28 January 2012

What Is Private Equity?

By James Kwak

Recently, a lot of the political debate has been about whether private equity—and by extension Mitt Romney—is good or bad. The argument on one side is that private equity firms are vultures who destroy firms to make money; on the other, that private equity is just capitalism at work, creates value, and creates jobs.

A private equity firm is an asset management company. It creates investment funds that raise most of their money from outside investors (pension funds, insurance companies, rich people, etc.), and then manages those funds. As opposed to a mutual fund, however, instead of buying individual stocks, these funds usually make large investments either in private companies or in public companies that they “take private” (more on that in a minute). While mutual funds and most hedge funds try to make money by guessing where securities prices will go in the future, private equity funds try to make money by taking control of companies and actively managing them. (There is a bit of a spectrum here, since mutual funds and hedge funds can exercise pressure on company management and private equity funds do take minority positions, but that’s the ideal-typical distinction.)

Selling the ‘Supply-Side’ Myth

January 27, 2012
 
Exclusive: Any rational assessment of America’s economic troubles would identify Ronald Reagan’s reckless “supply-side” economics as a chief culprit, but that hasn’t stopped Republican presidential hopefuls, led by Newt Gingrich, from selling this discredited theory to a gullible GOP base, reports Robert Parry.


By Robert Parry

Despite Newt Gingrich’s claim that “supply-side” economic theories have “worked,” the truth is that America’s three-decade experiment with low tax rates on the rich, lax regulation of corporations and “free trade” has been a catastrophic failure, creating massive federal debt, devastating the middle class and off-shoring millions of American jobs.

It has ”worked” almost exclusively for the very rich, yet the former House speaker and the three other Republican presidential hopefuls are urging the country to double-down on this losing gamble, often to the cheers of their audiences — like one Florida woman who said she had lost her job and medical insurance but still applauded the idea of more “free-market” solutions.

Right-Wing Lunacy: The Shameless Lies Conservative Media Tell Their Audience

From Social Security hysteria to "Obamacare" madness, right-wing propaganda is increasingly divorced from reality.


By Michael Lind, Salon
Posted on January 27, 2012, Printed on January 28, 2012

One benefit of the prolonged campaign for the Republican presidential nomination has been the revelation that most of the 20 or 30 percent of Americans who describe themselves as conservatives live in a fantasy world.  In their imaginations, Barack Obama, a centrist Democrat with roots in Eisenhower Republicanism rather than Rooseveltian liberalism, is a radical figure trying to take America down the path of “European socialism.” The signature healthcare reform of Obama and the Democratic Congress, modeled on Mitt Romney’s insurance-friendly Massachusetts healthcare program and closely resembling a proposal by the right-wing Heritage Foundation, is described as “statist,” “socialist” or “fascist” (as though Hitler came to power with the goal of providing subsidies to private health insurance companies).

27 January 2012

Obama's State of the Union Plays to His Base -- But Not Everything Was Worth Cheering

By Adele M. Stan, AlterNet
Posted on January 24, 2012, Printed on January 27, 2012

In the final State of the Union message President Barack Obama will deliver this term, he came out swinging against the obstructionism of Republicans in Congress, and spoke to the growing gap between America's rich and poor.

With a delivery that often sounded like he was imploring America to believe in itself again, Obama gave an address that may not have been his most inspirational, but got the job done. He laid out a strong case for his programs and his adminstration's efforts to revive the economy, and made the GOP look small and petty at the expense of everyday people. And in a moving moment just before he ascended the podium, the president embraced Rep. Gabrielle Giffords, who will resign her seat on Wednesday in order to focus on her recovery from the gunshot to the head she suffered at last year's rampage by Jared Loughner.

How Swedes and Norwegians Broke the Power of the ‘1 Percent’

by George Lakey
 
While many of us are working to ensure that the Occupy movement will have a lasting impact, it’s worthwhile to consider other countries where masses of people succeeded in nonviolently bringing about a high degree of democracy and economic justice. Sweden and Norway, for example, both experienced a major power shift in the 1930s after prolonged nonviolent struggle. They “fired” the top 1 percent of people who set the direction for society and created the basis for something different.

Both countries had a history of horrendous poverty. When the 1 percent was in charge, hundreds of thousands of people emigrated to avoid starvation. Under the leadership of the working class, however, both countries built robust and successful economies that nearly eliminated poverty, expanded free university education, abolished slums, provided excellent health care available to all as a matter of right and created a system of full employment. Unlike the Norwegians, the Swedes didn’t find oil, but that didn’t stop them from building what the latest CIA World Factbook calls “an enviable standard of living.”

Mitch Daniels' State of the Union Response Shows GOP Priority: Beating Up on Workers

By Josh Eidelson, AlterNet
Posted on January 25, 2012, Printed on January 27, 2012
Last night’s State of the Union response by Mitch Daniels was remarkable before he uttered a single word.  Daniels’ response was the first to be delivered from a building surrounded by dozens of police cars and chanting activists, by a man on the cusp of delivering a body blow to workers’ rights.  “We were surprised, frankly,” says Jeff Harris of the Indiana AFL-CIO, “that the Republicans would choose somebody who is in open war with his constituents and his citizens and put him up as the national speaker for the Republican Party.”  For anyone who thought that progressive victories in Wisconsin and Ohio would lead the national Republican party to tone down the union-bashing, last night was a rude awakening.
Harris, the federation’s Communications Director, says Daniels “has done a phenomenal job of coming off as an average Hoosier, where he rolls around in an RV and wears a flannel shirt, but underneath, he has sold off our resources, he has privatized our welfare system…He is in the midst of busting unions and taking away our right to collectively bargain by making Right to Work his number one legislative priority.”

Fed Signals That a Full Recovery Is Years Away

By BINYAMIN APPELBAUM
Published: January 25, 2012

WASHINGTON — The Federal Reserve, declaring that the economy would need help for years to come, said Wednesday it would extend by 18 months the period that it plans to hold down interest rates in an effort to spur growth.

The Fed said that it now planned to keep short-term interest rates near zero until late 2014, continuing the transformation of a policy that began as shock therapy in the winter of 2008 into a six-year campaign to increase spending by rewarding borrowers and punishing savers. 

Top Dem Offshoring Expert Smells Something Fishy In Romney’s Tax Code

Brian Beutler

Sen. Carl Levin (D-MI) says Mitt Romney will have to make his pre-2010 tax returns available. That may sound like a predictable demand from a partisan Democrat. But it’s more than that.

Levin may well know more about tax avoidance strategies than anybody in Congress. In his capacity as the Democrats’ top investigator he’s has made extensive inquiries into the techniques businesses and individuals use, including overseas havens, to hide their money from the IRS. And what Romney’s revealed so far troubles him.

Why Evangelicals Don't Care When Rich White Conservatives Defile Marriage
By Amanda Marcotte, AlterNet
Posted on January 25, 2012, Printed on January 27, 2012

Newt Gingrich’s win in the South Carolina primary looks like it may not be an outlier; Gingrich’s poll numbers are rising rapidly in Florida, and he has a good chance of beating Romney there as well. Gingrich is doing well in no small part because he has so much support amongst evangelical Christians; so much so that many evangelical leaders refused to go along with an attempt to unify the Christian right behind Santorum.

In South Carolina, evangelical Christians voted for Gingrich 2-to-1 over boring family man Mitt Romney. For anyone who takes seriously the notion that evangelical Christians actually care about things like family and fidelity, this support for Gingrich is baffling, since he has a history of serial adultery that he barely bothers to disavow. But a closer examination of the situation makes clear what’s going on: for the Republican base, “family values” don’t actually matter, but are just a gloss painted over what really motivates them: reactionary rage. They love Gingrich because he’s a flaming ball of rage they can wield against everyone they hate.

25 January 2012

Beyond Loser Liberalism

by DEAN BAKER 
 
Last week Thomas Edsall had a column in the New York Times where he directly stated that the difference between conservatives and liberals is the extent over which they are willing to reverse market outcomes to redistribute money from winners to losers:
“…the two sides are fighting over what the role of government in redistributing resources from the affluent to the needy should and shouldn’t be.”
This was annoying not only because it is so seriously wrong, but also because this statement came from one of the more astute observers of American politics alive today.

How Larry Summers' Memo Hobbled Obama's Stimulus Plan

The Obama administration's economic blueprint was fatally flawed: it led to a weak stimulus and premature deficit reduction

by Dean Baker
 
Those still wondering why the Obama administration surrendered so quickly on the drive for stimulus and joined the deficit reduction crusade, got the smoking gun in an article by the New Yorker's Washington correspondent Ryan Lizza. Lizza revealed a 57-page memo drafted by Larry Summers, the head of the National Economic Council, in the December of 2008, the month before President Obama was inaugurated.

The memo was striking for two reasons. First, it again showed the economic projections that the administration was looking at when it drafted its stimulus package. These projections proved to be hugely overly optimistic.

Transcript: President Obama delivers State of the Union speech

(CNN) -- President Barack Obama delivered his State of the Union address Tuesday night. Below is a transcript of the speech.

Obama: Thank you so much. Thank you very much. Thank you. Thank you. Please, be seated.

Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans, last month I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought, and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world.

Best-Selling Author Thomas Frank Reads From His New Book, "Pity the Billionaire"

by: Thomas Frank, Truthout | Audio Book Excerpt 
 
Thomas Frank, formerly an opinion writer for The Washington Post as well as a current monthly columnist for Harper's, is the founder of the journal The Baffler and the author of a new book, "Pity the Billionaire: The Hard-Times Swindle and the Unlikely Comeback of the Right."

Frank says in an interview that his book is about the social construction of reality, writing that the right's political revival is due to their offering of "an idealism so powerful that it clouds its partisan's perceptions of reality."

The Obama Memos

The making of a post-post-partisan Presidency.

by Ryan Lizza
January 30, 2012

On a frigid January evening in 2009, a week before his Inauguration, Barack Obama had dinner at the home of George Will, the Washington Post columnist, who had assembled a number of right-leaning journalists to meet the President-elect. Accepting such an invitation was a gesture on Obama’s part that signalled his desire to project an image of himself as a post-ideological politician, a Chicago Democrat eager to forge alliances with conservative Republicans on Capitol Hill. That week, Obama was still working on an Inaugural Address that would call for “an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics.

If You Thought SOPA Was Bad, Just Wait Until You Meet ACTA

When sites like Wikipedia and Reddit banded together for a major blackout January 18th, the impact was felt all the way to Washington D.C. The blackout had lawmakers running from the controversial anti-piracy legislation, SOPA and PIPA, which critics said threatened freedom of speech online.

Unfortunately for free-speech advocates, these pieces of legislation are not the only laws which threaten an open internet.

George Soros on the Coming U.S. Class War

'The situation is about as serious and difficult as I've experienced in my career.'

 |

You know George Soros. He’s the investor’s investor—the man who still holds the record for making more money in a single day’s trading than anyone. He pocketed $1 billion betting against the British pound on “Black Wednesday” in 1992, when sterling lost 20 percent of its value in less than 24 hours and crashed out of the European exchange-rate mechanism. No wonder Brits call him, with a mix of awe and annoyance, “the man who broke the Bank of England.”

Soros doesn’t make small bets on anything. Beyond the markets, he has plowed billions of dollars of his own money into promoting political freedom in Eastern Europe and other causes. He bet against the Bush White House, becoming a hate magnet for the right that persists to this day. So, as Soros and the world’s movers once again converge on Davos, Switzerland, for the World Economic Forum this week, what is one of the world’s highest-stakes economic gamblers betting on now?

Eyewitness Identification Has 50% Error Rate? How We Throw People in Prison Based on False ID

By Patricia J. Williams, The Nation
Posted on January 23, 2012, Printed on January 25, 2012

“We see what we want to see,” my grandmother used to say. This insight visited me recently after I ran across the mall chasing a woman I thought was my cousin. It wasn’t, as it turned out, but I didn’t realize that until after I had puffed up behind her, bopped her amiably on the shoulder and cried out, “Boo!”

How was it possible, I thought in retrospective embarrassment, to so wrongly misidentify someone I know so well? Empirically my experience was all too common. I’d been thinking about my cousin a few moments before and saw the woman through the lens of those thoughts. We often project our life’s associations onto the faces of strangers. Constantly—if mostly unconsciously—we familiarize them with learned stereotypes. If we are wise, we learn to take caution with our assumptions. We recognize this innate fallibility, and most of the time it doesn’t matter very much.

Tennessee Tea Party ‘Demands’ That References To Slavery Be Removed From History Textbooks
By Marie Diamond on Jan 23, 2012 at 11:00 am

In 2010, the conservatives who controlled the Texas Board of Education caused an uproar when they made radical changes to the history curriculum for the state’s 4.8 million public school students. The changes included referring to the country’s first black president as “Barack Hussein Obama,” and requiring students to “contrast” Confederate President Jefferson Davis’ inaugural address with Abraham Lincoln’s philosophical views. 

24 January 2012

Jobs Won't Come Back to America Until the Government Pushes Greedy Corporate Executives to Invest at Home

by Robert Reich, Robert Reich's Blog
Posted on January 23, 2012, Printed on January 24, 2012
Who should have the primary strategic responsibility for making American workers globally competitive – the private sector or government? This will be a defining issue in the 2012 campaign.

In his State of the Union address, President Obama will make the case that government has a vital role. His Republican rivals disagree. Mitt Romney charges the President is putting “free enterprise on trial,” while Newt Gingrich merely fulminates about “liberal elites.”

American business won’t and can’t lead the way to more and better jobs in the United States. First, the private sector is increasingly global, with less and less stake in America. Second, it’s driven by the necessity of creating profits, not better jobs.

Study Points Towards a Future of Toilet-to-Tap Water

Some areas may already have drinking water from reclaimed wastewater

- Common Dreams staff 
 
A report from the National Research Council said that advancing technologies make it possible to convert sewage wastewater to potable drinking water and that doing so could confront the growing issue of water scarcity.

Blame Marriage Rates on the Family Values of the 1%

Monday, 01/23/2012 - 12:01 pm by June Carbone

While low marriage rates among the working class are being blamed on their flawed morality, the real problem is their lack of jobs and education.

Charles Murray is at it again. He burst onto the national scene in the ’80s, announcing that he knew why the African-American non-marital birth rate had risen so dramatically: the government made them do it. He explained that welfare and a host of other liberal sins had weakened the moral fiber of the poor, producing disaster. It would take free market discipline to instill the right values once again. Now Murray is back with a new book and a long article in the Wall Street Journal attempting to explain income inequality among whites. His claim: working class whites have lost ground because they have abandoned a commitment to marriage, religion, and hard work. In his world, unemployment is high because those on the losing end of today’s economy refuse to work, non-marital births occur because of a lack of emphasis on marriage, and the upper class can assist only by expressing its disapproval and “preaching what it practices” — presumably investments in Ivy League education, parent-subsidized internships, and marriage between two investment bankers at 32.

The Economic Idiocy of Economists

by: Mark Weisbrot, Center for Economic and Policy Research

The American Economic Association's annual meeting is red-letter day for 'the dismal science'. And dismal it proved.

The American Economic Association's annual meetings are a scary sight, with thousands of economists all gathered in the same place – a veritable weapon of mass destruction. Chicago was the lucky city for 2012 this past weekend, and I had just finished participating in an interesting panel on "the economics of regime change", when I stumbled over to see what the big budget experts had to say about "the political economy of the US debt and deficits".

The session was introduced by UC Berkeley economist Alan Auerbach, who put up a graph of the United States' rising debt-to-GDP ratio, and warned of dire consequences if Congress didn't do something about it. Yawn.

Can Bossy Billionaires Now Boss Forever?

Unprecedented, man-made trends in ocean's acidity

Nearly one-third of CO2 emissions due to human activities enters the world's oceans. By reacting with seawater, CO2 increases the water's acidity, which may significantly reduce the calcification rate of such marine organisms as corals and mollusks. The extent to which human activities have raised the surface level of acidity, however, has been difficult to detect on regional scales because it varies naturally from one season and one year to the next, and between regions, and direct observations go back only 30 years.

Combining computer modeling with observations, an international team of scientists concluded that anthropogenic CO2 emissions over the last 100 to 200 years have already raised ocean acidity far beyond the range of natural variations. The study is published in the January 22 online issue of Nature Climate Change.

The biology of politics: Liberals roll with the good, conservatives confront the bad

New study brings to light physiological, cognitive differences of political left and right

From cable TV news pundits to red-meat speeches in Iowa and New Hampshire, our nation's deep political stereotypes are on full display: Conservatives paint self-indulgent liberals as insufferably absent on urgent national issues, while liberals say fear-mongering conservatives are fixated on exaggerated dangers to the country.

A new study from the University of Nebraska-Lincoln suggests there are biological truths to such broad brushstrokes.

In a series of experiments, researchers closely monitored physiological reactions and eye movements of study participants when shown combinations of both pleasant and unpleasant images. Conservatives reacted more strongly to, fixated more quickly on, and looked longer at the unpleasant images; liberals had stronger reactions to and looked longer at the pleasant images compared with conservatives.

Paul Krugman: Is Our Economy Healing?

How goes the state of the union? Well, the state of the economy remains terrible. Three years after President Obama’s inauguration and two and a half years since the official end of the recession, unemployment remains painfully high.

But there are reasons to think that we’re finally on the (slow) road to better times. And we wouldn’t be on that road if Mr. Obama had given in to Republican demands that he slash spending, or the Federal Reserve had given in to Republican demands that it tighten money. 

The Way It Was

The Beatles ruled. The mini was in. I was seventeen, and pregnant. What happened next is what could happen again.

I'm not sure what I expected, but my letter was not printed, and no advice was forthcoming. The silence was utter. Possibly Miss Blake, like Nathanael West's Miss Lonelyhearts, had a drawer where such letters were tossed. If so, the other letters in that drawer were no doubt a lot like mine—except that they were not written by wiseass children. They were real. And for the writers of those letters, the silence was real. And I remember thinking: Gee, what if I really were that girl I made up? What would I do?

David Cay Johnston: To calm the storm, Romney should release returns for 1984–1999 (the Bain years)



In an earlier post I focused on Mike Papantonio's concerns about Mitt Romney involvement in Cayman Island offshore banks (actually secret investment trusts).

There I also alluded (incorrectly as it turns out) to David Cay Johnston's issues, which are not the same as Papantonio's. Those issues deserve examination on their own, especially given Johnston's widely-admitted expertise on the U.S. tax code and its implications.

Commentary: Getting 'those people' to straighten up and fly right

Prime snark--Dictynna

By Terry Plumb | The Rock Hill Herald

The General Assembly is back in session, thank the Lord; now, we'll have some protection against Those People.


Take, for instance, the bill Republicans have introduced to require drug tests for anyone applying for unemployment checks. We certainly don't want to give taxpayers' hard-earned money to some druggie just because he's out of work.

How to Create a Depression

by: Martin Feldstein, Project Syndicate


Cambridge - European political leaders may be about to agree to a fiscal plan which, if implemented, could push Europe into a major depression. To understand why, it is useful to compare how European countries responded to downturns in demand before and after they adopted the euro.

Consider how France, for example, would have responded in the 1990’s to a substantial decline in demand for its exports. If there had been no government response, production and employment would have fallen. To prevent this, the Banque de France would have lowered interest rates. In addition, the fall in incomes would have automatically reduced tax revenue and increased various transfer payments. The government might have supplemented these “automatic stabilizers” with new spending or by lowering tax rates, further increasing the fiscal deficit.