Sunday Funnies and Open Thread

Posted on June 23, 2013 by lmsinca

I’m not going to say “I told you so” but I did have the feeling this was going to happen somewhere.  I just don’t think all civic responsibilities lend themselves that well to private enterprise.

It would be interesting to uncover what is happening in other states.  Maybe it’s going better than in these three.

Because the private sector can do everything better, more efficiently, and therefore more cheaply than government, many states have outsourced their prisons to private prison companies to generate cash, and to save money in their budgets. However, three states have now dumped the largest private prison company in the U.S., due to numerous, serious issues. According to ThinkProgress, Idaho cut ties with Corrections Corporation of America (CCA), while Texas closed two CCA prisons of its own, and Mississippi ended their relationship with CCA as well. All of this happened within the last month. The problems these states were seeing ranged from inhumane conditions (including the use of prison gangs, denying access to medical care, bad food and sanitation, widespread abuse by guards, and more) to financial problems, such as falsifying hours to extract more money from the government, and deliberately understaffing the prisons.

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Ralph Nader says it’s not just about privacy when we consider the NSA story, it’s about privatization of what were and maybe should still be government functions.

This is a stark example of the blurring of the line between corporate and governmental functions. Booz Allen Hamilton, the company that employed Mr. Snowden, earned over $5 billion in revenues in the last fiscal year, according to The Washington Post. The Carlyle Group, the majority owner of Booz Allen Hamilton, has made nearly $2 billion on its $910 million investment in “government consulting.” It is clear that “national security” is big business.

Given the value and importance of privacy to American ideals, it is disturbing how the terms “privatization” and “private sector” are deceptively used. Many Americans have been led to believe that corporations can and will do a better job handling certain vital tasks than the government can. Such is the ideology of privatization. But in practice, there is very little evidence to prove this notion. Instead, the term “privatization” has become a clever euphemism to draw attention away from a harsh truth. Public functions are being handed over to corporations in sweetheart deals while publicly owned assets such as minerals on public lands and research development breakthroughs are being given away at bargain basement prices.

These functions and assets—which belong to or are the responsibility of the taxpayers—are being used to make an increasingly small pool of top corporate executives very wealthy. And taxpayers are left footing the cleanup bill when corporate greed does not align with the public need.

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And last, I hate that Paula Deen story.  I don’t follow her cooking show or know too much about her but I have watched her a few times when my husband flips through the channels.  She always seemed like a bit of a character to me.  If what everyone’s saying is true it sounds like she made some pretty inappropriate and even racist comments and then botched the apology.  Sheesh, I grew up with people who used the “n” word which was completely cringe worthy and caused a lot of family arguments and even tears on occasion.  But, and this is a big but, there are ways and then better ways to comment or make your point.  I thought this story had a perspective we don’t see in print very often.  It’s something I think about a lot.

When the story broke, media coverage was almost tabloid-like. Not surprising, considering it was the National Enquirer that broke the story. In this day and age, when people want easily digestible bites of information rather than well-detailed and supported fact-based news, many saw the titles and nothing more. Titles such as ‘Paula Deen Admits To Using The N-Word’ and ‘Paula Deen’s Apology for Using The N-Word Is Ridiculous.’ As a result, reactions weren’t much better. As one of my colleagues said, it’s as if someone popped the lid off Ugly and let it all spill out. On Facebook, one page posted a picture of Deen with the text of the alleged comment, captioned “Racist Tw*t… Yes you are.” The ensuing comments on the post ranged from civil discussion to “racist white trash c*nt,” “C*nt fucking retard,” and “shove a stick of butter up her ass.” Really?

There were cases where people made offending remarks about her weight, about her diabetes, about being southern. People called for her to be hanged and lynched. People called her a “cracker,” a “honkey,” and other vulgar, racist words for whites. People called her a bigot, a racist, a bitch, all while calling her that most vile word you can call a woman– a c*nt. I won’t even spell it out, I find it so offensive. Since when did it become socially acceptable to skewer someone with the same type of ignorant language you are accusing them of using?

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I so want to write this kind of long(ish) sentence sometimes……haha

economic cartoon

evidence comic

women comic

Filed under: big government, comics, free markets, NSA, prisons | Tagged: | 14 Comments »

Morning Report

Posted on January 20, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1308.1 -2.3 -0.18%
Eurostoxx Index 2427.4 -7.670 -0.31%
Oil (WTI) 99.96 -0.430 -0.43%
LIBOR 0.5611 0.000 -0.02%
US Dollar Index (DXY) 80.3 0.244 0.30%
10 Year Govt Bond Yield 1.99% 0.02%
Futures are down slightly this morning on weakness in Europe and a lackluster earnings report from GE and Google. GE’s Earnings were a penny better (surprise, surprise) but revenues came in light due to weakness in Europe and the finance business. Google stunk up the joint with a miss on the top line and the bottom line. It is down 8% pre-market.
Sorry I wasn’t around yesterday, though I see some people filled in for me.  I was at the CSFB Securitized Products conference yesterday in the city. Congressman David Schweikert (Vice Chairman of te House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises) spoke regarding the regulatory environment. A few takeways from the conference:
1) CSFB expects housing to decline 5%-7% this year and that *should* mark the bottom.
2) The government wants to introduce private capital into the mortgage market, but at the same time is trying to drive it away. The SEC is looking at changing the treatment of mortgage REITs which would drain, not add, private capital.
3) To get Fannie Mae capitalized to a reasonable level that would allow it to re-float would take a quarter of a trillion dollars. Nobody has a clue where that much money can be raised in the private sector. Which means Fannie and Fred will continue to be wards of the state.
4) The government is really interested in REOs to rentals. The problem is scalability.
5) 60% of underwater homeowners are current on their mortgages. Any sort of mass refinancing / mass principal cramdown for delinquent borrowers will also contain a massive moral hazard problem. Also, different treatment – the homeowner with a FHA loan gets relief, while the guy who’s mortgage went the private label route gets nothing.
6) There are a few leaders in Washington who get it, but most don’t. The appetite is still for slowing the foreclosure pipeline (in spite of volumes of evidence that it doesn’t do a thing to slow price depreciation – in fact it makes it worse).
7) Democrats want mass principal cramdowns and refis in spite of the fact that it would be an economic drag. It is simply a 1:1 transfer of wealth from investors to borrowers, so there is no multiplier effect, and the additional regulatory risk would drive mortgage rates higher. CSFB has conducted studies showing it is the affordability of the mortgage payment that matters, not the borrower’s equity position.
8) Question of the day: “Congressman, has anyone in Washington thought about just letting the markets clear?”  (The only thing that brought out laughter from the audience all day)
One observation I would make is that we want first time homebuyers, not necessarily hedge funds, to be buying up the excess supply. Yet closing times and down payment requirements for short sales drive many first time homebuyers away. I don’t know if it is because of regulatory reasons. If it is, Washington and the states should figure out a way to streamline the process.
In economic data, existing home sales comes out at 10:00.

Filed under: Earnings Announcements, Economic data, Economy, free markets, housing, politics | 35 Comments »

Where We Are Today-The Middle Class

Posted on November 22, 2011 by lmsinca

I read this piece this morning and thought it had quite a few interesting points to make.  Since I began blogging about three years ago (I know, I was a little slow) one of the things I’ve been harping on is the reversal of fortune or stagnation of the middle class.  I think a lot of it has to do with the high cost of health care, which this piece doesn’t explore, but I’ve also blamed our free trade policies which have created a large trade deficit, out sourcing jobs with no consequences for the out sourcers, lack of quality investment in education and being stuck in a couple of wars and fossil fuel reliance.  I don’t believe either party has done a very good job in the last several decades of addressing issues that would encourage or train our people for the 21st. Century.  We’ll give them a little in the way of a safety net, which is always at risk, when what people really want are jobs and a decent life to pass on to their children.  I understand that our first commitment at the Federal level is National Security and we could probably get rid of some Federal agencies and combine others but in the meantime our leaders have shirked their duty, a strong word I know, in providing opportunity to our citizens.  That’s my opinion anyway.  Think how much money we’d save if people didn’t need to rely on the safety net so thoroughly or how much more tax revenue we’d have at current levels of taxation if more people had decent paying jobs.  Most of the innovation of the last couple of decades has come from the financial industry, which just seems weird to me, not that we don’t need financial services but the balance has skewed too far away from industry and innovation, again, in my opinion.  Here are several excerpts from this rather long piece.

In recent months, Federal Reserve Board Chairman Ben Bernanke and President Obama have sounded increasingly urgent alarms about the staggering number of long-term unemployed. And they are right to do so: 42.4 percent of the nation’s 13.9 million unemployed workers have been out of a job for more than six months. That’s by far the highest share of long-term unemployed since the government started keeping records a half-century ago.

What Bernanke and others rarely mention, though, is that this trend has been building for at least three decades. The share of left-behinds has generally ratcheted up with every economic downturn since the early 1980s. And today, even two years after the Great Recession technically ended in June 2009, the number of long-term jobless has continued to climb to record levels. It shot up from 29.3 percent of total unemployed workers in June 2009 and peaked at 44.6 percent as recently as September.

Washington, dominated by a free-market consensus ever since President Reagan’s era, has ignored that 30-year pattern. Partly as a result, reams of data show that America’s middle class has been shrinking. Among the few who has long second-guessed the Washington mind-set is Frank Levy, an economist at the Massachusetts Institute of Technology who coauthored a much-cited 2007 paper concluding that labor began losing the fight to capital in the late 1970s.

“I’m not sure how much better we could have done in preserving the middle class,” he says. “But I know that, with a few exceptions like the earned income tax credit, we didn’t really try.”

There can be little question that the middle class, or what’s left of it, is less and less able to cope. Adjusted for inflation, average hourly wages declined by 1 percent from 1970 to 2009. Meanwhile, home prices increased 97 percent, gas prices went up 18 percent, health costs rose 50 percent, and the price tag for public college spiked a whopping 80 percent after adjusting both wages and costs for inflation, according to figures compiled by the Senate Health, Education, Labor, and Pensions Committee. The average family of four needs an annual income of $68,000 just to cover basic costs, but in 2010, half of all jobs paid less than $33,840. The number of Americans living below the poverty line—46.2 million—is the highest in the 52 years that the Census Bureau has been tallying figures.


The bleak numbers raise obvious questions about the dominant economic paradigm of our time. For more than a generation, we have thought of the spread of free markets and globalization were pretty much inevitable. Economists, trade experts, and policymakers, including both Republican and Democratic presidents, have told us, in effect, that we could do little about the brutal displacement of old industries and jobs, and that we might as well just get used to it. Indeed, we were told, the U.S. must lead this charge: Free trade in the West helped to win the Cold War, after all, and the United States emerged as the sole superpower. It created to a strange blend of false fatalism and American hubris. Somehow, the champions of hands-off economic policy insisted, we would come out on top in the end.

It may not be an accident that the growth of long-term unemployment, starting in the 1980s, coincided with what MIT’s Levy calls the end of the “Treaty of Detroit”—a consensus that supported high minimum wages, progressive taxes, and other New Deal policies. Scott agrees. “Looking at wage trends, they all shift dramatically for the worse since then. The peak was really 1979. That’s the point at which three trends came together: the process of globalization, de-unionization, and deregulation. The fundamental guiding philosophy was, ‘markets know best.’ ”
Today, as a result, a deeper sense of alienation haunts American society than anyone can remember. “The sense that were all in this together as one nation, a common society and a common policy, has been disrupted by globalization,” Rodrik says. “Now, there is a greater realization that the benefits of globalization accrued disproportionately to the professional classes, the higher skilled, the ones who had the mobility and access to capital.” “And what strikes me is how unperturbed and unaffected and apparently insulated the winners have been in this whole process…. The costs are heavily concentrated among the youth, the high school dropouts, those with little education, the blacks in the urban areas. The rest of us effectively have been insulated.”

The solution for the United States may be a smarter combination of more-intensive training and education programs that turn industry and academia into partners, and a savvier policy of subsidizing crucial industries. Whatever the budget constraints, American workers need a lot more money for education and training. Total federal spending for job training adds up to a mere $15 billion annually, or one-tenth of 1 percent of gross domestic product, far less than any other major country. It may be too late for today’s displaced workers. But the children and grandchildren of displaced workers mired in these lost communities need to know that jobs exist for those willing to leave home and get trained and that education does not require on ruinous debts.

Nor should industrial policy be about the government “picking winners,” as the debacle over Solyndra, the bankrupt solar-panel company, made clear. Instead, the government can more subtly prod strategic industries along by, say, taxing fossil fuels to encourage investment in green technologies. For anything like such a comprehensive change to happen, of course, politicians in Washington will have to agree on the nature of the malady they helped to create over the past 30 years. And there is little sign of that happening yet.

Filed under: education, free markets, innovation | Tagged: | 14 Comments »