The Declaration of Independence…

The Declaration of Independence

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume, among the Powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shown, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

Dear Americans…(OLD, Author Unknown)

Originally posted on Corporate Whoredoms & the American Kleptocracy:

[Please] sign the following pledge before it’s too late. Please pass it on
to fellow members.

I do solemnly swear to uphold the principles of a socialism-free society and
[hereby] pledge my word that I shall abstain from the use of and
participation in any socialist goods and services including but not limited
to the following:

*Social Security
*Medicare/Medicaid
*State Children’s Health Insurance Programs (SCHIP)
*Police, Fire, and Emergency Services
*US Po Postal Service
*Roads and Highways
*Air Travel (regulated by the socialist FAA)
*The US Railway System
*Public Subways and Metro Systems
*Public BusBus and Lightrail Systems
*Rest Areas on Highways
*Sidewalks
*All Government-Funded Local/State Projects
*Public Water and Sewer Services (goodbye socialist toilet, shower,
dishwasher, kitchen sink, outdoor hose!)
*Publiic and State Universities and Colleges
*Public Primary and Secondary Schools
*Sesame Street
*Publicly Funded Anti-Drug Use Education for Children
*Public Museums
*Libraries
*Public Parks and Beaches
*State and…

View original 409 more words

TPP Fast Track Votes (SOURCE: DAILY KOS)

The Senate just voted to pass Trade Promotion Authority (fast-track) bill 62 to 37.

48 Republicans and 14 Democrats voted for it. 32 Democrats and 5 Republicans voted against it.

Here are the 14 Democrats:

Michael Bennet (D-CO)
Ben Cardin (D-MD)
Maria Cantwell (D-WA)
Tom Carper (D-DE)
Chris Coons (D-DE)
Dianne Feinstein (D-CA)
Heidi Heitkamp (D-ND)
Tim Kaine (D-VA)
Claire McCaskill (D-MO)
Patty Murray (D-WA)
Bill Nelson (D-FL)
Jeanne Shaheen (D-NH)
Mark Warner (D-VA)
Ron Wyden (D-OR)

Here are the 5 Republicans:

Susan Collins (R-ME)
Mike Lee (R-UT)
Rand Paul (R-KY)
Jeff Sessions (R-AL)
Richard Shelby (R-AL)

The cloture vote was nearly identical, the only exception being Ben Cardin.

And before the cloture vote, the Senate voted for a perfecting amendment from Orrin Hatch (R-UT); that roll call was the same as the final one.

Before these final votes, the Senate voted on a series of amendments.

Currency Manipulation

First up were two currency manipulation amendments.

Ron Wyden (D-OR) and Orrin Hatch (R-UT) offered their own (and, obviously, much weaker) currency manipulation amendment in order to forestall that of Debbie Stabenow (D-MI) and Rob Portman (R-OH). The administration had issued a veto threat over the Stabenow-Portman amendment because it would be, in the administration’s view, prohibitive to TPP negotiations going forward. The Wyden-Hatch amendment also sought to offer political cover to those voting against Stabenow-Portman.

The Wyden-Hatch amendment passed 70 to 29.

The Democratic caucus split in half: 23 for and 23 against.

Here are the 23 who voted for the weak currency manipulation amendment:

Michael Bennet (D-CO)
Richard Blumenthal (D-CT)
Cory Booker (D-NJ)
Maria Cantwell (D-WA)
Ben Cardin (D-MD)
Tom Carper (D-DE)
Chris Coons (D-DE)
Joe Donnelly (D-IN)
Dick Durbin (D-IL)
Dianne Feinstein (D-CA)
Heidi Heitkamp (D-ND)
Tim Kaine (D-VA)
Amy Klobuchar (D-MN)
Pat Leahy (D-VT)
Joe Manchin (D-WV)
Claire McCaskill (D-MO)
Barb Mikulski (D-MD)
Patty Murray (D-WA)
Bill Nelson (D-FL)
Jeanne Shaheen (D-NH)
Jon Tester (D-MT)
Mark Warner (D-VA)
Ron Wyden (D-OR)

6 Republicans joined the other 23 Democrats in voting against it:

Roy Blunt (R-MO)
Richard Burr (R-NC)
Lindsey Graham (R-SC)
Rob Portman (R-OH)
Jeff Sessions (R-AL)
Richard Shelby (R-AL)

Next up was Debbie Stabenow (D-MI) an Rob Portman (R-OH)’s currency manipulation amendment, which would require that any future trade agreements include enforceable currency provisions.

In her press release announcing the amendment, Stabenow explained,

A strong U.S. dollar against a weak foreign currency – particularly one that is artificially weak due to government manipulation – causes foreign products to be cheaper in the United States and for U.S. products to be more expensive in countries that manipulate their currencies. According to Ford, the weak yen gives Japanese automakers an added $6,000 in profit on the average car and as much as $11,000 more profit per vehicle, depending on the make and model.
Additional cosponsors included Senators Tammy Baldwin (D-WI), Sherrod Brown (D-OH), Bob Casey (D-PA), Heidi Heitkamp (D-ND), Amy Klobuchar (D-MN), Joe Manchin (D-WV), Chuck Schumer (D-NY), Jeanne Shaheen (D-NH), Elizabeth Warren (D-MA), Joe Donnelly (D-IN), Al Franken (D-MN), Bob Menendez (D-NJ), Mazie Hirono (D-HI), Richard Burr (R-NC), Lindsey Graham (R-SC), and Susan Collins (R-ME).
The amendment failed 48 to 51.

36 Democrats and 12 Republicans voted for it. 41 Republicans and 10 Democrats voted against it.

Here are the 10 Democrats:

Michael Bennet (D-CO)
Maria Cantwell (D-WA)
Tom Carper (D-DE)
Chris Coons (D-DE)
Dianne Feinstein (D-CA)
Tim Kaine (D-VA)
Patty Murray (D-WA)
Bill Nelson (D-FL)
Mark Warner (D-VA)
Ron Wyden (D-OR)

Here are the 12 Republicans:

Kelly Ayotte (R-NH)
Roy Blunt (R-MO)
Richard Burr (R-NC)
Shelly Moore Capito (R-WV)
Susan Collins (R-ME)
Joni Ernst (R-IA)
Lindsey Graham (R-SC)
Chuck Grassley (R-IA)
Jerry Moran (R-KS)
Rob Portman (R-OH)
Jeff Sessions (R-AL)
Richard Shelby (R-AL)

ISDS

After that, the Senate took up Elizabeth Warren (D-MA)’s amendment to prevent any trade deals that include ISDS from using Fast Track legislation.

It was cosponsored by Senators Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Barbara Boxer (D-CA), Sherrod Brown (D-OH), Bob Casey (D-PA), Dick Durbin (D-IL), Al Franken (D-MN), Martin Heinrich (D-NM), Heidi Heitkamp (D-ND), Joe Manchin (D-WV), Ed Markey (D-MA), Gary Peers (D-MI), Brian Schatz (D-HI), Tom Udall (D-NM), and Sheldon Whitehouse (D-RI).

The amendment failed 39 to 60.

38 Democrats and 1 Republican voted for it. 52 Republicans and 1 Democrat voted against it.

That one Republican was Rand Paul (R-KY).

Here are the 8 Democrats:

Tom Carper (D-DE)
Chris Coons (D-DE)
Dianne Feinstein (D-CA)
Tim Kaine (D-VA)
Claire McCaskill (D-MO)
Bill Nelson (D-FL)
Mark Warner (D-VA)
Ron Wyden (D-OR)

Docking

Next up was Sherrod Brown (D-OH)’s amendment to require the approval of Congress before additional countries may join the Trans-Pacific Partnership Agreement.

It was cosponsored by Bob Casey (D-PA), Bob Menendez (D-NJ), Jeff Merkley (D-OR), Gary Peters (D-MI), Chuck Schumer (D-NY), and Debbie Stabenow (D-MI).

It failed 47 to 52.

38 Democrats and 9 Republicans voted for it. 44 Republicans and 8 Democrats voted against it.

Here are the 9 Republicans:

Kelly Ayotte (R-NH)
Susan Collins (R-ME)
Lindsey Graham (R-SC)
Chuck Grassley (R-IA)
Jerry Moran (R-KS)
Rand Paul (R-KY)
Rob Portman (R-OH)
Jeff Sessions (R-AL)
Richard Shelby (R-AL)

Here are the 8 Democrats:

Maria Cantwell (D-WA)
Tom Carper (D-DE)
Dianne Feinstein (D-CA)
Heidi Heitkamp (D-ND)
Claire McCaskill (D-MO)
Patty Murray (D-WA)
Bill Nelson (D-FL)
Ron Wyden (D-OR)

Trade Adjustment Assistance

Jeff Flake (R-AZ) offered an amendment to strike the extension of the trade adjustment assistance program.

It failed 35 to 63 to 1.

That one was Orrin Hatch (R-UT) who voted present.

17 Republicans joined the Democrats in voting against it:

Kelly Ayotte (R-NH)
Roy Blunt (R-MO)
Richard Burr (R-NC)
Shelly Moore Capito (R-WV)
Dan Coats (R-IN)
Thad Cochran (R-MS)
Susan Collins (R-ME)
Bob Corker (R-TN)
John Cornyn (R-TX)
Lindsey Graham (R-SC)
Dean Heller (R-NV)
John Hoeven (R-ND)
Mark Kirk (R-IL)
Murkowski (R-AK)
Rob Portman (R-OH)
Dan Sullivan (R-AK)
Pat Toomey (R-PA)

TAGS
Fast TrackISDSRecommendedTAATradeTrade Promotion AuthorityTrans-Pacific Partnership

SOURCE:  DAILY KOS

Bill Black: Krugman is Half Right Posted on May 18, 2015 by Yves Smith

Bill Black: Krugman is Half Right
Posted on May 18, 2015 by Yves Smith
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

Paul Krugman has a nice column entitled “Fraternity of Failure” dated May 15, 2015.

In Bushworld, in other words, playing a central role in catastrophic policy failure doesn’t disqualify you from future influence. If anything, a record of being disastrously wrong on national security issues seems to be a required credential.

But refusal to learn from experience, combined with a version of political correctness in which you’re only acceptable if you have been wrong about crucial issues, is pervasive in the modern Republican Party.

Krugman moves from foreign policy to economic policy and sees the same fraternity of failure among Republican economists.

Take my usual focus, economic policy. If you look at the list of economists who appear to have significant influence on Republican leaders, including the likely presidential candidates, you find that nearly all of them agreed, back during the “Bush boom,” that there was no housing bubble and the American economic future was bright; that nearly all of them predicted that the Federal Reserve’s efforts to fight the economic crisis that developed when that nonexistent bubble popped would lead to severe inflation; and that nearly all of them predicted that Obamacare, which went fully into effect in 2014, would be a huge job-killer.

Given how badly these predictions turned out — we had the biggest housing bust in history, inflation paranoia has been wrong for six years and counting, and 2014 delivered the best job growth since 1999 — you might think that there would be some room in the G.O.P. for economists who didn’t get everything wrong. But there isn’t. Having been completely wrong about the economy, like having been completely wrong about Iraq, seems to be a required credential.

What’s going on here? My best explanation is that we’re witnessing the effects of extreme tribalism. On the modern right, everything is a political litmus test. Anyone who tried to think through the pros and cons of the Iraq war was, by definition, an enemy of President George W. Bush and probably hated America; anyone who questioned whether the Federal Reserve was really debasing the currency was surely an enemy of capitalism and freedom.

It doesn’t matter that the skeptics have been proved right. Simply raising questions about the orthodoxies of the moment leads to excommunication, from which there is no coming back. So the only “experts” left standing are those who made all the approved mistakes. It’s kind of a fraternity of failure: men and women united by a shared history of getting everything wrong, and refusing to admit it. Will they get the chance to add more chapters to their reign of error?

Krugman’s explanation is compelling, except that it ignores the rival fraternity of failure inhabited by economists and finance “experts” who support the New Democrats and New Labour. Krugman chooses three economic prediction issues to discuss: was there a housing bubble, would the Fed’s liquidity programs in response to the crash cause hyper-inflation, and would Obamacare be a huge job-killer? He faces tight word count limits and one can only discuss a few examples in any column. The three examples he chose are certainly legitimate. But the examples he chose focus on Republican errors, are not the most important economic errors, and are not as clean as he implies in purportedly differentiating between Republican error and Democratic Party economist success.

The Housing Bubble

Economists who tend to support the Democratic Party like Dean Baker were the ones who got the housing bubble correct – and early. But, overwhelmingly, economists who tend to support the Democratic Party either got the bubble wrong, or made minimal efforts to warn about the bubble and call for public sector actions to burst it.

The reason the vast majority of economists, regardless of political affiliation, got the bubble wrong has next to nothing to do with partisan “tribalism.” The reason they got it wrong is because orthodox economists of all political persuasions believed in economic myths that had been falsified by white-collar criminologists 75 years ago. For a bubble to occur, market prices for that good (and a vast array of financial derivatives for which that good constitutes the “underlying) must systematically move in the wrong direction away from the “efficient” price – for many years and (in the case of housing) by over $1 trillion cumulatively. Orthodox economists, believed in the efficient market hypothesis and knew such bubbles were impossible.

The most logical explanation for such a bubble is a rational explanation – widespread “accounting control fraud” by lenders and loan purchasers. Orthodox economists make a standard assumption of rational behavior, including by criminals. But orthodox economists have a primitive tribal taboo against the “f” word – fraud. When it comes to bubbles, therefore, orthodox economists overwhelmingly simply assume mass irrationality. They would rather drop their most cherished assumptions about economic behavior than admit the reality that there are elite white-collar criminals and that their crimes can become epidemic when the incentive structures are so perverse that they produce a criminogenic environment. .

This problem of dogma is compounded by the problem that the orthodox responses to a bubble are clumsy, slow, and awful in terms of their “collateral damage” to the Nation, particularly those most in need. Basically, the orthodox response is to throw the economy in a recession – hoping to kill off the bubble and reduce the severity of the eventual recession it would have caused when it collapsed on its own. Worse, the orthodox policy recommendation to avoid future bubbles is permanent monetary austerity and higher interest rates to deter bubbles – producing rolling recessions and weak growth. Indeed, orthodox economists are so dubious of their ability to correctly identify a bubble and so cognizant of the grave harms and risks posed by trying to use orthodox responses to bubbles that their standard recommendation is to do nothing even if they suspect that a bubble is developing.

The vastly better response to a bubble like the housing bubble is unknown to orthodox economists and is never taught to students. The answer is to (1) put the fraudulent lenders and loan purchasers out of business by vigorous supervision, enforcement, and prosecution and (2) to limit their growth by effective regulation and bans on loan products most conducive to fraud. The regulators and prosecutors must break the “Gresham’s” dynamic that can make fraud epidemic.

We did this as regulators in 1984-1986 and deliberately burst the developing real estate bubbles in the Southwest before they could cause any national, much less international, economic crisis. It was certainly not pain free and we were aided by passage of the 1986 tax reform act that ended some of the most perverse real estate tax incentives, but it worked brilliantly and represents even today the most successful policy intervention against a bubble. The same strategy would have prevented the Great Recession, but the anti-regulators refused to follow our lead.

Inflation and Monetary Stimulus

This was an odd formulation by Krugman because it ignored fiscal stimulus which is where economists that tend to support the Democratic Party had their greatest success relative to economists that almost invariably support the Republican Party. Krugman’s point on the “hyper-inflation” crazy-hawks is correct, but it would have been even more forceful had Krugman brought in fiscal policy.

Obamacare as a Faux Job Killer

This too could have been explained in a manner that would have added support to Krugman’s thesis. The key to recall, that Krugman knows but did not mention here, is that Obamacare is a direct steal from a far-right-wing “think” tank that overwhelmingly supports Republicans. Further, Republican economists frequently supported the plan and Mitt Romney famously was the first to implement the plan when he was Governor of Massachusetts. Now, however, one would risk being torn apart at a Republican gathering by announcing support for the ultra-right-wing health insurance plan. Krugman, years ago, explained many of the defects of Romneycare/Obamacare. Of late he has also explained that while Romney/Obamacare is a poorly designed plan because of the dogmas of its right-wing drafters, it is also much better than “no care.” “No-care” was the prior system.

Republican economists act like virtually all Republicans in constantly inventing myths and horror stories about Romney/Obamacare. At this juncture, the problem is plainly one of ethics. The Republican economists are so eager to curry favor with Republican politicians that they lie as a matter of routine when they try to picture a hard-right-wing health insurance program as a near-Communist conspiracy.

But What If We Looked at Democratic Economists on the Most Critical Issues?

The single most important economic issue of the last three decades has been the three “de’s” – deregulation, desupervision, and de facto decriminalization. On that issue, which has driven our three most recent financial scandals, economists who are prominent New Democrat supporters have been disastrous. Yes, the Republican economists are often even worse. On the most important economic issue the dominant economists of both parties have simply formed rival fraternities with the same membership requirement – a track record of failure.

The Garn-St Germain Act that prompted the federal v. state regulatory race to the bottom that generated the savings and loan (S&L) debacle was drafted by a Republican economist (Dick Pratt), but it enjoyed broad bipartisan support and faced no opposition from economists associated with the Democratic Party. Not a single outside academic economist associated with the Democratic Party supported our struggle to reregulate, resupervise, and prosecute the industry and the elite frauds driving the S&L debacle. Democrats and Republicans formed a bipartisan effort to defeat our efforts against the fraud epidemic. Speaker Wright led the opposition in the House and four of the five Senators who did Charles Keating’s bidding in his jihad against our efforts to reregulate the industry were Democrats.

Of the two Democratic economists President Reagan sought to appoint to leadership positions running our regulatory agency, one (George Benston) was Keating’s man and a ferocious proponent of the three “de’s.” The other (Larry White) was always instinctually a fraud-denier and an opponent of regulation. To White’s credit, he overcame these instincts in a number of important decisions, but he was never able to overcome his dogmas sufficiently to become a leader against the fraud epidemics raging in the industry.

There are many problems with the three “de’s,” but the paramount problem is that they can create criminogenic environments that produce epidemics of “control fraud” that cause catastrophic damage. But orthodox economists of parties share the primitive tribal taboo against the “f” word. Orthodox economists of both parties share the same absurd standard assumptions that (implicitly) exclude fraud (it is impossible if there is perfect information and people act rationally).

Orthodox economists of both parties are proudly mono-disciplinary. They virtually never read any of the sophisticated modern research on white-collar criminology even though James Galbraith has explained (in his article prompted by a Krugman column) that our predictive success far exceeds economists’ predictive strength. Similarly, George Akerlof and Paul Romer explained in their 1993 article on “looting” that the S&L regulators got the fraud epidemic right from the beginning while the economists missed it.

Orthodox economists of both parties use almost exclusively econometric and modelling techniques that must produce systematic, massive error in the presence of epidemics of accounting control fraud. The mathematics on this is indisputable and these economists are proud to a point well-beyond arrogance about their purported quantitative expertise. Why then do they continue to use almost exclusively a failed methodology that they know must produce systematic, massive error in the presence of fraud? They also know that under their standard assumption about human behavior the bankers’ quants should design the models to systematically, and dramatically overvalue assets (by ignoring fraud) in order to maximize the quants’ (and their senior officers’) compensation.

Krugman is better on this subject than many economists. He famously got the California energy crisis correct by be willing to believe that Enron and its co-conspirators had formed a cartel to restrict supply. Cartels are another area in which economists supporting both parties were long insane. They claimed, contrary to all known experience (and Adam Smith’s famous warning) that cartels were, at worst, so ephemeral, with a half-life similar to Ununoctium, that they were not worth worrying about. Criminologists never made this mistake, but why would an economist read the criminology literature to learn about crimes like fraud and cartels?

It was the Rubinites in the U.S. and New Labour in the UK using orthodox economics as their weapon that constituted the Schwerpunkt of the assault against effective regulation under President Bill Clinton and Vice President Al Gore and Prime Ministers Tony Blair and Gordon Brown. Clinton’s destruction of Glass-Steagall and squashing Brooksley Born’s effort to protect us from fraud in financial derivatives through passage of the Commodity Futures Modernization Act of 2000 that gets the most attention, but the desupervision of the financial industry and the embrace of the regulatory race to the bottom were far more destructive. It was under Clinton and Gore’s assault that the underwriting rule we used in 1991 to drive liar’s loans out of the S&L industry was replaced with a guideline deliberately crafted to be unenforceable and useless. It was Clinton and Gore who began and primarily “accomplished” cutting the FDIC staff by more than three-quarters and the OTS staff of S&L regulators by more than half. I have just completed a series of articles detailing how Blair and Brown championed the City of London “winning” the regulatory race to the bottom by destroying the last vestiges of financial regulation, supervision, enforcement, and prosecutions in the UK.

Similarly, it was the Rubinites in the U.S. and the Blairites in the UK who spread the economic nonsense that a government with a sovereign currency (like the U.S. and the UK) was just like a consumer household. Under this myth, government deficits were immoral and harmful while budget surpluses demonstrated superior morality and were desirable. Blair and Brown turned the City into the financial cesspool of the world by championing the regulatory race to the bottom (which the City “won”), produced massive epidemics of control fraud that caused a financial crisis and threw the UK into the Great Recession, and then “bled the patient” through self-destructive and economically illiterate austerity while Labour’s economists generally remained silent about how insane these policies were or even provided support.

It was President Obama, having seen the catastrophe set in motion by the Rubinites (yes, greatly exacerbated by President Bush and his “wrecking crew”), who decided to place the Rubinites in power in his administration and to supplement them with Republican failures like Ben Bernanke and Timothy Geithner (who dropped his party affiliation to set up such promotions).

Here is how I explained Obama’s and Bush’s deliberate embrace of officials with a track record of failure it on April 3, 2009 in my first interview by Bill Moyers.

WILLIAM K. BLACK: These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because…

BILL MOYERS: What do you mean?

WILLIAM K. BLACK: Well, Geithner has, was one of our nation’s top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he’s a failed legacy regulator.

BILL MOYERS: But he denies that he was a regulator. Let me show you some of his testimony before Congress. Take a look at this

TIMOTHY GEITHNER: I’ve never been a regulator, for better or worse. And I think you’re right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.

BILL MOYERS: Overwhelmed by regulation! It wasn’t the absence of regulation that was the problem, it was despite the presence of regulation you’ve got huge risks that build up.

WILLIAM K. BLACK: Well, he may be right that he never regulated, but his job was to regulate. That was his mission statement.

BILL MOYERS: As?

WILLIAM K. BLACK: As president of the Federal Reserve Bank of New York, which is responsible for regulating most of the largest bank holding companies in America. And he’s completely wrong that we had too much regulation in some of these areas. I mean, he gives no details, obviously. But that’s just plain wrong.

The point I was explaining was that prominent politicians frequently feel they can gain politically by taking policy positions that are destructive but popular. These politicians want to be able to trot out their economist in such circumstances and have him (more rarely, her) say something that is economic nonsense that the economist fabricates to make the politician’s terrible policy argument sound like it accords with economic history. Ethical economists, therefore, tend to be disfavored by prominent politicians. One of the inherent consequences of presenting nonsense economic positions is that the economist’s predictions will fail – repeatedly. An economist who is willing to repeat a fabricated economic claim that he knows to be false to support his politician’s latest insane policy proposal will have a record of failure that prominent politicians will love. This economist is willing to lie, repeatedly, for me when I need him to lie.

My proposal to Bill Moyers was that we try the opposite strategy. Fire the persistent failures and the cheats and hire people with a track record for integrity and getting things right.

WILLIAM K. BLACK: Now, going forward, get rid of the people that have caused the problems. That’s a pretty straightforward thing, as well. Why would we keep CEOs and CFOs and other senior officers that caused the problems? That’s facially nuts. That’s our current system.

So stop that current system. We’re hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right? Follow what works instead of what’s failed. Start appointing people who have records of success, instead of records of failure. That would be another nice place to start. There are lots of things we can do. Even today, as late as it is. Even though they’ve had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.

Black and Krugman on Choosing Failures and the Resultant “Reign of Error”

In addition to identifying the same dynamic of deliberately choosing failures that I explained in 2009 that Krugman has now named fittingly the “Fraternity of Failure,” I notice that his same May 15, 2015 column used a phrase I had just used two days earlier in an article in my series of columns on New Labour.

Note to Blair: it would be a truly excellent thing for the world if financial regulators were to “always err on the side of caution” and to have only “one-way pressures” “to guard the public interest” rather than to aid and abet the City banksters’ “reign of error” and fraud. The fact that Blair felt that (mythical) UK financial regulators devoted “to guard[ing] the public interest” were a disaster tells you all you need to know about how deeply he was in the banksters’ pocket even before they made him “filthy rich” (in the immortal words of Blair’s Red Tory strategist, Peter Mandelson).

Krugman’s column aptly uses the same “reign of error” phrase in an analogous context.

It doesn’t matter that the skeptics have been proved right. Simply raising questions about the orthodoxies of the moment leads to excommunication, from which there is no coming back. So the only “experts” left standing are those who made all the approved mistakes. It’s kind of a fraternity of failure: men and women united by a shared history of getting everything wrong, and refusing to admit it. Will they get the chance to add more chapters to their reign of error?

(A tip as a criminologist: contrary to all the cop shows on TV where the boss pronounces “there is no such thing as a coincidence,” coincidences such as these are common. Anyone who understands statistics understands why.)

 

Elizabeth Warren’s Trade Deal Fears Confirmed: Canada Uses NAFTA to Challenge Volcker Rule Posted on May 14, 2015 by Yves Smith

Elizabeth Warren’s Trade Deal Fears Confirmed: Canada Uses NAFTA to Challenge Volcker Rule
Posted on May 14, 2015 by Yves Smith

In her attacks on Obama’s pending trade deals, Elizabeth Warren has argued that could undermine US financial regulations like Dodd Frank. The Administration has taken to trying to dismiss Warren as not knowing what she was talking about. More skillful defenders of the traitorous trade deals took the tact of saying that Warren could in theory be right, but the odds of her fears playing out were so remote as to not be worth worrying about.

In a long, careful article in the Nation yesterday, George Zornick explains even with the limited information that we have now about the contents of proposed treaties like the TPP and its ugly European step-sister, the TTIP, Warren’s worries are valid. For instance:

Like with TPP, we don’t know all the details of TTIP yet, but advocates have many fears. One is that the Federal Reserve’s plan to impose separate liquidity requirements on foreign banks might be scotched…

And it’s not just Dodd-Frank: the leaked EU proposal for TTIP has a provision that new regulations first be “analyzed” to determine if they have an unacceptable impact on trade. Americans for Financial Reform (AFR) worries that this could “impose a presumption that regulations must be judged on the basis of their trade impact rather than their effectiveness as public interest policies promoting financial stability.”

Keep in mind that by design, a substantial portion of Dodd Frank implementation was kicked down the road to allow lobbyists to have a second go at weakening it, with studies required before rules would be written. Significant portions of rulemaking have yet to be completed and would appear to be subject to the TTIP analysis requirement, giving the banking industry yet another change to gut legislation.

But an example of Warren’s concerns came out of left field yesterday, as reported by the Wall Street Journal:

A U.S. rule that prohibits banks from taking risky bets with their own money violates the North American Free-Trade Agreement because it bans U.S. banks from trading triple-A-rated Canadian government debt, Canada’s finance minister said Wednesday…

Canadian concerns about the Volcker rule’s treatment of sovereign debt aren’t new. In 2012, Canada joined European countries and Japan in raising concerns about the law’s reach..

Mr. [Joe] Oliver noted that the Volcker rule reflects concerns about the credit standing of some foreign securities. That concern doesn’t apply to Canada, he said, because Canada’s credit rating is better than the U.S. government and U.S. municipalities…

“I believe—with strong legal basis—that this rule violates the terms of the Nafta agreement,” Mr. Oliver told a securities industry audience in New York that included the U.S. ambassador to Canada, Bruce Heyman. “I hope the United States administration sees that changing the Volcker rule is in its own best interests and that of its biggest trading partner.”

Pretending that the only risk of holding foreign securities is credit risk is disingenuous. Foreign bond investors are also subject to currency and interest rate risks. Needless to say, the Treasury Department disagreed firmly with Oliver’s view.

One has to wonder, given that Canada has been unhappy about how the Volcker Rule applied to Canadian government debt since 2012, why the Nafta argument was hauled out at this juncture. Has the negotiation of the TPP led Canada to look at trade treaties more seriously as a way to get its way? Regardless, the fact that Canada thinks it has a strong case for having its bonds exempted from the Volcker Rule looks to be a harbinger of the creative ways these pending, toxic trade deals could be deployed, given their far more sweeping provisions.

The Democratic Party Would Triangulate Its Own Mother BY MATT TAIBBI May 14, 2015 Rolling Stone

The Democratic Party Would Triangulate Its Own Mother
The latest squabble over the Trans-Pacific Partnership shows just how low America’s “Progressive” Party has sunk

BY MATT TAIBBI May 14, 2015

Barack Obama
President Obama took on Sen. Elizabeth Warren this week in a dispute over the Trans-Pacific Partnership. Kevin Dietsch/Getty
Barack Obama made headlines this week by taking on Sen. Elizabeth Warren in a dispute over our latest labor-crushing free trade deal, the Trans-Pacific Partnership. The president’s anger over Warren’s decision to lead the Senate in blocking his authority to fast-track the TPP was heavily covered by the Beltway media, which loves a good intramural food fight.

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Elizabeth Warren and President Obama The Trade Beef Between Elizabeth Warren and Barack Obama »
It was quite a show, which was the first clue that something wasn’t quite right in this picture. The Beltway press made a huge spectacle out of how the “long-simmering” Obama-Warren “feud” had turned “personal.”

And there were lots of suggestions that the president, in his anger toward Warren, simply let his emotions get the best of him – that he let slip impolitic and perhaps sexist words in his attacks on Warren, whom he described as “absolutely wrong” and “a politician like everyone else.”

Reuters, taking the cheese all the way with this “it just got personal” storyline that people on both sides of the Warren-Obama spat have been pimping to us reporters all week, quoted observers who put it like this:

“The president miscalculated in making this about Elizabeth Warren, that backfired badly. It only served to raise awareness of the issue and drive people away from his position,” said Chris Kofinis, a Democratic strategist who has worked with labor unions opposed to the pact.

“It never makes sense to make these kinds of issues personal,” he said.

Politicians do get angry. They even sometimes get angry in public. They are, after all, human, in some cases anyway.

But politicians mostly only take their masks off when cornered: stuck in a televised argument with an expert irritant, called to speak in a legislative chamber just as that nagging case of intermittent explosive disorder kicks in, surprised by a ropeline question on the campaign trail, etc.

But if you think that Barack Obama, one of the coolest cucumbers ever to occupy the White House, sat down for a scheduled interview in front of a professional softballer like ex-Times and current Yahoo pundit Matt Bai – a setup that’s the presidential media equivalent of a spa treatment – and just suddenly “lost it” in a discussion about the TPP, you’ve been had.

Almost without a doubt, Obama’s remarks were carefully scripted. And it’s likely all of these “whispers” suddenly circulating on the Hill about a percolating genuine personal feud between Obama and Warren also came from a focus-group-aided strategy meeting somewhere.

Even Bai approvingly described Obama’s move as an effort to triangulate the “professional left.” These tactics make a lot of sense politically, and within the Beltway, chiding the “unrealistic” progressives of the Warren ilk is considered almost a rite of passage for politicians on the blue side who want to prove they’re “serious about governing.”

Triangulating – beating up on the ideologues within your own party in order to shore up your centrist cred and reassure your money sources – is an especially brilliant solution for Democrats targeting national office. Those politicians need virtual monopolies on union and minority votes, but also need just enough centrists and white southerners to stay viable. To keep those latter votes, you need to make a few very conspicuous moves from time to time.

That’s surely what happened here with the TPP, a monster deal with the potential to reshape not just our trade profile but our domestic financial regulatory structure. Along with a Democratic Party that would love one last chance to prove itself to Wall Street heading into 2016, Obama badly wants this deal passed, perhaps as a way to steer his legacy in a more bipartisan direction before he rides off into the sunset.

So he picked just the right moment and just the right words to goad the press into painting him as someone who’s just so angry at Elizabeth Warren’s failure to understand how the real world looks from behind the Oval Office desk, he just couldn’t keep his feelings reined in. He tried to retain his usual Björn Borglike exterior, but the oven-mitt questioning of Matt Bai just beat it out of him!

Backing up for a moment: if there’s one thing that a generation of free trade agreements has taught us, it’s that it’s a mistake to read too much into the fine print of any of these deals. With both the WTO and the Multilateral Agreement on Investment (MAI), there were all sorts of horror stories that were circulated about ordinary Americans ending up surrendering their sovereignty to corporate-friendly secret tribunals in Switzerland and other cabals.

That hasn’t exactly happened. But what certainly has happened is that we’ve racked up enormous trade deficits with the countries that are signatories to our free trade deals. No matter how you slice it, these deals reduce the percentage of American exports while accelerating imports from countries where workers not only often have crappy workplace protections (if they have any at all), but sometimes have reduced political freedoms as well.

This deal Obama is proposing is supposed to contain the strongest labor and environmental provisions ever, and, well, who knows. I seriously doubt it. It seems like just another way to make screwing foreign and domestic workers cheaper for the boardroom set, which is certainly a goal such people have a right to pursue. That part of it – the part where Wall Street hasn’t sucked enough of the world dry yet and so wants this deal too, knowing the White House is willing to oblige – that isn’t the really bad part.

The part that’s really irritating is that the same politicians who whine every chance they get about being unfairly painted as Marxists on Fox and Clear Channel are now cleverly using the animus generated by those news outlets against the Elizabeth Warrens of the world as shortcuts to political gain.

Both the Clintons and Obama, remember, have singled out Fox and the media part of the “vast right-wing conspiracy” as warts on the face of America. The Obama White House has even called Fox “a wing of the Republican Party,” and “not really a news station.”

But ask yourself this: how much triangulating kick would Obama really get out of piling on Elizabeth Warren if she wasn’t right-wing America’s current favorite Trojan-Horse Trotsky? If she wasn’t pitched as being so “left” that Bill O’Reilly said she would make Obama look like “Reagan” in comparison?

The reality is, as much as the mainstream Democratic Party whines about Fox and its cohorts, they constantly use all the negative energy of the conservative media as free marketing. Instead of standing in true partnership with unions and working people and employing a strategy of forcing the rest of the world to democratize and grant workers real rights in exchange for access to American consumers, they’ve done the opposite – beating up on the captured labor demographic as a way to reassure big business.

Again, this goes back to Clinton, Al From, Dick Morris, the DLC days. Third Way Dems first dared American workers to try to get a better deal with Republicans. Then, once they established that they could safely take minorities and labor for granted, they used right-wing caricatures of welfare moms or rappers to score points with the political middle.

It’s clever, and it sure as hell works as a way to win elections. It just seems like doing the right thing and standing up for actual people would work just as well.

 

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