The Fiscal Financial Cliff Was Created To Protect Millionaires And Billionaires This Was A Win Win For The 1%

The Fiscal Financial Cliff Was Created To Protect Millionaires And Billionaires This Was A Win Win For The 1%.

Would tea party accept a Bill Clinton-brokered deal with Obama?

Would tea party accept a Bill Clinton-brokered deal with Obama? (via The Christian Science Monitor)

Following the decisive victory by the man they vowed three-and-a-half years ago to pry out of the White House, the antigovernment tea party movement found itself reassessing its role within a fractured Republican Party that faced broad electoral disappointments on Election Day. President Obama’s…

A Rare Look at Why The Government Won’t Fight Wall Street | Matt Taibbi | Rolling Stone

A Rare Look at Why The Government Won't Fight Wall Street | Matt Taibbi | Rolling Stone.

The great mystery story in American politics these days is why, over the course of two presidential administrations (one from each party), there’s been no serious federal criminal investigation of Wall Street during a period of what appears to be epic corruption. People on the outside have speculated and come up with dozens of possible reasons, some plausible, some tending toward the conspiratorial – but there have been very few who’ve come at the issue from the inside.

We get one of those rare inside accounts in The Payoff: Why Wall Street Always Wins, a new book by Jeff Connaughton, the former aide to Senators Ted Kaufman and Joe Biden. Jeff is well known to reporters like me; during a period when most government officials double-talked or downplayed the Wall Street corruption problem, Jeff was one of the few voices on the Hill who always talked about the subject with appropriate alarm. He shared this quality with his boss Kaufman, the Delaware Senator who took over Biden’s seat and instantly became an irritating (to Wall Street) political force by announcing he wasn’t going to run for re-election. “I later learned from reporters that Wall Street was frustrated that they couldn’t find a way to harness Ted or pull in his reins,” Jeff writes. “There was no obvious way to pressure Ted because he wasn’t running for re-election.”

Kaufman for some time was a go-to guy in the Senate for reform activists and reporters who wanted to find out what was really going on with corruption issues. He was a leader in a number of areas, attempting to push through (often simple) fixes to issues like high-frequency trading (his advocacy here looked prescient after the “flash crash” of 2010), naked short-selling, and, perhaps most importantly, the Too-Big-To-Fail issue. What’s fascinating about Connaughton’s book is that we now get to hear a behind-the-scenes account of who exactly was knocking down simple reform ideas, how they were knocked down, and in some cases we even find out why good ideas were rejected, although some element of mystery certainly remains here.

There are some damning revelations in this book, and overall it’s not a flattering portrait of key Obama administration officials like SEC enforcement chief Robert Khuzami, Department of Justice honchos Eric Holder (who once worked at the same law firm, Covington and Burling, as Connaughton) and Lanny Breuer, and Treasury Secretary Tim Geithner.

Most damningly, Connaughton writes about something he calls “The Blob,” a kind of catchall term describing an oozy pile of Hill insiders who are all incestuously interconnected, sometimes by financial or political ties, sometimes by marriage, sometimes by all three. And what Connaughton and Kaufman found is that taking on Wall Street even with the aim of imposing simple, logical fixes often inspired immediate hostile responses from The Blob; you’d never know where it was coming from.

In one amazing example described in the book, Kaufman decided he wanted to try to re-instate the so-called “uptick rule,” which had existed for seventy years before being rescinded by the SEC in 2007. The rule prevents investors from shorting a stock until the stock had ticked up in price. “Forcing short sellers to wait for the price to tick up before they sell more shares gives a breather to a stock in decline and helps prevent bear raids,” Connaughton writes.

The uptick rule is controversial on Wall Street – I’ve had some people literally scream at me that it doesn’t do anything, while others have told me that it does help prevent bear attacks of the sort that appeared to help finally topple already-mortally-wounded companies like Bear Stearns and Lehman Brothers – but what’s inarguable is that Wall Street hates the rule. Hedge fund types or employees of really any company that engages in short-selling will tend to be most venomous in their opinions of the uptick rule.

Anyway, Connaughton and Kaufman were under the impression that new SEC chief Mary Schapiro would re-instate the uptick rule after taking office. When she didn’t, Kaufman wrote her a letter, asking her to take action. When that didn’t do the trick, he co-sponsored (with Republican Johnny Isakson) a bill that would have required the SEC to take action.

Nothing happened, and months later, Kaufman gave a grumbling interview to Politico about the issue. One June 30, the paper’s headline read: “Ted Kaufman to SEC; Do Your Job.”

The next day, the Blob bit back. Connaughton was in the basement of the Russell building when a Senate staffer whose wife worked for Shapiro shouted at him. From the book:

“Hey, Jeff, you’re in the doghouse.” He meant: with his wife.

“Why?” I asked.

“That Politico piece by your boss.”

I was taken aback but tried to downplay the matter. “We just want the SEC to get its work done.”

“Remember,” he said. “We all wear blue jerseys and play for the Blue Team. I just don’t think that helps.”

When Connaughton told Kaufman over the phone what the staffer said, Kaufman exploded. “You call him back right now and tell him I said to go fuck himself in his ear,” Kaufman said.

Similarly, when Kaufman tried to advocate for rules that would have prevented naked short-selling, Connaughton was warned by a lobbyist that it would be “bad for my career” if he went after the issue and that “Ted and I looked like deranged conspiracy theorists” for asking if naked short-selling had played a role in the final collapse of Lehman Brothers. Naked short-selling is another controversial practice. Essentially, when you short a stock, you’re supposed to locate shares of that stock before you go out and sell it short. But what hedge funds and banks have discovered is that the rules provide “leeway” – you can go out and sell shares in a stock without actually having it, provided you have a “reasonable belief” that you can locate the shares.

This leads to the obvious possibility of companies creating false supply in a stock by selling shares they don’t have. Without getting too much into the weeds here, there is an obvious solution to the problem, which essentially would be forcing companies to actually locate shares before selling them. In their attempt to change the system, Kaufman and Connaughton discovered that the Depository Trust Clearing Corporation, the massive quasi-private organization that clears most all stock trades in America, had come up with just such a fix on their own. Kaufman recruited some other senators to endorse the idea, and as late as 2009, Connaughton and Kaufman were convinced they were going to get the form. “I said to Ted, ‘We’re going to change the way stocks are traded in this country.'”

But before the change could be made, Goldman, Sachs issued “data” showing that there was “no correlation” between naked short selling and price movements. When Connaughton asked an Isakson staffer what the data said, the staffer, intimidated by Goldman, replied, “The data proves we’re full of shit.” Connaughton looked at the data and realized instantly that it was a bunch of irrelevant gobbledygook, even firing off an angry letter to Goldman telling them the tactic was beneath even them.

But Goldman’s tactic worked. A roundtable to discuss the idea was scheduled by the SEC on September 24, 2009. Of the nine invited participants, “all but one” were for the status quo. Connaughton expected the DTCC representatives to unveil their reform idea, but they didn’t:

Afterwards, I went over to [the DTCC representatives] and asked, “What happened?” Sheepishly, and to their credit, they admitted: “We got pulled back.” They meant: by their board, by the Wall Street powers-that-be.

Essentially the same thing happened in Kaufman’s biggest reform attempt, the amendment to the Dodd-Frank bill he co-sponsored with Ohio’s Sherrod Brown, which would have broken up the Too-Big-To-Fail banks. But the Brown-Kaufman amendment, which was really the meatiest thing in the original Dodd-Frank bill, the one reform that really would have made a difference if it had passed, just died in the suffocating mass of the Blob. The key Democrats one after another failed to line up behind it, and in the end it was defeated soundly, with Dick Durbin, the number two man in the Democratic leadership, giving it this epitaph: “a bridge too far.”

Again, those interested in understanding the mindset of the people who should be leading the anti-corruption charge ought to read this book. It’s the weird lack of concern that shines through, like Khuzami’s comment that he’s “not losing sleep” over judges reprimanding his soft-touch settlements with banks, or then Southern District of New York U.S. Attorney Ray Lohier’s comment that the thing that most concerned him – this is the period of 2008-2009, the middle of a historic crimewave on Wall Street – was “cyber crime.”

On the outside we can only deduce the mindset from actions and non-actions, but Connaughton’s actually seen it, and with the book you get to see it too. It’s scary and definitely worth a read.

Read more: http://www.rollingstone.com/politics/blogs/taibblog/a-rare-look-at-why-the-government-wont-fight-wall-street-20120918#ixzz26sqMxULA

Rising gas prices crimp Americans’ spending – Yahoo! News – The Fed doesnt have an answer

Rising gas prices crimp Americans' spending – Yahoo! News.

WASHINGTON (AP) — Higher gas prices are crimping consumer spending and slowing the already-weak U.S. economy. And they could get worse in the coming months.

The Federal Reserve this week took steps to boost economic growth. But those stimulus measures are also pushing oil prices up. If gas prices follow, consumers will have less money to spend elsewhere.

The impact of the Fed’s actions “is likely to weigh on the value of the U.S. dollar and lift commodity prices,” said Joseph Carson, U.S. economist at AllianceBernstein. “We would not be surprised if (it) fueled more inflation in coming months, squeezing the real income of U.S. workers.”

Americans are already feeling pinched by high unemployment, slow wage growth and higher gas prices.

Consumers increased their spending at retail businesses by 0.9 percent in August, the Commerce Department reported Friday. But that was largely because they paid more for gas. Excluding the impact of gas prices and a sizeable increase in auto sales, retail sales rose just 0.1 percent.

Perhaps more telling is where Americans spent less. Consumers cut back on clothing, electronics and at general merchandise outlets — discretionary purchases that typically signal confidence in the economy.

Gas prices have risen more than 50 cents per gallon in the past two months. The national average was $3.87 a gallon on Friday. Most of the increase took place in August, which drove the biggest one-month increase in overall consumer prices in three years, the Labor Department said Friday in a separate report.

“Consumers were not willing to spend much at the mall since they are feeling the pump price pinch,” said Chris Christopher, an economist at IHS Global Insight.

Weaker retail sales will likely weigh on growth in the July-September quarter. Economists at Bank of America Merrill Lynch slashed their third-quarter growth forecast to an annual rate of only 1.1 percent, down from 1.5 percent. That’s not nearly fast enough to spur more hiring, which has languished since February.

The Fed is hoping to kick-start growth with a series of bold steps announced Thursday that could make borrowing cheaper for years.

It plans to spend $40 billion a month to buy mortgage bonds to make home buying more affordable. It also pledged to keep short-term interest rates near zero through at least mid-2015.

And Fed Chairman Ben Bernanke said the Fed will continue its efforts — and intensify them if necessary — until the job market improves “substantially.”

The announcement ignited a two-day stock market rally that sent the Dow Jones industrial average to its highest level since December 2007, the first month of the Great Recession.

But the Fed’s actions also helped move oil prices briefly above $100 a barrel Friday for the first time since May. They fell back slightly, but were still up 74 cents to $99.04 a barrel in mid-afternoon trading.

Carson noted that the Fed’s previous rounds of bond-buying pushed up commodity prices and fueled greater inflation. That weakened the ability of U.S. consumers to spend and likely slowed growth, he said.

He expects the same thing to happen again.

The Fed’s moves can push up oil prices in several ways. The Fed creates new money to pay for its mortgage bond purchases. That increases the amount of dollars in circulation and can lower their value. Oil is priced in dollars, so the price tends to rise when the dollar falls. That’s because it costs more for overseas investors to purchase dollars to buy oil.

Lower interest rates also push investors out of safer assets, such as bonds, and into riskier investments, such as oil, in hopes of a greater return. And if the Fed’s moves accelerate growth, that would increase demand for oil and gas and also raise their prices.

Higher gas prices are eating up a bigger share of Americans’ incomes than in previous years. Spending at the pump accounts for 8.2 percent of the typical family’s household income, according to Fred Rozell of the Oil Price Information Service. That’s just below last year’s 8.3 percent.

Those represent the biggest slice of household income spent on gas since 1981. The typical household spends about $342 per month on gasoline. Before gasoline prices began rising in 2004, households spent less than $200 per month, Rozell said, under 5 percent of median income.

Average gas prices are higher this year than last year. But Americans are using less by driving more fuel-efficient cars and driving less.

Meanwhile, average wages, adjusted for inflation, have been flat for the past year, the Labor Department said Friday. That adds to the squeeze on consumers.

One silver lining is that weakness should eventually push prices back down, economists note. That’s because people cut back on oil and gas consumption when prices rise.

“Unless the economic data rapidly improve, the gains in oil … prices are unlikely to be sustained,” Julian Jessop, an analyst Capital Economics, said.

__

AP Energy Writer Jonathan Fahey contributed to this report from New York.

Health Care Premiums Rise Modestly, Report Says – NYTimes.com

Health Care Premiums Rise Modestly, Report Says – NYTimes.com.

A family with employer-provided health insurance now pays just under $16,000 in annual premiums, an increase of about 4 percent over a year ago, according to a study released Tuesday by the nonprofit Kaiser Family Foundation.

Individual policies purchased through an employer rose even less, increasing just 3 percent from last year to an average of $5,615, the study said.

“It is a year of very moderate increases in premiums and health care costs,” said Drew Altman, the chief executive and president of Kaiser, which tracks health care spending. The foundation surveys more than 2,000 small and large employers each year.

The increase, to $15,745 from $15,073, contrasts with the 9 percent increase Kaiser reported from 2010 to 2011, which gave rise to concerns that health care spending might begin rising rapidly again.

Kaiser said the lower premiums were a sign that the rise in health care costs continued to be modest. But the study’s authors were cautious about the explanation, wondering whether the smaller increases in recent years signaled the start of a long-term trend or were simply the result of a slow economy.

“We don’t know if health care premiums and costs will shoot back up and by how much when the economy improves,” Mr. Altman said. Insurers generally base the premiums they charge on what they expect the health care costs of their members will be.

Analysts generally agree that the deep recession and the sputtering recovery have helped keep health care spending — and insurance premiums — lower than the double-digit increases experienced in 2004 and before. In 2002, for example, Kaiser reported a 13 percent jump.

Part of the reason, they say, is that many consumers have decided not to go to the doctor or have elective surgery during the downturn because of higher out-of-pocket costs.

About half of workers covered by employers now have a deductible of at least $1,000 for individual policies. In 2007, only 21 percent of workers had deductibles that high, according to Kaiser. The study is being published online by the journal Health Affairs.

The report also looked at differences between how much employees are paying for premiums in companies where at least 35 percent of workers earn $24,000 or less a year, compared with how much employees are paying where at least 35 percent of workers earn $55,000 a year.

Employers typically ask workers to pay some share of the overall premium cost out of their paychecks.

Kaiser found that workers at places with more low-wage employees paid on average $1,000 more in premiums than those working at places employing more higher-earning workers. The low-wage employees paid, on average, nearly $5,000 for their share of premiums, while higher-earning individuals paid about $4,000, on average.

Paul Ginsburg, the president of the Center for Studying Health System Change, a nonpartisan research group, cautioned against reading too much into survey results for any one year, especially since last year’s findings by Kaiser may have been high.

But, over all, he said, health care spending seemed to be relatively stable. “Recession and the slow recovery are probably the principal factor,” he said.

Some insurance executives are also cautious about predicting that health care spending will not rise rapidly, once the economy recovers. Many have been surprised at how much people have reduced their doctor visits. “I didn’t think I would see utilization this low, either,” said Janice Knight, an executive for Health Care Service Corporation, which operates Blue Cross Blue Shield health plans in states like Illinois and Texas.

Others speculate that there could be something more going on as both patients and doctors adapt to changes stemming from the federal health care law and a determination by private insurers to keep spending down.

When asked to share more of the cost of a branded prescription drug, for example, consumers were more willing to use generic medications, and the Affordable Care Act has numerous provisions that help rein in costs, said David Cutler, a health economist at Harvard University. “The slow economy is only part of it,” he said.

“Every data point makes me more likely to believe that this a fundamental change rather than just a temporary change,” said Mr. Cutler.
A version of this article appeared in print on September 12, 2012, on page B1 of the New York edition with the headline: Health Care Premiums Rise Slightly.

News Wrap: Paul Ryan Attacks President Obama’s Economic Record in Iowa | PBS NewsHour | Sept. 5, 2012 | PBS

News Wrap: Paul Ryan Attacks President Obama's Economic Record in Iowa | PBS NewsHour | Sept. 5, 2012 | PBS.

Transcript

KWAME HOLMAN: Republicans today offered their own critical take on the Democratic Convention. In Adel, Iowa, vice presidential candidate Paul Ryan said tonight’s main speaker, former President Bill Clinton, will try to shift attention from Mr. Obama’s economic record.

REP. PAUL RYAN (R-Wi.), Vice Presidential Candidate: We’re going to hear a lot of things in Charlotte, but we’re not going to hear a convincing argument that we’re better off than we were four years ago.
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We’re going to hear from President Clinton tonight in Charlotte. My guess is, we will get a great rendition of how good things were in the 1990s, but we’re not going to hear much about how things have been in the last four years.

KWAME HOLMAN: Meanwhile, Republican presidential nominee Mitt Romney continued debate preparations at a private home in Vermont. However, he took a quick trip to an appliance store in nearby Lebanon, New Hampshire, where he spoke with supporters about the needs of small business.

Wall Street hesitated today, after a profit warning from the shipping giant FedEx. The company says it’s being hurt by a slowdown in business, the latest sign that the global economy is dialing back. That was enough to keep stocks in check. The Dow Jones industrial average gained 11 points to close at 13047. The Nasdaq fell five points to close at 3069.

The passage of Hurricane Isaac has exposed oil from the 2010 spill along the Louisiana and Alabama coastline. BP acknowledged today that the oily tar came from its record-breaking leak at a Gulf well site. The tar balls and mats had been buried under sand since then, but reappeared after the hurricane caused severe beach erosion. Louisiana has closed one stretch of beach and restricted fishing.

The government of Syria came under new pressure today from two former allies. Turkish Prime Minister Recep Tayyip Erdogan accused the Syrian regime of terrorism. He also criticized the

United Nations for not doing enough to stop the killing of Muslims.

RECEP TAYYIP ERDOGAN, Turkish Prime Minister (through translator): The regime has become one of state terrorism. It is now in that situation. Since March 2011, the number of those who have been massacred and martyred in Syria is now almost 30,000. In Syria, the massacres that are empowered by the indifference of the internal community, especially the U.N. Security

Council, are continuing increasingly.

KWAME HOLMAN: In Cairo, Egypt’s President Mohammed Morsi also denounced Syria. He called again for President Bashar al-Assad to step down. Meanwhile, The New York Times cited reports that Iraq is again allowing Iran to use its airspace to fly weapons to the Syrian regime.

The Iraqis had shut down the air corridor earlier this year, under U.S. pressure.

A former police chief who touched off a major scandal in China has been charged with defection, taking bribes and abusing his power. State media announced the charges against Wang Lijun today. In February, Wang briefly took refuge at a U.S. Consulate after being demoted as police chief in a city in Southwestern China. That led to the ouster of Bo Xilai, his former boss, as Communist Party leader there. Bo is still under investigation.

Last month, Bo’s wife, Gu Kailai, was given a suspended death sentence for the murder of a British businessman.

In Afghanistan, the military announced today it has arrested or expelled hundreds of soldiers, as part of an effort to stop so-called insider attacks on foreign troops. The attacks come as the U.S. tries to continue its plan to transition out of Afghanistan.

Margaret Warner has the story.

MARGARET WARNER: On a pre-convention swing through Virginia yesterday, President Obama again touted his plans to end the Afghan war.

PRESIDENT BARACK OBAMA: This November, you get to decide the future of the war in Afghanistan. By the end of this month, I will have brought home 33,000 troops.

(CHEERING AND APPLAUSE)

PRESIDENT BARACK OBAMA: I have said we will end this war in 2014.

MARGARET WARNER: But a linchpin of that promise, to train Afghan forces to take over the fight, faces a new challenge; 45 NATO troops have been killed this year by Afghan troops, 15 just last month, all this just two years before a planned handover of security to full Afghan control.

U.S. and Afghan officials have vowed to fix the problem. And, in Kabul today, a Defense Ministry spokesman said hundreds of Afghan forces have been fired or detained for showing links with insurgents.

GEN. MOHAMMAD ZAHIR AZIMI, Spokesman, Afghan Defense Ministry (through translator): All the Afghan security forces were ordered to use all of their resources in hand to prevent these kinds of incidents.

MARGARET WARNER: And last weekend, the U.S. military suspended training for 1,000 new recruits in special village-based Afghan local police units being tutored by American special forces.

U.S. Army Lieutenant General James Terry said today about a quarter of the insider attacks can be blamed on insurgent infiltrators or their sympathizers. The rest, he said, stem from personal vendettas and cultural miscommunication.

LT. GEN. JAMES TERRY, Commander, ISAF Joint Command: We also understand that a lot of grievances and dispute resolutions are done, frankly, at the barrel of a gun out there.

MARGARET WARNER: Though the U.S. is re-vetting all 16,000 Afghan local police forces, it’s unclear how many of the total 350,000 Afghan troops will be re-screened.

6 Worst Lies In Paul Ryan’s Speech

6 Worst Lies In Paul Ryan’s Speech.

en on Aug 30, 2012 at 9:36 am

Vice presidential candidate Rep. Paul Ryan (R-WI) is taking flack on the morning news shows for his keynote address at the Republican National Convention Wednesday night. His speech was riddled with false claims, so much so that even Fox News wrote, “To anyone paying the slightest bit of attention to facts, Ryan’s speech was an apparent attempt to set the world record for the greatest number of blatant lies and misrepresentations slipped into a single political speech.”

Here are the most glaring lies from his speech:

1. “A downgraded America.” Ryan blamed the president for the nation’s credit downgrade in August 2011 after Republicans threatened to allow the government to default on its debt for the first time in history. But the ratings agency explicitly blamed “Republicans saying that they refuse to accept any tax increases as part of a larger deal.”

2. “More debt than any other president before him, and more than all the troubled governments of Europe combined.” Romney has made the almost identical claim, that Obama has amassed more debt “as almost all of the other presidents combined.” But their math doesn’t add up: when Obama took office, the national debt was $10.626 trillion. It has increased to slightly above $15 trillion.