Digby's Hullabaloo Posts

Riddle Me This

by tristero

BP during the oil spill was more popular. More Americans prefer that the US go communist. Lawyers and Hugo Chavez are more popular, and so was Nixon during Watergate!

Can you guess what it is? No? Click here. Then read all of Ezra Klein’s amazing piece.

Catholics bringing sexy back

Our glorious drug war

by David Atkins

Via the ACLU:

Texans can sleep more soundly at night knowing that Elisa Castillo, a grandmother and nonviolent first-time drug offender, is serving a life without parole sentence in Fort Worth. Yes, you read that right — the latest casualty of our War on Drugs is a grandmother who never even touched the drugs that sent her to prison. Though she may not look like public enemy No. 1, our persistently illogical criminal justice system has determined that this harsh punishment fits her crime. The truth, though, is that her fate was sealed, in large part because she didn’t have a card to play when negotiating her sentence.

Convicted in a drug-smuggling conspiracy, 56-year-old Castillo maintains that she didn’t know she was being used as a pawn in a cocaine trafficking operation between Mexico and Houston. Given her alleged role as a low-level player in the conspiracy, it makes sense that she was not privy to — and therefore could not provide — any valuable information to federal agents that could lead to the arrest and prosecution of the leaders or other high level members of the alleged conspiracy. Since she was of no help to the government, Castillo received the harshest sentence of the approximately 68 people involved in the scheme, despite being a first-time offender who never saw the drugs she was accused of trafficking.

It is well known that state and federal sentencing schemes allow for reduced punishment when offenders are able to provide information that leads to the prosecution of others. As former federal prosecutor Mark W. White III explained, “Information is a cooperating defendant’s stock in trade, and if you don’t have any…the chances are you won’t get a good deal.” But at what cost are these bargains made? There are clear incentives for law enforcement officials to seek information from criminal suspects when possible. But this system of trading information for reduced time often means that those at the bottom of the chain end up suffering consequences that are disproportionate to their crimes. As such, Castillo was effectively left to die in prison because of what she did not know.

Even if she did know what was going on, life in prison for a grandmotherly first-time offender who never touched the drugs and wasn’t any sort of criminal mastermind is insane. It’s the mark of a sick, twisted society.

Buy hey, look on the bright side: at least in prison she’ll be guaranteed access to healthcare, unlike many “free” people in Texas who happen to be poor.

.

Can they possibly all be held accountable?

by digby

This Freeh report (pdf) on the Penn State pedophile scandal is brutal. I wonder how many more of our revered institutions will one day be characterized in this way:

The most saddening finding by the Special Investigative Counsel is the total and consistent disregard by the most senior leaders at Penn State for the safety and welfare of Sandusky’s child victims. . . .

Seriously, how many of these have we heard about the Catholic Church over the past few years. WTH?

I can’t say it any better than Peterr at FDL says it here:

In the days ahead, hands will be wrung and chests will be beaten. But if you’re looking for signs of a culture that lacks accountability, watch and listen for the widespread and abundant use of the passive voice. “Mistakes were made. . . . Policies were not followed . . . ” Yes, mistakes were made — and they were made by real people. Yes, policies were not followed — they were not followed by real people. Unless and until the climate of non-accountability disappears, abusers will continue their abusive ways.

Child abusers will do it, and the price will be paid by children, their families, and their communities.

Unscrupulous mine owners will do it, and the price will be paid by their workers, their families, and their communities.

Mortgage and financial industry abusers will do it, and the price will be paid by homeowners, their families, their communities, as well as investors and the broader economy as a whole.

The energy industry will do it, as will the health insurance industry, the military, and anyone else who puts protecting their own power ahead of doing what’s right. The MOTUs of all stripes will continue in their ways, unless and until accountability comes raining in on their parades.

Bill Black regularly bemoans “regulatory capture,” by which he means that the ostensible overseers have become the partners and servants of those they are supposed to be watching over. Penn State is learning the hard way about what happens when accountability returns home after a long absence. Good.

Now if only the SEC, the Fed, the DOJ, the bishops and cardinals of Roman Catholic church, and others in authority would learn that same lesson, because there’s an urgent need for climate change when it comes to accountability that stretches well beyond University Park, Pennsylvania.

I’m honestly not sure if “accountability” is the way to think about this. Look at the Catholic hierarchy. Are they humbled? I don’t think so. Did Enron teach anyone anything? It doesn’tlook like it. Abramoff et al? This goes deeper than just getting away with it and having to be brought to account. That doesn’t seem to matter all that much in the greater scheme of things.

The Village media now permanently lives in bizarroworld

by digby

I have been taking a little break from cable news the last few weeks and tuned in today to see it’s even worse than usual. This segment between Andrea Mitchell and Steven Rattner captures the ongoing state of decay. The first three minutes are unremarkable twaddle about Romney and Bain but at about 3:30, Mitchell hits her stride:

Visit msnbc.com for breaking news, world news, and news about the economy

Here we have it:

Mitchell: I want to ask you about the fiscal cliff and what we face because you have been such a persuasive proponenet of doing something and taking a tough decision.

This is a conversation between some players you know very well, Warren Buffet and Simpson and Bowles on “Squawk Box.”

Buffet: The US economy is doing better than virtually any other large economy in the world. The US has come back a long way, with the exception of housing, from where it was a few years ago.[cut] I still think housing should come back significantly to move us generally upward.
[cut]
Bowles: I think if I had to take the probability, I’d say the chances are we’re going over the fiscal cliff.

Host: And why do you think the odds are that we do go over the fiscal cliff?

Bowles: Because it’s politically painful

Simpson: You’ll get beat..

Buffet: It’s not going to get less painful in the future..[end video]

Mitchell: This of course at Herb Allen’s annual retreat, the summer camp for rich people, I think.

Rattner: and moguls

Mitchell: Let’s talk about this.. there’s no indication from either camp that anybody wants to speak truth to the American people in this campaign.

We’re arguing about Bain Capital! We’re arguing about a lot of other things which are big issues. But what about what we’re about to face in the fall after the election?

Rattner: Well you’re right. The solutions to the fiscal cliff are painful and they involve sacrifice on all sides so it’s not surprising that when you’re running a political campaign it isn’t your first choice to deal with a very substative policy.

Mitchell: Walter Mondale proved that in 1984…

Rattner: Walter Mondale on the tax issue. But the fact is this deadline is coming. I’m not quite as pessimistic as Erskine is because it’s so insane to go over the fiscal cliff that I have to believe that at the end of the day people will somehow avoid that.

But what’s starting to happen, you’re starting to see in the markets, I think, nervousness about this. People are starting to focus on it. There’s something called the fear index, there are some other indices around that are suggesting now that this is something now that is getting through to the investor community that we have a problem.

Mitchell: And just one other point. There is some conversation on the Hill. There was a Politico story yesterday that McCain, Lindsay Graham, and other big players, John Kerry, are talking about taxes.

Rattner: I think there are a lot of conversations going on on the Hill among the responsible poeple, including the people you just mentioned, who recognize that going over the cliff is crazy. But it’s kind of like a little foreplay, I don’t think they’re down to anything seroius. But the other thing is that the special interests like the defense industry are starting to use thier muscle to get what they want out of this so I tihnk the games have begun.

He also said this:

“Imagine if you’re sitting in France or Germany or London and see us fooling around with the debt limit and say, ‘We may not want to let the government borrow another penny,'” said Steven Rattner, an investment banker who headed Treasury’s auto industry task force. “There’s going to be a lot of market dislocation, a lot of volatility and lot of worrying.”

Oh wait. That was last year, during “Armageddon.” How did his prediction hold up anyway?

Right.

But let’s look at the whole discussion. First, Mitchell superciliously asserts that the campaigns are refusing to be “honest with the American people” about the painful sacrifices “we” are going to be required to make. (We’re talking about that silly Bain capital when we should be pimping Social Security and Medicare cuts 24/7!) This is one of her (and Luke Russert’s) favorite tropes. Since she is a multi-millionaire TV celebrity I have a hard time imagining that having her social security slashed or having a slightly higher tax rate is going to have much impact on her financial security. But hey, it’s the thought that counts.

Then we have these multi-millionaires — one a Wall Street master of the universe himself, the other married to the Oracle of Greenspan, implying they aren’t part of the Herb Allen financial elite that includes the likes of Buffet, Bowles and Simpson, which is fatuous in the extreme.

Finally, there’s the whole notion that this fiscal cliff is anything more than yet another artificial, arbitrary self-imposed deadline that can easily become yet another artificial, arbitrary, self-imposed deadline. The good news is that these people have cried wolf so often on this debt nonsense that nobody’s listening anymore.

We have a weak economy with high unemployment. The rest of the world is shaky. Now is not the time to be asking for more “sacrifice” from the American people in order to solve a problem that is not urgently important. How do we know it’s not urgently important? This:

The Financial Times reports that there was record demand for 10-year Treasurys this week. “The $21 [billion] sale of 10-year paper sold at a yield of 1.459 per cent, the lowest ever in an auction.” William O’Donnell, a strategist at RBS Securities, told the FT that “we were expecting good auction results but this one has left me speechless.”

Remember: Low yields means we’re getting the money for a cheap. It means the market thinks we’re a safe bet. And it means we have the opportunity to get capital for almost nothing and invest it productively…

The market will literally pay us a small premium to take their money and keep it safe for them for five, seven or 10 years. We could use that money to rebuild our roads and water filtration systems. We could use that money to cut taxes for any business that adds to its payrolls. We could use that to hire back the 600,000 state and local workers we’ve laid off in the last few years.

Or, as Larry Summers has written, we could simply accelerate payments we know we’ll need to make anyway. We could move up maintenance projects, replace our military equipment or buy space we’re currently leasing. All of that would leave the government in a better fiscal position going forward, not to mention help the economy.

The fact that we’re not doing any of this isn’t just a lost opportunity. It’s financial mismanagement on an epic scale.

That’s Ezra Klein saying that, by the way, not some lefty radical.

Mitchell wasn’t wrong when she said the campaigns weren’t being honest with the American people. That’s true, they aren’t. But then neither is she. And frankly, the campaigns aren’t as bad as these Villagers are by ginning up a phony crisis in order to slash the safety net at a time when the nation should be borrowing cheaply and spending more. It’s oppositeland.

But there’s no reason to think they won’t flog this horse as much as they can and no guarantee that the politicians won’t respond and make some reprehensible deal to close a couple of loopholes in exchange for deep cuts to the safety net. That seems to be the working assumption. They’ve put a lot of energy into creating this phony crisis. They are very reluctant to let it go until they have what they want.

And by the way — letting the tax cuts for those over 250k expire in exchange for cuts for average people isn’t adequate either. No cuts. They’re not necessary at the moment. Put people back to work, then we’ll talk.

.

Some dark comedy

by David Atkins

When the times are out of joint and it falls on a few committed people to set it right, it’s important to avoid madness by maintaining a good sense of humor. So enjoy a couple of pieces of dark comedy today:

Don’t get too down out there. We’ve got a long, long slog ahead.

.

What happened at Bain in 1999?

by digby

I have been wondering obsessively why Romney is so keen on saying that he left Bain in 99 instead of 02. I mean it’s not as if he’s running from his career there in general. So why is so adamant that he not be associated with it during that period? The easiest answer is that he stupidly said it without really thinking through the implications of holding the title and being compensated while allegedly being uninvolved and now he’s stuck with it because of his FEC filing.

On the other hand, there are some things beyond the usual off-shoring and layoffs that he might not want it known that he profited from. Henry Blodget writes:

[T]he reason this issue is important is that Romney wants to disavow responsibility for anything Bain or Bain companies did after early 1999.
And one of the things that Bain did after early 1999, as Dan Primack of Fortune points out, is invest in a company called Stericycle whose services included the disposal of aborted fetuses.

For obvious reasons, an investment in a company that performed this service might hurt Romney’s standing with the right-to-life voters in the Republican party, even though Romney was pro-choice at the time the investment was made…

As “Chairman, CEO, and President” of Bain, he damn well would have remained responsible for these decisions. In which case, saying he had “left” and implying that he had no involvement or responsibility whatsoever is highly misleading.
The CEO of a car company may not have input into the decision of what specific cars the company makes or where it makes them (though he or she obviously could if s/he wanted), but this CEO is unequivocally responsible for these decisions.
Similarly, if Romney was CEO of Bain at the time it made the Stericycle decision, as well as the company layoffs and other unpleasant facts that Candidate Romney would like to disown, he certainly was responsible for these decisions.

You have to wonder how the true believers would feel about that little deal. Once being pro-choice is one thing. Profiting from abortion may just be a bridge too far for people who have compared that company to Nazis.

Update: I missed this original comprehensive piece last week from Mother Jones breaking the story of the disposal business:

The SEC filing lists assorted Bain-related entities that were part of the deal, including Bain Capital (BCI), Bain Capital Partners VI (BCP VI), Sankaty High Yield Asset Investors (a Bermuda-based Bain affiliate), and Brookside Capital Investors (a Bain offshoot). And it notes that Romney was the “sole shareholder, Chairman, Chief Executive Officer and President of BCI, BCP VI Inc., Brookside Inc. and Sankaty Ltd.”

The document also states that Romney “may be deemed to share voting and dispositive power with respect to” 2,116,588 shares of common stock in Stericycle “in his capacity as sole shareholder” of the Bain entities that invested in the company. That was about 11 percent of the outstanding shares of common stock. (The whole $75 million investment won Bain, Romney, and their partners 22.64 percent of the firm’s stock—the largest bloc among the firm’s owners.) The original copy of the filing was signed by Romney.

Another SEC document filed November 30, 1999, by Stericycle also names Romney as an individual who holds “voting and dispositive power” with respect to the stock owned by Bain. If Romney had fully retired from the private equity firm he founded, why would he be the only Bain executive named as the person in control of this large amount of Stericycle stock?

Good question.

Update II:

You should check out this StopStericycle site. One of their major campaigns is to out the executives of the company and warn away investors:

If you are a trader of stocks or a holder of mutual funds, please check your portfolio for the company Stericycle (SRCL). If you find that you are partaking in the blood money of Stericycle, pull out now. Your investment in Stericycle helps to financially support Stericycle’s daily collaboration with the abortion industry.

Additionally, please check your portfolio for the companies listed on our top shareholders, mutual fund investors and other investors lists. These companies are profiting from Stericycle’s blood money, and if you invest in them, you are as well. We encourage you to remove your investment until these corporations stop supporting Stericycle.

Correspondingly, it is important to also contact the corporate officers and fund managers of these companies via phone, postal mail or e-mail and inform them that you have ceased supporting their company until they discontinue their investment in Stericycle. You may click on the names of each company on our profiteers lists to obtain their respective contact information.

Update III: I should make it clear that I have no idea if Romney was aware of the abortion tie (doubtful) or even if the company was doing it in 1999. But I’m guessing that either way he doesn’t want to be associated with it. For obvious reasons.

.

Crazy like a Fox (news)

by digby

This is a bad day for Mitt Romney what with being accused of potentially committing a felony for lying to the SEC and outsourcing to China and all, but for my money, this is the worst thing he’s said during the entire campaign:

By the way, I had the privilege of speaking today at the NAACP convention in Houston and I gave them the same speech I am giving you. I don’t give different speeches to different audiences alright. I gave them the same speech. When I mentioned I am going to get rid of Obamacare they weren’t happy, I didn’t get the same response. That’s ok, I want people to know what I stand for and if I don’t stand for what they want, go vote for someone else, that’s just fine. But I hope people understand this, your friends who like Obamacare, you remind them of this, if they want more stuff from government tell them to go vote for the other guy-more free stuff. But don’t forget nothing is really free.

I don’t know why he didn’t just call Obama the “Food Stamp President” while he was at it. A lot of us immediately saw Mitt’s speech for what it was — a chance to show the racists among his base that he’s one of them and African Americans know it.

Yes, he couched in the idea that he says this to all audiences (which isn’t true, but he had said this before.) But he and his handlers aren’t fools and know that saying this to the NAACP carries a very different sort of freight. They knew exactly what they were doing.

Update: Michael Tomasky discusses the speech itself as obviously a ploy to turn the event into a Coretta Scott King funeral among the Freepers:

That speech wasn’t to the NAACP. It was to Rush Limbaugh. It was to Tea Party Nation. It was to Fox News…Romney and team obviously concluded that a little shower of boos was perfectly fine because the story “Romney Booed at NAACP” would jazz up their (very white) base.

.

Your Daily Grayson

by digby

There is one Democrat out there who consistently makes the case for health care on a moral basis. And they call him crazy for it:

“Republican Governers are engaging in a sadistic form of public policy making by denying these people their care.”

It’s true.

Grayson’s got a good chance to win this time and be back in the House in the fall, in a much more secure Democratic district than he had before. But they are going to throw tens of millions of dollars at this district to try and stop him. If you’d like to help him fight them off, you can donate to his campaign here.

.

Profiting From Market Failure

By tristero

Douglas Smith is an author, a consultant, an executive, a teacher, and one of the most astute political/cultural observers I know. Recently, he helped found Econ4, a consortium of prominent economists who seek to challenge economic orthodoxies and groupthink to develop new kinds of economic policies for the 21st century. Recently, he published an important article for the Captialism Unmasked series on Alternet entitled Profiting From Market Failure: How Today’s Capitalists Bring Bad Things to Life. Here are a few excerpts, but do read it all:

Cheerleaders of capitalism attribute failure only to government, to individuals and occasionally, to organizations – but never to markets. Yet except in the dream worlds of fact-free economists, markets are always out of balance and screwing up.

The same forces that so brilliantly coordinate resources in a global automotive market have also operated to plan obsolescence, to impede the provision of safety belts and air bags, and to obstruct the pace of fuel-saving innovation.

Clearly markets often fail in bringing us the things that make our lives better. Which raises the question: How do capitalists respond to market failures?

More specifically, to what extent do capitalists deploy their wealth in the search for new and better mousetraps? And to what extent do capitalists double down on market failures by intentionally perpetuating and profiting from the failures themselves? And, most importantly, how do the markets for gathering and deploying capital respond to failures in markets that deliver crappy products and shoddy services?

Consider Joe Wilson of Xerox, a Rochester, New York hometown boy who took the reins of the family office supplies business, learned about Chester Carlson’s invention of “dry writing,” and then bet his company and capital for 14 straight years on the promise that xerography would dramatically improve communications. Fourteen years. This was not the “fast buck, no risk” capitalism of today’s swashbuckling pirates. It was difficult, nerve-wracking, persistent and risky.Joe Wilson and Xerox reveal the persistence, focus and actual risk-taking demanded to convert market failures into market success. Such powerful forces, though, threaten incumbents. When better mousetraps emerge, some players lose. Xerox’s success pushed out carbon copies, and those who profited from them. Economist Joseph Schumpeter called this process “creative destruction.” Like water finding its own level, capital should flow to better mousetraps if capitalism is to fulfill its potential to expand “good things to life” for humanity.

…

[But] take a look at healthcare markets. Instead of taking Joe Wilson-style risks on innovation, too many captains of the heathcare industry and the capitalists who fund them choose to perpetuate market failures and enrich themselves in the process. They “just say no” to the risks inherent in searching for new life-saving drugs and treatments. Ditto to opportunities to dramatically expand access to those who currently cannot afford them. For these well-off incumbents, there is simply too much profit to be made by raising prices, manipulating intellectual property protections, bribing doctors, misleading the public, cutting costs, and choking distribution. (See Maggie Mahar’s Money-Driven Medicine.)

…

If you’re part of the 99 percent, take a clear, long look around. Odds are, you’ll read about people distressed from the consequences of too many market failures in housing, financial services, energy, labor, law, accounting, healthcare, insurance, transportation, telecommunications and more. Likely enough, you have shared some of this distress yourself.

Buckle up. It’s going to get worse. Having extracted so much wealth and power from exacerbating instead of fixing failures in so many markets, the lords and ladies of free-market capitalism want even more by privatizing education, prisons, parking and tolls, the military, and with Citizens United, democratic politics.

Remember this: all markets both succeed and fail. The balance between more successes versus more failures is in the hands of ethical and responsible owners and investors… like Joe Wilson, who invest capital in converting failures into good things for life. Today, those folks are losing out – badly — to people who thrive on failed capital markets that put a higher premium on perpetuating failures instead of fixing them. There is one way to fix the mega-failures in capital markets: regulation. Governments must step in now. Otherwise, capital markets free of all restraint will, as sure as night follows days, rain ever more pain on the many in order to generate wealth for the few.