the 2020 census–especially if Democrats retake governorships and legislatures in an anti-Trump wave. They know their time is limited. The Trump phenomenon itself can be seen in many ways as a temporarily successful Hail Mary pass by a conservative base that sees its vision of America collapsing in front of its eyes." He also points to what is happening in North Carolina and notes, "parties that expect to regain power once they have lost it don’t typically behave this way, because they know that bad behavior can become a precedent used against them that will make it difficult for them to govern when they return to power. The Republican strategy here only makes sense if they expect never to regain power once they have lost it." And he concludes by saying, "That’s what makes the current incarnation of the Republican Party so dangerous. They have total control now, but they know their time is limited if elections remain fair. They’re reduced to the apartheid calculus: either implement authoritarian control, or watch everything they have worked for disappear in four to eight years, perhaps forever." Please read the whole piece as it brings into stark relief the contempt for democracy that Republicans have shown over the last couple of decades and the reasons why, from a Republican point of view, it reflects a "sensible" strategy that will only get worse in the years ahead.

It is far easier to imagine the Democratic party crafting a message that will appeal to white working class voters than it is to imagine the Republican party crafting a message to woo Hispanic and African American voters, especially in the aftermath of the Trump campaign and this election. If we ignore the demographic desperation that the Republican party feels and the fear it engenders, we will constantly underestimate their desire and ability to destroy American democracy in order to maintain their power. We have let it happen for far too long already.

David Gregory Does Not Understand The Constitution

David Gregory, formerly of NBC and now of CNN, was on the Brian Lehrer show this morning and the topic was the Electoral college vote today. Unfortunately, there is no audio or transcript of the segment up yet, so I am doing this mostly from memory. Specifically, the issue was whether the Electoral College voters should be encouraged to be faithless and vote their conscience. Gregory basically kept on harping that not enough Democratic voters came out and voted for Hillary Clinton in the states that mattered, In addition, the popular vote was meaningless because Trump would have run a different campaign if those had been the rules. Both are valid points but have nothing to do with answering the question. When callers pointed out the fact that it is clear there was foreign interference in the election, that Trump's foreign business ventures are unknown, and that Trump is a demagogue, Gregory response is that was just a liberal point of view. Yes, he said, we need to investigate the foreign interference thoroughly but calling Trump a demagogue and a danger to our country is purely politics and will not invalidate the election. He frequently went to the same old trope, that liberals would be up in arms if the shoe were on the other foot. I think I can almost guarantee that Republicans would be pressing even harder to have the Electoral College step in and that there would be at least a significant number of Democrats who would also oppose an action by the Electoral College to overturn the results. In fact, even today, there are a significant number of Democrats who do not want to see the Electoral College intervene. Of course, Gregory sweeps all that under the rug with his blanket statement that liberals' position would change if the situation was reversed. As noted, I have no transcript, but he never mentions that Republicans' positions would also change. He specifically focused on, his term, "liberals". He then went to say that, after the 2000 election, there was pressure to change the Electoral College but that momentum as never followed up on. He neglected to mention that Republicans have been the only ones who have benefited from the Electoral College and there might not be a great incentive for them to change that. Nor did he focus on the fact that the disconnect between the popular vote and the Electoral College winner has happened more frequently in the last 15 years than in the prior 200 and is likely to happen even more frequently in the future.

But the most disturbing part of the conversation was Gregory's insistence, and I will use his words, that we should not "empower" the Electors to overturn the vote because that would be "undemocratic". But, as callers pointed out to Gregory, the Electoral College is enshrined in the Constitution. Hamilton, in a letter to the People of New York State the he ably represented, described his support for the Electoral College, saying, "Nothing was to be more desired than that every practicable obstacle should be opposed to cabal, intrigue, and corruption. The most deadly adversaries of republican government might naturally have been expected to make their approaches for more than one quarter, but chiefly from the desire of foreign powers to gain an improper ascendant in our councils." The Russian hacking and Trump's business ties to Russia are probably the closest thing this country this has ever seen to exactly what Hamilton feared. Now, other supporters of enshrining the Electoral College had differing reasons for doing so but the fear that Hamilton expressed can not be discounted.

I am not in favor of the Electoral College overturning the result of this election and I'm sure it will not happen, although I would be happy to see a significant number of "faithless" Electors if only to send a signal that this election had serious problems. I am in favor of abolishing the Electoral College as it violates the principal of one person and one vote and, based on the continuing divide between urban and rural America, the likelihood of similar results in the years ahead are high and will further erode American's faith in democracy. The Electoral College is enshrined in the Constitution, but it is totally undemocratic. So the fact that Gregory describes the idea that Electors fulfill their Constitutional duty as the framers wished as "undemocratic" without bothering to mention that the whole process itself is "undemocratic" is laughable, yet shocking. He is essentially telling us to ignore the Constitutional provisions that were given to the Electors in order to defend the Electoral College itself, a stance that makes no sense.

Gregory's inability to face the fact that the Electoral College is totally undemocratic is bad enough. It seems that he also wants to deny the Electors' right to fulfill their Constitutional role simply because that would highlight how undemocratic the system is. All the while, he continues to harp on the fact that "both sides would do it". If this is what passes for media analysis even in the wake of this election, then our democracy is seriously under threat.

Sunday, December 18, 2016

Natural Weekends - Sunsets And Clouds

Schumer's Plan To Work With Trump Ensures More Democratic Losses

I've already raised concern about Chuck Schumer's becoming the voice of Democratic opposition in the Senate. And this article in Politico should strike fear into the heart of any Democrat who dreams of being in the majority again. Schumer has always been a deal-maker and, like Trump, that is what he loves to do. He honestly believes that he can work with Trump, or at least maneuver Trump, into getting things done that Democrats want to accomplish. According to the article, Schumer has been trying to "talk himself into the idea that the president-elect isn't really a Republican, but a pragmatist with no apparent ideological mooring". Actually, as many people who have worked with Trump have attested to, Trump is a mentally imbalanced serial abuser whose word means nothing. Schumer sees his ability to get Preet Bharara re-appointed as US Attorney in New York as an indication he can work with Trump, but Trump's rationale for going along with that was that Bharara had aggressively gone after Democratic corruption in the state. I have nothing against Bharara or the fact that he is going after corruption, but Schumer's thinking that is a "win" and indicates you can work with Trump is borderline delusional.

Schumer is taking the well-worn path that history recent history has shown to only appeal to the Washington press corps and their obsession with bipartisanship but always ends in continued failure for the party involved. Back in the 1970s and 1980s, GOP leaders like Bob Dole and Bob Michel continually worked with Democrats to get meaningful legislation accomplished. That strategy also ended up maintaining Republican minority status in the House and providing only rare control of the Senate. It was not until Newt Gingrich came along and decided to destroy the norms of governance and fight every Democratic action tooth and nail that the GOP managed to retake the House. Republicans spent eight years opposing everything Obama, even things like Obamacare that were originally GOP proposals, and their reward is now total control of Congress and the presidency. I'm not saying that this approach is good for the country and a responsible way to run the government but recent history has shown that it may be the only way to win. Jonathan Chait makes this point more emphatically and clearly than I when he describes the reality that we currently live in and the choice Schumer has before him. Says Chait:
"Senate Democrats work with Trump → Voters conclude Trump is doing a good job → Senate Republicans and Trump win reelection
Senate Democrats don’t work with Trump → Voters conclude Trump is doing a bad job → Senate Democrats win reelection"

Schumer's apparent calculus about Trump also would seem to ignore the other elephant in the room, namely that Republicans will control the content of virtually all legislation. I seriously doubt that Trump will have much influence on the extreme legislation that is bound to come out of the House. So Senate Republicans will only be too happy to get a handful of Democrats to help them eliminate some of the rougher edges of that legislation and get it passed. And then the Republicans will go right ahead and say this shows that they can get things done. Meanwhile Schumer will be telling Democrats something like "we made it less bad than it could have been". That sounds like a winning strategy.

Schumer does not seem to understand that most voters barely pay attention to the day-to-day workings in Washington. Heck, even some of the people who voted for Trump did not believe it was possible for the law to be changed and have their health insurance taken away, even though that was clearly what Trump was proposing. So, although the voters are not going to pay attention to the details, they do pay attention to the background noise that Washington creates. When all they hear is how dysfunctional Washington is, they blame the President and his party, probably because they believe the President has far more power than he really does. And, in this environment, the critical thing is to signal that your party is opposed to all this dysfunction, despite the fact that your party may be creating that dysfunction. Schumer already failed his first test on this issue by not shutting down the government, even for just the weekend, over pension benefits for miners. In addition, that step would have been a signal to Democratic voters around the country that their leaders in Washington were going to be united going forward - even Joe Manchin would have been on board. If Schumer does continue down the path laid out in this Politico article, it will ensure dramatic Senate losses in 2018, which is already going to be a difficult year for Democrats, and put the House even farther out of reach.