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FDR2

Jim Hightower

US Postal Service selling out workers and … America

You know what America needs? More jobs, that’s what.

Not Walmart-style “jobettes,” but real jobs, stable ones with a good salary and benefits, union jobs so workers have a say in what goes on, jobs that have strong protections against discrimination. A job you could make a career, do useful work, take pride in it, earn promotions, and be respected for what you do.

Believe it or not, there is at least one place where such jobs still exist. But – and you really aren’t going to believe this – those in charge are pushing like hell to eliminate them, turning positions that ought to be a model for American job growth into just another bunch of jobettes. The place? Your local post office.

Right-wing government haters in Congress, along with the corporate executives now sitting atop the US Postal Service, claim that in order to “save” this icon of Americana, they must decimate it. These geniuses are privatizing the workforce, selling off the invaluable community facilities, and shrinking services. Hello – the workers, facilities and services are what make the post office iconic and give it such potential for even greater public use.

Their latest ploy is a “partnership” with Staples, the big-box office supply chain. In a pilot program, 82 Staples outlets have opened “postal units” to sell the most popular (and most profitable) mail products. Rather than being staffed by well-trained and knowledgeable postal workers, however, the mini-PO’s will have an ever-changing crew of Staples’ low-wage, temporary sales clerks with weak performance standards and no public accountability.

Cheapening postal work might be good for a few profiteers like Staples, but it will diminish postal service – and it’s exactly the wrong direction for America to be going. For info and action go to www.apwu.org.

“Staples Plucks Postal Jobs,” www.labornotes.org, January 27, 2014.

The psychic pain borne by the rich

One thing about the tea party Republicans in Congress is that they do know who butters their biscuits. Several have recently rushed forward with an anguished plea in defense of Wall Street barons, CEOs, and billionaires: “Stop the vilification of wealthy people,” is their cry.

A crusade to protect pampered plutocrats from having to hear the public’s scornful words about them is not likely to draw much support from… well, from the public. Still, it is true that being a 1 percenter is not an easy burden to shoulder. Yes, they do have money and power, but don’t you see, they never have enough. If your sense of self-worth is tied up in your net worth, then what if your net is comparatively small?

It’s important for us riff-raff to realize that there are the rich – and then there are THE RICH. The relativity of status within the 1 percent creates enormous stress, even feelings of wealth inadequacy. They’re constantly thinking: “Is his bigger than mine?” Imagine if you had to live with that!

Perhaps you didn’t know, but the average household income for the 1 percent as a whole is a mere $1.26 million a year. Okay, that’s rich, but it’s not RICH. For that honorific, you have to step it up many notches and climb into the elite class of the richest one-tenth of 1 percenters. Their average household wealth is $6.37 million a year. Now that’s money.

Yet, it’s not enough. Those elites are looked down on by an even thinner slice of net worthies: The royal class of the richest one one-hundredth of 1 percenters. This is the stratosphere where the richy-richiest of THE RICH dwell, making ends meet on an average household income of $31 million a year.

Come on, people, have some feeling for the psychic pain of those who’re struggling to keep up with the one one-hundredths of 1 percent. It’s a tough world up there.

“Even Among the Richest of the Rich, Fortunes Diverge,” The New York Times, February 11, 2014.

 

 

Naked Capitalism on Reining in High-Frequency Trading

SEC Is Kinda Thinking About Doing Something About High Frequency Trading

Posted on April 15, 2014 by

Before you get too excited about the notion that the SEC might actually be saddling up to Do Something about high frequency trading, the agency has roused itself to issue a leak….that it is pondering launching a limited trial to address all of one practice.

I’m not making this up. From the Wall Street Journal:

SEC officials, including some commissioners, are considering a trial program to curb fees and rebates they say can make trading overly complex and pose a conflict of interest for brokers handling trades on behalf of big investors such as mutual funds.

At issue are “maker-taker” fee plans, which pay firms that “make” orders happen—often high-frequency trading firms that specialize in trading strategies designed to capture payments. The plans charge firms that “take” trades—typically big investment firms looking to buy or sell a chunk of stock or hedge funds making bets on short-term price swings.

The trial program would eliminate maker-taker fees in a select number of stocks for a period to show how trading in those securities compares with similar stocks that keep the payment system.

MI-CC363_MAKERT_G_20140414173904

Now let us consider the rather awkward position the SEC finds itself in. It sat by as the NYSE and Nasdaq allowed HFT firms to co-locate servers so as to get advantaged access to orders. The exchanges were eager to play ball because the high frequency traders paid for this privilege. And the fig leaf is that while FINRA, Wall Street’s self regulatory body, has a rule against brokers front-running their clients, the high frequency traders aren’t acting as brokers. As the New York Times noted:

There is no small paradox in the stock exchanges profiting by selling access to information that can be used for something that looks an awful lot like front-running, while Finra enforces a rule prohibiting brokers from doing the same thing.

Now unless the high frequency trading furor dies down quickly (which it might, scandals can sometimes have a short half life), we are likely to have Congressional hearings and the SEC will have to explain itself.

The SEC is almost certain to contend that it not only does take l’affaire high frequency trading seriously, it’s been moving with all deliberate speed. As a Bloomberg story pointed out last week:

The SEC took its first deep dive into HFT in January 2010, before many other enforcement agencies had waded into the debate. As part of a broad review of market structure, it examined how brokers route the electronic orders of speed traders and questioned whether that put other investors at a disadvantage. The report elicited more than 400 comment letters from banks, exchanges, retail brokerages, and large institutional investment firms.

Yves here. Notice how all of nothing happened? That means the SEC ran into such a thicket of competing interests that it didn’t see an easy path forward. And mind you, later that year, the flash crash took place. But the SEC has yet to implement any measures to prevent a recurrence.

Now here is the beautiful part:

The trick for regulators is finding ways to prevent abuses without blocking high-speed firms that actually benefit investors…

The problem is that the SEC doesn’t have all the data it needs. In 2012 the agency spent $2.5 million on a surveillance system named Midas (Market Information Data Analytics System) that collects information from all 13 public exchanges in the U.S. This essentially gives the SEC the same view of the market that many speed traders have. It doesn’t, however, give it a picture of the whole market. Only about 70 percent of trades happen on public exchanges; the rest take place offline, either inside large wholesale brokerages that match buy and sell orders internally or in private trading venues called dark pools. To see that activity, the SEC needs a much more powerful system that can track the life of every stock quote, order, and trade…

In 2010, White’s predecessor, Mary Schapiro, approved a project to build such a system to funnel terabytes of information every day into one massive feed that regulators could monitor. Called the consolidated audit trail (CAT), the system would allow the SEC to conduct detailed forensic analysis and weed out abuses. The contract for the huge project, which will cost more than $1 billion, still hasn’t been awarded. The SEC estimates that CAT won’t be finished until 2016.

One billion dollars? For a ginormous data feed to gather info on the 30% of the market the SEC does not see now? And given how most IT initiatives go, this “one data feed to rule them all” project could easily come in vastly over budget.

The SEC’s annual budget is $1.3 billion. As much as HFT is an important issue, this is a grossly disproportionate expenditures. As a management consultant, I’ve regularly had to do studies in OTC markets where we had access to only a teeny slice of market data compared to what the SEC had. You don’t need perfect information to make decisions. You can get it via sampling and qualitative assessments for an itty bitty fraction of this $1 billion price tag.

So what this really says is either the SEC is unwilling to act and is playing the Penelope game*, of making action dependent on a task that will never get done, or it is genuinely unwilling to walk into a political minefield, and so will make a proposal only if it has incontrovertible data. Needless to say, I’m leaning toward the first theory.

Now that isn’t to say that the practice the SEC has roused itself to take interest in is unimportant. The Wall Street Journal notes:

Fund managers and others concerned about the negative effects of maker-taker recently held a series of private meetings with SEC Chairman Mary Jo White and other staff members to push for its elimination, according to people familiar with the meetings. Among those who met with the SEC was Jeffrey Sprecher, chief executive of IntercontinentalExchange Group Inc., which owns the New York Stock Exchange; representatives from fund manager T. Rowe Price Group Inc; and representatives from RBC Capital Markets, a unit of the Royal Bank of Canada….

Maker-taker has come under a harsh spotlight in recent years, with big investment firms, academics and exchange executives saying it can hurt long-term investors and skew brokerage-firm incentives.

A primary criticism is that the fees pose a conflict for brokers, who might choose to route an investor’s order to an exchange with the goal of earning a payment, not to get the best deal for the client.

A recent study by finance professors Robert Battalio and Shane Corwin at the University of Notre Dame and Robert Jennings at Indiana University found stockbrokers appear to routinely route client orders to markets that provide the best payments. The study found that can saddle investors with worse results than if the brokers hadn’t factored in the payments, and that such trades are “unlikely to be consistent with the broker’s responsibility to obtain best execution” for investors.

Even so, the Journal stresses that White has only indicated she is sympathetic to the calls to eliminate maker-taker, but has not made any decision. And thinking about launching a trial looks a lot like a way to slow-walk any action.

So it looks like the SEC will have its pat answers if it is put under the Congressional hot lights: it takes all the public concerns seriously, it has been soliciting input from all the concerned parties. It’s even about to launch a project!

Don’t buy it. Remember, after the 1987 crash, President Reagan authorized a study within ten days and had an analysis and recommendations, know as the Brady Commission Report, two months later. The data gathering is admittedly more difficult due to the opaque nature of some of the market, but having no point of view on high frequency trading nearly four years after the flash crash should be seen as an indictment of the SEC’s seriousness and competence.

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*Remember the wife of Odysseus held off her suitors by saying she’s marry one of them once she finished weaving a burial shroud for her father, which she unravels every night.

The Numbers on Rising Inequality

inequality_t2u

Saved for posterity, the study of Emmanuel Saez (UC Berkeley) and Gabriel Zucman (LSE and UC Berkeley) can be found here:

Rising Inequality

Naked Capitalism: BP and the Rape of the Gulf

Fourth Anniversary of Gulf Oil Spill: Wildlife Is Still Suffering from Toxic Cover Up

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Posted on April 13, 2014 by

Cross-Posted from Washington’s Blog.

BP and the Government Decided to Temporarily Hide the Oil by Sinking It with Toxic Chemicals … The Gulf Ecosystem Is Now Paying the Price

As we noted at the time, and on the first (and here), second and third anniversaries of BP’s Gulf oil spill, BP and the government made the spill much worse by dumping toxic dispersant in the water in an attempt to to sink – and so temporarily hide – the oil.

In addition, adding dispersant makes oil 52 times more toxic than it would normally be.

EPA whistleblowers tried to warn us about the oil spill dangers

Gulf toxicologist Susan Shaw told us last year:

Covering up the [Gulf] oil spill with Corexit was a deadly action … what happened in the Gulf was a political act, an act of cowardice and greed.

(60 Minutes did a fantastic exposé on the whole shenanigan.)

And the cover up went beyond adding toxic dispersant. BP and the government went so far as hiding dead animals and keeping scientists and reporters away from the spill so they couldn’t document what was really happening.

As the National Wildlife Federation (NWF) notes in a new report, the wildlife is still suffering from this toxic cover up.

NWF reports:

Some 900 bottlenose dolphins of all ages—the vast majority of them dead—have been reported stranded in the northern Gulf between April 2010 and March 2014. In 2013, bottlenose dolphins were found dead or stranded at more than three times average rates before the spill. In 2011, dead infant or stillborn dolphins were found at nearly seven times the historical average and these strandings have remained higher than normal in subsequent years. NOAA has been investigating this ongoing wave of bottlenose dolphin strandings across the northern Gulf of Mexico since February 2010, before the Deepwater Horizon rig exploded. This is the longest period of above-average strandings in the past two decades and it includes the greatest number of stranded dolphins ever found in the Gulf of Mexico. In December 2013, NOAA published results of a study looking at the health of dolphins in a heavily-oiled section of the Louisiana coast. This researchers found strong evidence that the ill health of the dolphins in Louisiana’s Barataria Bay was related to oil exposure.

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Dolphins in Barataria Bay showed evidence of adrenal problems, as has been previously reported in mammals exposed to oil.4 Barataria Bay dolphins also were five times more likely than dolphins from unoiled areas to have moderate-to-severe lung disease. Nearly half the dolphins studied were very ill; 17% of the dolphins were not expected to survive. The study concludes that health effects seen in Barataria Bay dolphins are significant and likely will lead to reduced survival and ability to reproduce.

NWF found many other species have also been harmed by the dispersant-oil mixture:

Roughly 500 stranded sea turtles have been found in the area affected by the spill every year from 2011 to 2013. This is a dramatic increase over the numbers found before the disaster. Other teams of scientists have reported negative impacts of oil on a number of species of fish, including tuna red snapper and mahi-mahi. As we have learned from previous spills far smaller than the 2010 event, it has taken years to understand the full effects on the environment. In some cases, recovery is not complete even decades later. Twenty-five years after the Exxon Valdez spill in Prince William Sound, clams, mussels, and killer whales are still considered “recovering,” and the Pacific herring population, commercially harvested before the spill, is showing few signs of recovery. [One of the main ingredients in Corexit - 2-butoxyethanol - was also used in the Valdez spill] … the full scope of the Deepwater Horizon disaster on the Gulf ecosystem will likely unfold for years or even decades to come.

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The Atlantic bluefin tuna is one of the largest fish in the Gulf, reaching average lengths of 6.5 feet and weighing about 550 lbs. A single fish can sell for tens of thousands of dollars.… The Deepwater Horizon rig exploded while the April-May breeding season in the northern Gulf was underway. In 2011, NOAA researchers estimated that as many as 20% of larval fish could have been exposed to oil, with a potential reduction in future populations of about 4%.

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A more recent study shows that a chemical in oil from the spill can cause irregular heartbeats in bluefin and yellowfin tuna that can lead to heart attacks, or even death. The effects are believed to be particularly problematic for fish embryos and larvae, as heartbeat changes could affect development of other organs. The researchers suggest that other vertebrate species in the Gulf of Mexico could have been similarly affected. Scientists found that four additional species of large predatory fish—blackfin tuna, blue marlin, mahi-mahi and sailfish—all had fewer larvae in the year of the oil spill than any of the three previous years.

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The Deepwater Horizon spill occurred during the blue crab spawning season, when female crabs were migrating out of estuaries into deeper waters of the Gulf to release their eggs.

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[Reports indicate problems with crabs.] Blue crabs provide evidence of oil tainting Gulf food web. 2. Alabama Local News. 2013. Blue crab stock declines are concern for Gulf Coast fishermen. 3. Houma Today. 2013. Locals say blue crab catches plummeting. 4. Louisiana Seafood News. 2013. Lack of Crabs in Pontchartrain Basin Leads to Unanswered Questions. 5. Tampa Bay Times. 2013. Gulf oil spill’s effects still have seafood industry nervous. 6. Presentation at the 2014 Gulf of Mexico Oil Spill & Ecosystem Science Conference. The Effects of the Deepwater Horizon Oil Spill on Blue Crab Megalopal Settlement: A Field Study.

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Marine life associated with the deep sea corals also showed visible signs of impact from the oil. In a laboratory study, coral larvae that had been exposed to oil, a chemical dispersant, and an oil/ dispersant mixture all had lower survival rates than the control larvae in clean seawater.

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According to a recently published federal report, oyster eggs, sperm and larvae were exposed to oil and dispersants during the 2010 oil spill. Oil compounds known as polycyclic aromatic hydrocarbons (PAHs) can be lethal to oyster

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In the fall of 2010, even after the Macondo well was capped, oyster larvae were rare or absent in many of the water samples collected across the northern Gulf of Mexico.

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There are nearly 1000 known species of foraminifera in the Gulf of Mexico. These small marine creatures form part of the base of the marine food web, serving as a food source for marine snails, sand dollars and fish. Previous research has shown that these sediment-dwelling microorganisms are sensitive to oil damage. Rapid accumulation of oiled sediment on parts of the Gulf floor between late 2010 and early 2011 contributed to a dramatic die-off of foraminifera. Researchers found a significant difference in community structure and abundance during and after the Deepwater Horizon event at sites located from 100-1200 meters deep in the Desoto Canyon, nearly 100 kilometers south-southwest of Pensacola, Florida. Deep sea foraminifera had not recovered in diversity a year and a half after the spill.

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Killifish, also known as bull minnows or cockahoe, are prized bait fish and play an important role in the Gulf food web..…This species has been extensively studied in the aftermath of the disaster because of its abundance and its sensitivity to pollution. Oil exposure can alter the killifish’s cellular function in ways that are predictive of developmental abnormalities, decreased hatching success and decreased embryo and larval survival. In 2011, Louisiana State University researchers compared the gill tissue of killifish in an oiled marsh to those in an oil-free marsh. Killifish residing in oiled marshes showed evidence of effects even at low levels of oil exposure which could be significant enough to have an impact at a population level. Additional research has found that four common species of marsh fish, including the Gulf killifish, seem to be avoiding oiled areas. These behaviors, even at small scales, could be significant within marsh communities, leading to changes in food web dynamics.

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In the aftermath of the spill, a number of fish, including red snapper, caught in Gulf waters between eastern Louisiana and western Florida had unusual lesions or rotting fins. University of South Florida researchers examined red snapper and other fish and determined that their livers contained oil compounds that had a strong “pattern coherence” to oil from the Deepwater Horizon spill.… An analysis of snapper populations in the Gulf that was done between 2011 and 2013 showed an unusual lack of younger snapper. Further research found a significant decline in snapper and other reef fish after the spill. Small plankton-eating fish, such as damselfishes and cardinalfishes, declined most dramatically but red snapper and other larger reef fish also declined.

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Seaside sparrows live only in coastal marshes, where they are common year-round residents. Oil from the Deepwater Horizon spill remains in some marshes, putting seaside sparrows at continued risk from direct oiling, contaminated or reduced food supplies, and continued habitat loss. In 2012 and 2013, seaside sparrows in Louisiana salt marshes were found to have reductions in both overall abundance and likelihood to fledge from the nest. Because these birds are not aquatic, exposure to oil would likely come from incidental contact on the shore or from eating oil or bugs and other creatures that have oil in their systems. Other studies have shown a significant decrease in the insect population in oiled marshes, which could be reducing prey availability for seaside sparrows.

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Roughly 700 sperm whales live year-round in the Gulf’s deep waters off the continental shelf…. A researcher at the University of Southern Maine has found higher levels of DNA-damaging metals such as chromium and nickel in sperm whales in the Gulf of Mexico compared to sperm whales elsewhere in the world. These metals are present in oil from the spill. Whales closest to the well’s blowout showed the highest levels.

Nothing has changed … indeed, the U.S. has let BP back into the Gulf. And BP is going to drill even deeper … with an even greater potential for disaster.

It’s not just BP … or the Gulf. Giant banking and energy companies and the government have a habit of covering up disasters – including not only oil spills, but everything from nuclear accidents to financial problemsinstead of actually fixing the problems so that they won’t happen again.

Naked Capitalism: States Investigate Corporate Tax Havens

Tiny Maine Against Tax-Dodging Multinationals

Posted: 08 Apr 2014 12:36 AM PDT

By Abigail Field, attorney. Cross posted from Benzinga

While Congress cowers before multinationals’ lobbyists and moves to re-enact loopholes that let corporations like GE and Apple hide their income from the IRS, the Maine Legislature decided it had had enough. On Friday, April 4, Maine passed legislation that will end some of the games.

“I would like the Governor to sign the bill,” said Rep. Adam Goode, the sponsor of the legislation. “The bill is about huge multinational corporations that hide their income in off shore tax havens. Small businesses in Maine don’t use these tricks. That puts Maine’s small businesses at a competitive disadvantage.”

Governor LePage has ten days to sign the bill into law, veto it, or let it become law without his signature. According to Maine Revenue Services, closing the “Water’s Edge” loophole will raise $10 million for every two year budget cycle.

“In Maine $10 million is a lot of money,” said Rep. Goode. If the Governor vetoes the bill, “we’re sending a message that we’re prioritizing multinational corporations’ access to tax havens over kids’ access to head start or seniors’ access to prescription drugs. Those programs are routinely on the chopping block.”

The Water’s Edge Loophole

Companies can dodge taxes by shifting income to low-tax jurisdictions. Not only do they send the money to tax havens off shore, but they also set up companies to hide income in low tax states, such as Nevada and Delaware. Twenty-three states and the District of Columbia countered stateside tax avoidance by “combined reporting.”

Combined reporting requires companies to report their income in all states; then the combined income is taxed in proportion to the business’s activity in their state. That way, if large amounts of income that were produced by business activity in, say Maine, but were reported for tax purposes as belonging to Delaware, it would be included in the total income pie that Maine would proportionately tax.

But if combined reporting stops at “the Water’s Edge,” it only includes income reported within the United States. To get at offshore tax havens, the states can require worldwide combined reporting, or Water’s Edge plus a list of known tax havens.

Maine, like Montana and Oregon, has taken the latter approach. Rep. Goode’s bill includes a list of 38 known tax havens. Goode noted that Maine already uses combined reporting to stop corporations from hiding their money in low tax states like Delaware or Nevada. “If we won’t let corporations hide their money in Delaware, why would we let them hide it in the Cayman Islands or Bermuda?”

Multinationals Lobbied to Stop Taxes at the Water’s Edge

According to a U.S. PIRG report on how multinationals’ tax avoidance hurts states and how ending the Water’s Edge loophole would help, in the 1970s and 1980s several states required combined worldwide reporting. After the U.S. Supreme Court upheld its legitimacy, multinationals turned to lobbying and succeeded in changing state laws.

As a result, most states with combined reporting allow waters’ edge reporting, and most of the handful that require multinationals to add income from tax havens do it ineffectively. Instead of a clear list of 38 tax havens, like the Maine bill on Governor LePage’s desk, those laws invite litigation by failing to clearly define “tax haven” or otherwise fail to reach all tax haven income, according to the U.S. PIRG report.

Montana Stood Up to the Multinationals in 2003; Oregon Recently Did Too

In 2003 Montana required multinationals to report tax haven income using a clear, effective list. Dan Bucks, the Montana Director of Revenue from January 2005 to January 2013, administered the law and saw its usefulness first hand. As Bucks explained to Minnesota Legislators who considered (but failed to pass) similar legislation:

“Administratively, there have been no noticeable costs or challenges associated with the implementation or enforcement of the law. As Director of Revenue, I received no complaints from corporate taxpayers about the law, its implementation and or its impact.”

What’s more, the law worked:

“In [tax year] 2010, the additional revenue attributable to the tax haven law was $7.2 million. That revenue was due to $102.9 million of income that had been artificially shifted to tax havens, but was now reported to Montana in proportion to real economic activity in the state.”

Oregon passed similar legislation in July, 2013. Oregon’s Legislative Revenue Office expects the state will collect $18 million more in corporate taxes in 2014, an additional $42 million in the 2015-2017, and an additional $49 million in the 2017-2019 biennium, according to the U.S. PIRG report.

Governor LePage Is Mum For Now

Will Governor LePage enable Maine to shut this loophole or not? According to his Press Secretary Adrienne Bennett, “The Governor has the 10 days to take action on the bill. It is his policy not to comment until he has had an opportunity to review the bill in its entirety.”

The 10 days will expire midnight of April 16 (Sundays don’t count, and Day 1 was Saturday April 5.) As long as the Governor doesn’t veto the bill, it will become law. And a third state’s taxpayers will see multinationals pay a fairer share of their state’s bills.

 

Naked Capitalism: The Face of Oligarchy in Spain

Another Day, Another Political Corruption Scandal In Spain’s ‘Mafia State’

Posted on April 7, 2014 by

By Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media. Originally published at Testosterone Pit

Political corruption has become synonymous with political leadership in Spain. After 16 long months of the Bárcenas affair, it is common knowledge that senior members of the current governing party operated a highly lucrative political slush fund for well over 20 years.

Everyone also knows that no matter what shady backroom shenanigans their senior political representatives get up to, they will pay no price. All crime, no punishment — that’s the new modus operandi at the top of Spain’s political establishment. As if to drill this point home, the country was treated this week to a spectacle of political hubris and impunity so farcical and obscene that it leaves no doubt in one’s mind: Spain is now run by a mafia state!

It all began with a simple traffic infraction. On Thursday afternoon, at roughly 4:30 p.m. Spanish time, a unit of Madrid’s traffic police sighted a Toyota Verso illegally parked in a bus lane on Gran Via, one of the city’s busiest thoroughfares. They pulled up alongside the vehicle and began taking down its details.

Little did they know that said vehicle belonged to Spain’s “Iron Lady”, Esperanza Aguirre, the former president of the Madrid Community and one of Spain’s most connected and powerful political figures. Aguirre had, in her own words, just “popped out” of her car to get some cash out of a nearby ATM.

When she returned to find her car surrounded by traffic wardens, the political big shot did what most big shots do in such situations: she pushed her weight around. According to a British tourist who witnessed the scene, “she got increasingly agitated.” After just a few minutes of questioning by the officers, Aguirre lost her patience and cool, put her car into gear, and drove off, in the process knocking over one of the officer’s motorbikes. As she sped along Madrid’s Gran Via, a police car gave chase, but when the officers inside signaled for her to pull over, she refused.

After driving all the way home, Aguirre parked her dented Toyota in the garage. When the police arrived, they were met by agents of the Civil Guard who serve as her official bodyguards – all paid for with public money, of course, despite the fact that Aguirre no longer occupies a public role.

According to allegations in El País, the agents cautioned the police officers against pressing charges against their boss. Thankfully, the officers declined, choosing instead to report Aguirre for direct disobedience of authority.

A “Noble” Politician

Unfortunately for the police officers, they could not have picked a more powerful foe. As the Countess of Bornos, Grandee of Spain, Esperanza Aguirre is a distinguished member of the Spanish nobility. She is also the current president of the Madrid branch of the Popular Party (PP) and aspires to run as the city’s new mayor in the next round of local elections.

Adored by the right and detested by the left, Aguirre cuts a sharply polarising figure. She is also Spanish premier Mariano Rajoy’s fiercest critic and rival. Indeed, before yesterday’s brief moment of madness, Aguirre was considered one of the hot favourites to succeed, if not topple, Rajoy in the coming years.

It’s not just in Spain where Aguirre wields influence. In February 2004, she was appointed Honorary Dame Commander of the Order of the British Empire, making her the first Spanish woman to have received the honour. She is also a regular attendee of the world’s most exclusive elite club, the Bilderberg Group.

Until recently Aguirre enjoyed an almost spotless reputation. She is, to date, one of worryingly few senior PP politicians not to have been implicated in the Bárcenas scandal, and although rumours keep surfacing about her involvement in the Gurtel political kickbacks affair, the accusations never quite seem to stick. Like Teflon Tony (Blair), Aguirre has an annoying habit of skirting scandal.

At least, that is, until now!

Hubris and Impunity

Having fled like a two-bit fugitive from the law, both in broad daylight and in front of countless witnesses and CCTV cameras, Aguirre should have somewhat more difficulty explaining her actions this time round.

That hasn’t stopped her from launching a full-frontal media attack against the officers that charged her, calling them “machistas” (male chauvinists) and accusing one of the police officers of having “badly parked” the motorbike she herself knocked down. To the undisguised glee of Spain’s right-wing press, she even snidely mocked the officer who reported her (a man who bravely discharged his duty and should be held up as a rare example of honest public service) for seeking counselling after the incident.

How quickly the countess has changed her tune! Just two days before, on April 1st, Aguirre was singing the praises of the country’s riot police for its violent suppression of protests in the country’s capital. “A self-respecting nation cannot allow the police to be attacked; they are the ultimate guarantors of our freedom,” she wrote in one tweet.

Such bare-faced hypocrisy, impunity and hubris have become par for the course among Spain’s political elite. In almost any other European country, Aguirre would have spent Thursday night behind bars. She would probably have also been tested for alcohol or drug consumption — something the police in Madrid never thought to do. Her reputation ruined, her career in tatters, she would have had little choice but to apologise publicly for her criminal behaviour, resign as president of Madrid’s Popular Party, and hope that the law show mercy on her.

But this is Spain we’re talking about and as Spaniards are fond of saying these days, “Spain is different”.

Immunity, the Big Vehicle for Political Corruption

In Rajoy’s Spain, the hard, heavy hand of the law is meant only for the meek and powerless. The same senior government ministers that are frantically creating new laws to criminalise political protest and dissent believe themselves to be quite literally immune from justice. Sadly, judging by the events of the last two-and-a-half years, they’re probably right.

Even when it was discovered late last summer that the Popular Party’s top bosses had taken a leaf out of Richard Nixon’s book by arranging for the destruction of incriminating evidence in the Bárcenas affair, no heads rolled, no arrests were made [watch here how Rajoy sweats and squirms as he is questioned on Bloomberg about the allegations]. Contrast that with Germany, where a number of senior politicians have had to resign after being accused of academic plagiarism. Or with the UK, where the cabinet minister Chris Hunne was made to serve 50 days of an eight-month prison sentence for having blamed a speeding offence he had committed on his wife.

You see, in most other European countries, cases of political corruption tend to be dealt with swiftly and expediently. In Spain they go on forever, or at least until the appropriate statute of limitations kicks in. Governments in other countries realise that to preserve at least the outward appearance of the rule of law, it must at least appear to apply to everyone, regardless of their position or status (of course, with the obvious exception of senior bankers).

In Spain, by contrast, the rule of law no longer applies, if indeed it ever did; instead what we have is the law of rule. On Friday, the Minister of Justice, Alberto Ruis Gallardón, as good as granted complete immunity from prosecution to all senior members of the country’s scandal-tainted royal family, by making sure that in future they can only ever be tried in the country’s supreme court for crimes they have committed — something we can rest assured will never happen!

As for Aguirre, the chances of her paying the price for her reckless actions are razor slim — unless, of course, her political enemies, including Rajoy, decide, for convenience sake, to take her out of the picture. Much more likely is that the police officers who valiantly discharged their duties will lose their jobs, tax payers will pick up the tab for the repairs to Aguirre’s car, senior public servants will be made exempt from traffic laws, and once the public furor dies down (which it no doubt will), Aguirre will be voted in as mayor of Madrid. Such is life in Spain’s mafia state!

* * *

And, as noted in the comments that follow:

A two-tiered justice system is a feature of kleptocracy. We already have such a system here in the US. The article tries to draw a North-South distinction on how political misdeeds are treated. I think such differences are superficial. Europe’s rich and elites, North and South, as a class, exist beyond the law. Their looting remains essentially untouched and unchallenged.

And:

Spanish proverb “the law is like a spiderweb, it catches flies while the hawk goes free.”

Naked Capitalism: The Media and Inequality

Joe Firestone: Is the MSM Blackout on Inequality, Plutocracy, and Oligarchy Ending?

Yves Smith

Yves here. Although I like this piece, I believe Joe is not cynical enough about MSNBC, which has become a messaging apparatus of the Democratic party. The reason that MSNBC is now talking about inequality is Obama is pushing for a minimum wage increase, so wealth and income disparity are no longer verboten topics. Moreover, the Dems have now opened season on the Kochs and Sheldon Adelson. Both have been highly influential operators for decades. Moreover, the Kochs have been major funders of the extreme right wing campaign to make American values pro-corporate, which was set forth in 1971 in the Powell Memo.

The fact that the Dems are using inequality as a talking point to distract attention from their numerous policy failures, particularly on the economy, may be the big reason we’ve seen such an upsurge in billionaires making badshit crazy remarks about persecution of late. These statements aren’t for the hoi polli, they are for the Beltway operators, as in they had better not go Huey Long on them. As if there was even a possibility that Obama Administration was capable of that.

By Joe Firestone, Ph.D., Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program. He taught political science as the graduate and undergraduate level and blogs regularly at CorrenteFiredoglake andDaily Kos as letsgetitdone. Cross posted from New Economic Perspectives

All of a sudden MSNBC cable commentators are talking about plutocracy and oligarchy. Surprisingly, the first occurrence of this I’m aware of was Chuck Todd, reacting on his Daily Rundown show to the spectacle of Republican candidates traveling to Vegas to seek funding from Sheldon Adelson and his group of hugely wealthy Jewish Republican donors. Todd began to explore the implications of that event. He seemed exercised, and more than the slightest bit upset, about its meaning for Democracy and used the words plutocracy and oligarchy. Andrea Mitchell also discussed it later and she, too, registered apparent dismay, while using the “p” and “o” words.

Chris Hayes has been on leave during this period, so we haven’t heard from him about this. But Chris Matthews, the “oh so very slightly left-of-center insider” has been making very unfriendly noises about Adelson, the Kochs, and the Supremes, culminating today (April 3rd) with nasty references to plutocrats, oligarchs, and candidates, kissing oligarchs somewhere or other, on both his program and Al Sharpton’s.

But the most interesting outbreak of a sudden passion for democracy and hostility toward plutocracy and emerging oligarchy has occurred on The Cycle show, where, in the wake of Abby Huntsman’s oligarch-inspired attack on Social Security and entitlements generally, Krystal Ball has begun talking about inequality, Thomas Piketty’s recently published in English hyped-book on the subject, and the rise of plutocracy and oligarchy in the United States. Here are two videos from the April 1st Cycle show. In the first, Krystal Ball in introduces a discussion among Cycle co-hosts, Touré, Abby Huntsman, and Luke Russert, and Susan Ochs of the Aspen Institute, making a guest appearance.

Amid much praise of Piketty’s book and assertions that it may lead to a re-orientation in the world view of American politics there was a discussion primarily among Susan Ochs, Ball, and Huntsman, about why the rich are sitting on all their money and are not investing it in new businesses that would lower unemployment, create a positive spiral of economic growth that, in turn, would create a healthy and dynamic economy, that, in its turn, would lower inequality.

Huntsman, of course, delivered the right wing gospel, that the increasing concentration of wealth with growing inequality, predicted by Piketty, can be avoided by policies that would restore growth, with the implication being that programs funding new innovations and the proper mix of tax incentives for the rich might shift the psychology of business and persuade investors to stop sitting on their money and start creating the long-awaited full recovery. Huntsman also emphasized the talking point that people aren’t bothered by inequality as long as they themselves are making gains, a contention I critiqued recently.

Ochs, assisted by Ball, with murmurs of agreement from the other two on the panel, quickly talked her down, however, pointing out that businesspeople would be unlikely to respond to anything but increased sales, especially when they could make profits the easy way through financial activities in the international economy. Ochs, in particular, emphasized that the key to restoring a healthy economy and reducing inequality was increased demand; but, following the principle of pundits talking about problems, but rarely real solutions, she stopped short of telling us what could be done to create that demand if business will not do it.

Later in the program, Krystal Ball, in the second video, returned to the subject of inequality, and this time emphasized strongly the danger to democracy it represented. This commentary didn’t make any specific proposals, but it was quite out front in both emphasizing the problem of inequality as a threat to democracy and calling for something “radical” to be done about it.

Meanwhile, Jamie Galbraith has reviewed Piketty’s book. He thinks that while it breaks new ground, its measures of rate of return on capital are flawed because Piketty attributes the rise of return on capital in relation to national income to slower economic growth:

. . . according to a formula he dubs a “fundamental law.” Algebraically, it is expressed as r>g, where r is the return on capital and g is the growth of income. Here again, he seems to be talking about physical volumes of capital, augmented year after year by profit and saving.

But he isn’t measuring physical volumes, and his formula does not explain the patterns in different countries very well. For instance, his capital-income ratio peaks for Japan in 1990—almost a quarter century ago, at the start of the long Japanese growth slump—and for the United States in 2008. Whereas in Canada, which did not have a financial crash, it’s apparently still rising. A simple mind might say that it’s market value rather than physical quantity that is changing, and that market value is driven by financialization and exaggerated by bubbles, rising where they are permitted and falling when they pop.

Jamie Galbraith also disagrees with Piketty on the policies we ought to use to reduce inequality. Piketty recommends a very pronounced focus on a global tax on wealth and also on high marginal income tax rates to go back to post-war policies, while Jamie says:

If the heart of the problem is a rate of return on private assets that is too high, the better solution is to lower that rate of return. How? Raise minimum wages! That lowers the return on capital that relies on low-wage labor. Support unions! Tax corporate profits and personal capital gains, including dividends! Lower the interest rate actually required of businesses! Do this by creating new public and cooperative lenders to replace today’s zombie mega-banks. And if one is concerned about the monopoly rights granted by law and trade agreements to Big Pharma, Big Media, lawyers, doctors, and so forth, there is always the possibility (as Dean Baker reminds us) of introducing more competition.

Finally, there is the estate and gift tax—a jewel of the Progressive era. This Piketty rightly favors, but for the wrong reason. The main point of the estate tax is not to raise revenue, nor even to slow the creation of outsized fortunes per se; the tax does not interfere with creativity or creative destruction. The key point is to block the formation of dynasties. And the great virtue of this tax, as applied in the United States, is the culture of conspicuous philanthropy that it fosters, recycling big wealth to universities, hospitals, churches, theaters, libraries, museums, and small magazines.

I think Jamie has it right, especially since, as he says, a return to high progressive tax rates would be met by various tax avoidance schemes of the kind that caused the previous regime of high progressive taxation to become ineffective over time, and also because a global tax on wealth would be very hard, if not impossible, both to legislate and to administer in today’s world. In addition, however, I think Piketty may not understand how fiat currencies can be used by governments to lower inequality by creating full employment, along with higher minimum wages, and a healthier labor market, in which employers would find it much more difficult to pay less than a living wage.

And this brings me back to the possibility of alleviating inequality by creating a truly healthy economy even better than the one western nations enjoyed in the quarter century after World War II. The Cycle panel and Susan Ochs left us at the point of recognizing that business needed demand before it was likely to use its assets to create a positive growth spiral in which all would share in the rewards of increased productivity reducing inequality in the process.

Well, of course, there is an emphatic Modern Money Theory (MMT) answer to the chicken-egg problem highlighted by The Cycle discussion. And that is that the Government is the only force that is likely to end economic stagnation and rising inequality, because it has the policy space and financial capability to create full employment and price stability.

 

Common Dreams: Hightower on Moral Monday

I Think They Can

Some of the states where the Moral Monday movement is rising are mighty steep political hills for progressives to climb.

Supporters of the Moral Monday movement in Raleigh, N.C. last month. (Photo: United Workers/cc/flickr)Like that little choo-choo in the classic children’s book “The Little Engine that Could,” Moral Monday is the little movement that says, “I think I can” and keeps chugging up the hill.

This new progressive coalition became a full-throttle citizen uprising in North Carolina  early last year.

Fueled by rising public outrage at the rampant right-wing extremism of the Republican-run state government, a few advocates for workers, civil rights, and other people’s issues went inside North Carolina’s state capitol on a Monday in April.

Led by Rev. William Barber, head of the North Carolina NAACP, they literally put their bodies on the line in protest of the GOP’s reckless crusade to turn the state into a privatized utopia for unfettered corporate greed and tea party wackiness.

Several members of the small group were arrested that day, and Republican leaders berated their protest as “Moron Monday.”

To build a movement, you’ve gotta start moving.Those politicos aren’t laughing now.

The protesters kept coming and their numbers kept growing, for Moral Monday had struck a chord. The protest spread across the state. A rally in February drew more than 80,000 people, and public approval ratings for the governor and state assembly have tanked.

The legislature is now out of session, but Moral Monday still has weekly meetings and is launching a 50-county organizing and voter education campaign this summer.

It’s now a burgeoning multi-issue, grassroots movement for progressive change. And it’s literally on the move, branching out to other states — Moral Monday Georgia is going full steam this year, South Carolina has a Truthful Tuesday movement gaining steam, and the movement is getting started in Alabama, Florida, New York, and Wisconsin.

Some of these states are mighty steep political hills for progressives to climb, but success begins with someone saying, “I think I can.” To build a movement, you’ve gotta start moving.

Naked Capitalism: PayPal’s No Friend of Yours

Wolf Richter: I Just Got PayPal’s New Absolutely-No-Privacy-Ever Policy

Posted on April 2, 2014 by

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Testosterone Pit.

Sunday, when people had other things to do and weren’t supposed to pay attention, PayPal sent its account holders an innocuous-sounding email with the artfully bland title, “Notice of Policy Updates.” PayPal didn’t want people to read it – lest they come away thinking that the NSA, which runs the most expansive spying dragnet in history, is by comparison a group of choirboys.

The email started with corporate blah-blah-blah on privacy, that PayPal was “constantly” changing things “to give you more of what you want and improve your experience using us.”

Got it. This is going to be for your own good.

The email further discourages you from diving into it: So “this might not be your favorite stuff to read… but if you are interested take a look.” And this having gone out on a Sunday: “if you have other pressing things to do we’ll understand.” The click-through ratio of that link to these policy changes must have been near absolute zero. So I clicked on it.

Once on that page, you have to dig through some dry verbiage before you get to what they cynically call their “Privacy Policy.” Turns out, PayPal is a giant data hog.

It already has the information you hand over when you sign up, including your name, “detailed personal information such as date of birth,” address, phone number, banking and/or credit card information. It further collects information about all “your transactions and your activities.”

When you get on a PayPal site or use its services, it collects “information sent to us by your computer, mobile phone or other access device.” This “includes but is not limited to” (so these are just examples): “data about the pages you access, computer IP address, device ID or unique identifier, device type, geo-location information, computer and connection information, mobile network information, statistics on page views, traffic to and from the sites, referral URL, ad data, and standard web log data and other information.”

You read correctly: “and other information” – anything it can get.

PayPal also collects personal data by putting cookies, web beacons (“to identify our users and user behavior”), and “similar technologies” on your device so that you can be tracked 24/7 even if you’re not using PayPal’s services, and even if you’re not on any of its sites.

Wait, “similar technologies?” By clicking on another link, you find out that they include pernicious “flash cookies,” newfangled “HTML 5 cookies,” and undefined “other web application software methods.” Unlike cookies, they “can operate across all of your browsers.” And you can’t get rid of these spy technologies or block them through your browser the way you get rid of or block cookies. You have to jump through hoops to deal with them, if they can be dealt with at all.

In addition, PayPal sweeps up any information “from or about you in other ways,” such as when you contact customer support and tell them stuff, or when you respond to a survey (Just Say No), or when you interact “with members of the eBay Inc. corporate family or other companies.” Yup, it sweeps up information even when you interact with other companies!

It may also “obtain information about you from third parties such as credit bureaus and identity verification services.” And it may “evaluate your computer, mobile phone or other access device to identify any malicious software or activity.” So they’re snooping around your devices.

And when you download or use PayPal’s apps to your smartphone, or access its “mobile optimized sites,” it collects location data along with a host of other data on your mobile device, including the unique identifier that ties it to you personally in order to manipulate search results and swamp you with location-based advertising “and other personalized content,” or whatever.

After vacuuming up all this information “from or about you,” PayPal will then “combine your information with information we collect from other companies” and create a voluminous, constantly growing dossier on you that you will never be able to check into.

Who all gets your personal information that PayPal collects? You guessed it.

First, it defines “personal information.” Turns out, much of your personal information is not “personal information”: any information that PayPal has “made anonymous” – we already know how anonymous that really is – is not “personal information,” and thus can be freely shared with or sold to whomever. And it shares the remaining “personal information” with:

  • eBay and its affiliates
  • Contractors that “help with,” among other things, “marketing and technology services”
  • Financial outfits (such as GE Capital) that help decide, for example, if you should receive pre-approved credit-card offers
  • Credit bureaus and collection agencies, which get your account information
  • Companies PayPal might merge with or be acquired by. There goes your entire dossier. You can’t stop it from being sold to the new entity, which might be a Chinese company.
  • A basket of our favorite law enforcement and government agencies and “other third parties pursuant to a subpoena, court order, or other legal process….”

You can’t opt out of PayPal’s spy apparatus.

You can only opt out of receiving their ads and pitches. And activating that “do not track” function in your browser to keep PayPal off your back? No way José. “We do not currently respond to DNT signals,” it says laconically.

So, if you don’t like being surveilled like that, you’re still free to close your PayPal account. But that’s not going to wipe out the information PayPal has collected “from or about you,” and its automatic systems continues to collect data through cookies, beacons, and “similar technologies,” and through the sophisticated spy capabilities that are part of any smartphone worth its salt [hilarious video.... iPhone 5nSa].

PayPal will simply mark your account as “closed” and you can’t get into it anymore, but it will “retain personal information from your account for a certain period of time” – probably forever – to do all sorts things, including “take other actions as required or permitted by law.” Yup, as permitted by law. It won’t do anything illegal with it. That’s the only promise. Alas, there aren’t exactly a lot of legal restrictions in the US on what companies can do with personal data.

PayPal is not unique. They’re all doing it. They’re part of the enormously hyped bubble of Big Data whose business model is to collect and monetize your personal information, which has become part of a new asset class. And seeing this, the NSA is dying of data envy.

But government agencies are already on a roll with off-the-shelf surveillance technologies, and they justify them with peculiar rationales: According to the LA Police Department, anyone driving a car in the greater Los Angeles Metropolitan area is automatically part of a vast criminal investigation! Read…. Los Angeles Cops Argue ALL Cars in LA Are Under Investigation