The Stars Hollow Gazette - Recommended Diaries

1% Want To Steal Your Social Security, Pres. Obama Is Helping Them

joe shikspack — Mon, 14 May 2012 00:36:06 GMT

Practically since the modern social safety net was created wealthy, powerful right-wingers and organizations have been trying to kill it. In recent years, those right wing forces have had a lot of help from Democrats in making their twisted dreams a reality. Organizations like the billionaire Koch family created and funded Cato Institute and hedge fund billionaire Peter Peterson's namesake foundation have led the fight against Social Security.

The extreme right wing's attacks and deceptive campaigns over the course of decades are now close to fruition with the help of neoliberal Democrats.

President Obama has come very close to helping right-wingers realize their long-desired goal; only the incredible intransigence of congressional Republicans has saved the social safety net thus far.

The Scam

Back during the Reagan years Social Security faced a short-term funding crisis and Congress appointed the Greenspan Commission to make recommendations for putting Social Security on a sound financial footing for the future. The recommendations generated by the commission became the basis for the 1983 Social Security Amendments which among other things raised the level of revenues by significantly raising the rates that workers pay.

Since the adjustments made to rates were based on pessimistic assumptions the revenues generated produced significant surpluses. Rather than using the proceeds from the revenue increase to pay off the federal debt and invest the remainder in bonds, Reagan (and most of his successors) have used them to pay for tax breaks for corporations and the wealthy.

As David Cay Johnson explains in a fine article on this:

Let's look at how Social Security taxes have grown in the last half century - a little-known tale of tax burdens shifted off the rich and onto workers. From 1961 through 2011, the year covered in the last Social Security report, Social Security taxes exploded from 3.1 percent of Gross Domestic Product to 5.5 percent.
Income taxes went the other way. The personal income tax slipped from 7.8 percent of the economy to 7.3 percent, with most of the decline enjoyed by people in the top 1 percent of incomes. The big drop was in the corporate income tax, which fell from 4 percent of the economy to 1.2 percent. Notice that the corporate income tax fell by 2.8 percentage points, an amount almost entirely offset by a 2.4 percentage point increase in Social Security taxes.
The effect has been to ease the taxes of the wealthy, while burdening the vast majority of workers. Considering how highly ownership of stocks is concentrated, the benefit of those lower corporate taxes went overwhelmingly to the top 1 percent and, especially, the top 1 percent of the top 1 percent. Considering that the Social Security tax is capped, most of the burden of the increased payroll tax went to the bottom 90 percent.

We have now reached a point where the gifts given to corporations and the rich based upon the increase in revenues from Social Security taxes are no longer supportable. Unfortunately, the wealthy have grown accustomed to a certain lifestyle based upon significant growth of their wealth and are in no mood to give back.

The biggest reason why the revenues for Social Security are no longer satisfactory is not that there are too many greedy geezers, it's our growing income inequality. As Robert Reich explains:

Greenspan's commission must have failed to predict something. What?
Inequality.
Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation. Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission's fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.
Today, though, the Social Security payroll tax hits only about 84 percent of total income. It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

The simplest solution to the shortfall in funding for Social Security is probably to raise the cap so that the payroll tax once again affects 90% of total income.

That, in our current political environment, would likely be called class warfare.

The Con

Back in 1983, in the wake of the Social Security Amendments right-wingers from the Heritage Foundation and the Cato Institute put together what they called Achieving a "Leninist" Strategy, a plan to replace Social Security with a privatized plan. Here's their description of their strategy:

A Plan of Action
The first element consists of a campaign to achieve small legislative changes that embellish the present IRA system, making it in practice a small-scale private Social Security system that can supplement the federal system. As part of this campaign, the natural constituency for an enlarged IRA system must be identified and welded into a coalition for political change. If these objectives are achieved, we will meet the next financial crisis in Social Security with a private alternative ready in the wings-an alternative with which the public is familiar and comfortable, and one that has the backing of a powerful political force.
The second main element in our reform strategy involves what one might crudely call guerrilla warfare against both the current Social Security system and the coalition that supports it. An economic education campaign, assisted by modest changes in the law, must be undertaken to demonstrate the weaknesses of the existing system and to allow it to be compared accurately (and therefore unfavorably) with the private alternative. In addition, methods of neutralizing, buying out, or winning over key segments of the Social Security coalition must be explored and formulated into legislative initiatives. The objective of this element of the strategy complements the first. The aim is to weaken political support for the present system when the next financial crisis appears.

Elsewhere in their document the right-wingers lay out further elements of their plan. Seniors already retired or nearing retirement are to be bought off, to "neutralize the most powerful element of the coalition that opposes structural reform." They would construct a coalition of those who will reap benefits from a private system and the banks, insurance companies and other institutions that will gain from providing such plans to the public. They would press for incremental "modest changes in the laws and regulations designed to make private pension options more attractive."

Does any of this sound familiar to you? It should, millions of dollars have been spent and huge media campaigns have been waged to bring you messages based on the above. And they're still doing it today.

Trudy Lieberman has a must-read article at the Columbia Journalism Review's website, How the Media Has Shaped the Social Security Debate that demonstrates the degree to which the right-wing's "education effort" on Social Security has been successful in misinforming the public. Read the whole article, but here's a sampling to give you a sense of it:

For nearly three years CJR has observed that much of the press has reported only one side of this story using "facts" that are misleading or flat-out wrong while ignoring others. Whatever the reason-ideology, poor understanding of how the program works, gullibility, or plain old reportorial laziness-news outlets have given the public a skewed picture of the financial health of this hugely important program, which is the sole source of retirement funds for millions of Americans and will continue to be for decades to come.
The one-sided reporting on this issue has influenced the way millions of Americans, especially younger ones, now think about Social Security. A twenty-nine-year old web manager for a New York City agency recently told me she was opting out of the program, which the city pension system allows her to do. "I don't think Social Security is a wise investment given the (availability) of a deferred compensation plan," she said. "It's a known fact," the woman explained, "if it stays the way it is right now, it would run out of funds in 2035." How did she know that? She listed the media outlets that helped shape her opinion. The elites were there like The Wall Street Journal, CNN, The New York Times, and Bloomberg News, but so were relative newcomers like Investopedia and other media products. The message from the elite media is trickling down.
It's a popular message. Broadcast anchors, hosts, and expert guests have also told the public that Social Security is the cause of the federal deficit, and have narrowly framed the possible cures. The ones mentioned most often include reducing cost-of-living increases; means testing the program, which will turn it into a welfare arrangement; and raising the age of eligibility to 69, 70, or higher. ... With that kind of news reporting, young people like the New York City worker can be forgiven for misunderstanding the concept of social insurance and believing Social Security is almost dead. Over the decades since the passage of Social Security in 1935, the media have used the term "social insurance" less and less, which of course keeps people in the dark about what it really is. In 1930, The Washington Post, The New York Times, and the Chicago Tribune together published nearly eighty articles with the words "social insurance" in the headline. In 1990, there were at most two-one in the Times and one in the Post. By then the Cato Institute and other conservative think tanks were well on their way to changing the media's narrative and description of Social Security. The program was no long to be described as social insurance, but as an investment that fell short of what people could achieve on their own by saving and managing their payroll tax contributions. It was not a good deal for younger workers.

With the media bombarding the public with these negative messages about the future viability of Social Security, the right wing is growing ever closer to its destructive goal. There is one right winger, hedge fund billionaire Peter G. Peterson who is investing heavily in dragging their initiative across the goal line:

The idea of "fiscal responsibility" seems to have become as American as motherhood and apple pie - both parties preach it, and say the other guys are the profligate ones. The group of people saying "hey, we print our own money, interest rates are at zero, inflation is not an issue, the corporate sector isn't borrowing, there are a thousand more important things to worry about right now, why on earth is everybody worried about the deficit all of a sudden" is in a decided minority.
The obsession about fiscal prudence is a new phenomenon, and can be dated, pretty much, to 2008, when Blackstone went public and Pete Peterson took his billion dollars in proceeds and decided to use it to found the Peter G Peterson Foundation. Wherever fiscal prudence is preached, Peterson's money can nearly always be found.

Guess where Pete Peterson's money has been found hanging out lately? Check the next section...

The Heist

President Obama is not the first modern Democrat to cooperate with the right wing on these issues, Bill Clinton and his Treasury Secretary Robert Rubin and Erskine Bowles (Clinton's chief of staff and lead budget negotiator) worked hard for the right wing agenda:

Robert Kuttner, in his 2007 book The Squandering of America, detailed how Washington elites of both Parties had been planning to weaken Social Security since the Clinton Administration. Clinton's Treasury Secretary Robert Rubin prodded the president to cut a deal with Newt Gingrich to partially privatize Social Security. Clinton appointed [Erskine] Bowles as his intermediary. But in the plan's initial stages the Monica Lewinsky scandal erupted, causing both embarrassed Congressional Democrats and Gingrich to distance themselves from Clinton. The plan fell apart.

We may have Monica Lewinsky to thank for the fact that Social Security withstood a right-wing attack during the Clinton administration. Erskine Bowles, Clinton's COS budget negotiator, of course turned up again like a bad penny when the Obama administration appointed him to the Debt and Deficit Commission (the Catfood Commission for us regular folks). Bill Clinton is still working hard to help the right wing even today:

Bill Clinton's the headliner at next month's "Fiscal Summit" of the Peterson Foundation, along with Tim Geithner, Paul Ryan and John Boehner. That's the organization founded by billionaire Pete Peterson to carry out the traditionally right-wing goals he spelled out in the 1980s: to cut Social Security and Medicare and other government programs, and to lower taxes for the wealthiest Americans even more. ...
Clintonite Democrats are all too eager to embrace this false "centrism," taking the lead from the ex-President who made false statements like this one at the last "Fiscal Summit": "... on Social Security it was meant to be self-sustaining, and with the retirement of the baby boomers it won't be anymore."
But then, that's how the elites of both parties roll, and they get plenty of help from centrist Democrats who follow the ex-president's lead. Rather that take responsibility for their own actions, the "centrist" crowd prefers to promote the deceptive illusion that both the overall Federal deficit and Social Security's problems were caused by middle-class Americans themselves. The blame itself take different forms: Sometimes they blame Americans for having the temerity to be born in large numbers during the Baby Boom. At other times they blame them for living longer. And at other times they sneeringly dismiss them as "greedy geezers."

Peterson's conference, which Bill Clinton headlined was timed with a particular goal in mind:

On Wednesday Wall Street multi-billionaire Peter G. Peterson, who has pledged to spend a billion dollars to panic Americans about deficits in order to get them to slash Social Security and Medicare, is conducting a "Fiscal Summit" in Washington featuring many of the very people who created the deficits Peterson decries.
This summit is designed to stampede President Obama's new deficit commission (which meets the day before - on Tuesday - for the first time) into adopting their version of fiscal austerity.

President Obama created the National Commission on Fiscal Responsibility and Reform, otherwise known as the "Catfood Commission." He had first attempted to form a bipartisan entitlement commission, but was shot down by the Senate.

From its inception, the Catfood Commission was created by President Obama to cooperate with conservative organizations dedicated to destroying Social Security:

When Obama's new Deficit Commission gets going, it has plans for "partnering"--in the words of executive director Bruce Reed--with outside groups. Among them will be the foundation run by Wall Street billionaire Peter G. Peterson, who today is upstaging the president with his own fiscal summit in Washington. Obama insists he is keeping an open mind about how to deal with the deficit and national debt-- but he's already stacked his own commission with people who lean heavily toward one particular solution: cutting entitlements for the old, the sick, the disabled, and the poor. And if that wasn't enough, he now looks to be working hand-in-glove with a wealthy private organization whose central purpose is to cut Social Security and Medicare. Talk about foregone conclusions.
In June, according to the Washington Post, Obama's deficit commission will be participating in a 20-city electronic town hall meeting, put together by an organization called America Speaks. It is financed by Peterson, along with the MacArthur Foundation and Kellogg Foundation. This is a truly unusual event because it marks the first time a presidential commission's activities are financed by a private group that has long been lobbying the government on the very subjects the commission is supposed to "study."

Not only was the committee "cooperating" with private interests hell-bent on destroying Social Security, it later emerged that President Obama's commission was being funded by these right-wing ideologues:

the National Commission on Fiscal Responsibility and Reform has also come under attack for its unusual approach to staffing: Many of its employees aren't employed by the panel at all.
Instead, about one in four commission staffers is paid by outside entities, many of which have strong ideological points of view about how to tackle the deficit.
For example, the salaries of two senior staffers, Marc Goldwein and Ed Lorenzen, are paid by private groups that have previously advocated cuts to entitlement programs. Lorenzen is paid by the Peter G. Peterson Foundation, while Goldwein is paid by the Committee for a Responsible Federal Budget, which is also partly funded by the Peterson group.

President Obama chose to partner with a billionaire that was funding three groups (Pew-Peterson Commission, America Speaks and Simpson-Bowles) that shockingly (I'm shocked, shocked I tell you!) created similar recommendations as Robert Kuttner explained in an apppearance on Democracy Now:

You've got three privately funded commissions by the Peterson Foundation, Pete Peterson, proposing the same stuff. It's intended to create a drumbeat to carry out a wish list that has long been the goal of fiscal conservatives, that has nothing to do with this crisis. Social Security is in surplus for the next 27 years. So, the idea that you can somehow get the budget closer to balance by cutting Social Security is perverse. It's politically insane.

President Obama's commission rejected the plan created by the co-chairs (Simpson and Bowles), but the beltway bureaucracy and the media pretended it was successful and it became the basis for numerous attempts at budget resolutions. In fact the failed report of the commission has become something of a zombie plan that keeps showing up whenever there are budget negotiations.

The entitlement cutting mania of Simpson and Bowles' failed commission was followed by the failure of the Supercommittee. In the wake of that failure was the failure of the Gang of Six. That was followed by the failure of the President himself to be able to arrange a Grand Bargain to cut Social Security in exchange for some extremely modest tax hikes.

Stop the Thieves

Sounds like the social safety net survived by the skin of it's teeth, doesn't it? Well, President Obama with the assistance of Democrats has dealt a serious hit to Social Security. The damage that this cut will cause won't be evident until later. He has undermined Social Security's legitimacy by diminishing its funding and putting it on a less sound financial footing, thereby making it more vulnerable to attacks.

The president has bought into a Republican proposition favored by conservatives who would love to do away with this New Deal creation. They know this will deprive the trust fund of $120 billion in annual revenue and that shortfall will sooner or later have to be made up to sustain future benefits. Can you imagine Congress finding $120 billion for Social Security amid all the other fiscal pressures?
For that matter, can you imagine Congress turning off this modest tax break for working people once it's in place? If you believe that, you probably believe Obama is going to fight to recover the $700 billion tax giveaway to billionaires while he is in the midst of his reelection campaign.

Further, the debt ceiling will be reached sometime before the end of this year though currently the Treasury says that it expects to be able to hold off until after the elections by invoking "extraordinary measures."

This next battle over the debt ceiling whenever it occurs will of course be another opportunity for a "grand bargain" that is clearly on the President's mind. This time the extremist right wingers will have another ally in their quest, Nancy Pelosi, leader of the Democrats in the House has indicated that she will support the Peterson/Catfood plan.

It is a testament to the ingenuity, deviousness and power of the right wing extremists that, despite the fact that Social Security is an enormously popular program, with support from across the political spectrum they have managed to get the people's representative government to the point of being willing to make drastic cuts to this program rather than take relatively simple steps to fix it.

We are at a point where it looks like if we would like to keep the social safety net for ourselves and our children and grandchildren we are going to have to make some noise, probably a lot of noise. Maybe even some angry noises, with signs and chants and feet in the streets.

This would be a great time to remind the President, your Senators and your Congressman that cutting the social safety net is not something that you support. Perhaps you should tell them that if they can't see their way to supporting you when you are old or infirm that they shouldn't expect any help from you, either. Just sayin'.

Don't Believe Your Lying Eyes

ek hornbeck — Thu, 17 May 2012 13:57:25 GMT

You know, some of us drink because we're not poets. I've been a writer all my life and it's as much a part of me as my sexual orientation and skin color ('tro, male, and white not that it should make a difference). I don't pretend to special expertise even in the matter of piloting river boats which is why I'm careful to maintain my anonymity. Feel free to disagree, you're probably right.

Yet as a writer it's gratifying to come across affirmations of sanity, if not an audience, and in that spirit I offer this-

Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling'
Matt Taibbi, Rolling Stone
POSTED: May 15, 5:39 PM ET

"Fuck the compliance area - procedures, schmecedures," chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales.
...
A quick primer on what naked short selling is. First of all, short selling, which is a completely legal and often beneficial activity, is when an investor bets that the value of a stock will decline. You do this by first borrowing and then selling the stock at its current price, then returning the stock to your original lender after the price has gone down. You then earn a profit on the difference between the original price and the new, lower price.
What matters here is the technical issue of how you borrow the stock. Typically, if you're a hedge fund and you want to short a company, you go to some big-shot investment bank like Goldman or Morgan Stanley and place the order. They then go out into the world, find the shares of the stock you want to short, borrow them for you, then physically settle the trade later.
But sometimes it's not easy to find those shares to borrow. Sometimes the shares are controlled by investors who might have no interest in lending them out. Sometimes there's such scarcity of borrowable shares that banks/brokers like Goldman have to pay a fee just to borrow the stock.
These hard-to-borrow stocks, stocks that cost money to borrow, are called negative rebate stocks. In some cases, these negative rebate stocks cost so much just to borrow that a short-seller would need to see a real price drop of 35 percent in the stock just to break even. So how do you short a stock when you can't find shares to borrow? Well, one solution is, you don't even bother to borrow them. And then, when the trade is done, you don't bother to deliver them. You just do the trade anyway without physically locating the stock.
Thus in this document we have another former Merrill Pro president, Thomas Tranfaglia, saying in a 2005 email: "We are NOT borrowing negatives... I have made that clear from the beginning. Why would we want to borrow them? We want to fail them."
Trafaglia, in other words, didn't want to bother paying the high cost of borrowing "negative rebate" stocks. Instead, he preferred to just sell stock he didn't actually possess. That is what is meant by, "We want to fail them." Trafaglia was talking about creating "fails" or "failed trades," which is what happens when you don't actually locate and borrow the stock within the time the law allows for trades to be settled.
If this sounds complicated, just focus on this: naked short selling, in essence, is selling stock you do not have. If you don't have to actually locate and borrow stock before you short it, you're creating an artificial supply of stock shares.

Magic beans.

The Liberal Party (Part 2)

ek hornbeck — Wed, 16 May 2012 22:53:12 GMT

Runaway train on entitlement cuts?
digby, Hullaballoo
5/16/2012 01:00:00 PM

I'm afraid we are looking as a scenario in which they'll end up accepting "tax reform" (another word for tax cuts for the wealthy and corporations) in exchange for tax hikes on the middle class and benefits cuts to social security and medicare. And they will strut and puff and knock themselves over patting each other on the back for being "responsible" and doing the "hard work" of screwing the American people, including the most vulnerable, in the middle of a depression and at a time when their futures have never been more insecure. Heckuva job.
I don't know what more to say about this. Voting against them will not stop it. Voting for them will not stop it. So far, public opposition will not stop it. Certainly, there's little reason to believe that the administration will stop it.
...
Everyone keeps telling me that they will never cut social security and medicare because they're popular programs. One would certainly think that should be true. So can someone please tell me what they have to gain by pretending they want to? Honestly, I don't see it either as a negotiating ploy or a public relations tactic. The only thing I can come up with is that they believe the Village hype that they will be "heroes" for bucking the popular will. And perhaps they will be -- not in the public's mind, of course, but Gloria Borger and Cokie Roberts will think they're just dreamy and Pete Peterson and his pals on Wall Street will surely be grateful.
...
Democrats know all this. Becerra should have his district offices inundated with phone calls. People should picket and protest. But I doubt it will do any good. They are determined to do this and they aren't being honest about the reasons why. (Either that or they are too stupid to be in elective office and that's saying something.) Bill Clinton is one of the most astute students of the budget in the entire country. He knows very well that he is spouting utter crapola. There is no earthly reason for him to do this except as a reflexive desire to appear reasonable to people who loathe the very air he breathes --- or appease Pete Peterson and his pals. Actually, in his case, it's probably both.
This has the feeling of a runaway train to me. The Republicans have worn them down and they just want to get past the election. Sure, they may get some little token of a tax hike on the wealthy in return. But it will be nothing to the sacrifices that average Americans will have to make. Indeed, this whole formulation is fundamentally immoral --- tax hikes on millionaires in exchange for poor, sick old people having to do with less than their already meager guarantee is disgusting. Couldn't we at least agree to fuck over the sick, old people only as a last resort?

I disagree with digby. Vote against them.

Random Japan

mishima — Sat, 12 May 2012 21:00:00 GMT

IT'S A DOG'S LIFE
From the "Only in Japan" file: A column in The Japan Times mentioned that many pet groomers in this country now offer "claw decoration," i.e., having your dog's nails done. One "dog beauty artist" in Tokyo charges between ¥3,000 and ¥5,000 for all four paws. Apparently, a common request is for dog and owner to get matching nail art.
Good news for cat lovers. Cat cafés, where customers can "mingle freely with felines in a relaxed atmosphere," might not have to abide by new Ministry of Environment regulations that limit the hours pets can be displayed (8am-8pm). It's all part of a plan to reduce the stress level of animals at pet shops.
And a bit of good news for bald mice, as well. Researchers from the Tokyo University of Science have reportedly been successful in efforts to grow hair on hairless rodents. It's tough enough to find a mate when you're at the bottom of the vermin totem pole, but when you're bald, too...
Another group of some ten protesters went on a hunger strike in front of the Ministry of Economy, Trade and Industry to show their displeasure over the government's plan to restart nuclear reactors at the Oi power plant in Fukui Prefecture.
A Yokohama court gave a "spiritual salon" manager a suspended sentence after finding her guilty of fraud. The 48-year-old woman committed a "clever and malicious crime that took advantage of people's worries about health and work to scam them out of money."
Police were investigating the case of a severed wire in a wing of a Boeing 787 produced at a Mitsubishi Heavy Industries plant in Nagoya. The cut appears to have been intentional and is similar to other cases in 2002 and 2009.

stats
29.9 million Twitter accounts created in Japan before Jan 1, third most among countries, according to social media research company Semiocast
127,799,000 Japan's total population as of Oct 1, 2011, a decrease of 259,000, or 0.2 percent, from a year earlier, according to government data
126,180,000 Japanese nationals as of Oct 1, 2011, down 0.16 percent from 2010

great snakes
A 66-year-old man in Ushiku was found dead outside his house with bite marks on his head and arm and a 6.5-meter python nearby. The man's son operates an exotic pet store in the area and had a reptile compound at the house.
Investigators think that the driver of a minivan in Kyoto that killed eight people, including himself, might have had an epileptic fit after dinging a taxi prior to the deadly crash.
A 67-year-old woman in Gunma Prefecture finally lived her college dream and entered the Tokyo University of Social Welfare, but not before she had survived severe poverty as a child, had lost a daughter in a car accident, was hurt badly herself in another car accident, and then survived being swept up in the killer tsunami last year.

2Channel

Drug Channel?

Woman

Bites Man

Robbing

For Love

Is It Time For Schneiderman To Walk Away From The Task Force?

TheMomCat — Fri, 11 May 2012 16:46:03 GMT

It may be past time for New York State Attorney General Eric Schneiderman to walk away from Residential Mortage Backed Securities working group (RMBS) and point it out for the sham that it is. It's just not working and perhaps never was intended to "work", from Anna Cuevas at Huffington Post:

Not only have they not done anything, they also have no dedicated website, address, or telephone number. Under the arm of the Department of Justice and U.S. Attorney General Eric Holder, the Group planned to have 30 employees within the first few weeks -- however, as of this date, the only names associated with the Group are the co-chairs: Lanny Breuer, Stuart Delery, Robert Khuzami, John Walsh, and Eric Schneiderman. While the president deemed that this group would "speed assistance" to homeowners, that assistance has thus far been exceedingly slow or non-existent. [..]
Questions remain and need to be answered. The Residential Mortgage-Backed Securities Working Group is the sixth group formed by the administration to address the foreclosure crisis and provide relief to homeowners. Unfortunately, this group, like the others, is not seeing the urgency of the matter -- that is, if they do, in fact, exist and are something more than a public relations announcement. As it appears, the new Residential Mortgage-Backed Securities Working Group is not working -- they don't even have a place to work from.

Schneiderman tried to put a positive spin on this circle jerk but it's not easing the growing skepticism. From David Dayen at FDL News Desk:

My point on this was always that the President's appropriation request and $6 will get you a very expensive cup of coffee at my local Intelligentsia café (seriously, $6 for a cup of coffee?). Presidential budget requests are as ignored in Washington as pledges to not accept lobbyist money, or marital vows. The request didn't mean anything, and the House Republicans currently putting together the budget were highly unlikely to honor it.
Sure enough, yesterday, the Justice, Science and Commerce appropriations bill, the proper venue for this additional $55 million request, came up for a vote. Maxine Waters tried to include the appropriation for the RMBS working group. And it failed pretty badly. [..]
there's no chance that the working group gets anything close to this kind of money for at least 4 months, and in all likelihood not at all.
It's just another example of how the protestations about the legitimacy of the working group fall apart when subjected to the slightest scrutiny.

At naked capitalism, Yves Smith was even more critical of the task force and Schneiderman's "performance" on Up with Chris Hayes:

The point is that (Iowa AG Tom) Miller was a convenient stooge for the Administration. His job was to maintain the pretense that the effort he was leading was in the public's interest and moving ahead at a good clip. These weren't very easy lies to sell and Miller wasn't very good at pedaling them, but that didn't matter much. His job was to keep up a certain level of background noise.
But nothing was going to happen unless the Administration wanted it to happen, and for some reason, the powers that be decided in late 2011 that a mortgage settlement would be a useful election talking point. So they saddled up and pushed the foundering deal over the line.
Now that the Administration has traded up from the unknown Miller to the soi disant "Man the Banks Fear Most" Eric Schneiderman, we have the instructive spectacle of watching Schneiderman look more and more Miller-like with every passing day. Admittedly, Schneiderman is far more skilled at passing off Administration canards than Miller, and is also trusted by many progressives, so he can probably run on brand fumes for quite a while. [..]
Schneiderman may be able to get away with this longer than he should, particularly since the plan is likely to be to file a couple of headline-getting but not-seriously-threatening-to-the-banking-oligarchs cases in the weeks before the election. He seems not to have noticed how the Administration has been quick to cast aside its operatives when they are no longer of use to them. In case he has managed not to notice how he is being played, expect him to have a rude awakening by the election.

Read Yves entire article, it's a scathingly realistic assessment of the Obama administration, the RMBS (could that abbreviation be more appropriate?) and Schneiderman. If Schneiderman doesn't walk away from this joke, he will lose what little credibility he has left which, at this point, isn't much.

Huge Protests at BofA Shareholder Meeting Today. Pay Packages Approved, Proposals Defeated.

joanneleon — Wed, 09 May 2012 20:58:02 GMT

Class War Kitteh on pinterest

Charlotte Occupies Bank of America!

Andrew Dunn

Bank Of America Protests Begin At Shareholder Meeting
Activists from Occupy Wall Street, the environmental movement and labor unions, along with victims of home foreclosures, have begun massive demonstrations at Bank of America's shareholder meeting in Charlotte, N.C., on Wednesday morning.
[ ... ]
Inside the Bank of America meeting, disgruntled shareholders [ ... ] will force votes on proposals [ ... ]
Outside the meeting, protesters promise a boisterous slate of events to draw attention to Bank of America's relationship with the federal government, the coal industry and its long record of foreclosure abuse. Occupy Atlanta's Tim Franzen said there are three marches planned, each with its own theme: the bank's environmental record, the housing crisis and corporate accountability issues. The marches will converge into one big protest.

Protests Inside the Meeting

Moynihan used a timer to limit the amount of time that shareholders were allowed to speak. Some shareholders were turned away and not allowed to enter. Electronic devices and recording devices were banned from the meeting.

About 100 protesters were inside the meeting and they said that they could hear the drumming and chanting outside.

Bank of America CEO Faces Shareholder Ire Amid Protests
Moynihan presided as shareholders pressed him on complaints ranging from mortgage practices and foreclosures to customer service and political contributions. One attendee at the headquarters in Charlotte, North Carolina, lamented the lost value of his shares and referred to the bank as "a felon."
[ ... ]
"You've got to do something about your mortgage servicing," one speaker told Moynihan. The CEO told borrowers in the hall and "everyone out there" that he personally pledged the bank would work with them. "You can call us and we will figure it out," he said, eliciting laughter in the audience as he encouraged them to call a toll-free number. Moynihan said a million modifications have been completed, "and I don't think we could have done that without being competent."

"You are part of the poisoning of Appalachia and so is every one of your directors and so is every one of your shareholders," Kincaid said. "You are part of the destruction of an entire region of the country."
"Sir, our environmental team will take a look at it. We look at it all the time," Moynihan said. The crowd responded with jeers.
http://www.huffingtonpost.com/...

Update 2: Reports of contentious interactions inside the shareholder meeting. One shareholder reportedly commented, "I'm of the judgment that Bank of America is a felon," adding, "I don't believe that Bank of America would be here today without the 99% of taxpayers that bailed out Bank of America. The $45 billion that you received pales behind the hundreds of billions that were guaranteed in bonds, commercial paper, and the list goes on and on."
http://www.thenation.com/blog/...

Andrew Dunn ‏ @andrew_dunn
Meeting is moving quickly. #BofA CEO Moynihan did not speak long on state of the company, talked about need for an orderly meeting.
Andrew Dunn ‏ @andrew_dunn
Appears that most shareholders in here are activist-minded. Lots of applause for criticisms. #BofA
Andrew Dunn ‏ @andrew_dunn
Shareholders commenting/questioning about mortgage servicing and political spending. Moynihan giving very short answers. #BofA
Andrew Dunn ‏ @andrew_dunn
"I'd like a little bit more thoughtful response," shareholder tells Moynihan, to applause, on servicing. He obliges. #BofA
Andrew Dunn ‏ @andrew_dunn
Moynihan says bank has increased servicing staffing by 20k, repeatedly reviewed, and "doing everything we can." #BofA
Andrew Dunn ‏ @andrew_dunn
Meeting now turned into people sharing their individual problems on mortgages. Moynihan directing them to give name/# to team outside. #BofA
Andrew Dunn ‏ @andrew_dunn
Moynihan defends exec pay, says most is performance linked and aligned with shareholder interests. #BofA
Andrew Dunn ‏ @andrew_dunn
Several have asked why people have to come to shareholder meeting to be heard. Laughter when Moynihan says 1-800 number works well. #BofA
Andrew Dunn ‏ @andrew_dunn
People are becoming more restless, starting to shout over Moynihan as he gives answers. Lots on his statement on payday loans. #BofA
Andrew Dunn ‏ @andrew_dunn
Moynihan says will take questions for a few more minutes and then close. Some people have taken mic multiple times. #BofA
Andrew Dunn ‏ @andrew_dunn
Last commentor: "This is America... Listen to the people in the room." Moynihan says he has listened carefully. #BofA
Andrew Dunn ‏ @andrew_dunn
Meeting over. Activists shouting (mic check) as they leave. #BofA
https://twitter.com/#!/andrew_...

Protests Outside the Meeting

A news conference was held early in the morning, around 7:30 a.m., and protesters staged a boxing match between a faux Brian Moynihan, CEO of Bank of America, and a woman with the name "Miss 99% Power".

At 8:30 a.m., three different marches began, billed as "The Showdown in Charlotte". One march with the theme of "Housing Justice Now" began at North Tryon and 9th streets. The second march was themed "Worker's Rights" and it began at old City Hall on East 4th and Davidson streets. The third march with the theme of "Anti-Coal Investment" started South Tryon Street at the Green. The destination of all the marches was the barricaded Bank of America headquarters building and they arrived around 9 a.m.

Protests were staged at the BofA headquarters for a couple of hours and traffic was blocked at the intersection after which protesters marched to the Bank of America stadium where they chanted "we'll be back" in reference to the Democratic National Convention in September.

Estimates on the number of protesters vary from hundreds, to 1000, to a comment in The Nation story based on a tweet from NBL saying that police estimated the crowd size to be 2000-3000.

4 arrested at Bank of America protest
An estimated 500 to 750 protesters marched from three directions on the Bank of America Corp. headquarters Wednesday morning, blocking the intersection of 5th and College streets while dozens of police watched nearby. At least four people were arrested.
[ ... ]
Shortly after 10 a.m., police arrested several men after they tried to enter the shareholders meeting. The men said Bank of America had foreclosed on their homes. One was identified at Johnny Rosa of Framingham, Mass.

Some of the chants heard outside:

"Bank of America, you can't hide, we can see your greedy side!"
"Whose streets? Our streets!"
"I pay, you pay, why doesnt BoA?"
"What goes up, must come down. Tear the banks to the ground!"
"The people united will never be defeated"
"workers on the march today, BoA has got to pay"

Shareholders Approve Moynihan's Pay Package

According to Fortune Magazine, Brian Moynihan is the worst performing CEO based on stock performance.

Fortune reports that Moynihan took a $3 million pay cut over his compensation for 2010, for a $7 million payout in 2011. The Wall Street Journal describes the pay package like this:

$6 million in restricted stock and $950,000 in a base salary. He was awarded no cash bonus, while several of his top lieutenants received bonuses.

Reuters, however, reports that Moynihan will now receive $8.1 million in 2011, an increase of $1.9 million over 2010.

In any case, the shareholders approved it, which was expected. The large proxy advisory firms had advised the shareholders they service to vote yes on the pay package and the Wall Street Journal is reporting that it was passed with 92% approval by shareholders. The proxy firms argued for BofA saying that the bank's plan was superior to other banks in coupling pay to performance. The bank's nominees for the board were also approved.

Shareholder Proposals Defeated

While the official webcast of Bank of America's shareholder meeting was dominated by comments from disgruntled shareholders, preliminary results indicated that all of the shareholder proposals to change the bank's operations were defeated.
http://www.huffingtonpost.com/...

These types of proposals are very difficult to pass, but sometimes the protests motivate bank officers to change their policies, so they are not futile.

Trillium Asset Managment sought to "bar the company from making contributions to politically oriented groups like the American Legislative Exchange Council and the U.S. Chamber of Commerce" and another large institutional investor for pension plans sought requirements for BofA to disclose its political spending. Another shareholder proposal involved requiring BofA to review its foreclosure practices. According to the reports, all of these proposals were defeated.

Shareholders Turned Away

Information from Liz Rose of Campaign for America's Future :

I just got a call from the Bank of America's shareholder meeting in Charlotte from Richard Eskow, a writer for the Campaign for America's Future. Richard represents 82,000 shares of investor stock of BoA and yet he was turned away with 40 other shareholders just now and he and the others were asked to leave BoA property. Some shareholders who were turned away were elderly.
http://www.huffingtonpost.com/...

Heavy Security

Sara Shaw
‏ @Sara_Jeans
Security is so tight that stockholders are forced to wait in line outside. They cant help but see & hear the power of the people #makeboapay
https://twitter.com/#!/Sara_Je...

"3 helicopters here now, one not in frame. Is this much spending necessary? #makeboapay"
http://instagr.am/p/KaNvMio4f8/

Allison Kilkenny:
I previously wrote about the extraordinary measures the City Manager of Charlotte, Curt Walton, has taken to ensure one of the largest banks in the world won't have its peace disturbed by a group of enthusiastic citizens exercising their First Amendment rights. Walton has unilaterally declared the shareholder meeting an "extraordinary event," meaning the city plans to restrict free speech and expand the ability of police and security forces to target activists.

The city of Charlotte is preparing for the protest with a preemptive civil liberties crackdown that will likely provide some insight into the city's tactics for coping with the Democratic National Convention in September. Under the rules, protesters can be arrested or searched for carrying bags with the "intent" to conceal any of a host prohibited items, which range from weapons to commonplace markets. Wearing a scarf with the intent to conceal one's identity is also grounds for arrest under the rules.
http://www.huffingtonpost.com/...

Grievances

NCACP lists a plethora of complaints against BoA, including the facts that the bank is the leader in home foreclosures and funding of the US coal industry, and a huge job killer (100,000 workers have been let go over the past several years). Meanwhile, BoA's top five executives rewarded themselves with over $500 million in bonuses, while the bank saddled students with a lifetime of debt.
And the checklist of grievances goes on.
http://www.thenation.com/blog/...

Info from Sites Posting Updates

OccupyWallSt.org:

10:30am: Arrests have been made as victims of Bank of America foreclosures attempt to enter the meeting.
9:30am ET: After several marches converged earlier this morning, at least 1000 people are currently occupying the intersection of 5th and college in front of the Bank of America headquarters in Charlotte, North Carolina in a peaceful sit-in protest. About a 100 shareholders who support the movement are inside as heavily armed police guard the BoA building.

The Nation:

10:40 Arrests at BOA meeting in Charlotte (see below). One of them, Johnny Rosa, a BOA foreclosure victim, tells Huff Post: "I just want to stop what they are doing."
9:40 Frequent updates on BOA protest in Charlotte here. Such as: "Stephen Lerner, a member of the executive board at the Service Employees International Union, and a frequent target of attacks from hardline conservative media a sends an update: 'We have moved into streets.. Shutting down key intersections. Cops mellow so far.'"

Livestreams:
http://qik.com/video/50869581
http://www.livestream.com/glob...
Twitter Hashtags:
#99Power
#bankvsamerica
#OWS
#BreakUpBofA
#makeBoApay

Pictures:
http://imgur.com/a/yDwmh

Videos:

Last but not least, here is another accomplishment that I believe can be credited to Occupy Wall Street.

Aaron Krager:

This is turning into a very different kind of shareholder season, one that is every bit as much about civic concerns as it is about the price of any stock, as investors have been denied admission to their own annual meetings amid concerns over surrounding protests.

That is the opening paragraph from Fortune. A stark reality for corporations as the growing discontent from activists has moved into the boardroom. Progressive activists around the country will probably smile at the lede believing times are beginning to change.

NDAA Detention Provision Ruled Unconstitutional

TheMomCat — Thu, 17 May 2012 16:36:54 GMT

In New York City, U.S. District Judge Katherine Forrest ruled that the indefinite detention provision of the National Defense Authorization Act (NDAA) is unconstitutional in violation of the First and Fifth Amendments. The NDAA was signed into law by President Obama in late December after a veto threat over language that was eventually changed at his request.

In a 68-page ruling blocking this statute, U.S. District Judge Katherine Forrest agreed that the statute failed to "pass constitutional muster" because its broad language could be used to quash political dissent.
"There is a strong public interest in protecting rights guaranteed by the First Amendment," Forrest wrote. "There is also a strong public interest in ensuring that due process rights guaranteed by the Fifth Amendment are protected by ensuring that ordinary citizens are able to understand the scope of conduct that could subject them to indefinite military detention."

This puts a whole new spin on today's debate in the House floor Thursday of an amendment to the NDAA proposed by Representatives Adam Smith (D-Wash.) and Justin Amash (R-Mich.), that would undo the detention provisions and bar military detention for any terror suspects captured on U.S. soil. The ruling was made in response to a law suit brought by former New York Times war correspondent and Pulitzer Prize winner, Chris Hedges and others who argued that the law would have a "chilling effect" on their work:

Hedges was joined in the suit by linguist, author and dissident Noam Chomsky, Pentagon whistle-blower Daniel Ellsberg and other high-profile activists, scholars and politicians.
Hedges argued in his testimony that his work as a journalist would bring him into contact with terrorist organizations that would, given the scope of the law, qualify him for indefinite detention. The plaintiffs argued that the threat of detention alone would be an unconstitutional encroachment on their First Amendment rights to free expression and association, as well as a violation of the Fifth Amendment right to due process.

As Glen Greenwald points out in his Salon article, the court rejected the argument by the government that the NDAA did nothing more than the 2001 AUMF already did and thus did not really expand the Government's power of indefinite detention:

The court cited three reasons why the NDAA clearly expands the Government's detention power over the 2001 AUMF (all of which I previously cited when denouncing this bill).
First, "by its terms, the AUMF is tied directly and only to those involved in the events of 9/11," whereas the NDAA "has a non-specific definition of 'covered person' that reaches beyond those involved in the 9/11 attacks by its very terms."
Second, "the individuals or groups at issue in the AUMF are also more specific than those at issue in § 1021″ of the NDAA; that's because the AUMF covered those "directly involved in the 9/11 attacks while those in § 1021 [of the NDAA] are specific groups and 'associated forces'." Moreover, "the Government has not provided a concrete, cognizable set of organizations or individuals that constitute 'associated forces,' lending further indefiniteness to § 1021."
Third, the AUMF is much more specific about how one is guilty of "supporting" the covered Terrorist groups, while the NDAA is incredibly broad and un-specific in that regard, thus leading the court to believe that even legitimate activities could subject a person to indefinite detention.
The court also decisively rejected the argument that President Obama's signing statement - expressing limits on how he intends to exercise the NDAA's detention powers - solves any of these problems. That's because, said the court, the signing statement "does not state that § 1021 of the NDAA will not be applied to otherwise-protected First Amendment speech nor does it give concrete definitions to the vague terms used in the statute."

(emphasis mine)

A word of caution, we shouldn't celebrate victory just yet. This is a preliminary injunction issued by one judge and the government will surely appeal it the Circuit Court.

The debate in the House on the amendment to the NDAA introduced by House Armed Services ranking member Adam Smith (D-Wash.) and Rep. Justin Amash (R-Mich.) that would undo the detention provisions and bar military detention for any terror suspects captured on U.S. soil, will go on this afternoon. The amendment has strong bipartisan support in the House. We still need to take action and write our Representatives to vote for this amendment.

Demand Progress: End Indefinite Detention!

Say it ain't so.

ek hornbeck — Thu, 17 May 2012 13:54:16 GMT

Make Banking Boring
By JOE NOCERA, The New York Times
Published: May 14, 2012

Let's begin by stipulating the obvious: nobody outside of JPMorgan Chase knows for sure what really happened with those trades that have cost it so much money and done such severe damage to its once stellar reputation.

You know Joe, it's really not very hard to understand at all.

JP Morgan invested a ton of money, and by a ton I mean Trillions of exposure, in an obscure and lightly traded piece of paper labeled CDX NA IG 9 that represents a notional basket of 125 European stocks.

What do I mean by "notional"? Well, there's not actually a pile of stock certificates lying around that you can use to wrap fish or wipe your ass or wallpaper your living room, these stocks are "synthetic" meaning that if anyone ever needs to see one you have to go down to the store and buy it at whatever the market price is.

But there is always a price and a market- or is there?

As the Hunt brothers found out in the early '80s with a far more tangible and useful (you can use it to make photographic film and it has excellent electrical conductivity) asset, you can assemble a position that so dominates a market that you can't sell without lowering the price which is high because of your artificially created scarcity.

Supply increases in the face of fixed Demand and the price goes down. Real Economics 101 stuff, not hard to understand at all.

Now the problem with CDX NA IG 9 is you can't use it to make spoons or candlesticks. Heck, as I pointed out before you can't even use it to wipe your ass because it doesn't exist.

So its value is entirely dependent on finding another ~~sucker~~ investor who's willing to give you something for nothing.

Good luck with that.

Seven Pillars of Wisdom

ek hornbeck — Tue, 15 May 2012 22:27:09 GMT

Strategy and tactics of guerrilla warfare tend to focus around the use of a small, mobile force competing against a large, unwieldy one. The guerrilla focuses on organising in small units, dependent on the support of the local population. Tactically, the guerrilla army attacks its enemy in small, repetitive attacks from the opponent's center of gravity with a view to reducing casualties and becoming an intensive, repetitive strain on the enemy's resources, forcing an over-eager response which will both anger their own supporters and increase support for the guerrilla, thus forcing the enemy to withdraw.

Fourteenth Edition of the Encyclopedia Britannica (1929)

This seemed unlike the ritual of war of which Foch had been priest, and so it seemed that there was a difference of kind. Foch called his modern war "absolute." In it two nations professing incompatible philosophies set out to try them in the light of force. A struggle of two immaterial principles could only end when the supporters of one had no more means of resistance. An opinion can be argued with: a conviction is best shot. The logical end of a war of creeds is the final destruction of one, and Salammbo the classical textbook-instance. These were the lines of the struggle between France and Germany, but not, perhaps, between Germany and England, for all efforts to make the British soldier hate the enemy simply made him hate war. Thus the "absolute war" seemed only a variety of war; and beside it other sorts could be discerned, as Clausewitz had numbered them, personal wars for dynastic reasons, expulsive wars for party reasons, commercial wars for trading reasons.
Now the Arab aim was unmistakably geographical, to occupy all Arabic-speaking lands in Asia. In the doing of it Turks might be killed, yet "killing Turks" would never be an excuse or aim. If they would go quietly, the war would end. If not, they must be driven out: but at the cheapest possible price, since the Arabs were fighting for freedom, a pleasure only to be tasted by a man alive.
...
In the Arab case the algebraic factor would take first account of the area to be conquered. A casual calculation indicated perhaps 140,000 square miles. How would the Turks defend all that-no doubt by a trench line across the bottom, if the Arabs were an army attacking with banners displayed . . . but suppose they were an influence, a thing invulnerable, intangible, without front or back, drifting about like a gas? Armies were like plants, immobile as a whole, firm-rooted, and nourished through long stems to the head. The Arabs might be a vapour, blowing where they listed. ... It seemed that the assets in this sphere were with the Arabs, and climate, railways, deserts, technical weapons could also be attached to their interests. The Turk was stupid and would believe that rebellion was absolute, like war, and deal with it on the analogy of absolute warfare.
...
The Arab army just then was equally chary of men and materials: of men because they being irregulars were not units, but individuals, and an individual casualty is like a pebble dropped in water: each may make only a brief hole, but rings of sorrow widen out from them. The Arab army could not afford casualties.
...
The Arab war should be a war of detachment: to contain the enemy by the silent threat of a vast unknown desert, not disclosing themselves till the moment of attack. This attack need be only nominal, directed not against his men, but against his materials: so it should not seek for his main strength or his weaknesses, but for his most accessible material.
...
The printing press is the greatest weapon in the armoury of the modern commander, and the commanders of the Arab army being amateurs in the art, began their war in the atmosphere of the 20th century, and thought of their weapons without prejudice, not distinguishing one from another socially. The regular officer has the tradition of 40 generations of serving soldiers behind him, and to him the old weapons are the most honoured. The Arab command had seldom to concern itself with what its men did, but much with what they thought, and to it the diathetic was more than half command. In Europe it was set a little aside and entrusted to men outside the General Staff. But the Arab army was so weak physically that it could not let the metaphysical weapon rust unused. It had won a province when the civilians in it had been taught to die for the ideal of freedom: the presence or absence of the enemy was a secondary matter.
...
The Turkish army was an accident, not a target. Our true strategic aim was to seek its weakest link, and bear only on that till time made the mass of it fall. The Arab army must impose the longest possible passive defence on the Turks (this being the most materially expensive form of war) by extending its own front to the maximum.
...
The contest was not physical, but moral, and so battles were a mistake. All that could be won in a battle was the ammunition the enemy fired off. ... Battles are impositions on the side which believes itself weaker, made unavoidable either by lack of land-room, or by the need to defend a material property dearer than the lives of soldiers. The Arabs had nothing material to lose, so they were to defend nothing and to shoot nothing. Their cards were speed and time, not hitting power, and these gave them strategical rather than tactical strength.
...
The Desert and the Sea. In character these operations were like naval warfare, in their mobility, their ubiquity, their independence of bases and communications, in their ignoring of ground features, of strategic areas, of fixed directions, of fixed points. "He who commands the sea is at great liberty, and may take as much or as little of the war as he will" ... The Arab army never tried to maintain or improve an advantage, but to move off and strike again somewhere else. It used the smallest force in the quickest time at the farthest place. To continue the action till the enemy had changed his dispositions to resist it would have been to break the spirit of the fundamental rule of denying him targets.
...
An Undisciplined Army. The internal economy of the raiding parties was equally curious. Maximum irregularity and articulation were the aims. Diversity threw the enemy intelligence off the track. By the regular organization in identical battalions and divisions information builds itself up, until the presence of a corps can be inferred on corpses from three companies. The Arabs, again, were serving a common ideal, without tribal emulation, and so could not hope for any esprit de corps. Soldiers are made a caste either by being given great pay and rewards in money, uniform or political privileges; or, as in England, by being made outcasts, cut off from the mass of their fellow-citizens. There have been many armies enlisted voluntarily: there have been few armies serving voluntarily under such trying conditions, for so long a war as the Arab revolt. Any of the Arabs could go home whenever the conviction failed him. Their only contract was honour.
Consequently the Arab army had no discipline, in the sense in which it is restrictive, submergent of individuality, the Lowest Common Denominator of men. In regular armies in peace it means the limit of energy attainable by everybody present: it is the hunt not of an average, but of an absolute, a 100-per-cent standard, in which the 99 stronger men are played down to the level of the worst. The aim is to render the unit a unit, and the man a type, in order that their effort shall be calculable, their collective output even in grain and in bulk. The deeper the discipline, the lower the individual efficiency, and the more sure the performance. It is a deliberate sacrifice of capacity in order to reduce the uncertain element. ... In irregular war if two men are together one is being wasted. The moral strain of isolated action makes this simple form of war very hard on the individual soldier, and exacts from him special initiative, endurance and enthusiasm. Here the ideal was to make action a series of single combats to make the ranks a happy alliance of commanders-in-chief. The value of the Arab army depended entirely on quality, not on quantity. The members had to keep always cool, for the excitement of a blood-lust would impair their science, and their victory depended on a just use of speed, concealment, accuracy of fire. Guerrilla war is far more intellectual than a bayonet charge.

Here is the thesis:
Rebellion must have an unassailable base, something guarded not merely from attack, but from the fear of it: such a base as the Arab revolt had in the Red Sea ports, the desert, or in the minds of men converted to its creed. It must have a sophisticated alien enemy, in the form of a disciplined army of occupation too small to fulfill the doctrine of acreage: too few to adjust number to space, in order to dominate the whole area effectively from fortified posts.
It must have a friendly population, not actively friendly, but sympathetic to the point of not betraying rebel movements to the enemy.
Rebellions can be made by 2% active in a striking force, and 98% passively sympathetic. The few active rebels must have the qualities of speed and endurance, ubiquity and independence of arteries of supply. They must have the technical equipment to destroy or paralyze the enemy's organized communications, for irregular war is fairly Willisen's definition of strategy, "the study of communication," in its extreme degree, of attack where the enemy is not.
In 50 words: Granted mobility, security (in the form of denying targets to the enemy), time, and doctrine (the idea to convert every subject to friendliness), victory will rest with the insurgents, for the algebraical factors are in the end decisive, and against them perfections of means and spirit struggle quite in vain.

Not Capitalism

ek hornbeck — Tue, 15 May 2012 19:34:20 GMT

Modern economic philosophy is generally considered to have started with Smith and Hobbes who were reacting against a system of monarchal merchantilism where favored courtiers were rewarded with monopolies in a planned economy enforced by a state claim of exclusive authority on violence.

Read that again because it's important.

Their groundbreaking contribution was the concept that markets (individuals) could more efficiently allocate resources (capital) than corrupt cronyism. You know, free market capitalism.

Compare and contrast-

End of the Affair?
The Editors of The New York Times
Published: May 14, 2012

There has been less buying and selling of stock, and there have been huge outflows of investor dollars from domestic stock mutual funds, as detailed recently by The Times's Nathaniel Popper. If the trend continues, the result could be a less robust market, with fewer companies opting to raise money by issuing shares and fewer investors willing to put their retirement savings into stocks.
...
Policy makers should pay attention. Evidence suggests that investors are not merely reacting to tough conditions, but rather are staying away because they do not trust the market. Restoring trust is crucial to restoring the market.
American stocks have doubled in price since the market hit bottom three years ago. But trading in the United States stock market has not only failed to recover since the 2008 financial crash, it has continued to fall. In April, average daily trades stood at 6.5 billion, about half their peak four years ago. By comparison, after the market busts of 1987 and 2001, trading recovered within two years. In fact, going back to 1960, trading had never declined for three consecutive years, let alone four and counting.
Investors haven't just hunkered down, they have headed for the exits. Since the start of 2008, domestic stock mutual funds, a common way for individuals to invest, were drained of more than $400 billion, compared with an inflow of $52 billion in the four years before that.
...
There is also the feeling that the market has become increasingly unfair to investors. For example, Mr. Popper also reported recently on rebates to brokers from stock exchanges. In general, brokers are required to find the best prices for clients who pay them to buy and sell shares. But with the nation's 13 exchanges now paying brokers for sending them business, brokers may have an incentive to search for the biggest rebate rather than the best price. A new study has estimated that rebates could be costing mutual funds, pension funds and individual investors as much as $5 billion a year.
Also known as "maker-taker" pricing, the rebates have caught the attention of market researchers and investor advocates, including two former economists for the Securities and Exchange Commission who issued a report in 2010 saying that "in other contexts, these payments would be recognized as illegal kickbacks."

I realize citation of major media outlets is considered but a quaint remnant of irrelevant reality by sycophants and 'bots, but I thought I'd draw this to your attention.