Links 6/13/11

Dear readers,

I managed to spill water all over my external keyboard. Since Apples have the suckiest laptop/netbook keyboards known to man, and I refuse to use sucky technology, you have to wait for the post I had somewhat completed for my keyboard to (hopefully) dry out. The good news is that use of an external keyboard means any damage was limited to it (my Macbook Air sits on an old NeXT slab safely off the surface of my desk).

Andrew Martin: They are clean, intelligent and cuddly. Let’s hear it for the rat Independent (hat tip Buzz Potamkin). The apparently do make good pets, but life expectancy is only about two years. I wouldn’t enjoy getting attached to one and having it die on me so soon.

Beavers get tough defending their turf Anchorage Daily News (hat tip Buzz Potamkin)

Roundup Birth Defects: Regulators Knew World’s Best-Selling Herbicide Causes Problems, New Report Finds Huffington Post (hat tip reader furzy mouse)

Scientists Trap Antimatter For More Than 16 Minutes (video) Singularity Hub (hat tip reader furzy mouse)

Japan’s Decline as a Robotics Superpower: Lessons From Fukushima Sakai Yasuyuki, Asia Pacific Journal (hat tip reader Martin L)

‘Controlled’ power cuts likely as Sun storm threatens national grid Independent (hat tip Buzz Potamkin)

In a pure coincidence, Gaddafi impeded U.S. oil interests before the war Glenn Greenwald (hat tip readers May S and Crocodile Chuck)

Gaddafi is another name for oil Tehelka (hat tip reader May S)

More than 600, including 103 children, sickened by lead poisoning in China Associated Press (hat tip reader furzy mouse)

Control Fraud and the Irish Banking Crisis Bill Black, New Economic Perspectives (hat tip Philip Pilkington)

In Greece, Some See a New Lehman New York Times

Banks battle over US tax law Financial Times

WWFDRD (What would Franklin Delano Roosevelt do)? Elizabitchez (hat tip Lambert Strether). The post is much better than the title, and has a useful discussion of how to strip the system of its legitimacy.

Medicare Saves Money Paul Krugman, New York Times

Las Vegas Mayoral Candidate Sees Own Vote Flipped to Opponent on Touch-screen Voting Machine TruthOut (hat tip reader furzy mouse). Speaking of legitimacy…

Obama Seeks to Win Back Wall St. Cash New York Times

National mortgage fraud scandal spreads to the judiciary Atlanta Examiner (hat tip Lisa Epstein)

Dangerous faux research The Incidental Economist (hat tip reader Amit). Looks like a study based on what we used to call “McKinsey intuition” aka complete BS.

Roubini Says ‘Perfect Storm’ May Threaten Global Economy Bloomberg. He was early last time. I’m betting he’s late this time. Markets try to be in front of real world events, even if it winds up being only a smidge in advance. An\1
d remember how in 2008 the Bush Administration was in kick the can down the road mode, doing everything it could to push the reckoning till after the election and failing?

Debt Collectors Ask to Be Paid a Little Respect New York Times. The Times should be ashamed of itself to be running an industry press release as a new story (of course, the device is to make the story about the PR effort, which still allows them to talk about how nice debt collectors really are).

How to avoid our own lost decade Lawrence Summers, Financial Times. The FT has also created a shrine to Larry:

The comments on his piece are on the whole pretty hostile to the FT giving Summers the microphone. I hope like-minded FT subscribers will join the fray (or if you have energy, a nastygram to the editor would be good too).

Antidote du jour:

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  1. Amit Chokshi

    The thing is Larry is right in his latest op-ed? Sad that it’s after he leaves office and yes he’s a dangerous person from a policy standpoint but he’s sounding like Romer in that one article. Cheap rates, infrastructure, austerity is assinine, etc.

    1. Foppe

      But how seriously should you take a person who ‘gets it’, right at the moment when he’s relinquished whatever political power he had? It reminds one of Greenspan realizing “there was a flaw” only when there was nothing he could do about it any more. (Well, he could’ve talked to Ben, but seeing what Ben’s been up to should tell you more than enough.) The momst convincing lies, after all, are the ones that contain as much truth as possible. (See the discussion surrounding the RI for a recent example.)
      Therefore, I find the idea that Summers will now regularly be writing down his thoughts here disturbing to say the least.

      1. Foppe

        And anyway, he doesn’t really say anything in his piece. If you’ll look at the “what is to be done” section, the most concrete suggestion is some drivel about a pay-roll tax holiday, and then the suggestion that “the fiscal debate should acknowledge something”..

        1. Lidia

          Oh, Summers is on board with the safety-net-killing payroll tax holiday? Why am I not surprised? I’ve never read anything by him that didn’t show him to be a complete and utter wanker. Constantly amazed at his popularity, I can only think that the other wankers keep him around only so that they can look less wanker-ish.

      2. Glenn Condell

        ‘But how seriously should you take a person who ‘gets it’, right at the moment when he’s relinquished whatever political power he had? It reminds one of Greenspan realizing “there was a flaw” only when there was nothing he could do about it any more.’

        These people apply the Straussian noble lie doctrine in pursuit of their Randian goals. Sometimes they have to (appear to) take a step backward, in order to move forward more effectively. This means that sometimes they have to (gulp) tell the truth and make like it’s implications bother them, you know, like normal human beings, so that they seem to be ‘on our side’ despite past performances which have led to a historic wealth transfer, for which they’re.. erm.. ah.. sorry!

        That oughta do it, they think. Sadly, it does.

        ‘It’s just a jump to the left – but then a step to the right…’

        1. Doug Terpstra

          So true; Summers is an unrepentent elitist, who is only feebly attempting to feign empathy.

          However, this time it may be as much a defensive act born of fear as it is Machiavellian “strategery”. Even maestro Greenspam, winner of the 2001 Enron Award for Distinguished Public Service, sees the ominous writing on the wall:

          “The fact that I am in favor of going back to the Clinton-era tax structure is merely an indication of how scared I am about how this debt problem and its order of magnitude.”

          I think these turkey-necks are beginning to envision the guillotine blade and are attempting, too late, to buy some measure of redemption. Even the imperturbable Obama seems a bit rattled these days. There are big changes rumbling.

  2. Doly

    An update about the indignants in Spain from my mother, that has now visited Barcelona:

    I went out for lunch and when I came out of the restaurant I heard shouts and a placard at the bottom of the street, it was a demonstration of the indignants, life is full of coincidences. I was lucky. So I waited and joined the protest. We went shouting towards the hospital because bit by bit they are privatising health care. The best part was two fire trucks that came by, at different times, and they greeted us very enthusiastically and encouraged us.

    In the afternoon I went for two or three hours to the Plaza de Cataluña to see the indignants. It had the same atmosphere as Madrid or La Coruña. They said that tomorrow they are going to close down the camp, they are very tired now and they prefer to continue working from home. They will continue organizing demonstrations, and they will leave an information post in the Plaza de Cataluña.

    I was in a very interesting debate that made me understand better this movement. It’s the great thing of this movement, we were in a small group very different people: middle-aged women from Barcelona, people from the neighbourhoods, University students, a couple of squatters, some intellectuals, several people that were involved in the fight against Franco, and they talked about this movement and the citizen fights in Europe and Spain in those times… very interesting. We concluded that now the movement works by itself, even if people wanted to stop it, it wouldn’t be possible.

    One man in the group lives in France and he said that there they are presenting the movement as the protest of marginal people, the news are ignored and when they talked about it they don’t say that all sorts of citizens participate, and that this is a serious political debate on the street. I’m getting to know the French, from my point of view they are quite into censorship and they don’t give all the information to citizens, probably because they’re trying to avoid that a similar movement arises in their country. In the Bastille they have thrown out the camp by beating them up several times. They also said they have thrown out, beating them, today, quite a few camps in Spanish camps. I’ll tell you about what happened in Coruña when I return.

    1. Max424

      “We went shouting towards the hospital because bit by bit they are privatising health care.”

      Et tu, Spain?

      Thanks for the report, Doly. Best of luck.

  3. War is Peace

    Glenn Greenwald: “…the very notion that the U.S. wages wars not for humanitarian or freedom-spreading purposes, but rather to exploit the resources of other nations for its own large corporations, is deeply “irresponsible” and unSerious. As usual, the ideas stigmatized with the most potent taboos are the ones that are the most obviously true.”

    Related to this….

    Americans just realized the Afghan War is about protecting Freedom, Democracy and Pashtun Pedoph*le “Boy Players” – eXiledonline

    “So, why are American and NATO forces fighting and dying to defend tens of thousands of proud pedoph*les, certainly more per capita than any other place on Earth? And how did Afghanistan become the pedoph*lia capital of Asia?”

    (asterisks are to get around potential automated word censors)

    Here’s a modest proposal for an Army recruiting slogan: Join the Army: Get your ass shot off in the service of Goldman Sachs, JPMorgan, Halliburton, GE, Chevron, Lockheed Martin, Citigroup, Occidental Petroleum while defending tens of thousands of proud pedoph*les!!

    And as an additional signing bonus, have your body bag (or artificial limbs) autographed by the war cheerleader of your choice: Tom Friedman? John Burns? Robert Siegel? (Take your pick)

  4. AGK

    How not to be hostile!? The guy has lost any credibility, does not posses the mind needed to grasp the complexity and crappy condition of the situation he did personally contributed for and still has the stupidity to admonish.. It is mockery. I wonder are his patrons equally short-sighted or the article is result of the unconscious urge to position himself as credible source of fresh thought, something obviously he will never be able to do.. given his past record of ‘achievements’.

  5. Philip Pilkington

    Re: the Summers piece.

    Ha! I knew it. The top dawgs know exactly what’s going on. So, all the austerity talk is just mush to feed into the insanities of the media-machine.

    What a strange world we live in.

    1. Doug Terpstra

      In fact, Summers is proposing exactly that —austerity— deferred and deepened.

      “Stimulus should be continued and indeed expanded”, he writes, “by providing the payroll tax cut to employers as well as employees. Raising the share of payroll from 2 per cent to 3 per cent is desirable, too.”

      What a stroke of unadulterated Wile E. Coyote genius: tax cuts for everyone everywhere! Even better: defund Social Security to stimulate the economy; and after that, the Neocons’ brass ring, a tax holiday for Medicare! Oh, and one more thing: “reaching and enforcing trade agreements.” What imaginative vision, tax cuts and trade deals. Why hasn’t anyone thought of that before?

      How fortunate we are that Larry has descended to cast his pearls of wisdom before unworthy swine. Where has he been all our lives? Let’s make him king! Oh, yeah, that’s right; he got us into this mess. I almost forgot … NOT.

      Summers is an arrogant elitist still bent on his Straussian agenda, and his apparent conversion from faith-based voodoo trickle down is only a thinly-disguised Machiavellian ploy after all. Or, maybe a small sign of panic, as the wheels wobble ominously on the globalized economy

  6. john

    > my Macbook Air sits on an old NeXT slab…

    I demand a photo of this juxtaposition. Tomorrow’s antidote?

    1. geeker

      Yves seems to have a penchant for good hardware. I wonder which external keyboard she uses.

  7. Jackrabbit

    If the Times article on debt collectors is a PR puff piece, then the Times article on Obama’s Wall Street charm offensive is a billboard (despite the ending remark that some invitee declined the invitation).

    And how do you write a piece about Obama’s Wall Street fund-raising without mentioning his biggest contributor last time? Easy, I guess, when you have been compromised by your relationship with said donor and your star Wall Street Reporter has just been lambasted for cheerleading on that donor’s behalf.

    I imagine the Times response being effectively: we had to kill the news to save it, along with the slimy squid-approved tagline: our reporting is in-line with industry practice.

  8. ella

    Unfortunately, the best way to avoid a US lost decade has been lost. It was lost because Summers protected the powerful banking elites when he was an adviser to Obama. Instead of reasonable economic stimulus, wall street and banking reform early in the Obama administration we had little to weak stimulus and reform. Funny he should speak out now. Is he trying to preserve his reputation for the future? Anyone looking at his policy decision in the Clinton and Obama administrations and his stewardship of Harvard would certainly question the efficacy of his decisions.

  9. doom

    Thanks for Elizabitches. Electoral boycotts are important weapons in LatAm and Africa. In places like that, people see that their vote is being used to legitimate state actions they never agreed to, and they’re not too vain to admit that their democracy is phony. Here indoctrination calls the state “America” and wraps up your identity with so-called democracy. So people still fall for the ‘But you voted for it!’ trick. You still hear shills blaming voters for exploitation that they did not vote for. Voting implies consent of the governed. It’s not a civic duty. You don’t have duties, states have duties, you have rights. No rights, no consent of the governed, no vote. It’s very simple when the brainwashing wears off.

    1. Another Gordon

      Chris Hedges would agree that elites should be afraid. In a video lecture made ahead of the publication of the “Death of Liberalism” he argues that the last truly democratic president was, surprisingly, Nixon because he was the last to be afraid of the electors.

      Hedges point was that Nixon passed environmental and other legislation (I forget the details but it was quite a long list) that enriched or improved ordinary peoples lives.

      How times have changed!

  10. Jim Haygood

    So how do we make the elites afraid enough to let change happen without becoming brutal hooligans? The first step is to strip the system of it’s veneer of legitimacy.

    The first step to creating fear in the elites is to stop giving them legitimacy through elections. Vote for anyone other than a legacy party politician (even the so-called good ones) or don’t vote at all. It doesn’t matter if you vote Green or Socialist or even for the damn Libertarians. Just don’t give either of the two big parties the legitimacy they need to keep stealing from us.

    My sentiments exactly. Stop feeding the Depublicrat trolls.

    Step #2 is to ridicule them into irrelevance, starting with Peace Laureate O’Bomber the Drone Messiah, surely the most ridiculous political figure of this young century.

  11. aeolius

    We are victims of this wonderful way to catch little guys who have no muscle.
    For many years we had a “KrystalNacht” account with UBS started with an off-shore inheritance. Money which never touched shore.We were reported and filed for amnesty. Now the tax period was for the hot years and so the highpoint the account valued !.5mil. But after the crash, the value decreased markedly. So when the tax bite hit we owed over 50% of current value.
    Meanwhile the Big Boys prosper with a different set of rules

    Question: Now that the SCUS has in its wisdom ruled that for donation purposes Corporations are people, how is it that they are allowed different tax rules?

    1. Foppe

      “Little guys who have no muscle?”
      I wholly agree that it is undesirable that corporations can dodge taxes, but I am not quite convinced that you can apply for “little guy” status if you were basically committing fraud and “were reported and filed for amnesty”. (and subsequently lost “half” of your apparently rather sizable inheritance to the IRS. Being taxed is not losing something, and it rather saddens me that you think this way.)
      But if you want justice, by all means, fight for tax reform (though good luck convincing the Washington state legislature of this; they seem to be bought and paid for when it comes to MS).

    1. Foppe

      What makes you think the protestors are home owners? China is a big country, with lots of possibilities for local variation in employment figures (and thus social unrest). The housing bubble is only directly relevant for the people who could afford to buy homes and those who are employed in construction..

      1. Philip Pilkington

        “The housing bubble is only directly relevant for the people who could afford to buy homes and those who are employed in construction.”

        Tell that to the Irish…

        Oh, wait… I’m Irish. Yeah, that’s not true. Many industries are involved in producing materials for the construction sector. And when there’s layoffs in any industry this leads to lower wages and lower aggregate demand.

        1. Foppe

          I’ll admit it was a slight overstatement on my behalf, but China has a fairly large manufacturing sector compared to Ireland. :) (But yes, the bust of the RE bubble would also be bad for Australian exports, for one thing.)
          Anyway, while it’s true that layoffs can and in time probably will lead to lower wages, in a country like China there is probably a decent amount of inertia involved as well, simply because those laborers cannot easily travel elsewhere, and because the large manufactories are also largely bound to the ‘economic zones’ along the coast. Moreover, the countryside seems to serve as a buffer that can reabsorb a lot of workers at least temporarily when they lose their jobs. (Moving from the reserve labor force to the latent one.)

          1. MyLessThanPrimeBeef

            No amount of public spending can placate the anger over the large, and increasingly larger, gap between the poor and the rich in China.

            Maybe as well save that money for the victims of taxation – their middle class.

    1. Valissa

      “The intuitive mind is a sacred gift and the rational mind is a faithful servant.
      We have created a society that honors the servant and has forgotten the gift.”
      – Albert Einstein

      1. MyLessThanPrimeBeef

        Nice quote.

        I would add that the servant has also forgotten about his master where the servant never goes bankrupt but the master dreads the threat.

        Bad servant.

  12. Tertium Squid

    Obama to the banksters:

    “Now, you guys know I’m going to have to put on my populist trousers here for the next year, and I may have to say some unpleasant things. But I want you to remember that I’ve been your guy from the start, and that’s not going to change.”

  13. La Caterina


    See Friday’s decision from the New York Appellate Division, 2nd Department (Queens, Bklyn, Long Island) holding that the bifurcation of the note & mtge via a MERS assignment (in the absence of any evidence that MERS actually owned/held the note) renders the assignment a nullity.

    Notably, the Second Department cited not only to Gretchen Morgenson’s recent MERS article, but also to Petersons’s 2010 MERS article in the U. of Cincinnati Law Review. I’d call this a game changer in NY as it affects 4 counties with some of the state’s highest foreclosure rates.

    1. Jim Haygood

      Thank you for pointing this out. Some of the commentary on this decision has skipped right over the ‘Second Judicial Department’ reference, neglecting that the banks have one more level of appeal available to them — to the statewide New York Court of Appeals.

      Not sure which four counties you have in mind, but Wikipedia says that the Second Judicial Department includes three NYC counties, two in Long Island and five in the lower portion of upstate.,_Appellate_Division

  14. kevinearick

    Currency Basis: Property vs. Talent

    So, they don’t have a currency / solvency problem because the gov owns land … which agency “privatizes” to its friends for pennies on the dollar … and the proposed solution is to accelerate the process …

    The taxpayer pays $1 million to put someone else’s kid through school. Likely the child of an ignorant single parent, from the same system, entering as a critical thinker, asking why, and is “trained” not to think, to comply (“I don’t know why; it’s just how I was told to do it” positive feedback), and graduates without the ability to read, write or add 2 and 2, and the solution is to give this “family” access to all kinds of make-work social programs, all the while expecting the promises of pensions and healthcare upon retirement, because a few, at the top of the ponzi lottery economy, got theirs. That’s a simple stupid problem.

    Assumptions: property is your most important asset; accelerating property taxes by massively inflating RE prices to support this “school” system will lead to something other than bankruptcy of the pension and healthcare systems, by pushing the contributor to receiver ratio over the cliff.

    They are not selling cars; they are selling oil. They are not selling property; they are selling taxes. They are not selling oil or taxes; they are selling control. All of Vermont is a hobby farm with trash trees, which qualifies it for the ag and conservation subsidies.

    Based on the accounting income from this utterly irrational property scheme, the ultimate “owners” are playing the currency game. Centrally planned, variable income, hidden by accounting complexity skewing the hub, is the worst of all worlds, and yes, the talented kids do care. It doesn’t matter from an absolute valuation perspective that there are few talented kids; that just makes each worth more, which is why the algorithm connecting them, to deliver current where it is most needed effectively, is so important.

    For a long time, girls asked why and were told to go play with their dolls. Naturally, they got tired of playing with their dolls (can you imagine saying that to the daughter of a woman crossing the country in a covered wagon?). Now, unfortunately, both the boys and the girls don’t ask why, like why are people competing with stupid machines to do stupid make-work, faster, liquidating their own culture in the process, through a dead financial short.

    Every community needs to develop a diversified talent pool as quickly as possible. Build your hub accordingly. Only a machine associates a job with identity for the purpose of directing current. The property derived is dumber yet, and the credit derived from that property is dumbest of all.

    Currency is a derivative, with an event horizon. Treat it as such. Do not allow it to elude. A community currency should elucidate, on the AC side of the mirror, with a resistor resisting the resistance. Let them steal the present, but never, ever, show them the first or second integral, until you have the next set ready to go on the shelf.

    Let me be sure I understand the argument. A country cannot go bankrupt because its citizens must pay taxes. The kids are stupid because they do not pay taxes, and the taxpayer’s government will threaten my job if I don’t comply with this line of “thinking.” I would suggest that an economy is a function of trust and the kids have every reason to view the taxpayer as the enemy. Geithner may or may not be a moron, but he is specifically paid by the taxpayer to be stupid.

    The intelligent kids do constructive when others are not watching, do de-constructive when others are watching, and say nothing. Others follow the de-constructive example and talk their heads off, proving to the increasingly bipolar world that they are idiots. Naturally, the nexus algorithm is designed to identify the intelligent kids by elimination, and the middle class taxpayer has been only too happy to oblige.

    My problem is that I was born in Ozzie-and-Harrietville, with the Protestant work ethic ingrained, which is a habit, like smoking, but I have never been out-worked despite every chain at the disposal of the nexus attached. The kids don’t have that problem.

    So, when do you suppose they are going to try and unveil the strong dollar, to take advantage of the turning tide, and what do you suppose they will see when they do?

    1. ambrit

      My Dear Mz Valissa;
      Boy oh boy! This is a game changer for micro devices. The ripple effects will become Tsunami sized events. (This might rescue Jobs Law.)

  15. Pwogessive

    Ezra Klein is a worthless hank of dog hair. He belongs on a pet-barbershop floor, not where he is, wherever that is, that gets him quoted like he’s the nuncio from liberal common sense. Why he isn’t even a good chew toy.

    (Insert worthless crap Ezra Klein quote here)

    Imagine if this guy was advising Henry Clay; why, the Civil War might have come in 1823 – though now that you mention it, that sounds okay, doesn’t it? Okay, let’s have him advising the Continental Congress in the summer of 1776.

    Posted by Owen Paine on Saturday June 11 06:30 PM
    at the stopmebeforeivoteagain blog

    1. Cynthia

      I give Owen Paine an A+ for his creative use of the English language, but I can only give myself a C+ for my ability to grasp it. This time around though, I managed to pass the test with flying colors!

      1. Janet

        Cynthia: LOL That’s so true. He’s like the Thomas Pynchon of political commentators.

  16. Benedict@Large

    RE: “Dangerous faux research” The Incidental Economist

    Sorry to burst the bubbles of everyone who wants to extol the virtues of ObamaCare, but McKinsey is merely reporting on a flaw that employers have found in the bill involving the penalty versus the premium assistance component. Because of this flaw, it will be more profitable to drop group coverage for anyone under median income. (This would be the 78 million number that McKinsey says may lose coverage.)

    THIS FLAW IS REAL. I know this because I found it when the bill was still under consideration, and screamed about it then as loud as I could, but to no avail. No one wanted to hear it because they were either too busy laughing at Tea Party antics (distraction is that group’s real purpose, if you hadn’t figured that out yet), or too busy blowing kisses at everything Obama, or too desperate for anything with the name “healthcare” on it to notice what was inside.

    Well now you all have your bill, and as the McKinsey study makes real through direct interviews what I found through my own careful research back then, it is a ticking time bomb that will destroy Obama’s second term (if he even gets one), as well as destroy access to healthcare for many tens of millions who now have it. [Individual policies are CRAP, by the way, and will be getting worse. Take it from someone in the business.]

    And one more time, right wingers will blame the liberals and say that government can’t do anything right. “See?” they will say. “We told you so.”

    And this time, for once, they will be right.

    [Besides, if the study really is BS, what’s everyone all worried about? On the other hand, if it’s not … y’all got a real big problem, don’t you?]

    1. Yves Smith Post author

      Then why did McKinsey get completely incoherent when asked to defend their work?

      1. Benedict@Large

        Yves: I’ve checked for an official response from McKinsey and found none. [Did I miss it?] On the assumption then that there is none, what we have is a third party who is not disinterested (and possibly hostile to the report) reporting what they say McKinsey said. That’s not much to go on. Supposedly there is some disagreement within McKinsey, but until there is something more official, we have to assume the report is McKinsey’s official position. [As I mentioned in my comment to “Dangerous Faux Research”, it sounds like McKinsey may simply have balked when asked to hand over their raw survey results, and if so, that is appropriate. It’s unlikely that survey participants agreed in advance to be identified publicly, so McKinsey would be right to protect them.]

        My greater issue here however is that parties who favor ObamaCare have jumped all over this report in a knee-jerk fashion, in some cases clearly not even reading what is freely available on-line of the report []. I assume much of that is a defensive response to Republican’s promoting the report (though I suspect the GOP promoters too have read as much of the report as the Dems!), but this is hardly helpful. Consider: These parties are interested in the success of ObamaCare, and if there is actually a reason (more on this below) why so many employers would already be considering dropping their plans, you would think they would want to know what it is. It certainly wouldn’t do them any good to find this out only AFTER all of these employers dropped, and there was nothing that could be done to reverse the effects of the flaw.

        As to what exactly the flaw is that I observed back then (and which the link above says is the same flaw that the defecting employers found), consider a simple though typical calculation (rough numbers): The employer spends $8K per employee per year for his or her health plan. The fine for not covering that employee is $2K. The employer could pay that fine, give the employee a $6K raise, and break even. The advantage to the employer would be to get them out of the healthcare business, something that most would prefer to do if it were reasonably practical. The employee then would have to buy an individual plan, but would be assisted in doing so by ObamaCare’s premium support feature. The key is exactly how much would this support amount to. For a median income person, this would amount to $2K (again, rough numbers). This means that for half of all covered employees (this is likely the 78 million number reported), their raise plus the government support would place them EQUAL OR BETTER in raw dollars received if their employers simply dropped their plans. Now, this in isolation might not be enough for an employer to make the decision to drop coverage, but it certainly would be enough to cause all employers to at least LOOK at dropping coverage, and this is exactly what McKinsey is reporting.

        A final note: I was not the only one to notice this at the time. CATO also spoke about it, and it’s documanted on their site from that time. CATO’s position of course is that employers should not at all be involved in providing health insurance, and that everyone should be forced into the (horrible) individual market. I suspect (but have no proof) that CATO had some hand in getting the bill written in this fashion.

  17. Hugh

    The interesting thing about FT associating its brand, and credibility, with Larry Summers is what it says about FT and its credibility. If you want to point to a moment when FT “jumped the shark”, it would be this decision. I mean how can you take them seriously on economic matters, when they think that hiring Larry Summers is a good idea?

  18. Foppe

    “After David Koch Leaves NIH Board, NIH Hands Down Long-Delayed Classification Of Top Koch Pollutant As A Carcinogen”
    Now, there is probably no causal link here, as TP suggests, but what I found most curious about this story is not the possible link between Koch’s leaving and the classification of formaldehyde as a carcinogen, but the fact that Koch was on the board in the first place.
    I looked into it a bit, and it is an advisory board “with no official power”, and it has 18 members, which are mostly selected by the President of the US:

    Not more than 12 of the appointed members will be selected from among the leading representatives of the health and scientific disciplines (including not less than 2 individuals who are leaders in the fields of public health and the behavioral or social sciences) relevant to the activities of NCI. Not more than six of the appointed members will be representatives from the general public, including leaders in fields of public policy, law, health policy, economics and management. Not less than five of the appointed members will be individuals knowledgeable in environmental carcinogenesis (including carcinogenesis involving occupational and dietary factors). All non-federal employees will serve as Special Government

  19. Valissa

    Feds seize elderberry juice from Kansas winery

    Such raids have taken place a lot in the last few years, but lately it’s almost overwhelming to keep up! FDA raids operate the same way: issue a warning not to make health claims, company makes changes, inspections ensue, everything seems fine with no more word from FDA, then BAM! agents raid the place like a crack house and confiscate the drug.

  20. Max424

    re: Libyan oil

    Exxon/Mobile’s oil reserves are depleting at an annual 5% clip. What does this mean?

    It means Exxon/Mobile is a goner (in 15 years — max), unless they can find a shitload of oil somewhere.

    BP is in a similar, desperately screwed position:

    Norway’s NOC is dying. Mexico’s NOC is dying. Iraq is a disaster. Iran is hopeless. Saudi Arabia, quite probably, hit peak production back in 2005. Russia hit peak in ’88. England his peak in ’79. The US hit peak in 1970.

    In 1970, 85% of the planet’s oil reserves were privately held. Today, 85% of the planet’s oil reserves are held by NOCs.

    India has a NOC. China has many NOCs. Both countries are on the scouring the earth, looking for oil. The US does not have a NOC. By 2020, the US will need to import 80% of its oil (15 million bpd, plus). It will need to purchase this oil on what’s left of the “open market,” if there still is one.

    What does all this mean?

    War, is my guess.

      1. Max424

        Too funny.

        And yet, strangely, not so funny.

        Back in the day, I wrote several horsey related comments on the Yglesias blog, stuff like:

        “Matty, what you insane DC central planners should be working is a comprehensive horse breeding program. The end of the Era of Cheap Energy means; we are going to need tens of millions of horses in the very near future (like tomorrow!).”

        And Matt, once you get this up and running, don’t waste taxpayer money breeding thoroughbreds, they’re useless. We’re gonna need working horses, of hardy main and character. And don’t forget; finding a horse (and shoe) adaptable to suburban living and transport (asphalt and malls), should be a top priority.”

        “Note: Who knows, kid, if you peeps do this right, maybe your beloved central planning central bankers can create a world horse bubble out of this; and on the backs of these noble animals, Mother Dow can finally make that long, steep climb, to the illusive 36,000.”

        1. MyLessThanPrimeBeef

          So true though.

          A added bonus is that a healhty horse with no digestive problems is a biogradable low-emission machine.

          1. Cedric Regula

            If you capture and recycle methane gas in gas headlamps, you can drive ’em at night too!

  21. MyLessThanPrimeBeef

    The problem with scientists is they can’t trap a banster at all, much less than 16 minutes.

    It might help divorcing their funding from bansters, but I am not sure.

  22. Foppe

    Yves: you might like this, or you might just find it disturbing (like I do), but anyway:

    For the Executive With Everything, a $230,000 Dog to Protect It

    I just ran across this article, and I found it a very, very curious read.
    It’s written by a journalist, but it reads almost like product placement, and it’s filled to the brim with very strange quotes, that seem hand-crafted to appeal to every exec’s inner macho: “The dog has to get along with children,” Mr. Prather said. “The client is often a guy on his second family. He travels a lot, leaves his wife alone with the kids in a large house — maybe 30,000 square feet, so big you don’t even know what’s going on at the other side of the house. He wants peace of mind and a dog that his wife can handle. We don’t sell tank-stoppers.”
    (Appealing to a ridiculous notion that such an exec would be able to protect his (apparently helpless) wife and kids if only he were home all the time.)
    And if that isn’t weird enough, there’s also this, which almost makes it sound like he’s trying to sell bdsm or porn when talking about the dog: “It’s the speed, the smartness, the quickness — and you would not believe the roughness that she has inside. She’s like a little pit bull when she bites. She has that model face, and then opens the gums up and lets you have it.”

  23. Valissa

    re: control fraud article by Bill Black.

    Very educational article. Black discusses control fraud AND looting, which is great to see. Looking forward to hearing more from him about the criminogenic aspect. In particular I’m interested on his take on the banker’s relationships with regulators and politicians and how “investments” made in those lubricate the criminogenic process.

  24. XRayD

    Nobel laureate Michael Spence, author of The Next Convergence, has looked at which American companies created jobs at home from 1990 to 2008, a period of extreme globalization. The results are startling. The companies that did business in global markets, including manufacturers, banks, exporters, energy firms and financial services, contributed almost nothing to overall American job growth.

    The firms that did contribute were those operating mostly in the U.S. market, immune to global competition — health care companies, government agencies, retailers and hotels. Sadly, jobs in these sectors are lower paid and lower skilled than those that were outsourced.

    Read more:,8599,2076568,00.html#ixzz1PCFuVPJt

    1. Cedric Regula

      D’ya think if boomers mail our resumes to Sweden we can get a Nobel Prize for them? The prize is a million bucks, I hear.

  25. MyLessThanPrimeBeef

    The Noble prize selection committee has done so much to promote peace by handing out Peace prizes over the years, I think it should give itself a Noble Peace prize.

    The winner for the 2012 Noble Peace Prize is….The Noble Committee.

  26. Susan Truxes

    Just thinking about the relative sizes, both square miles and population, of Greece, Iceland, and Ireland compared to California. Ireland is comparable to Indiana, maybe 1/5 of California, and Ireland a population of less than 5 million. And a debt of 80 billion? California has a population approaching 30 million and a debt of less than 30 billion. In normal times California has an economy to match most nations – it is a deep and dynamic economy. It is true it has been hung out to dry at present, but it will come back. My guess is that Ireland will never come back if it is burdened with 80 billion on the backs of 5 million people (including children) with only a small, agrarian economy. Even if their debt were legitimate, which it isn’t because as Bill Black outlines: Ireland was burdened by fraudulent banking, Ireland couldn’t ever pay it back. Why is anyone pretending payback is even possible? and Greece is the same. It is absurd.

  27. Bernard

    Dear Ms. Smith
    thanks for this blog and all you do. i just want to say i appreciate your effort.

  28. Fifi

    On Roubini’s bond market revolt, the question remains the same. Where would the bond holders go? Even taking into account the Republicans, hellbent on destroying the credibility of Treasuries.

    Where would the bond holders go? Commodities? Stocks? Abroad?

  29. charles 2

    Larry Summers : “The fiscal debate must accept that the greatest threat to our creditworthiness is a sustained period of slow growth.”

    William Black : “Nyberg concedes that the controlling officers could only believe that their lending policies were not suicidal if they adopted an irrational belief contrary to everything we know about finance. The CEO simply had to believe that:

    “As long as there was confidence that prices would always increase and exit finance was available, an upward spiral of lending and property price increases was maintained.” (Nyberg 2011: 50)

    Yes, if prices always increase then banks might survive making bad loans. Making bad loans would still be irrational, however, for an honest lender because they could still make more money by making good loans.”

    The mother of all control fraud (the grandmother being in China…)

  30. Liquidity Trappe Family

    spill water all over my external keyboard. Since Apples have the suckiest laptop/netbook keyboards known to man, and I refuse to use sucky technology, you have to wait for the post I had somewhat completed for my keyboard

    ~~Her Iveness~

    Are Macintosh Apple Pie keyboards still a distinctly different breed of cat? Still incompatible with compatible keyboards? Who knows!

    I got AppleBoard by mistake once from *Kensington*. Now they also make compatibleBoard which I love intensely. Although not waterproof it has the best key-action that I have encountered. Check it out!


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