Economic Stories of Relevance in Today's World -- October 2, 2011

Bob Chapman - The International Forecaster - October 1, 2011 - Remember that $400 billion increase in debt recently enacted? Well it is gone and it only took six weeks. Washington has quite a talent for spending debt, which is other people’s money. Not satisfied the Senate, as we reported, added in another $500 billion. The media covered up the increase in debt by making a major issue of the President’s speech concerning jobs. The enabling super committee is at work cutting $2 trillion from the budget. This supposedly will be concluded by November. These cuts were not designed as such, but they will help slow any recovery, as will any tax increase. As the CBO says, the wrong thing at the wrong time. Even with cuts and tax increases about half of federal government spending will be borrowed. Worse yet, most of any cuts will come from Social Security and Medicare, which are not entitlements, but are benefits the public paid for. Government wants to play Robin Hood, take from those who sacrificed and paid for the benefits and give to those who paid nothing into the system.


Health Insurance Costs Rising Sharply This Year, Study Shows - New York Times - Reed Abelson - September 27, 2011 - The cost of health insurance for many Americans this year climbed more sharply than in previous years, outstripping any growth in workers’ wages and adding more uncertainty about the pace of rising medical costs...    A new study by the Kaiser Family Foundation, a nonprofit research group that tracks employer-sponsored health insurance on a yearly basis, shows that the average annual premium for family coverage through an employer reached $15,073 in 2011, an increase of 9 percent over the previous year...   The Kaiser survey includes both big and small companies using employer-sponsored coverage representing about 60 percent of all insured Americans of working age. The annual growth in premiums, according to the survey, had slowed in recent years to 5 percent, rising just 3 percent in 2010, in part due to the lingering effects of the recession. After years of double-digit increases, the moderation was a welcome relief...   Obama administration officials argue that new regulations are forcing insurers to be more circumspect about raising rates. Insurers seeking to raise premiums next year by more than the 10 percent maximum will have to publicly justify their rate increases, and the new law requires the companies to spend at least 80 cents of every dollar they collect in premiums on medical care. If they end up taking too much in premiums, they will have to refund the money to consumers...



The rich are different - and not in a good way, studies suggest - MSNBC - August 10, 2011 - Psychologist and social scientist Dacher Keltner says the rich really are different, and not in a good way: Their life experience makes them less empathetic, less altruistic, and generally more selfish. In fact, he says, the philosophical battle over economics, taxes, debt ceilings and defaults that are now roiling the stock market is partly rooted in an upper class "ideology of self-interest." "We have now done 12 separate studies measuring empathy in every way imaginable, social behavior in every way, and some work on compassion and it's the same story," he said. "Lower class people just show more empathy, more prosocial behavior, more compassion, no matter how you look at it." In an academic version of a Depression-era Frank Capra movie, Keltner and co-authors of an article called "Social Class as Culture: The Convergence of Resources and Rank in the Social Realm," published this week in the journal Current Directions in Psychological Science, argue that "upper-class rank perceptions trigger a focus away from the context toward the self…." In other words, rich people are more likely to think about themselves. "They think that economic success and political outcomes, and personal outcomes, have to do with individual behavior, a good work ethic," said Keltner, a professor of psychology at the University of California, Berkeley. Because the rich gloss over the ways family connections, money and education helped, they come to denigrate the role of government and vigorously oppose taxes to fund it. "I will quote from the Tea Party hero Ayn Rand: "'It is the morality of altruism that men have to reject,'" he said. Whether or not Keltner is right, there certainly is a "let them cake" vibe in the air. Last week The New York Times reported on booming sales of luxury goods, with stores keeping waiting lists for $9,000 coats and the former chairman of Saks saying, "If a designer shoe goes up from $800 to $860, who notices?"...

Brutal bank crackdown but crooks go free - Commentary: ‘Occupy Wall Street’ harassed while bankers go free - MarketWatch - David Weidner - September 27, 2011 - If you want to know how a nation supposedly by and for the people has become uprooted, one only needs to see how common young people, who are suffering so badly in this recession, were humiliated further by trying to exercise their given right to peacefully protest.  If this is justice, I’d rather break the law.   The bankers who brought us this mess not only walk free, they drive free in Bentleys paid for by money looted through toxic mortgages, trading debacles and derivative madness. Regulators, prosecutors and an administration patsy to big finance do nothing except hand out $1.3 trillion in bailout cash and guarantees.  Consider how sick this narrative has become. A counter protest was planned in which bankers and traders said they would douse the “dirty hippies” of Occupy Wall Street with champagne, to give them “a bath.” Watch YouTube video of police arresting protesters .   These are the people police are protecting.  The ones outraged by greed run amok, reckless behavior and fraud are getting wrestled to the pavement and arrested...    Brian Moynihan, the chief executive of Bank of America Corp. BAC -3.62% , got $10 million in stock and salary. Thomas Montag, Moynihan’s lieutenant actually got more, $14.3 million. Their bank has lost $14 billion during the last year. Shareholders — that’s you moms and pops, widows and orphans with 401(k)s — are holding the bag....    

That kid with the bandana who was thrown to the ground? Could have been Jamie Dimon of J.P. Morgan Chase & Co. JPM -4.05%  or Joe Cassano, who ran American International Group Inc.’s AIG -4.11%  cowboy outfit, the financial products unit, that caused $60 billion in losses.  Maybe those protesters were planning a new mortgage-backed security doomed to fail.   This could all be just one big mistake.    After all, this country wasn’t founded to serve a bunch of elitists. Government wasn’t intended to be bought and paid for by financial interests. Our nation’s economy wasn’t supposed to be built on fraud and abuse. If that came to pass, you’d expect people to be angry. You’d expect people to get roughed up. You’d expect a revolution.    And you’d expect the system would fight like hell to keep it down.



Wall Street Vampires - Citizen Vox - Rachel Lewis - September 24, 2011 -  Vampires. Thieves of the night. As sunlight is said to be deadly to them, these mythical creatures venture out to drain the blood from their innocent victims only when it is dark outside.  Judging by the reactions of Wall Street to Public Citizen’s attempt to shine a light on their industry, it seems sunlight kills more than vampires though. Lady Liberty can’t help but wonder if the Goldman Sachs, J.P. Morgan et al crew are trying to audition for the next season of True Blood . . . or, more likely, they have something to hide.   Remember that big gas price spike back in 2008? Well, Tyson Slocum, director of Public Citizen’s Energy Program, didn’t buy the reasons offered for it then, and he didn’t buy it this spring either when he spoke with then-MSNBC’s Cenk Uygur for a segment properly entitled, “Rigged Game.” Uygur’s first question, ”Is it possible that speculators are driving up the gas prices?” Slocum’s reply–”Absolutely.” At the time President Barack Obama, responding to the media frenzy over gas prices, announced the formation of a task force to look into what was driving the increase. Slocum explained to me that this was many months ago and so far, “not a peep” has been heard from this investigative team.  Fast-forward a few months. Sen. Bernie Sanders (I-Vt.) managed to use his congressional powers to get a hold of a set of three-year old trading documents from one of the days leading up to the 2008 $144-per-barrel oil spike, which coincided with the exorbitant gas prices we all remember seeing at the pump then. Sanders, aware of Slocum’s expertise, forwarded these documents to Slocum and to the Wall Street Journal, which reveled at what it considered a ”rare glimpse of the secretive world of oil trading, where buying and selling often takes place away from public markets.” Soon thereafter, all hell brook loose . . .

Wall Street Donated $41 Million to Supercommittee Members - Truthout - Mike Ludwig - September 26, 2011 - "Wall Street bought the deregulation that led to our economic collapse and the American public has paid the price," said Nick Nyhart, president and CEO of Public Campaign, the group that co-authored the report. "The supercommittee should not give Wall Street and big banks another free ride because of their campaign cash." Congressional veterans Sen. John Kerry (D-Massachusetts) and Sen. Max Baucus (D-Montana) top the list, having each received about $6 million in contributions from the financial sector during the course of their careers in Washington. The top GOP recipient on the committee, Sen. Jon Kyl (R-Arizona), has received $5.2 million from the sector.
Donations from the political action committees and executives of Bank of America, JPMorgan Chase and Wells Fargo - banks that received $95 billion in federal bailout funds - account for one-fifth of the $4.3 million in campaign cash donated by commercial banking interests to the 12 supercommittee members. Supercommittee co-chair Rep. Jeb Hensarling (R-Texas) received the most from the big banks. Bank of America, JP Morgan Chase and Wells Fargo have given Hensarling a total of $188,962 during his Congressional career. Hensarling also serves as the vice chair of the House Financial Services Committee and has received a total of $3.9 million from financial interests. The report also identifies 27 former or current aides to supercommittee members who have worked as lobbyists for the financial industry. Manny Rossman, for example, was Kyl's chief of staff before landing a position at the Breaux Lott Leadership Group, where his clients include Citigroup, Goldman Sachs and Prudential Financial....


How Attorney General Eric Holder Colluded With Bank Of America To Destroy Wikileaks And Silence Unfriendly Journalists, Including Glenn Greenwald - The Daily Bail - When we wrote a few weeks ago about Eric Holder, Wikileaks and Bank of America, we focused on the irony of the U.S. Attorney General threatening to prosecute an organization (Wikileaks) that possibly holds the very information on which he might draw up his very first indictment of a major bank or Wall Street executive.

Why hasn't Eric Holder asked to see the evidence, which Wikileaks claims to have, that executives at one of our largest banks may have committed serious crimes?

Let's be honest, Holder doesn't really give a rip about financial crimes, but the media should at least be asking him why he doesn't want to see the evidence.  We know he'd love to get his hands on Julian Assange's hard drive -- why doesn't he want to see Brian Moynihan's (or Ken Lewis's)? 

For some reason, Holder and the rest of the Obama administration would rather endanger our Constitutional rights to due process and a free press by persecuting journalists on specious charges, than to actually do their job and enforce the law.

These are valid questions -- ones for which we really didn't have good answers other than the usual corruption, cowardice and ineptitude when it comes to prosecuting large financial institutions.
However, new information has surfaced that shines a whole new light on the situation.  By now, most of you have heard about Bank of America's plans to go after Wikileaks and Glenn Greenwald.  Until they were caught, Bank of America was working with a group of law and cyber security firms to draw up plans for destroying Wikileaks, the hacker group Anonymous, as well as Wikileaks supporters in the media (like Greenwald)....      Ironically, the hacker group Anonymous turned the tables on Bank of America's hit team and captured a cache of emails that all but prove the Justice Department's direct involvement.  Here is an email from one of the firms, admitting that it was the Department of Justice that set the ball rolling:


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