California Free Press

Financial Parasites Have Become Neo-Feudal Landlords

by John Lawrence

Classical economics divided income into two types: earned and unearned. Earned income came from productive labor combined with capital investment. Unearned income was considered parasitical and consisted of rent, interest and dividends. It was not considered as adding to GDP but as subtracting from it. It was money made by manipulating money much as feudal landlords made their money in what has been called a rentier economy.

Today most of the money earned by the 1% which is driving the income inequality gap is made in the financialized, rentier economy but is now considered earned income. New methods have been devised to make money not by productive labor and investment but by manipulating financial instruments. One such manipulation consists of stock buybacks.

Why would a company buy back its own stock, stock that was issued in the first place supposedly to give the company money it needed for productive investment to produce goods and services. The answer is very simple. When a corporation buys its own stock (often with borrowed money), the stock usually goes up at least temporarily. That gives the executives of the company and activist hedge funds time to cash in their stock grants, options and garden variety stocks and make a killing. The boost in stock value also impresses Wall Street which cares solely about the short term financial indicators for a company and not at all about what the company did to achieve those indicators.

When a company uses its profits or even borrowed money to buy back its own stock, that's money that is not being used for research and development or to expand production or to make a better product. The money that the executives and hedge funds make is strictly because of financial manipulation, but in a financialized economy it's considered to be additive to GDP. The measurement of GDP is no longer linked wholly or even mainly to production, but now consists to a large extent of income that is made in the rentier economy.

Carl Icahn, a big investor in Apple, is always trying to get them to buy back their stock so he can cash in. The billionaire activist investor lobbied Apple to buy back billions worth of its shares to boost value to shareholders. In April 2014 Apple boosted its buyback plans by $30 billion and even split its stock for the first time in nine years. Satisfied? Never. Icahn's taking another swing at getting Apple to buy back even more stock, saying the shares could double to more than $200 apiece.

Another way the parasites make money which makes the GDP figures look good is to not pay taxes. The tax code has been completely captured by the large corporations and their lobbyists which has shifted the burden away from corporations and onto the average working person - the 99%. Both Democrats and Republicans are complicit in this arrangement, one example of which is the tax giveaway they are getting ready to implement.

William Greider in an article entitled Democrats and Republicans Are Quietly Planning a Corporate Giveaway—to the Tune of $400 Billion writes the following:

The bad news is that key leaders of the Democratic Party—including the president—are getting on board with Republicans, despite some talk about confronting income inequality. Influential Democrats intend to negotiate with Republican counterparts on the size and terms of post-facto tax “forgiveness” for America’s globalized companies. This is real money they’re talking about—a giveaway of hundreds of billions

Why haven’t voters heard about this from candidates? Because Republicans and Democrats both know it would make angry voters even angrier.

The major multinationals complain about a tax problem that most citizens would love to have for themselves: Thanks to a loophole in the tax code, the companies do not have to pay US taxes on profits they have earned in foreign countries until they bring the money home to American shores. Altogether, the globalized US companies have accumulated $2.1 trillion in untaxed profits, most of it parked in overseas tax havens.

The multinationals are waiting for Congress to forgive them their debts.

Oh, but forgive the debts of the little guy? Never!! While corporations expect to have their debts forgiven, there is no such help for for the average American or average debtor nation like Argentina or Greece.  For the rest of us the commandment is "Thou shalt PAY UP." Wall Street has adamantly stuck to this first Principal of Finance which is sancrosanct, so sancrosanct in fact that bankruptcy rules for the average American are being tightened while at the same time they are being loosened for corporations. You think student loan debtors can go bankrupt? Guess again.

After all part of the vulture capitalist's playbook is to buy a company with borrowed money, load it down with debt, strip its assets, raid its pension fund, then take it into bankruptcy in order to destroy its union. Having accomplished all that and by the way added to GDP while so doing, the company can then be taken out of bankruptcy, taken private and then taken public again in order to get another infusion of cash from an Initial Public Offering (IPO) which is immediately gobbled up by the hedge fund (another name for vulture capitalist) itself. All of these shenanigans make money off of money, do nothing for productive investment but do add to GDP.

Congress let these corporations have a "tax holiday" in 2004 on the hope and promise that these corporations would spend their largesse doing research, investing in America and creating jobs. What happened? The 15 companies that benefited the most from a 2004 tax break for the return of their overseas profits cut more than 20,000 net jobs and decreased the pace of their research spending. One of the beneficiaries was Qualcomm, a major whiner for another tax holiday. On his way out the door Paul Jacobs exhorted his employees and shareholders to “Send your Congress people your opinion that you’d like American companies to be able to bring offshore money back to the United States to either reinvest or return to shareholders.” Qualcomm had $21.6 billion in overseas profits in 2014. And those poor shareholders - most of them in the 1% - are having to make do without their money. Oh, Boo Hoo.

As a result GDP is no longer a measure of the health of an economy. If a tornado wipes out a town, the money spent to rebuild that town adds to GDP, but does not constitute a contribution to the economy that adds anything except to restore what was already there. In the same way hedge funds add nothing productive to the American economy, but they do increase GDP. So GDP as a measure of anything productive is passe. It is merely a measure of the cash that changes hands regardless if it changed hands as a result of winning a bet in a casino or in the casino of Wall Street or it changed hands because someone bought something that was actually useful.

And don't forget the second Principle of Finance - "If Wall Street fucks up, thou shalt bail us out" in which case taxpayers will restore their financial rectitude and well-being like we did in 2008. Or maybe this time it will be a bail-in in which case citizens will make Wall St whole again with money from their savings accounts which by the way are the property of the banks. The bank has merely issued you what amounts to an IOU, and, what's more, you're treated to practically zero interest rates on your savings. How's that you thrifty senior savers?

If GDP doesn't measure the exchange of productive goods and services or productive investment, why does every politician and pundit insist on "growing the economy" meaning increasing GDP? We would be better off in some ways if GDP were diminished and the emphasis was on a sustainable economy, an economy which valued the health and welfare of the average person instead of the 1%. All the money that is made from the oil and gas industries needs to diminish if we are to make any progress with global warming. All the money made by Wall Street on fees, interest and derivatives needs to diminish if the economy is to be placed on a more solid financial footing.

Consumers contribute 70% of GDP. If we start growing our own food and fixing our own cars and buying less junk, this will diminish GDP, but the average American will be better off. They would have less debt. If we stop going into debt, GDP would go down. But so would the inequality gap as corporations earned less profit and Americans took on less debt. How to make America great again? Pay down your debt, do more for yourself instead of buying goods and services in the cash economy, buy and work local and stop patronizing large corporations and Wall Street banks.

The only way that the central bank of the US, the Fed, knows to grow the economy is to lower interest rates and force more debt on American citizens. This is what monetary policy amounts to. Fiscal policy, in which the government would create jobs directly by providing money for infrastructure revitalization, is non-existant thanks to Republicans who won't approve expenditures by government that would actually create jobs and the military-industrial complex which gobbles up every available dollar.

If American citizens don't take on more debt, the economy goes to hell in a handbag. The only way around this is to start a public bank. Then the local economy can be served directly including creation of good jobs without reliance on Wall Street. By the way sports fans, the plan for the new San Diego "Convadium" would involve the City of San Diego issuing a billion dollars in bonds, a plan they are touting as requiring no taxpayer funding, but which will involve huge payments to Wall Street for fees and interest. These bonds will be backed by nothing except hotel taxes. Who's liable here if the plan goes south?

Michael Hudson writes in his book, Killing the Host - How Financial Parasites and Debt Destroy the Global Economy:

"Trying to rise into the middle class these days is a road to debt peonage. It involves taking on mortgage debt to buy a home of one's own, student loans to get the education needed to get a good job, an automobile loan to drive to work, and credit card debt just to maintain one's living standards as the debtor falls deeper and deeper into the hole. Many recent graduates find that they have to pay so much on their student loans that they must live at home with their parents and cannot afford to get married and start a family, much less qualify for a mortgage. That is why consumer spending has not risen since 2008. Even when income rises, many families find their paychecks eaten up by debt service."

Bernie Sanders is addressing the problem of debt peonage, which is gradually enslaving the American middle class, directly by calling for free public education and Medicare For All. He is also addressing the US tax code which has been rigged in favor of the wealthy and the corporations starting with Ronald Reagan's and Alan Greenspan's meddling. Republican Presidential candidates would only hasten the descent of the American middle class into debt peonage by giving further tax breaks to the rich while transferring even more of the tax burden onto the middle class and the poor.

The American dystopia that is becoming more likely is one in which a small percentage owns the means of production and rent producing assets while the vast majority eke out a living doing menial labor that can't be done by robots and automatons. Andrew F. Puzder, CEO of the parent company of Carl’s Jr., has announced he’s investing in machines because he doesn't want to pay employees $15 an hour or to pay for their health care. Puzder makes more in one day ($17,192) than one of his minimum-wage employees working full time makes in a year ($15,080), The Nation reported last year.

Work for nothing or be replaced by a robot - that's the choice for the 99%. But robots are taking middle class jobs now and will take more in the future, minimum wage or no minimum wage. So what's the solution? Start your own business, become self-employed, stay away from student loan debt or start or become a member of a cooperative enterprise. You have no future as a minimum wage employee regardless of the minimum wage. Take the bull by the horns instead of trying to convince the cow not to shit on you.

The American dystopian vision of the future is even more appalling than the feudal era in which human labor was actually needed to make the economy work. Sure the 1% controlled the wealth; it was a rentier economy but human labor was necessary. Now humans as well as their labor are expendable. The future could hold a life of abundance and leisure for everyone but that is not likely unless wealth is more evenly distributed. It won't be more evenly distributed unless consumers stop consuming, take matters into their own hands and start producing for themselves. The sad truth is you can make more money as a self-employed laborer than you can working a 40 hour week for MacDonald's even if you just do a couple of jobs per week! Why work for $10. an hour for someone else when you can make five times that much as a self-employed doing exactly the same work?

Why Are Innocent People Being Killed by Terrorists?

by John Lawrence from the San Diego Free Press

Many people cannot understand why radical Islamists are killing innocent people as happened in Brussels recently. What did these people ever do to them to justify their being ruthlessly terminated as they were just going about their everyday lives in a peaceful manner?

It's not as though many innocent civilians in the Middle East have not had their lives terminated as they were simply going about their business. As many as 12 civilians were killed in December 2013 in Yemen when a US drone targeted vehicles that were part of a wedding procession going toward the groom’s village. Since 2002, drones piloted by the US Central Intelligence Agency and the Pentagon have killed hundreds of people in the country, mostly members of al-Qaeda in the Arabian Peninsula, but also dozens of civilians, including children. The deadliest attack killed more than 40 people - including 22 children and 12 women - when a Tomahawk cruise missile fired from a naval vessel hit the village of al-Majala on December 17, 2009.

What could be more innocent than a wedding party? What I wonder is - were the victims of these and other attacks that killed innocent women and children ever compensated for their losses? I think the answer is no. US attacks in the Middle East that have destroyed real estate and many peoples' lives go uncompensated by US authorities. Not only do they not apologize, they don't compensate financially the people involved for their losses. Compensation for the grandchildren that the bride and groom will never have? Hardly.

Hulk Hogan won a $115 million settlement because someone publicized a sex tape he had made. Erin Andrews was awarded $55 million for a lawsuit over a nude video. But victims of US violence in the Middle East. Nada. They get nothing but smoldering resentment for the loss of their loved ones. Why are they resentful and whom is the resentment directed at? Guess.

Aljazeera reported:

"Between a Drone and Al-Qaeda" - a report published in October 2013 by Human Rights Watch - found the US has carried out 80 targeted operations in Yemen since 2009, including strikes from drones, warplanes and naval vessels stationed in the Gulf of Aden, killing at least 473 people.

Observers say attacks such as these are helping push Yemenis into the arms of al-Qaeda.

"It is far from the only instance of the US indirectly assisting al-Qaeda's PR machine - and even its human resources department," wrote Yemeni activist Farea al-Muslimi recently about the Radaa strike.

The West including the US and Europe has to come to the realization that they are responsible for the radicalization of people who have been victimized by their policy which has resulted in innocent civilians being killed throughout the world. In the minds of radicalized Islamists who commit atrocious acts and take the lives of innocent civilians in the west, these acts are balanced by the Western nations, mainly the US, which have taken innocent lives in the Middle East. It is tit for tat with not much tit comparatively doled out for a whole lot of tat. There is no comparison when you measure the number of innocent lives lost on both sides.

Republican Presidential candidate John Kasich has said:

"We must also redouble our efforts with our allies to identify, root out and destroy the perpetrators of such acts of evil. We must strengthen our alliances as our way of life and the international system that has been built on our common values since the end of the Second World War comes under challenge from these and other actors of evil."

Tell me, Mr Kasich, how this is an Act of Evil, but the destroying of innocent lives in the Middle East is not an Act of Evil? Tell me how the hundreds of thousands if not millions of lives destroyed in the Middle East is not an Act of Evil perpetrated by George W Bush who lied the American people into a war in Iraq. Tell me how this is not the result of that war that led directly to the rise of ISIS or ISIL or whatever you want to call it. Real estate destroyed with no compensation. Lives and families destroyed without even an apology. The wonder is why there are not even more terrorists than there are. They must figure two can play that game: the game of destruction of innocents with no remorse that is.

The strike on a Doctors Without Borders hospital in Kunduz, Afghanistan, which killed 32 people, including three children, was an accident. Did the US compensate Doctors without Borders including paying money to the families of the victims? I don't think so. Did the US military rebuild the hospital? That's not what the US military does. It destroys with no apologies. It does not rebuild. The US has a history of aerial military mistakes not only in Afghanistan, but in other countries including Libya and Syria. These countries have become wastelands which have undergone the most thorough destruction which has precipitated the overwhelming European refugee crisis. Is the US offering compensation to the refugees? I don't think so. There is no compensation in war.

In 1991, during the Gulf War, the US bombed a complex in the Amiriyah neighborhood of Baghdad. The bombs, which were laser precision-guided, hit the complex and killed 408 civilians. At the time of the bombing, US officials said they hit the complex because they thought it was being used as a command center and accused Saddam Hussein of using civilians as human shields. Has the US rebuilt the neighborhood or offered financial compensation to the victims? No, let's blame Saddam who lost his life and his country because of US lies. Saddam had kept a lid on the seething ethnic tensions and was no threat to the US.

A Defense Department official who spoke on condition of anonymity said, "Under a well-established principle of international law, nations are not liable to provide compensation for injuries or damage occurring during combat operations." Thank you for that clarification.

"In any conflict there are unintended casualties. But we are working to make all of Iraq a better place to live." Really. Really? Is Iraq a better place to live now than it was before the US invasion led by George W Bush who said that his father had not gone far enough in his invasion? Who said that if he got a chance to invade, he'd go all the way to Baghdad and surround himself with glory as a wartime President and get all his agenda passed? “If I have a chance to invade…if I had that much capital, I’m not going to waste it. I’m going to get everything passed that I want to get passed and I’m going to have a successful presidency.”

The Guardian reported:

The drones came for Ayman Zawahiri on 13 January 2006, hovering over a village in Pakistan called Damadola. Ten months later, they came again for the man who would become al-Qaida’s leader, this time in Bajaur.

Eight years later, Zawahiri is still alive. Seventy-six children and 29 adults, according to reports after the two strikes, are not.

However many Americans know who Zawahiri is, far fewer are familiar with Qari Hussain. Hussain was a deputy commander of the Pakistani Taliban, a militant group aligned with al-Qaida that trained the would-be Times Square bomber, Faisal Shahzad, before his unsuccessful 2010 attack. The drones first came for Hussain years before, on 29 January 2008. Then they came on 23 June 2009, 15 January 2010, 2 October 2010 and 7 October 2010.

Finally, on 15 October 2010, Hellfire missiles fired from a Predator or Reaper drone killed Hussain, the Pakistani Taliban later confirmed. For the death of a man whom practically no American can name, the US killed 128 people, 13 of them children, none of whom it meant to harm. ...

Some 24 men specifically targeted in Pakistan resulted in the death of 874 people. All were reported in the press as “killed” on multiple occasions, meaning that numerous strikes were aimed at each of them. The vast majority of those strikes were unsuccessful. An estimated 142 children were killed in the course of pursuing those 24 men, only six of whom died in the course of drone strikes that killed their intended targets.

In Yemen, 17 named men were targeted multiple times. Strikes on them killed 273 people, at least seven of them children. At least four of the targets are still alive.

The U.S. government has implemented targeted killings since the Sept. 11 attacks as a counter terrorism measure and as retribution against al Qaeda and the Taliban. Under the Obama administration, many of these targeted killings have been carried out using unmanned drones. Despite the high number of civilian casualties, President Barack Obama has repeatedly defended the strikes. To paraphrase, the only way, it seems, to get a bad guy with a gun is to take out a whole bunch of good guys without guns.

Targeted killings? That's exactly what the attacks in Brussels, Paris, Turkey and elsewhere were. Targeted killings exactly as were those killings that targeted relatives of those radical Islamists. The resentment engendered by the targeted killings of civilians in the Middle East has come home to haunt those of us living in the West. It's tit for targeted killing tat, and killing civilians is what it's about on both sides. The chickens always do come home to roost.

Hulk Hogan and Erin Andrews can get millions for an illegally made or publicized sex tape. Victims of US and western violence don't get as much as an "I'm sorry for your loss."

Joe Wilder: Gentleman of Jazz

by John Lawrence

The San Diego Jazz Society Presented Joe Wilder and Marshall Royal

Joe Wilder was not only a magnificent trumpet player but a gentleman according to all who knew him. I had the privilege of presenting him and saxophonist Marshal Royal along with a local rhythm section composed of Mike Wofford, Bob Magnusson and Roy McCurdy at the Lyceum Theatre in 1990 under the auspices of the San Diego Jazz Society. A CD was made of the performance which, unfortunately, is out of print. Joe helped to break down racial barriers on Broadway, radio, television and in classical music.

Wilder’s sense of propriety was legendary. When Wilder was in Lionel Hampton’s orchestra in the early 1940s, fellow band members used to offer him a $10 bill if he would simply utter one four-letter word. Wilder never collected! A soft-spoken and stately man, he never appeared in public without a tie. He was a non-smoker and non-drinker. He was as impeccable in his playing as he was in his personal life. Classically trained, he had to face the reality that no African-Americans were being hired for symphony jobs in the 1930s and 40s. After auditions for symphony jobs, they were told, "Don't call us; we'll call you."

So he branched out into big bands. He played with the bands of Les Hite, Lionel Hampton, Jimmie Lunceford, Herbie Fields, Sam Donahue, Lucky Millinder, Dizzy Gillespie, Noble Sissle and Count Basie among others! On the road with the Hampton band in Iowa in 1946, Wilder and a fellow trumpeter were refused service at a Chinese restaurant in Des Moines. They stayed for hours and the following day did the same, manifesting passive resistance years before the sit-ins in the South.

He experienced many other outrageous displays of racism as did all other African-Americans during that period. Jim Crow was the prevailing attitude. Blacks had no rights to stay at public hotels or eat in public restaurants. According to Joe's biography, "Softly, With Feeling" by Edward Berger, when Joe was working with Jimmy Gorham's band:

Gorham's band played an engagement at the all-white Warwick Hotel in Philadelphia for a lady who was throwing a party. "This was only the second time that a black band played in the hotel - my father happened to be in the band that first played there years earlier," Wilder said. "And after that engagement, the white union local told the hotel that if they hired any more black bands, they would bar any white bands from playing in there." But the hostess specifically requested Gorham's band, which was a big hit with her guests. "During the intermission," Wilder recalled, "she came over to compliment Jimmy and said with a deep Southern accent, 'Mr. Gorham, I just wanted to tell you that my guests all enjoyed y'all's music. Most of them have never heard a hot nigger band before!' There was a silence in that band room, and then the guys started asking each other, 'Did she say what I think I just heard?' They lit into that woman to the point that some of us actually felt sorry for her because she didn't actually mean to offend us.

Born in Philadelphia in 1922 into a musical family, he grew up in an integrated neighborhood and had both white and black friends. As a child he was featured on a weekly children’s radio program in Philadelphia: Parisian Tailors’ Colored Kiddies of the Air. He attended the Mastbaum School of Music which also produced other notable jazz musicians such as Lee Morgan, Buddy DeFranco, Red Rodney, Bill Barron and Ted Curson. Wilder interrupted his musical career when World War II came around. He was one of the first black marines.

Black Musicians Had to Deal With Racism Especially in the South

In his biography Wilder recounted a serious incident  involving Illinois Jacquet when they were traveling in the South with Lionel Hampton's band:

We were in Alabama, and Illinois was late getting to the station, and the train was getting ready to pull out. Illinois didn't have time to run down and get his luggage and stuff into the black coach. So he just got on the first step that was open. He started walking through the white cars, and this conductor, who looked like the Kentucky colonel, hit him and said, "Boy, what do you think you're doing back here?" Illinois said to him, "Who you calling 'boy'?" and kept walking. The guy pulled out a pistol and followed him into the black coach. Illinois was talking back to him, and several of our guys who carried pistols stood up. Our road manager, who was a very nice red-haired Texan named Mack O'Connell, came into the coach just as this guy was threatening to blow Illinois' head off. Mack shouted, "What's going on here?" The conductor said, "Cap'n, is them your niggers?" And Mack said, "Yeah, why?" Well, you better teach 'em how to behave down here!" the conductor replied. Meanwhile, Red Farrington, the band boy, was standing right behind the conductor with a switchblade. Mack O'Connell quieted the whole thing down. He was a nice guy. A lot of guys didn't like him because he had a southern drawl. A lot of us were turned off by the accents, but a lot of these guys were the nicest people you could run into.

It's easy to see how quickly incidents like these involving a black man and a white authority figure like the police can get out of hand like is still happening today.

After his stint with the big bands, Wilder broke the color line by dint of his excellent musicianship started getting gigs for Broadway shows in the 1950s. Ed Berger wrote:

Wilder went on to play in such hit productions as Guys and Dolls and Cole Porter’s Silk Stockings, joining the touring company of the latter in 1953. “They went first to Mr. Porter and asked if he had any objection to a black musician playing first trumpet,” Wilder recalls. “All he asked was, ‘Can he play my music?’ When they told him I could, he answered, ‘Well, that’s all that matters.’ I never got an opportunity to tell him how much I appreciated it.” As a Broadway regular, he was in the pit orchestra of the musical "42^nd Street" for more than eight years.

In the mid-50s Wilder joined the elite group of first-call musicians in the New York City studio scene. Again he had to overcome racial barriers. He overcame prejudice and stereotypes with sheer talent and consummate professionalism. “We’re all going to encounter bigotry and racism in some form or other but you can’t let yourself get mired down in those problems,” he says. “When you run into that kind of a situation you stop and you think about the guys that you’ve known, the friends you’ve had, the people who were absolutely in no way like that. And those are the people that you relate to.”

He was on staff at ABC from 1957 to 1974. He was heard on “The Voice of Firestone,” “The Dick Cavett Show” and other programs that used live music. As a non-traveling musician, he was able to stay at home with his family unlike most jazz musicians of that day. Wilder was adaptable enough that he could play any kind of music. He also cut some jazz albums under his own name as well as many albums as a sideman for other jazz musicians and vocalists.

Wilder Never Gave Up His Dream

Still Wilder never gave up his dream of becoming a classical musician. He went back to school at Manhattan School of Music and did several gigs with the New York Philharmonic. In 1968 he became principal trumpet for the Symphony of the New World, which he cited as “the first fully integrated symphony orchestra in the United States.” He also recorded his own album of classical trumpet pieces thus predating by 15 years and paving the way for Wynton Marsalis' dual role in jazz and classical music.

Ed Berger wrote:

Joe Wilder’s trumpet sound remains one of the glories of American music. His elegant solo style is instantly identifiable, drawing from the swing and bebop eras he straddled, as well as reflecting his classical experience. As Whitney Balliett wrote in a 1986 New Yorker profile of Wilder, “His solos are immaculately designed.… He makes the song gleam.” Whether skillfully manipulating his mutes and plunger, or displaying his ravishing tone on open horn, Wilder’s solos tell a story with poise, wit, swing and feeling. He is also one of those rare musicians who can captivate an audience by simply playing a melody.

In Joe's biography Wynton Marsalis wrote in the foreword: "Beyond the excellence of his playing, as a man he has such dignity and feeling and is so engaged and intelligent. He brings a warmth to every situation. He loved my kids who were very young at the time, and was constantly looking out for them. He would tell me, 'You've got to be attentive to your kids.' He's always talking about family and the importance of savoring moments together."

In 2008 Mr. Wilder was named a Jazz Master by the National Endowment for the Arts, the nation’s highest honor for a jazz musician.

Joe Wilder died at the age of 92 in 2014 in New York City. Wilder's survivors include Solveig, his Swedish born wife of 56 years; daughters Elin Wilder-Melcher, Solveig Wilder and Inga-Kerstin Wilder; son Joseph Wilder Jr.; and six grandchildren.

 

Hedge Fund Billionaire Paul Singer Makes Argentina Cry For Itself

by John Lawrence

Argentina is the latest country to suffer at the hands of US vultures. Paul Singer of the Elliott Management hedge fund will reap a huge sum based on his purchase of Argentinian bonds in 2001. His firm has about 300 employees, yet it has managed to force Argentina, a nation of 41 million people, to its knees. Hedge funds like Singer's play a big part in the financialization of the global economy, making money off of money with no productive labor involved. They are making the inequality gap between the wealthy, the 1%, and the rest of us, the 99%, even bigger. Singer's money will be deposited into the account of one of his subsidiaries in the Cayman Islands, a tax free jurisdiction, which means he will pay no US taxes on his windfall.

During the Argentine Great Depression from 1998 to 2002, Argentina took on a lot of debt from US bondholders. The economy shrank by 28 percent from 1998 to 2002. After Argentina defaulted on its bonds, Singer and others snatched them up for pennies on the dollar. Singer will get back $2.28 billion, equal to about 369% of the face value $617 million in principal, under the terms of a settlement announced February 29, 2016. However, Singer bought the bonds for pennies on the dollar and then insisted in being paid back full face value in US Courts which agreed with him. So his return on investment is more likely around 2000%.

Argentina tried to restructure or write down its debt in 2005. While most investors agreed to receive less than full face value, Singer was a holdout demanding he be paid 100 cents on the dollar for full face value for bonds he had purchased for pennies on the dollar. Most of the speculators who had purchased these bonds agreed to a 76% payout, but not Singer. He saw a chance to make a killing. By 2013 his NML affiliate in the Cayman Islands (a no tax jurisdiction) had spent about $49 million for Argentinian bonds which had a face value of perhaps $250 million.

A second debt restructuring in 2010 brought the percentage of bonds out of default to 93%, but Singer was still a holdout. Bondholders, who participated in the restructuring, accepted repayments of around 30% of face value and deferred payment terms, and began to be paid punctually. On the other hand Singer sued in New York federal court to get full face value of the bonds he owned plus accrued interest and expenses amounting to $832 million. Because the bonds were denominated in dollars, as part of the restructuring process, Argentina had agreed that repayments would be handled through a New York corporation and governed by US law. So Argentina had to accept this federal court's jurisdiction whether it liked it or not.

Clever lawyering on the part of Singer and the other holdouts noticed that Argentina had omitted to provide for holdout situations and had instead deemed all bonds repayable on pari passu (equal) terms. This is fancy lawyer lingo that prevented preferential treatment among bondholders. The holdout bondholders therefore sought, and won, an injunction in 2012 that prohibited Argentina from repaying the 93% of bonds that had been renegotiated unless they simultaneously paid the 7% holdouts their full face value for the bonds they possessed as well.

According to Michael Hudson in his book Killing the Host - How Financial Parasites and Debt Destroy the Global Economy:

These funds are called "vultures" because they feed on "dead" bonds in default. Complaining that "these hedge finds who have bought the bonds at 20-30 cents to the dollar ... now want to be repaid in full citing contractual obligations," Argentine Minister of Economics Axel Kiciloff pointed out that the vulture funds had bought the bonds "with the sole purpose of obtaining a favorable judgment [from a US court in order] to make an exorbitant profit."

In addition to demanding 100% of the bonds' full face value, Singer asked for twelve years of accrued interest (compounded), punitive damages, and reimbursement for the legal expenses incurred in his approximately 900 attempts to embargo and seize Argentine assets in any countries that would recognize his claim.

Singer's ploy had worked before. In 2008 British Courts had awarded his fund full face value principle plus interest on Congo debt. Since that time Britain has passed laws protecting highly indebted countries from being attacked by Singer's modus operandi. The US, however, has no such protection.

After failing to seize Argentine assets, Singer's lawsuit came before Second Circuit Court Judge Thomas Griesa. It was his lucky day because Griesa agreed with him that he should be able to stop Argentina from settling with 92.4% of its bondholders until Singer was paid full face value for his bonds. In 2012 Griesa directed the Bank of New York Mellon to stop disbursing Argentina's payments to the vast majority of its bondholders which had agreed to accept lower than face value for the bonds they possessed.

Even though international law has outlawed the pari passu principle, Judge Griesa insisted on it thereby placing Argentina in what amounts to a position of debt servitude and forcing them to default on the bonds they had already renegotiated with the 93%. Financial Times columnist Martin Wolf called Griesa's ruling "extortion backed by the USA judiciary."

Even though Argentina appealed to the US Supreme Court, it was of no avail as the conservative majority led by Justice Scalia ruled in favor of subjugating a government power - Argentina - to Wall Street. Scalia insisted that Singer could go after Argentina's assets if it couldn't pay up treating it just like a debtor who couldn't pay his mortgage or credit card debt.

Furthermore, the Supreme Court ruled that Argentina had to provide Singer's hedge funds with a list of assets it possessed anywhere in the world so Singer could go after them and Argentina would be responsible for his legal bills in so doing. Even after Argentina deposited money in the Bank of New York Mellon to pay interest due on June 30, 2014, Judge Griesa directed the bank to return the money and ordered Argentina to send representatives to New York to negotiate with Singer.

In an article in the New York Times, Argentina Finds Relentless Foe in Paul Singer’s Hedge Fund, it was reported:

“We’ve had a lot of bombs being thrown around the world, and this is America throwing a bomb into the global economic system,” said Joseph E. Stiglitz, the economist and professor at Columbia University. “We don’t know how big the explosion will be — and it’s not just about Argentina.”

As a hedge fund, Elliott’s pursuit of Argentina is motivated by a desire to make money. Having bought its Argentine bonds for well below their original value, the firm stands to make a killing if Argentina pays the bonds in full. Legal filings indicate that the face value of its Argentine government bonds was around $170 million, but the firm most likely acquired many of them for much less than that. Elliott and other investors are now seeking more than $1.5 billion, which includes years of unpaid interest.

Michael Hudson commented:

As shaped by Judge Griesa, the Court of Appeals and the US Supreme Court, current US law forms a financial vise to prevent countries from escaping from debt deflation, rentier serfdom and seizure of their assets by creditors. Griesa's ruling threatens that without restructuring onerous foreign debts, entire economies will be driven into depression, unemployment and emigration of young labor, capped by pressures for insider privatization.

In the summer of 2014, over 400 banks, bond investors and debtor countries worked via the International Capital Market Association to limit the ability of vulture hedge funds to block settlement and compromises using the pari passu principle. Judge Griesa's ruling would be rendered obsolete and the pari passu would be defined to mean "equal treatment but not equal payouts for bondholders."

Judge Griesa's rulings had made it impossible for any debtor country to renegotiate its debts down to within its ability to pay. Any vulture fund could demand to be repaid full face value even if the majority of bondholders are willing to negotiate and receive less. Argentina's President Cristina de Kirchner called the holdouts "vultures" and "financial terrorists."

Is it any wonder then that the BRICS countries are forming their own fund from which countries could borrow in other than dollar denominated assets carrying with them the restriction that any negotiations would have to go through the US judicial system controlled by conservative judges and a conservative Supreme Court. Thankfully, Scalia is no longer there to squeeze every penny out of debtor countries for the benefit of Wall Street.

So why was Argentina able to settle now? It has not been able to borrow more money in the bond markets because of this long running situation and it is hurting. The new administration of President Mauricio Macri has taken a more conciliatory tone than did the Kirchners who called Singer a vulture and a financial terrorist. Macri decided that, rather than be forced out of the bond markets, he would rather borrow the money to pay off the vultures as long as they could then get back into the business of borrowing even more money to run the country. On Feb. 19, Judge Griesa dealt the holdouts a setback by agreeing to lift an injunction that had prevented Argentina from raising new money in bond markets or paying its creditors which led to the settlement with Singer and the other vultures. One caveat: Argentina's legislature still has to approve the deal.

However, by borrowing even more money to pay its debts, Argentina is being led down the road to insolvency and debt deflation. Borrowing money to pay off debts amounts to a huge Ponzi scheme which, when it eventually collapses, will allow the vultures to profit even more off of Argentina's carcass.

So what will Paul Singer do with his ill gotten gains which will force Argentina into debt servitude? Will he use the money for philanthropic purposes? Hardly. Currently, he's supporting Marco Rubio for President. Here's what Rubio wants to do:

1. Rubio wants to repeal Obama’s executive order to expand background checks and close gun sale loopholes.

2. When asked about closing down mosques, Rubio said he wants to shut down “any place radicals are inspired.”  

3. He denies humans are responsible for climate change.

4. His tax plan gives the top 1 percent over $200,000 in tax cuts every year. That’s as bad as Donald Trump’s tax plan.

5. He wants to cut $4.3 trillion in spending, including funds from Medicare and other programs, essentially freeze federal spending at 2008 levels for everything except the Pentagon.  

6. He wants a permanent U.S. presence in Iraq, and would end the nuclear deal with Iran, putting us on a path to war.

7. We have no way to know where he is on immigration because he’s flip-flopped — first working on legislation to regularize citizenship for undocumented immigrants, and now firmly anti-legalization.

8. He wants to repeal Obamacare.  

9. He’s against a woman’s right to choose, even in cases of rape and incest.

An excerpt from Paul Singer's New Bible:

Commandment 1: Thou shalt PAY UP.

Commandment 2: (If you disobey Commandment 1,) Thou shalt relinquish thine property.

Commandment 3: Thou shalt have no mercy for debtors.

These are the precepts to live by that take precedence over every other consideration such as "Love your neighbor as yourself" and "Do unto others as you would have them do unto you." These commandments apply both to individuals and nations. Bankruptcy is getting more difficult for both individual debtors and nations, easier for corporations. Case in point - next to impossible for student loan debtors. The goal is perpetual debt servitude presided over by a rent extracting parasite class - the 1%. In the vulture class's sights: Greece, Brazil, Spain, Italy and finally American college graduates.

The game plan is for the Fed and the European Central Bank to encourage more debt by going to negative interest rates. This is the only way they can think of to get consumers to borrow and spend more (and go into more debt) in order to keep GDP going up. US GDP consists of 70% consumer spending. Once the debtor is unable to pay, then seize or privatize (as the case may be) their assets, erect a toll booth and charge rent. This turns neighbors into beggars, provides austerity for all and allows private corporations to profit from providing essential services like water as is the case in Detroit.

Bernie Is Best to Trounce Trump

by Frank Thomas

Vote for Bernie in the primary and get a guaranteed win for Trump in November.  ... or is it ... Vote for Hillary in the primary and get a guaranteed win for Trump in November?

I prefer a presidential candidate of exemplary integrity, keen problem-solving skills, a dedication to improving the common man's welfare and equitable sharing in society's progress (or breakdowns) - as opposed to the systemic marginalization and impoverishment of Main Street taking place the last 35-40 years.

As we have moved further and further to the right in past years, we've moved further away from our founding values of fair play, justice, and a rising tide for all. Result? A democracy that has morphed into a plutocracy under the heavy-handed influence of special money interests - serving narrow, greedy pursuits and to hell with everybody else and the environment. We have been invaded by the Tea Party, far-right paradigm of anti-everything-government, pro-individual and privatization-of-everything-government and Trump’s blustery populism – exploiting and stirring the general public’s insecurity and anger.

American “exceptionalism” is not working socially. Our rates of poverty and homeless people are the highest in the western world. Bernie's mission is to correct the social injustices and middle-class-race-to-the-bottom we are trapped in. Trump will typically call Bernie's revolutionary change Socialism – when in fact it's a return to a more balanced, uncorrupted-by-MONEY governance that equitably advances the interests and well-being of ordinary Americans and communities.

In this effort, Hillary's credibility has been contaminated by her long-standing neo-liberal flirtation with Wall Street MONEY powers. Since 2008, she and Bill have earned a stupendous fee income in excess of $150 million for speeches to the corporate rich and powerful – many in secret, e.g., Goldman Sachs from whom Hillary pocketed $675,000 for three speeches. Now, she is suddenly projecting a concern for the common folk. As Bernie said, "You are finally discovering the right religion."

But Hillary's small-step incremental change approach will NOT rectify the profound structural flaws in our political-economic model. Bernie’s movement for daring systemic change for systemic problems is right on. Trump, a remarkably non-ideological candidate, is also advocating bold reforms to better the lot of the common people while also “Making America Great Again.” His angry, insurgent followers are seeking an authoritative leader who mirrors their fears, frustrations and feelings of being disenfranchised.

So far, Trump is succeeding in persuading his electorate that he has the “Can Do” answers to their insecurities and fears of the changing threatening world around them. BUT, his xenophobia, egocentric overbearing, ethnically insulting communicative manner is on the edge of angrily dividing Americans and bringing our political system into discredit.

Trump presents himself as the “Strict Father, Self-Deified Populist Savior;” Bernie presents himself as “We, the Worker Movement for Real Change”; while Hillary presents herself as the “Working the System, Establishment Pragmatist”.

One commentator said, “Trump vs. Clinton will appear to most Americans as a choice between something new and risky, and something old and corrupt.” In my view, a Trump vs. Sanders contest will appear to most Americans as a choice between something new and risky (e.g., involving a reckless xenophobic playing with millions of peoples’ lives) vs. something bold and realistic in answer to systemic societal problems, e.g., decay of infrastructure and educational systems; threat of disastrous climate change; huge income inequality; and the insecure, downgraded, low-wage job generation; climate-warming threat.

A large number of Independent supporters now behind Sanders will very likely never vote for Hillary ... some may even vote for Trump as their second choice. Many people are simply not particularly enthusiastic about Hillary's candidacy - given her perceived dishonesty, super-cozy Wall Street relations, her changing positions and copying of Bernie’s ideas based on opportune expediency. For example, very early on Sanders said the Trans Pacific Partnership should be trashed (as has Trump said recently). Hillary initially favored TPP as she did the Keystone Pipeline, but much later changed her mind when she finally saw the bottom-up forces against both initiatives.

I think Bernie stands a far better chance of defeating Trump than Hillary does. He's authentic. And his winning chances would be supremely reinforced should he have Elizabeth Warren as his Vice President.

Trump can have a field day with Hillary's considerable weaknesses compared to Bernie strengths. Hillary provides a lot of material for Trump to run on – most notably her long ongoing neo-liberal flirt with money powers who have made her and Bill multi-millionaires; and her character trait of playing with the truth. Her false statement in the Michigan debate about Bernie’s refusal to support funds to save the Michigan auto industry is typical of her verbal chicanery.

Bernie won't be easily demeaned by Trump. Bernie is the original one who’s all about saving/strengthening the disappearing middle class and basic social nets. He's much closer to Mainstream America's pain and knows what’s necessary to ameliorate and remove that pain. Trump will try to characterize Bernie with the standard ultra-conservative demagogic epithets: Bernie is the “cradle-to-grave SOCIALIST”, the Government-Do-&-Tax-Everything Freedom Heretic, the National Debt Multiplier, etc. … all the usual propagandistic Republican ‘BS’.

Bernie is a refreshingly honest, pragmatic politician who speaks Harry Truman straight talk from the heart to ALL Americans. He’s not about to bankrupt or socialize America with his reforms of a system that’s broken in so many unfair and corrupt ways. His program is about freeing America from the money controls of special interests, and the marginalization and income-impoverishment of the middle/lower classes. I trust Bernie and his inspiring, uplifting vision of how to repair and renew our nation's course as a country "of, by and for the people." Unlike Trump, he will be a unifier, not a divider.

If Bernie is elected President, will he have a more difficult time getting his program passed than Obama had or Trump (or Hillary) might? I think the answer to that is NO. Bernie’s immense support by the below 30 generation as well as the middle age and diverse gender/ethnic groups and independents is a “Movement” that will give him a unique moral leverage to greatly mitigate Republican obstruction. Also, over half of Bernie’s program corresponds to that of Trump’s. But I would prefer Bernie at the helm unifying our country’s renewal and as the controlling finger on military adventures and the nuclear button. Hillary has shown herself to be a consistent hawkish proponent of regime change interventions and Drone actions where more innocents have been killed than the enemy.

Lastly, it would be an ‘eye-opener’ to see what the cost-benefit picture is of Bernie’s program compared to Trump’s program. In the Netherlands, it is standard practice to have an independent detailed cost-benefit analysis of each party’s policy program … BEFORE any election or major budget decisions.

Of course, this is all academic if Democrats don't get the vote out which they historically have been so egregiously poor at (also in recent Michigan contest yesterday). It's all academic if Bernie wins the popular delegate vote while Hillary wins the nomination by amassing most of the 712 super delegates - a flagrantly undemocratic process equivalent to the exceptional money-powered influence of corporations and billionaires in our political system. Bernie is forced to start wooing super delegates to divert their unpledged votes to him as the race for pledged votes progresses in his favor .

The vast majority of unpledged super delegates unfairly support Hillary. To date, she has 1238 votes - including 500 super delegates, a number the media often fails to exclude or highlight - vs. Bernie's remarkable 572 votes. This undemocratic super delegate anachronism, aimed at insuring that "grassroots activists" like Bernie don't undermine the established political elites, gives the ugly impression that the Democratic Party’s nomination process is rigged ... for Hillary.

Frank Thomas
The Netherlands
March 12, 2016

Extreme Weather Watch: February 2016 - Tornadoes Devastate South, West Sets Heat Records

by John Lawrence

At least seven people died when more than 50 tornadoes swept across parts of the south and eastern United States in late February. The extreme weather destroyed hundreds of homes and forced the closure of schools and government offices. At least four people died in Virginia, including a two-year-old boy. One witness said that the destruction in the small town of Waverly was "completely devastating." Virginia Governor Terry McAuliffe declared a state of emergency. Scientists have linked an increase in the intensity and deadliness of tornadoes to climate change.

Tornadoes also devastated parts of Mississippi, Lousiana, Alabama and Florida. Dozens were injured and severe damage was reported across the Deep South. Two of the dead were in an RV park in Convent, Louisiana. A tornado ripped through the park leaving 160 motor homes and trailers in a field of debris. "Cars were crumpled on the highway. It picked cars up and threw them in the ditch," Sharon Faison, a medical assistant who drove to the mobile home park where the three deaths occurred, told the station. "We just have to pray."

Storms demolished apartment buildings north of Pensacola. The path of the Pensacola tornado was roughly 7 miles long. It destroyed four buildings and damaged 24, with minor damage to 58. As many as 30 tornadoes were reported. Florida Gov. Rick Scott declared a state of emergency in Escambia and Santa Rosa counties.

Some 209,000 customers were without power, officials with utility companies in several states and the District of Columbia said. There were 70 mph winds and flash flood warnings in several states with tens of millions of people in the danger zone. Tornadoes were embedded in thunder storms.

Five tornadoes touched down in North Carolina. A tornado also touched down in Lancaster County, Pennsylvania.  Multiple buildings, homes and barns were taken down.

A rare February tornado watch was issued for parts of the Northeast. The watch area included the District of Columbia, Delaware, central and eastern Maryland, southern New Jersey, southeast Pennsylvania, and Northern Virginia.

These kinds of tornadoes are not normally seen until spring, but there is nothing normal about today's weather. The violent weather was blamed on El Nino which is driving a sub-tropical jet stream containing  higher than normal moisture across the south.

Record Heat in the West

February 2016 was the hottest February in San Diego history with an average temperature of 64 degrees F surpassing the previous record set in 1980 by 4 degrees F. Daytime average temperatures averaged 74.5 degrees. San Diego set heat records for Feb 9 (83°), Feb 11 (84°) and Feb 16 (89°). A high pressure dome blocked storms from the region. Total rainfall was .05 inches.

Dozens of record highs were set across the Golden State, Desert Southwest and other parts of the West, as many locations had temperatures in the 80s and 90s. The heat was a staggering 15 to 25 degrees above average, even warmer than typical highs during the hottest months of the summer.

Phoenix recorded their earliest 90-degree day on record more than a full week ahead of the previous earliest occurrence according to the National Weather Service.

Downtown Los Angeles set a daily record high by reaching 90 degrees on Feb 16, just one day after setting a new record high for Feb. 15 of 89 degrees. These temperatures were considerably higher than the average high in the upper 60s. At an average high temperature of 77.5, this February sailed almost two degrees above the previous record set in 1954, according to the LA Times. February 29’s reported high of 74 capped a 10-day spell of temperatures in the 70s and 80s. Those mild but abnormally warm days combined with two record heat spells earlier in the month to lift February 2016 into the lead for hottest February ever according to a Times analysis of weather data going back to 1878.

Anaheim, California set a record for the warmest location in the US on February 16, according to the Weather Prediction Center, after temperatures soared to 97 degrees.

Death Valley, California, reached the 90-degree mark for the first time this year, topping a daily record, and missing the earliest such "first 90s" of the year by just six days (Feb. 10, 2006). Incidentally, America's hottest location had more days with highs in the 90s last year (193 days) than days of lower high temperatures.

Climate Change Responsible for Erratic Weather

In a new Ted talk, Al Gore runs down the dire facts that climate change is already bringing into existence. Droughts are forcing subsistence farmers off their lands throughout the world. Then they move to the cities where they become part of the urban poor living in slums. Miami, which is scheduled to be wiped out from sea level rises, already experiences flooding streets at high tide even when there is no rain. The water comes up from the storm drains.

First the bad news : "[T]he accumulated amount of man-made, global warming pollution that is up in the atmosphere now traps as much extra heat energy as would be released by 400,000 Hiroshima-class atomic bombs exploding every 24 hours, 365 days a year."

Al Gore continues:

So we're having record-breaking temperatures. Fourteen of the 15 of the hottest years ever measured with instruments have been in this young century. The hottest of all was last year. Last month was the 371st month in a row warmer than the 20th-century average. And for the first time, not only the warmest January, but for the first time, it was more than two degrees Fahrenheit warmer than the average. ...

These climate-related disasters also have geopolitical consequences and create instability. The climate-related historic drought that started in Syria in 2006 destroyed 60 percent of the farms in Syria, killed 80 percent of the livestock, and drove 1.5 million climate refugees into the cities of Syria, where they collided with another 1.5 million refugees from the Iraq War. ...

The 10 largest risk cities for sea-level rise by population are mostly in South and Southeast Asia. When you measure it by assets at risk, number one is Miami: three and a half trillion dollars at risk. Number three: New York and Newark. I was in Miami last fall during the supermoon, one of the highest high-tide days. And there were fish from the ocean swimming in some of the streets of Miami Beach and Fort Lauderdale and Del Rey. And this happens regularly during the highest-tide tides now. Not with rain -- they call it "sunny-day flooding." It comes up through the storm sewers. And the Mayor of Miami speaks for many when he says it is long past time this can be viewed through a partisan lens. This is a crisis that's getting worse day by day. We have to move beyond partisanship.

Now the Good News:

And I think the answer is in three parts. First, the cost came down much faster than anybody expected, even as the quality went up. And low-income countries, places that did not have a landline grid -- they leap-frogged to the new technology. The big expansion has been in the developing counties. So what about the electricity grids in the developing world? Well, not so hot. And in many areas, they don't exist. There are more people without any electricity at all in India than the entire population of the United States of America. So now we're getting this: solar panels on grass huts and new business models that make it affordable. Muhammad Yunus financed this one in Bangladesh with micro-credit. This is a village market. Bangladesh is now the fastest-deploying country in the world: two systems per minute on average, night and day. And we have all we need: enough energy from the Sun comes to the Earth every hour to supply the full world's energy needs for an entire year. It's actually a little bit less than an hour. So the answer to the second question, "Can we change?" is clearly "Yes." And it's an ever-firmer "yes."

Last year -- if you look at all of the investment in new electricity generation in the United States, almost three-quarters was from renewable energy, mostly wind and solar.

Just like cell phones leapfrogged over landlines in many parts of the world where no phone service existed, renewable energy has been put in place where no previous electric grids existed. The cost of renewables is now below the cost of fossil fuels. That means that, from an investment standpoint, new energy installations are going to be renewables and not fossil fuels. The only question is can the planet get there fast enough.

Clash of Republican Con Artists

from the New York Times

by Paul Krugman

MARCH 4, 2016

So Republicans are going to nominate a candidate who talks complete nonsense on domestic policy; who believes that foreign policy can be conducted via bullying and belligerence; who cynically exploits racial and ethnic hatred for political gain.

But that was always going to happen, however the primary season turned out. The only news is that the candidate in question is probably going to be Donald Trump. Establishment Republicans denounce Mr. Trump as a fraud, which he is. But is he more fraudulent than the establishment trying to stop him? Not  really.

Actually, when you look at the people making those denunciations, you have to wonder: Can they really be that lacking in self-awareness?

Donald Trump is a “con artist,” says Marco Rubio — who has promised to enact giant tax cuts, undertake a huge military buildup and balance the budget without any cuts in benefits to Americans over 55.

“There can be no evasion and no games,” thunders Paul Ryan, the speaker of the House — whose much-hyped budgets are completely reliant on “mystery meat,” that is, it claims trillions of dollars in revenue can be collected by closing unspecified tax loopholes and trillions more saved through unspecified spending cuts.

Mr. Ryan also declares that the “party of Lincoln” must “reject any group or cause that is built on bigotry.” Has he ever heard of Nixon’s “Southern strategy”; of Ronald Reagan’s invocations of welfare queens and “strapping young bucks” using food stamps; of Willie Horton?

Put it this way: There’s a reason whites in the Deep South vote something like 90 percent Republican, and it’s not their philosophical attachment to libertarian principles.

Then there’s foreign policy, where Mr. Trump is, if anything, more reasonable — or more accurately, less unreasonable — than his rivals. He’s fine with torture, but who on that side of the aisle isn’t? He’s belligerent, but unlike Mr. Rubio, he isn’t the favorite of the neoconservatives, a.k.a. the people responsible for the Iraq debacle. He’s even said what everyone knows but nobody on the right is supposed to admit, that the Bush administration deliberately misled America into that disastrous war.

Oh, and it’s Ted Cruz, not Mr. Trump, who seems eager to “carpet bomb” people, without appearing to know what that means.

In fact, you have to wonder why, exactly, the Republican establishment is really so horrified by Mr. Trump. Yes, he’s a con man, but they all are. So why is this con job different from any other?

The answer, I’d suggest, is that the establishment’s problem with Mr. Trump isn’t the con he brings; it’s the cons he disrupts.

First, there’s the con Republicans usually manage to pull off in national elections — the one where they pose as a serious, grown-up party honestly trying to grapple with America’s problems. The truth is that that party died a long time ago, that these days it’s voodoo economics and neocon fantasies all the way down. But the establishment wants to preserve the facade, which will be hard if the nominee is someone who refuses to play his part.

By the way, I predict that even if Mr. Trump is the nominee, pundits and others who claim to be thoughtful conservatives will stroke their chins and declare, after a great show of careful deliberation, that he’s the better choice given Hillary’s character flaws, or something. And self-proclaimed centrists will still find a way to claim that the sides are equally bad. But both acts will look especially strained.

Equally important, the Trump phenomenon threatens the con the G.O.P. establishment has been playing on its own base. I’m talking about the bait and switch in which white voters are induced to hate big government by dog whistles about Those People, but actual policies are all about rewarding the donor class.

What Donald Trump has done is tell the base that it doesn’t have to accept the whole package. He promises to make America white again — surely everyone knows that’s the real slogan, right? — while simultaneously promising to protect Social Security and Medicare, and hinting at (though not actually proposing) higher taxes on the rich. Outraged establishment Republicans splutter that he’s not a real conservative, but neither, it turns out, are many of their own voters.

Just to be clear, I find the prospect of a Trump administration terrifying, and so should you. But you should also be terrified by the prospect of a President Rubio, sitting in the White House with his circle of warmongers, or a President Cruz, whom one suspects would love to bring back the Spanish Inquisition.

As I see it, then, we should actually welcome Mr. Trump’s ascent. Yes, he’s a con man, but he is also effectively acting as a whistle-blower on other people’s cons. That is, believe it or not, a step forward in these weird, troubled times.

An Open Letter to the Republican Establishment

by Robert Reich

Sunday, February 28, 2016

You are the captains of American industry, the titans of Wall Street, and the billionaires who for decades have been the backbone of the Republican Party.

You’ve invested your millions in the GOP in order to get lower taxes, wider tax loopholes, bigger subsidies, more generous bailouts, less regulation, lengthier patents and copyrights and stronger market power allowing you to raise prices, weaker unions and bigger trade deals allowing you outsource abroad to reduce wages, easier bankruptcy for you but harder bankruptcy for homeowners and student debtors, and judges who will let you to engage in insider trading and who won’t prosecute you for white-collar crimes.  

All of which have made you enormously wealthy. Congratulations.

But I have some disturbing news for you. You’re paying a big price – and about to pay far more. 

First, as you may have noticed, most of your companies aren’t growing nearly as fast as they did before the Great Recession. Your sales are sputtering, and your stock prices are fragile.  

That’s because you forgot that your workers are also consumers. As you’ve pushed wages downward, you’ve also squeezed your customers so tight they can hardly afford to buy what you have to sell.

Consumer spending comprises 70 percent of the American economy. But the typical family is earning less today than it did in 2000, in terms of real purchasing power.

Most of the economic gains have gone to you and others like you who spend only a small fraction of what they rake in. That spells trouble for the economy – and for you.

You’ve tried to lift your share prices artificially by borrowing money at low interest rates and using it to buy back your shares of stock. But this party trick works only so long. Besides, interest rates are starting to rise.

Second, you’ve instructed your Republican lackeys to reduce your and your corporation’s taxes so much over the last three decades – while expanding subsidies and bailouts going your way – that the government is running out of money.

That means many of the things you and your businesses rely on government to do – build and maintain highways, bridges, tunnels, and other physical infrastructure; produce high-quality basic research; and provide a continuous supply of well-educated young people – are no longer being done as well as they should. If present trends continue, all will worsen in years to come.

Finally, by squeezing wages and rigging the economic game in your favor, you have invited an unprecedented political backlash – against trade, immigration, globalization, and even against the establishment itself.

The pent-up angers and frustrations of millions of Americans who are working harder than ever yet getting nowhere, and who feel more economically insecure than ever, have finally erupted. American politics has become a cesspool of vitriol.

Republican politicians in particular have descended into the muck of bigotry, hatefulness, and lies. They’re splitting America by race, ethnicity, and religion. The moral authority America once had in the world as a beacon of democracy and common sense is in jeopardy. And that’s not good for you, or your businesses.

Nor is the uncertainty all this is generating. A politics based on resentment can lurch in any direction at almost any time. Yet you and your companies rely on political stability and predictability.

You follow me? You’ve hoisted yourself on your own petard. All that money you invested in Republican Party in order to reap short-term gains is now reaping a whirlwind.

You would have done far better with a smaller share of an economy growing more rapidly because it possessed a strong and growing middle class.

You’d have done far better with a political system less poisoned by your money – and therefore less volatile and polarized, more capable of responding to the needs of average people, less palpably rigged in your favor.

But you were selfish and greedy, and you thought only about your short-term gains.

You forgot the values of a former generation of Republican establishment that witnessed the devastations of the Great Depression and World War II, and who helped build the great post-war American middle class.

That generation did not act mainly out of generosity or social responsibility. They understood, correctly, that broad-based prosperity would be good for them and their businesses over the long term.

So what are you going to do now? Will you help clean up this mess – by taking your money out of politics, restoring our democracy, de-rigging the system, and helping overcome widening inequality of income, wealth, and political power?

Or are you still not convinced?

Americans Are Being Screwed by Drug Companies

by John Lawrence

It's Not the Fault of Obamacare

You can blame lobbyists from the health insurance and pharmaceutical industry in conjunction with Republican lawmakers who lobbied the Affordable Care Act to death making it in the long run unaffordable and probably untenable. Why? Because there are no cost containment features in the Act. None. Nada. Zippo.

What that means is that the drug companies can raise the prices of drugs 5000% like Martin Shkreli of Turing Pharmaceuticals did for Daraprim without breaking the law. Shkreli's arrogance, the latest example of which is calling the Congressmen who interrogated him "imbeciles", has gotten him into much trouble but not for raising the price of a life saving drug 5000%.

You see in America, my friends, screwing unfortunates with heart disease and cancer is not a crime but defrauding investors out of their money is. Your Republican controlled government is not looking out for the little guy. Lobbyists are running the lawmakers. Oh, you don't have a lobbyist working for you? Then you're shit out of luck. With the exception of a few good Democrats like Elizabeth Warren and Bernie Sanders, your interests are not only being ignored. You're being considered as sheep to be led to slaughter.

Republican gerrymandering, voter suppression and the filibuster have guaranteed that only Republican laws will be put into effect, and that means that corporations have the right to screw you but the investor class will be protected. In fact after the 2008 Wall Street caused financial meltdown, investors were paid back 100 cents on the dollar (there were no haircuts), and the only rule applying to the little guy was that he had to pay his debts 100 cents on the dollar (there were no write downs for underwater mortgages).

But I digress. The company leading the pack in drug price increases is Canada-based Valeant, which lifted list prices by at least 20% some 122 times since the beginning of 2011. Isuprel and Nitropress, the heart drugs Valeant bought from another company, have been staples of medical care for decades. Doctors use Isuprel during procedures treating heart-rhythm problems, and give Nitropress to emergency patients whose blood pressure has risen to life-threatening levels. Doctors say there are few good alternatives.

Valeant Pharmaceuticals Pondered Carefully How Much It Could Charge for a Lifesaving Drug

Valeant Pharmaceuticals has also been in the business of making life-saving drugs for heart disease, AIDS and cancer unaffordable. Evidence has been brought to light that Valeant Pharmaceuticals carefully pondered how much it could raise the price of heart drugs Isuprel and Nitropress before buying them and then raised the prices overnight by 525% and 212% respectively.

Profit was the only consideration. Blame the lobbyists who cut cost containment out of Obamacare, not Obama. “Our duty is to our shareholders and to maximize the value” of the products that Valeant sells, said Laurie Little, a company spokeswoman.

Ascension health system, which operates 131 hospitals across the country, estimates the increases will triple its spending on the drugs this year to $8 million. Ever wonder why health care premiums are so high? Richard Fogel, a heart doctor at Ascension’s St. Vincent Heart Center in Indianapolis, said the lack of good alternatives in certain clinical situations leaves him little choice but to keep using the pair.

Cleveland Clinic says the price hikes for the two Valeant drugs is unexpectedly adding $8.6 million, or 7%, to this year’s budget of roughly $122 million for medicines administered at its hospitals. Like its peers, Cleveland Clinic generally pays for drugs it administers, then hopes the reimbursement it receives for patient care will cover the expense.

Companies are buying established drugs from other companies and then jacking up the prices. Early last year, Mallinckrodt PLC paid $1.4 billion for Cadence Pharmaceuticals, though the Ofirmev pain injections that were the crown jewel of the deal were projected to have just $110.5 million in revenue for 2013, according to a Mallinckrodt conference call with analysts discussing the deal. However, Mallinckrodt had a better idea with regard to pricing.

Three months later, the list price for a package of 24 Ofirmev vials jumped almost 2½ times to $1,019.52. “It seemed like highway robbery,” said Erin Fox, who directs the drug information service at University of Utah Health Care.

These price increases can be very lucrative; that, not patient care, is the whole idea. Horizon Pharma PLC upped the price of Vimovo pain tablets after buying the rights from AstraZeneca in late 2013. On Jan. 1, 2014, its first day selling Vimovo, Horizon raised the list price for 60 tablets to $959.04, a 597% increase. Horizon raised the price again on Jan. 1 this year to $1,678.32 for the tablets.

Prices were hiked dramatically on a drug used for "swimmer's ear" - Cortisporin-TC Otic Suspension. Cortisporin was originally developed by Glaxon Wellcome and approved by the Food and Drug Administration (FDA) in 1975. Glaxo sold the rights to the drug to Monarch Pharmaceuticals in 1997. Ten years later it was sold to JHP Pharmaceuticals which was acquired by Par Pharmaceuticals in 2014 which was acquired by Endo International for $8 billion. 

A vial used to cost $6. A few years ago Cortosporin was selling for $10. Last year it went for $100. and now it's $200. This is a product that helps kids recover from ear infections. Heather Lubeski, Endo's senior director of corporate affairs, said the company is "committed to providing top quality products to patients to improve lives." She believes the product's pricing is "rational and appropriate."

After Price Gouging the Public, Drug Companies Move to Ireland to Avoid Paying US Taxes

Endo moved to Ireland to avoid paying millions of dollars in US business taxes. Endo’s moving to Ireland is part of one of the biggest trends in global mergers and acquisitions. It's called tax inversion. By moving their headquarters to another country, US companies are able to slash taxes.

Now Pfizer, maker of Viagra and Celebrex, wants to pull the same crap: first price gouge, then move to Ireland to avoid US taxes. Pfizer intends to save $35 billion in taxes by merging with Allergan. A group called Americans for Tax Fairness (ATF) is urging the US government to block the merger which would let Pfizer do a "tax inversion" but keep its offices in New York City where they are now. The group also accuses Pfizer of gouging Americans with frequent and excessive price hikes while benefiting from multiple loopholes and deductions which effectively reduce its global tax rate to 6.4%.

"This is theft, what Pfizer is doing," said Frank Clemente of ATF. "This is a company that is extremely profitable. It's ripping us off in two ways. It's dodging taxes and jacking up prices."

Pfizer has raised prices on multiple drugs including Viagra, Celebrex, Lyrica and Zyvox by over 39% from 2013 to 2015 - 23 times the rate of inflation! This year it's already raised prices on 60 drugs by more than 10%. Like Shkreli of Turing Pharmaceuticals, Pfizer is pleasing its Wall Street overlords and masters by squeezing as much profit as possible out of its products. That's their only consideration.

Shkreli gloated to investors about all the money he and they were going to make on Daraprim while any compassion for the unfortunate people, for whom Daraprim was a life-saving drug, went totally out the window. Here's what he told his investors: "So 5000 paying bottles at the new price is $375,000,000 - almost all of it is profit, and I think we will get three years of that or more. Should be a very handsome investment for all of us. Let's all cross our fingers that the estimates are accurate." The unmitigated greed is appalling. Some patients were left with co-pays of $16,000!

Credit Democrat Elijah Cummings for using his position as head of the House Committee on Oversight and Government Reform to bring thousands of pages of documents to light that made it clear that Valeant's and Turing's only concerns were how much profit they could make by buying drugs and raising their prices exorbitantly.

Before buying Isuprel and Nitropress, Valeant hired a consultant to determine by how much the prices for the two drugs could be raised. It was determined that there was "ample room" to price gouge unfortunates because previous large increases had not "dampened use." Lambs being led to slaughter? You bet.

Imagine the Powerpoint presentation as the pricing consultant presented to Valeant executives the information that the goal for 2015 was for $279.3 million in revenue for Isuprel up from $54.5 million in 2014. Similarly, the goal for Nitropress was $245.5 million up from $98.7 million in 2014. The executives probably were immensely satisfied as they high fived each other over "aggressive pricing through consultant recommendation." That quote was actually taken from one of the documents that Cummings was able to obtain.

The Truth About the Drug Companies

Way back in 2004 Dr. Marcia Angell published a book, The Truth About the Drug Companies - How they Deceive Us and What to Do About It. During her two decades at The New England Journal of Medicine, Dr. Marcia Angell had a front-row seat on the appalling spectacle of the pharmaceutical industry. She watched drug companies stray from their original mission of discovering and manufacturing useful drugs and instead become vast marketing machines with unprecedented control over their own fortunes.

Instead of doing research like they say they need their vast profits for, they lobby Congress, produce drugs of dubious value and pay their executives obscene sums. They use TV advertising to convince the American people they need their drugs - even those that will ultimately cause them harm. They pay competitors not to produce cheap generic drugs. They pay doctors to prescribe their drugs.

It's all about the free enterprise system, folks, conceived and dedicated to keeping Americans free to charge you outrageous prices especially if your life depends on their products. They have no mercy whatsoever or concern for their fellow human beings. It's all about making as much money as possible. As one of the 1% class said, "You only have to make a fortune once." Short term profits are what it's all about, folks.

This is from the New England Journal of Medicine:

By Angell's account, the current slide toward the commercialization and corruption of clinical research coincided with the election of President Ronald Reagan in 1980 and the passage of the Bayh–Dole Act, a new set of laws that permitted and encouraged universities and small businesses to patent discoveries from research sponsored by the National Institutes of Health (NIH). Research paid for by the public to serve the public instantly became a private, and salable, good, one that is producing drug sales of more than $200 billion a year. ...

The same companies also spend heavily to lobby governments. According to Angell, Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry's U.S. trade association, has “the largest lobby in Washington,” which in 2002 employed 675 lobbyists (including 26 former members of Congress) at a cost of more than $91 million. [In 2014 the pharmaceutical industry spent $229 million lobbying.] The result has been above-average growth in corporate profits during both Republican and Democratic administrations.

The most recent and (at least to observers outside the United States) perplexing lobbying effort caused Congress explicitly to prohibit Medicare from using its huge purchasing power to get lower prices for drugs, thus opening up a dollar pipeline, in the form of higher drug prices, directly from taxpayers to corporate coffers. These changes, along with the cave-in by the Food and Drug Administration (FDA) in 1997 that permitted direct-to-consumer advertising to bypass mention in their ads of all but the most serious side effects, have further augmented profits. The overall effect has been a corruption not only of science but also of the dissemination of science.

That was in 2004. It's even worse today. The bottom line is that the American public is being screwed by Big Pharma in conjunction with Republican lawmakers. It's not Obama's fault. He did the best he could. Unfortunately, Obamacare is flawed not due to Obama but due to the fact that he had to make concessions to lobbyists for the pharmaceutical industry to get the ACA legislation passed at all. Bernie Sanders wants to take it to the next level - Medicare for all. Just the elimination of all the paperwork involved in today's medical industry will save billions of dollars as will the proscription of the legislative provisions which disallow Medicare from negotiating drug prices.

Big Pharma Raised Prices Again in January

Drugmakers didn’t let up on price increases with the start of the new year, demonstrating the industry’s pricing power in the face of mounting criticisms of prescription costs in the U.S. Pfizer,  Amgen, Allergan, Horizon Pharma  and others have raised U.S. prices for dozens of branded drugs as of January 2016, with many of the increases between 9% and 10%. Some of the increases add thousands of dollars to the cost of already expensive drugs, and come on top of repeated price hikes in recent years.

Vanda Pharmaceuticals on Jan 1 raised the price of its new drug Hetlioz, which treats a sleep disorder in blind people, by 10%, to $148,000 a year, a spokeswoman said. Piper Jaffray analysts say the price of the once-daily capsule is now 76% higher than when it was introduced in 2014.

Since New Year’s Day, Pfizer has raised list prices an average of 10.6% for more than 60 branded products with annual U.S. sales of at least $10 million, according to Deutsche Bank. Prices for eight of the products went up at least 20%.

Amgen raised the price of the anti-inflammatory drug Enbrel by 8% in late December following an 8% increase in September and a 10% increase last May. Enbrel costs about $704 a week for the typical dosing for treatment of rheumatoid arthritis or more than $36,600 a year.

Acorda Therapeutics raised the price of its drug Ampyra, which is used to help multiple-sclerosis patients improve walking, by 11% on Jan. 1, to an annual cost of more than $23,650 a patient. The company has raised the price several times since the drug was approved in 2010. The drug’s new cost is about four times its cost at launch in the 1990s, said Raymond James analyst Christopher Raymond. The price hikes for Enbrel and other drugs “seem to have increased in magnitude and frequency,” he said.

Imagine having an insurance card where you can walk into any doctor's office, show your card and never have to pay a bill. That's the way it is in Canada and most other advanced countries. The cost savings resulting from simplification of paperwork alone makes Medicare for All worthwhile. Bernie Sanders' message is very simple - Medicare for All will not only save money, it will provide superior health care for everybody the way it does in the rest of the world. But in America freedom implies that the owner of a life saving product can gouge its victims as much as possible in order to make profits for shareholders and investors. Wall Street frowns if the price gouging isn't to the max. To paraphrase Janis Joplin, "Freedom's just another word for the ability to price gouge."

When Elijah Cummings was grilling a smirking Shkreli in front of the House Oversight and Government Reform Committee, Cummings said to him, "It's not funny Mr. Shkreli. People are dying." But all that Shkreli and the others are interested in is maximizing growth potential and creating value for shareholders. I guess they are the only ones who count in this world. Money talks and shit walks. Then Shkreli called the lawmakers "imbeciles" for not knowing that in a capitalist economy that's par for the course.