Tidbits Quotations
To Accompany the November 28, 2011 edition of Tidbits
Bob Jensen at Trinity University

I especially like Number 01 below

Quotations forwarded by Maureen

01. In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress.
- John Adams
My favorite
02. If you don't read the newspaper you are uninformed, if you do read the newspaper you are misinformed.
- Mark Twain
03. Suppose you were an idiot. And suppose you were a member of Congress, but then I repeat myself.
- Mark Twain
04. I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
- Winston Churchill
05. A government which robs Peter to pay Paul can always depend on the support of Paul.
- George Bernard Shaw
06. A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money.
- G. Gordon Liddy
7. Democracy must be something more than two wolves and a sheep voting on what to have for dinner.
- James Bovard, Civil Libertarian (1994)
8. Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries.
- Douglas Casey, Classmate of Bill Clinton at Georgetown University
9. Giving money and power to government is like giving whiskey and car keys to teenage boys.
- P.J. O'Rourke, Civil Libertarian
10. Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.
- Frederic Bastiat, French economist(1801-1850)
11. Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
- Ronald Reagan (1986)
12. I don't make jokes. I just watch the government and report the facts.
- Will Rogers
13. If you think health care is expensive now, wait until you see what it costs when it's free!
 - P.J. O'Rourke
14. In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other.
- Voltaire (1764)
15. Just because you do not take an interest in politics doesn't mean politics won't take an interest in you!
- Pericles (430 B.C.)
16. No man's life, liberty, or property is safe while the legislature is in session.
- Mark Twain (1866)
17. Talk is cheap...except when Congress does it.
- Anonymous
18. The government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other.
- Ronald Reagan
19. The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.
- Winston Churchill
20. The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.
- Mark Twain
21. The ultimate result of shielding men from the effects of folly is to fill the world with fools.
- Herbert Spencer, English Philosopher (1820-1903)
22. There is no distinctly Native American criminal class...save Congress.
- Mark Twain
23. What this country needs are more unemployed politicians.
- Edward Langley, Artist (1928-1995)
24. A government big enough to give you everything you want, is strong enough to take everything you have.
- Thomas Jefferson
25. We hang the petty thieves and appoint the great ones to public office.
- Aesop

NPR Video Infographic:  Visualizing population growth (in full color) ---

Infographic Video: The Story of Broke: An Animated Look at US Federal Spending and Values --- Click Here

Politicians who arrive in Washington as men and women of modest means leave as millionaires. Why?
Sarah Palin, "How Congress Occupied Wall Street," The Wall Street Journal, November 18, 2011 ---

The Wonk (Professor) Who Slays Washington

Insider trading is an asymmetry of information between a buyer and a seller where one party can exploit relevant information that is withheld to the other party to the trade. It typically refers to a situation where only one party has access to secret information while the other party has access to only information released to the public. Financial markets and real estate markets are usually very efficient in that public information is impounded pricing the instant information is made public. Markets are highly inefficient if traders are allowed to trade on private information, which is why the SEC and Justice Department track corporate insider trades very closely in an attempt to punish those that violate the law. For example, the former wife of a partner in the auditing firm Deloitte & Touche was recently sentenced to 11 months exploiting inside information extracted from him about her husband's clients. He apparently did was not aware she was using this inside information illegally. In another recent case, hedge fund manager Raj Rajaratnam was sentenced to 11 years for insider trading.

Even more commonly traders who are damaged by insiders typically win enormous lawsuits later on for themselves and their attorneys, including enormous punitive damages. You can read more about insider trading at

Corporate executives like Bill Gates often announce future buying and selling of shares of their companies years in advance to avoid even a hint of scandal about exploiting current insider information that arises in the meantime. More resources of the SEC are spent in tracking possible insider information trades than any other activity of the SEC. Efforts are made to track trades of executive family and friends and whistle blowing is generously rewarded.

Trading on insider information is against U.S. law for every segment of society except for one privileged segment that legally exploits investors for personal gains by trading on insider information. What is that privileged segment of U.S. society legally trades on inside information for personal gains?

Congress is our only native criminal class.
Mark Twain --- http://en.wikipedia.org/wiki/Mark_Twain

We hang the petty thieves and appoint the great ones to public office.
Attributed to Aesop

Answer (Please share this with your students):
Over the years I've been a loyal viewer of the top news show on television --- CBS Sixty Minutes
On November 13, 2011 the show entitled "Insider" is the most depressing segment I've ever watched on television ---
Also see http://financeprofessorblog.blogspot.com/2011/11/congress-trading-stock-on-inside.html

Jensen Comment


Watch the "Insider" Video Now While It's Still Free ---

"They have legislated themselves as untouchable as a political class . . . "
"The Wonk (Professor) Who Slays Washington," by Peter J. Boyer, Newsweek Magazine, November 21, 2011, pp. 32-37 ---

In the Spring of 2010, a bespectacled, middle-aged policy wonk named Peter Schweizer fired up his laptop and began a months-long odyssey into a forbidding maze of public databases, hunting for the financial secrets of Washington’s most powerful politicians. Schweizer had been struck by the fact that members of Congress are free to buy and sell stocks in companies whose fate can be profoundly influenced, or even determined, by Washington policy, and he wondered, do these ultimate insiders act on what they know? Yes, Schweizer found, they certainly seem to. Schweizer’s research revealed that some of Congress’s most prominent members are in a position to routinely engage in what amounts to a legal form of insider trading, profiting from investment activity that, he says, “would send the rest of us to prison.”

Schweizer, who is 47, lives in Tallahassee with his wife and children (“New York or D.C. would be too distracting—I’d never get any writing done”) and commutes regularly to Stanford, where he is the William J. Casey research fellow at the Hoover Institution. His circle of friends includes some bare-knuckle combatants in the partisan frays (such as conservative media impresario Andrew Breitbart), but Schweizer himself comes across more as a bookish researcher than the right-wing hit man liberal critics see. Indeed, he sounds somewhat surprised, if gratified, to have attracted attention with his findings. “To me, it’s troubling that a fellow at Stanford who lives in Florida had to dig this up.”
It was in his Tallahassee office that Schweizer began what he thought was a promising research project: combing through congressional financial-disclosure records dating back to 2000 to see what kinds of investments legislators were making. He quickly learned that Capitol Hill has quite a few market players. He narrowed his search to a dozen or so members—the leaders of both houses, as well as members of key committees—and focused on trades that coincided with big policy initiatives of the sort that could move markets.

While examining trades made around the time of the 2003 Medicare overhaul, Schweizer experienced what he calls his “Holy crap!” moment. The legislation, which created a new prescription-drug entitlement, promised to be a huge boon to the pharmaceutical industry—and to savvy investors in the Capitol. Among those with special insight on the issue was Massachusetts Sen. John Kerry, chairman of the health subcommittee of the Senate’s powerful Finance Committee. Kerry is one of the wealthiest members of the Senate and heavily invested in the stock market. As the final version of the drug program neared approval—one that didn’t include limits on the price of drugs—brokers for Kerry and his wife were busy trading in Big Pharma. Schweizer found that they completed 111 stock transactions of pharmaceutical companies in 2003, 103 of which were buys.

“They were all great picks,” Schweizer notes. The Kerrys’ capital gains on the transactions were at least $500,000, and as high as $2 million (such information is necessarily imprecise, as the disclosure rules allow members to report their gains in wide ranges). It was instructive to Schweizer that Kerry didn’t try to shape legislation to benefit his portfolio; the apparent key to success was the shaping of trades that anticipated the effect of government policy.

Continued in article

Jensen Questions
If all these transactions were only by chance profitable, why is it that the representatives, senators, and their trust investors always profited and never lost in dealings connected to inside information?

More importantly why did representatives and senators who write the laws have to write themselves in as exempt from insider trading laws?

Why aren't national leaders like Nancy Pelosi, John Kerry, and John Boehner who vigorously deny inside trading actively seeking to overturn laws that exempt representatives and senators from insider trading lawsuits? Why do they still hold themselves above their own law?

Why have representatives and senators buried reform legislation concerning their insider trading exemption so deep in the legislative process that there's zero hop of reforming themselves against abuses of insider trading and exploitation of other investors?

Watch the "Insider" Video Now While It's Still Free ---

If you agree with the above, pass it on.
Warren Buffett, in a recent interview with CNBC, offers one of the best quotes about the debt ceiling:"I could end the deficit in 5 minutes," he told CNBC. "You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election. The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in1971...before computers, e-mail, cell phones, etc. Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land...all because of public pressure.Warren Buffet is asking each addressee to forward this email to a minimum oftwenty people on their address list; in turn ask each of those to do likewise. In three days, most people in The United States of America will have the message. This is one idea that really should be passed around.*Congressional Reform Act of 2011......
1. No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office.

2.. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system,and Congress participates with the American people. It may not be used for any other purpose..

3. Congress can purchase their own retirement plan, just as all Americans do...

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care insurance and participates in the same health care plan as the American people.

6. Congress must equally abide by all laws they impose on the American people..

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor,not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

If each person contacts a minimum of twenty people then it will only take
three days for most people (in the U.S.) to receive the message. Maybe it is


Read more: http://www.cbsnews.com/video/watch/?id=7387951n&tag=contentMain;contentBody#ixzz1dfeq66Ok

Holman Jenkins of The Wall Street Journal contends that in total representatives and senators do not perform better (possibly even worse) than average investors in the stock market ---
What he does not mention is that opportunities to trade on inside information is generally infrequent and often limited to a few members of a particular legislative committee receiving insider testimony or preparing to release committee recommendations to the legislature.

Jenkins misses the entire point of insider trading. If it was a daily event in the public or private sector it would be squashed even harder than it is now being squashed, because rampant insider trading would drive the public away from the financial and real estate markets. The trading markets survive this cancer because it is relatively infrequent when it does take place among corporate executives (illegally) or our legislators (legally).



Feeling cynical?
They say that patriotism is the last refuge
To which a scoundrel clings.
Steal a little and they throw you in jail,
Steal a lot and they make you king.
There's only one step down from here, baby,
It's called the land of permanent bliss. 
What's a sweetheart like you doin' in a dump like this?

Lyrics of a Bob Dylan song forwarded by Amian Gadal [DGADAL@CI.SANTA-BARBARA.CA.US


Bob Jensen's threads on Rotten to the Core ---

"It's Still Possible to Cut Spending: Here's How:  The obvious place to begin is the repeal of ObamaCare. We also need to empower the states, streamline the federal government and modernize Medicare and Social Security," by Glenn Hubbard (Dean of the Columbia Business School), The Wall Street Journal, November 23, 2011 ---

After two months of talks, the super committee announced failure on Monday to agree on reducing federal deficits by $1.2 trillion over the next decade. But as the late economist Herb Stein once remarked: If something cannot go on forever, it won't. That applies to the mounting budget shortfalls. But how?

President Obama's answer is higher taxes. But he can't be serious. Just accommodating his spending plans over the next decade requires across-the-board tax increases of 20%. Over the next 25 years, taxes would need to rise across the board by 60%.

Instead, what is needed is spending reform that offers goals, specifics and ways to blend fiscal responsibility with modernizing government. This includes near-term action on discretionary spending and longer-term action to reform entitlements and reduce the growth of Social Security and Medicare. Then revenue contributions can be addressed in the context of tax reform.

The first goal is to reduce federal spending to a healthier 20% share of GDP from today's bloated 25% within a decade. A tall order, yes, given the profligacy of the last few years. But it can be accomplished by eliminating unnecessary federal programs, empowering states, and reforming and streamlining government.

The obvious place to begin is repealing ObamaCare and its expansion of spending. Programs like the federal Community Development Fund, which should fall under state and local or private responsibilities, can be axed. So can intercity and high-speed rail grants, which lack plans to make rail competitive, and duplicative education programs.

We should also let states experiment with alternatives to our current one-size-fits-all federal solution. The best example is Medicaid, which should be converted into a block grant. Replacing federal matching support with block grants eliminates state incentives to attract additional federal subsidies, while allowing states to manage Medicaid more efficiently. Federal Medicaid costs should be capped at growth of 1% over the inflation rate.

The federal work force can shrink through attrition, and employee compensation can be adjusted to private levels. We should cut costly applied research in fields such as renewable energy at the Department of Energy, focusing only on basic research. And the Davis-Bacon Act, which inflates the price of federal construction projects by requiring high-cost union labor, has to be repealed.

These three approaches would bring federal spending down to 20% of GDP. Yet as ambitious as they are, these won't solve our long-term budget problems, which reflect yawning deficits in Social Security and Medicare.

Regarding Social Security, the program first needs to be made solvent and sustainable over the long term. In particular, program outlays need to grow more slowly to allow for rising costs in health-care entitlements. Second, we must modernize Social Security by making it more effective in protecting low earners and more conducive to personal saving and the longer work lives needed in today's economy. These changes will require a strong minimum benefit, gradual increases in the retirement age, and slowing benefit growth for more affluent Americans.

As a pro-growth measure, we should also eliminate the Social Security payroll tax for all individuals age 62 and older to encourage individuals to keep working and to increase their attractiveness to employers. In that vein, we should also eliminate the retirement earnings test that reduces benefits for early retirees who continue to work.

Our long-term budget problems are dominated by Medicare's unfunded liabilities of tens of trillions of dollars. But changes must preserve Medicare's role of assisting lower- and moderate-income Americans. As with Social Security, Medicare's eligibility age should be increased gradually, and we should promote work by eliminating the Medicare payroll tax for individuals 62 or older.

A more modern version of traditional Medicare would replace Parts A, B and D with comprehensive benefits including coverage for catastrophic costs and prescription drugs. Simpler cost-sharing would be offered—with one deductible for inpatient and outpatient services and a common coinsurance rate for all services.

Medicare would be placed on a budget through premium support, which would let beneficiaries choose among competing health plans, much like federal employees do now. Subsidies would be larger for lower-income or higher-health-risk individuals. The annual growth would be determined by Congress along with other spending priorities.

And what about taxes? Incorporating revenue increases into forward-looking budget planning requires care. For the plan to be pro-growth, marginal tax rates must not be raised. That leaves base-broadening by reducing tax expenditures and tax preferences. With this in mind, Congress should agree on a revenue target for the decade, then deliver on this target via tax reform.

Merely extending the 2001 and 2003 tax cuts is not the most pro-growth policy. Fundamental tax reform need not be revenue-neutral, as the Bowles-Simpson Commission plan—which would raise net revenue through broadening the tax base—indicates. And reform can be progressive. But tax reform is important for ensuring that deficit reduction promotes economic growth as well as budget austerity.

It is unfortunate that many members of Congress and much of the public don't understand that America's fiscal problems can be solved almost entirely by altering the trajectory of government spending. President Obama's leadership failure here is obvious.

If something cannot go on forever, it will stop. But even with the super committee's failure we may be able to avoid a sudden, calamitous stop—and provide a government worthy of the 21st century for all Americans.

Mr. Hubbard, dean of Columbia Business School, was chairman of the Council of Economic Advisers under President George W. Bush.

Glenn Hubbard is not a fan of Ben Bernanke
The video is a anti-Bernanke musical performance by the Dean of Columbia Business School ---
Ben Bernanke (Chairman of the Federal Reserve and a great friend of big banks) --- http://en.wikipedia.org/wiki/Ben_Bernanke
R. Glenn Hubbard (Dean of the Columbia Business School) ---

"The Next Economic Revolution," by Alex Planes, Financial Education Daily, November 23, 2011 ---

In one of the buildings at NASA's Ames Research Center, within walking distance of the Googleplex, elite groups of very smart people are trying to prepare for a future so advanced we can't even predict what it'll look like. This Singularity University is a hub for forward-thinking experts to learn about robotics, artificial intelligence, and other key technologies of the next century.

What's conspicuously absent is a serious discussion of this future's economy. For hundreds of years people have brushed aside Luddite complaints and kept on creating new jobs out of the ashes of dead industries. However, the link between technological gains and employment growth is becoming frayed.

The singularity for which the university is named is one theoretical end result of all human technological progress. It's a point at which we finally create machines that vastly exceed human ability in every possible way, starting a runaway process of computer self-improvement that ends in sci-fi utopia. Man and machine will merge. Angels will sing, perhaps in binary code. Underpinning this is Ray Kurzweil's assertion, backed by numerous statistics, that
technological progress is exponential, and thus gets faster and more dramatic over time.

The inconceivably computational future, Kurzweil says, is going to be our ultimate achievement, a networked nirvana. That is, if we're ready for it.

See the article to view the graph!

The data divide
Unfortunately, not everyone is ready for the future. Many people are barely ready for the present. Pundits talking about the possibility of a lost decade often overlook the previous decade, which was the first since the Great Depression with no net job creation. Despite the lack of hiring, real GDP grew by nearly $2 trillion, adjusted for inflation -- to put that in perspective, it's about the size of Italy's economy. What made up the difference? Productivity.

This optimistic productivity trajectory may be underestimated in many ways, since it's virtually impossible to calculate the productivity society gains from free digital resources like Google and Wikipedia. But wages simply haven't kept up. I showed in a previous article that average income grew far less than the income at the top of the scale over this period of time, but median income -- which may be closer to the reality for most workers -- actually fell in the last decade.

Rise of the machines
Productivity growth that doesn't correspond to a rise in employment or income has to come from somewhere. Are the workers still on the job that much more productive with fewer coworkers? The explanation, according to MIT researchers Erik Brynjolfsson and Andrew McAfee, coauthors of
Race Against the Machine, is rising automation. The trend's gotten more pronounced since the recession, as you can see on the chart. Equipment and software spending is up 26% since the recession, though payrolls are essentially flat.

When you stop to consider the many things automated processes can now accomplish that were once thought exclusive to humans, this isn't so surprising:

Continued in article

"Campaign Planned to Stop Student Loan Repayments," Inside Higher Ed, November 17, 2011 ---

Part of the Occupy Wall Street movement is planning to announce on Monday a campaign to encourage people repaying student loans to stop doing so. The idea is that people will pledge to stop repaying their loans when 1 million people agree to do so. The hope is that such a volume of non-repayment would make it difficult to punish those who opt to stop paying. The repayments could continue, however, if certain conditions are met. Those conditions include making public higher education free to students. The campaign was described to Inside Higher Ed by Andrew Ross, a prominent humanities scholar at New York University, who has been involved with the efforts to start the drive.

Read more:
Inside Higher Ed



Jensen Comment
This seems to be a conditional (contingency) boycott. It's obvious who is helped by the boycott. But not so obvious is who the boycott hurts. If this boycott was against the private sector, such as refusal to pay credit card balances, the courts would probably keep prosecuting with punishments (including jail time) that seriously hurt many who built up credit card purchase by thousands of dollars before joining the boycott. Even lenders that go bankrupt could continue prosecuting with mean-dog attorneys and bad debt collectors that can make life for credit defaulters really miserable.

In the case of this particular boycott of student loan repayments, this obviously hurts the government and would contribute to our annual trillion dollar deficits.

What Andrew Ross does not anticipate is the probable reaction of employers and graduate schools (including law schools, business schools, and medical schools). These entities may simply refuse to hire/admit student loan defaulters. Also students needing more loans for graduate studies would be denied thos loans.

The boycotters may be forced to live with very long-term miserable credit scores that prevent them from buying homes, getting credit cards, starting up businesses with bank loans, getting car loans, etc.

And future students may well have very difficult or impossible chances of getting student loans.

And worst of all, the Tea Party would most certainly take control of the legislature, executive branch, and eventually even the judicial branch of government.

This is really an Andrew Ross Horror Show.

"Let’s All Feel Superior," by David Brooks, The New York Times, November 14, 2011

First came the atrocity, then came the vanity. The atrocity is what Jerry Sandusky has been accused of doing at Penn State. The vanity is the outraged reaction of a zillion commentators over the past week, whose indignation is based on the assumption that if they had been in Joe Paterno’s shoes, or assistant coach Mike McQueary’s shoes, they would have behaved better. They would have taken action and stopped any sexual assaults.

Unfortunately, none of us can safely make that assumption. Over the course of history — during the Holocaust, the Rwandan genocide or the street beatings that happen in American neighborhoods — the same pattern has emerged. Many people do not intervene. Very often they see but they don’t see.

Some people simply can’t process the horror in front of them. Some people suffer from what the psychologists call Normalcy Bias. When they find themselves in some unsettling circumstance, they shut down and pretend everything is normal.

Some people suffer from Motivated Blindness; they don’t see what is not in their interest to see. Some people don’t look at the things that make them uncomfortable. In one experiment, people were shown pictures, some of which contained sexual imagery. Machines tracked their eye movements. The people who were uncomfortable with sex never let their eyes dart over to the uncomfortable parts of the pictures.

As Daniel Goleman wrote in his book “Vital Lies, Simple Truths,” “In order to avoid looking, some element of the mind must have known first what the picture contained, so that it knew what to avoid. The mind somehow grasps what is going on and rushes a protective filter into place, thus steering awareness away from what threatens.”

Even in cases where people consciously register some offense, they still often don’t intervene. In research done at Penn State and published in 1999, students were asked if they would make a stink if someone made a sexist remark in their presence. Half said yes. When researchers arranged for that to happen, only 16 percent protested.

In another experiment at a different school, 68 percent of students insisted they would refuse to answer if they were asked offensive questions during a job interview. But none actually objected when asked questions like, “Do you think it is appropriate for women to wear bras to work?”

So many people do nothing while witnessing ongoing crimes, psychologists have a name for it: the Bystander Effect. The more people are around to witness the crime, the less likely they are to intervene.

Online you can find videos of savage beatings, with dozens of people watching blandly. The Kitty Genovese case from the ’60s is mostly apocryphal, but hundreds of other cases are not. A woman was recently murdered at a yoga clothing store in Maryland while employees at the Apple Store next door heard the disturbing noises but did not investigate. Ilan Halimi, a French Jew, was tortured for 24 days by 20 anti-Semitic kidnappers, with the full knowledge of neighbors. Nobody did anything, and Halimi eventually was murdered.

People are really good at self-deception. We attend to the facts we like and suppress the ones we don’t. We inflate our own virtues and predict we will behave more nobly than we actually do. As Max H. Bazerman and Ann E. Tenbrunsel write in their book, “Blind Spots,” “When it comes time to make a decision, our thoughts are dominated by thoughts of how we want to behave; thoughts of how we should behave disappear.”

In centuries past, people built moral systems that acknowledged this weakness. These systems emphasized our sinfulness. They reminded people of the evil within themselves. Life was seen as an inner struggle against the selfish forces inside. These vocabularies made people aware of how their weaknesses manifested themselves and how to exercise discipline over them. These systems gave people categories with which to process savagery and scripts to follow when they confronted it. They helped people make moral judgments and hold people responsible amidst our frailties.

But we’re not Puritans anymore. We live in a society oriented around our inner wonderfulness. So when something atrocious happens, people look for some artificial, outside force that must have caused it — like the culture of college football, or some other favorite bogey. People look for laws that can be changed so it never happens again.

Commentators ruthlessly vilify all involved from the island of their own innocence. Everyone gets to proudly ask: “How could they have let this happen?”

Continued in article

"Labor's Lost Loves:  Detroit Mayor Bing announced 1,000 layoffs and seeks concessions," The Wall Street Journal, November 19, 2011 ---

Last week's repeal of Ohio's collective-bargaining law was hailed as a victory for labor and a harbinger of Democratic gains next year. In truth, it is more likely that unless Ohio's public-union labor agreements are revisited, the vote could come back to haunt Ohio and its Democrats. For evidence look no further than Detroit, Michigan.

Yesterday, Mayor Dave Bing announced that Detroit will lay off 1,000 workers by early next year, about 9% of the city's workforce. Savings realized: $12 million. Savings needed: $45 million, which is Detroit's projected budget shortfall for this fiscal year.

As if reading a script repeated in many cities—and soon across Ohio absent changes—Mayor Bing asked unions for "concessions" on pension reforms and work rules. Without concessions, David Littmann, an economist with the Mackinac Center for Public Policy, says Detroit could go into default in four months.

Vallejo, Calif. declared bankruptcy in 2008. Harrisburg, Pa. filed last month, followed recently by Jefferson County, Ala. The causes are a combination of unmanageable public costs and fiscal mismanagement. The results are the same: urban deterioration.

As to Ohio, an informed school of thought holds that the labor-reform law was defeated mainly because voters came to believe it would de-fund police and fire departments. But unless Ohio's legislature revisits labor reform quickly, the state's cities and towns will face cash crunches that force reductions in services and layoffs. Ironically, opinion polls taken before the vote on Issue 2 indicated that voters favored proposals to require public workers to make greater contributions toward their health-care and pension benefits.

Detroit, Vallejo, Harrisburg and Jefferson County may be only the first wave of U.S. cities heading to the brink of bankruptcy. Too many more labor "victories" like that in Ohio, and much of urban America is undone.


"Freddie's Friend:  Newt Gingrich was on the wrong side in the housing fight, but, hey, he needed the money," by Holman W. Jenkins, The Wall Street Journal, November 19, 2011 ---

Into each candidacy some rain must fall, and the surge of Newt Gingrich is being dampened by a storm over his 1999 consulting relationship with the now-failed mortgage giant Freddie Mac.

Five months after resigning his House speakership under a cloud, Mr. Gingrich signed aboard with Freddie. To do what is a bit of a controversy. "He's not going to be representing us externally or lobbying on our behalf," a Freddie spokeswoman told the press at the time.

Mr. Gingrich himself today explains, in the full glory of hindsight, that he was there to advise Freddie that its "insane" lending policies were stoking a housing "bubble."

Less heroic is a story from a former Freddie veep in charge of political schmoozing, who told Bloomberg News that Mr. Gingrich was hired to indicate how Freddie might cozy up to conservatives.

To those innocent of Washington ways, the full truth may sound even more improbable: Mr. Gingrich was being paid so the world would know he was on Freddie's payroll, so he wouldn't be tempted to insert his voluble self on the other side of a soon-to-be roiling debate about Freddie's future.

Larry Summers had just become Clinton Treasury secretary, and was a sharp critic of Fannie and Freddie. Alan Greenspan, at the Fed, had been warning for years about their size and risk. Richard Baker, an influential Louisiana Republican in charge of a key House subcommittee, had long pressed for reform of the mortgage giants.

In the private sector, JP Morgan, AIG, Wells Fargo and other big players had just launched a new Washington trade group, FM Watch, for the exclusive purpose of curbing the growth of Fannie and Freddie. They were especially concerned about a potential invasion of subprime lending, one of the few mortgage sectors not yet gobbled up by the government-sponsored housing lenders.

Mr. Gingrich had spent 20 years in Congress, owed a $300,000 ethics fine, plus was going through a divorce. Freddie's contract, with its $25,000-per-month retainer, came at an opportune moment. But if Republicans today are going to get fussy about occasional acts of expediency among their hopefuls, they might as well recruit an infant to fill the role of 2012 nominee.

Especially since Mr. Gingrich was never a natural Freddie antagonist anyway. As big-government libertarian, he rather liked the idea of subsidizing homeownership. He also collected millions from health-care interests, and he supported a version of the individual health insurance mandate. These were once respectable ideas in GOP circles. Yet the inconvenient fact remains: Mr. Gingrich had placed himself, from the perspective of 2011, on the wrong side of the housing policy debate.

Alas, what history also records is one of the great boomerangs of PR history. FM Watch in early 2002 produced a study suggesting that Fannie and Freddie, in pursuit of profits and executive bonuses, had neglected the housing needs of minorities and the poor. The idea was to show that Fannie and Freddie's implicit federal subsidy should be pared back because it wasn't serving a good purpose. Oops. A short time later, after becoming enveloped in unrelated accounting and bonus scandals, guess how Fannie and Freddie sought to repair their standing with politicians?

But let's be fair to all, including John Paulson Gingrich. Though the housing bubble boils down to a simple matter of too much money chasing too few good borrowers, to see it coming was no simple matter.

Fannie and Freddie played a role, channeling billions from China into U.S. mortgages that never would have been invested in subprime in the absence of Fannie and Freddie's implicit U.S. government guarantee.

Wall Street played a role, tapping large pools of risk-averse pension money that never would have been interested in subprime if not repackaged as Triple-A rated securities.

Mortgage brokers played a role, putting all this sloshing liquidity to work by inventing new types of mortgages that let speculators and frisky households place one-way bets on rising home prices.

Continued in article

Jensen Comment
As most scientists and Al Gore pulled away their support of corn ethanol (it takes more energy to produce than it delivers), in a blatant move to woo Iowa farmer support Newt Gingrich announced his support for corn ethanol. Newt is a politician without integrity!

Video of Occupy Wall Street protesters holding a "moment of silence and solidarity" for the Jesus wannabe who took shots at the White House

"'Follow Those Kids!':  Media lefties keep cheering as "protests" become more depraved," The Wall Street Journal, November 18, 2011 ---

. . .

As we noted Wednesday, a man who reportedly "spent time blending in" with the Obamaville in the nation's capital, was being sought on suspicion of firing a gun at the White House last week. Police arrested the suspect, Oscar Ramiro Ortega-Hernandez, on Wednesday, and they tell the Washington Post that they "found no connection between him and the Occupy D.C. protest." Although Obama was not in the White House at the time the shots were fired, yesterday Ortega-Hernandez was charged with attempting to assassinate the president.

That didn't stop Obamavillians in San Diego from holding a "moment of silence and solidarity" in the alleged shooter's honor. In case you think we're making this up, it was vidoetaped and is viewable at YouTube.

"The good news is that Occupy Wall Street is not going anywhere," writes Richard Schiffman at the Puffington Host. "It is here to stay. . . . OWS is not about supplying readymade answers and political solutions, but about asking the right questions." Those must be questions like: Hey, wouldn't it be fun to harass little children? Or: Shouldn't we show solidarity with a guy who (allegedly) tried to assassinate the president?

"I call Occupy Wall Street a spiritual rather than a political movement," Schiffman says. That's what they called the People's Temple, too--which, before decamping for Guyana, was also a favorite of the left. Chicago's WMAQ-TV reports that Windy City Obamavillians are getting "advice about non-violent protesting" from none other than 1960s terrorist Bill Ayers. One wonders at what point people like Robinson, Schiffman and the Times's editors will change their tune and start pretending they've never heard of these awful people.

Occupy Seinfeld
In our discussion yesterday of Obamaville and free speech, we neglected to note that the Supreme Court in 1984 ruled on a case that raises many of the same issues as the cleanup of Obamaville. In Clark v. Community for Creative Non-Violence, the justices ruled 7-2 that the National Park Service could enforce rules against camping at Washington's Lafayette Park and on the National Mall.

CCNV, a left-wing group (surprise), had sought a permit for a capital protest against "homelessness." Although of course they had every right to do so, the court held that the prohibition against camping was a reasonable restriction on the time, place and manner of speech. The court did, however, hold that "the activity in which respondents seek to engage--sleeping in a highly public place, outside, in the winter for the purpose of protesting homelessness--is symbolic speech protected by the First Amendment."

Which raises a question: Are the Obamaville encampments similarly "symbolic speech"? We're not convinced that the answer is yes. The connection between the CCNV's prospective camp and "homelessness" was clear, but what exactly are the tents at Obamavilles supposed to symbolize?

Legal scholar Jim Huffman argues at the Daily Caller that "the Occupy Wall Street movement . . . made a critical mistake. It envisioned a movement, but called itself a tactic." Public-relations professionals are offering similar criticisms, Ragan's PR Daily reports:

The movement's PR efforts drew derision from Fraser P. Seitel, managing partner of Emerald Partners and author of The Practice of Public Relations. OWS, he says, has "botched an opportunity to capture public opinion and achieve something. Americans, by every measure, distrust the politicians who run Washington and lead major institutions. So public opinion was ripe for the plucking."
However, the movement blew it by having no overriding purpose, stated goals, or visible leadership, he says, and it is increasingly perceived as a bunch of publicity-hungry complainers intent on disrupting others who are making a living.
"Occupy Wall Street is right about one thing," he says. "The whole world is watching. And it's generally repulsed by what it's seen."

It's a little like the problem with "the war on terror," which is cast as a conflict with a tactic rather than with an identifiable enemy. Another comparison that comes to mind is "Seinfeld." Obamaville is a violent protest movement about nothing.

There's a Protest Singer Singing a Protest Song
"Man Charged With Trying to Kill Obama Thought He Was Jesus"--headline, Toronto Star, Nov. 17

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The Wall Street Journal, in an investigational piece (December 20, 2010), reported that five spine surgeons at Norton Hospital in Louisville, Kentucky, who performed the third-most spinal fusions of Medicare patients in the country, had received more than $7 million in “royalties” from Medtronic, the nation’s biggest manufacturer of spinal implants.
"Physician Payment Sunshine Act Signals New Dawn for Compliance," by Joseph J. Feltes, MD News, November 14, 2011 ---

Once upon a time, physicians and their families used to be able to enjoy exotic cruises sponsored by pharmaceutical companies where their only obligation, it seems, was to sign in briefly at sparsely attended meetings before embarking on offshore adventures. It’s been awhile since the sun slowly set on the wake of the last ship’s 
sybaritic junket.

Today, the Federal Physician Payment Sunshine Act — part of national healthcare reform — signals a new dawn of transparency, compliance obligations, and regulatory scrutiny. Beginning January 1, 2012, manufacturers of drugs, devices, biologicals or medical supplies, covered by Medicare, Medicaid or other federal healthcare program, must report to the Department of Health and Human Services all payments or transfers of value they make to physicians or 
teaching hospitals.

The Sunshine Act applies to payments or transfers of value covering a broad array of activities, including: consulting fees; compensation for services other than consulting; honoraria; gifts; entertainment; food; travel (including specified destinations); education and research; charitable contributions; royalties or licenses; current or prospective ownership or investment interests (other than through publicly traded securities or mutual funds); direct compensation for serving as faculty or as a speaker for medical education programs; grants; or falling within the catchall “any other nature of payment or other transfer of value as defined by the Secretary of HHS.” Additionally, if the payment or transfer of value relates to marketing, education, or research which pertains to a covered drug, biological, device or supply, that also must be reported, along with the name of the covered product.

Remaining outside the aura are certain excluded items that need not have to be reported, such as the transfer of items having a value of less than $10 (unless the items exceed an annual aggregate of $100); product samples for patient use not intended to be sold; educational materials that directly benefit patients or are intended for patient use; the loan of a covered device for 90 days or less for evaluation purposes; items or services provided under a contractual warranty; certain discounts and rebates; and in-kind items used to provide charity care, to name a few.

Covered manufacturers must disclose to the Secretary in electronic form the name of the physician (or teaching hospital); the physician’s business address, specialty and National Provider Identifier; the amount of payment or value of transfer; the dates on which payments or transfers are made; a description of whether payment or transfer was made in cash or cash equivalents, in-kind items or services, or stocks or stock options. This information will be stored in a database.

While the burden of reporting rests with covered manufacturers, access to and use of the electronic information stored in the database can be accessed by the media, consumers, the Office for Inspector General, and by prosecutors. That could pose potential liability risk to physicians for non-compliance with federal Anti-Kickback (illegal remuneration), the Stark laws (financial interest), or the False Claims Act (ill-gotten gain). It also could create potential reputational damage — fairly or unfairly — if it were to appear that research was flawed or a physician’s choice of drug was influenced by payments or other transfers of value.

The Wall Street Journal, in an investigational piece (December 20, 2010), reported that five spine surgeons at Norton Hospital in Louisville, Kentucky, who performed the third-most spinal fusions of Medicare patients in the country, had received more than $7 million in “royalties” from Medtronic, the nation’s biggest manufacturer of spinal implants.

The WSJ indicated that it had “mined” certain Medicare databases as the source of its exposé. The new Sunshine Act likely will eliminate the need to dig deeply, since the information will be collected in one database, there for the picking. Critics of the law, including Thomas Peter Stossel, MD, Professor of Medicine at Harvard Medical School, objects that the term “Sunshine” carries with it the “implicit aura of corruption,” which indeed is unfortunate.

Continued in article

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"Wind farms are useless, says Duke:  The Duke of Edinburgh has made a fierce attack on wind farms, describing them as 'absolutely useless.'".by Jonathan Wynne-Jones, London Telegraph, November 19, 2011 ---

In a withering assault on the onshore wind turbine industry, the Duke said the farms were “a disgrace”.

He also criticised the industry’s reliance on subsidies from electricity customers, claimed wind farms would “never work” and accused people who support them of believing in a “fairy tale”.

The Duke’s comments will be seized upon by the burgeoning lobby who say wind farms are ruining the countryside and forcing up energy bills.

Criticism of their effect on the environment has mounted, with The Sunday Telegraph disclosing today that turbines are being switched off during strong winds following complaints about their noise.

The Duke’s views are politically charged, as they put him at odds with the Government’s policy significantly to increase the amount of electricity generated by wind turbines.

The country has 3,421 turbines — 2,941 of them onshore — with another 4,500 expected to be built under plans for wind power to play a more important role in providing Britain’s energy.

Chris Huhne, the Energy Secretary, last month called opponents of the plans “curmudgeons and fault-finders” and described turbines as “elegant” and “beautiful”.

The Duke’s attack on the turbines, believed to be the first public insight into his views on the matter, came in a conversation with the managing director of a leading wind farm company.

When Esbjorn Wilmar, of Infinergy, which builds and operates turbines, introduced himself to the Duke at a reception in London, he found himself on the end of an outspoken attack on his industry.

“He said they were absolutely useless, completely reliant on subsidies and an absolute disgrace,” said Mr Wilmar. “I was surprised by his very frank views.”

Continued in article



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Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

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