Bitcoin for Undergrads, Wall Street’s Next Pump-and-Dump

Corey Pein, May 5, 2014

The story was everywhere last week: MIT undergraduates will each receive $100 in Bitcoin when they arrive on campus next fall. The gift comes thanks to an affluent donor and two precocious student entrepreneurs — one a sophomore computer science major, the other a first-year Sloan MBA student and president of the MIT Bitcoin Club.

I exaggerate slightly when I say the story was everywhere. As far as I know, Foreign Affairs hasn’t yet picked it up. But the Boston Globe, Boston Magazine, USA Today, Time, Vice, The Wire, Slate, the Guardian, the Independent, the Telegraph, the Christian Science Monitor, the Jewish Daily Forward, RT, public radio’s Marketplace, Reuters, and Bloomberg all did run with it, along with basically every tech blog (and there are way too many tech blogs).

Paul Krugman: Riksbank Officials Lead Sweden Into a Trap

A correspondent recently pointed me to the news from Sweden, which has stopped flirting with deflation and moved right in.

It's amazing: the country, which at first weathered the recent crisis fairly well and faced none of the institutional constraints membership in the euro zone would have imposed, has managed - completely gratuitously - to get itself into a deflationary trap.

U.S. Chamber targets Dems in state attorney general races

Funding for attack ads difficult to trace

By Ben Wieder, 6:00 am, May 8, 2014 Updated: 9:57 am, May 8, 2014

The ads accuse Nevada Secretary of State Ross Miller, a candidate for state attorney general, of living a lavish lifestyle at the taxpayers’ expense.

Shots of Miller with Mike Tyson and Hugh Hefner’s former girlfriend flash across the screen as the narrator highlights more than $60,000 in gifts Miller has accepted from “special interests” since taking office in 2006.

A Mangled Case of Justice on Wall Street

By Pam Martens: May 8, 2014

On October 10, 2013, bank examiner Carmen Segarra and her attorney, Linda Stengle of Boyertown, Pennsylvania, took on one of the mightiest and interconnected institutions on Wall Street: the Federal Reserve Bank of New York. They relied on the Federal court system, funded by the taxpayer, and a fair and impartial judge to level the playing field. Things got off to a promising start.

Devaluing Work and Workers

Friday, 09 May 2014 11:30
By Emily Schwartz Greco and William A Collins, OtherWords | Op-Ed

The Great Recession leveled a blow to the middle and working classes from which they haven’t yet recovered.

Given that labor’s pay and prestige in America peaked in the 1960s, this isn’t exactly new. Still, it’s time that all our leaders took this challenge more seriously. After all, we don’t just have the rich getting richer while the poor get poorer anymore. The middle is collapsing.

Thomas Frank: Academy Fight Song

This essay starts with utopia—the utopia known as the American university. It is the finest educational institution in the world, everyone tells us. Indeed, to judge by the praise that is heaped upon it, the American university may be our best institution, period. With its peaceful quadrangles and prosperity-bringing innovation, the university is more spiritually satisfying than the church, more nurturing than the family, more productive than any industry.

The university deals in dreams. Like other utopias—like Walt Disney World, like the ambrosial lands shown in perfume advertisements, like the competitive Valhalla of the Olympics—the university is a place of wish fulfillment and infinite possibility. It is the four-year luxury cruise that will transport us gently across the gulf of class. It is the wrought-iron gateway to the land of lifelong affluence.

Finance and Democracy

Posted on May 9, 2014 by James Kwak

Roger Myerson, he of the 2007 Nobel Prize, wrote a glowing review of The Banker’s New Clothes, by Admati and Hellwig, for the Journal of Economic Perspectives a while back. Considering the reviewer, the journal, and the content of the review (which describes the book as “worthy of such global attention as Keynes’s General Theory received in 1936″), it’s about the highest endorsement you can imagine.

Myerson succinctly summarizes Admati and Hellwig’s key arguments, so if you haven’t read the book it’s a decent place to start. To recap, the central argument is that under Modigliani-Miller, the debt-to-equity ratio doesn’t affect the cost of capital and therefore doesn’t affect banks’ willingness to extend credit; the real-world factors that make Modigliani-Miller untrue (deposit insurance, taxes, etc.) rely on a transfer of value from another party that makes society no better off.

Study strengthens link between neonicotinoids and collapse of honey bee colonies

Boston, MA — Two widely used neonicotinoids—a class of insecticide—appear to significantly harm honey bee colonies over the winter, particularly during colder winters, according to a new study from Harvard School of Public Health (HSPH). The study replicated a 2012 finding from the same research group that found a link between low doses of imidacloprid and Colony Collapse Disorder (CCD), in which bees abandon their hives over the winter and eventually die. The new study also found that low doses of a second neonicotinoid, clothianidin, had the same negative effect.

Further, although other studies have suggested that CCD-related mortality in honey bee colonies may come from bees' reduced resistance to mites or parasites as a result of exposure to pesticides, the new study found that bees in the hives exhibiting CCD had almost identical levels of pathogen infestation as a group of control hives, most of which survived the winter. This finding suggests that the neonicotinoids are causing some other kind of biological mechanism in bees that in turn leads to CCD.

Paul Krugman: Just Blame the Naysayers

Aha. I missed this, from Jürgen Stark, which is one of the most amazing things I've ever seen written by a former central banker: "It is likely we are living in an extended period of price stability," the former European Central Bank board member wrote in a recent op-ed for the Financial Times. "This is good news. It boosts real disposable income and will eventually support private consumption. Inflation expectations are well anchored, and there is no evidence households and companies are delaying purchases because of negative expectations. Warnings about outright deflation and calls for E.C.B. action are misguided and irresponsible. The longer this discussion continues, and the more intense it becomes, the more likely the risk of a self-fulfilling prophecy."

So, Mr. Stark began by asserting that low inflation boosts real disposable income. That's a zero-credit answer on any undergraduate exam: yes, low inflation makes income gains higher for any given rate of increase in nominal (or unadjusted) income, but low inflation reduces the rate of nominal income growth one for one. The notion that an influential former monetary official doesn't understand this is breathtaking.

Pushing Down the Top

Ned Resnikoff
May 6, 2014

David Brooks wants you to know that he shares your concern for the poor. That’s always where these conversations must necessarily begin—with a polite acknowledgement that everyone means well and want the best for those wretched, faceless, and largely theoretical creatures who populate the lower strata of society.

The only difference between Mr. Brooks and you, his left-leaning interlocutor, is that he wants the best for everybody, regardless of accumulated wealth. You, on the other hand, have allowed your understandable compassion for the poor to curdle into an unaccountable rancor against the wealthy.

Christian Minister Incites Christians To 'Spiritual Violence'

By John Amato May 8, 2014 6:00 am

John Hagee's son Matthew issued violent directions to his sheep and called for "spiritual violence" to fight those that disagree with them.

You may remember John McCain's shame when he first accepted and then rejected extreme right wing, anti-Catholic minister John Hagee's endorsement. Well, that knocked the minister off the front pages of the news for quite a while, but now Hagee is back with proselytizing more insanity. Only this time it's his son Matthew spewing the hatred.

On yesterday's "Hagee Hotline," Matthew Hagee called on conservative Christians to become more "spiritually violent" in fighting against things like gay marriage and abortion because secularists who support such things have "become violent with people of faith."

Paul Krugman: How to Save the Planet, at Minimal Expense

Joe Romm, the physicist and editor of the Climate Progress blog, recently drew attention to the third slice of the latest report from the United Nations' Intergovernmental Panel on Climate Change, about the costs of global mitigation, or reducing the sources of greenhouse gases.

The panel announced earlier this month that these costs aren't that big - a few percent of gross domestic product, even by the end of the century, which means only a trivial hit to the growth rate.

Look Who the Folks Who Took Down ACORN Are Targeting Now

Right-wing operatives with links to big retailers going after worker centers like the Restaurant Opportunities Center.

 Lee Fang,
April 30, 2014

In a presentation at the Drake Hotel in Chicago last October, Joseph Kefauver addressed a conference of executives from companies like Nike, Macy’s and Crate & Barrel, among other leading brands. Kefauver, a key player in the rising cottage industry of lobbyists and consultants hired by the retail sector, warned his audience that a new movement was taking hold, one that could leverage the “exponential growth of grassroots networks” to force change at corporations beyond the reach of traditional labor unions. These activists, Kefauver explained in his PowerPoint presentation, could create pressure in the media, throughout a supply chain, and even in the policy and political arena, making them a threat to business’s bottom line unlike any other. In addition, he noted ominously, these new groups are spreading beyond the big cities and blue states and have established a “left-of-center beachhead in traditionally conservative areas.”

A Primer: Just What Is Net Neutrality, and Why All the Fuss? 

Wednesday, 07 May 2014 09:44
By Joshua Holland, Moyers & Company | Op-Ed

The battle over Net neutrality is once again heating up. But not everyone has followed this somewhat complicated issue. Here, then, is a primer for understanding what's at stake in the fight for an open Internet.

Just what is Net neutrality anyway? Net neutrality is a principle that Internet Service Providers (ISPs) – and the regulators that oversee them — treat all Internet traffic the same way. The idea is to keep the Net free and open, giving users equal access to any website or application. Net neutrality would prevent companies that provide Internet access from blocking or slowing down traffic to or from specific sites in much the same way as a phone company has to put through your call, regardless of whom you're calling. Timothy Lee has a simple explainer at Vox. Rob Frieden, a professor of telecommunications and law at the University of Pennsylvania, wrote a more detailed backgrounder on the issues surrounding Net neutrality. And Armand Valdez at Mashable offers an accessible, two-minute video explaining the concept.

Surprise! 'Pro-business' policies hurt state economic growth 

Michael Hiltzik

Conservative economic pundits just love to justify "business-friendly" policies to state governments as keys to job growth, which after all is the whole ballgame in economic policy-making.

As Menzie Chinn of the University of Wisconsin has now shown, the problem is that pro-business policies don't really contribute to economic growth. They just make the rich richer, which is not the same thing at all.

Why is California's Jerry Brown Robbing Main Street to Prop Up Wall Street?

By Ellen Brown

May 7, 2014 | Governor Jerry Brown is aggressively pushing [3] a California state constitutional amendment requiring budget surpluses to be used to pay down municipal debt and create an emergency “rainy day” fund, in anticipation of the next economic crisis.

On the face of it, it is a sensible idea. As long as Wall Street controls America’s finances and our economy, another catastrophic bust is a good bet.

it's not warm when she's away

Night or day, this solar power plant always turns us on

By Holly Richmond

If you live on a rotating planet or have ever heard Bill Withers, you know solar power has its limits. We need electricity even after clouds roll in or the sun goes down (unless you’re a goth and enjoy total darkness).

Which is why an award-winning solar project in Spain is so awesome. The Gemasolar plant can store 15 hours’ worth of heat, which means it’s regularly able to produce energy around the clock. The plant delivered energy 24/7 for 36 days straight in 2013.

Richard Eskow: Who’s Fighting for Public Workers?

Sometimes you have to step back a few paces to see how much conservatism has distorted the public debate. Case in point: employment. Somehow the right has managed to stigmatize public-sector jobs so effectively that only politicians of rare and admirable courage are willing to defend them.

Unfortunately, those politicians seems to be in short supply nowadays.

What Powerful and Greedy Elites Are Hiding When They Scapegoat the Schools

by Diane Ravitch

Our economy is changing in ways that are alarming. Income inequality and wealth inequality are at their highest point in many decades; some say we are back to the age of the robber barons. Most of the gains in the economy since the great recession of 2008 have benefited the 1 percent, or even the 1 percent of the 1 percent. The middle class is shrinking, and we no longer have the richest middle class in the world. The U.S. has the highest child poverty rate of any of the advanced nations of the world (and, no, I don't count Romania as an advanced nation, having visited that nation, which suffered decades of economic plunder and stagnation under the Communist Ceausescu regime).

Forbes reports that there were 442 billionaires in the U.S. in 2013. Nice for them. Taxes have dropped dramatically for the top 1 percent since the 1970s. But don't call them plutocrats. Call them our "job creators," even though they should be called our "job out-sourcers."

LEAKED: Docs obtained by Pando show how a Wall Street giant is guaranteed huge fees from taxpayers on risky pension investments

By David Sirota
On May 5, 2014

When you think of the term “public pension fund,” you probably imagine hyper-cautious investment strategies kept in check by no-nonsense fiduciary laws.

But you probably shouldn’t.

An increasing number of those pension funds are being stealthily diverted into high-fee, high-risk “alternative investments” that deliver spectacular rewards for the Wall Street firms paid to manage them – but not such great returns for pensioners and taxpayers.

Students From 19 Countries Demand End to Economics Curriculum That Blocks Progress on Everything from Food Security to Climate Change

By The International Student Initiative for Pluralism in Economics

May 5, 2014 | It is not only the world economy that is in crisis. The teaching of economics is in crisis too, and this crisis has consequences far beyond the university walls.

What is taught shapes the minds of the next generation of policymakers, and therefore shapes the societies we live in. We, 37 associations of economics students from 19 different countries, believe it is time to reconsider the way economics is taught. We are dissatisfied with the dramatic narrowing of the curriculum that has taken place over the last couple of decades. This lack of intellectual diversity does not only restrain education and research. It limits our ability to contend with the multidimensional challenges of the 21st century - from financial stability, to food security and climate change. The world should be brought back into the classroom, as well as debate and a pluralism of theories and methods. This will help renew the discipline and ultimately create a space in which solutions to society’s problems can be generated.

Lack of Order: The Erosion of a Once-Great Force for Integration

The federal government’s vigilance in enforcing the court-backed desegregation of the country’s schools is a shadow of what it once was.
by Nikole Hannah-Jones
ProPublica, May 1, 2014, 1:11 p.m.

For decades, federal desegregation orders were the potent tool that broke the back of Jim Crow education in the South, helping transform the region's educational systems into the most integrated in the country.

Federal judges, often facing down death threats and violence, blanketed Southern states with hundreds of court orders that set out specific plans and timetables to ensure the elimination of racial segregation. Federal agencies then aggressively used the authority of the courts to monitor hostile school systems, wielding the power of the 1964 Civil Rights Act to strip federal dollars from districts that refused to desegregate.

Thomas Frank: Our sad “Mad Men” revolution: How consumerism co-opted rebellion

Talking revolution with Lewis Lapham -- and how capitalism manages to keep coming out on top
Aspiring writers of my generation regarded — still regard — Lewis Lapham as the greatest essayist of our time. We tried to emulate everything from his glittering sentences to his rugged skepticism to his sartorial elegance.

For many years he was editor of Harper’s Magazine; today he runs Lapham’s Quarterly, which has just released a new issue on “Revolutions,” filled with historical writings on the subject in question. Back in March, Lewis asked me to join him in a public conversation at Book Court bookstore in Brooklyn to celebrate the launch of the issue; what follows is an edited transcript of the proceedings. Thanks to Book Court for making the recording available to us.

Strong institutions reduce in-group favoritism

Ineffective social and political institutions make people more likely to favour their family and own local social group, while good institutions make them more likely to follow impersonal rules that are fair to everyone, suggests a forthcoming study in the journal Human Nature.

A series of experiments found that people in societies with supportive government services, food security and institutions that meet their basic needs were very likely to follow impartial rules about how to give out money. By contrast, those without effective, reliable institutions showed favouritism toward members of their local community.

The Post-Constitutional Era

By Chris Hedges

The U.S. Supreme Court decision to refuse to hear our case concerning Section 1021(b)(2) of the National Defense Authorization Act (NDAA), which permits the military to seize U.S. citizens and hold them indefinitely in military detention centers without due process, means that this provision will continue to be law. It means the nation has entered a post-constitutional era. It means that extraordinary rendition of U.S. citizens on U.S. soil by our government is legal. It means that the courts, like the legislative and executive branches of government, exclusively serve corporate power—one of the core definitions of fascism. It means that the internal mechanisms of state are so corrupted and subservient to corporate power that there is no hope of reform or protection for citizens under our most basic constitutional rights. It means that the consent of the governed—a poll by OpenCongress.com showed that this provision had a 98 percent disapproval rating—is a cruel joke. And it means that if we do not rapidly build militant mass movements to overthrow corporate tyranny, including breaking the back of the two-party duopoly that is the mask of corporate power, we will lose our liberty.

Dean Baker: The New York Times Turns Paul Krugman Into His Opposite

Remember Paul Krugman yelling that huge budget deficits will impose an enormous burden on our children and threaten to sink the economy? You probably don't remember this because he has been strongly arguing the opposite position for the last five years.

This is why it was striking to see the NYT opinion page's description of Krugman's column last week which has Krugman referring to a "fiscal crisis." Krugman absolutely does not believe there was a fiscal crisis. Krugman's column discussed the financial crisis and the economic downturn that followed the collapse of the housing bubble.

Following the money behind the anti-science madness in North Carolina's US Senate race 

Institute for Southern Studies Executive Director Chris Kromm appeared on the MSNBC news show "All in With Chris Hayes" on Wednesday to discuss what Hayes described as "what may be the most-watched upcoming U.S. Senate race in the country" -- the crowded Republican primary to select the challenger to Democratic Sen. Kay Hagan.

There are eight Republicans battling to take on Hagan, and this week there were two debates between the four leading candidates: North Carolina House Speaker Thom Tillis, physician and Tea Party activist Greg Brannon, nurse practitioner Heather Grant, and Mark Harris, pastor of First Baptist Church of Charlotte and president of the Baptist State Convention of North Carolina. The primary will take place on May 6; if no candidate wins more than 40 percent of the vote, a runoff between the top two vote-getters will be held on July 15.

How the rich stole our money — and made us think they were doing us a favor

Pushing people toward stocks, real estate and credit cards have all come at a cost -- and with one goal in mind
David Atkins

If you’ve paid attention to the economy over the last few years, you’ve doubtless seen the charts and figures showing the decline of the American middle class in concert with the explosion of wealth for the super-rich. Wages have stagnated over the last 40 years even as productivity has increased, which is another way of saying that Americans are working harder but getting paid less. Unemployment remains stubbornly high even though corporate profits and the stock market are at or near record highs. Passive assets in the form of stocks and real estate, in other words, are doing very well. Wages for working people are not. Unfortunately for the middle class, however, the top 1 percent of incomes own almost 50 percent of asset wealth, and the top 10 percent own over 85 percent of it. When assets do well but wages don’t, the middle class suffers.

Brian Beutler: The Fascinating Politics of a Drawn-Out Battle Over the Minimum Wage

With the notable exception of Tennessee's Bob Corker, Senate Republicans united on Wednesday, using their power under filibuster rules to prevent a debate on a bill that would increase the minimum wage gradually to $10.10 an hour.

On a superficial level, this was a staged, political vote with a predictable outcome, designed to draw a distinction between the parties for voters ahead of the midterm election. Increasing the minimum wage is overwhelmingly popular, even in conservative states, and Democrats want the voters to know which party opposes it. Or better yet, to use the minimum wage as a wedge issue and split the party.

Deride and Conquer: Dismantling the USPS

Sunday, 04 May 2014 00:00
By Douglas Jamiel, Truthout | News Analysis

The historical cost of building our postal network, its unique characteristics and efficiency, the nefarious efforts to privatize and cripple it, and the economic and personal costs of losing it are considered.

An army prefers to fight on familiar terrain. Absent such serendipitous circumstances, a good general will try to move the conflict to more hospitable ground. In their long-thwarted campaign to cripple, privatize and cannibalize the assets of the United States postal system, conservative and business interests have finally, it seems, turned the tide of battle by employing a more measured and subtle strategy of legislative and economic subterfuge. Having failed in a full-on frontal assault on government control last attempted by private carriers in the mid-1840s, the Postal Service's detractors have mounted a new, more promising offensive in the present era. To their credit, they have enjoyed some success by redefining the terms of engagement, and by reconstituting the nature and mission of the US postal system from its historical role as a civil service entity to a Frankenstein-like corporate/government hybrid with most of the downsides, and few of the advantages of both.

How Sweet Is It?

George Scialabba

I suppose you’re not entirely responsible for your obituary notices. When Albert Hirschman died in December 2012, the time-servers leaped in to claim his legacy, from Malcolm Gladwell in The New Yorker to Cass Sunstein in the New York Review of Books to the anonymous Economist.

[...]

One of Hirschman’s most popular essays, “Rival Views of Market Society,” revived the eighteenth-century idea of doux commerce, or the civilizing effects of nascent capitalism. “It is almost a general rule,” Montesquieu wrote in L’Esprit des Lois (1748), “that wherever manners are gentle, there is commerce; and wherever there is commerce, manners are gentle. . . . Commerce polishes and softens barbaric ways.” Condorcet agreed; even the radical Thomas Paine argued that commerce “is the greatest approach towards universal civilization that has yet been made.”

If you dispute Chris Christie's budget estimates, he'll go after you — even if you're right

Updated by Andrew Prokop on April 29, 2014, 2:50 p.m. ET

"Governor Christie's predictions for tax collections have missed the mark," the Bergen Record's John Reitmeyer writes today, and the state now has an $800 million budget shortfall. It's only the latest in a series of optimistic budget estimates by Christie that have been disproven by reality.

Economic forecasting is hard, and there isn't malfeasance behind every missed projection. But what makes this particularly embarrassing for Christie is that, when the state's top budget wonk criticized his past forecasts, Christie responded by insulting him and suggesting that he be fired.

Robert Samuelson Is Badly Confused About the Well-Being of Retirees

Sunday, 27 April 2014 20:03

Robert Samuelson told readers in his latest column that we need not worry that people are undersaving for retirement. Unfortunately this conclusion rests largely on a confused reading of the data.

Samuelson starts by telling readers:

"In 2010, roughly 80 percent of households headed by someone 65 to 74 owned their homes reports, economist Peter Brady of the Investment Company Institute, the trade group for mutual funds. ... For all homeowners, median home equity — the amount not owed on the mortgage — was $120,000."

The Prelude to the End of the American Era 

And so it begins. Russia is not restraining the separatists, the Kiev government is finally really sending in the troops, Barack Obama and EU leaders claim they will impose real sanctions and Russia and China are set to ink a deal to export Russian Gas to China, the world’s industrial heartland.

If the sanctions are imposed, for whatever reason (Russian invasion or not), they will force the creation of a second economic, non-dollar bloc. Russia is not Iran, and China is not going to cut off Russia to please the West, rather the contrary. The creation of a real non dollar bloc which can make almost anything people want, and which has access to essentially all key resources from oil to rare minerals, metals and food is an existential threat to the hegemony of the West and its allies like Japan and Korea.