Tuesday, August 25, 2009

UnitedHealth Group

I posted the Chris Hayes clip too soon. The very next segment on Countdown exposed United Health Group as the criminals they are. There's no way to summarize the investigative journalism, you have to watch the entire thing... If you have United Health Group, I have a feeling that you'll want to change asap...

Charity Care

Chris Hayes from The Nation Magazine was on Countdown with Keith Olbermann tonight and I thought he had a brilliant analysis of the Republican strategy for health care. If you don't want to watch the entire clip, just check out 2:10 - 4:15:

"Civilization on this planet had charity based health care for a long time... and, sure, fine ... if you're in the 9th century, and you can drag yourself, ill, to the local church and get some charity care that's fine, but that's not the way that a country in the 21st century takes care of this fundamental public issue. We come together ... through self-governance to address these things. This is not something that's to be tossed off as a realm of charity."
Well said!

I love how Senator Coburn doesn't realize that the concept of neighbors helping neighbors is just another way to describe a democratic government...

Sunday, August 23, 2009

What was Yahoo! Thinking?

I was checking the news on Yahoo! today and came across an article entitled Millions Face Shrinking Social Security Payments in which I found something incredibly dishonest. Along with the article, directly below the headline, was a picture of President Obama, leading the reader to make a visual link between the president and the headline implying that it is because of him that social security payments will be going down.

The caption on the picture, written in light grey in tiny letters, is as follows:

"President Obama talks about the Afghan elections Friday, Aug. 21st, 2009, outside the White..."

So the picture isn't even associated with the article! How can they be so intellectually dishonest? Why does the media want seniors to be so afraid of the President?

Here is a screenshot of the article:

To make the issue even worse, the article states that the amount of the checks will NOT be decreasing (which would be illegal) but would be remaining the same, with no cost of living adjustment. The reason that the checks will be "shrinking" is because of increased premiums for medicare.

So, embedded in the article is another reason why we need to reform the health care system, but Yahoo! chose to portray the article as President Obama personally taking money away from senior citizens. Add that to the death panel lies and a pattern of scaring seniors starts to emerge...

What could their motives possibly be?

Monday, August 17, 2009

A Little Perspective on Cost

As health care reform continues to bring out the worst in us, I thought I'd try to put the projected costs of Obama's plan into a little perspective.

According to a report from The Congressional Research Service, after the passage of the supplemental funding bill of 2008 on June 30, 2008, Congress had spent a total of $864 billion since 9/11/01 to fight the War on Terror (74% on Iraq alone and less than 1% on medical care for veteran). Once you include estimates for 2009 and 2010, the total spent rises to over $1 trillion in the last 9 years.

Or, to put it into more understandable terms:
As of February 2009, DOD’s average monthly obligations for contracts and pay were about $10.9 billion, including $8.4 billion for Iraq, and $2.6 billion for Afghanistan, a monthly average some $3 billion below last year.
If we accept that 9/11 was the root cause of this spending, then it is also fair to state that it was the murder of 2,974 people that gave Bush the "political capital" to initiate the massive government spending program known as the Global War on Terror. If you compare that to the 22,000 people that died last year due to lack of health insurance, over 7x the number of people that died on 9/11, the cognitive dissonance begins to set in.

With most estimates of the cost of Obama's health care plan ranging from $300 billion - $1 trillion over the next 10 years, how can ANYONE go on television and claim that the country can't afford to do it. Where were those same people claiming that we couldn't afford the Global War on Terror? My recollection may be a bit fuzzy, but I don't think ANYONE was claiming that we couldn't afford it. How are health care executives that make tens and hundreds of millions of dollars off of denying these now deceased people access to medical care any different than Al-Qaeda?

So, spending over a trillion dollars (over $10 billion a month) after the death of around 3000 people is a no brainer, but spending an equivalent amount to stop an ANNUAL death total of around 20,000 is considered political suicide? What happened to our government...

None of this even takes into account that the cost of health care causes an American to declare bankruptcy roughly every 30 seconds.

As a bit of a side note about George W Bush and "political capital," listen to this clip from 1999 where Bush claims that if he has the political capital, he WILL invade Iraq:



Saturday, August 15, 2009

Should Progressives Form Their Own Party?

As Bill Maher so elloquently put it on one of his recent shows:
"Every time Obama tries to take on a progressive cause, there's a political party standing in his way: the Democrats...

We don't have a left and a right party in this country anymore, we have a center-right party and a crazy party. Over the last 30 odd years, Democrats have moved to the right and the right has moved into a mental hospital. So what we have is one perfectly good party for hedge fund managers, credit card companies, banks, defense contractors, big agriculture, and the pharmaceutical lobby; that's the Democrats. And they sit across the aisle from a small group of religious lunatics, flat-Earthers, and civil war reenactors who mostly commuincate by AM radio and call themselves the Republicans. And who actually worry that Obama is a Socialist, Socialst?! he's not even a liberal...

Shouldn't there be one party that unambigiously supports cutting the military budget, a party that is straight up in favor of gun control, gay marraige, higher taxes on the rich, universal health care, legalizing pot, and steep direct taxing of polluters? These aren't radical ideas, a majority of americans are either already for them or would be if they were properly argued and defended. What we need is an actual progressive party to represent the millions of Americans who aren't being served by the Democrats. Because bottom line: Democrats are the new Republicans."
Watch the entire segment below:




With that in mind, the Financial Times had an interesting article from Yukio Hatoyama, the leader of the Democratic Party of Japan and potentially the next Prime Minister. In it, he details his political philosophy of "fraternity:"
  • "Although freedom and equality are important for human beings, if they are followed to fundamentalist extremes, they can both result in immeasurable horrors. Therefore, Coudenhove-Kalergi recognised the necessity of a concept that could achieve a balance and maintain respect for humanity. That is what he sought in the idea of fraternity."
  • "Freedom is supposed to be the highest of all values but in the fundamentalist pursuit of capitalism, which can be described as ‘freedom formalised in economic terms’, has resulted in people being treated not as an end but as a means"
  • "In our present times, fraternity can be described as a principle that aims to adjust to the excesses of the current globalised brand of capitalism and make adjustments to accommodate the local economic practices that have been fostered through our traditions."
  • "I believe it is no exaggeration to say that the global economy has damaged traditional economic activities and market fundamentalism has destroyed local communities."
  • "Under the principle of fraternity, we will not implement policies that leave economic activities in areas relating to human lives and safety, such as agriculture, the environment and medicine, at the mercy of the tides of globalism… Our responsibility as politicians is to refocus our attention on those non-economic values that have been thrown aside by the march of globalism."
  • "The ties that bring people together have become weaker and the spirit of public service has also dimmed…we aim to build a society of coexistence in which people can rediscover the ties that bring them together, help each other, and find meaning and fulfilment in performing a useful social role.”
  • "We reject the Ministry of Finance-led theory of fiscal reconstruction that relies on the imposition of uniform restrictions on, or the abolishment of, social welfare payments and which seeks to take shortcuts by raising consumption tax...(and) the bureaucrat-led system of centralised government and the indiscriminate spending facilitated by that system, from the social safety net collapse and greater inequality of wealth that results from an uncritical faith in globalism and finally, from the public loss of faith in politics following unhealthy collusion between government, civil service and industry."
Knowing that this man may become the leader of the worlds 2nd largest economy, I say Progressives co-opt his platform of Fraternity and form their own political party.

As a side note, Mr Hatoyama had this to say about the US economic system:
“The recent financial crisis has suggested to many people that the era of American unilateralism may come to an end. It has also made people harbour doubts about the permanence of the dollar as the key global currency. I also feel that as a result of the failure of the Iraq war and the financial crisis, the era of the US-led globalism is coming to an end and that we are moving away from a unipolar world led by the US towards an era of multipolarity.”
So Japan openly sees Iraq as a failure and the US as the root cause of the financial disaster. I wonder what the rest of the world thinks...

The Hypocrisy of Glenn Beck

On Countdown with Keith Olbermann yesterday, Keith juxtaposed clips from The Glenn Beck Show from earlier in the year, after Beck had surgery, with more recent clips of him calling the American health care system "the best in the world". Check it out:

Friday, August 14, 2009

Another Pending Crash?

Two articles from Bloomberg caught my eye this afternoon.

The first, which is the source of the above graphic, indicates that there may be a massive swell in US bank failures in the near future. According to the article:
  • "More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5% or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival. The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3% or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full."
  • "Also left out were the 19 lenders that underwent the Treasury’s stress tests in May; they were deemed “too big to fail” and told by regulators that government capital was available to keep them in business."
  • "Excluding the stress-test list, banks with nonperformers above 5 percent had combined deposits of $193 billion, according to Bloomberg data. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter."

One thing the article fails to mention is why a ratio as low as 5% is such a problem. Unless I am mistaken, it is because of the way our banking systems' fractional reserve lending works. By law, banks must keep the ratio of outstanding loans to assets at 10:1, or to put it another way, for every dollar the bank has in deposits, they can loan out $9. That means that a "well capitalized" bank will have only 10% of its outstanding loans on hand.

In the other article, the chief portfolio strategist for bear markets at Federated David Tice claims that US stocks are "dramatically overpriced."

According to his numbers, the recent bull market pushed the S&P 500s' price-to-earnings ratio to the highest it's been since December 2004. To put an exclamation point on his findings, the article goes on to say:
Tice said he’s the most confident ever that the stocks will fall beneath their March lows. A drop to 400, a 61 percent plunge from yesterday’s close, is likely within a year, he said.
What would our economy look like if the S&P 500 dropped to 400? Would we even have an economy left? Would we even have a functioning government?

Population Growth

According to a recent CNN report, the world population is expected to hit 7 billion by the year 2011 with 97% of the growth over the next 40 years occuring in Asia, Africa, Latin America and the Caribbean.

In order to appreciate just how massive this growth in population has been over the past 200 years, listen to this brief excerpt from this past Tuesday's Thom Hartmann Show:



As we are discussing health care reform and global warming legislation, I feel these stats must be taken into account. After all, if we think that scarcity of natural resources like food, water, and energy (all of which are essential for life on Earth) and the scale of greenhouse gas emissions are problems now, just wait until we have literally billions of more people to worry about.

The Redistribution of Wealth...Upward


After all the sturm and drang from the Republicans about President Obama's socialist agenda to "spread the wealth around," a new paper from University of California, Berkeley Professor Emmanuel Saez shows that that has already occured...but in an upward direction. The above graph illustrates just how bad the situation is.

What Professor Saez found, to quote Paul Krugmann of the New York Times, was "truly amazing:"
  • since 2000, just the top 0.01% of income earners DOUBLED their cut of the nations total income to 6%
  • As of 2007, the top 10% of American earners accounted for 49.7% of total wages, a level "higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the 'roaring" 1920s.'"
  • "The top 1% incomes captured half of the overall economic growth over the period 1993-2007"
  • "...while the bottom 99% of incomes grew at a solid pace of 2.7% per year from 1993-2000, these incomes grew only 1.3% per year from 2002-2007. As a result, in the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth."
So, as you hear complaints that President Obama's proposed health care surtax on the wealthy is somehow unfair, point to this report. After seeing these numbers, is it any wonder why there is so much anger being displayed at health care town halls nationwide? In my opinion, the anger is justified, it's just aimed in the wrong direction.

Where is the Single Payer Debate?

With all of the attention on the pending health care overhaul focusing primarily on scare tactics, misinformation, and rowdy town hall meetings, one option has flown conspicuously under the radar: a national single-payer system, or more easily understood as Medicare-for-all. The benefits of such a system, which President Obama supported as a Senator, include:
  • health care delivery would remain private, i.e. private doctors, private hospitals, etc
  • the government would act as the sole provider of health insurance which would drastically reduce paperwork and administrative costs (medicare operates at a 3-4% overhead as compared to 30-40% for the average for-profit insurance company)
  • no more insurance executives making hundreds of millions or, in the case of GroupHealth executive Bill McGwire, billions of dollars off of the sick and dying
  • by creating the largest pool of insureds possible, it would maximize the spreading of risk and provide the cheapest possible form of insurance
So why hasn't this potential solution been a part of the debate even though recent polls suggest that it is the option most Americans would support, while they may not even know they are supporting it?

According to Fairness and Accuracy in Reporting, FAIR, the answer simple: interlocking boards of directors among the media, pharmaceutical, and insurance industries. Their investigative reporting found that:
"nine major media corporations and their major outlets, Disney (ABC), General Electric (NBC), CBS, Time Warner (CNN, Time), News Corporation (Fox), New York Times Co., Washington Post Co. (Newsweek), Tribune Co. (Chicago Tribune, L.A. Times) and Gannett (USA Today) found connections to six different insurance companies. Five out of the nine media corporations studied shared a director with an insurance company; two insurance companies—Chubb and Berkshire Hathaway—were represented by more than one media corporation director.

"The study also found crossover between these media corporations and several large pharmaceutical companies, such as Eli Lilly, Merck and Novartis, whose profits would also likely be negatively impacted by a single-payer system. Out of the nine media corporations studied, six had directors who also represented the interests of at least one pharmaceutical company. In fact, save for CBS, every media corporation had board connections to either an insurance or pharmaceutical company."
This overlapping wouldn't be cause for concern had FAIR not discovered the following trend:
"single-payer was mentioned in only 164 articles or news segments from January 1 through June 30, 2009; over 70% of these mentions did not include the voice of a single-payer advocate. Over 45% of the pieces that did include a single-payer advocate were episodes of the Ed Show, an MSNBC program whose host, Ed Shultz, frequently advocates for single-payer healthcare. Without the Ed Show, just 19% of articles or news segments that mentioned single-payer would have included an actual advocate of the plan."
So the next time you hear a negative portrayal of a national single-payer system, such as Canada's, ask yourself if the media corporation telling you that has a conflict of interest in doing so...

Thursday, August 13, 2009

The Christian Mafia

If you don't watch Real Time with Bill Maher, you missed an unbelievable interview with Jeff Sharlet, the author of The Family: The Secret Fundamentalism at the Heart of American Power. I don't know if I would have the guts to go on national television and speak truth to this kind of power.

If just half of what he's saying is true, I'm terrified by who is running this nation and what is being done around the world in OUR name.


Hazardous Health Care Debates

Rachel Maddow had a brilliant segment on her show tonight that every Democrat and sane Republican in Congress needs to watch. She gives a great summary of how far our political discourse has fallen and how it got there. I hope we aren't near some tipping point...

Visit msnbc.com for Breaking News, World News, and News about the Economy

Wednesday, August 12, 2009

The Department of Defense, Retired Military Officers, and Selling of the Iraq War to the American Public

In April of last year, David Barstow of The New York Times broke the story (for which he subsequently won the Pulitzer Prize) that the Department of Defense had employed retired military advisors to help them "sell" the American public on the Iraq War through interviews in the media. The question of whether or not this program amounted to a violation of the "use of appropriated funds for publicity or propaganda activities" is still being hotly debated despite two reports, one from the Inspector General of the Department of Defense and the other from the Government Accountability Office, claiming that the programs offenses did not rise to the level of a violation. A close reading of the two reports, however, shows why the debate is continuing.

According the IG's report:
We confirmed only one instance where an RMA was disinvited from Pentagon outreach briefings because of his unfavorable comments on DoD activities. In sworn testimony, a senior DoD official told us that General Barry R. McCaffrey, U.S. Army, Retired, was excluded from future briefings because he provided an “unfavorable perspective on the war” in television commentary.
In my opinion, the fact that even one retired military advisor was excluded due to his anti-war views is enough to consider the program propaganda. A brief consultation with Merriam-Webster would agree, as propaganda is defined as "ideas, facts, or allegations spread deliberately to further one's cause or to damage an opposing cause."
Wouldn't the silencing of dissenting opinions be considered a deliberate action to "further one's cause?"

To make matters worse, the GAO report uncovered the follow details about the DoD program (FOIA means Freedom of Information Act, RMO's means retired military officers, and OASD-PA is the Office of the Assistant Secretary of Defense for Public Affairs
):
  • A "trip schedule" that DOD included in its FOIA release identified nine trips that DOD arranged for RMOs, often accompanied by OASD-PA staff ... In some documents, OASD-PA staff described these trips as paying "huge dividends" with regard to media access, and suggested that future planned travel be limited to those RMOs with the greatest ability to serve as "message force multipliers."
  • OASD-PA staff planned RMO conference calls, meetings, and travel to coincide with significant events. For example, OASD-PA staff scheduled conference calls with RMOs to coincide with the release of the President's budget request to Congress, and DOD reports to Congress on Iraq, and to coincide with congressional hearings on troop readiness.
  • The Comptroller's Office, however, advised us that it did not have information permitting it to calculate the total cost to DOD of the RMO outreach program, including total RMO travel costs.
  • While DOD did provide talking points and other information to RMOs, and some DOD staff referred to the RMOs as "surrogates," RMOs clearly were not paid by DOD to be news readers or otherwise to deliver text provided to them by DOD...The only restriction we found that DOD imposed on RMOs was that they not identify by name any particular individual as a source.
So, to recap, the Department of Defense sent retired military officers to Iraq, Guantanamo, etc at an unknown cost to the taxpayer, then had conference calls scheduled around "significant events" to unify their message to the press, even going so far as to provide them with "talking points and other information." Then, at the next news cycle, they only continued using those RMO's who had been the most effective in spreading the administrations message. Since these retired military leaders were portrayed by the media to be impartial commentators in the discussion of whether or not to invade Iraq, which they clearly were not, how is this not an explicit propaganda campaign?

The most confusing part to me is how the GAO report didn't reach the same conclusion. Part of their own report clearly states:
Agency communications are considered covert and violate the prohibition if they are misleading as to their origin ... or if the agency conceals its role in sponsoring the materials ... Concealing the agency's role in a communication goes beyond the range of acceptable agency public information activities ... Otherwise, to the public it may appear that an independent party endorses the agency's position. Hence, materials prepared by an agency or agency contractors and circulated by them as the ostensible position of parties outside the agency constitute covert propaganda and violate the prohibition.
To me, that sounds like exactly what happened.

Unfortunately, one of the potentially more scandalous aspects of Mr. Barstow's New York Times article, was not even examined by the GAO:
While the New York Times' allegations generated legitimate scrutiny of the relationship between RMOs and DOD and raised questions about potential competitive advantage, compromised procurement processes, and the RMOs' commercial ties, those questions do not, in our view, implicate the prohibition on the use of appropriations for publicity or propaganda purposes and they are therefore outside the scope of this opinion. For similar reasons, this opinion also does not examine whether the RMOs disclosed to the viewing public or the networks whether they had commercial ties to DOD contractors or other possible conflicts of interests.
If we were to find out that a significant number of the RMO's employed in the DoD program were also on the payrolls of the same defense contractors who reaped massive profits off of the decision to go to war, we would truly be living in Orwell's 1984.

Sen. Bernie Sanders (I-VT) Unfiltered

Senator Bernie Sanders (I-VT), the longest serving Independent in the Senate and formerly the longest serving Independent in the House, has partnered with Robert Greenwald from Brave New Films to introduce the weekly web series Senator Sanders Unfiltered. So in addition to the weekly, hour-long Brunch with Bernie segment on The Thom Hartmann Show (Fridays from 9-10 am PST), you can now submit your own question for the Senator via the web.

Check out the trailer below for the web series:




To show a more aggressive side of the Senator, listen to this exchange he had with Alan Greenspan back in 2003 and keep in mind that this is back when Mr Greenspan was considered by most in politics to be an infallible economic god:




If you're not familiar with the Senator, he is frequently on Bill Maher and other talk/news/panel shows, so if you liked what Bernie had to say, I highly recommend checking your local listings.

As far as I'm concerned, he and Dennis Kucinich should split from the Democratic party and start one that is truly progressive.

Tuesday, August 11, 2009

The Broken Labor Market

One of the theories behind the destruction of the Middle Class is that as productivity skyrocketed in the 80's and 90's, while wages failed to keep pace. With productivity creating supply and wages driving demand, this created an imbalance in our economy. In order to fill in the shortage of demand (i.e. wages), the Federal Reserve dropped interest rates to loosen the credit market and banks started to offer attractive home equity lines of credit. So according to this theory, the crisis that we are in occurred because the American consumer hit his/her credit limit, causing demand to plummet and grinding our economy to a halt.

But why do I mention this? According to the Labor Department, wages have grown by 1.8% over the past year, the lowest increase ever recorded. Looking at 2009, wages increased by only 0.3% in the first quarter and 0.4% in the second. Comparing those stats to the productivity gains seen over the same quarters shows that we are doing nothing to "fix" the fundamentals of our economy, i.e. mismatched supply and demand. According to Bloomberg:
The productivity of U.S. workers grew in the second quarter at the fastest pace in almost six years as employers slashed payrolls to bolster profits. Productivity, a measure of how much an employee produces for each hour worked, rose at an annual 6.4 percent pace, more than forecast, after a 0.3 percent gain the prior three months, Labor Department data showed today in Washington.
What does this mismatch between productivity and wages mean to business? Bloomberg goes on to say:
The productivity report showed labor costs decreased at a 5.8 percent pace, the second consecutive fall and the biggest since 2001.
So if you're curious as to how the stock market can be hitting new highs even though none of the fundamentals of the economy have changed, in my opinion, you have to look no further than this report. Companies are increasing their profitability by shedding labor costs, not by increased sales/business.

So when you hear the term "jobless recovery," realize that there is no such thing. Until wages have risen enough, or prices deflate enough, there will still be a mismatch between supply and demand and our economy will continue to sputter along. I just hope we don't end up like Japan and their "lost decade"

Monday, August 10, 2009

Economic Recovery?

If you are considering divesting your retirement money back into equities, you may want to think again. The above chart, from Bloomberg.com, illustrates the problem.

Comstock Partners has stated that government efforts can't “solve a problem of excess debt generation that resulted from greed and living way beyond our means...We could wind up with a lost couple of decades.”

According to the Federal Reserve Bank of San Francisco, if private borrowers reduce their debt at the same rate as Japan's did after its economic bubble burst in the 1980's, savings rates will continue to climb to about 10% in 2018. This could inhibit growth in U.S. consumer spending, which makes up 70% of our GDP, by 0.75% annually on average during the next nine years.

This uncertainty in the markets is also apparent in the VIX, the "fear" index, which is indicating that the biggest bull run the market has seen since the 1930s won't last through September. According to last week’s reading, there is a 68% likelihood the S&P 500 will fluctuate as much as 7.2% in the next 30 days. From a historical perspective, the same upward-sloping curve occurred last August before the S&P 500 fell 9.1% in September and 17% in October. Ironically, September has also historically been the worst performing month.

On a slightly partisan note, if you look at the chart of Debt vs GDP, it's clear when our country started to live beyond it's means: the 1980's. More interestingly, this is the same time that Ronald Reagan took our top marginal tax rate from 70% to 28% over a 7 year period, while at the same time increasing taxes on the middle class through increased social security and medicare taxes. After the massive tax cuts for the wealthiest Americans, is there any wonder why the ratio of debt to GDP skyrocketed?

So, if you are looking for a point where the redistribution of wealth upward began, look no further than Ronald Reagan. In 1979, the top 1% owned 20.5% of the nations wealth. By 2004 (the latest I could find data) that number had grown to 34.3%, after peaking at 38.5% in 1995. I assume that drop was due to the market crashes of the late 90's and early 00's, so I'm sure the ratio peaked again in 2007 before the credit crunch.

Banking: "Heads I win, Tails you lose"

New York Attorney General Andrew Cuomo has just released his analysis of the compensation of the 9 largest banks participating in the Troubled Asset Relief Program, or the TARP, and the conclusions are rather shocking. (The above chart shows just how ridiculous bonus payments were in 2008 alone and comes from the AG's report, linked above)

Despite the executive claim that "employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak," their bonus structures can be summed up as "heads I win, tails you lose."

According to a Wall Street Journal review of the report:
The $32.6 billion in bonuses is one-third larger than California's budget deficit. Six of the nine banks paid out more in bonuses than they received in profit. One in every 270 employees at the banks received more than $1 million.
Although the report is full of financial information, I feel the most striking data can be seen in the following the chart I put together:

So, are we to believe that it is somehow a coincidence that a massive spike in compensation and benefits, as compared to net income, occurred at the same time as the largest government bailout this country has ever seen? Between 2007 and 2008, the average compensation as a percentage of net income at these banks increased by 47% while at the same time posting record losses totaling almost $100 billion. How have we not opened investigations into this unprecedented theft from the American taxpayer?

So while the White House is on the record as saying:
"The president continues to believe that the American people don't begrudge people making money for what they do as long as...we're not basically incentivizing wild risk-taking that somebody else picks up the tab for"
How is that not the situation we are currently in?

So for anyone who thinks a pay czar is too much socialism, I ask what are the other options? If the banking sector won't responsibly reform themselves from the inside, how is it NOT the proper role of government to step in and fix the problem?

Just to add insult to injury, at the same time that the banks are taking unprecedented amounts of "free" money from the government and Federal Reserve, they are also increasing their overdraft fees. If current trends continue, banks stand to collect a record $38.5 billion in overdraft fees alone, double what they brought in in 2000. In fact, 5 of the 10 largest banks have increased their overdraft fees within the last year, raising t
he median overdraft fee from $25 to $26, the first increase during a recession in 40 years. The largest banks (with over $50 billion in assets, i.e. Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo) charge even more, with a median fee of $35.

What makes this practice so destructive is that it disproportionally affects the poorest depositors and those with the lowest credit ratings. According to Moeb Services, 90% of overdraft revenues come from just 10% of the 130 million checking accounts in the US. After taking so much taxpayer money, how can we let the banks do this?

Saturday, August 8, 2009

Torture Photos

In one of the biggest departures from his campaign promises of openness and transparency, President Obama's Justice Department has asked the Supreme Court to overturn an appeals court decision requiring the Pentagon to disclose photos depicting alleged abuse of prisoners in U.S. military custody in Iraq and Afghanistan. The photos had originally been ordered to be released due to a Freedom of Information Act lawsuit filed by the ACLU.

Solicitor General Elena Kagan is on the record as saying:
“The President of the United States and the Nation’s highest-ranking military officers responsible for ongoing combat operations in Iraq and Afghanistan have determined that disclosure by the government of the photographs at issue in this case would pose a significant risk to the lives and physical safety of American military and civilian personnel by inciting violence targeting those personnel"
President Obama has stated:
“It's… my belief that the publication of these photos would not add any additional benefit to our understanding of what was carried out in the past by a small number of individuals. In fact, the most direct consequence of releasing them, I believe, would be to further inflame anti-American opinion and to put our troops in greater danger."
So let me get this straight? Abusing detainees is legally ok, but releasing photos depicting the abuse isn't? There is a massive cognitive dissonance in that reasoning.

So far, the government has admitted that the photos depict “soldiers pointing pistols or rifles at the heads of hooded and handcuffed detainees” and one image showing a handcuffed and hooded prisoner and a soldier who is acting “as if” he is violating a detainee with a broom handle. Others, however, are claiming far worse.

According to Major General Antonio Taguba, the former army officer who conducted the official inquiry into Abu Ghraib:
“These pictures show torture, abuse, rape and every indecency... The mere description of these pictures is horrendous enough, take my word for it.”

One of the sworn statements given to Mr Taguba from a detainee, which was released due to a Freedom of Information Act request, went as follows:
“I saw [name of a translator] ******* a kid, his age would be about 15 to 18 years. The kid was hurting very bad and they covered all the doors with sheets. Then when I heard screaming I climbed the door because on top it wasn’t covered and I saw [name] who was wearing the military uniform, putting his **** in the little kid’s ***…. and the female soldier was taking pictures.”
Either the photos show that Bush Administration is guilty of systematic torture and therefore the photos shouldn't be released out of concern of retaliation against our troops, or the pictures are 99% harmless and should be published. So, if President Obama really believes that we are in the first scenario and continues to block the photos from being released, he must launch an investigation into the previous administrations "enhanced interrogation" program. The President can't have it both ways.

To put an exclaimation point on this insanity, this story was initially broken back on May 10th 2004 by Sy Hersh in The New Yorker. How has this flown so far under the radar that all of the facts still aren't out by 2009? I would guess most Americans still have no idea that nearly 100 detainees have died in US custody since 2002 ...

Friday, August 7, 2009

Blackwater

Xe, the contractor formerly known as Blackwater, is rapidly becoming part of one of the craziest, jaw-dropping stories I've ever heard. The story, broken by Jeremy Scahill, has been covered on Countdown with Keith Olbermann all week, so I thought I'd consolodate the clips below.

The essence of the story is that Eric Prince, the founder of Blackwater, considered himself the head of a Christan army tasked with the elimination of Muslims around the world who murdered not only countless Iraqi's but also at least one person who was going to testify against the company. It's unbelievable.


The combination of this story, if it is accurate, with Secretary of Defense Donald Rumsfeld putting biblical quotes on the coversheets of President Bush's Iraq War intelligence briefings paints a horrible picture of how the previous administration really saw the Iraq War...

Friday, August 7



Thursday, August 6



Wednesday, August 5


Tuesday, August 4

Health Care Hodgepodge

Amenable Mortality

Amenable mortality is defined as a body count of people who die due to a lack of "timely and effective health care" and is a useful statistic when comparing different countries health care systems. The higher the amenable mortality, the more the health care system is failing.

According to a British study done in 1997-1998, as reported by Consumer Reports, the US ranked 15th out of the 19 countries they looked at. When they redid their study again for 2002-2003, they found that the US had fallen to last place. The current rankings are as follows:

If the US reaches the average of 18 other countries, up to 75,000 deaths would be saved every year. If the U.S. ranked in the top three, there would be 101,000 fewer deaths per year.

So who how can anyone claim that the US has the best system on Earth?


Prescription Drug Commercials

As a quick follow up to an earlier post on big pharma, it looks like Congress may ban or more tightly regulate TV commercials for prescription medications. Personally, I think this is a great idea because, like certain financial instruments, some things are too complicated to be marketed directly to the general public. It should be a doctor recommending a medication to their patient, not the company who stands to profit of off it.

What most people don't know is that The United States is one of only two countries that permit direct-to-consumer drug advertisements, the other being New Zealand.


Brave New Films

Robert Greenwald just released a new video, you can watch it below, exposing the health care industry's massive profits and executive compensations at BraveNewFilms.org. He also set up the website sickforprofit.com that has some other unbelievable information.

Irrational Markets Part 2


Today, AIG announced a $1.8 billion second quarter profit, it's first since 2007. Bolstered by this "optimistic" news, AIG's share price closed out an impressive week of gains at 27.14 (after opening the week at only 13.18). That means that in the last 5 days, AIG's market value has more than doubled. The chart above, from Yahoo!Finance, shows AIG's weekly share price data.

However, if you dig a little deeper into AIG's financial release, it's clear that this "profit" was completely manufactured through accounting tricks. According to the Financial Times, who did the digging:
  • Their profit was driven by lower writedowns on toxic assets, due to improvements in credit markets and changes to accounting rules (i.e. the mark-to-market rule that was eased in April), and not by increased revenues.
  • According to Ed Liddy (the former government-appointed CEO of AIG), a reduction in credit from the New York Fed would cost AIG $5 billion in future quarters.
  • Operating income in general insurance fell 20% as premiums dropped
In addition to that financial turmoil, AIG announced not only a new CEO this week, but also a new nonexecutive chairman. How does financial chaos + leadership chaos = 106% increase in share price?

Irrational Markets

The Department of Labor announced today that the "official" unemployment rate decreased from 9.5% to 9.4% during the month of July. Because of this "good news," the market climbed over 100 points today. However, after a closer look at the data, I would love to know why this was received as good news.

Buried in the announcement, as reported by cnn.com, was the following information:
  • Although there was a net loss of 247,000 jobs in July (the fewest job losses since August 2008), the Labor Department's unemployment rate dropped due to revised job loss numbers for June and 237,000 people it stopped counting as unemployed (i.e. they became what are known as discouraged workers, they retired, or they went back to school)
  • The average hourly work week increased to 33.1 hours, up from a record low of 33.0 hours in June (still not close to a full-time work week).
  • The number of workers who wanted full-time work but could only find part-time jobs fell by 191,000, or 2%. By backing out that percentage, I arrive at the massive number of over 9.5 million Americans who are "under-employed."
  • The number of people unemployed for more than six months reached a record high of nearly 5 million people.
  • The average time of unemployment has reached 25.1 weeks, the longest ever recorded.
  • According to FT.com, over 16% of people in the US are currently unemployed, underemployed, currently reskilling, or discouraged.
To make matters even more confusing, when ADP released their unemployment estimate of 371,000 jobs lost in July (which was higher than analysts had predicted) two days ago, the market dropped. So because someones guess came in worse than someone else's guess, the market went down? Why doesn't "the market" just wait for the official numbers to be released before pricing in that change? Why is there so much speculation involved?

Because I'm not an economist, I'll end this with two quotes from experts (from an article in at FT.com):

“A more hopeful sign would be a sharp increase in the rate of unemployment due to people re-entering the workforce” - Joseph Brusuelas, director of Moody’s Economy.com

“This is almost like you’ve had a 20 pound weight dropped [on your head] and now it’s a 10 pound weight: It’s still really bad news” - Peter Morici, professor of economics at the University of Maryland.

64th Anniversary of Hiroshima

Yesterday marked the 64th anniversary of the worst massacre in human history: the dropping of the atomic bomb on Hiroshima. 50,000 people from 60 countries gathered to commemorate the event and listen to Japan's call for a total elimination of nuclear weapons by the year 2020. Japanese Prime Minister Taro Aso spoke, detailing Japan's commitment to building a non-nuclear world:
"Japan will continue to uphold its three non-nuclear principles, and lead the international community toward the abolishment of nuclear weapons and lasting peace."
So, as we face the potential of nuclear war with Iran, North Korea, Hamas, or any "stateless" enemy, it's important to remember that the only nation to ever USE a nuclear weapon was the US. As we remember what we did, here are some reminders:
  • The Hiroshima blast killed approximately 80,000 people instantly, and destroyed the entire city. The total reached 220,000 when Nagasaki was bombed three days later.
  • "The full count of the atomic bomb's victims was approximately 140,000 by the end of 1945, and has since reached 260,000."
  • "The use of the bomb to end WWII ushered in a new nuclear era, and today, there are 27,000 bombs in the global nuclear arsenal. According to William Hartung of the New America Foundation, that's enough to destroy the world several times over."
The LA Times conducted a poll ("Do you think the United States did the right thing or the wrong thing by dropping the atomic bomb on Hiroshima and Nagasaki?") to see whether or not American's still agree with President Truman's use of the bomb and found some interesting results:
  • 61% said they believed it was the right thing, 22% called it wrong, and 16% were undecided.
  • 73% of voters older than 55 approved, while only 50% of voters ages 18 - 34 approved.
  • 74% of Republicans said the bombings were a good idea, and 49% of Democrats agreed.
  • 72% of men approved and 51% of women agreed.
Though some of those numbers surprise me (especially that almost 3 out of 4 people over age 55 approve of the bombing), the fact that the approval rate drops 25% among the younger generation gives me hope that we are moving in the right direction.

Personally, I can't think of any reason why a nuclear weapon should ever be used. What could justify the instantaneous killing of 80,000 human beings? Not to mention the fact that modern nuclear weapons are thousands of times stronger than the bombs dropped on Hiroshima and Nagasaki.

To put some perspective on the issue, the American Cancer Society estimates that 440,000 people die annually from tobacco use. Or put another way, almost twice as many people die annually from tobacco products than died from dropping nuclear bombs on Hiroshima and Nagasaki...

Tuesday, August 4, 2009

Big Pharma

A new study featured on MSNBC.com found that from 1996 to 2005, the number of Americans on antidepressants doubled from 13 million to 27 million, or almost 10% of the population.

According to IMS Health, in 2008 there were more than 164 million prescriptions written for antidepressants, which totalled $9.6 billion in U.S. sales. The reason this should be alarming, however, isn't mentioned in the study.

Psychologists from the University of Hull in England studied 50 clinical trials of modern antidepressants (4 Selective Serotonin Reuptake Inhibitors, or SSRIs for short, were tested including Prozac and Efexor) and found that, for mildly depressed patients, they work no better than a sugar pill. Even the results of their efficacy for the most severely depressed patients were inconclusive.

As a results of the study, Professor Irving Kirsch from the university’s psychology department has stated:
The difference in improvement between patients taking placebos and patients taking anti-depressants is not very great. This means that depressed people can improve without chemical treatments. Given these results, there seems little reason to prescribe anti-depressant medication to any but the most severely depressed patients.
The bad news doesn't end there. There is a huge collection of anecdotal evidence that SSRIs cause violent episodes and increase the patients risk of suicide. For example, both Eric Harris of the Columbine tragedy and Cho Seung-Hui of the VA Tech massacre were taking or had taken SSRI's. Because a study of 2200 children on SSRIs done by the FDA found that thoughts of suicide occurred at roughly twice the rate of a placebo, SSRIs currently have the most serious type of FDA warning: the "Black Box" label warning.

All that being said, why isn't our government doing something to protect the record number of current consumers from the potentially dangerous class of drugs? In my opinion, it again has to do with the power of money in our current political system. Courtesy of citizen.org, who produced the graph seen above, here are some interesting facts about the profitability of the drug industry:
  • "it was rated the most profitable industry in 2000 and has been consistently ranked number one or two by Fortune over the past few decades"
  • "Fortune reports that the 11 drug companies in the Fortune 500 enjoyed rates of profitability (measured in return on revenue) that were three to four times greater than the median for all industries in the Fortune 500. Pfizer, the second-largest drug company, has seen the value of its stock increase a stunning 1,454 percent over the last decade"
  • "Public Citizen found that Fortune 500 drug companies plowed 30 percent of their revenues into marketing and administration, while committing just 12 percent of revenues to research and development"
  • "The largest American drug company, Merck, had profits of $6.8 billion in 2000, which was more than the profits of all the Fortune 500 companies in the airline, entertainment, food production, metals and hotel/casino/resorts industries combined."
  • "The drug industry’s success in Fortune 500 profitability rankings has become a rite of spring. In the 1970s and 1980s, Fortune 500 drug companies enjoyed rates of return on revenue that were two times greater than the median for all industries in the Fortune 500. In the 1990s, the drug industry’s rates of return on revenue were almost four times greater than the median for all industries in the Fortune 500."
In an example of what happens when the lobbyists win, all you have to do is look at Medicare Part D. By getting the now famous the-government-can't-negotiate-drug-prices-with-the-drug-companies donut hole in the program, the ten largest pharmaceutical manufacturers saw a combined $8 billion increase in their profits in just the first 6 months of the program. Also, because President Bush did not fund the program, Medicare Part D added an unfunded liability of almost 9 trillion to the national debt. Let's hope they don't get their hands on the current health care overhaul...

So, to summarize: A record number of Americans are taking a medication that may or may not be more effective than a sugar pill that has the most dangerous FDA warning because of increased risk of suicide and violence while at the same time bankrupting the nation and enriching the executives of a handful of multi-national corporations.

Banking in America: 2009

Just weeks after announcing massive profits, it appears that the banking sector made them off of the backs of the taxpayer, NOT by increased lending or refinancing.

JP Morgan Chase, Bank of America, Goldman Sachs, and Citigroup alone announced profits totaling $13.6 billion for the second quarter, just 6 short months after losing a combined $20.8 billion.
That is a net turnaround of $34.4 billion in half a year. If you were to step back even further, according to Presido, the 115 banks that participated in the TARP managed to turn their 2006 combined profits of $119.3 billion into a loss of $19.3 billion in 2008, totaling a net turnaround of $138.6 billion in 2 years. Over that same period, roughly 33% of CEOs and 40% of CFOs at these very same banks saw their direct compensation rise, primarily through increases in stock options of 71% for CEOs and 59% for CFOs. So not only did the banks destroy our economy, their executives got paid more to do it.

To make matters worse, New York State Attorney General Andrew Cuomo just released a report showing that in 2008 several financial institutions that received bailout money gave bonuses that greatly exceeded the amount of profit generated by the banks. For example, according to CBS News:
• Goldman Sachs, which earned $2.3 billion last year and received $10 billion in TARP funding, paid out $4.8 billion in bonuses in 2008 - more than double their net income.

• Morgan Stanley, which earned $1.7 billion last year and received $10 billion in bailout funds, handed out $4.475 billion in bonuses, nearly three times their net income.

• JPMorgan Chase, which earned $5.6 billion in 2008 and received $25 billion from the government, paid out $8.69 billion in bonus money.

• Citigroup and Merrill Lynch lost a combined $54 billion last year. They received a total of $55 billion in bailouts and paid out $9 billion in combined bonuses. ($5.33 billion for Citigroup; $3.6 billion for Merrill Lynch, which was subsequently acquired by Bank of America, which was just fined $33 million by the SEC for misleading investors about the Merrill bonus payments.)
According to a Wall Street Journal article from back in April, the major recipients of the TARP contracted their lending and refinancing by 23%, as compared to when the program began in October. The decline was so widespread that only 3 of the TARP's 19 largest beneficiaries had an increase in new loans and the total dollar amount lent declined in 3 of the first 4 months of the program. According to the Treasury Department (compiled by the Wall Street Journal), the decrease in lending per bank is as follows, with a median value of -2.2%:


Perhaps the banks have been failing to loan money because they were too busy refinancing delinquent loans through Obama's $75 billion Making Home Affordable program? Think again. Here are the percentage of eligible loans currently being modified, broken down by bank according to the Treasury Department:
  • Wachovia: 2%
  • Bank of America: 4%
  • Wells Fargo: 6%
  • Citigroup: 15%
  • JP Morgan: 20%
  • GMAC: 20%
  • Aurora Loan Services (a former unit of Lehman Brothers): 21%
  • Morgan Stanley’s Saxon Mortgage Services: 25%
So to summarize: over the last two years the banking sector managed to lose $140 billion while dramatically increasing executive compensation (to the point that, for some banks, their bonuses paid exceeded total profits and the ratio of CEO pay to worker pay is now between 300-400 to 1 on average ) and managing to receive a massive taxpayer bailout. Then, once they had the bailout funds, they cut lending even further and (because of a little known change in mark-to-market, fair-value accounting standards by the FASB) are drag their feet in helping their customers renegotiate their loan agreements.

What a system...

Monday, August 3, 2009

The "Success" of Cash for Clunkers

As many in the media trumpet the success of the "Cash-for-Clunkers" program, I'd like to point something out from an article that ran in the Financial Times today:
According to transportation department data, Toyota accounted for three of the top 10 models bought under the cash-for-clunkers scheme. Honda and Ford had two each, and GM and Chrysler one each.
So, with 7 of the top ten cars sold under the program being foreign-made, cash-for-clunkers has been very successful at stimulating the economies of Japan and South Korea, but not so much for ours. Should Congress have considered a "Buy American" clause in the legislation? It may have discouraged some of the car buyers, but it would have led to a greater domestic stimulus.

However, as far as the programs environmental impact is concerned, it has been an overwhelming success:
The government estimates the average fuel consumption of vehicles bought under the programme is 25.4 miles per gallon, compared with an average 15.8 mpg for trade-ins.
The only question left is whether or not the Senate will pass the $2 billion supplement to the program. Many Republicans, John McCain for one, have already pledged to block it.