And This Is Surprising How?

(Cartoon by Mark Streeter and found at Cagle.com.  Click on image to enlarge.)

It's not just the GOP using the Affordable Care Act for gain, our capitalist market place has added an niche as well:

From the L.A. Times:

To hold down premiums under the healthcare law, major insurers have sharply cut the number of doctors and hospitals available to patients in the state's new health insurance market.

Now those limited options are becoming clearer, and California officials say they are receiving more consumer complaints about access to medical providers. State lawmakers are also moving swiftly to ease some of the problems that have arisen.

"It's a little early for anyone to know how widespread and deep this problem is," said California Insurance Commissioner Dave Jones. "There are a lot of economic incentives for health insurers to narrow their networks, but if they go too far, people won't have access to care. Network adequacy will be a big issue in 2014." [Emphasis added]

Because the state Insurance Commissioner is keeping a close watch on premiums in "California Care" (the state version of the ACA), the insurers are paring costs (and maintaining profits) by paring the list of doctors in their network.  Doctors willing to accept reduced billing rates are promised more patients in return.  It's a sweet deal for both the insurance companies and the medical establishment, and a not-so-sweet deal for the patients..

Many patients suddenly discover (often mid-treatment) that their doctors won't/can't accept the patients' insurance.  For a cancer patient, this can be devastating. Even if the patient locates another doctor for treatment, the wait for an appointment may be extensive.

Nice, eh?

But that's what happens when you let the insurance companies help in writing the law.

A Few Pennies Worth

(Editorial cartoon by Kevin Siers (11/30/12) published by the Charlotte Observer and featured by McClatchy DC.  Click on image to enlarge and then return.)


AP has published a terrific analysis of the garment industry and how it works globally to get the cheapest labor possible, regardless of the conditions under which the workers labor, all to save a few pennies and to make a few bucks.  The entire article is worth the read, but I'm still going to quote a significant portion of it.

In the charred bones of the Tazreen Fashions Ltd. factory, the labels and logos—sewn and printed in scarlet and royal blue—beckon from the ashes. Even in ruins, there's no missing that these T-shirts and jeans were intended for U.S. stores and shopping carts, designed as bargains too good to pass up, or stocking stuffers just in time for the holidays and in just the right size.

But a week after the blaze outside Bangladesh's capital killed 112 workers, a glaring question remains unanswered: How, exactly, did brands worth fortunes end up in such a place? And what does the odyssey that brings them to market across thousands of miles say about the everyday economics most consumers take for granted? ...

That complexity means there are secrets behind every label that moved through Tazreen, sewn in by workers earning the equivalent of 27 cents an hour, 6 days a week, packed between rows of sewing machines stacked on floor after floor of a building with exits locked or blocked.

Such conditions were also common in the U.S. until a fire achingly similar to the one in Bangladesh killed 149 workers at New York's infamous Triangle shirtwaist factory 101 years ago. But today, the globalized economy allows retailers and consumers in First World countries to turn to Vietnamese or Honduran or Bangladeshi workers to do those jobs, a role largely overlooked until a system that runs with formidable efficiency is upended by tragedy.

"You have to remember that there is a problem which we face in a globalized economy, which is that if one country enacts really strict safety guidelines that raise the cost of manufacturing, buyers have the option to take their business elsewhere and, thus far, have demonstrated a tendency to do so," said Josh Green, CEO of Panjiva Inc., an online data platform used by international marketers and producers.

The supply chain's flexibility makes it particularly well suited for the clothing trade's repeating cycle of design, order, production, shipment and sale. Apparel companies begin laying plans for new lines of clothing a year before they arrive on store shelves. But creativity quickly gives way to number-crunching, as executives set sales targets and try to figure out which producers can deliver within their required profit margins, Rangarajan said. ...

But the pressures at work in Bangladesh, which has climbed to second place behind China among the world's largest exporters of apparel, continue because it is part of a global production economy with interchangeable components. Making clothes requires relatively low-skilled labor and equipment that is easily relocated or replicated, making it "uniquely susceptible to geography hopping," Green says.

That gives big buyers of clothing significant leverage. When a major retailer buys a garment, roughly 50 to 60 percent of the costs are for raw materials, 15 to 25 percent is for labor, and the rest is split between transportation, overhead and expenses like import duties, Rangajaran said. But except for the labor, the other costs are largely beyond buyers' control.

"Continually chasing low-cost labor is one of the big levers you have to pull," he said.

The result is a production system that has rapidly bypassed long-ago ways of doing business, when most clothing companies owned the factories where their goods were made and the workers were on their own payrolls. Now, a company like Wal-Mart or Sean John does not have to own a single factory, and the plants they rely on can change from year to year. The shifting creates the new challenge of keeping tabs on conditions where the work is being done.    [Emphasis added]

This is what unrestrained capitalism looks like, and it's all done on a global scale.  There is no human face to it, only bodies locked into buildings forced to work long days for pennies.  And the Wal-Marts, the Targets, even the Disneys are tied into it.  Some of them try to hide behind the shield of  "supply chain managers, independent suppliers or in-country agents" so that when one of these "embarrassing" incidents occur they can feign ignorance of the conditions and fire one shield only to hire another.  

Jobs have been exported from this country to China, Bangladesh, and other countries to increase the profit margins.  The sad part is that it is working.  People flocked to Wal-Mart and Target just a few days after this horrible fire and bought the very products those workers slaved to make because they were cheap, not realizing just what this system has done to those workers but what it has done to workers in this country.  Our own wages are now depressed (at least for those lucky enough to have a job, or two part-time jobs) and dropping with the threat of moving more jobs off-shore.

And our owners, those who control those global corporations and industries, are sitting back and enjoying every minute of it.

Welcome To The Real World

So, it's been a momentous few days for Mark Zuckerberg. Friday's Facebook IPO moved him from mere millionaire to billionaire. Saturday he got married. Monday Facebook's stock dipped. He's still a billionaire (I suspect), but he's lost a chunk of change, more than 99% of the people will make in ten lifetimes.

David Horsey, whose cartoon heads this post, has a few salient comments on the whole affair.

Congratulations to Mark Zuckerberg on his surprise wedding last Saturday. I certainly hope his marriage gets off to a better start than Friday’s initial public offering of shares in his social networking colossus, Facebook.

Wall Street analysts are now saying the opening share price of $38 was too high for investors wary of buying into a business that delivers millions of messages and photos from college drinking parties but produces a comparatively modest revenue stream. As a result, at the close of trading on Tuesday, Facebook's estimated market value had dropped to $85 billion from the $104-billion value set by the IPO.

That means a lot of people lost money, not just Mark Zuckerberg, but hey! that's the market at work. As Horsey points out, "the market" is for suckers, for gamblers, it's one big casino, and nothing points that out more than this Facebook episode. Only the house and its shills win. And that's an historical fact, Jack.

People who were talked out of a pension and into a 401k 15 years ago have, more often than not, seen that nest egg go rotten. Wall Street has become a bigger gamble than Las Vegas, and there aren't even free drinks to soften the blow when you lose. Everybody is in the market these days, but only a few very big players actually get to play. Hedge fund managers, derivatives hawkers and slick guys in suits from banks that are too big to fail place all the bets and roll all the dice. We just stand on the sidelines watching our modest investments take a stomach-churning roller coaster ride. [Emphasis added.}

What is really exceptional about the Facebook debacle is that even some of the major players got screwed, and got screwed royally.

As Facebook shares continued their slide, regulators launched inquiries into whether privileged Wall Street insiders were alerted to the company's weakening financial projections, leading them to shun the stock or dump shares just as buying was opened to the public.

Morgan Stanley, which led the Wall Street effort to bring the social network public, came under fire following reports that the bank had told some favored clients that the bank was cutting its revenue estimates for Facebook. The lowered expectations came after the tech giant expressed caution in a public filing about its advertising sales on mobile devices. [Emphasis added]

Apparently there is a ranking even within the ownership class. What a surprise, eh? The only difference is that some of the big boys are not having any of this crap and have the money and the muscle to get the SEC and other regulatory agencies to move in and have a look-see, something the rest of us don't have.

If it weren't for the fact that a lot of little investors got caught up in this debacle (yes, they were foolish, but it was a safe investment, so they were told), this might be fun to watch.

Granny Bird Award: Johnson & Johnson

The winner of this edition of the Granny Bird Award, an award given from time to time to those who go out of their way to harm the health and welfare of elders, goes to a large health care provider for its distribution of a hip replacement device that the company had to have known was was unsafe.

From the New York Times:

The health care products giant Johnson & Johnson continued to market an artificial hip in Europe and elsewhere overseas after the Food and Drug Administration rejected its sale in the United States based on a review of company safety studies.

During that period, the company also continued to sell in this country a related model, which earlier went on the market using a regulatory loophole that did not require a similar safety review. ...

...During some eight years on the market, the two implants were used in about 93,000 patients worldwide, about one-third of them in the United States. Both models were based on the same component, an all-metal hip socket cup that experts say was faulty in design. [Emphasis added]

Johnson & Johnson behaved despicably in two separate ways. The first is the company went ahead and sold the device in other countries even after the FDA rejected it for safety reasons. What, people (mostly elders) in other countries aren't entitled to a safe hip replacement?

The second is that the company used a regulatory loophole to get a related device on the US market and continued to sell it even after the FDA disapproved the other device for safety reasons. The designs of a crucial part were the same.

What is particularly galling is that the company did nothing illegal, nothing which would bring the wrath of the federal government down on it. The recipients of the device, however, do have standing for some pretty hefty product liability suits. I hope those affected lawyer-up with the best lawyers in the nation to smack the hell out a company which showed such total disregard for the health and safety of its consumers.

Ah, the joys of unfettered capitalism, where all that matters is making money anyway one can.

Compounding Costs

It's a rare day when insurance companies, employers, and labor unions all agree on something, yet that's exactly what is happening in California on the issue of "compound" medications.

From the Los Angeles Times:

An unusual coalition of corporations, insurance companies and labor groups is pushing for legislation that would put restrictions on the customized medicines known as compounded drugs, saying the prescribing of these drugs has become rife with abuse.

Compounded drugs are medications whose ingredients have been tailored to meet a patient's individual needs. Proponents say they improve treatment, but critics say they are typically made with many of the same ingredients found in over-the-counter pills and generic prescription drugs and simply boost profits for doctors and pharmacies.

The doctors who "prescribe" these drugs assert that the compounded drugs are customized to fit their patients' needs and drug sensitivities. Unnecessary ingredients in FDA approved drugs are removed, and other elements added. For the extra work involved, the patient gets a much better medication.

Doctors who prescribe and hand out such compounded painkillers and analgesic salves as KetoLido and Lidorub said their patients need them.

By removing certain nonessential elements or turning pills into ointments and salves, pharmacists can develop medicines that, for instance, avert drowsiness, allergic reactions, problems with swallowing pills or damage to the kidney or liver.

Sounds good, right?

Perhaps, but the doctors and pharmacies involved expect to get paid for the "extra effort" involved, and there's the rub.

One bill that a doctor submitted last month to an insurer sought $1,058 for a prescription compound containing Ketoprofen powder, a non-opiate pain medicine, said the person, who spoke on condition of anonymity because the bill could become part of a confidential state investigation.

The insurer paid the physician $36, the value listed for the active ingredient on the state pharmaceutical reimbursement schedule, the person said. A similar, 30-day supply of Ketoprofen powder in prescription capsule form sells for $15.79 at Costco pharmacies. ...

Suspicions of abuse have been fueled by advertisements for compounded drugs on Craigslist two years ago that offered "doctors who see work comp patients … $20K a month dispensing meds."

"There are no legal issues, no billing — we do the billing, no costs or risks to the doctor," the ads said. "We have over 400 doctors in California."

The ads boasted that "we have a great product an Anti-Inflammatory Cream that's compounded and has spectacular results" and that doctors could make a $141.60 profit on every prescription.

And that, my friends, is just one reason why health care costs continue to rise.

Made In America ...

...or Why I Hate Wall Street Banksters.

This past weekend, the Los Angeles Times gave us the perfect example of why employment numbers are still down which is why economic recovery for most of us is still so far down the road as to be invisible.

...what makes [Yet-Ming] Chiang's ordinary-looking beige Toyota Prius even more special is that it's powered by a breakthrough battery that he invented and is working to turn into the kind of high-tech, green, "Made in America" product that many see as the key to the nation's economic future.

Safer and longer-lasting than conventional lithium-ion car batteries, the 52-year old MIT professor's invention packs 600 cells into a case the size of an airplane carry-on bag. His technology has transformed the batteries used in many cordless power tools.

So impressive was Mr. Chiang's invention that he received funding from the government to go into production here. Unfortunately, that seed money wasn't enough. Conventional investors on Wall Street weren't interested in building US plants to manufacture the new batteries to be used in cars as a replacement for gasoline.

The obstacles here are rooted in the sad history of manufacturing's decline in the United States: Despite the promise of Chiang's batteries, many on Wall Street and in Silicon Valley were incredulous when he and other leaders at A123 asked for capital to build factories in America — Asia, yes, but Michigan, why would you want to?

Even more daunting, nearly all of the world's battery manufacturing industry is in Asia, where plants can be built faster and supplies and equipment are much easier to get than in the United States. These days, it's hard to find Americans who even know how to build a battery factory.

That's why A123 had to give in and build its first plants in China, where the company could move into production quickly to show auto industry customers that it could deliver on future contracts.

The brilliant thinking of our owners was that it cost too much to build such a plant to manufacture the product here, where it would be used. Labor is much cheaper in China where wages are kept low to keep workers at poverty levels where they would be much less likely to be brazen enough to insist on safe working conditions. China also doesn't have those pesky regulations regarding hazardous waste disposal and other environmental protection requirements.

So Mr. Chiang had to build his first factory in China, where his ground breaking invention was quickly copied and produced by competitors, because China doesn't enforce intellectual property rights, especially those from other nations.

Mr. Chiang, a Chinese immigrant and naturalized citizen, however, refuses to be stopped. He's building his US plant and placing it in Michigan where there are plenty of people familiar with manufacturing in the auto industry, most of whom are currently unemployed. He's doing it for several reasons, some of which Wall Street couldn't possibly understand. He feels it's the right thing to do for his country and his fellow citizens. He can justify it to the money men by pointing out that shipping costs for his new batteries to the place where it will be used demand such a plant.

"Without question, we would rather have done it all in the U.S.," said Chiang, who left Taiwan as a 6-year-old with his family, earned degrees at MIT and has been a materials science professor there since the mid-1980s. "I'm an American citizen. We're an American company. It's an American-born technology."

Good on you, Mr. Chiang, and welcome to America. We need some in-sourcing.

Weird News

I swear that I am not making this up.

Here's the link.

An Illinois consumer craving seafood who bought a 2-pound bag of shrimp priced at $12.99 a pound expected to pay about $26 for dinner, not $16 for the meal and $10 for some melted ice.

That's one example of an expensive-but-little-noticed rip-off in which seafood shoppers pay for large amounts of ice that are not supposed to be included in the price, according to a group of industry and government officials that conducted inspections in 17 states.

The investigation found many such cases across the country, and the culprit is the coating of ice applied to frozen seafood to preserve quality during storage and distribution. The ice was wrongly included as part of the labeled weight of seafood, according to the National Conference on Weights and Measures, which conducted the investigation. In some instances, the investigation found, ice accounted for up to 40 percent of the product's weight. ...

The investigation was prompted by the National Fisheries Institute, a seafood industry association, over concerns about improper labeling used by some packaging companies.

Coating seafood in ice is a common and legal practice. What isn't legal, Onwiler said, is to include ice in the weight of the seafood. In some cases, investigators found seafood packers were also adding a thicker coat of ice than was necessary in order to add weight to the seafood.

Ah, the wonders of the free market.

Egads! WaPo Got It Right

Consumers pay $3.5 billion too much annually for their prescription drugs, according to this rather surprising editorial in the Washington Post. Surprising? Let's just say I felt like I had been smacked upside the head with a mackerel, but in a good way. Fred Hiatt and his editorial board got this one right, in fact, they nailed it.

The 1984 Hatch-Waxman Act was supposed to help consumers by offering a 180-day exclusive marketing period to generic companies that could develop their own "bio-equivalent" versions of brand-name drugs without infringing on the brand-name drugs' patents. Allowing brand-name patent holders to sue if they thought the generic equivalents came too close to the patented drug's composition, the act was designed to promote the development of cheaper alternatives and encourage challenges to weak patents. But the result has been an increasing number of out-of-court settlements in which brand-name drug companies simply pay generic competitors to stay out of the market. A measure intended to make cheaper, generic alternatives available sooner has had the paradoxical effect of delaying competition. [Emphasis added]

In many other industries, such conduct would be viewed as the kind of collusion that would (and should) require investigation under anti-trust laws. Somehow, however, the pharmaceutical companies (both large and small) have managed to avoid such reviews through the manipulation of well-intended but, as it turns out, deficient legislation. The answer, of course, is to fix the legislation. In this case, to require a showing that the "settlements" are legitimate and not intended to subvert honest competition.

As Congress embarks on major health-care reform, it has a chance to fix the system. Banning all "pay-for-delay" settlements except where they can be proven to be pro-competitive would be a good start. True, some pay-for-delay settlements inadvertently benefit consumers by allowing generic products to enter markets sooner than they would have after litigation. But that is no excuse for failing to fix a system with fundamentally flawed incentives. The only difference between one company paying another not to produce a competing product and one company paying another not to produce a competing product yet is that the second is still, paradoxically, legal. This must change.

Well, it certainly would be a start.

Nicely done, WaPo.

Tea Partying

In setting up discussion of any subject on the air, usually the host/ess goes looking for some one to represent each side. In the case of issues like theft, sometimes it's difficult to get anyone to represent the side of a thief. Now we have one. Yesterday in a tirade on floor of the Chicago exchange, Rick Santelli let loose a tirade against those poor who have had their economic security stolen from them by letting themselves be sold toxic mortgages. Thanks, Rick, you are about to join Alan Dershowitz, representative for torture, as the one to call when you need a good villain.

Shouting that the purchasers of mortgages that are now failing ought to have to pay them like those responsible folks who didn't have an illness, lose their jobs, or fail to refinance before housing values began their rapid plunge, Santelli nominated himself for executioner of the day. If you fail, you are the Santelli version of our worst fears, the one who provides the dark side of the moon in our system. You are going to suffer, and that's what the Santelli rant demands. You get to Go To Jail, Do Not Pass Go, Do Not Collect $200. Anyone who tries to stop the downfall of the unfortunate is guilty of ruining things for those who didn't stumble, who are able to meet their obligations. In the Santelli view, there is an antihero, and that is in this case President Obama. He has the nerve to make things easier on the victim, even deny the Santelli faction their satisfaction at watching victims suffer. His advice in days leading up to the meltdown? You guessed it. Everything is going up.

...August up 1.1%, and everything before May was a negative number for years...That's a trend," said Santelli.

That's just one incidence of Santelli's advice, but let's just point out, he isn't among the Krugmans and Roubinis who put a damper on 'creativity' in inventing the mortgage bundles that are now known as toxic.

David Brooks steps up to the plate to share the glory, using the rant to make a point that almost makes even his grasping mantra look good. (I will give you the link, but if you hit on it remember that will assure Bobo that he has a slavering following.)

A few years ago, the global economic culture began swaying. The government enabled people to buy homes they couldn’t afford. The Fed provided easy money. The Chinese sloshed in oceans of capital. The giddy upward sway produced a crushing ride down.

These oscillations are the real moral hazard. Individual responsibility doesn’t mean much in an economy like this one. We all know people who have been laid off through no fault of their own. The responsible have been punished along with the profligate.

It makes sense for the government to intervene to try to reduce the oscillation. It makes sense for government to try to restore some communal order. And the sad reality is that in these circumstances government has to spend money on precisely those sectors that have been swinging most wildly — housing, finance, etc. It has to help stabilize people who have been idiots.

There you have it, the idiots are the ones who fell for the line Brooks was pushing right along with Santelli, that the economic fundamentals were sound and prosperity could be built into your expectations. If you bought into this, as did most of the world, and lost then you have become the idiots we have to pull out.

Where is the screaming at the perpetrators of this catastrophe? All in blogs like this one, who deplored the creation of a financial system where regulation was treated as a barrier to the prosperity our pundittoes insisted had arrived never to depart, as long as the voice of reason would just shut up.

This is my scream, that the tea party ought to be dumping Allan Greenspan for refusing to use the laws to stop the ratings analysts, when he knew they were lying for gain. The tea party then needs to throw in the ratings analysts who were inveigling investors who did their homework, and giving out ratings that their bundles of mortgages did not even begin to deserve. Our tea party then needs to toss in the business reporters who never looked, or if they did ignored, at the instability of bundling up bad and good mortgages and selling them as top dollar earners to investors who then showed a really sound financial picture that was really shaky to the core. The tea party can then go on to the mortgage service perpetrators that sent out their slick ads to potential homebuyers asking them to buy as much house as they wanted, without any means to pay the mortgage, and told them they could refinance before their minimal rates could readjust upward. Onwards with the tea party to the agents who sold the houses, mouthed the lines, got signatures on paper so they could get awarded commissions for their dirty work. If there's any room left in the harbor, then that tea party ought to pitch in the investors who bought as many houses as they could on that totally fabricated market, basically using funds from investors who were being swindled to finance their purchases. Then let's toss the homebuyers who were swindled and now can't meet their payments.

The idiots are the ones who ignored rational considerations to create this miasma. It wasn't great judgment on the part of those who bought in. Their judgment was swayed by seeing the big fish who were insisting that wasn't a net they were swimming toward but economic nirvana, the spiral that went up forever. Oops. It's a net. The little fish that followed the Santellis and Brooks into it are not the ones who created it. Nope. That gapmouthed screamer on the YouTubes, on the news clips, rabblerousing against the victims of his braindead economic reporting - that's the idiot personified.

Gambling on Credit

Like buying a house, credit cards at one time were rewarded to those who were able to pay interest on the loans they represent. The change that was signaled in our mailboxes was much like the advance from mortgage qualification to sub-prime lending. When we became bombarded by constant pleas to take another credit card, to those of us who basically distrust anyone who tells us they're going to make an offer in our own best interest, it should have been suspicious to everyone. Sadly, it wasn't.

Those offers of low, low cost loans were never the signal of a new day dawning. On Wall Street, the bundles of subprime loans seemed to too many investors like a great idea. When the debt hit home, and they found out the bundle contained toxic loans, it was a shock. It shouldn't have been. Their irrational exuberance was and is a huge shock.

For the most part, though, American households were coasting into the same delusional thinking. While getting salaries adequate to take care of everyday expenses, most families took on debt for things like the dinner out, the special occasion outfit, the gift for the special occasion, the trip to the amusement park for the kids, and even the flu.

A lot of people seem to have forgotten that demands on families went ballistic during past months. When the gas that powered their cars to work galloped up in price to twice its last decades' price, then grocery prices followed skyward, then prices on literally everything that had to be transported went through the ceiling, few cut back. U.S. personal debt went to levels that had never been anticipated by most of us. Most families put the unplanned expenses onto credit cards.

This morning on NOW, Elizabeth Warren gave a bit of information that all of us need.

David Brancaccio (DB): Some people think that default on credit cards could be the next big hurricane that hits. What's your view on that?

Elizabeth Warren (EW): I think this is a real danger area ... We have about 50 million American families who can't pay off their credit cards. They're rolling them from one month to the next and that's a bad sign. This is short term, high-interest debt with a lot of tricks and traps in those contracts. We have 50 million families who are walking around carrying sticks of dynamite and the fuse is lit ... This is a bad, bad storm brewing.

DB: What do you regard as tricks and traps?

EW: Let me put it this way. In 1980, according to the Wall Street Journal, the typical credit card contract was about a page and a half long. It told you about the interest rate, about being late and that was pretty much it. Today, the typical credit card contract according to the Wall Street Journal is about 31 pages long. So, tricks and traps? It's that other 29 and a half pages.

DB: I have a 30-page credit card contract and I've never quite gotten through it.

EW: I teach contract law at Harvard Law School and I can't understand my credit card contract. I just can't. It's not designed to be read. Read the Government Accountability Office (GAO) study on this. The GAO looked at credit cards and they said: "Nobody can understand this stuff." Are you kidding me? And understand when you've got terms that say: "In effect, we'll charge anything we want any time we want for any reason or no reason at all," what's the point of reading it?

DB: Many people think they'll be okay if they pay their credit card bill on time and meet the monthly minimum payment. They didn't realize that the credit card companies could shift the rules, but they're wrong weren't they?

EW: They're really wrong. You would think that if you upheld your end of the contract that the contract was still binding. But in the case of credit cards, you would be wrong, because the credit card companies bury back in that language the right to change the terms of your credit card including the interest rate at any time for any reason and for no reason at all. So if you're kind of chugging along at the 7.99 percent interest rate you carefully shopped around for and you meet all the terms, your credit card company can decide it's time for 29.9 percent, and that's it. It's 29.9 percent. Pay up or it's over for you.

DB: But the credit card companies would probably say that they increased interest rates because the customer's so-called risk profile changed?

EW: That is what the credit card companies will say because I think it's probably pretty unpopular to say: "We did it because we could. We did it because we put it in the contract and we have the power and what are you going to do about it?" The notion that these credit card companies are pricing for risk is a public relations sham ... What the credit card companies are doing is maximizing their profits. The way they figured out to maximize their profits—thanks to the laws we have right now—is to draw in as many people as they can.

Every credit card for a credit card company is like a lottery ticket. They're just waiting to see who's going to maybe stumble a little. Maybe get into trouble on a car loan. Maybe nothing at all except they just look vulnerable. They're just in the right zip code. They're just the right profile for people who won't be able to run any place else. And those are the ones you slam. Those are the ones you hit with the 29 percent interest rate, the 35 percent interest rate, the new fees. And then, because of course if you can't pay it, then you get hit with a fee for not paying or for paying late, for going over limit. And the game is afoot. With any luck at all from the credit card company's perspective, these people will become little annuities that will just keep generating profits for the credit card companies for months, for years, maybe forever.

The legislation that has recently been passed is not retroactive. While in the future credit card companies have been prevented from levying outlandish interest rates on consumers without cause, and without warning, their practices in the past have bankrupted too many people.

Right wingers who like to blame the government for making loans to the poor will no doubt enjoy the spectacle of families unable to pay for the credit offers they accepted. (Just ran into one today, here, see comments 11 - 14 as of this writing.) There is, it seems, no joy like a winger's seeing some one lose a home or job, even though it makes the economy worse for them as well as for the losing person or family. Hopefully the free market crowd will learn some of the truths, as the information about slimey practices of lenders and credit card companies resounds in the news, and are revealed in shows like NOW and Bill Moyers' Journal. Okay, I tend to hope things will be clear and wingers will learn.

It could happen. However, if you are one of those who got squeezed into too much debt, there is help. Here.

IO! Saturnalia! Turned Into IOU

Having gotten power back on the dependable side, watching the media in action, I am not sure that's such a good thing. Anyone else inundated with bright colored dancing cute things' ads telling you life isn't complete if you don't go to (your ad here)? And I got a kick out of seeing somewhere that there is a new way to view the festive Saturnalia/(your holiday of choice here) which is a big new sales event on Saturns.

This isn't just a season that threatens those now jobless with a bad time, it seems to be hell on wheels for shopaholics. I may have to get that Chia pet... to put away for next year. Okay, what I really want is some flight shoes.

Anybody who has gotten a deal on a car, a dress or an electronic gadget can relate to the euphoric thrill that comes with shopping. But this year, the combination of retailers' aggressive discounting and current economic anxiety "is a disaster" for people who feel a compulsion to shop, says Terrence Shulman, a social worker and founder of the Shulman Center for Compulsive Theft and Spending, in Franklin, Mich.

The bombardment of promotional emails and discount coupons from retailers this season is "like giving matches to a pyromaniac," says April Benson, a New York psychotherapist who specializes in the disorder.
(snip)
A group of Stanford University researchers caused a stir in 2006 when they reported in the American Journal of Psychiatry that about 5.8% of the U.S. population can be said to have "compulsive buying behavior," characterized by an abnormal preoccupation with shopping, purchasing of unnecessary items and adverse consequences, like "impaired social or occupational functioning, and/or financial problems." The researchers, who conducted a random survey of 2,513 people, were surprised to find that it affects men and women almost equally -- about 6% of women and 5.5% of men. Compulsive buyers tend to be younger (mean age 39.7 years, as opposed to 48.7 years for other respondents in the survey), and earn under $50,000 a year.

This month, the Journal of Consumer Research published another study of compulsive buying, using broader diagnostic criteria, which found that the prevalence of compulsive buyers in the U.S. could be 8.9% or higher. The study, conducted by marketing professors at the University of Richmond who surveyed 1,200 people, also found that compulsive shoppers are more likely to be anxious, materialistic, have low self-esteem and harbor negative feelings that are relieved by shopping.

Candy Thompson, a 30-year-old single mother of four in Indiana, attributes her shopping binges to bipolar disorder. In recent months, she says ballooning debt and other financial pressures have forced her to cut spending. But she nevertheless posted an ad recently on craigslist seeking "pointy toed boots and heels."

"I am a shopaholic and...I need to build my collection," she wrote in the ad. She says she already owns 220 pairs of shoes.

Okay, my closet holds a few pairs of really great shoe buys that have yet to be worn, but any day, now, there will be a need for them. More like a garage sale in my future. But it could be worse. I could be buying a wardrobe so that I will have something to wear with them. There's an inspirational thought for the season.

At least it's not 220 cats.

That this is a Wall Street Journal article is all the more ironic. It's their BFF's who desperately are crying for us all to Go Shopping, and get More Debt. Without the rampant buying spree that the Saturnalia season has become for those businesses, there will less for all those welfare CEO's.

Desperate times might remind our corporate sector that without a living wage, consumers mysteriously disappear. That would take an inspiration. Well, 'tis the season.

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NADA

So I thought it was pretty funny that the National Auto Dealer's Association acronym is the Spanish word for nothing. I suspect that the members of NADA aren't all that amused. I understand it is pressure from that very troubled group putting a lot of pressure on their congressmen to send help before the auto industry self-destructs. My opinion on the role of the automaker CEOs' instrumentality in their troubles has already been expressed. Briefly, they wore blinders as the rest of the world pared down on pollution, built up on durability, and made wise choices in vehicles for our world. Consumers voted with their pocketbooks, and American automakers' consumer base diminished, yet those CEO's continued over the cliff of big, bigger and biggest dinosaur products.

The auto industry is the latest cliffdweller in our downward economic spiral. That industry, like the other suffering industries, relies on consumers to exist. Where the consumers went is into the hole of our financial disaster. I found out that a family member has watched his retirement funds dwindle until they only just cover monthly mortgage payments. Living expenses are requiring that he and his wife work for a living, post retirement. At least they can find a way, but for many who are watching their retirement or other funds disappear it is not so easy.

The atmosphere of frustration and desperation that economic catastrophe has produced is not an easy one into which to announce, as Treasury Secretary Paulson did yesterday, that our taxpayer dollars are actually not going to be used as had previously been announced. Buying up those toxic loan packages just wasn't working out, he insisted, mostly because congress wasn't doling them out quickly enough.

Do you buy that? I don't and I think that Paulson was bluffing to begin with. Those toxic bundles are not yet finding a real value, and his announcing that $700 BN was going to be spent to buy them smells to me like incentive to financial industry giants to quickly start buying them up ahead of the U.S. To my eyes, he was hoping to inspire confidence enough that the bundles were saleable that it would create a market for them. It didn't work. Like housing values, toxic mortgage packages are still falling in value. No one wants to own them.

The formerly AAA rated packages are out there waiting for the financial community to conclude that they can't go any lower. They were at one point being snapped up everywhere, until it became apparent that our laws had been ignored, and those AAA ratings were a farce. Yesterday, our Cretin in Chief announced that our financial system is sound, no matter how bad it looks. Don't hold your breath waiting for him to announce that his trampling on the Rule of Law was the source of our problems, and that the world is not ever going to trust anything he does or says, not ever. When President Obama is in charge, there will be a return of this country to a position of trust, after he revives our constitution and its protections.

What I hadn't thought about showed up in this post that I saw at Eschaton this morning.

So we've been hearing it's the fault of greedy home buyers who ran out and purchased homes they couldn't afford. Or, conversely, maybe it was the fault of predatory lenders who made bad loans. Round and round the blame seemed to go. So I was completely baffled by Henry Paulson's announcement yesterday that it wouldn't help to buy up the toxic mortgages as promised in the bailout.

At least, it baffled me until I read this article. And that's when it occurred to me--he can't buy up the toxic mortgages to stave off the meltdown because a vast majority of these loans don't exist.

Here's the money quote from this long but startling article by Michael Lewis in Portfolio.com:

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. "They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford," Eisman says. "They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?"

Of course, printing their own money works until they have to produce it. As the diarist at Kos goes on to say, these people should be tarred and feathered. We should begin with Alan Greenspan, though, because he saw the troubles brewing and did nothing. He was convinced that the effects would be dispersed, and the whole picture was too large for it all to be affected. He was charged with executing the laws, and he did not do it. Like the criminal in the White House, Greenspan considered the laws to be negligible tools, and that the market governed better than those laws. Libertarians all, our executive branch denizens believed their own rhetoric, and ignored the laws meant to protect this whole world from what their crimes brought on.

NADA will be working to shore up one corner of a crumbling economic universe. Actually, they have better credentials than our financial industry does for doing a good job of saving their part of the economy.

The Slimy Hand Of The Free Market

Now here's a job for a real go-getter: selling health insurance policies which provide less coverage than Medicare to Medicare beneficiaries who are poor and disabled. Yes, you read that right. And they did it using tactics usually ascribed to used-car salesmen. From the July 26, 2008 edition of The Boston Globe:

One of the nation's largest health insurers has stopped marketing an insurance plan to Massachusetts senior citizens with disabilities after state officials received dozens of complaints that the company was using abusive and misleading sales tactics.

UnitedHealth Group Inc. suspended marketing of a private Medicare plan, called the Evercare Special Needs Plan for People with Limited Income, earlier this week after meeting with officials from the state Medicaid and elder affairs offices. About 3,000 state residents receive coverage through the plan.

Senior citizen advocates said some sales representatives refused to leave people's homes without getting a signature on a policy. Others misrepresented the plan, they said, claiming it would pay for care that is actually not covered. In addition, the advocates said, some agents repeatedly called seniors, despite requests from younger family members that they stop.

"This is just out of control," said Al Norman, executive director of Massachusetts Home Care, an umbrella group for 30 nonprofit agencies that assist seniors. "It shouldn't be happening. These brokers are using high-pressure tactics, bait-and-switch, and intimidation. They were inappropriately pushing people into a product they didn't want and didn't understand."

And didn't need. The results were usually disastrous. Here's one example:

Carmen Pola, 69, of Roxbury, said an insurance agent selling the Evercare plan came to her house and persuaded her to sign up for the coverage even though she was satisfied with her Harvard Pilgrim Health Care insurance. As a result, Pola said, her copayments for doctor visits increased from $15 to $25, and instead of $5 copayments for prescription medications, she is now required to pay full price.

And that's a problem for Ms. Pola and her husband. He's a diabetic, and they couldn't afford to pay to have an insulin prescription filled. She found herself begging for the insulin.

Non-profits and, presumably, the state have been getting complaints about the UnitedHealth Group tactics for at least a year, but it wasn't until just recently that the state called the insurance company in. Apparently that meeting had the desired effect because the company called off the dogs. What is especially dispiriting about this story, however, is that it happened in Massachusetts, the one state that has shown remarkable attention to making certain its residents have health insurance.

Of course, one can't lay the blame solely on the state government. The Federal Government opened the door wide-open for such abuse in its attempt to privatise Medicare one step at a time, something which the article notes:

The Evercare plan is intended for seniors who have significant disabilities, such as long-term illnesses. It has been sold in Massachusetts since 2006. Most enrollees are so-called dual-eligibles - they qualify for benefits under both the federal Medicare plan for people over 65 and the joint federal-state Medicaid program for low-income and disabled people. It is one of a variety of private healthcare plans that have proliferated nationwide in recent years as the federal government has promoted private alternatives to traditional Medicare. Health insurers have responded by devising ever-more specialized plans targeting specific groups. [Emphasis added]

And that's what happens when you let the Republicans take control of the government.

177 days.

Failure Of Market Forces

A matter of irrational exuberance indeed. Not so long ago the economic mavens were still saying that our market forces were going to solve their own problems. It has entered into a few discussions I've had lately, so I would like to point out that Alan Greenspan is directly responsible for the size of the present recession, for failing to regulate when he had the power, and saw what was occurring.

The failure of ratings agencies honestly to evaluate subprime loans, giving them wholly unjustifiable AAA ratings, guaranteed that investors of all sorts would wind up holding valueless paper, mortgages that represented no security. Subprime loans that were made on false information, on premises that established in advance the loans were unrepayable, are the basis for the losses that businesses are suffering. They are holding worthless paper, funny money, quite literally. All of this could have been stopped long ago, by the Fed's exercising its power to stop the ratings falsification.

The financial guru estimated that rising values, endlessly rising values, would make all of this mess go away.

In an interview with Sunday’s Frankfurter Allgemeine Zeitung, one of Germany’s most prominent newspapers, former Federal Reserve Chairman Alan Greenspan sharply criticized ratings agencies for their role in the current credit crisis. “People believed they knew what they were doing,” Mr. Greenspan says in today’s FAZ. “And they don’t.”

Still, he doesn’t think it’s necessary to strengthen rating-agency regulation. Essentially, they’re “already regulated,” he says, because investors’ loss of trust means the agencies are likely to lose business. “There’s no point regulating this. The horse is out of the barn, as we like to say.” Greenspan also said he believes that the volume of structured-finance products will decrease. “What kept them in place is a belief on the part of those who invested in that, that they were properly priced. Now everyone knows that they weren’t. And they know that they can’t really be properly priced,” said Greenspan.

This was written in September of last year, when the crumbling was already underway.

The same Fed ex-Chairman acknowledged in his Meet the Press interview, cited in the same article, that he had in a speech in 2004 urged more use of adjustable rate mortgages, "because they weren't going to live in the house long enough", but assured his audience that it was only justifiable, soundly based, mortgages he meant.

The myth that Alan Greenspan reveled in that prosperity had resulted from the 'sound economy' the absence of regulation had wrought was one that kept his own personal bubble up for long enough to expose it for the cruel hoax that it is. Losing their homes should teach those rowdy nouveau riche - so it would seem the mortgage industry is trying to escape all consequences of its excellent adventure.

Interestingly, I discovered in a conversation about these myths, that I was victim of another one. I have several times mentioned the sound policies of Henry Ford, who was the visionary who instituted paying workers enough to afford the product they made.

From my son, recently graduated from George Mason Law School, I found out that a 'classic' business law study is of the suit brought against Henry Ford by his stockholders. He was busily putting all of his profits back into the firm, and into those excellent wages, rather than pay dividends on investments. When the suit was finally settled in favor of investors, they took the returns and founded Dodge. I have to say that "dodge" now has a whole new meaning for me.

Was it greed, and diversion of funds from competitors, that actually underlay the concept that created the greatest properity that any country, at any time, ever experienced? While I never thought Henry Ford was a great benefactor, I apologize, I may have ennobled him more than I knew.

History is hardly kind to the robber barons, and it has a few more to add to their ranks.

...the merging of commercial and investment banking helped enable high-risk mortgage lending to make its way into the mutual funds and 401Ks of millions of Americans in the form of mortgage-backed securities. "Diversifying bad debt just spreads the poison," as Frank said in his Boston speech. It also makes a falling housing market reverberate throughout the economy far more than it did even during the S&L collapse. Enter the subprime crisis. And welcome back, 1929.

Quite possibly, our 401K just became a 200.5k, and we have the deregulator boosters in the GoPervian party to blame. Hopefully, we can make sure they never have the power to wreak this havoc again.

The Market Played, You Lost

We're watching the market play, lala, we're watching the market work.

[To be sung to the tune from "Alice In Wonderland", the movie, "We're painting the roses red."]

Or at least that's what the Elite aka Superclass are thinking impatiently while they try to deal with that nasty public affairs thingie. I quote again from Laura Miller's review of the book "Superclass" by financier David Rothkopf: ""We must resist the temptation to reflexively attack elites," he writes, since human societies need leaders and this is an able bunch, but elites ought to be more accountable to the millions of people whose lives they affect."

That effect is playing out as we chat. The bailout in progress is too late, because the laws that were carefully put in place to prevent economic collapse were blithely violated by that Elite that invented itself in our compliant media. The inevitable knowledgeable quote has been at the ready, shopped out to any media outlet that they could find, by the aspiring 'authority'. The same expert witnesses that switch from one side to another depending on the dollar amount in court are available for any quote the journanimal needs, it goes into the resume - for more dollars.

From those authorities, liberally sprinkled with winger thinktank types, the press got and gave its economic 'policy".

Southern Belle posted a speech that the worst executive in history made - on June 18, 2002 - this morning at Eschaton.

...the private sector needs to help, too. They need to help, too. Of course, it's in their interest. If you're a realtor, it's in your interest that somebody be interested in buying a home. If you're a homebuilder, it's in your interest that somebody be interested in buying a home.

And so, therefore, I've called -- yesterday, I called upon the private sector to help us and help the home buyers.

We all know now that all that help, or 'innovation', was in the form of subprime loans that could only be repaid by rolling over the houses continually, never building up equity. Those desperately bad loans then got packaged as good bets, AAA rated by ratings agencies whose interest was in selling the package instead of in making sound investment, to investors who were accustomed to belief in the soundness of the system. With totally undermining our laws, this occupied White House thought it was launching a Star Wars economy, with no bounds - i.e., no regulations. The Free Market was launched, and it has crashed.

As I have noted before, the new gold standard the administration endorsed was one of "consumer confidence" and its mantra "Go Shopping". When those lame chickens come home to roost, we see the Alan Greenspan retreat that Atrios reported at Eschaton this morning.

The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.

Home price stabilisation will restore much-needed clarity to the marketplace because losses will be realised rather than prospective. The major source of contagion will be removed. Financial institutions will then recapitalise or go out of business. Trust in the solvency of remaining counterparties will be gradually restored and issuance of loans and securities will slowly return to normal.

This is the ultimate bubble life, when satisfaction occurs from the purview of human suffering. Look, folks, you are homeless for a good cause, you are the cogs and the wheel is turning Just Like We Said.

Problem is, the current crunch disproves the concept that regulations are just inconveniences and inhibit market fairness. It isn't fair, and it isn't right, that the very Elite that were weaseled into positions of public trust violated that trust. It is that trust that the system depends on. It was wantonly destroyed, and that is why no one can borrow, and no one will lend. Without trust, the dollar is worthless, or, less than 96 yen, $1.59 to the Euro (12 ET), less than .33 gallon of gas.

What is going on in the bailout is well explained at Roubini's Global EcoMonitor.

Unless public money is used on a very temporary basis to achieve an orderly wind-down or merger of Bear Stearns this is another case where profits are privatized and losses are socialized. By having thrown down the drain the decades old doctrine and rule that the Fed should not lend or bail out non-bank financial institutions the Fed has created an extremely dangerous precedent that seriously aggravates the moral hazard of its lender of last resort support role. If the Fed starts on the slippery slope of providing massive liquidity support to non-bank financial institutions that have recklessly managed their risks it enters into uncharted territory that radically changes its mandate and formal role. Breaking decades-old rules and practices is a radical action that seriously requires a clear public explanation and justification.

The laws were carefully written over centuries because they provide the protections we all need. We all includes business interests. The world is in a financial crisis because the bases of the whole system, the laws, were violated.

The prosecution for this crime against humanity, which actually parallels that of the violation of every standard, must proceed.

309 days is too long.

****************************************************

It isn't just the family budgets that are facing shortfalls. States administer most of the programs that affect us directly, schools, roads and the like. With tax bases decimated, tax revenues are shrinking.

Programs for the elderly are being slashed in Maine. Government jobs are being eliminated in New Jersey. Prison construction has been put off in Virginia. Some schools in California will end their music programs.

About half of the state legislatures nationwide are scrambling to plug gaps in their budgets, shot through by rapid declines in corporate and sales tax revenue, distressed housing markets and a national economy on the verge of a recession.

Many states are reporting their largest budget shortfalls since the recessions of 2001 and 1991-2. In some states where tax increases are generally anathema, including Maryland and Kentucky, governors are looking to raise some levies.

“It is not just the standard downturn where unemployment rises for a while, income tax and sales tax revenues are weak, and ultimately the economy recovers,” said Iris Lav, the deputy director of the Center on Budget and Policy Priorities, a liberal research group in Washington that tracks state budgets.

Ms. Lav pointed to a confluence of factors — including weak consumer spending, high energy prices, dropping housing values and growing foreclosure rates — that suggest states will face a protracted struggle to keep their budgets afloat.

“This all will make it harder to recover,” she said.

Too bad the Elite aka Superclass doesn't have kids in school or elderly parents.

Watch the market working.

Delusional Jet Setting Crashes and Burns

First, I urge you to sign the petition against violating its charter, and protecting SMU from being violated by the Bush Liebury.

The amount of damage done to this country by the cretin in chief is incalculable, and someday perhaps a proper testimonial will be established, in a somber setting something like the Holocaust Museum on the National Mall in Washington, D.C.

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The self-importance of the family that has given this country, through the instrumentation of a severely defective right wing party, a crash, has a smugness that has lent to their disasters something of the comedic quality of Charlie Chaplin's pratfalls. Self esteem is a good quality, until it is unleashed on the public in the form of crime.

Our economic health as a nation has been damaged, hopefully not irreparably, by this family and their associates who have weaseled themselves into high offices they didn't even pretend to fill. The appointees this occupied White House has foisted onto the public payroll is a rogue's gallery of enemies of the country.

Amazing how much difference it makes to be one of the 'in crowd', according to the book "Superclass" by David Rothkopf (reviewed by Laura Miller at Salon). Following the dustup going on at Wall Street, I can't help relating what he recounts about global rulers to the blind faith that all the financial powers had in those erroneous ratings of investment packages that just happened to contain enough subprime material to be lethal.

Listening to the financial superstars talking at the economic lectures, and this a.m. on CSpan, the country's economic health has been under the care of the financial equivalent of evangelicals. When former Director of the Fed's Division of Monetary Affairs Vincent Reinhart says that there was a need to increase economic activity, so they just loosened the reins to let it happen, that's a pretty good explanation for bank robbery. Let that money out where it can do some good, there's some sound monetary policy for you.

An overview of these fellas who think they can just ignore the laws and do what seems like a good idea at the time gives me the impression there are many, many appointees of the worst administration in history who need to be let out where they can see daylight, very soon. While they have the delusion that controls are something they are above, we are in big trouble as a nation.

Above all, like anybody else -- in fact, more than anybody else, given the obsessive, often narcissistic energy required of moguls, politicians and would-be messiahs -- these people are self-interested. However gifted, they should not be allowed to operate in a vacuum. The difficulty is that most of them exercise their power transnationally, while laws and regulations are confined within the borders of nation-states (which Rothkopf, in classic Davos-man style, regards as doomed). "We must resist the temptation to reflexively attack elites," he writes, since human societies need leaders and this is an able bunch, but elites ought to be more accountable to the millions of people whose lives they affect. Otherwise, as history (and the current upsurge in religious extremism) shows, they may provoke a violent and chaotic backlash.

Nevertheless, the likelihood of a world government forming to handle the situation is remote -- not while nation-states have any life left in them to defend their sovereignty. International institutions -- the U.N., especially, but also the IMF and the World Bank -- are weak, or weakening, and are hemorrhaging credibility. The answer, according to Rothkopf, is not global government, but "governance," fewer formal agreements and mechanisms among international entities. The registration and management of Internet domain names (via a collection of organizations) is one example of this sort of governance, orderly and helpful in a way you wouldn't automatically associate with Rothkopf's ominous-sounding definition of the term: "Fulfilling government roles with mechanisms" that "lack the full traditional power, authority or mandates of governments."
(snip)
Rothkopf's idea is that the superclass ought to be smart enough to foresee any such crisis and head it off by doing more to make the currently disenfranchised feel like "stakeholders" in the new global order. The superclass should recognize that "order and legitimacy are the allies of both business and those who seek social stability."
(snip)
Deciding on how best to gentle the masses, how to settle on standards of global economic conduct and how to enforce those standards won't be easy, though. Fortunately for the superclass and anyone seeking to work with them, there are consulting companies like Garten Rothkopf ("an international advisory firm specializing in emerging markets investing and risk management related services") to turn to!

In the concluding pages of "Superclass" it becomes increasingly difficult to dispel the impression that you have just read what amounts to a 380-page business card.

You can learn all about the amazing insularity of overwhelming self-importance at your own expense, if you want to buy the book. I think we've all just been experiencing its worst dangers, watching our financial sector fall apart.

Sorry if I'm harping on regulations, and why we have them, more than you feel we need to hear about. I think, though, it's time to enlighten the public about basics the leftie blogworld, alone, realized - how badly the country, and media, have been misled.

Your self-styled elite are out there ignoring the laws meant to keep the country safe. Surprise! the country is not safe in their hands.

The Bush Liebury is one atrocity that should be stopped. Like a museum to any other
chimera, it should be part of the dark history of this nation's foul-ups.

The lessons of malfeasance that this executive branch has compiled should be a course in History 101; How Delusional Views Ended The Good Times. The course will be required for public sevice in the future.

Supercapitalism

I read an interesting op-ed piece published by The Shanghai Daily yesterday. The column was part review of Robert Reich's book "Supercapitalism" and part essay on American capitalism since World War II from a Chinese perspective. The criticism was, for the most part, right on the mark on both subjects.

"SUPERCAPITALISM: The Transformation of Business, Democracy, and Everyday Life" is essentially a glorification of the success of US capitalism.

Incidentally it also seeks to explore how the democratic capitalism has developed into a supercapitalism where corporations and market forces effectively neutralize input from American middle class, the bulwark of American democracy.

"The last several decades have involved a shift of power away from us in our capacities as citizens and toward us as consumers and investors," says author Robert B. Reich. ...

Reich explains that the development of US capitalism between the end of World War II and the mid-1970s depended on the balance achieved among three pillars: corporations, labor and government.

But unlike the self-contained and self-sufficient agrarian society, capitalism is never a closed system.

Classic Chinese scholar Qian Mu, in characterizing US capitalism, said Western capitalism centers on two dominant urges: the urge to make others poor; and the urge to kill others.

The first urge is self-evident given capitalists' natural voracity, for wealth is always a relative concept and enriching oneself must always come at the expense of others.

The second urge stems from the fact that, in Qian's words, "the first purpose of the greenback is to fabricate atomic weapons." Of course, today a host of other more lethal forms of weapons are being developed.

While I can't agree with Mr. Qian's second part, he does have a point with the first. Even when corporations, labor, and government are in balance (which rarely happens), the primary beneficiaries of that balance are the corporations, not the middle and lower class workers. When either labor or government, and especially when both, are factored out of the three part balance, corporations continue merrily on as the workers are marginalized even further. We are seeing that in the US at the present time.

And the columnist makes a solid point when he notes that Mr. Reich overlooks an important source for the success of corporations, most of whom are multinational or at the very least are international in the scope of their business dealings (e.g., Wal-Mart).

Reich fails to see, or finds it inconvenient to admit, that this has all been made possible by globalization.

Under the facade of co-prosperity, US supercapitalists can secure energy and goods from other countries cheaply, without having to shoulder the burden of pollution.

And therein lies the rub with corporate entities. For all the rights granted them by the US government, they really are not "persons," and moral considerations do not enter into the equation beyond the lip-service required for public relations purposes. The only thing important to corporations is making money, as quickly and as efficiently as possible.

But Reich does perceive this from a domestic point of view when he observes that companies whose only standard for success is the market have been known to pump pollution into the air and water, sex and violence into the media, and money into politics.

Even for this uncomfortable fact the author shifts the blame to consumers: if consumers did not buy, no one would sell; thus, the enemy is not the corporations, but their customers.

The author does not seem to realize the kind of control modern corporations can exercise over the consumers. ...

If Reich pursued this further, he might discover that decisions become much easier when the grab for money becomes the ruling passion, and moral deliberations have never been a disabling factor in the success of capitalism.

I haven't read Mr. Reich's book, but I think I will after this review. If this man, for whom I have had respect since he came onto the scene in the Clinton administration, has in fact written a paean to "Supercapitalism," I may have to adjust my attitude.

When Government Does Its Job

Every once in a while (and not nearly often enough) my spirits get lifted by news that, against all odds, the federal government is actually doing what the taxpayers are paying it to do. This article in today's Los Angeles Times is one of those times.

Federal officials are expected to announce in Los Angeles today a nationwide effort to combat fraudulent Medicare billing by medical equipment suppliers in 70 urban areas.

Such fraud in the federal healthcare program for the elderly has increased in recent years, particularly in the sprawling urban areas of Southern California and south Florida where many of the most vulnerable Medicare recipients live. ...

As part of their effort to stop such fraud, officials from the U.S. Department of Health and Human Services plan to require medical equipment suppliers to be vetted by approved accrediting agencies, some of the same ones that vet pharmacies and hospitals. Moreover, suppliers would have to set their prices through a competitive bidding process. The rules will begin to take effect this spring. ...

Under the new rules, suppliers will have to pay to apply to one of 10 accrediting organizations. Fees will range from $1,500 to $10,000, Brandt said.

During accreditation, suppliers will face stricter background checks and more frequent inspections with short notice, Brandt said. If those checks raise suspicions of fraud or the potential for fraud -- for instance, if a manager has had a felony conviction during the last five to 10 years -- the supplier could be bounced from the program, Brandt said.

Now, I've been critical of some of the actions taken by Medicare to contain costs (see here and here), but in this case, the actions being taken are appropriate. Durable medical equipment such as wheelchairs are often a part of elders' daily life and should be covered under the Medicare insurance program. What is not acceptable, however, is for the providers of those goods to gouge the elders and the federal government. When unscrupulous vendors step in take advantage of the system, then the government has to step in and impose the kind of regulations that force those vendors out of the system, and, if possible, out of business.

Apparently the medical equipment providers don't agree, however:

Many suppliers would rather see the government lower listed prices for Medicare equipment than impose more onerous requirements, said Bob Achermann, executive director of the Sacramento-based California Assn. of Medical Product Suppliers, which includes about 300 suppliers statewide.

Oh, please.

Selling an elder shopping for a wheelchair with an electronic leg lift so she can avoid foot ulcers everything but that wheelchair, and then billing her for the wheelchair (never delivered) anyway is the kind of behavior we should tolerate? If the trade organization is so concerned about the government's intrusion into their market, why didn't they clean up their act before the government was forced to do so?

Here, Mr. Acherman, is a quarter. Go buy yourself a clue.

The Big One

Another big meltdown in the U.K. comes when the value of the bonds they're holding appears to be nil. Just don't forget that we're supposed to be the bailout source here.

If you still believe that we're going to bail out the little guys who bought under false pretenses, instead of the bigtime crooks who convinced them it was going to be safe, the home market would always go up, history no longer applies - look at this nice bridge I'm selling at a big loss.

A number of big investment banks have admitted major losses caused by bad investments centred on the crisis-hit US sub-prime mortgage market.
Worst hit was Swiss bank UBS which was write down losses of 4bn Swiss francs ($3.4bn; £1.67bn) as a result.

The group said it would now planned to cut 1,500 jobs and make extensive management changes.

Later, US giant Citigroup revealed its sub-prime losses would total $1.3bn, as well as $2.6bn in extra credit costs.
(snip)
US bank Citigroup will also make a profit in its third quarter, but this will be a third of what it was last year - largely as a result of a $1.3bn write down sparked by US mortgage woes.

But it also confirmed a pre-tax loss of $1.4bn on loans to private equity firms, which have until now been snapping up businesses with ever more expensive price tags at a phenomenal rate.

"This is cringe-making for Citi's chief executive, Chuck Prince," said Mr Peston.

"In July, he told the FT that his bank was 'still dancing' in the private equity market, long after it was obvious that the private-equity bubble had been pricked and was deflating at an alarming rate."
(snip)
.....few had forecast the magnitude of the write downs.

"Today's UBS news is certainly bad news," said Claudia Meier, an analyst at Vontobel.

But she argued: "On the other side, it finally gives some more visibility to the sub-prime fears and we expect the market to like this."

You gotta love those financial news creators who think it's boom times for pawn brokers.

While I have seen a friend have to take her daughters out of college for a year until the local S&L was bailed out in MD, these glib financial propagandists think we'll all be better off now. After all, they've socked their ill-gotten gains away in something solid. Probably Euros.

Tossing 'Bodies' Overboard Loses American Hearts and Minds

Not so long ago, our local Rep. Ralph Hall was on the House floor attacking Marianas sex slaves for willingly participating in human trafficking. So nothing surprises us locals when we see our industrial overlords behaving like Orcs.

Today a nice little article about joint electrical production and use between the Texas and Mexico power generation industries was the frame for some remarks that reflect that continuing battle against the public waged by our business community. Of course, looser environmental standards and lower paid workers are very attractive to the Orcs.

Mexico remains a regulated utility monopoly, and building a plant involves heavy dealings with unions, said George Baker, research director for Houston consultancy Energia.com.

"They've got a very aggressive and powerful union that really costs them a lot," he said. "So if you import electricity, one of the things you get from that is that you don't have to hire a new body.(Emphasis added.)"

Isn't that attractive? it's a selling point to generate in Texas (deregulated, and a right-to-work state) because you can pitch those bodies out there to starve. Unions are an enemy, giving wages and decent working conditions to faceless bodies.

To me this characterizes the entire rationale of the GoPerv Party, that the employee is just a body; a disposable unit. We're not a consumer, such as are supposed now to go shopping to bring out economy back out of the pit created by corporate indifference. We're not an occupant of the society the Orcs participate in. We're a body that can be thrown to whatever lions of the moment are entertaining the hoarders of wealth.

Most encouragingly, though, the bodies that our business community are blithely tossing aside have votes. The great unwashed are showing they aren't such disposable nonentities in poll after poll. Today they are not accepting the 'Go Shopping' theme, they are not taken in.

One in three Americans expects a U.S. recession in the next year, and less than a quarter think home prices will rise, according to a Reuters/Zogby poll released on Wednesday.

Hispanics and African-Americans were more likely than whites to predict a recession, reflecting a deeper sense of job and economic anxiety among minorities, who represent a disproportionately large share of lower-income groups.

"There has been much, much, much more talk about a recession in the last 30 days than there had been before," pollster John Zogby said, noting that the key factors behind the latest downturn worries were issues that literally hit home for the general public -- housing and jobs.

Starving people are revolutionaries. It looks like time for the GoPervs to start following the jobs abroad, or get to work fixing the mess they've made here. I don't expect the kind of mentality that blithely tosses 'bodies' aside has the mental acuity to make that change.

Discontent has been thoroughly ignored by the businesses behind our present worker-unfriendly environment. Workers are not content to be 'bodies' that are tossed out with the Kyoto protocols. Look! we've stopped buying swill.

I believe the polls are some early rumblings of return to respect for human beings, and return to human rights.

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Below (as promised): Woody hugs a tree in the Bandelier National Monument.