They did so by voting no on the 2016 debt ceiling/budget deal.
I cannot add anything to that raw statistic except to say that I hope the 2016 Democratic Presidential campaign uses that fact to show how untrustworthy the GOP are to be in the White House. The No votes included every GOP Senator running for President except Lindsay Graham.
Friday, October 30, 2015
Sunday, October 25, 2015
Sunday Musings 10/25/15: The Fed, Ross Perot, and Islamic Terrorists
There are some tea party types that would like to abolish the Federal Reserve. I don't understand that. Without an institution to perform the Lender of Last Resort function, an economy is subject to periodic depressions that wipe out the savings and employment of everyone except those fortunate enough to be in the right place and 20 years before the event when people enter the work force, no one has a clue what the right place will be.
Imagine the state of the world if Ross Perot had not run for President in 1992. Bush I would likely have won reelection. Some other Democrat, possibly Al Gore, would have won the 1996 and 2000 elections. We would not have had Bush II and Cheney with their Iraq obsession, but would have had the obsession with Osama Bin Ladan. So Sadam Hussein would still be in Baghdad and ISIS would not exist.
We would also have a very different Supreme Court and there would be no Citizens United. And we can hope that there would have been better regulation of the mortgage market and there would have been no Great Recession and no Tea Party today.
But Ross Perot did run and we have a country seriously divided. About 20% of the voting population is adamantly conservative (no matter what inconsistencies exist within that framework) and 20% of the population is adamantly liberal. And once again, the 60% in the middle are tossed about in the storm created when one of the 20% on the fringe get to dominate with their views.
You would think a Presidential candidate could run on the views of that middle but we see almost every Presidential wanna be catering to the 20% of the fringe in their party.
This is pitiful and does a disservice to the electorate because they are neither lead nor allowed to vote for or against a realistic set of policies.
I am reading Henry Kissinger's book World Order. It has very complex thoughts and I will have more to say about it when finished. I am currently in his review of the Islamic World. The instincts that support terrorism have been part of Arab Islam since Mohammed founded the religion, and the developments that have allowed the rest of the world to develop economically and socially within a peaceful (more or less) manner the last 50 years are a dire threat to people who have those instincts and desires. But the autocratic regimes that either we or the Arab Spring over threw reveal a population divided into 3 relatively equal groups: Conservatives who support a radically conservative Islamic State, a secular military, and an educated middle class that wants democracy but can't get the votes to defeat the conservatives. If this book had been written 20 years ago, perhaps Bush II and Cheney would have had second thoughts about their confidence in nation building.
Nation building in the Arab World can only be done by Muslims as there is an insufficient body of people with democratic instincts within those countries. And the borders were a colonial convenience. Redrawing borders would seem inevitable to me if there is to be coherent government in some of these countries.
Imagine the state of the world if Ross Perot had not run for President in 1992. Bush I would likely have won reelection. Some other Democrat, possibly Al Gore, would have won the 1996 and 2000 elections. We would not have had Bush II and Cheney with their Iraq obsession, but would have had the obsession with Osama Bin Ladan. So Sadam Hussein would still be in Baghdad and ISIS would not exist.
We would also have a very different Supreme Court and there would be no Citizens United. And we can hope that there would have been better regulation of the mortgage market and there would have been no Great Recession and no Tea Party today.
But Ross Perot did run and we have a country seriously divided. About 20% of the voting population is adamantly conservative (no matter what inconsistencies exist within that framework) and 20% of the population is adamantly liberal. And once again, the 60% in the middle are tossed about in the storm created when one of the 20% on the fringe get to dominate with their views.
You would think a Presidential candidate could run on the views of that middle but we see almost every Presidential wanna be catering to the 20% of the fringe in their party.
This is pitiful and does a disservice to the electorate because they are neither lead nor allowed to vote for or against a realistic set of policies.
I am reading Henry Kissinger's book World Order. It has very complex thoughts and I will have more to say about it when finished. I am currently in his review of the Islamic World. The instincts that support terrorism have been part of Arab Islam since Mohammed founded the religion, and the developments that have allowed the rest of the world to develop economically and socially within a peaceful (more or less) manner the last 50 years are a dire threat to people who have those instincts and desires. But the autocratic regimes that either we or the Arab Spring over threw reveal a population divided into 3 relatively equal groups: Conservatives who support a radically conservative Islamic State, a secular military, and an educated middle class that wants democracy but can't get the votes to defeat the conservatives. If this book had been written 20 years ago, perhaps Bush II and Cheney would have had second thoughts about their confidence in nation building.
Nation building in the Arab World can only be done by Muslims as there is an insufficient body of people with democratic instincts within those countries. And the borders were a colonial convenience. Redrawing borders would seem inevitable to me if there is to be coherent government in some of these countries.
Saturday, October 24, 2015
Tuesday, October 20, 2015
Chris Christie
When politicians are down in the polls, they do desperate things to try and get attention.
However, other than Donald Trump and Ben Carson, such outlandish statements don't seem to do much good.
But for the record, yesterday, Chris Christie proposed that the U.S. arbitrarily set up a no-fly zone in Syria and promised to shoot down every Russian plane that violates that no-fly zone. Do you possibly think that there might be consequences from such action?
It is no wonder that people who work for him thought it was a good idea to close down George Washington Bridge access to punish a Democratic Mayor for not supporting him. Detailed thinking about consequences does not seem to a characteristic of Chris Christie or his staff.
He has now thoroughly convinced me that he is not qualified to be President. And I thought he was one of the saner candidates of the "deep bench" that the GOP is sorting through to nominate a Presidential candidate.
We are now down to Bush and Kasich as the only sane GOP candidates and they don't get much more support than a dog catcher would.
However, other than Donald Trump and Ben Carson, such outlandish statements don't seem to do much good.
But for the record, yesterday, Chris Christie proposed that the U.S. arbitrarily set up a no-fly zone in Syria and promised to shoot down every Russian plane that violates that no-fly zone. Do you possibly think that there might be consequences from such action?
It is no wonder that people who work for him thought it was a good idea to close down George Washington Bridge access to punish a Democratic Mayor for not supporting him. Detailed thinking about consequences does not seem to a characteristic of Chris Christie or his staff.
He has now thoroughly convinced me that he is not qualified to be President. And I thought he was one of the saner candidates of the "deep bench" that the GOP is sorting through to nominate a Presidential candidate.
We are now down to Bush and Kasich as the only sane GOP candidates and they don't get much more support than a dog catcher would.
Thursday, October 15, 2015
Dear Israel,
I know you have to defend your population but you have to also think about reality.
When you prevent economic activity you cut off hope. Without hope, you get either acquiesence or frustration. A body of frustrated people will act out in desperation and harm those who they perceive as frustrating them. They will not be peaceful.
This is why it is becoming ever more critical to Israel's survival as a democracy for all people who live within its borders that Israel arbitrarily create a State of Palestine so that the people have a government to focus their frustration on and Israel has a counterparty they can hold accountable for holding the peace.
And the West Bank Settlements have to go because you can't defend citizens who live in a foreign country and breed the frustration that is generating the storm of violence.
The reality is Israel cannot be a democracy and occupy the West Bank; confiscating property on a continuous basis.
How can you let 65 years of successfully dealing with threats and attacks make you so arrogant that you forget there is a reality of people living side by side and that a government cannot protect individual people from attacks by individual neighbors. There has to be a division between potential combatants and a viable state to hold accountable for the actions of their people.
For better or worse (in many months) Hamas is accountable for Gaza. Create the conditions so the PLO is accountable for the West Bank. It is is critical to Israel's future as a democracy and a peaceful place to exist.
Sincerely,
An Individual of Hebrew Heritage
When you prevent economic activity you cut off hope. Without hope, you get either acquiesence or frustration. A body of frustrated people will act out in desperation and harm those who they perceive as frustrating them. They will not be peaceful.
This is why it is becoming ever more critical to Israel's survival as a democracy for all people who live within its borders that Israel arbitrarily create a State of Palestine so that the people have a government to focus their frustration on and Israel has a counterparty they can hold accountable for holding the peace.
And the West Bank Settlements have to go because you can't defend citizens who live in a foreign country and breed the frustration that is generating the storm of violence.
The reality is Israel cannot be a democracy and occupy the West Bank; confiscating property on a continuous basis.
How can you let 65 years of successfully dealing with threats and attacks make you so arrogant that you forget there is a reality of people living side by side and that a government cannot protect individual people from attacks by individual neighbors. There has to be a division between potential combatants and a viable state to hold accountable for the actions of their people.
For better or worse (in many months) Hamas is accountable for Gaza. Create the conditions so the PLO is accountable for the West Bank. It is is critical to Israel's future as a democracy and a peaceful place to exist.
Sincerely,
An Individual of Hebrew Heritage
Wednesday, October 14, 2015
The Repeal of Glass Steagall Did NOT Cause the Financial Crisis (or income inequality)
In fact, it helped to alleviate it.
Let us review what Glass Steagall did. It forbid deposit taking banks from trading securities in the United States. But they could trade United States Treasuries, municipal bonds, foreign exchange, and gold. So U.S. based banks traded other securities in foreign affiliates which were exempt from U.S. law, but not U.S. regulation for safety and soundness. The investment banks, which were allowed to trade securities in the United States, were also lightly regulated for safety and soundness, but not as rigidly as the deposit taking banks.
So all the repeal of Glass Steagall did was allow U.S. based deposit taking banks to trade all securities in the United States entities.
So what happened in 2008? Washington Mutual and Countrywide (mortgage banks) failed or were sold on the brink of failure. Both were deposit taking banks that did not trade securities. Bear Stearns and Lehman Brothers, both investment banks, failed causing a financial crisis in which liquidity was withdrawn from all banks. One of the basic functions of the Federal Reserve, and every other Central Bank, is to be the Lender of Last Resort and provide liquidity to the banking system when there is a liquidity crunch. That is what the Federal Reserve did in 2008. But something else happened in the liquidity crunch. Some institutions that did not have access to the Federal Reserve were having liquidity calls on derivative positions and did not have the cash to make those payments. Merrill Lynch and AIG come into the picture here, neither a deposit taking bank. And Goldman Sachs had too much exposure to AIG and would be seriously harmed and possibly fail as a result. Goldman Sachs is not a deposit taking bank.
Let me change subject for a minute. The economy is made up of Labor and Capital. Together they equal GDP and are what keep the economy functioning and people employed. If you shrink either one, you create a recession or a depression (which is a very serious recession). When any company fails, debt and equity values are written off, they are made worthless. That loss of value is a reduction in capital and directly results in a loss of GDP as employment is reduced.
The thing about the the mortgage banks and the non-deposit taking investment banks is their balance sheets totaled into the hundreds of billions of dollars. You cannot wipe out 5% to 10% of GDP and not cause a more serious recession than you are already in. To be replenished, capital must come from income and that takes time to rebuild. In the meantime, employment is reduced directly in the firms that fail and the firms that supplied services to those now unemployed people so that other firms harmed by this failure can rebuild from the remaining profitability.
But the thing to remember about these liquidity starved firms is that their failure was caused by the mark-to-market of their assets and fear. Yes, they had some bad assets, but they also had equity. Yet, lenders fled.
And who saw value in buying these institutions at cheap prices, the deposit taking banks who had not failed and had been supported by the lender of last resort. So JP Morgan bought Bear Stearns for the value of their building, Bank of America overpaid for Merrill Lynch but has still made some money on it. I don't know why these same banks rescued Washington Mutual and Countrywide, but I suspect the legal liability was underestimated and absent that the economics would have worked.
But the point is, both JPM and BAC were stronger because of the diversity of their revenues and that put them in a position to make timely acquisitions and stabilize the economy. That is what you want to happen in a liquidity crisis. You want to cutoff the panic because panic exacerbates the recession.
2008 happened because the mortgage industry was poorly regulated. Too much credit was extended to people who could not pay it back and when those loans were written down, capital shrank and a recession occurred. The financial crisis was caused by that, and if that hadn't happened, there wouldn't have been a financial crisis. The mortgage industry didn't need Universal Banks like JPM, Citibank or BAC to do what they did. They could have done it with just the mortgage banks and the investment banks.
That is why there must be regulation of all aspects of the lending system.
That is what Dodd Frank accomplishes. And all reinstating Glass Steagall would do is reduce diversity of Big Bank earnings and their financial strength.
So Bernie Sanders and Martin O'Malley, you were wrong last night to call for a reinstatement of Glass Steagall. Glass Steagall or something like it will not solve income inequality.
Let us review what Glass Steagall did. It forbid deposit taking banks from trading securities in the United States. But they could trade United States Treasuries, municipal bonds, foreign exchange, and gold. So U.S. based banks traded other securities in foreign affiliates which were exempt from U.S. law, but not U.S. regulation for safety and soundness. The investment banks, which were allowed to trade securities in the United States, were also lightly regulated for safety and soundness, but not as rigidly as the deposit taking banks.
So all the repeal of Glass Steagall did was allow U.S. based deposit taking banks to trade all securities in the United States entities.
So what happened in 2008? Washington Mutual and Countrywide (mortgage banks) failed or were sold on the brink of failure. Both were deposit taking banks that did not trade securities. Bear Stearns and Lehman Brothers, both investment banks, failed causing a financial crisis in which liquidity was withdrawn from all banks. One of the basic functions of the Federal Reserve, and every other Central Bank, is to be the Lender of Last Resort and provide liquidity to the banking system when there is a liquidity crunch. That is what the Federal Reserve did in 2008. But something else happened in the liquidity crunch. Some institutions that did not have access to the Federal Reserve were having liquidity calls on derivative positions and did not have the cash to make those payments. Merrill Lynch and AIG come into the picture here, neither a deposit taking bank. And Goldman Sachs had too much exposure to AIG and would be seriously harmed and possibly fail as a result. Goldman Sachs is not a deposit taking bank.
Let me change subject for a minute. The economy is made up of Labor and Capital. Together they equal GDP and are what keep the economy functioning and people employed. If you shrink either one, you create a recession or a depression (which is a very serious recession). When any company fails, debt and equity values are written off, they are made worthless. That loss of value is a reduction in capital and directly results in a loss of GDP as employment is reduced.
The thing about the the mortgage banks and the non-deposit taking investment banks is their balance sheets totaled into the hundreds of billions of dollars. You cannot wipe out 5% to 10% of GDP and not cause a more serious recession than you are already in. To be replenished, capital must come from income and that takes time to rebuild. In the meantime, employment is reduced directly in the firms that fail and the firms that supplied services to those now unemployed people so that other firms harmed by this failure can rebuild from the remaining profitability.
But the thing to remember about these liquidity starved firms is that their failure was caused by the mark-to-market of their assets and fear. Yes, they had some bad assets, but they also had equity. Yet, lenders fled.
And who saw value in buying these institutions at cheap prices, the deposit taking banks who had not failed and had been supported by the lender of last resort. So JP Morgan bought Bear Stearns for the value of their building, Bank of America overpaid for Merrill Lynch but has still made some money on it. I don't know why these same banks rescued Washington Mutual and Countrywide, but I suspect the legal liability was underestimated and absent that the economics would have worked.
But the point is, both JPM and BAC were stronger because of the diversity of their revenues and that put them in a position to make timely acquisitions and stabilize the economy. That is what you want to happen in a liquidity crisis. You want to cutoff the panic because panic exacerbates the recession.
2008 happened because the mortgage industry was poorly regulated. Too much credit was extended to people who could not pay it back and when those loans were written down, capital shrank and a recession occurred. The financial crisis was caused by that, and if that hadn't happened, there wouldn't have been a financial crisis. The mortgage industry didn't need Universal Banks like JPM, Citibank or BAC to do what they did. They could have done it with just the mortgage banks and the investment banks.
That is why there must be regulation of all aspects of the lending system.
That is what Dodd Frank accomplishes. And all reinstating Glass Steagall would do is reduce diversity of Big Bank earnings and their financial strength.
So Bernie Sanders and Martin O'Malley, you were wrong last night to call for a reinstatement of Glass Steagall. Glass Steagall or something like it will not solve income inequality.
Tuesday, October 13, 2015
GOP Incoherency
While over 50% of those willing to be polled and representing themselves as GOP Primary voters want a non-politician to run as their Presidential candidate, the blathering radio hosts and bloggers who represent themselves as the conscience of the GOP are having a field day ripping Paul Ryan as not being conservative enough for them.
What does Paul Ryan want? Well he wants to turn Medicare into Obamacare for Seniors while wiping out Obamacare for everyone younger than 65. He wants to reform the tax code while maintaining some revenues to pay for defense, the judiciary, and the criminal incarceration system and not much more. He supports Supreme Court Justices along the lines of Scalia and Thomas. And he doesn't want to deport 11 million people and turn every person who remembers their immigrant ancestors into an anti-GOP voter.
The incoherence is now so rampant in the House of Representatives, that even David Brooks agrees with me that the Freedom Caucus doesn't respect Democracy.
Link to David Brooks column
What does Paul Ryan want? Well he wants to turn Medicare into Obamacare for Seniors while wiping out Obamacare for everyone younger than 65. He wants to reform the tax code while maintaining some revenues to pay for defense, the judiciary, and the criminal incarceration system and not much more. He supports Supreme Court Justices along the lines of Scalia and Thomas. And he doesn't want to deport 11 million people and turn every person who remembers their immigrant ancestors into an anti-GOP voter.
The incoherence is now so rampant in the House of Representatives, that even David Brooks agrees with me that the Freedom Caucus doesn't respect Democracy.
Link to David Brooks column
Thursday, October 8, 2015
The Most Amazing Thing About the Freedom Caucus
They claim they want respect for their minority position, and are willing to shut down the government if they don't get their way.
Yet, they refuse to acknowledge the right of the Congressional Democrats, who are a larger minority legislatively speaking, to have any say.
And they refuse to acknowledge the right of the President to have a say in any policy they care about.
So, the only conclusion you can reach is one that is truly amazing:
The Freedom Caucus does not believe in democracy.
How do we get rid of these people? They are a plague on society.
Yet, they refuse to acknowledge the right of the Congressional Democrats, who are a larger minority legislatively speaking, to have any say.
And they refuse to acknowledge the right of the President to have a say in any policy they care about.
So, the only conclusion you can reach is one that is truly amazing:
The Freedom Caucus does not believe in democracy.
How do we get rid of these people? They are a plague on society.
Monday, October 5, 2015
Homeland Security Policies and Gun Control
I had to fly to Atlanta and back this weekend. As usual, I had to remove my shoes, put my small bottles of liquid medicine in a plastic bag, checked my bag because I brought a big tube of toothpaste and not purchased a bottle of water at somewhere cheap because I can't bring it through security.
All because someone somewhere thought of a way to make a bomb that they might have set off on a US airliner and these precautions protect passengers from someone else using the same technology to bring a bomb onto a US Airliner. So thousands of passengers a day suffer inconvenience for their protection from something that has never happened. And the GOP and many Republicans support and tolerate this.
Yet, over 30,000 people die every year by gun shots in the U.S. It varies by year, but on average over 100 policeman, who are armed and trained to protect themselves, are killed by guns every year. And yet, there can be no political discussion on hot to make the public safer from this real risk we face every single day of the year.
Why can everyone be inconvenienced to protect ourselves from possible Jihadist terrorists, but we can't even discuss some reasonable Second Amendment abiding controls that would limit the use of guns with the goal of reducing the 30,000 deaths a year?
And for the upteenth time, why police don't universally support better gun controls is beyond my comprehension. More police are killed by guns where there is little gun control (Texas) than where there is more gun control. And most of the police killed where there is more gun control are killed with straw man purchased guns in little gun control states.
All because someone somewhere thought of a way to make a bomb that they might have set off on a US airliner and these precautions protect passengers from someone else using the same technology to bring a bomb onto a US Airliner. So thousands of passengers a day suffer inconvenience for their protection from something that has never happened. And the GOP and many Republicans support and tolerate this.
Yet, over 30,000 people die every year by gun shots in the U.S. It varies by year, but on average over 100 policeman, who are armed and trained to protect themselves, are killed by guns every year. And yet, there can be no political discussion on hot to make the public safer from this real risk we face every single day of the year.
Why can everyone be inconvenienced to protect ourselves from possible Jihadist terrorists, but we can't even discuss some reasonable Second Amendment abiding controls that would limit the use of guns with the goal of reducing the 30,000 deaths a year?
And for the upteenth time, why police don't universally support better gun controls is beyond my comprehension. More police are killed by guns where there is little gun control (Texas) than where there is more gun control. And most of the police killed where there is more gun control are killed with straw man purchased guns in little gun control states.
Thursday, October 1, 2015
Mohamedou Ould Slahi
I read the book, Guantanamo Diary, by this author a while back. He is prisoner in Guantanamo and the U.S. Government after 7 years of George W. Bush and 7 years of Barack Obama cannot find anything to charge him with. He wrote his book and describes what the government thought he did and describes why he didn't do what they thought he did.
Furthermore, a Federal Judge awarded Mohamdou his petition for habeous corpus and the U.S. Government is appealing that for no good reason. And while they release other prisoners, this Mauritanian who willingly walked into a police station in Mauritania to be questioned and was basically kidnapped by the CIA from there remains a prisoner.
So I appeal to my readers to go to the website in the link below and sign the ACLU petition asking the U.S. Government to end their appeal and release Mohamedou to Mauritania. They are within 1000 signers of their 50,000 goal to submit the petition.
Link to ACLU petition
There are bad people in Guantanamo and they should be in U.S. prisons so we can close Guantanamo. But Mohamedou Ould Slahi is not one of those bad people. He should be at home pursuing whatever life he can after 14 years in Guantanamo.
Furthermore, a Federal Judge awarded Mohamdou his petition for habeous corpus and the U.S. Government is appealing that for no good reason. And while they release other prisoners, this Mauritanian who willingly walked into a police station in Mauritania to be questioned and was basically kidnapped by the CIA from there remains a prisoner.
So I appeal to my readers to go to the website in the link below and sign the ACLU petition asking the U.S. Government to end their appeal and release Mohamedou to Mauritania. They are within 1000 signers of their 50,000 goal to submit the petition.
Link to ACLU petition
There are bad people in Guantanamo and they should be in U.S. prisons so we can close Guantanamo. But Mohamedou Ould Slahi is not one of those bad people. He should be at home pursuing whatever life he can after 14 years in Guantanamo.
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