Category Archives: Government

The Boring Stuff

Leave a reply

At work I'm called the King of BS, which stands for "boring stuff."  My job is to pay attention to things that most people don't want to think about (ordinances, regulatory agencies, market/economic issues, etc.) and I'm such a geek that I even volunteer my time to pay attention to the same kind of stuff on the Lewisville Planning Board.  I'm not going to sit here and tell you I'm doing it for any kind of noble purpose – I get paid for it at work and I don't consider the Planning Board work a sacrifice because I'm truly interested and for the most part I find it enjoyable.

What I've learned is that studying and debating issues like how far apart driveways should be and how to handle stormwater in developments can be incredibly tedious, but if we don't think about these things we could end up with at best an aesthetically unappealing town, and at worst a town with broken infrastructure that's literally a hazard to live in.

That's why I read the Washington Post story on the country's crumbling infrastructure with such interest.  We're literally in deep sh** and I think most people are totally unaware:

And just like roads and bridges, the vast majority of the country’s water systems are in urgent need of repair and replacement. At a Senate hearing last month, it was estimated that, on average, 25 percent of drinking water leaks from water system pipes before reaching the faucet. The same committee was told it will take $335 billion to resurrect water systems and $300 billion to fix sewer systems. 

So we need $635 billion dollars to keep our water and sewer systems going strong. Not so long ago I'd have found that number very daunting, but when you consider we spent $700 billion to bail out a bunch of bankers I think spending $650 billion to make sure we don't all die of dysentary isn't such a bad idea.  Of course it's probably a terrible idea because it would be a, gasp!, public works project and by God we can't have one of those socialist atrocities around here.  I mean why would we want to do something that's literally an investment in our community, would put people to work, and would go a long way towards insuring continued good health for future generations?  I know, I'm just a wild-eyed radical.

Why Every Kid Wishes School Schedules Ran Like Congress

Leave a reply

As many holidays, teacher work days, snow days, spring breaks and summer breaks as school kids get I think they'd still be thrilled to switch schedules with Congress.  Especially on days like yesterday (Wednesday, Dec. 21, 2011) when Congress said the Pledge of Allegiance and promptly adjourned for three hours. Apparently the Republican leadership didn't want to hear what the Democrats had to say. (Even more interesting, they shut off C-SPAN!):

The incident occurred mere moments after the House went into session. Hoyer made a motion for a vote on the Senate’s payroll tax cut extension, which would extend the lower rates for another two months, but the Republican presiding over the House did not acknowledge the motion. He instead adjourned the House, then got up and walked out.

“As you walk off the floor, Mr. Speaker, you’re walking away, just as so many Republicans have walked away from taxpayers, the unemployed, and very frankly, as well, from those who will be seeking medical assistance from their doctors, 48 million senior citizens,” Hoyer can be heard saying.

“We regret, Mr. Speaker, that you have walked off the platform without addressing the issue of critical importance to this country, and that is the continuation of the middle class tax cut, the continuation of unemployment benefits for those at risk of losing them, and a continuation of the access to doctors for all those 48 million seniors who rely on them daily for help.”

And that’s when the audio cut out. Seconds later, footage faded to a shot of the capitol from outside.

Here's the video:

 

Inside Moves

Leave a reply

Did you see the 60 Minutes story on our duly-elected Congresscritters potentially profiting by using information they gleaned from their work on the Hill to inform their investment decisions?  Well, according to this Wall Street Journal story many big-time investors are profiting from information they glean directly from members of Congress and Congressional staffers.

"Hedge funds and other investors have found that Washington can be a gold mine of market-moving information, easily gathered by those who are politically connected," according to Sanford Bragg, CEO and president of Integrity Research Associates, an independent group that analyzes research providers…

Wall Street firms have for years hired lobbyists to scour Congress and the White House for news that could affect stock prices. Now, investors want to hear from decision makers firsthand.

Many turn to William Williams, president of JNK Securities, a firm that brings lawmakers and investors together "to bridge the information gap between Washington and Wall Street," according to a recent news release.

Mr. Williams used to charge clients as much as $10,000 for meetings with lawmakers. That changed last year after a reporter from the publication Inside Higher Ed asked the office of Sen. Tom Harkin (D., Iowa) about an email from JNK showing it was charging to attend a possible meeting with the senator. Mr. Harkin refused to attend.

Now, hedge funds don't pay fees to JNK Securities. If they use information gleaned at these face-to-face meetings they are expected to execute their trades through the brokerage firm, which collects commissions.

There's more, but you get the picture.  I seriously doubt this kind of inside information is restricted to the federal level – I'm willing to bet it goes on at the state and local level as well – and as the reporters point out it's not illegal activity, but I think this is exactly the kind of thing that has escalated the level of mistrust of our public and business institutions to astronomical levels.

If you were to talk to the folks involved in these meetings, both on the government side and industry side, you'd probably get an earful about this dialogue being necessary to make sure the government fully understands the issues so they don't unnecessarily burden industry with misaligned regulation or some such thing.  Sure, it makes perfect sense for government representatives to fully understand the industries they are proposing to regulate, but I'll be darned if I can understand why those discussions can't be publicly broadcast so that everyone is on the same playing field. (Truth be told I can't think of a reason why investors would need to be included in the discussion at all, but for now let's just assume they have a place at the table). Let's put it this way – why shouldn't I, as an individual investor, have access to this information at the same time as a hedge fund investor?  If Congress was a public company and members of Congress were board members of the company then this behavior would be considered insider trading.  It's ironic that because they are essentially board members of USA Inc. their behavior is perfectly legal.

The article goes on to mention some proposed legislation that would prevent this type of inside information trading, but I'm not sure how effective any legislation can be until the entire culture in the halls of power changes. If the people in power can't perceive that it's wrong to play favorites in the public sector, to create a favored class, then there's not a piece of legislation that can be passed that will fix the problem because they'll simply find a way around it to help their friends. 

Long ago some wise people realized that our entire society is constructed on a foundation made up of one element – trust.  Without trust financial markets collapse, bank runs happen (why do you think we even have an FDIC?), government collapses (usually after a bout of totalitarianism) and civil society disappears.  If our leaders don't begin to reestablish trust with the people I fear what my children will inherit.  This probably seems like an over reaction to a relatively minor financial story, but I think this story perfectly highlights what's wrong with our country right now and I very much want to see this fixed before it's too late.

Did a Bear Raid on Citigroup in 2007 Crash the Economy?

Leave a reply

A paper (PDF) from a group called New England Complex Systems Institute seems to make the assertion that a "bear raid" on Citigroup in 2007 may have triggered the economic meltdown that led to the Great Recession:

A paper from the New England Complex Systems Institute claims that they have found evidence that traders executed a "bear raid" on Citigroup in 2007, precipitating the financial collapse. A "bear raid" is a market manipulation technique in which short sellers conspire to dump huge quantities of borrowed shares into the market all at once, driving the price down (short selling is a stock-trading technique in which shares are borrowed for sale; the short seller makes money when the value of the borrowed shares declines).

"Bear raids" have been considered a risk to markets since the Great Depression, and a financial regulation called the "uptick rule" was instituted in 1938 to prevent the tactic. The uptick rule was repealed in in July, 2007, and the alleged bear raid took place in November, 2007.

The paper's authors offered these comments about deregulation in their conclusions:

Within the resulting deregulated environment, it is still widely believed that the crisis was caused by mortgage-related financial instruments and credit conditions, and that individual traders did not play a role [32{35]. Our analysis demonstrates that manipulation may have played a key role. Methods for detecting manipulation and its eff ects are necessary to both inform and enforce policy.

When the SEC repealed the uptick rule on July 6, 2007, one of its main claims was that the market was transparent, and that such regulations were not needed to prevent market manipulation [6]. Our results suggest that, not long after the uptick rule was repealed, a bear raid may have occurred and remained undetected and unprosecuted. Our analysis reinforces claims that lax regulation was an integral part of the financial crisis [30].

In response to requests for reinstatement of the uptick rule after the fi nancial crash,the SEC underwent extended deliberations and fi nally implemented an alternative uptick rule, which allows a stock to fall by 10% in a single day before limitations on short selling apply [36]. This weaker rule would not have a ffected trading of Citigroup on November 1, 2007, as its minimum price was just 9% lower than the close on October 31. Subsequent day declines until November 7 were also smaller than 10%.

The authors go on to recommend some policy changes (adopting preventive measures instead of current retroactive penalties, regulatory agencies investigating individual events like this one, improve access to data, etc.) but given our government's reluctance to go after these folks I'm not confident that their advice will be heeded.

Christmas and Flying Spaghetti Monsters

Leave a reply

Remember our little local dust-up about flying the Christian flag at the veteran's memorial in King?  Imagine how nutty folks around here would get if, like Leesburg, VA, we had the Church of the Flying Spaghetti Monster vying for space with the traditional manger scene.

For the better part of 50 years, a creche and a Christmas tree were the only holiday displays on theLoudoun County Courthouse grounds.

Then came the atheists. And the Jedis. And the Church of the Flying Spaghetti Monster – each with its own decorations. A skeleton Santa Claus was mounted on a cross, intended by its creator to portray society's obsession with consumerism. Nearby, a pine tree stood adorned with atheist testimonials.

Flying Spaghetti Monster devotees are scheduled to put up their contribution this weekend. It's a banner portraying a Nativity-style scene, but Jesus is nowhere to be found. Instead, the Virgin Mary cradles a stalk-eyed noodle-and-meatball creature, its manger surrounded by an army of pirates, a solemn gnome and barnyard animals. The message proclaims: "Touched by an Angelhair."

Given our recent debates about the Christian flag and the controversy over the right (or not) to carry concealed weapons in local parks, there's a little part of my brain that would love to see what would happen around here if we had a similar setup to Leesburg's.  In that juvenile little part of my head I picture this scene:

Bible-quoting sharpshooters taking aim at spaghetti-eating atheists and agnostics who dive for cover, sending sauce and meatballs skyward during their panic, asking Mama Celeste for help since God's out of the picture until their own contingent of pistol packers can get their firearms unholstered and de-trigger locked to return fire.  Thankfully no one's hurt since none of the participants ever served in the military and thus never received truly effective arms training, although two bullets do somehow hit something – one Christian is saved by the lucky (divine?) presence of a condensed pocket-sized King James and one innocent bystander who picked a wildly inopportune time to squat for a meditation is spared when his tattered copy of Zen and the Art of Motorcycle Maintenance takes a direct hit. Eventually cooler heads prevail when the Occupy Wall Streeters, who were minding their own business in their designated protest box, step across their chalk line to broker a truce in which the atheists and agnostics provide a spaghetti supper for everyone at the park free of charge, the Christians put on their Christmas production, collection plates are passed and everyone splits the proceeds.

I'd pay to see it.

$7.7 Trillion

Leave a reply

If you've wondered exactly how big the bank bailout was during the height of the financial crisis you can now get a much better idea of the scale thanks to details being reported by Bloomberg as a result of its FOIA request. In a word: stunning.

The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open.

The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort — and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

And then there's this:

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue…

…the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.

Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data…

Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

There's plenty more to be learned in the article. You really should take the time to read it.

Kicked When They’re Down

1 Reply

While the banks might have abandoned their plans, for now, to start charging debit card fees they do have one group they're hitting with fees – the unemployed:

Bank of America recently aborted plans to charge ordinary banking customers $5 a month to use their debit cards in the face of national outrage. But the bank has quietly continued to mine another source of fees: jobless people who depend upon the bank's prepaid debit cards to tap their benefits. Bank of America and other financial firms — including U.S. Bank, Wells Fargo and JP Morgan Chase — have secured contracts to provide access to public benefits in 41 states. These contracts typically allow banks to collect unlimited fees from merchants and consumers.

In short, the same banks whose speculation delivered a financial crisis that has destroyed millions of jobs have figured out how to turn widespread unemployment into a profit center: The larger the number of people who are out of work and dependent upon the state for sustenance, the greater the potential gains through administering their benefits.

 

 

13% Ain’t So Bad

Leave a reply

So Gallup says that Congress' approval rating is at 13%, tied for an all-time low.  You might be tempted to think that this bodes ill for the current members of Congress, but I'd like to point out a few things that may help explain why low approval ratings probably won't translate into a lot of carnage for Congressional incumbents on Election Day 2012:

  • I bet if you did a separate poll for each member of Congress that asked his or her constituents how they were doing you'd get numbers showing a much higher approval rating.
  • I bet most of us think we do a fine job selecting our own Congresscritters, but the idiots in other parts of the country are TERRIBLE at selecting theirs.
  • The vast majority of incumbents will be facing off against people who are no great shakes themselves, and who are likely to be running poorly funded campaigns.  We tend to vote for the folks who spend the most to buy our love, so this doesn't bode well for challengers.

Sadly I don't have much hope for getting an improved Congress because I don't have a lot of confidence in the rest of us demanding one.

 

 

NC Senator Co-Sponsoring “Repatriation Holiday” Bill

Leave a reply

If you had to guess which North Carolina Senator, Republican Richard Burr or Democrat Kay Hagan, was co-sponsoring a bill with former Republican Presidential candidate John McCain that would provide a "tax holiday" for multinational firms which would you guess?  Of course it wouldn't be blog-worthy if it was Sen. Burr, so you'd be right if you guessed Sen. Hagan.  Over at Tax.com Christopher Bergin isn't too happy about it:

Why am I worked up? Because tomorrow two Senators, Democrat Kay Hagan and Republican John McCain plan to introduce a bill they will call the Foreign Earnings Reinvestment Act to provide a repatriation holiday. They should really call it the Outrageous Grab Under False Pretenses Act…

Why? In part because the U.S. economy stinks and they see an opening, neatly laid out in WIN America's mission statement: "We have an opportunity right now to make a significant investment in our struggling economy, boost U.S. businesses, and help put people back to work." They urge that "Congress should pass legislation to offer an immediate reduction of taxation on income earned overseas by innovative American businesses to allow that money to be brought home and invested in the United States." 

Trust me, there's nothing innovative or new here. The Heritage report correctly points out that this proposed “sequel to a similar 2004 holiday would, like its predecessor, have a minuscule effect on domestic investment and thus have a minuscule effect on the U.S. economy and job creation." So, the idea is that you line the pockets of large corporations at a time when regular taxpayers are struggling to hold onto their jobs, their houses and their way of life.

A Job Well Done

2 Replies

As someone who has served on the Lewisville Board of Adjustment in the past I read this post by attorney Tom Terrell with more than a passing interest. Basically he lauds the Harnett County Board of Adjustment for their hard work on a landfill case that took 33 hours spread over six nights to conclude. Most people have no clue what boards of adjustment do, and quite frankly the people who volunteer their time to serve on most municipal boards like BOAs don't get enough credit for their efforts, so it's nice to see when someone who deals with them on a professional level takes the time to give them their due.  Here's a bit of what he wrote:

After six nights and 33 hours of testimony and deliberation, the Harnett County Board of Adjustment reached a decision this week regarding a Conditional Use Permit for a regional landfill.  It was a marathon.  I know, because I was there…

The hearing demonstrated why we desperately need quasi-judicial proceedings and, despite what I consider to be demonstrable legal flaws in the decision itself, provided a showcase example of how a BOA should operate.

Quasi-judicial proceedings establish evidentiary frameworks for unpopular but necessary land uses.  Without them, the alternative is a decision based purely on emotion and, sometimes, hysteria.  Or bad math.  (Let’s just count the number of people in the room for and against and let it be “democratic” despite what our comprehensive plan says, despite what our zoning ordinance says, despite what our staff says, and despite what our planning board says)…

But my other point is that this BOA was among the best I’ve ever seen in how it handled the hearing itself.  Each night board members systematically disclosed calls from the media and emails from neighbors and how they handled them. They disclosed civic and personal connections with witnesses.

The board chair did a better job ruling on objections by attorneys than most judges I’ve been in front of, and he gave some leeway to members of the public to stray from true evidence (in one case, a speech on “the purpose of man”) and to relate blatant hearsay conversations while instructing and reminding board members what can and cannot be considered as evidence.

He also praised the Harnett County staff members and I think he's absolutely spot on when he says that "I’ve learned never to underestimate the importance of working with good staff." I've been lucky enough to work with many of the staff members in Lewisville and I can say that it has always been an enjoyable and rewarding experience.