Friday, April 17, 2015

Chapter 20

WikiLeaks has released another piece of the TPP. This is a chapter entitled "Advanced Investment". David Korten analyzed the chapter and summarized the points it makes:
  • Favoring Local Ownership Is Prohibited
  • Corporations Must Be Paid to Stop Polluting
  • Three Lawyers Will Decide Who's Right in Secret Tribunals
  • Speculative Money Must Remain Free
  • Corporate Interests Come Before National Ones

Four Pinocchios

That's what Glenn Kessler awards to the Obama administration claim that the TPP [Trans-Pacific Partnership] will add 650,000 jobs and provide $77 billion a year in real income to our economy. Kessler writes a fact checking column for the Washington Post and 4 Pinocchios is the worst score possible. While the numbers sound big, they represent only 0.4% increases in jobs and revenues.

Will any of our Senators act on this information?

Thursday, April 16, 2015

Some Citigroup history

Per Pam Martens of Wall Street on Parade:

December 11, 2008: SEC forces Citigroup and UBS to buy back $30 billion in auction rate securities that were improperly sold to investors through misleading information.
February 11, 2009: Citigroup agrees to settle lawsuit brought by WorldCom investors for $2.65 billion.
July 29, 2010: SEC settles with Citigroup for $75 million over its misleading statements to investors that it had reduced its exposure to subprime mortgages to $13 billion when in fact the exposure was over $50 billion.
October 19, 2011: SEC agrees to settle with Citigroup for $285 million over claims it misled investors in a $1 billion financial product.  Citigroup had selected approximately half the assets and was betting they would decline in value.
February 9, 2012: Citigroup agrees to pay $2.2 billion as its portion of the nationwide settlement of bank foreclosure fraud.
August 29, 2012: Citigroup agrees to settle a class action lawsuit for $590 million over claims it withheld from shareholders’ knowledge that it had far greater exposure to subprime debt than it was reporting.
July 1, 2013: Citigroup agrees to pay Fannie Mae $968 million for selling it toxic mortgage loans.
September 25, 2013: Citigroup agrees to pay Freddie Mac $395 million to settle claims it sold it toxic mortgages.
December 4, 2013: Citigroup admits to participating in the Yen Libor financial derivatives cartel to the European Commission and accepts a fine of $95 million.
July 14, 2014: The U.S. Department of Justice announces a $7 billion settlement with Citigroup for selling toxic mortgages to investors. Attorney General Eric Holder called the bank’s conduct “egregious,” adding, “As a result of their assurances that toxic financial products were sound, Citigroup was able to expand its market share and increase profits.”
November 2014: Citigroup pays more than $1 billion to settle civil allegations with regulators that it manipulated foreign currency markets. Other global banks settled at the same time.

Avoiding taxes

Companies have an obligation to keep costs low. Our corporations have looked to lowering their taxes, as well as other costs. One technique is inversion, where companies claim tax residence in a lower-tax jurisdiction. This was a popular technique until the Treasury took some steps to make the process more difficult. Still, 54 of the S&P 500 have their tax home overseas.

The latest tax-avoiding technique are master limited partnerships, which don’t pay the corporate income tax and instead pass on tax liability to their investors. Then you have REITs, which the Internal Revenue Service doesn’t treat as corporations. 

These techniques can either eliminate a company's US tax burden, or more commonly, lower it from 35% to 10%. The Congressional Budget Office predicted in January that these techniques, by eroding the tax base, would contribute to a drop in U.S. corporate receipts, from 2.3 percent of gross domestic product in 2016 to 1.8 percent in 2025. By then, receipts will be about 5 percent, or $27 billion a year, lower than they would be without the anticipated erosion, the CBO estimates.

Wednesday, April 15, 2015

Another view of income inequality

Different tax rates for different people

The managers of hedge funds, private equity funds and various other investment funds are different from you and me. Their pay is taxed at the capital gains tax rate rather than the tax rate applied to wage income. That can add up to a fairly significant sum as the ca[ital gains tax rate is 20%, while the tax on ordinary income for people in the high brackets is almost double that, at 39.6%. The difference is because their pay is supposedly commissions.

Did someone mention inequality?

Possibly it's Spring in Connecticut

The car window was open yesterday. The bedroom window was open last night. The patio doors will be open today. The temperature is over 60. The sun is bright.

Tuesday, April 14, 2015

What is wrong with US?

We really don't do well by many of our children. We have one of the highest relative child poverty rates in the developed world. As UNICEF reports, "[Children's] material well-being is highest in the Netherlands and in the four Nordic countries and lowest in Latvia, Lithuania, Romania and the United States." We rank near the bottom of the developed world in the percentage of 4-year-olds in early childhood education, which has been proven to be a good investment in a country's future.

And things are getting worse. In 2007 about 12 of every 100 kids were on food stamps. Today it's 20 of every 100. For every 2 homeless children in 2006, there are now 3 Over half of public school students are poor enough to qualify for lunch subsidies, and almost half of black children under the age of six are living in poverty.

Only two nations still refuse to ratify the UN Convention on the Rights of the Child: South Sudan and the United States.

Mark Leibovich has trouble understanding why the media makes so much of the various announcements of one's running for president. I have trouble understanding why we need to have such long presidential campaigns. If these candidates are so concerned about our country, why don't they spend the time trying to solve our many problems?

Fear in America

Monday, April 13, 2015

Water, water everywhere?

Drones in Yemen

The Open Society Foundation, a George Soros group, has just published a report severely questioning our use of drones in Yemen. It challenges Obama's statement that before any U.S. drone strike, “there must be near-certainty that no civilians will be killed or injured.” The report cites a drone strike that killed 12 people, including a pregnant woman and three children, and another in which the U.S. struck a house containing 19 people, including women and children.

The report also questions whether the U.S. is complying with international law. Further, the report raises questions about whether the United States is killing individuals when it is possible to capture them.

Income Inequality

Income Inequality Graph from Robert Reich’s Film, “Inequality for All”

Your anus is necessary

You can never leave a child alone

Would you believe it happened again? On Sunday the kids were 2 and 1/2 blocks from home when someone called the cops reporting them as playing alone.

“The police coerced our children into the back of a patrol car and kept them trapped there for three hours, without notifying us, before bringing them to the Crisis Center, and holding them there without dinner for another two and a half hours,” their mom, Danielle Meitiv, said to her Facebook friends. “We finally got home at 11 pm and the kids slept in our room because we were all exhausted and terrified.”

A pastime as a cop

You may have heard of the Oklahoma reserve sheriff's deputy who mistook his revolver for a taser and killed a suspect. It turns out that the sheriff's deputy is a 73-year-old insurance company executive, who is a member of the Tulsa County Reserve Deputy Program. Several members of this program including Bates are wealthy and have donated vehicles, weapons, and stun guns to the Sheriff’s Office. They are allowed to serve as police officers, although they are not compensated. They are classified as “advanced reserves,” meaning they “can do anything a full-time deputy can do”.

I find it quite bizarre that this program would allow sometime past retirement age to have an active role in arresting people.

An English Shepherd

Reality in DC

Climate is changing in the West

Most scientists agree that weather in the West is changing, particularly as regards the water supply. These changing weather patterns have shrunk snow packs, raised temperatures, spurred evaporation and reduced reservoirs to record lows. And it is unlikely things will get better soon. 

Rising temperatures are the reason. The federal Bureau of Reclamation, which manages much water in the West, reported in 2013 that average temperatures in the upper Rio Grande, in Colorado and New Mexico, rose almost 2.8 degrees during the 40 years ending in 2011 — and could rise an additional four to six degrees by 2100. The 40-year increase, twice the global average, was beyond anything seen in the last 11,300 years.

The deputy secretary of the interior, Michael Connor, recently said, “The challenge is systemic and persistent across the West. We need better infrastructure, better operation arrangements, better ways to share water and move water.”

Sunday, April 12, 2015

Rivers in America

The longest rivers in the U.S. are out West. I have been on or even seen very few of them. Yet, I have the sense that our rivers are not as important commercially as those in Europe. I have been on a few rivers in Europe, most recently the Seine. Whether it was the Danube at 1,780 miles or the Seine at 482, there was significant commercial travel, the major item being river cruises. But, I've seen boats carrying 50 or more cars on the Seine, tons of coal, and a raft of other goods. I don't think I'd see the same level of commercial goods unless I was on the Mississippi, the Missouri or Columbia.

Also, the rivers in Europe seem to be integrated into the towns they go through. Most of the ports along the river are within a short walk of the center of town. In France, there was even a river boat that served as a chapel.

An important part of the Chinese army

Will the hawk capture the squirrel?

Policing our schools

Since the Columbine incident, many schools now have policemen on duty every day. And in some of these schools the policeman has become the school disciplinarian; teachers or principals seem to have dropped out of the picture. In these schools the typical school incidents have been referred to the courts. Kids as young as 4 have been referred to the courts. 

If you look at the rate of referrals to law enforcement agencies by the school policemen for one year, I think you'll be surprised. The national rate was six students for every 1,000 pupils, with 19 states surpassing that rate. Virginia led the list with 16 referrals for every 1,000 students, followed by Delaware with almost 15; Florida with more than 12. Massachusetts, Ohio, Nevada and Washington, D.C., reported the lowest rates of referrals, at two or fewer students per 1,000. These incidents can be as trivial as kicking a trash can, clenching a fist at a school cop who intervened in a school fight, a four-year old throwing blocks and kicking at teachers.

Many of the kids who wound up in court  were special-needs kids — kids with physical or learning disabilities. In most states, black and Latino kids were referred in percentages that were disproportionate to their enrollment numbers.

Saturday, April 11, 2015

Paying for nothing

Okay, it's chicken feed when you compare it to the full federal budget of almost $4 trillion. But the GAO estimated that in 2004 the feds made $124.7 billion in improper payments. This was an increase of just about $19 billion from the prior year's estimate of $105.8 billion. 

It gets worse. The improper payments for fiscal year 2014, which were attributable to 124 programs spread among 22 agencies, represented 4.5% of program outlays in fiscal year 2014 compared to 4.0% reported in fiscal year 2013. 

About 65% of the improper payments were made by just three major programs: the Department of Health and Human Services' (HHS) Medicare Fee-for-Service and Medicaid programs, and the Department of the Treasury's Earned Income Tax Credit program.

Medicine marches on

The next goal is a head transplant. I am not kidding. Dr. Sergio Canavero, a renowned neurosurgeon and director of the Turin Advanced Neuromodulation Group in Turin, Italy, will try it on Valery Spiridonov, a Russian 30-year-old who has a rare muscle condition called Werdnig-Hoffmann disorder, a.k.a. spinal muscular atrophy, which causes one's muscles to waste away and has no known cure. May I introduce you to Mr. Spiridonov?


The operation will reportedly last up to 36 hours and cost an estimated $11 million. The entire procedure will require the assistance of around 150 doctors and nurses.

Spiridonov's new body will be taken from "a brain-dead but otherwise healthy donor," but Spiridonov's brain will be cooled down to between 50 and 60 degrees Fahrenheit to prolong the time brain cells can survive without oxygen. The spinal cord will be cut with a special scalpel that's especially sharp, and the head will be reconnected to the new body and spinal cord with "a special biological glue."

Once the operation is finished, Spiridonov will be put into a coma for around three to four weeks to prevent any movement, and his body will be given immunosuppressents so the body doesn't reject the new head.

"I'm very interested in technology, and anything progressive that might change people's lives for the better," Spiridonov told RT. "Doing this isn't only an excellent opportunity for me, but will also create a scientific basis for future generations, no matter what the actual outcome of the surgery is."

Courtesy of Business Insider