Tag: ek Politics

We start tonight with Funnel in your Pants, one of the classics.

Performing are Lindsey Graham, Bobby Jindal, George Pataki and Rick Santorum.  Unfortunately we will not be favored by Rick Perry who is too busy being indicted to appear or Jim Gilmore (who is he again?).

Lehman Day: Making Fun of the Second Great Depression Crowd

By Dean Baker, Truthout

Monday, 14 September 2015 00:00

This week marks the seventh anniversary of the collapse of Lehman Brothers, the huge investment bank. This collapse set off the worldwide financial panic that brought Wall Street to its knees. The anniversary of this collapse, September 15, is the day set aside to ridicule the people who warned of a second Great Depression (SGD) if the Treasury Department and the Federal Reserve Board didn’t rescue the Wall Street banks.

Just to recount the basic story, there is no doubt that without a government bailout most of the big Wall Street banks would have gone under. Citigroup and Bank of America were both effectively bankrupt and remained on life support with hundreds of billions of dollars of government subsidized loans well into 2010. The remaining investment banks, Merrill Lynch, Morgan Stanley, and Goldman Sachs were all facing bank runs. These would have been unstoppable without the helping hand of big government. Many other financial institutions also would have been brought down in the maelstrom, but these giants were for sure dead ducks at the time of the bailouts.  

There is no doubt that the initial downturn would have been more severe if the market was allowed to work its magic and put these banks out of business. But the question the SGD gang could never answer is how this collapse would prevent the government from boosting the economy immediately afterward. After all, then Federal Reserve Board Chair Ben Bernanke once ridiculed people who questioned the ability of the government to boost the economy, commenting the government “has a technology, called a printing press…”

Rather than sitting through a decade of double-digit unemployment, why would Congress not pass a large stimulus package supported by aggressive monetary policy from the Fed? There certainly was no economic obstacle to this path. And the claim that political gridlock somehow would have prevented any stimulus flies in the face of history. Even Republicans have supported stimulus to counter economic slumps. For those too young to remember, the last such incident was the stimulus package signed by President George W. Bush in February of 2008, when the unemployment rate was 4.7 percent.

In short, the idea of the government sitting paralyzed while the unemployment rate sat in the double digits is entirely an invention of the SGD crew. It has no basis in the real world.

It is easy to see why the SGD myth persists. Most obviously, the big Wall Street banks like to pretend they did us all a favor by letting the government bail them out. In their story the bailout wasn’t about saving Goldman Sachs and Citigroup, it was about rescuing the economy.

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They want the public to believe that the issues involved are complicated and beyond the understanding of normal people. This is why their focus is always the financial crisis. After all credit default swaps and collaterized debt obligations can be complicated.

On the other hand, the basic story of the housing bubble was pretty damn simple. When the country saw an unprecedented run-up in house prices it should have caught some economists’ attention. After all, the US housing market was the largest market in the world and it was not previously subject to erratic fluctuations of this sort.

The huge construction boom driven by the bubble was also not a secret. Nor was the flood of dubious loans, which even at the time were the subject of jokes about their poor quality by people in the industry.

In short, the story of the housing bubble and the devastation wreaked on the economy by its collapse is a simple one that the great minds of the economics profession should have all seen coming. Rather than acknowledge that they made a colossal blunder, it’s much better to build up the myth that it’s all so complicated. And, if we didn’t give Wall Street everything it wanted, we would be subject to the curse of the SGD.

Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock. But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand. The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash.

Officials Cover Up Housing Bubble’s Scummy Residue: Fraudulent Foreclosure Documents

by David Dayen, The Intercept

Sep. 14 2015, 8:17 a.m.

Every day in America, mortgage companies attempt to foreclose on homeowners using false documents.

It’s a byproduct of the mortgage securitization craze during the housing bubble, when loans were sliced and diced so haphazardly that the actual ownership was confused.

When the bubble burst, lenders foreclosing on properties needed paperwork to prove their standing, but didn’t have it – leading mortgage industry employees to forge, fabricate and backdate millions of mortgage documents. This foreclosure fraud scandal was exposed in 2010, and acquired a name: “robo-signing.”

But while some of the offenders paid fines over the past few years, nobody cleaned up the documents. This rot still exists inside the property records system all over the country, and those in a position of authority appear determined to pretend it doesn’t exist.

In two separate cases, activists have charged that officials and courts are hiding evidence of mortgage document irregularities that, if verified, could stop thousands of foreclosures in their tracks. Officials have delayed disclosure of this evidence, the activists believe, because it would be too messy, and it’s easier to bottle up the evidence than deal with the repercussions.

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In both of these cases, evidence of fraudulent activity harming homeowners has either been suppressed or not acted upon. Refusing to investigate illegal actions is an effective way of remaining in denial. But refusing to release the contents of those investigations, or refusing to rule on cases where the illegal actions have already been proven, really takes denial to the extreme.

In November 2010, Georgetown law professor Adam Levitin explained in testimony before the House Financial Services Committee why there were no real investigations of bank misconduct during the foreclosure crisis.

“Federal regulators don’t want to get this information, because they are too scared that if there is a problem, they’re going to have to do something about it,” Levitin said.

Stupid implies they were motivated by noble instincts and were merely misguided, ignorant, or incompetent.

Evil says they knew exactly what they were doing.

Unless you think everyone’s an idiot except you (which I do with ample justification but is not really relevant) I think you’ve got to come out somewhere on the evil side.  Does the rot go to the top?

Have you been asleep since Lehman?

Now the DOJ Admits They Got it Wrong

by William Black, New Economic Perspectives

Posted on September 11, 2015

It is now seven years after Lehman’s senior officers’ frauds destroyed it and triggered the financial crisis. The Bush and Obama administrations have not convicted a single senior bank officer for leading the fraud epidemics that triggered the crisis. The Department’s announced restoration of the rule of law for elite white-collar criminals, even if it becomes real, will come too late to prosecute the senior bankers for leading the fraud epidemics. The Justice Department has, effectively, let the statute of limitations run and allowed the most destructive white-collar criminal bankers in history to become wealthy through fraud with absolute impunity. This will go down as the Justice Department’s greatest strategic failure against elite white-collar crime.

The Obama administration and the Department have failed to take the most basic steps essential to prosecute elite bankers. They have not restored the “criminal referral coordinators” at the banking regulatory agencies and they have virtually ignored the whistleblowers who gave them cases against the top bankers on a platinum platter. The Department has not even trained its attorneys and the FBI to understand, detect, investigate, and prosecute the “accounting control frauds” that caused the financial crisis. The restoration of the rule of law that the new policy promises will not happen in more than a token number of cases against senior bankers until these basic steps are taken.

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As a corporate executive once told a former Assistant Attorney General of ours: “[A]s long as you are only talking about money, the company can at the end of the day take care of me . . . but once you begin talking about taking away my liberty, there is nothing that the company can do for me.”(1) Executives often offer to pay higher fines to get a break on their jail time, but they never offer to spend more time in prison in order to get a discount on their fine.

We know that prison sentences are a deterrent to executives who would otherwise extend their cartel activity to the United States. In many cases, the Division has discovered cartelists who were colluding on products sold in other parts of the world and who sold product in the United States, but who did not extend their cartel activity to U.S. sales. In some of these cases, although the U.S. market was the cartelists’ largest market and potentially the most profitable, the collusion stopped at the border because of the risk of going to prison in the United States.”

As prosecutors, (real) financial regulators, and criminologists, we have known for decades that the only effective means to deter elite white-collar crimes is to imprison the elite officers that grew wealthy by leading those crimes (which include the largest “hard core cartels” in history – by three orders of magnitude). In the words of a Deutsche Bank senior officer, the bank’s participation in the Libor cartel produced a “mountain of money” for the bank (and the officers). Holder’s bank fines were useless – and the Department’s real prosecutors told him why they were useless from the beginning. No one, of course, thinks Holder went rogue in refusing to prosecute fraudulent bank officers. President Obama would have requested his resignation six years ago if he were upset at Holder’s grant of de facto immunity to our most destructive elite white-collar criminals.

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The Department’s top criminal prosecutor, Lanny Breuer, publicly stated his paramount concern about the fraud epidemics that devastated our nation – he was “losing sleep at night over worrying about what a lawsuit might result in at a large financial institution.” That’s right – he was petrified of even bringing a civil “lawsuit” – much less a criminal prosecution – against “too big to prosecute” banks and banksters. I lose sleep over what fraud epidemics the banksters will lead against our Nation. The banksters have learned to optimize “accounting control fraud” schemes and learned that they can grow immensely wealthy by leading those fraud epidemics with complete impunity. None of them has a criminal record and even those that lost their jobs are overwhelmingly back in financial leadership positions. In the aftermath of the savings and loan debacle, because of the prosecutions and criminal records of the elites that led those frauds, no senior S&L fraudster who was prosecuted was able to become a leader of the fraud epidemics that caused our most recent financial crisis.

We have known for decades that repealing the rule of law for elite white-collar criminals and relying on corporate fines always produces abject failure and massive corporate fraud. We have known for millennia that allowing elites to commit crimes with impunity leads to endemic fraud and corruption. If the Department wants to restore the rule of law I am happy to help it do so. We have known for over 30 years the steps we need to take to succeed against elite white-collar criminals through vigorous regulators and prosecutors. We must not simply prosecute the current banksters, but also prevent and limit future fraud epidemics through regulatory and supervisory changes.

The Justice Department’s New Policy Is a Brutal Admission of Eric Holder’s Failures

By David Dayen, The Fiscal Times

September 11, 2015

This week, the Justice Department felt the need to write a memo to staff instructing them to indict individuals when they commit crimes, seemingly something implied by their job titles. It doesn’t say as much about the current Justice Department regime under Loretta Lynch as it does about the former one under Eric Holder.

No major Wall Street executive went to jail for the illegal actions that precipitated the financial crisis, despite a mountain of documentary evidence of fraud. Corporations and their employees got away with what amounted to slaps on the wrist. And Holder, after presiding over this, joined the head of his Justice Department criminal division and several top deputies at Covington & Burling, a white-collar defense firm that represents most major banks.

You can draw a direct line from this failure back to the “Holder memo,” written when he served as a deputy in the Clinton Justice Department. That memo created the “collateral consequences” policy, arguing that prosecutors who seek criminal cases against large companies should take into account innocent victims who may get hurt. It laid out a host of alternative remedies, such as fines and deferred prosecution agreements.

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The Justice Department would not have attempted to make this change without full recognition of the loss of public trust its actions over the past several years have engendered. Relentless criticism of the lack of white-collar prosecutions had an impact, and those who participated in that conversation should be proud.

But at this point, guidelines won’t do the trick, only actions will – a genuine effort to make the concept of justice more than a punch line. This is the beginning of a real overhaul in mindset at the Department of Justice. Hopefully, the resources and training needed to undertake wide-ranging investigations will accompany the guidelines. Hopefully, U.S. Attorneys and FBI agents will be allowed to do their jobs. Hopefully, settlements with corporations no longer represent a dead end of accountability. Hopefully, the Justice Department will live up to its name.

The End of the Deferred Prosecution Agreement?

by David Dayen, Naked Capitalism

Posted on September 8, 2015

DPAs usually arise out of the company disclosing misconduct and convening an internal investigation with some Assistant AG, promising full cooperation. The company gets credit for remedial conduct prior to the settlement, essentially setting their own punishment. And typically, DPAs are not paired with prosecutions for individuals committing the crimes.

So let’s look at the DPA that could bring this cozy situation crashing down. DoJ headlined back in June 2014 that Fokker Services BV would forfeit $10.5 million for selling aircraft parts and services to customers in Iran, Burma and Sudan. There was a parallel civil settlement with the Treasury Department’s Office of Foreign Assets Control (OFAC) to pay an additional $10.5 million. If you go down the press release, you find that Fokker received $21 million in gross revenue for these 1,153 illegal transactions, so the penalty was simply to give back what they received. Now they’re out a bunch of aircraft parts, one assumes, and I don’t really know the markup here. But that doesn’t seem too taxing.

In fact, in the DPA itself, we learn that “at least $21 million” was involved in the transactions. So it’s not possible to know what, if any, financial penalty was imposed. And FWIW, the civil penalty for the crime FSBV committed could have been as high as $51 million, per corporate law firm Akin Gump.

FSBV had to “accept responsibility” for its actions and really do little else. They agreed to cooperate with any matters relating to this investigation, making documents and individual employees available. For what purpose I have no idea, since nobody at FSBV has been indicted for this, 4 years after the company disclosed everything. FSBV must also continue to apply what it has already implemented voluntarily, namely compliance programs to prevent it from continuing to break the law. And… that’s about it. Plus, “in consideration of FSBV’s remedial actions to date,” this “punishment” all goes away within 18 months.

So I can see why Judge Richard Leon rejected this deal back in February, calling it “grossly disproportionate” and that “it would undermine the public’s confidence in the administration of justice and promote disrespect for the law… to see a defendant prosecuted so anemically for engaging in such egregious conduct.”

Just as a sidebar, I have a problem with a Dutch company being prosecuted by the United States for trading with other countries. There are a series of “trading with the enemy” type of laws that put the U.S. in the position of world trading policeman, sometimes for inscrutable reasons. But as long as that law is on the books, sentencing an offender to give back (some? all?) of their profits and promise not to do it again does seem a bit thin.

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DoJ and FSBV jointly appealed Judge Leon’s order, saying he exceeded his authority. When the law enforcement agency and the offending entity end up on the same side of a lawsuit, well, it certainly doesn’t look great.

So this week we’ll have arguments in the 1st Circuit Court of Appeals D.C. Circuit Court of Appeals (h/t Abigail Field). And I don’t really know what DoJ will have to say for themselves. These are the kind of craptastic agreements they’ve been making with corporate offenders for the entire Holder era (Holder, last seen just hanging out at his awesome new office at Covington & Burling, was AG when this DPA was made). Presumably they’ll avoid the specifics and just claim that judges can’t have the temerity to reject contractual agreements made by two sides, and how this would damage the separation of powers, prosecutorial discretion, &c.

But judges have held up DPAs in the past, though they were eventually approved. And considering that DoJ can also file a non-prosecution agreement, which don’t require court approval, there’s obviously some role for judges to play here. If you want to get judicial approval, you can’t expect that approval to come automatically. And if the goal is to extract the proper consequences out of a corporate offender, a judge resisting settlements that are overly lenient can only enhance DoJ’s efforts.

Of course, that isn’t what DoJ is after. They would rather settle these matters quietly, write a press release, and then get a judge to bless it to get buy-in from another branch of government, so if anyone questions the slap on the wrist they can say “well a judge approved it.”

Legally this is a jump ball; DoJ could easily wriggle off the hook here. But if the 1st Circuit D.C. Circuit blows up this little charade, they will have to make their terrible deals without a patina of outside approval. Or maybe, horror of horrors, they’ll have to do their job properly.

It’s that terribly British sense of humor you know.

Jeremy Corbyn confident Labour will unite around him if he wins

by Patrick Wintour, The Guardian

Thursday 10 September 2015 15.40 EDT

Jeremy Corbyn has predicted that his now-assumed election as Labour leader on Saturday will prompt a coming-together of the party, as he prepares to try to change politics by offering a collegiate and less confrontational leadership style.

With the polls finally closed and with his supporters confident that he has gone from being a 200-1 outsider to an astonishing winner, Corbyn plans to follow an acceptance speech by speaking to tens of thousands due to march in London on Saturday in support of refugees. He is determined to foster what he regards as a new social movement that has emerged this summer inside the wider labour movement.

Corbyn is to offer shadow cabinet posts to all wings of the party. Speaking to ITV News, he said: “MPs are important but they are not the entirety of the Labour party.

“We have a big job to do in exposing the government’s austerity programme and what it’s doing to the poorest and most vulnerable in our society: their bill on welfare reform and their bill on trade union issues and the way they are actually systematically slicing up public services in Britain through massive cuts and local government grants.”

But Corbyn faced a wave of criticism from senior party figures, some of whom warned that his supporters were sinister and represented little more than a Trotskyist 80s throwback.

Liz Kendall, the Blairite candidate, predicted that a Corbyn leadership would end in electoral failure and repeated her pledge that she would not serve on his frontbench since their political differences on the economy and foreign policy were too fundamental. Kendall said: “When the public are crying out for politicians to say what they mean, and mean what they say, I cannot serve on Labour’s frontbench if Jeremy Corbyn is leader.”

A wider group of senior shadow cabinet members have now collectively agreed to refuse to serve, saying they will accept the democratic result and give Corbyn the time and space to set out his own agenda. They argue that if a group of seven or so MPs were in the shadow cabinet while deeply opposed to his politics, it would be a recipe for instability and division and it would be better instead to have an honest disagreement outside the shadow cabinet.

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On Friday, David Cameron will follow George Osborne in deriding Labour for vacating the centre ground, saying he watched the contest in bewilderment as Labour continued to debate whether the deficit needed to be cut.

“It’s as if the financial crash, or the election for that matter, never happened. The question is not ‘do we have money to spend?’; it’s ‘how do we spend the money that we have to achieve the outcomes we want?’

“It’s a question that requires you to think about the role and nature of the state, the reform of public services, the way in which government programmes are designed and delivered – all of which have been totally absent in this Labour leadership election.

“Whoever wins the Labour leadership tomorrow, this is now a party that has completely vacated the intellectual playing field and no longer represents working people. It is arguing at the extremes of the debate, simply wedded to more spending, more borrowing, and more taxes. They pose a clear threat to the financial security of every family in Britain.”

Kendall, in a reflective speech, conceded Corybn’s campaign had “mobilised and enthused vast numbers of people in a way we haven’t seen for decades. The debate that’s exploded during this contest has been simmering for many years.”

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Kendall said: “The programme Jeremy Corbyn offers is not new. His policies and politics are the same now as they were in the 1980s – and will end up delivering the same result.

“Neither is he the sole keeper of Labour’s principles. No one has a monopoly on being led by their conscience. But modernisers must be honest with ourselves: many people who’ve joined our party in recent months do not believe we are offering change and some of them doubt our principles altogether. This is partly because too often in the past we’ve come across as technocratic and managerial.

“We’ve allowed ourselves to be defined as purely pragmatic – concerned with winning elections alone, rather than winning for a purpose – thereby ceding the mantle of principle to the far left.”

It was quite a year.  While there are other aspects I’d like to draw your attention to these.  After the strong second place showing of Eugene McCarthy, a conventionally economic liberal of the FDR/Keynes stripe, a reliable supporter of social justice, and a fervent believer in a technocratic neo liberal foreign policy (the multi-lateral democratic impulse that created the United Nations, the NATO Alliance, and the Common Market was not entirely without merit) that did not include Imperialism and Colonialism as a motivator (McCarthy was not much of a pacifist except by comparison) in New Hampshire, the sitting President Lyndon Baines Johnson (who was a revolutionary on social justice, a lying aggressive warrior of the Nuremberg type, and economically similar) decided that he was too divisive to bring victory to his party (mostly because of that social justice thing, but the war was pissing off people who could have been his allies).

So who to get now to save the McNamara achievers?

I hate to say it because I have a deep and abiding respect for him, his two brothers, and the rest of the family, but Robert Kennedy.

At the time he was the resurrection of all the momentum we thought we’d lost in ’63 and he might have fulfilled all our hopes and fantasies had he lived.  Even today, he’s the ‘good’ Kennedy.

It was a violent time to be alive in ways that I think have escaped people.  Boxcutters?  Try megatons.

When Hubert Humphrey took control during a police riot in the most thoroughly corrupt Democratic town in the country it was a victory for the status quo.

I present this cautionary tale in the context of the Joementum I can feel in the room.

Enough with the Joe Biden nonsense: The real reasons why the D.C. media loves him, but progressives should run away screaming

Paul Rosenberg, Salon

Thursday, Sep 10, 2015 12:00 PM EST

What Biden does have going for him is elite media fantasies. He’s their idea of what “the people” really want. He may have spent 30-some years representing credit-card companies in the U.S. Senate, but for the elite media, he’s a “regular Joe.” A more subtle way that Biden reflects D.C. insider fantasies of what the public wants is the way that he has moved significantly to the right over the years, without any in D.C. appearing to notice it.

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Biden’s distorted sense of who should be listened and who shouldn’t was, in short, a reflection of the shifting power relations coming to dominate Washington at the time. Previously, Democrats had usually taken seriously what ordinary people had to say. Whatever the eventual outcome might be, they were willing to hear from those on the front lines who might have a very different view of things. But after eight years of Reagan and four more of Bush, Biden was at the forefront of those who thought it far more important to listen and respond to conservative activists inside the Beltway, as shown by his response to Hatch quoted above.

This, then, was the broader legislative record that Biden had built-and was still building-at the time he encountered Anita Hill and Lani Guinier. He was busy moving the Democratic Party to the right on criminal justice policy, and they appeared as very unwelcome reminders, not just of what he was leaving behind, but of the fact that there was also much more to the realm of justice than his narrow focus could encompass. Let’s consider each these women in turn, how they were mistreated by elite Washington, and the role Biden played in mistreating them.

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The same Beltway press that approved of Biden back then will certainly not be bothered now. Anita Hill is very old news to them, and Lani Guinier? Most of them can’t even place the name. But the passage of time only makes Biden’s failures more glaring. Given the collision course between Black Lives Matter and Biden’s drug war record, there’s bound to be a much higher level of sensitivity to how Biden mistreated those two exemplary black women when he was the man in charge of the process that humiliated them.

How the Makers of “Zero Dark Thirty” Seduced the CIA with Fake Earrings

Peter Maass, The Intercept

Sep. 9 2015, 2:56 p.m.

From the moment it premiered in 2012, the film by Kathryn Bigelow and Mark Boal about the hunt for Osama bin Laden has been criticized as pro-torture propaganda. According to its many detractors, the film embraced the discredited notion that torture by CIA interrogators made Al Qaeda members talk about the whereabouts of their leader. It subsequently was revealed that Bigelow and Boal had received an unusual amount of access to CIA officials who had a keen interest in peddling the virtues of waterboarding, and this spawned a cottage industry of investigations and articles.

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According to the documents, at least 10 CIA officers met Bigelow and Boal at the agency’s headquarters in Langley, Virginia, as well as at hotels and restaurants in Washington D.C. and Los Angeles. In addition, the CIA director at the time, Leon Panetta, met Bigelow at a dinner in Washington and, soon after that, shared a table with her and Boal at the White House Correspondents’ Association Dinner. It also turns out that Boal read his script over the phone to CIA public affairs officials on four separate days in the fall of 2011.

But the biggest takeaway from these documents is that even as the CIA turned Bigelow and Boal into its willing propagandists, the filmmakers were turning the CIA into star-gazing dupes; the seduction went both ways. Bigelow and Boal emerge in these documents as excellent co-opters of the nation’s toughest spies – and it didn’t take much for them to do that.

Bigelow and Boal visited CIA headquarters (an officer recalled having to cover up classified material on one occasion), but the meetings soon moved off campus to “avoid jealousy” about who was getting “face time” with the famous duo, according to the CIA documents obtained by Vice. For instance, one CIA officer met Boal at his suite in the luxury Jefferson Hotel in Washington D.C. and dined with him at the hotel as well as at a nearby restaurant, Citronelle, where a slab of ribeye cost $39. Not long afterwards, Bigelow met that same officer in her accommodations at the Ritz-Carlton in Georgetown.

The seduction was bi-coastal. A CIA officer met Boal in Hollywood for a meal and then drove to a beach house in Malibu to talk with Bigelow. Boal gave the officer a bottle of Tequila and boasted it was worth “several hundred dollars” (although when someone at the CIA checked, the highest listed price was $169.99). The officer who had met Boal at the Jefferson Hotel also had dinner with him and Bigelow at the members-only Soho House in L.A. and later told investigators she had “developed a friendship” with the filmmakers. It had not been terribly expensive for Bigelow and Boal to develop these friendships, however – Bigelow had given the officer a set of what the director described as “black Tahitian pearl earrings” that, it turned out, were painted black and were so cheap they weren’t worth the cost of an appraisal.

The documents show that auditors at the CIA referred the matter to the Department of Justice for possible criminal action against Boal and Bigelow for bribing public officials. Prosecutors took no action.

Guatemalan President Resigns in “Huge Victory” for Popular Uprising

President Otto Pérez Molina of Guatemala Resigns Amid Scandal

By AZAM AHMED and ELISABETH MALKIN, The New York Times

SEPT. 3, 2015

Mr. Pérez Molina, a former general who was the military’s negotiator during talks to end of the nation’s brutal 36-year civil war, offered to present himself for possible charges in a multimillion-dollar customs fraud case, saying he would “face justice and resolve my personal situation.” Before, he had denied wrongdoing and refused to budge from office even as tens of thousands of Guatemalans took to the streets.

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Mr. Pérez Molina, 64, is the first president in Guatemalan history to resign because of corruption, experts said, offering a rare example in a region long marked by the impunity of its political class. And though the economy and reform efforts in Guatemala have lagged compared with those in other countries in Latin America, the move put it firmly within a wave of efforts elsewhere in the region to make political systems more responsive toward the public, especially the middle class.

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That peaceful protests have managed to oust a powerful leader who many say was connected to the dark history of the war, in which a United Nations panel concluded that the government was behind the majority of the 200,000 deaths in the conflict, has left those outside and within Guatemala stunned. Even before sunrise, protesters were starting to gather in the Plaza Central of Guatemala City, the nerve center for the widespread protests that started in April.

Guatemala president appears in court as congress accepts resignation

by Jo Tuckman and Nina Lakhani, The Guardian

Thursday 3 September 2015 14.42 EDT

Pérez Molina’s decision to step down is a huge victory for an unprecedented anti-corruption protest movement that has swelled in recent months with regular marches in major cities, road blockades in rural areas and a general strike last Thursday.

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Noisy celebrations erupted across Guatemala City on Thursday morning as news of his resignation began to spread. Fireworks were set off in public squares and gardens, while people on their way to work honked their car horns. Homes, cars, buses and shops were immediately draped in the blue and white national flag.

“We did it, the people did it,” said 33-year-old Gabriel Wer in a phone interview from the main square in the capital. But Wer, one of the organisers behind the huge weekly protests that started in April, warned: “But this is not the end, now we’re looking for justice.”

As TPP Grinds To A Halt, Asian Countries Start Focusing On Rival Trade Agreement RCE

by Glyn Moody, Tech Dirt

Tue, Sep 1st 2015 3:28am

Techdirt has written dozens of stories about the Trans-Pacific Partnership agreement (TPP). That’s largely because it seemed to be coming to a conclusion, after many years of negotiations, and so it was important to capture the last-minute twists and turns — and the dirty deals — as they happened. But as we reported a few weeks ago, that final breakthrough and completion never happened. Instead, we had the “Maui meltdown”, when a whole bunch of old and new problems raised their heads, with the result that TPP may have missed a key deadline that means it won’t be happening soon, if ever. That may have seemed an extravagant claim, but it is a sentiment that is gradually beginning to spread among commentators in Asia.

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Techdirt introduced the Regional Comprehensive Economic Partnership (RCEP) back in June, pointing out that it could end up even worse than TPP. But while TPP is at a standstill, RCEP seems to be moving forwards

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The biggest difference between TPP and RCEP is that China is part of the latter, but not of the former, while for the US, it’s the other way around. China therefore has a big incentive to make RCEP happen quickly, and seems to be grasping the opportunity opened up by TPP’s latest problems.

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RCEP has a big advantage in that it is not trying to define an ambitious set of new trading rules, as TPP is, but instead is merely attempting to harmonize existing trade agreements among RCEP’s 16 nations, which also include another major economy absent from TPP — India.

You are responsible for this material.  It will be on the test.

Told you.

The new SATs everyone’s kids will be preparing for next spring

Rachel Nuwer, Scientific American

Tuesday, Sep 1, 2015 04:30 AM EST

“Fortune favors the prepared mind,” as Louis Pasteur once said. So as school revs up this month, so do SAT prep classes. Students might be surprised, however, at the amount of time dedicated to visual literacy skills. The increased focus on graphics is designed to prepare an estimated 1.6 million college-bound pupils for the first redesign of the standardized college admissions test in more than a decade. Along with other updates, test takers of the March 2016 exam will encounter graphics not only in the math section as in past years but also in the reading and writing and language portions. Students will be asked to interpret information presented in tables, charts and graphs and to correct text so it accurately describes data found in accompanying figures.

Mounting evidence indicates that such literacy is a key skill for success in college, careers and daily life in general. In an increasingly data-rich world, graphics now pop up routinely in formats ranging from political campaign literature to household bills. “Being a literate consumer of that information is valuable regardless of your career,” says Jim Patterson, an executive director at the College Board, the nonprofit corporation that owns and publishes the SAT.

Education experts agree that students in many developed nations, including the U.S., lack experience with visual data. “Apart from basic x- and y- axis graphs, educators [around the world] don’t sufficiently teach students how to represent information graphically,” says Emmanuel Manalo, a professor of education psychology at Kyoto University in Japan. The SAT’s new focus most likely will nudge educators to shift their lesson plans accordingly. Students, in other words, won’t be the only ones with bubble charts or scatter plots on the mind this fall-teachers will, too.

The intellectual work required to interpret a graph taxes our brain more than the effort involved in reading the same information presented as text, according to a new study by Manalo and two researchers at the University of Twente in the Netherlands.

So why do we do info-graphics again?  Oh, that’s right.  It makes it easier to lie and obfuscate.

First of all, “money” is not a store of value.  Your baked mud Ur cow tokens are in fact less useful than Confederate dollars because those at least can be used to start fires or as wallpaper, cat box liners, and fish wrap.  Ur is no more, the cows are dead, and the market has been closed for thousands of years.

What does have value are income producing properties and enterprises.  These throw off a net positive revenue stream in whatever the current medium of exchange is from Yap stones to electrons.  By ‘medium of exchange’ we mean anything that can be used to arbitrarily facilitate the transfer of assets from one person to another and then reused to obtain goods or services from another party that was not initially involved.

Most people think of ‘money’ in terms of a pile of commodities or potential pile that can be measured against other piles.  If your pile is bigger, you win!  The problem with actual piles is that their economic utility can change.

Say for instance that you controlled 98% of the world’s supply of oil.  Surely that must be worth something.  Well, it depends.  Before the advent of the Industrial Revolution (and a good time after that) the economic utility of oil was primarily as a lubricant.  Handy if you had a lot of ox cart axels to grease, a smelly puddle of goo otherwise.

Nor does scarcity dictate value.  Your Orange Toaster that belonged to one of the developers of Exec (complete with manuals and beta code) may well be unique, but it should be in a museum next to the cow tokens because you’d probably have to pay to have it hauled away.

In fact cow tokens look better and better because in addition to the milk and meat and little cows, there’s also the fertilizer.  People pay you to haul it away.

Forty-six years ago, I started lending money in Larry Bingham’s back room. My first customer was a drover named Penny. He wanted two dollars on a Brindle cow at six percent interest. He said she gave six quarts of milk a day. You know what I made him do? I made him move that cow into my back yard for a whole week. And I watched him milk her every day. Sure enough, she gave an average of six and a half quarts a day, so I gave him the money at six and half percent interest. Not only that, I kept the 60 pounds of manure she left behind. When you show me collateral, madam, you better make sure it’s good collateral. For forty-six years, I’ve been lending money on good, old-fashioned principles. I stand here now to tell you one and all that I’ve never been offered a better piece of collateral that I hold in my hand now!

The big scary negative about inflation is that it takes your ‘money’ which is not invested in income producing properties and enterprises (like cows) and erodes its ‘store of value’ relative to its ability to be exchanged for assets.

This is actually a good thing because it encourages money to be put to productive use instead of being hoarded in the expectation that assets will become cheaper over time.  You can buy a heck of a computer today for what that Poly-88 cost in 1977 but you would have been without one for 40 years.

When is inflation not good?  Why, when prices are rising faster than wages and productivity,  This creates an incentive to consume instead of saving and accumulating capital.

So the important factor is net inflation.  If GDP (to the extent that it’s a valid measure of total economic activity which is questionable at best) is rising at 10% annually you can sustain annual inflation of 10% indefinitely with no problem at all except for the math challenged people who have a hard time dealing with zeros.  The same is true for any other point of equilibrium be it 2 or 200%.

When you hear about a Weimar or a Zimbabwe you are looking at exceptional cases that prove the rule.  Because of foolish adherence to the Gold Standard in which their War Reparations were denominated, Weimar was not a sovereign currency that could seek relative international trading value through devaluation, except domestically- thus hyperinflation.  In Zimbabwe 90% of the nation’s wealth was held by corrupt plutocrats who promptly converted it at a fixed rate into foreign currencies so there was domestic devaluation and- hyperinflation.

In a post-Bretton Woods system global devaluation of sovereign currencies results in national competitive advantages that increase trade and promote GDP growth until inflation reaches an equilibrium state.

What makes this relevant is that the Federal Reserve is looking to raise interest rates, making it more attractive to hoard money as opposed to investing it in productive enterprise despite the fact that there is virtually no inflation at all and the economy has not yet recovered from the productivity lost during the Lesser Depression.

The Federal Reserve is about to make a terrible mistake

by David Dayen, Salon

Tuesday, Sep 1, 2015 05:58 AM EST

(T)he Fed is experiencing a fallacy of schedule momentum. They want like to raise rates in September, by God, and a little stumble won’t stand in their way. Aside from stocks, however, the bigger problem is that the Fed’s rush to tighten is absent any conditions necessitating it – and is mostly being done out of concern with being “serious,” which has created nothing but pain this millennium.

The stubbornness was on display last weekend at Jackson Hole, Wyo., site of the Fed’s annual policy conference. Fed vice chair Stan Fischer made the case that inflation will soon move upwards, a key indicator that the central bank will soon raise interest rates. The idea is that falling unemployment will create tightening in the labor market, leading to increased wages and eventually rising prices. To stop prices from running out of control, the Fed needs to slow the economy by increasing interest rates.

There are a few problems with this reasoning. First of all, who exactly thinks the economy is running too hot right now? While unemployment has dropped, wages have been stagnant for the vast majority of workers for 35 years. Somewhat faster wage growth may be on the way, but it’s not here yet, and the idea that the moment when workers get a bit more in their paychecks, the Fed has to take away the punch bowl and make their lives worse doesn’t make much sense.

Because wages have been so low for so long, it would take up to 14 years of above-trend wage growth to rebalance the economy so that workers get their proper share. Rebalancing would transfer money to those who would spend it and have a significant economic impact.

Translation: We shouldn’t fear faster wage growth, we should embrace it.

…

This brings us to higher inflation, which Fischer and several other major central bankers assure us is just around the corner. In reality, the economy has been running below the Fed’s 2 percent inflation target for over three years. And it’s been missing by wider margins as the year has progressed. That’s partially due to low oil prices, which have a powerful effect on inflation because they lower the cost of shipping goods. And we should expect oil to either stay at the current level or drop even more over the next year.

In fact, Since the economic recovery hasn’t surged under the current policy framework, there’s a case for a higher inflation target. But for too long, 2 percent has not been a target but a ceiling; even if we’ve run below it for three years, the thinking goes, we must never go above it.

It’s even worse than that, actually. As Kevin Drum noticed, Fischer said this over the weekend: “Because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening.” So just the threat of getting to 2 percent is a ceiling. This attitude ensures inflation will remain well below target forever.

All this adds up to the fact that there’s no urgency to raise rates. The Fed is reaching for a reason to do so, and it’s puzzling to understand why. Some have charged that a pervasive low-rate environment could trigger a “reach for yield” by investors, and create financial bubbles. That’s a concern, but harming the economy isn’t the Fed’s only tool to ameliorate that; they could actually monitor financial institutions to ensure stability.

Others have claimed that the Fed must hike rates because what if they get caught with near-zero rates during a recession, and have no tools to spur a recovery? This is a funny idea, that the Fed must raise rates now so they can lower them later. If we had a functioning Congress willing to use fiscal policy to counteract recessions, this wouldn’t even be a question. But even still, the Fed has additional steps they could take in a downturn, and should probably confine themselves to addressing the policy of today, not hypotheticals some years down the road.

The real reason for increasing rates appears to be coming from outside groups, whether members of Congress or international colleagues, who just want the Fed to “get on with it.” There’s too much drama in thinking about the proper policy, and the central bankers should just rip off the Band-Aid and “return to normalcy.” According to this take, we’re in an “abnormal” rate environment, and central bankers are responsible, sober, normal people. Rates should be higher because rates should be higher. Current economic conditions have nothing to do with it.

…

These important questions shouldn’t be driven by some elite sense of what is “normal.” If the data were allowed to dictate decision-making, there’s no way we’d be talking about a rate hike. The Fed’s biases, only talking to other very serious people and not those affected by its policies, really show here. Workers need the Fed’s help, and central bankers should listen to them.

In some places impeachment is not “off the Table.”

Guatemala President Faces Arrest as Business Interests and U.S. Scramble to Contain Uprising

Guatemalan Supreme Court Approves Motion to Impeach President

By Sofia Rada, Truthout

Thursday, 27 August 2015 00:00

Amid a growing political crisis in Guatemala, the country’s Supreme Court issued a unanimous decision on August 25 to approve a motion by the attorney general to impeach the president. The attorney general identified President Otto Pérez Molina as the head of a corruption scheme that led to the resignation of the country’s vice president and a number of other senior officials. The growing crisis has mired the president’s administration for much of this year, but until now the opposition has been unable to get enough votes in congress to lift the immunity granted to Pérez Molina by Guatemalan law.

As opposition to his continuance in office mounted, Guatemalan President Pérez Molina announced on August 23 through a televised address that he would not resign. He categorically denied all claims that he has ties to the corruption scandal, which led to the May resignation of the country’s former vice president, Roxana Baldetti, who was arrested on August 21 and taken to court. The scandal concerns the funneling of taxes into private accounts and offering discounted custom rates for under-the-table payments. Despite growing protests and increasing pressure from those who oppose his continued rule, however, the president continues to reject any responsibility and does not show signs of succumbing to demands for his resignation.

In a statement sent via email to COHA, a U.S. Department of State Spokesperson said the department was closely monitoring the situation in Guatemala. The spokesperson reaffirmed the department’s support in “transparent, independent and impartial legal processes” and noted that the CICIG “has been a proven partner of both the government and people of Guatemala in their efforts to promote the rule of law.” The spokesperson did acknowledge the recent request by Guatemalan prosecutors for the right to impeach the president, but also urged all parties to respect the schedule of national elections and the Guatemalan constitutional process. Earlier in May, the State Department had issued a press release expressing its support of President Pérez Molina and his administration in efforts to address the issue of corruption in Guatemala. The State Department had also urged Guatemalans to support government institutions in investigations and prosecution of corruption and encouraged the president to work closely with the CICIG. However, the CICG has now identified Pérez Molina as complicit in the corruption scandal.

I haven’t forgotten Nancy.