BofA debit card fees

http://www.kqed.org/a/forum/R201110140900

Like with the Netflix-Qwikster debacle, depositors are starting to fight back against the fee-happy megabanks by divesting in favor of more honest institutions and credit unions. At least Netflix got humble (after seeing their stock get owned) and is trying to make it up to customers, but banks don't give a crap. Problem is, deregulation has created financial behemoths whose revenue streams don't really depend on small-potatoes depositors and consumer loans anymore. They're investment banks and brokerage houses now, and don't really need our money to make money (assuming they survive the toxic assets mess and DoJ probes). Actually grandma depositor is a nightmare customer for banks. Her account has a paltry $5K, she doesn't trade stocks, and she eats up customer service resources by calling and visiting each week. If they can't bleed her with shady card, overdraft, and other account fees, then what's her use to them?

This could also possibly explain why banks are so recalcitrant to modify mortgages or issue new loans, despite collectively sitting on $1T of cash. As M's link showed, banks can make more money (with less headache) by loaning gov't $ back to them, which to me looks a lot like arbitrage at the expense of the US taxpayer. For home loans, banks are getting investigated and fined for not following foreclosure protocol and kicking people out too fast. Obama urged banks to restructure loans, but no incentives were in place so the banks mostly did nothing. Because US housing is suffering from an over-supply of vacant homes, banks are preferring to demolish them (even paying out their $ to subcontractors to do it).

http://www.inquisitr.com/150096/u-s-banks-go-on-bulldozer-frenzy-destroy-thousands-of-foreclosed-homes/

I find this strange because they're taking a loss on homes when they could still be earning modest interest by keeping the customer in it. Banks aren't realtors, and I guess they don't want to deal with the paperwork and pains of maintaining/fixing up properties. So why not keep a family under the roof? Unless they're broke and jobless, something could be worked out. But instead they chose the foreclosure path, which is terribly traumatic on the mortgage holder and community, and costly to banks. But I guess they don't care since home loans are not a big chunk of profits anymore. Some Bay Area community and religious groups are appalled at this (they have spent countless hours trying to negotiate with banks on behalf of distressed homeowners), so now they're protesting with their wallets and closing their million-dollar BofA/WF accounts in favor of local CUs. But unfortunately that is a drop in the bucket to them. Though if more of us do it, it will start to make a difference.

The BofA debit card fees issue is interesting. I think Dick Durbin sponsored a bill to cap debit card transaction fees on retailers to 21 cents, down from the previous 44 cents. Retailers were complaining about lagging sales, as they pass these fees onto consumers in the form of higher prices. Depending on how you define and amortize costs, a debit card transaction costs BofA 5-26 cents. So assuming the truth is at the median of 16 cents, their profit margin was almost 300% pre-legislation, and is now still a healthy 31%. So all their pissing and moaning about losing $2B in revenues due to this law is probably bogus. Say it was true; is the $5 debit card monthly fee justified? If many of BofA's 57M consumer/small-biz accounts use debit cards and incur the fee, that would net them ~$2.5B! So they're not only recouping the dubious $2B in "losses", but coming out ahead! Like I said, for every shady revenue stream we close, another one springs up, and may be worse. It will never end, and we're always playing catch up. But I wonder if we'll see lower prices from retailers now that they're saving about half on debit card fees. I have my doubts, but it is a volume-sales industry with super-thin margins. They need us to buy more. 

We are partly to blame for all of this. Shareholders are putting so much pressure on public firms to show growth and good returns that the execs almost have no choice but to go all-out on short term profit taking. It's partly their greed, but also partly job security and competition. Of course institutional investors like pensions and hedge funds are the biggest influences. I don't think me with my 200 shares of BofA (what a crappy decision on my part in 2005) are going to change corporate behavior. But if we want firms to be less greedy, we have to start being less greedy ourselves by accepting lower rates of return.

Occupy Wall Street

http://wearethe99percent.tumblr.com/

http://news.yahoo.com/blogs/lookout/occupy-wall-street-isn-t-wall-street-191808167.html

What do you think about the recent protests? Biden likened the OWS movement to the liberal version of the Tea Party. I don't think that's really accurate, since the TP is well organized, corporate-funded, and represented by numerous politicians/interest groups. But I guess the TP believes that spendthrift, meddling gov't is stifling the economy and causing our problems, and OWS believes that Wall St. and its political agents are hoarding wealth and making life harder for the other 99%.

I haven't been following the MSM coverage of the protests, but I would surmise that it hasn't been as flattering as that of the TP. The TP are portrayed as "real Americans" and patriots trying to wrest the country back from an ever expanding, profligate gov't. But OWS may be seen as lazy, whining redistributionists who are jealous of the success of the rich. Predictably, the GOP hopefuls (who are all quite rich) said as much at the recent debate.

Congress has a TP caucus and their agenda has pretty much hijacked a lot of US fiscal and economic policy. I don't hear any leaders on the left rallying to the OWS's message and calling for change. Sure, they pay them token lip service now that the protests have survived a month, but I think the Dems see them more as a liability than an ally, or even a political opportunity. I know OWS is younger and less widespread/organized than the TP, so it's not fair to directly compare their exploits. But they claim that their aim is not to get changes through, but just to make more Americans aware of what parties are making life more unfair for them, in their opinions. That being said, even if they are really successful in spreading awareness, where do they go from there?

The TP wants to take the WH, Congress, and make major changes to US laws and society. For better or worse, it's a grand vision that inspires interest and donations (plus they have the religion lever at their disposal). What about OWS? Will there be enough middle-class outrage to oust the corporate stooges in Washington, get the Dems to start acting like Dems, and/or elect fresh faces who will actually fight for regular Americans? I'm skeptical. After all we went through in 2008 (and where was OWS then?), we just won't/can't address the 2 Americas issues, so it's more or less business-as-usual again. If the Great Recession wasn't enough to get us to wake up, what hope is there? Yes I understand that it took FDR almost a decade to enact financial reforms and jump-start the economy (mostly thanks to WWII), but in today's information age, change should be quicker. Heck, just a month after 9/11 we started to wage a world war on terror.

OWS are definitely not like the 1960's movements, and are a lot more pragmatic and bourgeois actually (not necessarily a bad thing): they have beef with soaring costs, no jobs, deregulation, and executive compensation, but they probably don't want to blow up the system. But those are Band-Aid fixes. Even if our leaders could cooperate and effectively address half of those issues, it would be a great accomplishment but gross inequalities would persist. I know we'll probably never return to the 1940s-60s when firms were less influential and the middle class controlled the highest % of US wealth in our history (global conditions are just way different now). But as long as the unfair structure persists, for every wrong we right, the elites will just find new and creative ways to keep pecking at the rest. If it's not tuition or real estate, it will be something else. It's a rigged game. So maybe blowing up the system is the only way, since clearly corporate America and its politicians aren't going to sober up on their own. Too much loot and ego are at stake. I am sure the Cubans, French, Russians, etc. didn't want to have to rise up violently, but things got so bad they didn't have a choice. Unfortunately we still have a choice in 2011, or at least we think we do.

So I commend OWS for their personal sacrifices and making a public statement for what they believe is right, even if most of their peers are too uncaring and cowardly to do the same (myself included). They have changed history, but so far just slightly. Now clever and benevolent progressive strategists must figure out how to harness their energy and turn it into some concrete good for America. Nothing wins over cynics and doubters like results that benefit them, and failing to deliver will only further undermine their credibility. At least they're honest and didn't oversell themselves like Obama (or the TP for that matter), but unless they have something to show at the end of the day, they'll soon be forgotten - and that is what the establishment is expecting. Does anyone still talk about the huge immigration marches and anti-war demonstrations during the Bush years? No, because they didn't catalyze any measurable change (or the change was for the worse). I know they meant well and gave their all, but it's a tough crowd out there. Like Plato's cave allegory, the philosopher had a hell of a time trying to educate and emancipate the prisoners.

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But I just wonder how that will convince the "silent majority" of Americans in the middle to support the people movement and oppose big banks? They probably already do to a certain extent, but they need to see something tangible before they pull their deposits out of WF. Because that is the only way to hurt a giant like WF: incite a huge run or stock dump, which may or may not be legal. Though to be honest, WF behaved rather responsibly during the housing bubble compared to their peers back east. BofA on the other hand...

The West boycotted South Africa because of Apartheid, and that eventually brought the regime down. Banks need a reason to treat us better. If OWS somehow can organize boycotts or sell-offs, then maybe Wall St. and DC will pay more attention. But a sit-in or picket line may not be that effective. It's a start, but unfortunately the public needs more. The Cal students have been bravely doing that for years, and still the Regents don't give a crap and keep raising fees.

In addition to bank boycotts, we should try to discourage people from entering banking, speculation, and finance. We have enough of those assholes already, and not enough good teachers, nurses, engineers, etc. As Krugman said, when he was in grad school, only the "losers" went into banking because it was boring and not innovative. But now banking has of course become really exciting and innovative, because of the relaxed laws. Many of America's top talent want to enter private equity and finance, partly because the compensation, sexiness, and power are so great.

We need to reverse this trend, either by changing school curricula to only teach more responsible, ethical finance, enacting laws to cap Wall St. pay (or tax their income & cap. gains more), and/or compartmentalizing the financial system the way it was supposed to be under Glass-Steagall. Let the SEC be the SEC (though I doubt that will happen). Too Big To Fail is a bigger problem now vs. 2007, and all the top economists and progressive politicians see it. Heck the conservatives at AEI and Heritage probably do too, but won't speak up. The Great Recession was just a selection process, with the survivors emerging stronger than ever (apart from BofA and Morgan Stanley recently), like abusing antibiotics and creating disease-resistant microbes. Risk-taking bankers and their firms should be socially ostracized, like pimps and ambulance-chasing lawyers. Once it's not as comfortable to work on Wall St., we may see a sea change. As usual, humans respond best to carrots and sticks.

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http://marketplace.publicradio.org/display/web/2011/10/12/pm-oped-stop-wall-street-recruitment-on-college-campuses/

2 Stanford students just wrote a great piece in the school's paper about what we've been discussing (I swear I didn't rip off their idea in my last email). They're tired of big banks recruiting top students into their fold. For all the major problems facing humanity now, do we really want bright kids with the most privileged educations joining the financial ranks to "make rich people richer"? Harvard sends 20% of students to "socially useless" fin. services (and MIT/Stf another 15% each). These rates are 3X higher than previous generations. I know that sector is probably the biggest US "growth industry", but I think most of us would agree that FS are too bloated and too large a chunk of our economy for comfort. And it got that way partly at the expense of other fields that actually earn an honest wage and make useful stuff. Maybe we have to import so many foreign scientists and engineers because FS are diverting our good ones from "real engineering" fields to design exotic securities and scams instead (and paying them 5X more in some cases).

Maybe we need to cap the # of students enrolling in business/finance each year from top schools. I know this won't happen, but we see it in other fields. For some competitive majors (computer science, vet med, etc.), schools may require separate applications and grade attrition, so only the most worthy students get a degree in the subject. Another quality control step to make sure we're not just pumping in more Madoffs and Skillings into the system. I know a lot of the evils of finance are taught on the job, so we can't do anything about that. But maybe making it harder to graduate in these fields will weed out the pack so only the most well-trained and promising (or possibly the most fanatical, connected assholes) will make it through.

It is structurally so hard to become a doctor or lawyer in America, even if you're smart and rich. Why the hell is it so easy to make six-figs as a real-estate agent, trader, or banker? A firm still has to hire you of course, but the education path to those jobs is a lot shorter than that of medicine/law. And docs/lawyers have to swear ethical oaths - what about something like that for FS?

Some campuses block military and CIA recruitment of students. Therefore schools should have the right to refuse WS recruiters too. And maybe the boards should think twice about the message they're sending by accepting WS money to build the Goldman Sachs Center, provide scholarships, or to gain access to research resources and curricula. But in these times of cash-strapped schools (partly due to WS recklessness), it seems unlikely that they would turn down private money (in fact they're sending droves of people out to solicit more donations, quid pro quo of course). Plus the top privates are so flush with WS cash already that they're already a lost cause.

...[U]niversity administrations are also responsible. At best, they have passively allowed the largest banks to dominate student recruitment; at worst, they have enthusiastically promoted these companies and encouraged students to enter finance. To this day, career development offices accept donations from the wealthiest banks in exchange for special recruitment access. For example, until recently, Stanford’s Career Development Center featured Goldman Sachs as a “Gold Partner,” despite the company being under federal investigation for criminal trading practices.... an academic community that actively supports the same financial institutions whose rampant greed caused untold national hardship is a community on the brink of moral bankruptcy. - T Norris, E Pollak

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First off, if you believe in the cause, I absolutely encourage you
guys to go down to your local "occupy" location (if even as a
spectator) to show your support. I was there on the Wednesday as a
part of the larger march, and I came away pretty impressed at the
broad appeal of the movement. Their work through social media has been
nothing short of impressive.

Success is hard to define for something like this movement. I tend to
be pretty pessimistic as to the ability to change the actions of
politicians. I was talking to one of our professors who has been in
the newspaper quite a bit in regards to these protests, and he
suggested that these protests should be seen less in the light of the
tea party, anti-war protests, or the 60s, and more like the (now
forgotten) protests in the Great Depression. Those protests helped
bring about the New Deal, and a long-term goal here would be some sort
of overarching shift in economic policy goals like the New Deal.
However, in order for that to happen, the movement will eventually
have to coalesce behind a specific set of issues (I think the breadth
of the movement is an advantage right now) and we will probably need a
sustained economic recession/depression.

I DO believe, however, that the average American has changed. I think
the recent experiences have shown the average American that the
maintenance of a "free market" requires as much government
intervention as the maintenance of a welfare state. This is something
academics have know for a long time (after all, what are all those top
flight economists doing in central banks around the world?), but
something new to the American voter. The language of "99%" references
this idea. If the government is going to intervene anyway, why
shouldn't it do so for the vast majority of Americans? The Tea Party
was frustration with the fact that the government was intervening, and
OWS is frustration with how the government is intervening. In this
way, both movements have the same root cause, although with radically
different aims and support bases. For this reason, I have argued to
colleagues that, taken together, the support and opposition of
establishment practices regarding financial markets represent an
ephemeral second dimension in American politics (in addition to the
standard left-right economic dimension).

I don't think we'll be seeing the average American marching anytime
soon, but I'm OK with that as long as the American public stays
broadly supportive, or non-committal, regarding the protesters. After
all, social change is often fought on many fronts, and we can't expect
everyone to take the activist route.

Finally, I'd like to end with an argument, perhaps optimistic, about
why OWS might have more staying power than we might all think. I
remember a trip to Niagara Falls during the dot-com boom. In order to
get there, one usually goes through Buffalo. As we stopped in Buffalo,
I was shocked at the awful state of the town, by any parameter. I
started asking people what was going on (Buffalo had the highest exit
rate of any metro area for a long time, I believe). Well, Buffalo,
like so many other cities/towns in America, was an industry town where
industry dried out. It had been that way since the late 80s/early 90s.
 It wasn't just Flint, Michigan, industry towns all over the country
have suffered the same fate over the last 25 years.

We were all told that these towns were dead anyway; they had ceased to
be competitive in the global economy. But, we were OK with it, as
things were booming in the Bay Area and New York. The cold hard fact
is that politicians, Democrats and Republicans alike, chose to
explicitly disinvest in and failed to protect the average American in
these towns; instead, politicians systematically diverted funds from
people who needed them in order to invest in "the economy," and many
of us grew up as a beneficiary of this policy. I believe this kind of
protest failed to start earlier due to geographic segregation. We
never really saw the suffering, except in the occasional Michael
Moore-type film. Well, the lack of protection is starting to affect
New York and SF now too. People are angry, and they have been angry
for a long time. How does an economy grow stronger when all the people
grow weaker? What the hell is a jobless recovery? How is it that any
of that ever made any sense?

This is an extraordinarily unpredictable movement. I have no idea
what's going to happen; it could all end tomorrow. But if people want
change, it's the best we've got.

-----------

Unfortunately, I think it was much easier for Guilded Age or Depression-era Americans to protests against the sins of corporate America than for us today (even if those populist movements have been swept under the rug of history). More than ever before, modern Americans work for corporations, invest in them (directly with 401ks, indirectly with pensions, etc.), and owe them (college, mortgage, CC debts). So to rise up against Wall St. means possibly compromising one's financial well-being and prospects for "the American dream" too. We all subconsciously hope (or are explicitly taught) that if we are team players, work hard, and go along, we'll become rich some day. I guess the middle class folks in OWS would really like to continue to believe that, but their personal struggles and the trajectory of America are forcing them to reconsider, and eventually protest.

Despite WS being a bigger part of our lives, our overall financial literacy is horrible. An average American trying to navigate modern finance and economics is like a toddler taking driving lessons. Heck most of us are college grads, but rely on others to do our taxes and manage our retirement. Yes the system is ridiculously complex (probably deliberate), but we should be doing better. This may partially explain the apathy and ignorance out there that some in WS and DC exploit. A fool and his money are soon parted. I guess it starts early with our poor record of math/finance/econ/ethics education, and our almost cultish obsession with material wealth and free market ideals. I guess this indoctrinates us to become very enterprising and entrepreneurial, but clueless on money management and prudent decision making.

Though I wonder how Western Europe and East Asia fare. They obviously score higher on math exams, but do they get exposed to practical finance/economics in secondary school? Of course some EU banks messed up worse than the US banks, but the Asian banks were more cautious (they learned after their boom-and-busts in the 1990's) and most Asian states did not need bailouts, did not see a spike in unemployment, and barely experienced a recession (what pains they felt were mostly due to fewer export orders by the West). As example, Samsung (which accounts for a whopping 13% of S Korean exports) actually posted its best performance during our recession. I guess culturally, Euros and East Asians tend to save more, borrow less, and take fewer risks than Yanks? I find that almost paradoxical because based on moral hazard, those living with strong safety nets like the French and Japanese should tend to take more financial risks than Americans living with generally inadequate labor protections, health coverage, and SocSec. But it's actually inverse, so it must be due to structural differences in the US economy/workforce/culture that change our consumer preferences and values. I dunno, what do you think? 

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http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10?op=1

So goddam depressing. I guess the GOP are wrong, it's not really class warfare. That implies the peasants have a fighting chance. I really want to see how the GOP candidates (and most Dems for that matter) would respond to those data and how their views/policies are perpetuating (if not worsening) the trends. No matter how your slice it, those data are not indications of a healthy democratic society.

But at least some thinking people on the right don't approve either, albeit from a more pragmatic perspective. On APM's "Marketplace" radio show, they have a regular left-right debate between Robert Reich (former labor sec.) and David Frum (former Bush speech writer on the economy). But Frum has recently resigned, ostensibly because he no longer wants the burden of having to "speak for the right", as he disagrees with the dominant GOP stances on gov't and fiscal austerity (he'll continue to speak for himself on his blog though). Anyone with basic econ knowledge knows that harsh austerity during a recession/weak recovery is bad. Even staunch capitalists realize that it's not good for business if people are broke (or heavily in debt), desperate, and chronically unemployed. Safety nets are not just about socialist "nanny gov't"; they promote consumer confidence, productivity, and purchasing power. Again, it's about return on investment. In the next 12 months, will you get more social benefit from giving people EDD checks/food stamps, or slashing public jobs/programs just to barely reduce our deficit? Reasonable conservatives believe in small gov't and controlling spending, for the long term and in good economic times. All the extremist fiscal crap that the GOP candidates are spewing now will just exacerbate the wealth gap, weaken America, and make them look like a party of rich assholes (even more than they already are). 

Under the pressure of the current crisis -- intoxicated by anti-Obama feelings and incited by talk radio and Fox -- Republicans have staked out an extreme position on the role of government... For three years, my political party has veered in a direction I cannot follow. And if the GOP insists on framing the 2012 election as a ballot question on fiscal and monetary austerity, or if they nominate somebody manifestly incompetent to do the job of president, they’re going to lose me – and a lot more people beside me. - D Frum

http://marketplace.publicradio.org/display/web/2011/10/12/pm-frum-goodbye-interview/

What sucks is... if those inequality stats applied to one's spouse or manager (sometime not so different!), a person would probably get a divorce/new job. But the US lower-middle classes are just taking it and taking it like a battered spouse. If we can't wrest our nation back from the bankers, maybe we all should just "boycott America" and move to Canada as refugees (joking of course, otherwise Canada would need at least 10 more pro hockey clubs). Then we'll see if the feudal lords can survive without their serfs to kick around. Maybe those free market libertarians would just import more Latinos to fill our void? But at least it would send a message that we are sick of this mistreatment. Why should we hang around playing their rigged game? I know we don't have it as bad as Somalia or something, but do conditions have to deteriorate that much for us to act? We have one life to live, we just want to be happy, and frankly I don't want to waste my time on earth slaving away at a pointless job, saddled by debt/worry, and looking forward to an uncertain future.

There are greener pastures out there somewhere. Maybe not in Greece or Ireland, but somewhere. Like with a bank run, a "brain drain" may be the only way to get American leaders to realize that they need to make the country a nice and fair place to live, in order to retain good people and maintain global standing. Unfortunately, we don't have that much leverage because billions of poorer, desperate people would sacrifice their first-born to take our place, even if conditions are so unjust here (because it's still better than their homelands). So is that what the US elites really want, a third world America? The middle class is fed up and has left (maybe a lucky few get promoted to the upper class), and droves of expendable immigrants have taken their place. Then they might as well dispense with the American nationalism, ideals, and such, as we would overtly be a plutocracy and corporation state.

http://www.huffingtonpost.com/arianna-huffington/third-world-america-why-i_b_706673.html

Turley: Obama "devastating" for civil liberties

Civil libertarians have long had a dysfunctional relationship with the Democratic Party, which treats them as a captive voting bloc with nowhere else to turn in elections. - J Turley

http://articles.latimes.com/2011/sep/29/opinion/la-oe-turley-civil-liberties-20110929

http://www.npr.org/2011/10/10/141213273/op-ed-obama-devastating-for-civil-liberties

I know we discussed this in the past about Obama's campaign pledges to promote civil rights and gov. transparency, but as president he has actually increased secrecy and expanded the powers of the US terrorism-industrial-complex (even over Bush levels), sometimes at the expense of the rules of war, civil liberties, and other laws/values. I guess the calculation was simple for Obama: it was more important to get the support of the military-intel community than the civil libertarians, so he made decisions to favor the former. Especially with the economy/jobs front-and-center, I guess his people felt that civil rights won't be a critical issue in 2012, especially when his yet-unnamed GOP rival would probably endorse and harsher stance on executive privilege and the security-vs-rights debate.

So that's where we stand: the GOP isn't mad at Obama because terror plots are being thwarted and Al Qaeda leaders are getting whacked. Though I'm sure they'd prefer to get the credit, and probably feel that Obama is just the lucky executor of the good Bush-neocon policies that are now bearing fruit. Any consolidation of executive power and trimming of Congressional/legal/regulatory red tape is probably good for them. They know they'll recapture the White House at some point, and then it's pedal to the metal.

But from the left, Turley likens it to Stockholm Syndrome. We've fallen in love with our captor, just because he's the first black president, a young, handsome, charismatic chap, the game-changer, the chosen one, whatever other superlative. We aren't happy with what he's doing, but we just can't allow ourselves to oppose him and admit that we were wrong. So like a kid without discipline, he keeps taking and pulling, and taking and pulling, because we do nothing. The Dems bet big on this guy, and now we're stuck with him. It's very hard for a parent to admit that their kid is a bad seed because they still love him.

Yes it's true that campaigning is different than leading, so maybe Obama is under more constraints now and exposed to different information, which has changed his views. But any leader under crisis has experienced that, and some still decided to stand up for their beliefs despite the political consequences, while others folded like cowards and played it safe. Some things he has done are just flat wrong, and it's not like lives were imminently at stake. Yes it's possible that a GOP president may be worse. But if we were voting between Hitler and Napoleon, would we be content supporting Napoleon because he was just slightly better? And let's remember that Obama has in fact exceeded Bush on many secrecy and rights violations issues. We've dug ourselves into quite a hole with this one.

We can't allow Obama to get away with making a blanket promise to not prosecute any Bush-era people or CIA employees/affiliates for torture or other abuses, and squash any private investigations. I know closing Gitmo didn't work out for him (he was naive to think it would be easy), and these terror issues are a legal nightmare. Yes, justice is hard work, but that's what separates us from cave men. Would we rather condone abuses power, shadow governments, and selective application of the law like the enemy regimes we routinely denounce? People must be held accountable for their crimes, or there's no deterrent for future criminality. Poking around at the CIA and Pentagon is going to cause some problems for a president, but sometimes avoiding conflict and failing to do the right thing is worse. Same thing with the Wall St. investigations, no one goes to jail or gets punished, so what incentive do they have to shape up? Our democracy and republic exist and survive because of checks-and-balances on power. If the president shirks that responsibility, and even blocks Congress from intervening, what is to stop the security establishment from running amok, like they have always done in similar loose situations throughout history?

US soldiers are standing trial for abusing or killing civilians during our wars. They are on the front lines fighting for their country, paid slave wages, and still have to answer for crimes if they err. Why should CIA sociopaths, reckless Blackwater mercenaries, and neocon paper-pushers be exempt? I have particular contempt for the fat suits drafting policies in DC. These chickenhawks mostly never sacrificed an ounce of sweat for America, yet they are making decisions that are destroying innocent families and creating all sorts of unanticipated blowback for us, in between their tee times and K St. power lunches. Such patriots. The hubris. And now Obama, the Peace Prize Laureate, has thrown his hat in with them.

Mitt Romney the "job creator"

"Private equity combines both the best and the worst of capitalism," [Howard Anderson, former VC & MIT Sloan prof.] says. "When things go well, there's wonderful stories to tell about growth. When things went bad, it is not a pretty system — especially since [Romney's former firm] Bain Capital may have personally done well themselves, where both their investors and the employees did not do well."

Here's a guy [Romney] that just took somebody else's money and used it to make more money. The guy has never produced a thing in his life. - Former GST steel worker

http://www.npr.org/2011/10/06/141115638/2-portraits-emerge-of-mitt-romney-the-businessman

NPR is doing a series on formative jobs that the GOP front-runners previously held. For Romney, I knew he came from an investment background and is quite rich, but the extent surprised me. He was the co-founder and first CEO of Bain Capital, an elite private equity firm, and is personally worth 100's of millions. But in 2012, does America really need another HBS-trained Wall Street stooge? With the economy sputtering (partly due to Wall St. and the banks), America and Congress are desperate and may be more susceptible to the allure of "the Wall St. solution for recovery." Under the wrong president (and I'm not saying that Obama is the "right" one), we may foolishly accept all sorts of deregulation and concessions in the hope of future prosperity. Mitt can't relate to the average working person at all, and personifies the 2 Americas. We know who/what he serves. Remember his "corporations are people" quote that was legally accurate but foolish to say while campaigning in Iowa?

http://www.politico.com/news/stories/0811/61111.html

Romney was amazingly successful while at Bain (by Wall St. standards), which is another red flag. The firm had a 15-year stretch of unheard-of 100% rate of return. Clients usually pay priv. equity firms 20% of their profits as fees, but Bain could get away with charging 30% because they were that good. But good at what? Bain was credited with launching or boosting household names like Staples, Domino's, Brookstone, and Sports Authority. So yeah, I guess Mitt does know how to create wealth (for himself and certain pals) and jobs (but just the financial or minimum-wage retail kinds).

You never bat 1000 in this business, so how about the failures? In some cases, Romney's clients paid handsomely for Bain's advice, yet still filed Ch. 11 and were diced up and sold for parts (KB Toys, Ampad-Mead, Dade Int'l, GST Steel). In other cases, Bain encouraged firms to scale back US operations and outsource. Maybe those were the "right" business decisions, but they wiped out millions of investor wealth, cost US manufacturing jobs, and maybe only replaced them with a few financial jobs and exec bonuses. Of course as CEO, it's not like Romney was personally signing the pink slips, but this is what Bain did under his leadership.

And of course, running America is not the same as running a firm. Past success (however amazing) is no guarantee of future performance. California didn't think that former CEOs Whitman and Fiorina had what it took to help the state, and business tycoons Perot and Forbes did not fare well in their political runs. I guess Mitt convinced the people of Mass. that he was the right guy for the gov. job, but POTUS is a different beast. Romney has learned and improved a lot since his failed 2008 presidential bid, and has a huge war chest. Considering the state of the country now, he is a compelling candidate for many people. But unlike the unrealistic hopes we had for Obama, at least we know what Romney stands for, and to his credit he's not really trying to present himself as something else.

The outrageously corrupt NCAA football bowls

http://www.hbo.com/real-sports-with-bryant-gumbel#/real-sports-with-bryant-gumbel/episodes/0/174-episode/video/cashin-in-clip.html/eNrjcmbOUM-PSXHMS8ypLMlMDkhMT-VLzE1lLtQsy0xJzYeJO+fnlaRWlDDnszGySSeWluQX5CRW2pYUlaayMXIyMgIAacUXOA==

http://seattletimes.nwsource.com/html/sports/2016261023_apfbcsugarbowltaxviolation.html

We already know that major college sports are corrupt, exploitative, and dysfunctional, but the actual numbers are shocking (thanks to an HBO Real Sports investigation and others). First, it's inconceivable that the org's running each bowls are classified as non-profit charities, despite earning over $250M combined each year. There used to be about 10 bowls, but now the number is up to 35. Even the most successful charities on the planet don't grow that fast, only scams and bubbles do.

The bowl org's claim they are charities because they purport to give 75% of revenues to the participating schools - institutions that benefit society in many ways. Yes, the perennial bowl participant football factories like OSU, Nebraska, and Miami have really used the money to provide top education and discoveries for America (often head coaches are paid much higher salaries than the most famous and productive professors). But in actuality, the avg. school payment is about 55% for the dozen or so bowls whose financial records were made available. The poorly-named Humanitarian Bowl only gave 27% to the schools. When confronted with these facts, bowl reps say they are saving the rest for posterity to pay out to schools "at a future date." Well schools are laying off employees, raising fees, and letting buildings crumble NOW.

The problem here is similar to the race to host the next Olympics or over-bidding to win an auction. Schools and communities are so obsessed with getting to a bowl (and the perceived value it entails) that they fail to consider whether it's really cost-effective. Part of the contract between the bowl and schools often involves paying for their own travel, and a guarantee to sell a block of tickets to fans, or the school will have to eat the cost of empty seats. But it's hard for small schools to get alumni and fans to travel across the country during winter holiday time (and eat the big costs of tickets, hotel. etc.), so some schools predictably end up on the short end.

The bowl gets paid no matter what, and then short-changes the schools with smaller contributions. Some bowls even forced the school bands to buy tickets even though they were providing free entertainment during halftime. So knowing all this, why do some cash-strapped schools still fall into the trap? They fall in love with the "prestige" of participating, and many coaches/athletic directors are paid bonuses for reaching a bowl. The bowl org's claim that despite these concerns, schools come out ahead in the end because the publicity will increase alumni donations and fan/student interest for the future. Of course it's very hard to quantify and verify this benefit, so we just have to trust them. And apparently schools do.

So maybe the bowls short-change schools, but they give back to the community, right? Bowls claimed that they've given "tens of millions of dollars" to communities and charities each year. But according to tax documents, the grand total last year was about $4M, or <2% of revenues. But that giving is still generous, right? Well not if you consider the tax incentives and other perks that cities and politicians offer to the bowls, sometimes totaling in the millions. Again, bowl reps repeat the Olympics argument that the event "pays for itself" with all the extra tourism and commerce. Sure, tell that to Greece. Remember that cities also have to eat the clean-up, security, traffic congestion, and other costs. The show examined the example of the elite Sugar Bowl and the financially depressed host New Orleans. The Sugar Bowl gave $1M to Louisianans, but took $6M from their state leaders. Former LA governor Blanco took thousands of dollars from the Sugar Bowl in campaign contributions, which is technically illegal due to the bowl's tax status. And in return, Blanco has helped to maintain this profitable arrangement, even to the detriment of her Katrina-ravaged, cash-hungry state.

Bowls are also lobbying politicians to fight any changes to the system that would hurt them financially, such as a move to a nationwide playoffs postseason format. They've used the profits that didn't go to schools/communities to sponsor lavish trips and "retreats" to discuss strategy and woo VIPs. The org's defend these actions as legitimate efforts to maintain and improve the quality of the bowls. How about executive compensation? The heads of MSF, Amnesty Int'l, and the Salvation Army all make less than $300K/year. The heads of some bowls take in $500-700K, despite managing a much smaller org than the true charities. In some cases, "honorary execs" are paid hundreds of thousands for a few hours of seasonal work per week. Despite their ludicrous pay, a former Fiesta Bowl exec (J Junker) was found to use bowl funds on golf and strip clubs. They give the usual Wall Street excuse - the market sets the going rate to recruit and retain the talent necessary for the job. So I guess "the market" just values a guy who sets up a single football game more than a guy who is in charge of helping millions of Americans day in, day out.

Again, imagine the opportunity costs of bowl profits that could have gone to the causes that they're supposed to go to. Nonprofits are not taxed because they serve a public need, but it seems that the bowls are making off with millions while actually undermining some critical public services.

Battle of the billionaires

http://news.yahoo.com/warren-buffett-defends-proposal-tax-super-rich-191916203.html

It's cool when the rich go to war against each other, though of course I'm rooting for the smart one who doesn't hack cell phones of victims' families. The Economist agreed with Buffett that the US tax code needs to be fundamentally reformed by ending most deductions (that mostly benefit the rich) and taxing cap. gains heavier than wages. That way real labor and productivity won't be penalized, but speculation and excessive trading will (that benefits few and may put the entire economy at risk). Can anyone give me a cogent argument why hedge fund managers' compensation (not their own investments, but pay from their firm) deserves to be considered cap. gains? Bush-enomics. It's probably true that taxing the rich won't help our deficit situation much, but it signals a strong message to the market so the dysfunctional incentives structure still widespread in Wall St. and upper America may change.

It's interesting how quickly the rich mobilize their media and political minions the minute anyone of import barely raises the issue of tax hikes. That reveals their defensiveness/awareness of the preferential treatment they're getting, and how they know it's a scam that can't last, no matter how gullible they think we are.

http://www.economist.com/blogs/freeexchange/2011/09/budget-politics