Archive for December, 2015

The Front Runner


Republican logoThe Front-Runner believes in his own “greatness,” but like any believer he’s plagued by self-doubt and insecurity. His belief in his own superiority borders on a delusion of omnipotence that he will happily display at any moment, for anyone. The reason for this is simple: the more he makes a show of his own greatness, the happier he feels because the display both reinforces his belief in his own more-than-mere-mortal powers and pushes his self-doubt into the background, even if only temporarily.

The Front-Runner is, in his own mind, infallible. This explains why he cannot bear even the slightest criticism or contradiction. To contradict him is to commit the heinous crime of lese majeste. To even voice a doubt about the truth or wisdom of anything he has ever said or done is a betrayal of the lowest sort. No further respect is due to any such doubter.

The Front-Runner will blurt out things that are not true or only half-true, distorted, or even completely invented. But admitting a flaw or mistake is inconceivable for the Front-Runner. For his followers and supporters, invented or distorted facts don’t matter at all. Facts are irrelevant. This is because the Front-Runner long ago learned and bent to his will a fundamental principle of his political party that no other candidate has either grasped or learned to use: in their party, all thought proceeds from an emotional basis first, and then works its way out to factual matters. Facts are selected based on whether or not they confirm the original emotion. Contrary facts are rejected or ignored. This, in its own small way, is a return the reasoning of the medieval scholastics, whose scientific principles were based not on observed phenomena, but rather on Holy Scripture, the sayings of the Church Fathers (e.g., St. Paul), and certain ancient philosophers (e.g., Aristotle) whose works could be interpreted as prefiguring the coming of the Christian Era.

Either you are with the Front-Runner or against him. There is no middle ground. Anyone against him is by definition an enemy, and there is not so much as one atom of anything good in an enemy’s entire being. He will attribute terrible, demeaning personal characteristics to an enemy, and try to publicly embarrass them. For example, with regard to women in particular, menstruation and bathroom breaks are favorite subjects of his ingrained misogyny. If possible, he will try to blame the enemy for everything that goes wrong (e.g., Obama).

When it comes to interviews, he must do all the talking because an interview risks putting him on the defensive. He must be “treated fairly,” and he alone shall be the judge of what is or is not fair. He cannot expose himself to any circumstance that would in even the slightest degree mar the image he has of himself. Therefore, the risk of being “bested” by some news media interviewer (think Palin) must be guarded against. And the best way to do that is to make sure that only he talks, and that no one else gets a word in edge-wise. If he thinks he has been “treated unfairly,” he will engage in ad hominem attacks on the questioner. An interviewer can ask him neither a follow-up question nor request a clarification. If such a question is asked, the Front-Runner will launch into a lengthy dissertation. If at the beginning of the interview the Front-Runner’s speech had any conversational qualities at all, rest assured that by the halfway point he will have abandoned those and assumed the role of a lecturer, with more know-it-all condescension than one might expect from a tenured university professor. When he’s done spouting, regardless of whether he addressed the question or not, the interview is over.

Though the Front-Runner continually burnishes his own reputation as a tough negotiator and an all-around tough guy, whether with the Chinese or other counterparties, in reality he is utterly incapable of facing any real opposition on any issue, small or large. He cannot risk appearing in an inferior light, or risk having another person “win,” or even dominate, any contest or debate.


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Republican commentator David Frum writes in the current issue of Atlantic magazine that the rise of Trump reflects a revolt within the Republican Party. He makes a good point, but the revolt is not limited to the GOP. The revolt among the Dems hasn’t received as much media attention though, chiefly because there’s no one like Trump on that side.

Revolt is an interesting topic these days. In response to a recent comment on regulatory capture, I wrote that capture itself is just an indicator of a larger problem that permeates our entire politics. A substantial portion of enforcement of the law falls into the laps of administrative agencies, whether state or federal.

But recent disasters with administrative agencies like the federal Mining and Mineral Service (BP Deepwater Horizon) merely reflect our corporatist state, in which regulatory agencies, and the legal regimes they represent, exist to serve and protect regulated entities. A facade of protecting the public interest must of course be carefully maintained, but this gets difficult when during economic hard times.

Corporatism is sometimes tough to discern because “hard” corruption —  giving an Abscam-like payoff in exchange for some official act or vote thrown to the payor, is unlawful. But regulatory capture is a feature of the “soft” corruption of American government at the state and local level. In the soft variety, individual regulators are beholden to the politicians who appointed them to the job (and the nice salary that comes with that job, plus reasonable hours and maybe even some perks). Their careers after their term at the administrative agency is up depend on the good will of their own patrons, the politicians, and their records in deciding cases in favor of the utility. One need only look at how many regulators ascend to jobs with the utilities they used to regulate. The politicians, in turn, are beholden to the wealthy individuals and large corporations who spend as much money as they can attempting to influence the policy choices made by the regulator, the legislature, or both.

The returns on this investment (i.e., campaign contributions) are beyond the wildest dreams of any business school professor. For example, banks and credit card companies spent more than $40 million lobbying for the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it harder for Americans to discharge their debts. Meanwhile, capital gains taxes are as low as they’ve been since the Great Depression. A 2009 study showed that for every dollar a company spent lobbying for targeted tax benefits, the expected return was between $6 and $20.

In his Atlantic article on the current Republican revolt, Frum says:

A majority of Republicans worry that corporations and the wealthy exert too much power. Their party leaders work to ensure that these same groups can exert even more. Mainstream Republicans were quite at ease with tax increases on households earning more than $250,000 in the aftermath of the Great Recession and the subsequent stimulus. Their congressional representatives had the opposite priorities. In 2008, many Republican primary voters had agreed with former Arkansas Governor Mike Huckabee, who wanted “their next president to remind them of the guy they work with, not the guy who laid them off.” But those Republicans did not count for much once the primaries ended, and normal politics resumed between the multicultural Democrats and a plutocratic GOP.

The Great Recession ended in the summer of 2009. Since then, the U.S. economy has been growing, but most incomes have not grown comparably. In 2014, real median household income remained almost $4,000 below the pre-recession level, and well below the level in 1999. The country has recovered from the worst economic disaster since the Great Depression. Most of its people have not. Many Republicans haven’t shared in the recovery and continued upward flight of their more affluent fellow partisans.

A few things to note here. First, Frum’s assurance (along with that of the Federal Reserve and any number of economists) that the Great Recession ended in 2009 indicates the gulf which separates him from ordinary Americans. As far as they’re concerned, the Great Recession is still in full swing. If a person has a job, his or her primary concern is to hold on to it. Thoughts of moving to something better, common in the 80’s or the 2000’s up to ’07, are no longer at the forefront.

In certain ways the dislocation that the middle class (however one might define them) has been experiencing since the Great Recession is very much like the dislocation following the end of the Great War, another cataclysm that demonstrated the abject failures of the world’s so-called elites. Wall Street’s big banks led the U.S. economy, and indeed the world’s economy, off the cliff, and government regulators were either asleep or, like Alan Greenspan, cheering them on as  heralds of the Great Moderation. Not only did none of them accept any responsibility for these events, they were rewarded. Goldman Sachs, short on cash, calls up alumnus Hank Paulson at Treasury on Friday evening and by Sunday morning they’re a bank holding company with access to the Federal Reserve cash window.  The executives at run-amok insurance giant AIG, which issued untold billions in credit default swaps that propped up Wall Street’s securities with bogus AAA ratings (from equally incompetent executives at S&P’s and Moody’s) didn’t get fired; they got bonuses. Bank of America misrepresented the huge and growing losses of Merrill Lynch to its shareholders so that it could close on its $50 Billion purchase of the latter. Did anyone go to jail?

No, except for Bernie Madoff, whose record-setting Ponzi scheme collapsed along with the economy. Bernie was bad, but he helped Wall Street by serving as a scapegoat.

The run-up to the 2008 economic collapse bears a remarkable resemblance to the worldwide and unprecedented economic expansion in the roughly 40 years between the end of the Franco-Prussian War and the assassination Archduke Franz Ferdinand in Sarajevo in 1914. The contemporaries of this Great Age of Imperialism conceived of it in much the same way as Greenspan conceived of his Great Moderation: an almost universal belief, not only in the U.S. but in Europe and Asia as well, that the world had entered into an unprecedented era of indefinite peace and prosperity. History was over, according to Fukuyama.

In the 1918 collapse of Europe, armies of each side fought bravely and, sometimes, atrociously, against each other.

Before the 2008 collapse, the apparent abundance caused by rapid expansion of credit led the mass of workers to believe that they were the underlying cause of prosperity.

In 1918, it dawned on the players that the the massive flow of blood during the war had ruined and beggared Germany, and, to a somewhat lesser extent, England and France.

In 2008, it dawned on U.S. and European elites that the massive flow of cheap and almost limitless credit had ruined and bankrupted whole classes of their own people, and even whole countries (Greece, Spain, Ireland, Iceland, and so on).

In 1918, the calamity of the war was directly caused by the political leaders of the countries, or, if you were on the right in Germany’s Freikorps or other proto-Nazi ) factions, it was the work of the “enemy within,” the Dolchstoss, the “stab in the back.”

And now, in 2015, we have Donald Trump with his new Dolchstoss:

We have losers. We have losers. We have people that don’t have it. We have people that are morally corrupt. We have people that are selling this country down the drain.

The Republicans shouldn’t be surprised that they’ve become the 21st Century’s answer to the Freikorps.

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Oil at $34.54

Nymex Crude Futures 12/21/2015 about 12:30 pm

Nymex Crude Futures 12/21/2015 about 12:30 pm

The chart says it all, but NYMEX WTI Crude hit $34.54 around noon today.

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Emmanuel, Rahm

When a dashcam of po-lice brutality
Displayed clear CPD typicality
The cops said, with aplomb,
And with backup from Rahm,
The cop acted with pro-portionality

Rahm said “Bad, but not institutional.”
Yet his “Sorry!” was circumlocutional:
“It is quite a pity,
“But don’t blame the City;
“Sixteen shots are quite constitutional.”

But the dashcam proved too big a bombshell.
And the masses thronged Casa Emanu-el,
Shouting “Rahm, read our lip!
Ist kaput* Mayorship!”
“So pack up and leave office pellmell!”

But Rahm had another design,
For blame to fast reassign.
“If you crawl back in your beds,
“I’ll call in the Feds,
“But don’t pressure me to resign!”

[Kaput, Ger. for utterly finished, destroyed.]

If you care to add a stanza, please feel free to comment.

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CPD Violence

Chicago Police demonstrating standard procedure for requesting citizens to return home.

As police brutality scandals continue to roil Rahm’s administration, and as the Justice Department steps in, a modest proposal for a solution comes to mind.

As matters now stand, all of the incentives undermine the rule of law and the administration of justice.

Here’s one way that we might realign incentives. When police are determined by a court to have violated a citizen’s civil rights and the City of Chicago must respond in damages, those damages should be paid with moneys withdrawn from the police pension fund. This would  very likely encourage the vast majority of officers who act within the law to rid the CPD of those officers who break it.

After all, the underlying problem with the CPD is that they have absolutely no skin in this game. When they break the law, Chicago taxpayers foot the bill, and the Rahmulans spare no effort to cover it up.


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Former Massey Energy Co. CEO Don Blankenship

Former Massey Energy Co. CEO Don Blankenship

Huffington Post has a blog entry on Massey Coal that’s worth reading:

Justice — of sorts — was finally delivered as Donald Blankenship, the former Chairman and CEO of Massey Energy, was convicted (with a maximum fine of $250,000 and up to one year in prison) of conspiring to willfully violate mine safety standards at the Upper Branch Mine in West Virginia, where 29 workers died in April 2010. Here’s a blog I wrote about it a few months after the disaster.

Huffington makes the point that the Upper Big Branch mine explosion is much like the 2008 financial crisis because they both have the same root cause: elected officials who should have been creating a regulatory system that protects workers (or investors, or the public) instead created a system whose first priority is to protect the corporations it was meant to watch over.

Read the full Huff Post entry here.

It’s also the same as the BP Deepwater Horizon, whose regulator was the Minerals Management System, or MMS. The MMS was a bureau within the U.S. Department of the Interior (DOI):

MMS’s biggest problem was agency capture. In 2008, MMS was caught in a scandal in which the Department of Interior’s inspector general found that regulators had “inappropriate relationships with industry that could compromise their objectivity.” Those inappropriate relationships allegedly included sharing alcohol at industry functions, using drugs, and sexual relationships between regulators and industry professionals. [17] The inspector general also characterized MMS as dependent on industry’s greater expertise with the technology of deepwater and ultra-deepwater drilling, and thus reliant on industry’s judgment of appropriate safeguards to incorporate in regulations.[18] Essentially, the oil industry’s deep pockets gave it strong leverage over MMS decisions.

Yep. MMS was literally in bed with the company it was supposed to regulate. And as they said on the bridge of the Titanic, that’s just the tip of the iceberg.

From: Changing Direction: How Regulatory Agencies Have Responded to the Deepwater Horizon Oil Spill (Part I of II)


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BP Deepwater Horizon, 2010

BP Deepwater Horizon, 2010

AP reports that federal prosecutors have dropped manslaughter charges arising from the 2010 Gulf of Mexico rig explosion that killed 11 workers and unleashed the nation’s worst offshore oil spill. The federal government also pressed criminal charges against four BP employees.

The Justice Department’s decision to drop manslaughter charges against two BP rig supervisors makes it increasingly likely that nobody will spend a day behind bars for any crime associated with the deadly disaster.

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