SCOTUS Refuses To Overturn Decision To Block North Carolina Voting Restrictions

In another victory for voting rights, the Supreme Court today split 4-4 on a request from North Carolina to grant a stay from a lower court's decision to block voting restrictions the state was trying to implement this year. The decision effectively blocks North Carolina from implementing five types of voting restrictions - a photo ID requirement, a cutback to early voting, the elimination of same day registration, a ban of out-of-precinct voting and a prohibition on pre-registration of young voters - for the 2016 election. The lower court also stated in its ruling that these measures targeted African-Americans "with almost surgical precision". Incredibly, four Supreme Court justices felt that that was just fine.

Fed Graph Of Future Fed Funds Rate Only Hurts Their Credibility

Sometimes you really have to wonder what is going on at the Fed. They recently released their projections for the Fed Funds rate all the way out until the fourth quarter of 2018:

As you can see, they have 70% confidence that the Fed Funds rate will be somewhere between slightly more than zero and slightly less than 5%, with their median path ending up at around 2.5%. Seriously, does anybody in their right mind think the Fed Funds rate will be anywhere close to 5% just 9 quarters from now! In fact, I would venture to say that even the rate of 2.5% is highly optimistic. The Fed has been overly optimistic about rates for years now and I'm afraid this graph will do nothing to enhance their credibility.

The August unemployment report comes out this Friday and some on the Fed are pushing for a September rate hike if those numbers are strong. I know the general consensus is that the anemic growth in the first two quarters of this year were due to drawing down inventories and that restocking those inventories along with robust job numbers indicate much stronger growth in the last half of this year. Well, let's actually see it before we act. In addition, the positive wage growth we've seen in the last year is primarily due to exceptionally low inflation rather than spectacular wage increases. It is unfathomable that the Fed does not understand that, while you may have to be ahead of the curve when interest rates are at 4 or 5 percent, you need to make sure you are slightly behind the curve when you are at the zero bound. Another rate hike that kills the economy like the one in December last year and the Fed will have lost all credibility.

Confusing Moves Indicate Fissures In Iranian Leadership

I am not expert on Iranian internal politics but it does seem like there must be some kind of internal battle going on within the government. I think we all knew that the nuclear deal with the US would create some friction within the Iranian government, but I'm not sure we expected the disarray to be this visible. First, there was the debacle with allowing Russia to use Iran as a base for attacks in Syria. Initially, Iran allowed Russia to use the Iranian Shahid Nojeh Air Base to refuel its bombers for attacks in Syria. A week later, the Iranians announced that the Russian use of the base was "finished, for now." Initial reports indicated that the Iranians were angry at Russia for publicly announcing the fact they were using the Iranian base and that was the reason for ending Russian use of the base. But in this day and age of sophisticated monitoring and satellites, it is inconceivable that Iran could think that this would not come out publicly very soon - the US probably knew what was going on as it was happening. Within Iran, there had been some pushback to the use of the base within Parliament, with some members pointing out that allowing a foreign base within the country violated the Iranian constitution. But you have to wonder if the internal dissension over this move was more complicated than that.

Then, earlier this week, a member of the Iranian delegation responsible for negotiating the nuclear deal was arrested and charged with spying. A prosecutor in Teheran earlier announced the arrest of a dual national for spying for Britain. An Iranian judiciary spokesman subsequently answered a question about this arrest of a dual national by calling him a "spy who had infiltrated the nuclear team". It is unclear but probable that the two announcements refer to the same person. This could be payback by the hardliners within the regime who opposed the nuclear deal. But I think it also indicates some of the fissures within the regime that this could happen.

More disturbing for the regime may be the fact that the economy is still mired in the doldrums. It had been expected that the economy would take off when the sanctions against Iran were lifted last year. But prices of essential goods have continued to rise and the expected foreign investment has yet to materialize. The hardliners place the blame on the US for not fulfilling their end of the deal and the Supreme Leader Ayatollah Ali Khamenei has backed away from the deal he once supported, saying the nuclear deal has had "no concrete or distinct impact on people’s lives". Yet, in parliamentary elections earlier this year, moderate candidates made a strong showing and the middle class largely still supports moderate President Hassan Rouhani and are disgusted by the corruption at the highest levels of government. But even Rouhani is feeling the heat from the hardliners, recently accusing the US of not implementing the nuclear deal in good faith. All this is a prelude to next June's election when Rouhani will probably stand for re-election. If the economy does not improve, you can expect the hardliners to regain control. But the internal battle between now and then may be reflected in some confusing moves by the government as each side jockeys for position.

Industry Contaminates And Taxpayers Foot The Bill

Two unrelated items in the NY Times today show once again that taxpayers continue to have to pick up the tab for the failures of corporations. Today, it relates to contamination of the environment. In East Chicago, Indiana, the mayor has decided that a development that houses 1,100 people needs to be demolished and the residents moved for their own safety. Soil tests at the complex show incredibly high levels of lead and of arsenic. The EPA insists the soil can be removed safely but the mayor believed that moving so much soil would actually aggravate the problem. Of course, the problem really was caused by a smelting plant just south of the development that was owned by the US Smelter and Lead Refinery. That area has already been declared a Superfund site but officials were shocked to see the high levels of lead in arsenic outside the plant. Right now, the focus is on the EPA and why it didn't know about this sooner and be more diligent about warning residents of the danger. But let's be clear - the blame clearly lies with the smelting plant.

In New York, the upstate area around Hoosick Falls is suffering through the contamination of their water supply. Initial tests showed that the Hoosick Falls water supply was contaminated with perfluorooctanoic acid (PFOA), a hazardous chemical used in the making of Teflon among other things. Subsequent studies showed the contamination extended to other nearby towns and even into Vermont. Landfills in three towns were also declared possible Superfund sites due to high levels of contamination with the chemical. Again, the EPA is accused of not being quick enough or transparent enough in informing communities of the dangers involved. And, again, the real cause of the problem is a nearby plant owned by Saint-Gobain Performance Plastics which is located on the Hoosick River and close to the municipal wells that provide water to Hoosick Falls. The company noted that it had paid for a water filtration system and was currently providing bottled water to residents as if that compensates for the damage that's been done and is an adequate replacement for having safe drinking water from your tap.

In both cases, the EPA is getting lots of flak about how they have handled the situation within the community and some of that may be deserved. But let's be clear that it is private industry that is creating these problems and then relying on government resources to clean them up. Initially, about 70% of the cost of cleanup of Superfund sites was borne by businesses, either through agreements with existing companies or via a tax on the petroleum and chemical industries. But since 2001, the majority of the cost of cleanup has fallen on taxpayers. In addition, the Superfund program is severely underfunded so that many sites are just sitting there due to the lack of resources for remediation. So the cycle continues - businesses pollute, citizens are harmed, and the problem just sits there or taxpayers foot the bill for the remediation that does occur. It's a great way to run a business.

End Of An Era For Grandstand Court At US Open

Yesterday marked the end of an era. It was actually supposed to have ended last September, but we were thankfully given one last brief reminder of how great it was. The grandstand court at the US Open has seen its final match. In fact, it was only supposed to be used as a practice court this year but problems with the court surface on one of the outer courts forced it back into use for the fist two days of the Open. The change was so unexpected that there was no "hawkeye" available on the court and so no challenges were allowed. But, ever faithful, the grandstand was still there, providing the most intimate setting of any court.

I grew up going to Forest Hills to watch the US Open. I must have only been 6 or 7 but I can still remember when Chuck McKinley slammed his racquet into the grass only to have it bounce up and break his nose; when Clark Graebner (I believe) was getting heckled by a fan during warmup and turned around and fired a ball right at the spectator to shut him up; all the Aussie greats - Laver, Rosewall, Stolle, Newcombe, Emerson; and my favorite, the tragic Mexican, Rafael Osuna who was even more graceful and effortless than Federer moving around the court. But not even those days could compare to the intimacy you had with players on the grandstand court at the Open.

People forget that when the Open moved to Flushing Meadows, Arthur Ashe stadium did not exist. Louis Armstrong was the showcase court and the grandstand was essentially the "other" show court. And there were so many classic matches. Louis Armstrong fans would look over the railing to catch the incredible upset that was far more enjoyable than the match on their court. And the atmosphere was electric as the overhanging Armstrong kept all the cheering reverberating through the grandstand. I'm guessing that there were more five set matches on the grandstand than any other court at the Open - I wonder if they keep records like that. Readers are free to leave a comment about memorable matches they may have seen on that special court.

In recent years, we've taken to going to the Open on the Thursday or Friday of the first week with just a grounds pass, getting in line around 8:30 or 9am, and then making a beeline for the grandstand when the gates opened. Invariably, you would get three good competitive matches between players usually ranked between 10 and 20 in the world. With a front row seat, you literally could reach out and touch the players when they came back to towel off. I'll never forget when Gael Monfils played a deep ball incredibly casually, missing his shot. A fan asked in a normal tone, not a yell, "Gael, what happened?". Monfils turned and replied in his French accent, "I do not know. I thought the ball was out but when it landed it was in." Or when the handsome Tommy Haas made my wife swoon when he gave her a big wink after a winning point. You could only feel that intimacy on the grandstand court.

The court will be demolished sometime before next year's Open as part of and upgrade to the grounds. And players and fans have given positive reviews to the new grandstand, although I haven't seen it yet. But I'm pretty sure there will be no other court that has the history and the intimacy of the old grandstand court. May it rest in peace.

Median Household Income Rose In 2015

It looks like 2015 was finally a good year for middle class incomes. Early estimates are that the median household income in the US grew by a pretty robust 3.8% in 2015 which would push income up to around $55,600 from 2014's $53,657. More importantly, the rise in income in 2015 far outstripped the anemic inflation rate. Inflation grew 0.1% in 2015, primarily due to plummeting energy costs. But even if food and energy are excluded (which are actually of primary importance to households), the inflation rate only came in at 1.8%, still well below the 3.8% in income growth. This means that households' purchasing power finally increased in 2015. Of course, median household income is still far below the $57,724 number as recently as 2000 and inflation has ticked up quite a bit since then as well. So, although purchasing power still remains far below the levels we had in the 1990s, at least they are finally headed in the right direction. Of course, there are people at the Federal Reserve who want to make sure they nip this increasing purchase power of American families in the bud. For them, it's time for a rate increase.

Trump May Be Paul Ryan's Undoing

Donald Trump may end up becoming Paul Ryan's undoing, despite Ryan's continued backing of Trump. A remote possibility would be that a landslide loss for Trump would also lead to the Republicans also losing the House. But that might actually be the best result for Ryan's political future. The more likely result is that Democrats win the Senate and make significant gains in the House but still leave Republicans in control. Unfortunately for Ryan, those gains that Democrats make in the House will be at the expense of "moderate" Republicans, which will only strengthen the hand of the extreme ideologues in the Freedom Caucus. In fact, one reason fro Ryan's continued support of Trump is primarily to keep those ideologues at bay. In addition, Ryan will also have to work with Democrats in the Senate in order to get any kind of legislation passed. The balancing act required to work with Senate Democrats while keeping the Freedom Caucus happy is probably beyond the capabilities of anyone, even a Cirque du Soleil performer. In fact, Republican hard-liners are already planning to obstruct a Clinton Presidency in much the same manner they have spent the last eight years obstructing Obama. But, without control of the Senate, all that will remain will be endless House committee investigations, something that really will not help Ryan build his 2020 presidential resume. But Ryan may have even more to fear from his own Republican caucus. Already there is talk within the Freedom Caucus of trying to ensure that Ryan does not retain his position as Speaker of the House on the first ballot next winter. This revolt against Ryan knows that it won't actually succeed. It is more focused on weakening Ryan and forcing him to accept changes in the rules and leadership that will give even more power to the Freedom Caucus. That would leave Ryan in the worst position possible, a pariah among conservatives and without any way to move forward the Ryan agenda that he desperately needs for his next presidential run.

Virtually No One Will Ever Go To Prison For Financial Crisis Fraud

If there was any better indication that there is something seriously wrong with our economic and legal system in this country, it is the fact that virtually no one has gone to jail for all the rampant fraud and abuse that triggered the greatest financial crisis since the Great Depression. I'm pretty sure that the outrage over this fact is something both Bernie Sanders and Donald Trump supporters can actually totally agree on. And, in fact, most American would also agree. To add insult to injury, taxpayers were then required, not asked, to bail out the very companies and very people that had created the crisis to begin with. In the end, it may have actually made money for the taxpayers but it certainly hasn't cost the financial firms and the fraudsters who ran them a dime.

Last week, the SEC wrapped up its final case against a Fannie Mae executive charged with securities fraud for understating their exposure to subprime mortgages. The result was a pathetic fine which the individual did not even have to pay for himself - Fannie Mae will make a mere $100,000 "donation" to the Treasury Department and the executive will pay nothing and receive no censure at all. He can continue in his job unperturbed.

If that wasn't bad enough, on the very same day an appeals court refused to reconsider a ruling that absolved Bank of America and Countrywide of committing fraud. An earlier appeals court ruling overturned the conviction of Bank of America/Countrywide that had been returned by a jury in 2013. The trial court demanded a nearly $1.3 billion penalty for Bank of America and a $1 million fine for the Countrywide executive named in the suit. But the whole case was overturned earlier this year by an appeals court in a ruling that said no fraud had been committed because "willful but silent noncompliance" did not amount to fraud because no misstatement had actually been made.

These two cases represent the final cases the government has been able to mount over the financial crisis and the results are incredibly pathetic. The only government conviction that has actually held up was against a minor Goldman Sachs trader. All other cases, even where the government has reached a settlement, have resulted in either minimal fines or fines that the defendant did not even have to pay on his own and a one or two year ban on certain management positions in public companies. I'm pretty sure that did nothing to discipline the offenders and it certainly sent a very loud and clear message to others in the industry that your chances of actually having to pay for your criminal actions are pretty negligible.

Fraud was rampant in the mortgage and securities business in the years leading up to the financial crisis and everyone knows it. The fact that the government could obtain virtually no convictions stands as a testament not only to a lack of aggressiveness on behalf of prosecutors but it also points out that the laws themselves are clearly failing. So, perhaps it is time to rewrite these laws.  One of the reasons business always love "clarity" and "stability" is that it gives them a chance to plan for a fairly certain short-term future. But it also gives them the opportunity to find creative ways around the laws and regulations. And we all know that some sensitive corporate decisions and discussions get done "off-line" simply to avoid creating a paper trail. Maybe it's time to write some broad laws that give prosecutors pretty wide latitude in whether they will prosecute or not. Certainly, lots of prosecutors will do nothing, but that's not much different from today where regulators and prosecutors are already in the pocket of big corporations. But every once in a while, a crusading prosecutor will take these companies on and perhaps win some big judgements and real jail time for the white-collar criminals involved. And maybe, just maybe, the uncertainty created by that possibility would make these people think twice before committing fraud.

EU Fight For Tax Fairness Opposed By Ireland And US

Antitrust enforcement has been a lot stronger in the EU than here in the United States over the last couple of decades. Of course, many believe that EU enforcement has been a little too focused on foreign-owned business (see Microsoft and Google) but at least they have taken some action to reduce the power of these virtual monopolies. Today, the European Commission order Apple to pay nearly $15 billion in back taxes due to illegal tax incentives offered the company by Ireland. The Commission has recently been focusing on corporate tax-avoidance via tax deals countries strike with multinational corporations. It has already gone after Starbucks in the Netherlands, Amazon in Luxembourg, and Anheuser Busch-InBev in Belgium. All of these companies have received favorable tax treatment from the country in question. All these countries are offering these sweetheart tax deals primarily in the hopes of bringing additional foreign investment into their country. But most of the time, these large multinationals barely have a presence in these countries and just move profits into country to pay a far reduced tax rate. In Apple's case, the "so-called head office [in Ireland] had no employees, no premises, no real activities," according to Margrethe Verstager, the competition chief of the Commission. But, by being "located" in Ireland, they were able to reduce their tax on European profits to 0.005%, saving over 50 euros for 1 million in profits.

These tax deals for multinationals actually provide them with an unfair advantage over other, smaller firms who do not have access to these special deals. They also essentially rob other EU countries of tax revenue that should rightfully belong to them. Considering the trouble that Ireland has had after the financial crisis, you would thing that they would only be too happy to receive an extra $14 or $15 billion. And you would think that the US would be happy that someone is trying to enforce tax fairness, perhaps making the repatriation of the profits of the US companies slightly more attractive. But, of course, you would be wrong. Ireland has vowed to appeal this decision on the grounds that they need "to defend the integrity of our tax system." They can't have other companies taking advantage of these sweetheart tax deals getting cold feet, whatever the cost to their own citizens. And a US Treasury spokesman said the decision would "undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU." Yes, we can't have anyone trying to crack down on these US-based multinationals companies. We can see pretty clearly where the priorities of government lies and it is clearly not with their own tax-paying public.

TPP Is Not A Trade Deal - It's A Corporate Power Play

The Huffington Post has a long article on one particular aspect of the proposed Trans-Pacific Partnership (TPP), the huge new trade deal with Asian-Pacific countries, that perfectly illustrates that these are not "trade" deals at all, but are just vehicles for protecting certain industries from competition. TPP has lots of additional patent and copyright protections that will only help Hollywood, the big pharmaceutical companies, and, of course, Wall Street.

Today's article focuses on what is called "investor-state dispute settlement" or ISDS in shorthand. It is essentially an extra-judicial court that resolves disputes between corporations and states. The court operates outside any country's judicial system - it is totally independent. The court was originally set up to ensure that states do not nationalize foreign-owned companies or seize their products without some form of compensation, which would be determined by the court. This gave foreign investors at least some confidence that their investment would not be totally lost through state intervention. But over time, the court's jurisdiction has expanded and TPP looks to expand it even more. Under ISDS, companies are now suing states over mere changes in policy that effect their business. As an example, due to the financial crisis and the resulting budgetary problems, Spain has been forced to reduce its subsidies to the solar power industry on a pretty regular basis over the last few years. As these subsidies were declining, investment arms of Deutsche Bank and BNP Paribas bought a few Spanish solar-thermal power plants. When Spain continued to reduce the subsidy, these investment firms sued Spain, claiming their expectation was that the subsidies would continue at a fixed level and their business was harmed because of the new reductions. It really takes a lot of nerve to create the financial crisis that drives countries into the ground and then sue them for not supporting your investments, but we are taking about the cartel of global banks - nothing is beyond them. The case is still pending. In fact, most people believe that these investments were made primarily to bring an ISDS case against Spain in the hopes of a massive settlement. And, increasingly, third parties are providing funding for these cases, protecting companies from the up-front costs of litigation and then taking a cut of whatever settlement results. In fact, many cases have resulted in over $100 million judgements against the states and that settlement has to be paid in cash. So, rather than being used as a tool to prevent states from seizing corporate property, ISDS is increasingly becoming a vehicle for speculation for investors to wins huge settlements from states for mere changes in policy.

TPP only expands this capability even further. Under the proposed treaty, at least 9,000 firms will now have access to ISDS. More importantly, the treaty expands "the minimum standard of treatment" to now cover financial firms.. This huge gift to Wall Street now gives those big banks the ability to demand compensation from countries that implement regulations that somehow effect the firms' bottom line under ISDS. And it is yet another example of how corporate power is challenging state sovereignty. From Aetna threatening to withdraw from Obamacare if their merger is blocked to tax-avoidance schemes using other countries, corporations are slowly whittling away at the power of individual countries to regulate them. Passage of TPP would just be another step down that road.

So Far, Clinton Is Running An Almost Flawless Campaign

I have spent a lot of time on this blog going on about the failings of the Donald Trump campaign but I have spent hardly a word on Hillary Clinton. And that's primarily because she has managed to simply stay out of the way and let Trump sink himself. Besides a small misstep when she said she "short-circuited" an answer during a Chris Wallace interview, she has largely run a pretty faultless campaign. The convention hit all the right notes and was remarkably successful. She has handled the "scandals" surrounding Benghazi and the email server pretty well. Her attacks on Donald Trump have basically used Trump's owns words against him, inoculating her from any of the usual trope that she is lying about his record. And she continues to make substantive policy proposals such as today's proposal on mental health.  Of course, everyone probably recognizes that none of these proposals will actually get through Congress as it is currently aligned but they continue to provide a stark contrast with the Trump campaign. She comes across as the serious candidate while he continually stumbles, now even having problems explaining his own immigration proposal which really is the centerpiece of his campaign. And that's not even talking about the superior organization that Clinton has built around the country. I kind of doubt whether she can keep this kind of "stealth" campaign going all the way until the election, especially when the debates roll around. Additionally, this kind of campaign may not energize enough new voters, making it harder for Democrats to win the Senate and, perhaps, even the House. It maybe that Trump alone will provide the impetus for a Democratic wave. For now, however, Hillary is running an exceptional campaign.

Broadband Firms Use State Law To Deny Citizens Access to Internet

Today's example of corporate power running amok and distorting the political process comes from a ruling by the United States Court of Appeals for the Sixth Circuit. The ruling upheld laws in Tennessee and North Carolina that restricted the spread of municipal broadband networks. Municipal broadband networks usually begin in areas where traditional internet providers either offer incredibly poor or even no service at all because it is not cost-effective to provide service to a few people over a wide area. But internet providers in Tennessee and North Carolina lobbied those states to limit the areas that these municipal broadband networks could service, leaving those customers locked out of the networks at the mercy of the broadband oligopoly or, in most cases, monopoly. The FCC had tried to use its power from a 1996 law that mandated it to remove barriers to broadband investment to block these laws but the appeals court ruled that the state laws were legal. Some lawmakers and other free market types have argued that these networks are costly to set up and could create an undue burden on taxpayers. Thom Tillis, Senator from North Carolina, had this to say, "[u]nelected bureaucrats at the F.C.C. completely overstepped their authority by attempting to deny states like North Carolina from setting their own laws to protect hardworking taxpayers and maintain the fairness of the free market". Yes, I guess that free market is working really well for those taxpayers who will now be denied internet access because they will no longer have access to the municipal network. Broadband providers have had virtual monopolies for years, providing lousy service at higher prices than most other industrialized nations. And now they are using their power in state legislatures to actually deny citizens access to the internet.

The Sordid Past Of Trump's Advisors

Donald Trump sure seems to be surrounding himself with some pretty sleazy advisors these days. First there was the hiring of Steve Bannon of Breitbart News to be his new campaign CEO. I have still yet to have anyone explain to me how a campaign CEO is any different from a campaign manager. Perhaps he gets paid ten times as much for doing the same job. His sordid record at Breitbart is well-known but perhaps less known is his less than stellar stint at Biosphere II. In recent days, it has also been revealed that Bannon was charged with domestic violence back in 1996 although the case was subsequently dropped. Bannon has also some serious tax problems as well as a civil lien imposed on him as recently as 2011. And now the latest revelation is that he is actually committing voter fraud by illegally registering to vote by using a vacant house due for demolition in Florida as his residence. Bannon apparently rented a couple of properties in Florida in which his divorced wife lived and which he also listed as his primary residence. At the same time, apparently, he was actually a resident of Laguna Beach, California and was registered to vote there up until 2014. Josh Marshall surmises that Bannon's use of the Florida residence was probably a tax dodge as Florida has no state income tax. It will be interesting to see if that turns out to be the case. On the other hand, Republicans can find a silver lining in this, as we actually may have uncovered a real case of voter fraud. But I doubt it - it is hard to imagine Bannon voting in person in Florida and California on the same day, although I suppose he could have taken advantage of early voting and/or absentee ballots to actually vote twice. Maybe that's why Trump is constantly hitting the theme of a "rigged" election - because Bannon has explained how it's done.

On Friday, it was also announced that former Chris Christie aide Bill Stepien has been brought in by the Trump campaign to enhance their get-out-the vote efforts. Stepien is probably a name that most people would outside of the New York area have never heard of but he was apparently an instrumental figure in the Bridgegate scandal that helped doom Chris Christie's campaign. That scandal involved shutting down lanes on the George Washington Bridge so that traffic would be forced through Fort Lee, New Jersey whose mayor had refused to endorse Christie. At the time, Stepien was Christie's campaign manager in his gubernatorial re-election campaign. He was also having an affair with Christie's deputy chief of staff Bridget Anne Kelly, whose email to the Port Authority that it was "time for some traffic problems in Fort Lee" linked the closures to Christie and his staff. Stepien was essentially thrown overboard by Christie due to the scandal as it became clear that, even if he did not know about the closures beforehand, he certainly condoned them after the fact. And a recently released contemporaneous text indicates that Stepien may have been much more involved than just after the fact. In any case, the trial regarding Bridgegate starts in about three weeks and you can be sure that Stepien's name will come up frequently and he might even be called on to testify as could Chris Christie. That's just the kind of publicity a campaign needs in the weeks leading up to an election.

Finally, there is Roger Ailes. His disgraced departure from Fox News as a serial sexual predator has been fully documented here and elsewhere. But he is now apparently an important strategist in the Trump campaign, despite Kellyanne Conway's statement that he "obviously has no formal or informal role with the campaign". I'm not the only one who thinks that Ailes will become more and more important to the Trump campaign as we head into the home stretch after Labor Day. In fact, you can see the Trump campaign making an issue of Hillary's health records as a way to blunt the fact of his not releasing his tax returns. To me, that just reeks of an Ailes' maneuver.

Trump's key advisors now consist of a tax-dodging flame-thrower, a man up to his eyeballs in criminal lane closures in New Jersey, and a serial sexual predator. If Hillary Clinton had advisors like that, can you imagine the daily torrent of media abuse she would be getting. But Trump seems to somehow get away with it, perhaps because he is a continual daily outrage machine. But that shouldn't allow him to not have to answer for his choice of advisors.

Another Criminal Scandal At Deutsche Bank

There is a fascinating story in last week's issue of the New Yorker about Deutsche Bank essentially helping Russians expatriate over $10 billion dollars over a four year period through a fairly simple scheme known as mirror trades. Deutsche Bank (DB) is another serial offender global bank, having been implicated and/or fined for violating US sanction, defrauding mortgage companies, manipulating the price of gold and silver, manipulating the LIBOR rate and then essentially lying to regulators about that, hiding vast losses during the financial crisis, criminally rigging the foreign exchange markets, and now this money laundering for wealthy Russians. In addition, according to the article, the lawyer who was brought in to upgrade the bank's controls and investigate former illegal activity was forced out because, according to a DB board member, he had been "overzealous" in showing that senior executive were well aware of the illegal activity that was occurring. And all this illegal activity has been uncovered just since 2008, a mere eight years.

The money laundering scheme worked like this. A wealthy Russian would open an offshore account in some tax haven and then invest in a Russian based fund. A broker for the Russian fund would by a Russian stock with rubles from Deutsche Bank. That same broker would then sell the same Russian stock for an offshore fund at exactly the same time to DB but this time for dollars, euros, or pounds. Then the offshore fund would transfer those monies into the wealthy Russian's offshore account, essentially converting rubles to the other currencies and moving the money from Russia offshore. Deutsche Bank would pick up a commission on both of these trades, meaning that the trades almost inevitably always lost money for the customers but enriched DB. Technically there is nothing illegal about mirror trades and there are occasions where they serve a legitimate attempt to exploit some inconsistencies in the market. But the willingness of these clients to continually sustain losses on these trades should have been a red flag. And any minimal amount of research would have also show that the funds involved in the trades had the same beneficial owner, another red flag. But DB made no effort to investigate their clients in clear violation of the "know-your-customer" rules that govern trading firms. It seems pretty clear that people in the DB Moscow office where the trades originated as well as a few people in the London office that executed these trades knew exactly what these trades were intended to do. But they did nothing to stop them, preferring to pick up the easy revenue instead. Finally, in 2015, an internal investigation into the mirror trades resulted in three members of the Moscow office being suspended. But please read the whole story, as my recap just covers of the most egregious actions at the bank.

In 2015, two researchers in the Deutsche Bank London office decided to look at capital movements that were not included in the normal balance of payments reporting number for individual countries. What they found in the UK was somewhat shocking - at least $1.5 billion per month in "unreported" capital was flowing into the UK economy every month and much of that money was coming from Russia. When the mirror trade scandal was finally revealed later that year, it became apparent that DB itself was responsible for about 20% of that capital movement. As anyone in London can tell you, foreigners have bought up tons of real estate in the city and it has become unaffordable for most average Londoners - I have a number of friends who have been forced to move out of the city. And a lot of the money used to buy London property is clearly money expatriated illegally from Russia as well as other countries.

Once again, the wealthy use their illegal gains at the expense of workers and families and banks and governments do virtually nothing to stop it. Deutsche Bank will again probably only receive a manageable fine for these mirror trades which it will just treat as the cost of doing business. All I can say, if any individual had wracked up the record of criminality that Deutsche Bank has managed in the last eight years, they would be looking at some serious jail time. It is really time we treated these serial offender companies exactly the same way.

US Open Preview

The US Open tennis tournament, the final major of the year, begins in just a couple of hours here in Queens, NY. And, as usual, the two number one seeds and prohibitive favorites are Novak Djokovic on the men's side and Serena Williams on the ladies'. But both players come into the tournament with some serious questions about their health and their play.

Djokovic had a poor loss at Wimbledon against Sam Querrey and then lost a classic match against Juan Martin Del Potro in the early rounds of the Olympics. There have been rumors of some sort of injury but it certainly seems that Novak has kind of lost his mojo ever since winning the French Open. That victory at the French gave him his career Grand Slam and also made him the first player since Rod Laver to hold all four major titles at once. He seemed on his way to a possible calendar Slam but that all ended at Wimbledon. According to Mats Wilander, Djokovic really lost his motivation after winning the French and he will need to some time to find that incredible drive again. So I don't expect Novak to make it all the way this year. And if he stumbles, the field is wide open. del Potro looks to be back in form after a number of injury-plagued years but he may not have the stamina yet to endure the full two weeks. Rafa Nadal looked like he also had recovered from a severe wrist injury with his play at the Olympics but it is questionable whether he can also hold up for two weeks. Kei Nishikori has made a couple of deep runs here at the Open but it remains to be seen whether he can be as consistent as he needs to be to win it. And Andy Murray has been playing some solid tennis all summer long as has Marin Cilic. If Djokovic does not return to the dominant form he has shown over the last two years, this could be a wonderful, wild ride on the men's side of the draw.

The question for Serena Williams is not motivation, but health. After a disastrous Olympics, it was revealed that Serena had a some kind of shoulder injury which was clearly effecting her play and, more importantly, her serve. Serena's serve is such a weapon and, without it, she can be vulnerable. On the other hand, Williams has incredible motivation this year. This is by far the tournament she most loves to win and a victory here would give her 23 major singles victories, surpassing Steffi Graf and add another record to her resume as the greatest women's singles player ever. But if she should lose early, it will open up the draw to a whole host of players. The number two seed, Angelique Kerber, has a chance to dethrone Serena as number one in the rankings, giving her motivation but also some added pressure. In addition, Agnieszka Radwanska and Karolina Pliskova have had solid summer tournaments and are both in form. But I don't think it will matter. I really believe this is the one Serena really wants to win so I expect her to be lifting the trophy in another two weeks.

Natural Weekends - More Clouds

More Cat Videos

Because you can never get too many cat videos, can you?

Connecticut Open - More Photos

 Louisa Chirico - forehand, backhand, and serve

Caroline Wozniacki serves with partner Klaudia Jans-Ignacik at net

One of the top rated doubles teams, Timea Babos (serving) and Yaroslava Shvedova

Natural Weekends - Female Cardinal And An Egret

Yellen Signals Rate Hike But Gives No Indication On Timing

Janet Yellen spoke today at the annual Jackson Hole symposium and once again indicated the Fed would be looking to raise rates, perhaps before the end of the year. Citing the improved labor market and the outlook for inflation and economic activity, she said, "I believe the case for an increase in the federal funds rate has strengthened in recent months".  That rather optimistic view was offset at almost the same time by the latest release of revised first and second quarter GDP from the BLS. The numbers hardly show an economy that is overheating. Second quarter GDP was revised down to just 1.1% and the first quarter GDP came in at an anemic 0.8%. Yes, the latest inflation numbers are getting close to the Fed's 2% target although even that is not a sure thing. But that 2% number is a target, not a cap, and there are many good arguments that higher inflation would actually be a good thing, as one Fed bank president has proposed. But maybe more importantly, wages have actually started to rise, putting more money in the hands of workers. And apparently the Fed just can't allow that to happen.

EpiPen Maker Price Gouges Before Monopoly Ends

Another quick follow up to the outrageous price hikes for EpiPens. It appears that Mylan, the company that makes EpiPens, settled a lawsuit in 2012 that would end its patent protection and allow a generic competitor in 2015. Mylan had already started to raise the price of the product before 2012, probably in anticipation of this settlement. And after the settlement, the price hikes increased in frequency. The company received even more good news when the generic was rejected by the FDA and its only other competitor had to be pulled from the market due to dosing problems, leaving Mylan with an absolute monopoly.

This has become pretty standard procedure with pharmaceutical companies whose products' patent protection is ending - massive price hikes in the last few years of monopoly power before a generic competitor arrives. I think everyone agrees that these firms should be give an opportunity to recoup the expenses of drug development. But having that monopoly power does not entitle a company to price-gouge. That is why regulating these monopolies is so important. Too bad our government can't be bothered to do it.

Uber Spends A Fortune To Build A Monopoly

I've certainly made my antipathy toward the gig economy and Uber in particular well known. Uber's basic business plan is to go into an area, violate the local rules and regulations, and hope that the service becomes so popular that local officials are afraid to shut it down. And, based on the most recent shareholders' conference call, it appears that the other part of their business plan is to expand into as many areas as possible as quickly as possible in the hopes of creating an impregnable monopoly. To that end, Uber has apparently lost $1.2 billion dollars in just the first two quarters of this year. The company pointed to heavy losses in their now-abandoned attempt to expand into China as well as a price war with its only real competitor, Lyft. Uber has now lost around $4 billion in its short seven year history. But don't worry about Uber too much - they have raised $16 billion so they have a few more years before they run through all that. But by far the most disturbing number in this latest report is that Uber believes that it controls somewhere around 85% of the market here in the United States. Does anyone believe that having one company in control of such a significant share of the market is going to work to the benefit of American consumers or workers? Me neither. It is really high time that antitrust laws in this country are actually enforced.

Jorge Ramos Reminds Us That We Will Be Judged

I have been giving a lot of what I think is deserved flak to the media for not aggressively pursuing Trump's refusal to release his taxes. Yes, I know that Trump gives us all something new and astounding to write about virtually every day. But like the refusal of Republicans to give Merrick Garland a hearing, Trump's refusal release his taxes is an attack on transparency and democracy. It sets a precedent that can only be detrimental going forward. I have also been critical of Republican leaders who still refuse to repudiate Trump even as his outrages continue and that history will judge them harshly for their cowardice.

Jorge Ramos is considered the Walter Cronkite of Spanish-language TV in America today. And Ramos sees Trump's actions and positions, not only on his taxes but also his racist and sexist remarks, as antithetical to American democracy. Ramos went on Fox News the other night and, in words far more eloquent than mine, laid down the gauntlet to the media, to the politicians, and to the American people regarding Trump. Here are his powerful words:

"It doesn’t matter who you are—a journalist, a politician or a voter—we’ll all be judged by how we responded to Donald Trump. Like it or not, this election is a plebiscite on the most divisive, polarizing and disrupting figure in American politics in decades. And neutrality is not an option. [...]
Regardless of whether Donald Trump wins or loses, we will be asked on November 9th: What did you do? Did you support him? Were you brave enough, ethical enough, to challenge him when he insulted immigrants, Muslims, women, war heroes and people with disabilities? Are you on the record correcting his lies? Did you discuss with your friends and family that in a democracy like ours there is no room for racism and discrimination? Or did you just seat idly, silently, allowing others to decide the future of the United States?
Because you will be asked.
Trump has forced journalists to revisit rules of objectivity and fairness. Just providing both points of view is not enough in the current presidential campaign. If a candidate is making racist and sexist remarks, we cannot hide in the principle of neutrality."

Connecticut Open - Kvitova And Wozniacki

 A few pictures of Petra Kvitova and Caroline Wozniacki from Monday at the Connecticut Open.

Does Mayor Ganim Actually Live In Bridgeport

Inquiring minds want to know if Mayor Joe Ganim actually lives in Bridgeport. Apparently Joe was recently caught renting his newly owned property in Black Rock, the area of Bridgeport hit hardest by Ganim's huge increase in the mil rate. The bylaws of the residential complex do not allow a business to be run out of the condos or short-term rentals. Unfortunately for Ganim, his sidelight was revealed when an out-of-town reporter who was writing an article about Connecticut politics actually rented the condo from Ganim through Airbnb. In addition, Ganim had claimed another condominium on Cartright Street as his primary address when he began his successful comeback into Bridgeport politics. But that condo is available as a rental on another website, hotpads.com. That leads to a disturbing question of where Joe actually lives considering both his properties are available for rent. Say it ain't so, Joe.

The Importance Of Trump's Taxes

Eric Trump says it would be foolish for his father to release his tax returns while he is supposedly under audit by the IRS. "There is no tax attorney in the world who will tell you to release your tax returns while you’re under a standard routine audit", says Eric. Eric goes on to further insult Americans by claiming, "You would have a bunch of people who know nothing about taxes trying to look through and trying to come up with assumptions on something they know nothing about." Apparently, Eric does not believe there are any Americans competent enough to analyze a tax return. Instead he suggests that the most important factor is not Trump's tax returns but at his assets. "You learn a lot more when you look at a person’s assets. You know how many hotels we have around the world? You know how many golf courses we have around the world?", says Eric. Actually we don't. We really have no idea whether Trump is merely a front man or whether he really has ownership interests in these worldwide properties. And that is why it would be nice to see Trump's taxes. Of course another good reason is that he is running for President of the United States and, as citizens, we should have a right to know what his financial profile actually looks like. Even though I doubt that this is the case, I think Americans have a right to know if Donald owes millions of dollars to Russian oligarchs, don't you? I would expect the same of every candidate running for President. There is no rule or regulation stopping Trump from releasing his taxes. And there are plenty of years of trump's taxes that even he admits are not under audit, but he still refuses to release those too.

The fact that Trump refuses to release his taxes should really automatically disqualify him from being President. And the media should pound away on this every single day. Because if Trump is allowed to get away with it this years, we may never see another candidate's taxes again. And that would be just one more blow to American democracy. 

Cost Of Insulin Reflects Runaway Capitalism

On Monday, we had the story of the skyrocketing price of EpiPen. Today's news is that even the cost of insulin has tripled between 2002 and 2012. Insulin has been around since the 1920s and is required for diabetics to properly maintain their blood sugar levels. Unlike the EpiPen, however, there are three large producers of insulin - Sanofi, Novo Nordisk, and Eli Lilly. Remarkably, all three of them manage to raise their prices in tandem in a move that is euphemistically known as "shadow pricing". In the past, this was known as price fixing and was, and probably still is, illegal. The rise in insulin prices highlight all that is wrong with the way drugs are priced in this country. All three companies manage to tweak their insulin products just enough to extend the lives of their patents, essentially blocking the creation of a "generic" insulin. But excessive patent protections aren't the only problem. There is a middleman between you and the drug producers and they are known as pharmacy benefit managers (PBMs). The PBMs are another oligopoly as three companies, ExpressScripts, CVS Health, and OptumRx, control over 80% of the market and service around 180 million insured people. They are supposed to use their market power to bargain for lower drug prices but, on the other hand, they are also for-profit companies, bringing in more than $200 million combined. The drug companies pay these PBMs "rebates" to encourage them to use their products. In the past, this was knows as either bribery or a kickback and was, and still is, illegal. So, rather than choosing the product with the lowest price, the PBMs actually have an incentive to choose the product that offers the largest rebate. In fact, although the amount of rebates is not, for some reason, publicly disclosed, it is estimated that over 50% of the cost of insulin is driven by the rebates the drug companies are offering. Of course, the benefits of those rebates do not get passed along to the consumer but are pocketed by the PBMs. So rather than lowering drug costs, PBMs are actually driving costs higher and lining their own pockets. The real answer is for the government to cap the costs of drugs like they do in every other developed country in this world. In Europe, for instance, the cost of insulin is about one-fifth of what it does here in the US.

To recap, we have two oligopolies that are driving the rising cost of insulin. The drug companies use their excessive patent protections to keep competitors off the market and PBMs dominate the insurance market, pocketing the cost savings that should be passed along to consumers. The drug companies are effectively price fixing and paying bribes or kickbacks to the PBMs who are happy to pocket these "savings". It really begs the question - are there any regulations to restrain these firms? Aggressive antitrust enforcement, restoring sensible patent protections, and prosecuting price fixing and bribery/kickbacks are clearly the answer if we really are interested in making sure consumers are not overpaying for the drugs they need to use. The tools are there if we choose to use them. Somehow I doubt our legislators are interested in that.

Court Rules Many Missouri Felonies Be Reduced To Misdemeanors Due To Error

Missouri has a real mess on its hands. On Tuesday, the Missouri Supreme Court ruled that, because of poor wording, the state's criminal code that designated certain types of crime associated with stealing as felonies was written in such a way that they did not apply to the original statue on stealing. Apparently, way back in 2002, the state amended the criminal code and added the designation of Class B and Class C felonies to "any offense in which the value of property or services is an element". Unfortunately, the statute that covers stealing makes no mention of the value of property or services, only "appropriate[ing] property or services of another." This means that anyone who was convicted of one of these felonies since 2002 will have the opportunity to have that sentence reduced to a misdemeanor. As the Missouri State Public Defenders Office noted in a memo, "This has implications for the statute of limitations (one year on a misdemeanor).  This has implications for convictions used to enhance. This has implications for inmates serving sentences for felonies." Unraveling all this for convictions under these felony statutes since 2002 is going to be a real chore. In addition, as the Defenders Office noted, there may also be repercussions for defendants who had their sentences for a subsequent crime upgraded because of the prior felony conviction, not to mention those who served jail time for a felony conviction under one of these statutes. How the state is going to compensate them is beyond me. But it won't be pretty. Thankfully for the state, a new criminal code goes into effect in 2017 and these items have been fixed, although that also seems to have happened by accident as no legislator seems to have been aware of the problem in the first place.

Today's Trump Lie

Yesterday on the O'Reilly Factor, Donald Trump claimed he had spoken to a top guy in the Chicago police and was told that he could stop the violence that has been plaguing Chicago in a week, if given the authority. Trump said, "I went to a top police officer in Chicago who is not the police chief, and he — I could see by the way he was dealing with his people, he was a rough, tough guy, they respected him greatly. I said, how do you think you do it? He said Mr. Trump, within one week we could stop much of this horror show that’s going on." Unfortunately, today the Chicago police responded by saying, "We've discredited this claim months ago. No one in the senior command at CPD has ever met with Donald Trump or a member of his campaign." So who did Trump talk to? Or is Trump having delusions? Maybe he's not mentally stable. Does he have a problem with the truth? Questions, questions. Of course, this is par for the course with the Trump campaign. And Republicans are still rallying behind this disaster. History is watching.

California Court Affirms Teacher Tenure Rules

In more good news for workers, the California Supreme Court refused to hear a suit that challenged the tenure rules for state teachers. The suit was brought by wealthy backers on the supposed behalf of poor and underserved students who they claim were being harmed by "bad" teachers who had received tenure. The suit was kind of a mess as the supposed plaintiffs were not taught by the ineffective teachers named, several of the plaintiffs attended schools that do not have teacher tenure, and one of the teachers named also happened to be teacher of the year in Pasadena. More likely, this suit was just another attempt to break the teachers' union and probably help the proponents of charter schools. In fact, a recent study showed that unionized school districts actually have higher teacher quality that non-unionized districts and are more likely to dismiss poor quality teachers. But that won't stop the proponents of this suit - they vow to take their case to the legislature next year. If they were really concerned about the poor and minority students as they claim, they would focus on the huge disparity in education resources that exist between districts, primarily due to inequality in wealth. Erasing this inequality, perhaps by even, God forbid, taking money from wealthier districts in order to provide more resources for poorer ones, would do far more for the students they claim to care about than getting rid of a few bad teachers.

White Collar Workers Push To Unionize

Workers got a couple of pieces of good news today, courtesy of the Obama administration and the National Labor Relations Board (NLRB). I've been a fan of Tom Perez over at the Labor Department, even pushing him for Hillary's VP choice. And he has come through for workers once again with a new regulation that prohibits firms who have had recent violations of labor law from receiving federal contracts. Specifically, the rule states that a company would be forced to disclose if it had violated workplace safety, workplace discrimination, labor organizing rights, or minimum wage and overtime laws in the prior three years. The disclosure would be required if there was official finding by a federal agency, a judgment from a court or an arbitration award and only the most egregious violations would result in a firm being ineligible for the contract.

And on Tuesday, the NLRB ruled that grad students who work as research and teaching assistants at private universities have the right to unionize. This ruling overturned a 2004 ruling by the NLRB that deemed the grad students as primarily having an educational as opposed to an economic relationship with their universities and therefore had no federal right to unionize. For years, teaching and research assistants have felt that these private universities were never properly compensating them for the increasing time and responsibilities.

In a strange twist, white collar workers are showing more and more interest in unionizing to combat the abusive corporate environments they work in even as blue collar union jobs continue to decline. Just today, the staff at Law360 voted to unionize, joining digital media workers at Salon, Vice, ThinkProgress, The Guardian, Huffington Post, and the now-defunct Gawker and Al Jazeera America. For many of these workers including the grad students, the issue is not necessarily about money but rather a recognition that, without a union, all the power resides with the company. Hopefully, this trend will continue and expand into other white collar industries as a response to corporate abuse and the outrageous compensation differences between top executives and the people who actually do all the work.

Tantaros' Suit Expands Problems For Fox And Murdochs

I have been skeptical that Fox News could endure the Roger Ailes' scandal without a thorough house-cleaning as is it was pretty clear that the culture at the company reflected the man at the top. And now a new lawsuit filed by former host Andrea Tantaros has specifically implicated not only Ailes but other senior top executives at Fox. In addition to Ailes, Tantaros also lists Fox News, newly appointed leader of Fox, Bill Shine, general counsel Dianne Brandi, and two other Fox executives as defendants. The suit not only makes claims of sexual harassment against Ailes as well as accusing Fox employees such as Scott Brown and Bill O'Reilly of inappropriate behavior but also claims that the company retaliated against her when she turned down Ailes' advances by moving her to a less prestigious time slot, leaking unflattering information about her, and undermining her career in other ways. Tantaros described the environment at Fox "like a sex-fueled, Playboy Mansion-like cult, steeped in intimidation, indecency and misogyny." The accusations against Shine and Brandi are hardly surprising. As general counsel, Brandi had to have been involved with the settlements that Fox paid out to silence some of Ailes' victims. And Shine was also tangentially implicated in the tragic abuse of Laurie Luhn which is why it was so surprising that the Murdochs made Shine part of the new leadership team. They may regret that decision now, especially if Shine is subsequently forced to step down as result of this suit or any new revelations the suit brings. If, in fact, that does happen, maybe the Murdochs will finally get the message and clean house at Fox.

Follow Up On EpiPen Price Hikes

A quick follow-up to yesterday's post about the rising cost of EpiPens. It turns out that the CEO of Mylan, the company that currently makes the EpiPen and has raised the price of the item by over 600% since 2009, is Heather Brescher. Brescher is the daughter of Democratic Senator Joe Manchin of West Virginia. And as the price of the EpiPen has risen, so has Brescher's compensation. In 2007, she was paid nearly $2.5 million in 2009 and today she makes nearly $19 million. Brescher was also involved in another seeming unethical ploy back in 2008. Mrs. Brescher was awarded an MBA from West Virginia University (WVU) even though she did not have enough academic credits to earn that degree. As it turned out, Mr. Brescher was a long time friend of the president of WVU who was subsequently force to resign when the scandal came out. It should also be noted that the former CEO of Mylan was not only a major contributor to Senator Joe Manchin but also the largest donor to WVU, which also may have influenced the decision to award Mrs. Brescher her degree.

This is another classic example of price-gouging that has become commonplace in the health care and pharmaceutical industries. When companies have a monopoly on a certain product or drug, there is nothing to stop them from these outrageous price increases. And restrictive patent laws just add to these companies' monopoly power. Yes, I know the pharmaceutical companies say that the research for new drugs is outrageously expensive and they need "protection" in order to recoup their expenses. But EpiPens have been around a long time and they are essentially a delivery device. And other drugs that have seen tremendous price increases are basically drugs that are very specialized and do not have a wide market, allowing one make to dominate the market. The costs for these drugs' development have been recouped long ago. But people like Heather Brescher come in, buy these products, and then jack up the prices. If there isn't some kind of regulation to rein in these health-profiteers, then there should be.

EpiPen Prices Result Of Near Monopoly Power

While I'm going on about the corruption in the US economy, I guess I should also mention the patent and copyright protections that many companies enjoy long after those protections should have run out. Nowhere is the problem more sever than in the prescription drug sector. Today, we find that the cost of an EpiPen, a lifesaving device for people with severe allergies, has risen dramatically in the last seven years. In 2009, a two-pen set (the recommended number for an individual at risk to carry) cost a little over $100 and the pens expire after one year requiring users to refill annually. By this May, that price had spiked to over $600. The EpiPen is a product that has been around for decades and in 2009 Mylan acquired the product. Since then, the price of the product has risen 600%. The company blames high deductible insurance policies and point out that they offer a $100 coupon for the product. But that still does not cover the entire cost of the drug for the people who need it. A competing product Auvi-Q was recently pulled from the market due to dosing concerns and leaving the Mylan product as the only one available. But prices hikes began long before their competition withdrew - the rise in prices is a clear result of only having one or two businesses in a particular market and a company that is bent on exploiting that position.

Conservative Dream In Kansas Is Reality Nightmare

The conservative dream world that Sam Brownback has built in Kansas has turned out to be a nightmare for the people who actually have to live there. Brownback, with input from that infamous economist Arthur Laffer, slashed taxes and promised that this would unleash a torrent of new jobs and increase revenues for the state. Unfortunately, the only torrent that has been unleashed is a tsunami of debt and the increase in jobs has been virtually non-existent. In July, Kansas' unemployment rate actually increased by 0.3% as the state lost over 5,500 jobs. This has come on top of 4% cuts in services across the state that merely mitigated the deficits the state was running up. And a slowing economy probably means even less revenue for the state and increasing deficits.

Arthur Laffer has been spouting his theory that reducing tax rates can somehow generate more revenue for nearly 3 decades now. But there is virtually no real world evidence of this ever taking place. Studies have shown that it might possibly occur when tax rates are at 70% or 80% and they are cut somewhat below that. But the majority of citizens in the US have never faced tax rate that high and the absolute top earners in the US haven't seen tax rates like that in half a century. There is no evidence that cutting rates when they are already below 50% or 60% have ever increased revenue. In fact, the evidence has shown that it merely reduces government income and feeds an increasing debt. Most economists agree with George H. W. Bush that it is simply "voodoo economics". It is time to put this myth to an end once and for all and call the curve by its more appropriate name - the Laugher Curve. And anyone who dares invoke it again should be laughed right out of the room.

GOP Is Responsible For White House Reality Show

Since I seem to be on a rant today, I might as well just keep on going. Donald Trump is not an aberration who somehow managed to come in and take over the Republican party. He is a creation of that party and they alone are responsible for him. From Nixon's Southern strategy and "silent majority", to the Willie Horton ad for G.H.W. Bush, to the Gingrich revolution, to Fox New,. Trump is the eventual result of that path that the party chose to take. And ever since the Gingrich revolution, the Republican party has been breaking the bonds of democracy in this country in astounding ways - impeaching a President for a personal affair, shutting down the government multiple times, organizing a "riot" to keep votes in Miami-Dade county from being re-counted in the 2000 election, using the Justice Department to impede investigations of Republicans and target Democrats, not giving a hearing to a Supreme Court nominee, and now, apparently, the Republican nominee is refusing to release his tax returns. The press, especially the corporate media, has been entirely complicit in allowing the Republicans to get away with these breaches without paying a significant price. In fact, their usual approach is that "both sides do it". Well Democrats have not impeached a President, they have not shut down government, they have given fair hearings and a vote to every Supreme Court nominee, and they do release their tax returns. But let's be clear, the real issue lies within the Republican party and its continual willingness to break the unwritten rules of democratic behavior. And it has led us to this - apparently Donald Trump has been in contact with NBC about continuing to run the Apprentice from the Oval Office if Trump is elected. That is right - Trump had to withdraw from the show during the campaign due to election law; but if he is elected, there is apparently nothing stopping him from continuing to host the show from the Oval Office. And he has actually discussed this with NBC. This is where the Grand Old Party has taken us - to a reality show run out of the White House. And they constantly talk about the integrity of the office, while denigrating any Democratic man or woman who would dare to hold it. For those Republicans who continue to support Donald Trump - yes, I mean you Paul Ryan and Mitch McConnell - history is watching and it will not be a kind judge.

The Corruption Of The US Economy - A Rant

Last Wednesday, I had four posts that illustrated various problems with our economy. The first post was about Aetna withdrawing from Obamacare exchanges apparently as payback for their merger with Humana being blocked on antitrust grounds. Aetna is one of the five health care companies that control over 80% of the health care insurance market in the US. Just like the Wall Street banks, these oligopolies have become so powerful that they can virtually do whatever they want and basically dare the government to rein them in.  Aetna's astounding letter to the DOJ essentially amounted to an extortion attempt in order to allow their merger to go through. The oligopolies largely collude with each other legally, and sometimes illegally, and make sure that no new competitors can be significant players in their industry. This reduces competition and actually makes the price of their products higher than they should be.

The second involved the CFTC essentially giving Steve Cohen, the head of the disgraced insider trading firm of SAC Capital, a slap on the wrist. This case perfectly illustrates that due to the wording and interpretation of the law, most white-collar criminals essentially get off without paying any significant price at all. When you compare the draconian sentences given for what are essentially minor drug crimes, the contrast is astounding. Time and again, executives are caught making millions of dollars illegally and suffer no serious punishment. Occasionally, firms will be fined but compared to their bottom lines, those fines amount to nothing. The lack of any significant prosecutions of Wall Street executives after the financial crisis is as good an indication as any of the futility of our current laws in properly regulating business. And in those industries controlled by oligopolies, the abuses continue with impunity. They will not change their behavior until they can be shown that there will be a real price to pay.

The third post was about a proposal in Arlington, Virginia to replace some bus service with Uber and Lyft ride-sharing services. This has become increasingly common since the Carter and Reagan years when the privatization of the commons began.  The privatization of government activities has rarely been a success for citizens and taxpayers, but it has been a bonanza for the companies that took over those functions. Privatization failures abound, from private prisons which are less safe and less healthy for inmates, to private contractors in the military who stole millions in Iraq and Afghanistan and managed to commit war crimes at the same time, to the privatization of parking meters and toll roads that have raised costs for citizens, lowered the pay of workers, and lined the pockets of those companies managing those services.

And the last post was how Donald Trump managed to pay pennies on the dollar for nearly $30 million in back taxes and interest owed to the state of New Jersey. This is crony capitalism at its worst. In many ways, it is linked to the ineffective laws that allow Steve Cohen to get away with a slap on the wrist. There is a reason those laws are ineffective. Similarly, wealthy individuals, large firms, especially those in oligopolies like Aetna, and politically connected companies like Uber are able to bend government to their will.  Groups like ALEC represent business and essentially write legislation that gets adopted word for word, sometimes without even being read.

All these examples expose the problems with the US economy these days. Conservatives always like to say that government should stay out of business. But the real problem is that business should stay out of government. Oligopolies like Aetna wield way to much economic and political power that abets criminal activity and a warping of the system to their advantage. That power also allows them to limit the legal price they pay for their illegal behavior. Either through regulatory capture or political connections, they get government to help them line their own pockets or avoid paying what they owe. And all this will be done under the banner of the free market. It is exactly the opposite - all these actions are meant to ensure that there is no challenge to their market dominance. All this means higher costs, lower wages, and worse service for American citizens. And it is doubtful that anything will change until we break up the oligopolies and restore some real punishment for businesses that are serial offenders.

Elite Universities Allowed Employees To Be Ripped Off In Retirement Plans

For educational institutions of higher learning, some of our elite colleges seem to have a pretty difficult time making sure their employees are not getting ripped off in their retirement plans. MIT, Yale, and NYU have all been sued in a class action case that claims that the universities allowed their employees to be charged excessive management fees for their retirement plans. The suit involves 403(b) plans which are similar to 401(k) plans but for nonprofit institutions. The allegations claim that the universities, as the retirement plan sponsors, failed to make sure the employees were not being charged excessive fees. The universities also failed to remove clearly non-performing funds with higher fees for equivalent or higher performing funds with lower fees. In addition, the schools sometimes had multiple record-keepers that resulted in higher administrative fees for employees. The suit claims that the universities cost employees tens of millions of dollars if they had used their bargaining power to reduce fees and pared their investment options.

MIT, in particular, was singled out for its use of Fidelity for its retirement plan. The university did not conduct a search for a provider that could have provided the best services for less but simply just chose to use Fidelity. Fidelity had donated hundreds of thousands of dollars to MIT and Fidelity's chief executive also sat on the MIT Board of Trustees, allowing her to influence the university's decision. The Fidelity plan offered an incredible 340 investment options of which over half were Fidelity funds. Had the university offered a pared down list of investment options, participants would have saved more than $8 million in 2014 alone. Yale and NYU had a similar problem with large investment options but also had the additional issue of multiple record keepers. The suit makes no allegation about why that may have occurred, but I don't think anyone would be shocked to find out that some of those record keepers had principals who were alumnae and/or donors to the universities.

Even at these bastions of supposed liberalism, the treatment of employees seems to be no better than in the private sector. If anything, employee retirement plans should be an area that should be closely monitored for performance and fees. It is, after all, your employees' future at stake. But, even at these prestigious universities, it is just another opportunity for Wall Street to rip off the little guy with the schools as apparently willing enablers. Hopefully, this suit will be a wake-up call for not only non-profits but also the private sector to make sure their retirement plans are fair and efficient.