Bits & Pieces (Thursday Night Lorax)

This is no time for play, there is no time for fun, this is no time for games, there’s work to be done!

So, all you get tonight is the trailer for the new movie version of The Lorax.

Seems like a more light-hearted, less apocalyptic Lorax.

With a lot more background on The Onceler. Might be pretty good.

Laterz!

Koch Brothers Prove Global Warming

As if we didn’t already have enough evidence of the evil and perfidy of those diabolical Koch brothers. Turns out, they funded a study by a climate change skeptic that ends up confirming previous temperature studies cited as proof for global warming.

John Stewart covers the scam of science.

“Pretty soon, you’ll be hooked on that grant money. Looking for that next big score. Is that what you want?”

“Yeah.”

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1266 28.6 2.31%
Eurostoxx Index 2464.6 129.540 5.55%
Oil (WTI) 92.98 2.780 3.08%
US Dollar Index (DXY) 75.502 -0.715 -0.94%
10 Year Govt Bond Yield 2.28% 0.08%

Stock markets are rallying on news that the Europeans have come to an agreement to deal with Greece, with bondholders taking a 50% haircut and boosting the rescue fund to 1 trillion euros. Is this the silver bullet that will solve this problem once and for all? The initial take seems to be no. The bigger question will be whether this quarantines the Greece problem or does the contagion spread to the rest of the PIIGS. For the moment, the markets are breathing a big sigh of relief.

3Q GDP came in with an annualized increase of 2.5%, more or less in line with the economists survey. Consumption came in higher than expected (2.4% vs 1.9% expected), which tells us there is a growing discrepancy between what consumers feel (as shown in the consumer confidence numbers) and what they actually do (as evidenced by spending numbers). As I have discussed before, this is how recessions end – consumers don’t start spending because they want to, they do it because they have to. Eventually the 10 year old car becomes too expensive to fix, Dad’s 5 year old dress shirts become ratty, and need to be replaced. The other headwinds in the economy will undoubtedly overpower any consumer strength for the moment, but those headwinds are becoming milder as time goes on. I am not buying the double-dip recession thesis. Just not buying it.

In other data, the labor market is still stuck, with initial jobless claims above 400k again and continuing claims at 3.65 million. The labor market is always the last to improve.

Chart: Initial Jobless Claims:

Thursday Morning Edition

People keep asking what the OWS protesters want. Honestly, I don’t really know. But I do know what some of them are angry about, income inequality, student loan debt, unemployment, crony capitalism, and now that one has been critically injured in Oakland I think the movement, if that’s what they’re calling it, will face a critical test. Can they maintain their commitment to non-violence in the face of law enforcement and city leaders losing patience with their occupations? Also, winter and cold weather are quickly materializing, how will this factor affect their resolve? There is also concern among the protesters themselves that there are anarchists among their ranks which may undermine the peaceful image they’re trying to maintain.

The LA Time has a good rundown of the dilemma facing city officials and police departments across the country. I thought it was a little derelict though that they didn’t mention the Iraqi Vet who was critically injured in Tuesday nights clash with Oakland PD.

Looming large is the cautionary spectacle of Oakland. Police there arrested about 100 protesters before dawn Tuesday, using tear gas and riot gear to break up encampments — only to face a massive evening protest and threats of continued unrest from angry backers of the movement.

Leaders in other cities said they don’t want a repeat of that chaos, but it’s unclear how they will eventually oust protesters who refuse to leave.

Even in Los Angeles, where city leaders have greeted the demonstrators warmly, there are signs of protest fatigue and increasing anxiety about what happens next.

Los Angeles Mayor Antonio Villaraigosa, who earlier this month had ponchos distributed to rain-soaked Occupy L.A. protesters, said Wednesday that the encampment next to City Hall “cannot continue indefinitely.”

Villaraigosa has instructed city officials to draft a plan for another location for the demonstration.

Here’s a little more about the wounded protester and highlights of attempts to break up the occupation.

OAKLAND, Calif (Reuters) – More than 1,000 activists protesting economic inequality reclaimed a downtown Oakland plaza late on Wednesday, a day after demonstrators were driven out and an Iraq war veteran was critically hurt in clashes with police.

The severe injury of Scott Olsen, 24, a former U.S. Marine who friends said served two tours of duty in Iraq, became a rallying cry among Occupy Wall Street supporters in Oakland and beyond as organizers urged protesters back into the streets.

Police kept their distance as protesters returned to the scene of Tuesday’s confrontations, while protesters largely avoided provoking them, although one activist defiantly set up a single, small tent in the square after midnight.

The “Occupy Wall Street” protests, which began in New York City last month, take issue with a financial system they say most benefits corporations and the wealthy. They are critical of U.S. government bailouts of big banks, high unemployment and economic inequality.

Loosely organized protest groups have since sprung up across the United States and in countries around the world. Tensions were building in several cities where authorities have been treading a fine line between allowing peaceful protest and addressing concerns about trespassing, noise and safety.

In an early morning raid in Atlanta, police evicted dozens of protesters from a downtown park and arrested 53 who refused to leave. They were allowed to camp in the park for three weeks, but Mayor Kasim Reed said he decided to evict them because of fire code violations and crowd control issues.

Kristof discusses some of the issues he thinks are driving the protests.

That alarmist view of the movement is a credit to the (prurient) imagination of its critics, and voyeurs of Occupy Wall Street will be disappointed. More important, while alarmists seem to think that the movement is a “mob” trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.

To put it another way, this is a chance to save capitalism from crony capitalists.

But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.

Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.

The upshot is that financial institutions boost leverage in search of supersize profits and bonuses. Banks pretend that risk is eliminated because it’s securitized. Rating agencies accept money to issue an imprimatur that turns out to be meaningless. The system teeters, and then the taxpayer rushes in to bail bankers out. Where’s the accountability.

Eye on the Courts

The Sixth Circuit recently heard oral arguments on an interesting “free exercise” case. However, the case also addresses free speech issues and the role of counselor among other thought provoking issues. As a liberal lawyer who was raised in an evangelical home and is now a practicing Catholic (there’s a joke in there somewhere) and since I know one of the lawyers involved in the case, I find the case very interesting. The basic facts are that a student, Julea Ward, enrolled in the counseling program at Eastern Michigan University and subsequently refused to talk with patients about their homosexual feelings. Ms. Ward was dismissed from the program and subsequently sued the University. The District Court granted Summary Judgment to the University, and Ward filed an appeal with the 6th Circuit who heard oral arguments in early October. A decision is expected some time in November.

Not to wade too deeply into the factual weeds, but the University’s program is accredited by the American Counseling Association and must follow the ACA’s Code of Ethics. It is this Code of Ethics that Ms. Ward was accused of violating and which led to her dismissal. There are programs that aren’t accredited by the ACA where Ms. Ward could have attended and possibly avoided this conflict. However, since she hired an attorney 3 years before she was kicked out of the program, it seems that she was probably actively seeking out this fight. To be fair to Ms. Ward, there is literature that supports the notion that it is appropriate to refer clients to another counselor where your personal beliefs may cause a conflict. So it does seem that the ACA and the University’s position on the Code of Ethics is not without it’s holes.

I have a hard time seeing this as a violation of the free exercise clause, or any other Constitutional right for that matter. As the District Court pointed out, this was a narrowly constructed rule that applied only to counseling students and only when they are speaking with a client. It also seems aimed at preventing clients from feeling judged by their counselor.

An interesting side note to this is that the Michigan Attorney General, Bill Schuette, filed a brief in support of Ms. Ward so he took a position contrary to the interests of a State University. On the other hand, the ACLU sided against the little guy and in favor of the big University. If the 6th Circuit upholds the District Court’s ruling, expect Ms. Ward to appeal to the SCOTUS. If the 6th Circuit reverses the District Court, there are several scenarios; appeal en banc, appeal to the SCOTUS, settlement, take a chance at trial.

If you have the time, here are the ACA’s amicus brief, Ms. Ward’s brief, the AG’s brief.

EMU has a site that links to several different briefs and opinions.

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