Category: regulation

More of This

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Joe Biden has signed an executive order giving farmers the right to repair their own tractors.

This is something that always seems to founder the rocks of the McConnell reef, and it is good policy, the right of people to what they own should be sacrosanct, and it shows the farmers, and the independent repair shops who serve those farmers, that it’s not all talk.

Tractors, with John Deere being a particularly egregious c%$# about it, have increasingly been locking farmers out of their own equipment, to the degree that older tractors actually have a higher resale value than newer models.

President Joe Biden will direct the U.S. Federal Trade Commission to draft new rules aimed at stopping manufacturers from limiting consumers’ ability to repair products at independent shops or on their own, a person familiar with the plan said.

While the agency will ultimately decide the size and scope of the order, the presidential right-to-repair directive is expected to mention mobile phone manufacturers and Department of Defense contractors as possible areas for regulation. Tech companies including Apple Inc. and Microsoft Corp. have imposed limits on who can repair broken consumer electronics like game consoles and mobile phones, which consumer advocates say increases repair costs.

The order is also expected to benefit farmers, who face expensive repair costs from tractor manufacturers who use proprietary repair tools, software, and diagnostics to prevent third-parties from working on the equipment, according to the person, who requested anonymity to discuss the action ahead of its official announcement.

………

The Biden Administration effort comes as the European Commission has also announced plans for new right-to-repair rules that would govern smart phones, tablets, and laptops. Environmental activists have said that restrictions on repairs encourage waste by making consumers more likely to throw out damaged items because of the high cost of repair.

But tech companies and manufacturers have warned that opening access to underlying software and services could endanger Americans, from improperly installed batteries on tech devices to modifications on tractors and other heavy equipment that could bypass environmental and safety systems.

By, “Endanger Americans,” the tech and agricultural equipment companies mean, “Endanger our monopoly rents.”

Now get to work on laws that prevent manufacturers from doing this, though one would think that the anti tie-in sales provisions of the Magnuson—Moss Warranty Act should already cover this.

It’s Bank Failure Friday!!! (On Saturday)

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We have the 5th credit union failure of the year, the Defense Logistics Federal Credit Union of Dover, New Jersey, which has been liquidated and taken over by the Pentagon Federal Credit Union (PenFed).

I still don’t know why the bank failures have flipped, with the credit unions outstripping commercial banks over the past few years.

Perhaps someone involved in banking regulation could give me a hint.

In any case, here is the Full NCUA credit union closing list.

Yeah, a Big F%$#ing Deal

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Joe Biden has issued a rule banning surprise medical billing. 

I’m surprised, particularly its application to emergency services, where private equity has made surprise billing a central part of their profit generation strategies.  (Biden has a lot of PE types in the administration)

This is an very good, at least in the context of an executive order: (We really need a law to ban this)

The Biden administration on Thursday unveiled the first in a series of rules aimed at banning surprise billing.

The interim final rule bars surprise billing for emergency services and high out-of-network cost-sharing for emergency and non-emergency services. It also prohibits out-of-network charges for ancillary services like those provided by anesthesiologists or assistant surgeons, as well as other out-of-network charges without advance notice.

………

While public health insurance programs like Medicare and Medicaid already prohibit balance billing, people with job-based coverage or individual health plans frequently and unknowingly accept care from an out-of-network provider before they are slapped with a surprise medical bill. The new rule aims to put a stop to that.

………

This first round of regulation applies to providers, air ambulance providers, group health plans, health insurance issuers and Federal Employees Health Benefits Program carriers. The rule takes effect in 60 days, but most provisions don’t apply until January 1. Providers and insurers have until September 1 to submit comments.

Air Ambulance providers have been charging insane rates over the past few years as PE has snapped up more services.

The private equity model of medicine is to drastically overcharge people in situations where they have no choice.

Under the new rule, health plans that cover emergency services cannot use prior authorization for those services and must pay for them regardless of whether the clinician is an in-network provider or emergency facility. Likewise, insurers can’t charge their enrollees higher out-of-pocket costs for emergency services delivered by an out-of-network provider. They also have to count beneficiaries’ cost-sharing for those emergency services toward their in-network deductible and out-of-pocket maximums.

………

The Biden administration is still working out the details about how the dispute resolution process will work. But Congress laid out the broad-brush strokes in December’s No Surprises Act, which passed as part of its end-of-year spending package. Providers and insurers will have 30 days to agree to a price for the medical services delivered. And if they don’t settle, they’re supposed to enter arbitration, during which each side will present a final offer and make their case for why their recommendation is best. The arbitrator must then pick one of the two offers. But they can’t split the difference.

MY guess is that the PE parasites will still find a way to rat-f%$# people, it’s king of their “thing”, but it looks to be significantly harder now.

Personally, I favor a government owned National Health Service as a solution, but this is a positive move.

We Have a New Definition of Chutzpah

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Amazon is demanding that FTC chief Lina Khan recuse herself on any decisions about Amazon’s abuse of its monopoly power because she has extensively studied the subject. 

They claim that she has pre-judged the issue, but really they are saying that anyone less corrupt than Robert Bork is biased.

Amazon can go Cheney themselves:

Amazon filed a 25-page petition today with the Federal Trade Commission asking that Chairwoman Lina Khan recuse herself from antitrust investigations into the company.

Khan, a frequent critic of Amazon and other Big Tech firms, was appointed FTC chair less than two weeks ago. Though there has been plenty of speculation about her first moves, her short tenure to date means she hasn’t had much opportunity to file lawsuits or announce investigations. Amazon’s petition shows that its legal team hasn’t sat idle since her nomination as commissioner and subsequent appointment as chair.

“Although Amazon profoundly disagrees with Chair Khan’s conclusions about the company,” Amazon wrote in the petition, “it does not dispute her right to have spoken provocatively and at great length about it in her prior roles. But given her long track record of detailed pronouncements about Amazon and her repeated proclamations that Amazon has violated the antitrust laws, a reasonable observer would conclude that she no longer can consider the company’s antitrust defenses with an open mind.”

Khan made a name for herself four years ago when she published a paper in a law journal. Titled “Amazon’s Antitrust Paradox,” the paper made the case that current antitrust laws have fallen short as tech platforms have risen to dominance. She argued that prices are a poor yardstick with which to measure anticompetitive behavior and market power, especially among platform companies like Amazon. The peculiar economics of platforms means that companies are happy to forgo profits in the name of growth, which leads to predatory pricing, she said. And because the very nature of platforms allows companies to control access to various products and services, it creates incentives for companies to favor their own products over rivals.

Since graduating from law school, Khan worked for the Open Markets Institute, which advocates for stronger antitrust laws and enforcement, and for the House Judiciary Committee, where she worked with Rep. David Cicilline (D-R.I.) to open a congressional inquiry into tech companies’ behavior.

The term for Amazon’s filing here is bullsh%$.

If Ms. Khan had made this statement as a government official, or if she had economic ties to Amazon or its competitors they might have an argument.

Here though, we simply have two drastically different views of the competitive landscape, and her statements were in an academic context.

To quote the noted philosopher Bender Bending Rodriguez:

If any member of the staff of the FTC were to suggest that there were a legitimate case for her recusal, I would suggest that they be reassigned to the FTC office in Butte, Montana.

Today in Amazon Rat-F%$#ery

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A brief rundown of poor Amazon behavior, first despite triple digit temperatures in the Pacific Northwest, and the Kent, Washington warehouse continued operations in brutal heat with no air conditioning. 

Next, and more significantly, Amazon is demanding stock warrants to carry some merchants’ products in their store, which in addition to being something that Glass-Steagall USED to ban is a pretty big slam dunk example of anti-competitive behavior:

Suppliers that want to land Amazon.com Inc. as a client for their goods and services can find that its business comes with a catch: the right for Amazon to buy big stakes in their companies at potentially steep discounts to market value.

The technology-and-retail giant has struck at least a dozen deals with publicly traded companies in which it gets rights, called warrants, to buy the vendors’ stock in the future at what could be below-market prices, according to corporate filings and interviews with people involved with the deals.

Amazon over the past decade also has done more than 75 such deals with privately held companies, according to a person familiar with the matter. In all, the tech titan’s stakes and potential stakes amount to billions of dollars across companies that provide everything from call-center services to natural gas, and in some cases position Amazon among the top shareholders in those businesses.

The unusual arrangements offer another window into how Amazon uses its market heft to increase its wealth and clout. The company has been under growing scrutiny from regulators and lawmakers over its competitive practices, including with companies it partners with.

………

Amazon routinely leverages its size and power to force terms that benefit itself, including by getting partners in one business to sign on to its other services; learning about up-and-coming technology companies through its venture-capital fund; or creating top selling Amazon branded goods that compete with small sellers on its site. It has aggressively competed to wrest market share from rivals, which Amazon says results in better deals for shoppers.

In its supplier deals that include warrants, Amazon throws its weight around to exact lucrative terms, knowing many companies won’t refuse, according to former Amazon executives who worked on the deals.

An Amazon spokeswoman said the warrants it obtains in commercial agreements are typically tied to milestones that Amazon has to meet, such as large purchases from the supplier. The company declined to comment on specific deals, or say how many warrants it has exercised or the amount of money it has made from such agreements. The spokeswoman said it has warrant deals in fewer than 1% of the commercial agreements it enters into.

Grocery distributor SpartanNash Co. last year amended a contract with Amazon to deliver groceries to its Amazon Fresh arm. The Grand Rapids, Mich.-based company had been supplying Amazon with food since 2016, but this time Amazon added a condition: if it bought $8 billion worth of groceries over seven years, it could get warrants to purchase around 15% of SpartanNash’s stock at a price potentially lower than the market. Amazon also said it wanted to be notified of any takeover offers for SpartanNash and have a 10-day window to offer a counterbid.

………

Amazon has been doing such deals with vendors for about a decade but has aggressively increased the practice in the past few years, said former Amazon executives and lawyers who worked on structuring the deals. In its latest quarterly report, the company valued its warrants at $2.8 billion, more than five times the level three years ago. Amazon doesn’t disclose the value of stakes it owns as a result of exercising its warrants.

A broader measure of its warrants and the stakes it holds in companies through warrants, direct investment or other ways increased 10 times to $8.4 billion in that period, according to Amazon’s quarterly filings.

………

Like stock options, warrants let the holder buy a company’s shares at a set price during a set period. If the stock surpasses that strike price, the warrant holder can buy shares at a below-market price.

Corporate executives in a range of industries and lawyers said Amazon’s push to get warrants as part of vendor deals is highly unusual. Warrant deals have more commonly been used by investors who back companies in financial trouble, in deals deemed high risk.

Amazon is using its market dominance to steal from the share-holders, but that’s OK with the corrupt stooges that Robert Bork unleashed on antitrust law.

………

In talks with Atlas Air Worldwide Holdings Inc., Amazon broached a 10-year leasing deal, with similar terms. This time Amazon demanded warrants that would amount to up to 20% of Atlas’s equity over five years—with an option for 10% more later—depending on how much business it gave Atlas. Amazon also wanted the right to elect a director to Atlas’s board, after meeting certain milestones.

People involved on both sides said that warrants were a condition of Amazon partnering with Atlas. “There was definitely a sense that if it wasn’t agreed to there wouldn’t be a deal,” said one of the people. Atlas executives didn’t want to pass up the revenue opportunity from Amazon and viewed giving up the warrants as the price of doing business with Amazon, said the person.

………

Former Amazon executives said they avoided doing anything during supplier negotiations, such as putting its ultimatums in writing, that would give fodder to critics who have said Amazon abuses its power. One of the former executives said that most companies complied with its demands over warrants. Several former Amazon executives who worked on such deals said in interviews that they found them to be unfair and one-sided, saying the companies weren’t in a position to refuse and that most of the upside went to Amazon.

This is extortion and demanding kick-backs, and while it is likely legal, it really shouldn’t be.

This sort of behavior is baked into its DNA, as we can see by their dealing with the press as well, with intimidation and lies being the rule rather than the exception:

It was a slow news day at Gizmodo, the tech website where Dell Cameron worked. Without a story of his own to report he decided to aggregate—a journalism term for rewriting and crediting—a day-old Tampa ABC-affiliate’s TV piece on how Amazon’s Ring home surveillance security system was being marketed to dozens of Florida police departments.

A day later, an email from an Amazon spokesperson popped into Cameron’s inbox. The brief email claimed that the Tampa-based reporter, Adam Walser, was “correcting his story” and suggested that Cameron would need to do so as well. In her mail, the spokesperson challenged the accuracy of the station’s entire report. “It is inaccurate that AWS or Amazon is marketing Amazon Rekognition to law enforcement, either individually or in combination with Ring,” she wrote.

Cameron checked, and he didn’t see a correction on the Tampa story. Before making any change to his post, Cameron decided to reach out to Walser and double-check. “I read him the exact email that they sent me,” Cameron says. Walser was puzzled, according to Cameron. “He said ‘That’s just not true, we’re not issuing a correction. I don’t know what they’re talking about.’” Cameron wrote back to the Amazon spokesperson relaying what he’d been told, and mentioning that Gizmodo was planning their own potential follow-up story that was “likely to include that Amazon attempted to obtain a correction from Gizmodo by falsely claiming the ABC station was planning to issue one.”

The Amazon spokesperson doubled down, insisting that a correction had indeed happened. She accused Cameron of being “up in arms” and “threatening” by mentioning the possibility that Gizmodo would publish a piece about being misled by Amazon. “I do not appreciate being called… a liar,” she added in a follow-up email.

………

“I do not believe for a second that this person is naive or didn’t understand what a correction is,” Cameron told me recently, almost two years after the interaction. “They got a job in the PR department at one of the most powerful companies in the world. I think they were trying to trick me into correcting a story and didn’t expect me to go back and contact the reporter.”

It’s not unusual for communications teams for corporations, non-profits, and the government all alike to be withholding in their interactions with the press and to try to spin things in the best possible light. It’s rarer that companies try to mislead and intimidate the press into falling into the lines that they want. But of the dozen journalists I spoke with for this story, most of whom declined to be identified out of concern for professional repercussions, all recalled times Amazon’s press team had engaged in manipulative and sometimes deceitful behavior. According to these writers and editors, and my own experience reporting on the company, Amazon’s comms team readily employs these rarer, bare-knuckle PR tactics. The ultimate result isn’t just that reporters have a harder time writing stories. Some may be deterred from writing on the company at all. And if those that do are deceived and unduly influenced, then by extension the public is as well.

Aside from Cameron, at least two reporters recalled moments when they felt Amazon’s press team had outright lied to them. Almost all of the journalists told me they found that Amazon press relations was either the most or among the most clawing and deceptive corporate communications team that they had dealt with in their work.

“Amazon is the only company I’ve dealt with that has directly lied to me,” said one tech writer, recalling instances when Amazon boasted of warehouse safety guidelines in ways that journalists who had spoken with rank-and-file employees had found not to be true.

“They’d often lie about things we had proof of,” said another reporter, citing times they had visual evidence contradicting the communications teams’ claims. “There will be videos of these big walkouts and they’ll say only a few workers participated.”

………

“I do think that the broader effort is to disincentivize you from telling the truth. They want you to feel like it’s going to be a world of pain if you do your job,” one veteran tech reporter said. “Even if corrections aren’t needed, it’s still a headache and a waste of time for reporters and editors and lets them know that they’re probably scheduling another headache for themselves the next time that they decide to write about Amazon.”

Another reporter at a smaller outlet with less resources described a similar chilling effect after the company pressured him after a critical story. “It just eats up so much of time, going back and forth with our attorneys,” the reporter said, describing how the trouble had made him hesitant to cover Amazon again. “You think twice about it. Is it really worth it? Maybe you have a good story but it won’t change how they do business. It’s kind of a scary thing.”

Amazon tried a similar tactic this September on Reveal—a non-profit investigative news shop that often releases its stories in partnership with newspapers, broadcasters, and other outlets—after it published an award winning series from a team led by reporter Will Evans about the company’s efforts to mislead the public about warehouse injury rates. “Yesterday we published an investigation into Amazon’s massive misinformation campaign. Naturally, we’re now the *subject* of their misinformation campaign,” wrote Andy Donohue, Reveal’s deputy director of projects.

………

But others noted Amazon is willing to go to bold lengths compared to other companies they’ve reported on. Amazon has a broader reputation for fostering a cutthroat corporate culture, which seems to be reflected in the company’s external communications. Ahead of April’s high profile unionization vote at the company’s Bessemer, Alabama facility, Amazon fallaciously tweeted claims that its hard-pressed drivers and warehouse pickers didn’t actually have to pee in bottles, and chided lawmakers like Bernie Sanders and Elizabeth Warren who had spoken out about the company’s labor conditions. Recode reported that the tweets were directly driven by Jeff Bezos, the company’s CEO and one of the world’s most wealthy men.

While that suggests the company’s aggressive PR efforts flow from the very top, there are other executives with a role in overseeing public relations and related portfolios. While the most high profile may be vice president of global corporate affairs Jay Carney, the former Time magazine reporter and Obama White House press secretary, two former Amazon communications staffers and another employee with knowledge of Amazon’s communications team told me that Drew Herdener, the vice president of communications, usually calls shots internally.

………

Amazon’s tactics seem to be well known among reporters. Beyond the dozen with personal experience I spoke with for this story, many others who had not themselves faced an Amazon harangue were aware of the company’s aggressive approach. Indeed, hints of Amazon’s press strategies have leaked out over the years. In 2019, a Twitter glitch notified users when they were put on other users’ private lists. Caroline Haskins, a reporter at BuzzFeed who had broken a series of stories on Amazon Ring, noticed that Morgan Culbertson, an Amazon PR person, had added her to a list called “Haters.”

The goal is to have these tactics, “Well known among reporters.”  The technical term for this is, “Chilling Effect.”

Even reporters who have never written a story about Amazon are leery of writing one.

………

It was not the first time I had been yelled at by a press flack—that’s not uncommon. Nor was it the first time I had been asked for a correction. But it was the first and only time a press flack tried to aggressively antagonize and intimidate me into stripping a quote out of a published story from an established expert.

That expert, Stacy Mitchell—the co-director of the Institute for Local Self-Reliance, a research group that advocates for small businesses—has seen the impacts of Amazon’s PR wrath firsthand. When I spoke with her for this story, Mitchell said that she’s had editors “tone-down and remove stuff to reduce the blowback from Amazon” or “at least brace themselves,” when preparing to publish op-eds she’s written.

See Effect, Chilling.

………

“I’ve heard about Amazon’s bullying from many journalists,” Mitchell says. “I sometimes ask reporters about it, and sometimes they bring it up off-handedly.”

………

Even accepting that less than ideal reality, Amazon seems to be doing something that goes beyond mere spin. Facebook, Google, or other tech giants’ softer pressure and prodding certainly don’t come with the best of intentions. But employing aggressive, intimidation tactics and playing word games that severely contort the truth clearly goes beyond the line, wherever it is.

I am not surprised.  The company was founded by a contemptible sociopath, and the company (Corporations are people, my friend) is a contemptible sociopath as well.

Right-Wingers Hate Their Cable Companies More Than They Hate Democrats

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This is why the Republican dominated legislature in Ohio has backtracked on its attempt to ban municipal broadband.

People really, really, really, really, really, really hate their cable companies:

After coming close to imposing a near-total ban on municipal broadband networks, Ohio’s Republican-controlled legislature has reportedly dropped the proposed law in final negotiations over the state budget.

The final budget agreement “axed a proposal to limit local governments from offering broadband services,” The Columbus Dispatch wrote. With a June 30 deadline looming, Ohio’s House and Senate approved the budget and sent it to Gov. Mike DeWine for final approval on Monday night, the Dispatch wrote.

As we wrote earlier this month, the Ohio Senate approved a version of the budget containing an amendment that would have forced existing municipal broadband services to shut down and prevented the formation of new public networks. The proposed law was reportedly “inserted without prior public discussion,” and no state senator publicly sponsored the amendment. It was approved in a party-line vote as Democrats opposed the restrictions in municipal broadband.

The House version did not contain the amendment, and it was dropped during negotiations between the House and Senate.

Lawmakers apparently relented to public pressure from supporters of municipal broadband and cities and towns that operate the networks. People and businesses from Fairlawn, where the city-run FairlawnGig network offers fiber Internet, played a significant role in the protests. FairlawnGig itself asked users to put pressure on lawmakers, and the subscribers did so in great numbers.

If Democrats want to win, they should claim that Republicans want the cable companies to have monopolies on broadband (true), and that they support robocalling by Indian and Pakistani telemarketers. (True enough)

We’d have 65 seats in the Senate, and 320 in the House.

 

Boeing Still Cannot Make Aircraft

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The FAA has announced that it is delaying certification of their new 777X variant because of design maturity and potentially disastrous problems with its control systems.

Everyone employed at Boeing’s Chicago headquarters beyond the janitors and secretaries need to be fired ……… and into the sun:

In yet another blow to Boeing, the Federal Aviation Administration last month formally denied the jet maker permission to move forward with a key step in certifying its forthcoming giant widebody airplane, the 777X.

In a sternly worded letter dated May 13, which was reviewed by The Seattle Times, the FAA warned Boeing it may have to increase the number of test flights planned and that certification realistically is now more than two years out, probably in late 2023.

That could push the jet’s entry into commercial service into early 2024, four years later than originally planned.

Clearly, someone at Boeing decided to, “Take off their engineer hat and put your management hat on,” with predictable results.*

Boeing is suffering death by MBA.

………

The FAA cited a long litany of concerns, including a serious flight control incident during a test flight on Dec. 8, 2020, when the plane experienced an “uncommanded pitch event” — meaning the nose of the aircraft pitched abruptly up or down without input from the pilots.

Boeing has yet to satisfy the FAA that it has fully understood and corrected what went wrong that day.

After all the troubles with the 737 MAX, you think that they would have that one at the top of their, “To Do” list, but in their rush to meet schedule, and to move production to a non-union facility, they screwed the pooch AGAIN.

“The aircraft is not yet ready,” [local FAA manager Ian] Won wrote. “The technical data required for type certification has not reached a point where it appears the aircraft type design is mature and can be expected to meet the applicable regulations.”

An FAA official, who asked not to be identified in order to speak freely, said the drag on 777X certification is now “the subject of a lot of attention” at high levels both within the agency and at Boeing.

The FAA got burnt by Boeing with the 737MAX, and they are now dubious of Boeing’s claims.

The reputational damage to the Seattle aircraft manufacturer from its rampant managerialism is ongoing and an existential threat to its continued viability as a going concern.

*This is a paraphrase of a comment made to Thikol engineer Roger Boisjoly by an unnamed manager when he warned of the danger of launching the Space Shuttle Challenger in very low temperatures.†

†For those who don’t know your history, the o-rings in the solid booster failed, and the Challenger blew up.

1000 Leona Helmsleys, Writ Small

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The not-for-profit news org Pro Publica has come into IRS records for some of the wealthiest people in America, and it turns out that the richest people in the United States pay little or no taxes.  They are claiming that they do not know the identity of their source.)

This has gotten notice from major mainstream news sources.

There has been some push-back from the usual suspects demanding, while the usual douche bags are demanding an aggressive criminal investigation.  Said douche bags include US Attorney General Merrick Garland.  (Multiple officials in the Biden administration has given every indication that it will extend the Jihad against whistle-blowers to the IRS leaker.)

We find a similar pattern in the tax filings of private equity (PE) firms, with the things like the carried interest loophole, the “fee waiver,” an under resourced IRS, and a revolving door of senior officials.

I kind of filed this under, “Same old, Same old,” until Pro Publica revealed that one of the leading candidates for Manhattan District Attorney was mentioned in the files as having paid little or no taxes on her husband’s multi-million dollar pay.

So, if these files become public, there is a pretty good chance that one of the go to sources for crappy candidates who stand for nothing that is routinely tapped by the Democratic Party establishment (There is no Democratic Party establishment), hedge fund managers, and PE types, who have lots of money, and spend profligately to get elected.

Now, it the people who are looking to cash in will have to go though a trove of tax data to make sure that THEY are not on that list:

The leading candidate to take over the investigation relating to former President Donald Trump’s taxes paid virtually no federal income taxes in four of six recent years.

Tali Farhadian Weinstein, who is married to hedge fund manager Boaz Weinstein, is running for Manhattan district attorney in the Democratic primary, in which early voting has already begun. She and her husband reported income as high as $107 million in 2011, and she recently donated $8.2 million to her campaign — more than her seven Democratic rivals have raised in total.

But in 2017, according to a trove of tax data obtained by ProPublica, she and her husband paid no federal income tax. In 2015 and 2013, they also paid no federal income tax. In 2014, she and her husband paid $6,584.

………

In two of the years in which the Weinsteins paid no federal income taxes, they reported negative income, losses that appear to be driven by the volatile performance of Boaz Weinstein’s hedge fund. They also claimed and received a refundable tax credit — a total of $5,000 over those two years — designed to help middle- and lower-income families with the costs of raising children.

In the other two years in which they paid little or no federal income taxes, they reported adjusted gross income of about a million dollars each year. They were able to reduce their income tax bill in those years by using a variety of deductions.

There’s no indication the Weinsteins did anything illegal.

That last bit is the REAL problem.

The fact that these sort of shenanigans are completely legal is a national embarrassment.

Because the City of London Owns England

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Following announcements by G-7 countries about standardizing a minimum tax for trans-national corporations and cracking down on tax evasion and tax havens, the UK has decided to go to the mat for its finance industry, AKA the “City of London”, whose core competency is tax evasion and money laundering:

U.K. Chancellor of the Exchequer Rishi Sunak is pressing for the City of London to be exempt from a plan by global leaders to make multinationals pay more tax to the countries where they operate.

Finance ministers from the Group of Seven advanced economies struck a historic deal last weekend that could force the world’s biggest companies to pay a minimum corporate tax rate of 15%.

Sunak is expected to make the case that financial services, including global banks with head offices in London, should be exempt from the plan when talks move to the G-20 next month.

………

A European Union official pushed back against the idea of an exemption. The EU expects all companies to pay their fair share of taxation, the official said at a briefing for journalists on Wednesday.

If they get an exemption, the City of London will spend its time turning client companies, and their subsidiaries into finance institutions so that hey can continue to evade taxes.

The UK would be hurt by this as much as any other nation, but they are the poodles of their finance industry, they have been since at least Margaret Thatcher.

An Unalloyed Bit of Good News

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Lina Khan, who shot to fame when her article in the Yale Law Review, Amazon’s Antitrust Paradox, mainstreamed an new (actually old, pre-1970) and aggressive anti-trust policy.

Since then she has been a leading voice in the movement for forceful and expansive enforcement of anti-monopoly enforcement, and now, she has been confirmed as Chair of the FTC.

Hopefully, this presages a much more assertive approach to monopolies by the agency:

In a move that heralds a growing effort to check the power and influence of Big Tech, President Biden on Tuesday appointed Lina Khan, a top antagonist of the tech industry, to chair the Federal Trade Commission, the federal government’s primary antitrust watchdog.

Biden’s decision to put Khan in charge of the FTC’s agenda is the clearest sign yet that his administration will take a drastically different approach to regulating the tech giants than did President Barack Obama, whose administration took a largely hands-off approach toward Silicon Valley.

………

Khan, 32, is known for her unconventional proposals to counter the tech giants’ power. While still in law school in 2017, she wrote a paper denouncing Amazon for what she said was anti-competitive behavior and suggesting U.S. anti-competition laws were poorly equipped to counter the world of e-commerce. (Amazon founder and CEO Jeff Bezos owns The Washington Post.)

Here proposal is not all unconventional. It was a pretty standard view of anti-trust before Robert Bork and Evil Minions™ perverted the field.

………

During her confirmation hearing, she signaled she would take a tough line on regulating tech giants. She said that in the past few years, new evidence has come to light showing there were “missed opportunities” for enforcement actions against tech companies under the Obama administration. She also said new findings show the FTC must be “much more vigilant” when it comes to large acquisitions in digital markets.

Khan also said she was particularly concerned about the ways in which large companies use their dominance in one market to give them an upper hand in others, an issue under intense scrutiny by Congress.

Hopefully, this presages an extremely muscular by the Federal Trade Commission.

Why Hasn’t This Been Done?

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The Biden administration has at this point failed to nominate a replacement for the relentlessy corrupt Ajit Pai as chairman. 

To quote the movie, Ocean’s Eleven, “You had ONE job.”

President Joe Biden’s failure to break the Federal Communications Commission’s 2-2 partisan deadlock is reaching a “critical point,” 57 advocacy groups wrote in a letter to Biden and Vice President Kamala Harris Friday.

Nearly five months after his inauguration, Biden has not yet nominated a Democratic FCC commissioner to fill the empty fifth slot. Democrat Jessica Rosenworcel has been leading the commission as acting chairwoman, but she lacks the majority needed to do anything opposed by the FCC’s two Republicans, such as reinstating net neutrality rules and reversing former Chairman Ajit Pai’s deregulation of the broadband industry. Even a step like raising the FCC’s broadband-speed standard—which hasn’t changed in over six years—will likely require a party-line vote because Republicans prefer a low speed standard for the FCC’s annual report on how many Americans lack modern broadband access.

In early April, over 100,000 people signed a petition urging Biden to quickly break the FCC deadlock. Advocacy groups are frustrated that they are still waiting. Why Biden is taking so long is unclear.

“Given the legislative calendar and the diminishing number of days for hearings and confirmation votes, we have reached a critical point to guarantee the agency charged with ensuring affordable communications access can do its work during your administration,” the groups wrote in their new letter.

This is an, “Own Goal,” and. to quote someone who is not named Charles Maurice de Talleyrand-Périgord, it is worse than a crime, it is a mistake.

We don’t want to wait until 2023, when, following 2 years of ineffectual action by Congressional Democrats leads to both the House and the Senate being flipped, when Mitch McConnell will dictate who can be put in that post.

Finally

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Protests make a difference.  Case in point, the Keystone XL Pipeline is not canceled:

The Canadian pipeline company that had long sought to build the Keystone XL pipeline announced Wednesday that it had terminated the embattled project, which would have carried petroleum from Canadian tar sands to Nebraska.

The announcement was the death knell for a project that had been on life support since President Biden’s first day in office and had been stalled by legal battles for years before that, despite support from the Trump administration.

On the day he was inaugurated, Mr. Biden, who has vowed to make tackling climate change a centerpiece of his administration, rescinded the construction permit for the pipeline, which developers had sought to build for over a decade. That same day, TC Energy, the company behind the project, said it was suspending work on the line.

On Wednesday, the company wrote in a statement that it “will continue to coordinate with regulators, stakeholders and Indigenous groups to meet its environmental and regulatory commitments and ensure a safe termination of and exit from the project.”

The good guys won, for once.

Just Shut Them Down

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The Federal Reserve has been forced to warned Deutsche Bank that it is money laundering again.

The fix for this is very simple:  Lock them out of the US, because they are not going to fix this.

This is BCCI with a German accent:

The Federal Reserve told Deutsche Bank AG in recent weeks that the lender is failing to address persistent shortcomings in its anti-money-laundering controls, according to people familiar with the matter.

The Fed’s frustration has escalated to a point that the bank could be fined, the people said.

Deutsche Bank has poured massive resources into addressing repeated shortcomings and penalties related to allowing suspect transactions. The Fed told Deutsche Bank that instead of making progress, the German lender with a large Wall Street presence is backsliding. The regulator has said that some of the anti-money-laundering control problems require immediate attention, according to the people.

………

The Fed’s harsh words contrast with the bank’s message that it has worked diligently to improve its systems and has put most of its legal troubles in the past.

The Fed’s latest warning comes four years after it classified Deutsche Bank’s U.S. operations as being in “troubled condition,” a rare rebuke for a major bank. In May 2020, it issued a fresh admonishment over the bank’s money-laundering controls.

………

Deutsche Bank is Germany’s largest lender and as a dollar clearing bank regulated by the Fed, is a major player in global financial transactions.

Shut down their dollar clearing operations.  Problem solved, and the Germans can deal with following their own “No Bailouts” advice that they foist on the rest of the Euro Zone.

Moron

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I’m not a big fan of the people that Barack Obama appointed when he was President, Timothy “Eddie Haskell” Geithner particularly comes to mind, but generally they were light-years ahead of anyone that Trump appointed.

There is one exception though, and it’s a big one, because Jerome Powell, who Donald Trump appointed as Chairman of the Federal Reserve to replace Janet Yellen, is immeasurably better than the now Treasury Secretary.

Much as she did as Fed Chair, Secretary Yellen is reacting to non-existent inflation, and calling for rate hikes.

Powell, the first non-economist Fed Chair in Decades, gets it in a way that economists don’t: 

Starting in 2018, President Trump harangued and hammered Fed Chair Jerome Powell to end Quantitative Tightening and to cut interest rates, and Powell buckled and did his infamous “180.” And now suddenly – unless this gets walked backed again tomorrow – we’ve got the opposite. Treasury Secretary Janet Yellen said in an interview with Bloomberg News on Sunday that higher interest rates would “actually be a plus for society’s point of view and the Fed’s point of view.”

Under Fed Chair Yellen, the Fed hiked interest rates five times, starting in December 2015. Yellen departed in February 2018 as Trump had refused to reappoint her, and instead replaced her with Powell. At the time, the sixth rate-hike was already baked in for the March 2018 meeting. She is no stranger to rate hikes.

Now Yellen – presumably with the backing of President Biden – is supporting Powell on rate hikes, which is a dramatic shift from the prior administration.

I will reiterate something that I have said many times, “If you have a problem, the conventional wisdom is ALWAYS wrong, because if it were right, the problem would already have been fixed.”

Janet Yellen is relentlessly conventional, which means that she is relentlessly wrong.

A Good Start

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New York State Senate has just passed a wide ranging antitrust law which appears to have some serious teeth.

It eschews Robert Bork’s corrupt and hypocritical sham that ignored the whole history, and recast antitrust as something that only applied when consumers were immediately charged more money.

The changes in the law:

  • It lowers the presumption of market dominance from 80%+ to 40%.
  • It allows private plaintiffs to file under the law.
  • It makes “Unilateral power to set wages or contractual provisions that restrict workers from moving from their current employer to a competitor,” evidence of market dominance.
  • Dominant firms would forbidden from, predatory pricing.

There is a good primer here. 

This has not passed the state assembly yet, and it is not clear if “Ratfaced Andy” would sign the bill into law.

You are getting a lot of bullsh%$ about how this will harm small business, but that’s a lie.

Business who would be subject to this would people like Google, Apple, Amazon, Facebook, and dominant hospitals in a regions, who all need to be taken down for the good of society:

The New York state Senate passed legislation Monday making it easier for plaintiffs to win antimonopoly lawsuits, in the latest state-led effort to rein in large technology companies in the absence of action by Congress.

The antitrust bill was opposed by business groups and backed by unions and other critics of corporate giants such as Amazon.com Inc. and Alphabet Inc.’s Google. To become law, it must also pass the state assembly and be signed by the governor.

Monday’s 43-20 party line vote represented an incremental victory for advocates of tougher antitrust laws, who will seek to use it as a springboard to tougher laws in other states and at the federal level.

“We have a problem in this country. We have a problem that there is tremendous market power in very, very few hands,” said New York state Sen. Michael Gianaris, a Democrat and the bill’s lead sponsor, at a virtual press conference Monday. “Small startups and medium-sized businesses don’t have the opportunity to grow and innovate.”

………

Mr. Gianaris said he would continue fighting for the New York bill if it doesn’t become law during the state legislature’s current session, which ends this week. No further legislative days are scheduled this year, although more could be added.

If the bill isn’t passed this year it would have to be reintroduced next year. New York Gov. Andrew Cuomo’s office had no immediate comment.

Congress is considering changes to federal antitrust law, but those efforts haven’t advanced significantly this year as lawmakers focus on other priorities. States including Maryland and Florida have enacted new statutes aimed at powerful tech companies.

The proposed New York law takes broader aim. It would make it unlawful for a company “with a dominant position in the conduct of any business…to abuse that dominant position.” A company would generally be presumed dominant if it had a greater than 40% market share.

That is a more plaintiff-friendly standard than current U.S. antitrust laws at the federal and state level. Generally under those laws, a company is considered a monopoly if it controls two-thirds of a market, and its conduct isn’t considered anticompetitive unless it can be shown to harm consumers.

It’s very late in the session, so there is a good chance that it won’t pass this year, but it should be back next year.

The Solution Is

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It appears that the wild swings in heavily shorted stocks, most recently for AMC movie theaters, is causing instabilities in the market that threaten the stability of index funds.

The solution to this is fairly straightforward, first and most importantly, enact a transaction tax for all financial transfers to increase the friction, and hence reduce the speculation.

It might also be a good idea to ban Payment for Flow Order, which is a Bernie Madoff inspired “Innovation” which is little more than an excuse for front running, where a broker executes their trades before those of their customers for their own personal profit.

Speculation is a cost we pay for investment, an evil that we tolerate in order to encourage investment.

A tax of between 10 and 50 basis points (⅒% — ½%) tax per transaction. 

Even if it does not generate as much revenue as its supporters predict, it will produce a very real public good:

Index funds are supposed to cut out the human-driven craziness that periodically infects markets, but the recent meme-stock fever proved the $11 trillion industry is far from immune.

The remarkable surge in shares of AMC Entertainment Holdings Inc. and a handful of other stocks is showing up in multiple exchange-traded funds, skewing portfolios, altering risk profiles and exerting outsized influence on prices.

Take the $68 billion iShares Russell 2000 ETF (ticker IWM). In the past week through Thursday, AMC powered 70% of the product’s advance. The stock was responsible for less than a 10th of the fund’s return in the previous week.

It’s a timely reminder that even diversified funds on autopilot remain subject to the whims and eccentricities that frequently lash markets out of nowhere.

………

“For index investing, the appeal is that human decision-making, human emotions are taken out of it,” said Tom Essaye, a former Merrill Lynch trader who founded “the Sevens Report” newsletter. “That works all well and good until a stock that is supposed to be 50 basis points of the fund now becomes 6%.”

This is going to destroy us all.

Clearly, We Need More of This, Not Less

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Colorado has added a requirement that job postings must include a salary range, so as to minimize wage disparities between white men and everyone else.

In response, companies have begun posting job openings specifically excluding Colorado, because they can keep wages lower if the applicants do not know what they are willing to pay.

The solution to this is not to revoke the Colorado statute, but to make it universal:

DigitalOcean is looking to hire a front-end software engineer who, if working remotely, is free to live anywhere in America, Canada, Germany, or Netherlands, but not in Colorado.

The US state in 2019 approved the Equal Pay for Equal Work Act and then formulated rules to apply the law [PDF], which went into effect on January 1, 2021. The statute requires, among other things, that companies posting job listings for in-state or remote positions include a salary amount or salary range. The intended purpose of the regulation is to prevent pay disparities.

DigitalOcean, which advertises about how it supports “a diverse and inclusive workplace,” does not explain specifically why it won’t consider hiring Colorado residents for remote positions, but its now-changed help wanted ad does make clear that Colorado is to blame.

“This position may be done in NYC or Remote (but not in CO due to local CO job posting requirements),” the online post said.

………

Many other firms have included similar language in their job ads.

Alcohol e-commerce platform Drizly is also looking for a remote Senior Software Engineer, anywhere except Colorado. “Please note: this role can be performed remotely anywhere in the United States with the exception of Colorado,” its job listing explains.

………

In a post last November to legal website JD Supra, Littler Mendelson PC attorneys Jennifer Harpole and Joshua Kirkpatrick, wrote that an exemption to the compensation inclusion requirement “makes it even more likely that multi-state employers with remote jobs will exclude Colorado workers from consideration…”

Make it a national requirement.  Problem solved.

Katie Porter and Her White Board

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Representative Katie Porter, (D-CA) does her homework, and she knows her numbers, and when she whips out her white board, someone is in for a can of whup ass.

In this case, it was the Richard Gonzalez, the CEO of AbbVie, which is gouging patients for its Humira Arthritis drug.

She showed that the money for R&D is dwarfed by advertising, and executive compensation, particularly that compensation which is driven by stock buybacks:

Or, as Porter observed: “You lie to patients when you charge them twice as much for an unimproved drug, when you tell us that R&D justifies those price increases. The Big Pharma fairy tale is one of groundbreaking R&D that justifies astronomical prices. But the pharma reality is that you spend most of that money making money for yourself and your shareholders.”

Roll the tape, it’s beautiful: (It’s also not that difficult if you aren’t spending 8 hours a day dialing for dollars for your DCCC dues)

New York Times Editors Come Out for State Owned Means of Production

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Not joking, they just wrote an editorial suggesting that not only should Covid-19 vaccine IP protections be suspended, but that the US government should set up its own state owned vaccine plants.

They have gone full Pinko:

The United States is well on its way to protecting Americans from the coronavirus. It’s time to help the rest of the world. By marshaling this nation’s vast resources to produce and distribute enough vaccines to meet global demand, the United States would act in keeping with the nation’s best traditions and highest aspirations while advancing its geopolitical and economic interests. It is a moment of both obligation and opportunity.

………

Covax, the World Health Organization’s initiative to pool vaccine resources, remains profoundly underfunded and has failed to meet even its modest target of vaccinating one-fifth of the population in the Global South. Without a major course correction, the rest of the world will have to wait until 2023 or later for large-scale vaccination initiatives like the one underway in the United States. The consequences of this disparity are expected to be severe. Hundreds of thousands more people will get sick and die from a disease that is now preventable with a vaccine. The global economy will contract by trillions of dollars, according to the International Chamber of Commerce, and tens of millions of people will plummet into extreme poverty as the virus continues to fester and evolve in the world’s more vulnerable reaches. 

………

President Biden can start by announcing that the United States intends to help and by appointing a vaccine czar to oversee the expansion of vaccine production. The federal government has ample legal power to compel the participation of the pharmaceutical companies, including the sharing of critical information and technologies. Congress has appropriated $16 billion to scale up production, most of which remains unspent.

Increasing manufacturing capacity has proved tricky. The global demand for vaccines may be high now, but once the coronavirus pandemic recedes, it will plummet back to normal levels. Increased public ownership, for its part, would ensure that vaccine-production capacity is ready for future pandemics, which are inevitable — potentially including new coronavirus variants for which routine boosters may be required.

To this end, the administration should consider taking a page from the Department of Energy playbook: Create publicly owned manufacturing facilities and contract with private companies to run them. (Several of the D.O.E.’s federally owned laboratories are run by private companies like General Electric and Bechtel.)

(emphasis mine)

I would note that the suggestion of federally owned manufacturing facilities is a good thing, and any future research or development contracts should require that these sites have a royalty free license.

But subcontracting to private companies to run them?  Too much of an opportunity for the sort of rat-f%$#ery that has pharma paying generic competitors not to produce.

Drugs factories are not like nuclear weapons factories:  Anyone can build one.

Have the government run these facilities.