Tag: regulation

Something that Trump Got Spectacularly Right

For decades, the Fed comported itself as an expert witness for deficit hawks on Capitol Hill.

Now, under the leadership of a Republican banker, the Fed is using its technocratic credibility to bolster big stimulus (and marginalize Larry Summers)https://t.co/LyyZxcssS8

— Eric Levitz (@EricLevitz) February 11, 2021

Because he is NOT an Economist

Specifically, he put Jerome Powell in charge of the Federal Reserve, whose background is as an investment banker rather than an economist, and because of this, he has not dedicated himself to fighting invisible mythical inflation preemptively, nor has he attempted to create prosperity by invoking the equally mythical confidence fueled austerity fairy.

It turns out that there is a profession more useless than that of the investment banker, it is that of the economist.

While Trump always found him too hawkish on monetary policy, he has been the most dovish Fed chair in at least 30 years, largely because he is not comparing penis size with other economists:

For most of the past four decades, the Federal Reserve has comported itself as a corroborating witness for deficit hawks on Capitol Hill, and a security system for anti-inflation paranoiacs on Wall Street.

In the late 1970s, stubbornly high inflation taught the central bank that the conflict between its dual objectives — to promote full employment and price stability — was fiercer than it had previously thought. Specifically, the Fed decided that it would need to preemptively cool the economy when unemployment got too low, so as to snuff out inflationary spirals before they took hold. This was because tight labor markets allowed workers to hold their employers hostage to unreasonable wage demands; with no reserve army of the unemployed to draw new hires from, bosses were forced to placate existing staff. Thus, employers ended up overpaying their workers and then trying to compensate by overcharging consumers. Workers, being consumers themselves, responded to such price hikes by extracting even higher wages from their employers, causing employers to enact even more extortionate price increases, setting off a vicious inflationary cycle. Therefore, central banks had to proactively preserve slack in the labor market — both by slowing economic growth through interest-rate hikes when unemployment got too low, and by encouraging Congress to rein in deficit spending lest it spur excessive demand for labor.

………

But times have changed — and so has the Fed.

Under Jerome Powell, the central bank has brought American monetary policy into belated alignment with federal law and empirical economics. Instead of attempting to preempt high inflation by sustaining a cushion of unemployment, Powell has waited for inflation to actually show itself before deliberately cooling the economy, a posture he has justified by emphasizing the myriad economic and social benefits of maximizing employment.

As a result, the Fed’s role in America’s fiscal policy debates has flipped. This week, Joe Biden’s $1.9 trillion stimulus plan took on some friendly fire from center-left economists Larry Summers and Olivier Blanchard. While both endorsed the necessity of significant stimulus spending, they suggested that Biden’s package was excessively large, and would risk “overheating” the economy — which is to say, the stimulus would risk injecting more demand into the economy than the nation can satisfy, given the size of its labor force and the productive capacity of its capital stock. And when demand outstrips supply, the result is inflation.

On Wednesday, the Fed effectively intervened in this debate on Biden’s behalf. In remarks to the Economic Club of New York, Powell argued that America’s actual unemployment rate is not 6.3 percent (as official data suggest) but 10 percent, once classification errors are accounted for; that it will take “continued support from both near-term policy and longer-run investments” to restore maximum employment; and that had the pandemic not intervened, there is “every reason to expect that the labor market could have strengthened even further without causing a worrisome increase in inflation.” That last statement is key. Not only does it suggest that Powell believes the U.S. economy can support an unemployment rate significantly below the 3.5 percent we saw in early 2020, the statement also implicitly rebukes the Congressional Budget Office’s official estimate of how much more demand the economy can accommodate without overheating. Which is significant, since Summers built his “overheating” argument around the CBO’s (historically unreliable) estimate of that figure.

………

The Federal Reserve’s authority over monetary policy — and technocratic credibility on questions of spending — gives it considerable power to shape the economic paradigm within which democratic politics operates. In the late 1970s, the central bank used this power to consolidate a reactionary turn in American economic policymaking. In 2021 — under the leadership of a Trump-appointed, Republican investment banker — it is doing its darnedest to consolidate a progressive one.

IMHO, Trump got it right by mistake, but he got this one very right.

So Says the ASSLaw Fellow

Jan Rybnicek, an antitrust attorney and a Senior Fellow at the Global Antitrust Institute of the Antonin Scalia School of Law (ASSLaw) has taken issue with both the Biden administration and in Congress to restrict mergers in the name of increasing competition in the marketplace.

She states that slowing the paces of M&A activity will reduce employment in the United States, despite the fact that mergers result in massive job cuts more often than not.

In fact the only areas of the economy that might see reductions in employment are beyond brokers and lawyers, so how could anyone claim with a straight face that this would cause job losses.

It’s almost as if the person writing this is an M&A lawyer, and ……… Checks Notes ……… never mind.

Prop 22 Lawsuit Dismissed by California Supreme Court

So, it appears that the Gypsy cab companies attempt to strip rights from their workers will proceed as planned.

This sucks: 

The California Supreme Court today shot down the lawsuit filed by a group of rideshare drivers in California and the Service Employees International Union that alleged Proposition 22 violates the state’s constitution.

“We are disappointed in the Supreme Court’s decision not to hear our case, but make no mistake: we are not deterred in our fight to win a livable wage and basic rights,” Hector Castellanos, a plaintiff in the case, said in a statement. “We will consider every option available to protect California workers from attempts by companies like Uber and Lyft to subvert our democracy and attack our rights in order to improve their bottom lines.”

As an aside, now is the time to start getting signatures to repeal the bill. 

The “Gig Economy” companies will have 2 years of showing that their so-called worker protections are a lie, so, unlike Prop 13, getting another bite at the apple is a good thing.

Destroying Wall Street for the Lulz

If I was a Hedge Fund losing billions to Reddit shitposters, I would get a second job driving for Uber, cut out the Starbuck’s, and skip the avocado toast.

— Jean-Paul Blarte: Mall Cop (@OldPappyThomas) January 27, 2021

This is Beautiful


The Hedge Funds are Pissants

MaY NeEd tO gEt BaiLeD oUt pic.twitter.com/JrGW4hsxyI

— Aimee into the Sun🌹 (@AimeeDemaio) January 27, 2021

Too True


The inevitable sea shanty

to be clear. This has nothing to do with gamestop as a business. They are just a piece of rope being used in a tug of war between internet nerds and wall st suits.

the rally cry on r/wallstreet bets:

“we can remain retarded for longer than they can stay solvent!”

— Shaan Puri (@ShaanVP) January 26, 2021

The real bottom line

It appears that a bunch of Redditors have taken down at least 2 hedge funds, and on one side are the titans of Wall Street saying something must be done to stop this, and on the other side is literally everyone else in the world, who are pointing and laughing:

GameStop’s stock price continued to soar in after-hours trading last night to over $300. While many are waiting for it to come crashing back down, it might be too late for some major hedge funds. With the stock still sitting at well over $250 a share (unthinkable just last year when it was trading at under $5) after the market reopened, Melvin Capital, one of the largest hedge funds betting against the company, is reportedly getting out of the game after suffering major losses, seemingly driven out by amateurs trading on their phones and joking on Reddit in what continues to be one of the most bizarre stories of 2021 so far.

“Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss,” the fund’s manager told CNBC this morning.

The firm, which was worth about $12.5 billion before the battle between short sellers and Redditors began, bet big against GameStop and a number of other companies, only to see 30% of the fund disappear over the last few days. That prompted other billionaires to swoop in and lend Melvin $2.75 billion to help cover the losses. Andrew Left, a notorious short-seller activist, also announced in a new YouTube video today that his investment firm moved away from most of its bets against GameStop’s stock at “a loss of 100%.”

………

Meanwhile, the ensuing chaos caused GameStop stock trading to be temporarily halted yet again this morning and caused outages on the trading app Robinhood. Other companies like Blackberry and AMC are also seeing smaller, though still dramatic stock climbs, as Reddit traders attempt to go boost other companies massively shorted by big hedge funds.

All of this is the culmination of a long game that’s been brewing on the WallStreetBets subreddit for a while now as amateur day traders decided to turn the misfortunes of a floundering brick-and-mortar game seller into their cause celebre for dunking on professional investment firms. In some ways it’s a very complicated story driven by the weird mechanics of Wall Street, but in other ways it’s a familiar tale of extremely online people trying to stick it to someone, in part to make a buck, but also for the “lulz.” Here’s a quick rundown of how things got here.

Short version:  A bunch or Redditors, seeing that the moribund console game store GameStop was the most shorted stock in America, decided to take down said short sellers by bidding up the price and creating a “Short Squeeze”.

The mechanism is such that the hedge funds are incredibly exposed to this, and at least one had to be bailed out by other Wall Street Parasites because it was essentially insolvent.

What’s more, it appears that the same thing is happening with AMC Theaters, Bed Bath & Beyond, and Blackberry as I am typing this. (Scroll down) 

One thing that is not clear at this point is whether some other hedge fund type entity might be involved in this on the other side, though even if they did, they have done nothing illegal, since the information, “Let’s do it for the lulz,” is both accurate and publicly available.

One thing that is clear at this point is that this entire affair is showing most of the short selling activity out there serves no useful purpose, and that the arguments in favor of it, basically that shorting stocks create a financial incentive aggressive due diligence of companies, are 6 pounds of shit in a 5 pound bag.

It is one step removed from the infamous Bucket Shops of the early 1900s.

I, for One, Welcome Our New Inflatable Rat Overlords

Now that Joe Biden has fired corrupt National Labor Relations Board general counsel Peter Robb, it appears that Scabby the Rat is safe for now.

Robb, a former union busting lawyer, has been on a jihad against the union mascot Scabby the Rate, First Amendment be damned.

Hopefully, the new NLRB council won’t be such a corrupt unethical bastard:

The fate of Scabby the Rat is up in the air after President Joe Biden forced out National Labor Relations Board general counsel Peter Robb, who had made it one of his top priorities to deflate the union protest symbol, and tapped a new acting general counsel on Monday.

In one of his first actsafter taking office Jan. 20, Biden sent the Trump-appointed Robb and deputy NLRB general counsel Alice Stock packing. On Monday, Biden tapped NLRB Chicago regional director Peter Sung Ohrto be acting general counsel.

Legal experts say those shake-ups could mean the end of Robb’s attempt to muzzle the ratbased on a legal theorythat unions violate the National Labor Relations Act when they deploy the fanged, red-eyed rodent in so-called secondary boycotts.

………


And the general counsel has the authority to decide which cases can continue to proceed before the board, said Alyssa Busse, a union-side attorney at Allison Slutsky & Kennedy PC, which could mean the end of cases that seek to upend precedent protecting the inflatable pest.

“Even though the general counsel is separate from the board, the general counsel still has significant influence on which cases are brought before the board,” Busse said.

………


The general counsel’s office is challenging an NLRB administrative judge’s ruling that the display, which shamed Lippert “for harboring rat contractors,” may have embarrassed company officials but did not block customers or workers. Robb wanted the board to consider doing away with two Obama era decisions that gave workers the right to use banners and Scabby during secondary protests as long as they were not confrontational or disruptive.

In October, the NLRB sought public inputon whether it “should alter its standard” and limit workers’ rights to display the rat and banners during secondary protests.

Those comments, now submitted to the board, put the case even closer to a decision that could upend the current law, clarify it or leave it untouched.

………


But a more likely path is that the acting general counsel will drop the case against Lippert Components, according to Andrew D. Midgen, an attorney at labor-side firm Pitta LLP.

“Even though the [Lippert] case is fully briefed, the acting GC has the authority to withdraw the complaint. There are good grounds within the NLRA and Supreme Court precedent that decides prosecutorial and adjudicatory decision-making within the agency,” Midgen said. “As long as it’s a prosecutorial decision, then the final authority rests within the acting GC. The decision as to whether to pursue a complaint is a prosecutorial decision.”

Whether the board issues a decision on the Lippert case, or another case pending at the board over Scabby, Ohr could also change the guidance to NLRB regional offices on how to handle relevant cases and what legal theories they must pursue, experts said.

Robb’s office issued multiple memos in recent years ordering regional offices to pursue cases in which unions allegedly violated the NLRA by using the rat and other long-recognized symbols of labor protests that often pop up during union demonstrations.

Here’s hoping that this is the beginning of a trend.

One of the worst things that Obama did when he got into office was to knife labor in the back by abandoning the  the Employee Free Choice Act.

It was horrible policy, and worse politics.

Yeah, Me Too


A throw away tweet


My throw away response

I agree with Mike Caulfield statement on Twitter’s take-down and appeals process,  that it is arbitrary, opaque, and the subject has no inkling as to the process.

I would not be writing about this, except that this happened to me.

About a week ago, I got locked out of Twitter for a post I made in June.

Someone posted a sign a McDonald’s which appears to state that they are out of happy meals, though they use the term “Boy Toys.”

The poster suggested that he was sad, because he wanted his “twinks”, a slang term for young, and young appearing, gay men.

My response was that he was being “Homonormative, (a play on the term “Heteronormative”) and that “Wymyn” (An 80s radical feminist spelling for “Woman”) might want their “Boy Toys” as well.

It was pretty anodyne, though every 2 weeks of so, it showed up in someone’s feed, and they would ask, “What the heck is Wymyn?”

When I got the ban, I appealed the decision, which was likely automated, and was probably driven by someone flagging it.  (No accounting for humor, I guess)

That I got a Twitter Timeout™ was actually kind of  a thrill, I have been in a bit of a competition with my son Charlie after Twitter flagged him for suggesting that Meghan McCain do something anatomically dubious with a cactus.

I submitted an appeal, and then nothing happened.

After 4 days of not being able to access twitter, I deleted the tweet.

But just before I deleted the tweet, I came across Mr. Caulfield’s essay, and I agree with his assessment of the appeals process:

So that would be my recommendation to Twitter. Either cancel the appeals process, apply it narrowly to suspensions, or speed it up. At the very least, inform people engaging in it what the average time for resolution is. And while my suspension probably won’t derail national or international efforts against COVID-19, I can’t help but think of all the medical researchers and public policy people out there using Twitter to communicate and collaborate. So as much as Twitter seems to think any deference to academic culture is a thumb on the scale, I really hope they can have someone write up a list of experts more important than me and take a bit more care before they ban them. I assume what I was hit with was based on a programmatic scan, not trolls gaming reporting. But the anti-vaccine trolls are out there and I know they are reporting the heck out of anyone that gets in their way. If Twitter doesn’t make a nominal effort to protect those researchers, there will be much more high-profile (and damaging) bannings to come.

(Incidentally the fact that the report does not actually tell me if I have been banned by a programmatic scan –having 5g and vaccines in the same tweet — or via a report is very bad in terms of both transparency and utility. I actually need to know whether it is a troll report or algorithm. If it’s an algorithm, it’s a lightning strike, and I go on the way I have. If the trolls have found me, that’s a different problem, and one I need to be alerted to.)

When we talk about the size of the online giants, what is frequently ignored is the generally poor quality of user* services. 

Terms and services are poorly written, arbitrarily enforced, and completely lacking in any measurable human involvement.

It would not be at all unreasonable to require that the large online service sites to provide clearer processes, along with the ability to contact an actual human being.

The quality of the services would improve, at least from the end user perspective, and it would make the enormous scale that entities like Facebook, Twitter, and Google have achieved more expensive, which might aid smaller challengers and mitigate against further growth.

*They not customers, the advertisers are the customers, the users are the product.

Well, Shit (It’s Bank Failure Friday!!! )

 Do you know that I did not expect to see?

Two credit union failures in the first two full weeks of the year.

Today, the Indianapolis’ Newspaper Federal Credit Union of Indianapolis, IN was placed under conservatorship.

An article at American Banker says that they were shut down for, “Unsafe and unsound practices at Indianapolis’ Newspaper FCU,” though no specifics are given. 

It does look like they were attempting something rather speculative, and ultimately unsuccessful, over the past 12 months though.

The Good,

Gary Gensler, who surprised everyone when he was appointed by Obama as the head of the  Commodity Futures Trading Commission (CFTC) and then aggressively pushed for regulation and investigations of fraud, is Biden’s choice to head the Securities and Exchange Commission (SEC).  

Word is that Wall Street is crapping their pants over this choice:

Gary Gensler will be named chair of the U.S. Securities and Exchange Commission (SEC) by President-elect Joe Biden, said two sources familiar with the matter, an appointment likely to prompt concern among Wall Street firms of tougher regulation.

Gensler was chair of the Commodity Futures Trading Commission (CFTC) from 2009 to 2014, and since November has led Biden’s transition planning for financial industry oversight.

His appointment as the country’s top securities regulator is expected to put an end to the four years of rule-easing that Wall Street banks, brokers, funds and public companies have enjoyed under President Donald Trump’s SEC chair Jay Clayton.

At the CFTC, Gensler implemented dramatic new swaps trading rules mandated by Congress following the 2007-2009 financial crisis, developing a reputation as a hard-nosed operator willing to stand up to powerful Wall Street interests.

A former Goldman Sachs banker and a professor at MIT Sloan School of Management, Gensler also oversaw the prosecution of big investment banks for rigging Libor, the benchmark for trillions of dollars in lending worldwide.

When he came into the CFTC, it was assumed that he would be yet another corporate stooge.

Instead he was a pleasant surprise in an administration that was largely defined by corporate stooges.

The Bad,

Samantha Power has been picked by Biden to head USAID

Power is a bloody lunatic, who is almost as prone to demand the use of military force as the late and unlamented John McCain.

The is a warmonger of the highest order, and given that USAID is frequently used as a cutout to support regime change activities by the US State Security Apparatus, this is not good.

Former UN Ambassador Samantha Power, (in)famous for her screaming duels over Syria with late Russian envoy Vitaly Churkin, was picked by Joe Biden to head the US Agency for International Development (USAID) in his administration.

Though her appointment was rumored in Washington for weeks, Biden’s transition team officially confirmed it on Wednesday. Power is best known for her “humanitarian” interventionism advocacy. As an aide at the Obama White House, she championed US intervention in Syria and Libya – where US-backed Islamist militants sought to overthrow secular governments – in the name of stopping “genocide.”

Let us not forget that the intervention that she forcefully championed in Libya has led to the return of open air slave markets, and Syria………

And The Ugly

That would be Victoria “Fuck the EU” Nuland, whose pathological hatred of the Russians is largely responsible for the Ukraine the mess it is today.  (War, Fascism, Corruption, the deification of Nazi Sympathizers, etc.), who has been picked by Biden to be the Undersecretary of State for Political Affairs

This is a remarkably bad idea, if just because she was the prime mover behind the Ukrainian coup, which closely mirrors what happened at the Capitol on January 7

Who is Victoria Nuland? Most Americans have never heard of her because the U.S. corporate media’s foreign policy coverage is a wasteland. Most Americans have no idea that President-elect Biden’s pick for Deputy Secretary of State for Political Affairs is stuck in the quicksand of 1950s U.S.-Russia Cold War politics and dreams of continued NATO expansion, an arms race on steroids and further encirclement of Russia.

Nor do they know that from 2003-2005, during the hostile U.S. military occupation of Iraq, Nuland was a foreign policy advisor to Dick Cheney, the Darth Vader of the Bush administration.

You can bet, however, that the people of Ukraine have heard of neocon Nuland. Many have even heard the leaked four-minute audio of her saying “Fuck the EU” during a 2014 phone call with the U.S. Ambassador to Ukraine, Geoffrey Pyatt.

During the infamous call on which Nuland and Pyatt plotted to replace the elected Ukrainian President Victor Yanukovych, Nuland expressed her not-so-diplomatic disgust with the European Union for grooming former heavyweight boxer and austerity champ Vitali Klitschko instead of U.S. puppet and NATO booklicker Artseniy Yatseniuk to replace Russia-friendly Yanukovych.

………

Despite outrage from German Chancellor Angela Markel, no one fired Nuland, but her potty mouth upstaged the more serious story: the U.S. plot to overthrow Ukraine’s elected government and America’s responsibility for a civil war that has killed at least 13,000 people and left Ukraine the poorest country in Europe.

In the process, Nuland, her husband Robert Kagan, the co-founder of The Project for a New American Century, and their neocon cronies succeeded in sending U.S.-Russian relations into a dangerous downward spiral from which they have yet to recover.

Nuland accomplished this from a relatively junior position as Assistant Secretary of State for European and Eurasian Affairs. How much more trouble could she stir up as the # 3 official at Biden’s State Department? We’ll find out soon enough, if the Senate confirms her nomination.

………

The neocons’ coup de grace against Obama’s better angels was Nuland’s 2014 coup in debt-ridden Ukraine, a strategic candidate for NATO membership right on Russia’s border.

………

The muscle for Nuland’s $5 billion coup was Oleh Tyahnybok’s neo-Nazi Svoboda Party and the shadowy new Right Sector militia. During her leaked phone call, Nuland referred to Tyahnybok as one of the “big three” opposition leaders on the outside who could help the U.S.-backed Prime Minister Yatsenyuk on the inside. This is the same Tyanhnybok who once delivered a speech applauding Ukrainians for fighting Jews and “other scum” during World War II.

After protests in Kiev’s Euromaidan square turned into battles with police in February 2014, Yanukovych and the Western-backed opposition signed an agreement brokered by France, Germany and Poland to form a national unity government and hold new elections by the end of the year.

But that was not good enough for the neo-Nazis and extreme right-wing forces the U.S. had helped to unleash. A violent mob led by the Right Sector militia marched on and invaded the parliament building, a scene no longer difficult for Americans to imagine. Yanukovych and his members of parliament fled for their lives.

………
 
Nuland’s militaristic worldview represents exactly the folly the U.S. has been pursuing since the 1990s under the influence of the neocons and “liberal interventionists,” which has resulted in a systematic underinvestment in the American people while escalating tensions with Russia, China, Iran and other countries.

Nuland is a complete horror show, and she should be kept as far as possible from the reins of power as possible.

She is a disaster waiting to happen.

What Took You So Long?

Months after being invaded by gun toting fascist and white supremacist terrorists, the Michigan legislature has finally decided that maybe allowing any Tom, Dick, and Harry to open carry in the state house is a bad idea:

Michigan banned the open carry of guns inside its Capitol building on Monday, following mob violence last week at the US Capitol and last year’s storming of the Michigan statehouse.

The Michigan ban came as reports detailed FBI warnings about possible violence at state capitols and in Washington in the run-up to the 20 January inauguration of Joe Biden.

………

Security officials are preparing for a large crowd in Washington for the inauguration, and state officials are preparing for protests.

On Monday, ABC News reported a similar FBI bulletin warning of armed protests “at all 50 state capitols” and in Washington, but neither the date of that bulletin nor the evidentiary basis for its advice was given.

………

Security around the Capitol has been stepped up.

Armed men stormed the Michigan capitol in April, protesting social restrictions aimed at curbing the spread of Covid-19. It later emerged that a group had plotted to kidnap and perhaps kill the governor, the Democrat Gretchen Whitmer.

April ……… May ……… June ……… 9 Months?

It too them 9 Fucking Months to realize that it’s a bad thing for the legislature to be threatened by mooks carrying assault rifles?

Seriously? 

I get that Republicans controlled both state houses, but I would figure that they would have a have enough of a self preservation instinct to act sooner.

Well, Here Is Some Bullsh%$ That Is Falling by the Wayside

I get that transporting pets via aircraft is expensive, and can be risky, but the epidemic of people using the “Emotional Support Animal” con in response is selfish and potentially dangerous. (As someone who drove from Texas to Maryland with cats in a big cage in the back of a minivan, I feel your pain)

Thankfully, due to some rulings by the DoT, it’s looking like the bullsh%$ is ending

It’s clear that there are SOME people who are effected by this who are being honest, and they have my condolences to, but the assholes spoiled it for you:

Alaska Airlines is the first U.S. carrier to ban emotional support animals on its flights following a Department of Transportation ruling that airlines will only be required to transport service dogs.

Beginning Jan. 11, the airline will allow only service dogs that are “specially trained” and will refuse transport to emotional support animals.

The DOT rule change came early this month following the agency’s decision to revise its Air Carrier Access legislation because passengers have for years been requesting airlines accept their “service” pigs, rabbits and peacocks. Until now, the department had not defined what constituted a service animal, and all emotional support animals were federally required to be permitted on planes.

By way of context, there were something like ¾ million passengers who brought animals onto airliners using the “Emotional Support Animal” excuse in 2017.

By way of context, there are only about ½ million service dogs in the US, so it’s not unreasonable to assume that well over 90% of those flyers in 2017 were lying through their teeth.

Now, it’s only dogs, and they have to be specifically trained as a helper animal.

Again, a Good Start

It appears that some philanthropists have come to realize that the structures of philanthropies in the United States don’t generate much in the way of charity for the level of tax deductions provided.

Given my background, I founded a small charity in the early 1990s,* this remains an area of interest for me.

There has been a massive growth in various charitable organizations, and a commensurate growth in the taxes not paid,  but not a growth of the actual charity provided:

A group of high-profile philanthropists and foundations, along with estate and gift tax experts, have come together to push for reforms to charitable giving laws that would increase the amount of money available for nonprofits.

Their goal is to unlock some of the US$1 trillion sitting in private foundations and donor-advised funds (DAFs) that is not obligated to be distributed to nonprofits under current law. The group, known as the Initiative to Accelerate Charitable Giving, also aims to make it easier for the 90% of taxpayers who don’t itemize to gain a tax benefit for giving to charity.

“The purpose is to get money to working charities so they can put money to work,” says Ray Madoff, a professor of estate and gift tax estate planning, at Boston College, and the main force behind the U.S. initiative along with Houston philanthropist John Arnold.

……… 

Under current regulations—established in 1969, according to Madoff—private foundations are obligated only to pay out 5% of their assets to public charities annually. The rest can be invested as the foundation chooses, and can be passed down through generations. 

DAFs, which have been an increasingly popular way to set aside money for charity, allow individuals to make donations into an investment fund managed by a public nonprofit, and get an immediate tax deduction. There is no requirement for funds to be distributed to a qualified public charity, since the DAF itself is managed by one.

The existence of these tax-advantaged vehicles, which today hold US$1 trillion in assets, raises a question that Madoff has studied for years. That is: What is society getting in return for not receiving those tax dollars? The answer, she realized, was “a lot less than we think.” 

………

And while individuals do actually make grants to charities from their DAFs, they aren’t required to do so. “It’s not that everybody is not spending anything, it’s that the vehicle facilitates large contributions of money—and there are definitely US$1 billion DAF accounts that are subject to no payout requirements,” Madoff says. 

Another problem is that private foundations can meet their annual 5% payout requirement by distributing funds to a DAF instead of directly to an operating charity. 

The U.S. provides “significant tax benefits,” Madoff says, “but we only get them halfway there, and the [law isn’t] doing much to get the money all the way to charities.”

………

This coalition is asking Congress and the incoming presidential administration of Joseph Biden, for “emergency charitable stimulus” legislation to require private foundations to boost their annual payout rate to 10%, and to require a mandatory payout rate of 10% for DAFs, for three years, specifically to facilitate more dollars reaching charities hit by the Covid-19 crisis. According to the Independent Sector, an organization that supports the nonprofit sector, 7% of nonprofits in the U.S. are expected to close because of the pandemic.

………

“When tax benefits only apply to 10% of the population, then we are amplifying the voices of the wealthiest,” Madoff says. “It’s really important that tax benefits be available for all taxpayers.” 

……… 

The group also believes Congress should ensure that private foundations can’t meet their payout obligations by transferring funds to a DAF, or by paying family member salaries (which is currently allowed by law).

For DAFs, the group is recommending that all funds in these vehicles are distributed within 15 years. They are also recommending an “aligned benefit rule,” that would allow a donor to get a break on capital gains taxes and estate and gift taxes upon funding their DAF, but would withhold the income-tax deduction until distributions are made to a public charity.

Modern charity increasingly serves as an employment guarantee to the Professional Managerial Class (PMC), which explains, for example, why college has become so expensive.

It all goes to special assistants to the senior VP in charge of filling out useless paperwork.

Endless number of people sending reports and creating data that never gets used for anything useful.

It’s all Dave Graeber’s Bullsh%$ Jobs.

*Even today, total turnover is probably less than $½ million a year, and it has no employees.
Or, as I call them, the Democratic Party establishment’s (There is no Democratic Party establishment) base.

Audit the Whole Industry

Once again, it appears that charter schools are once again misusing public funds:

Primavera online charter school, like many businesses this spring, sought help from the federal Paycheck Protection Program to weather the economic disruption of the COVID-19 pandemic.

The Chandler, Arizona, school received a PPP loan of nearly $2.2 million, the largest forgivable loan among the 132 Arizona charter schools that obtained them.

But Primavera’s loan appears to have been more of a bonus than a lifeline.

The school, which like all Arizona public schools didn’t lose state funding because of the pandemic, ended its fiscal year on June 30 with $8.8 million in the bank – almost double the annual payroll costs for its 85 teachers, records show.

The school also shipped $10 million to its lone shareholder: StrongMind, an affiliated company owned by Primavera’s founder and former CEO Damian Creamer.

………

An Arizona Republic review of more than 100 charter school financial records, audits and federal Small Business Administration documents found the overwhelming majority of the Arizona charter schools that obtained PPP loans didn’t need the money.

………

“The PPP loans are taxpayer dollars intended to help the needy, not the greedy,” [charter school auditor Jason] Todd said.

………

The Republic found that most of the charter schools getting PPP funds padded their cash balances (savings accounts), and a few for-profit charter operations, like Primavera, gave money away to shareholders that matched or exceeded their PPP loan amounts.

………

A 2018 Republic investigation found the state’s charter school industry, which gets more than $1 billion annually from the state general fund, has produced several multi-millionaires through self-dealing and lax oversight.

Creamer is among the prominent figures who’ve made millions of dollars operating Arizona charter schools. His online alternative school boasts more than 20,000 full- and part-time students. Primavera paid Creamer $10.1 million in 2017 and 2018.

………

“The Trump administration’s faulty design and mismanagement of the Paycheck Protection Program let thousands of mom-and-pop businesses slip through the cracks without adequate aid while charter schools cashed in,” [president of Accountable Us, Kyle] Herrig said.

Herrig’s organization said that the PPP loans given to Creamer’s interests “merit further investigation” because his “businesses seem to have fared well throughout the pandemic.”

………

Arizona Schools Superintendent Kathy Hoffman, who also is a member of the Charter Board, said she was astonished by The Republic’s findings.

“It saddens me those dollars are not going to students,” she said. “It’s very excessive. These dollars should be going where they are needed most, and that’s the students and instructional needs.”

Corruption is a feature and not a bug for charter schools. 

Destroying the teachers’ unions, and stealing public money for private profiteers are the raison d’être of the charter school movement.

That is why the audits.   If fraud can happen, it is happening.

Yeah, Right

The American Hospital Association wants the Centers for Medicare & Medicaid Services (CMS) to suspend its price transparency regulations,  because it’s too burdensome.

Bullsh%$.

They just don’t want to be held to account for their deliberately opaque pricing structures and policies.

If there is one thing that hospitals get right, it’s how to charge people as much as is humanly possible:

Dive Brief:

  • The American Hospital Association filed an emergency motion for a stay, which means it’s seeking to stop the government from enforcing its price transparency rule, set to go into effect Jan. 1 if the law is not struck down in federal appeals court.
  • The AHA is still awaiting a final verdict from the court after the three-judge panel heard oral arguments in October. In the meantime, the group is hoping to bar the law from going into effect as hospitals are overwhelmed by the rollout of the coronavirus vaccines and record-high COVID-19 caseloads.
  • Emergency relief is warranted, AHA said, because CMS will start conducting audits of price transparency compliance and those not following the regulations face financial penalties, the parties said in a Monday filing.

Dive Insight:

A CMS bulletin from last Friday led AHA to file the emergency request with the federal appeals court. The notice informed providers that CMS is prepared to “audit a sample of hospitals for compliance starting in January” and those providers found in violation will face civil monetary penalties.

AHA argues that halting the policy is necessary given the “exceptional circumstances” the industry faces.

………

Meanwhile, the hospital lobby is still waiting on the ruling from federal appeals court. But after listening to oral arguments back in October, industry experts don’t feel AHA will prevail in the case, which is seeking to knock down the law.

The three-judge panel seemed highly skeptical that it is unlawful for the government to compel providers to publish the negotiated rates they reach with insurers for services provided to patients.

The hospitals can literally turn over pricing data at the press of a button, but the hospitals want to continue to profit over secrecy, and they are hoping to put one over on the incoming administration.

Speaking of the Silly Season

Trump has vetoed the Defense Authorization bill, because he wants to keep Confederate names on military bases and because Twitter has been mean to him.

No, this is not The Onion.

Trump is demanding a repeal of section 230 of the Communications Decency Act, and he is objecting to changing the names of military bases named after traitors:

President Trump made good Wednesday on his repeated threats to veto a $741 billion defense spending bill, setting up what is expected to be the first successful veto override of his presidency during his last weeks in office.

………

The House and Senate each passed the defense bill earlier this month with strong veto-proof majorities, rejecting Trump’s insistence that it be changed to meet his oftentimes shifting demands. Both chambers are expected to sustain the two-thirds majorities needed to override the president’s veto, despite pledges from House Minority Leader Kevin McCarthy (R-Calif.) and other stalwart Trump allies not to cross the president’s wishes.

In his veto message, Trump complained that the legislation includes “provisions that fail to respect our veterans’ and military’s history” — a seeming reference to instructions that the Defense Department change the names of installations commemorating Confederate leaders. He also scorned the bill as a “ ‘gift’ to China and Russia,” slammed the bill for restricting his ability to draw down the presence of U.S. troops in certain foreign outposts, and excoriated lawmakers for failing to include an unrelated repeal of a law granting liability protections to technology companies that Trump has accused, without significant evidence, of anti-conservative bias.

………

Trump and his advisers have repeatedly objected to various provisions in the behemoth defense legislation, including its mandate to the Pentagon to rename the 10 military installations bearing titles that honor the Confederacy and the bill’s limitations on reducing troop levels in Germany, South Korea and Afghanistan.

Trump’s insistence that the defense bill become a vehicle for a repeal of Section 230 of the Communications Decency Act, which protects companies from bearing legal responsibility for content third parties post on their websites, became a breaking point between the president and congressional Republicans during the final days of negotiations over the legislation. Trump views its repeal as a way to punish social media companies like Facebook, Google and Twitter.

It’s stupid and petty, but Trump does Stupid and Petty better than anyone.

Today in Dysfunctional Ecological Policies

We have The Nature Conservancy selling carbon offsets.

This is why cap and trade and carbon offsets are a bad idea.

Our society is simply too corrupt for this.

We need the heavy hand of taxes, and the blunt force of the state without ANY opportunity for profit:

At first glance, big corporations appear to be protecting great swaths of U.S. forests in the fight against climate change.

JPMorgan Chase & Co. has paid almost $1 million to preserve forestland in eastern Pennsylvania.

Forty miles away, Walt Disney Co. has spent hundreds of thousands to keep the city of Bethlehem, Pa., from aggressively harvesting a forest that surrounds its reservoirs.

Across the state line in New York, investment giant BlackRock Inc. has paid thousands to the city of Albany to refrain from cutting trees around its reservoirs.

JPMorgan, Disney, and BlackRock tout these projects as an important mechanism for slashing their own large carbon footprints. By funding the preservation of carbon-absorbing forests, the companies say, they’re offsetting the carbon-producing impact of their global operations. But in all of those cases, the land was never threatened; the trees were already part of well-preserved forests.

………

The Nature Conservancy recruits landowners and enrolls its own well-protected properties in carbon-offset projects, which generate credits that give big companies an inexpensive way to claim large emissions reductions. In these transactions, each metric ton of reduced emissions is represented by a financial instrument known as a carbon offset. The corporations buy the offsets, with the money flowing to the landowners and the Conservancy. The corporate buyers then use those credits to subtract an equivalent amount of emissions from their own ledgers.

………

Few have jumped into this growing market with as much zeal as the Nature Conservancy, which was founded 69 years ago by a small group of ecologists seeking to preserve the last unspoiled lands in the U.S. In the seven decades since, the nonprofit in Arlington, Va., has grown into an environmental juggernaut, protecting more than 125 million acres. Last year its revenue was $932 million, which eclipsed the combined budgets of the country’s next three largest environmental nonprofits.

Now, with an increasing number of companies looking for creative ways to cut emissions, the nonprofit has accelerated its work on carbon projects. But a review of hundreds of pages of documents underpinning those projects and interviews with a half-dozen participating landowners indicate that the Conservancy is often preserving forested lands that don’t need defending.

You see something similar in China, where they have built hydroelectric dams in remote regions, where they will never deliver power, so that offsets could be purchased by European companies for cap and trade.

We need real change, and financializing strategies for anthropogenic climate change is criminogenic.

We will not survive the fraud.

Boeing, AGAIN

Now it appears that Boeing pressured FAA test pilots during the review of the 737 MAX fixes.

Now is not the time for more rigorous regulatory action.

Now is the time for criminal prosecutions, and perp walks for senior Boeing executives:

Senate investigators concluded that Boeing “inappropriately coached” Federal Aviation Administration’s (FAA) pilots for a simulator test last year conducted during the effort to test and recertify the company’s 737 MAX as safe to fly again after two deadly crashes.

The conclusion is contained in a report issued Friday by the Republican majority in the Senate Commerce Committee on an investigation that was launched after the two MAX crashes but that ultimately broadened to unearth numerous safety problems across the FAA.

A whistleblower who served as an FAA aviation safety inspector told Senate investigators that Boeing officials prompted the FAA test pilots before the test, which was designed to test pilot reactions to an emergency, to be ready to respond.

The FAA inspector alleged the Boeing official told the pilots, “Remember, get right on that pickle switch” — meaning an electrical thumb switch on the control column used to pitch up the jet’s nose.

Even with that prompt, one of the pilots took 16 seconds to respond, four times longer than Boeing and the FAA had assumed.

According to the report, the investigators asked to interview that pilot, but a Transportation department lawyer prohibited the pilot from answering questions about the incident.

Senior members of the FAA need to be brought into court in handcuffs as well.

Of Course They Did

The Federal Reserve has allowed banks to start issuing dividends and make stock buybacks again, because, after all, how can our financial system work without the masters of capitalism that we just bailed out (AGAIN!) having their damn stock options vest.

Financial stability is secondary to making sure that Wall Street CEOs get the obscene bonuses:

The Federal Reserve has given America’s most profitable banks the green light to resume share buybacks for the first quarter of next year, even though it found that the country’s biggest lenders could face pandemic-related loan losses of more than $600bn.

The US central bank’s decision to lift a six-month ban on buybacks followed months of public protests by profitable lenders, including Morgan Stanley and JPMorgan Chase, several of whom immediately signalled their intention to restart purchases.

Many analysts and investors expected the Fed to hold firm to its restrictions, as the US continues to suffer record coronavirus cases and deaths and lawmakers struggle to agree stimulus measures to boost the economy through another round of shutdowns.

………

Lael Brainard was the only one of the Fed’s five-person board of governors to vote against freeing banks up to return more to shareholders.

“Today’s action nearly doubles the amount of capital permitted to be paid out relative to last quarter,” she said in a statement. “Prudence would call for more modest payouts to preserve lending to households and borrowers during an exceptionally challenging winter.”

Just a small reminder:  The Federal Reserve does not work for the American people, or even for the benefit of the financial system.  It works for the bankers.

We are going to buy out these rat-f%$#s again sooner rather than later.

Finally,

The Federal Trade Commission and 47 states have filed a lawsuit to break up Facebook.

This is long overdue.

As an aside, at the top of the list should be the replacement of all the class B shares of Facebook, the ones with special voting rights that allow Zuckerberg to maintain complete control of the company, with class A shares, at least on a temporary basis.

Mark Zuckerberg’s 58% of the vote would become 5.8% of the vote, and the slightly less psychopathic “adults in the room” could deal with take charge.

A breakup will take years and millions of dollars. Changing the class of shares could be done almost instantly, and the the cost of this would be minimal.

The lawsuit is calling for Instagram and WhatsApp to be spun out from Facebook:

The Federal Trade Commission and a coalition of 47 states attorneys general today filed a pair of long-awaited antitrust suits against Facebook, alleging that the company abused its power in the marketplace to neutralize competitors through acquisitions and prevent anyone else from presenting a more privacy-friendly alternative to consumers.

“By using its vast troves of data and money, Facebook has quashed or hindered what the company perceived as potential threats,” New York Attorney General Letitia James, who led the states’ effort, said. “In an effort to maintain its market dominance, Facebook has employed a strategy to impede competing services.”

The lawsuit brought by the states (PDF) asks the court to prohibit Facebook from engaging in “any anticompetitive conduct” or practice going forward. That includes a request for Facebook to be blocked from any acquisitions valued at greater than $10 million without first getting permission from the states.

The states also explicitly ask that Facebook’s acquisitions of Instagram and WhatsApp be found in violation of the Clayton Act and that Facebook be required to divest those businesses if necessary “to restore competitive conditions” in the marketplace.

The suit filed by the FTC (PDF) also calls for Facebook to face more scrutiny when it acquires other firms and to be broken up if necessary to restore competition in the marketplace.

………

As we’ve explained before, antitrust law isn’t just about being a literal monopoly or even about being the biggest player in a sector. Instead, it’s about power—how much you have, and what you do with it. Antitrust investigators basically want to answer the question: did you become the biggest naturally, or did you cheat along the way?

In that framing, then, Facebook stands accused of cheating to beat out any potential competition—a lot.

………

Emails obtained by Congress earlier this year as part of its investigation into Big Tech’s outsized power revealed that Zuckerberg explicitly thought of Instagram as a threat before acquiring it.

If apps such as Instagram were allowed to grow, Zuckerberg wrote in a 2012 email, it “could be very disruptive” to Facebook, and he added that an acquisition “will give us a year or more to integrate their dynamics before anyone can get to their scale again.”

………

The FTC and the states both launched their antitrust investigations back in the long-long ago of 2019, as did Congress, European Union competition regulators, and regulators from several other nations. The Congressional report, published in October, now seems like a harbinger of today’s suit: the House committee found that Facebook (as well as Apple, Google, and Amazon) exerts monopoly power in the marketplace and should be forced to split up.

It’s incredibly rare in the modern era for the courts actually to force a company to break up for antitrust reasons. The last major breakup came more than 35 years ago, when AT&T finally split up in to the seven regional “Baby Bells” after a decade-long legal fight with the Justice Department. The court initially ordered a breakup in the Microsoft antitrust case that began in the late 1990s, but Microsoft appealed the ruling and, in 2001, reached a settlement with the DOJ that left its business intact.

Some of Facebook’s app updates from earlier this year seem to have been designed with a potential antitrust suit in mind: the company in late 2019 began a plan to integrate WhatsApp, Facebook Messenger, and Instagram Direct messaging into a single service. The integration between Instagram’s and Facebook’s messaging services began in August; when all three platforms are combined, Facebook will reach an estimated 3.3 billion users on a single messaging service.

Which is, in and of itself, evidence of bad faith and monopolistic behavior.

………

“The claims being reported—serial predatory acquisition and withholding interoperability—set up a strong case,” said Charlotte Slaiman, competition policy director at Public Knowledge. “This action reflects a lot of work from advocates, experts, and enforcement officials to build the case, first that Facebook was deserving of scrutiny, and then that the company really has run afoul of our antitrust laws. To fix the harms to competition, we need to see changes to Facebook’s business and the company should be required to open up its network to competitors so that users are not locked in.”

Whatever the plaintiffs are trying to achieve, they have to be as disruptive as possible to Facebook, because otherwise, they are going to pull crap that makes IBM’s shenanigans in its antitrust defense look like tiddly winks.

*At one point, IBM literally submitted trailer loads of documents as evidence as a delaying tactic.  The lawsuit spanned 3 decades.

Arthur Anderson Squared

It increasingly appears that accounting firm Ernst & Young covered up fraud by the defunct German electronic payments firm Wirecard.

Here’s hoping that regulators go medieval on their ass:

Germany’s audit watchdog suspects EY partners knew they were issuing a “factually inaccurate” audit for Wirecard in 2017, according to four people familiar with the matter.

Apas, the Berlin-based audit oversight body, has reported EY to prosecutors, telling them that the firm may have acted criminally during its work for Wirecard, which collapsed into insolvency earlier this year in one of Europe’s largest fraud scandals.

Wirecard, a once high-flying German payments company, was audited by EY for more than a decade and until 2019 always received unqualified audits.

However, in 2017 EY was just days away from denying Wirecard the crucial all-clear, according to documents reviewed by Apas. On March 29 of that year EY warned Wirecard that a qualified audit was imminent and shared a draft version of a qualified opinion with its client, people familiar with the documents told the FT.

………

Just days later, the auditors changed their minds. On April 5, they signed an audit opinion that stated: “Our audit has not led to any reservations.”

Apas found that it was unreasonable to believe that the issues could have been resolved within a few days, according to people familiar with the matter. The watchdog told prosecutors that therefore EY’s unqualified audit was “factually inaccurate”.

Last week the EY auditing partners, Andreas Loetscher and Martin Dahmen told MPs that they were being probed by Apas over their work for Wirecard and declined to give testimony to the parliamentary inquiry commission into Wirecard.

………

Munich prosecutors are evaluating the evidence sent by Apas and have not decided whether to open a criminal investigation of EY partners. Under German law, auditors found guilty of such misconduct can be punished with up to three years in jail.

I’m rooting for Munich prosecutors to do the right thing here, which, in light of prosecutions in Munich, feels a bit strange to me.

Prosecutions, even without convictions serve as a deterrent, and convictions, even with relative short sentences are a real deterrent.