Links 7/8/11

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Abhaxas Dumps Details of the Internal Florida Voting Database Online ZeroPaid

Egypt: Thousands of protesters gather in Tahrir Square BBC

MasterCard Attacks EU’s Order to Cut Fees Bloomberg

Incentives and debt Michael Pettis. I may post about this over the weekend; it’s very consistent with my experience of Japan in its bubble era.

I.R.S. Drops Audits of Political Donors New York Times.

Buffett: GOP Threatening To ‘Blow Your Brains Out’ Over Debt Ceiling Huffington Post

Mr. President; You Are Out Of Touch on Debt Jon Walker, FireDogLake

The debt ceiling and the end of QE2 Steve Waldman

The Carry Trade and Fed Swap Lines Ed Harrison

Dimon-Bernanke Skirmish Shows Bankers Losing Bloomberg. If you believe that headline, I have a bridge I’d like to sell you. Losing a skirmish is not the same as losing a war.

Fed’s Feeble Swipe Fee Rule Is an Unauthorized Sop to Big Banks Adam Levitin, American Banker

Chase Gets Man Thrown In Jail For Fraudulent Check. Except The Check Is Legit. Consumerist. This makes me ill.

Borrower Blasts Bungling Mortgage Servicer FoxNews (hat tip Lisa Epstein). The servicer has forced him to sign over his right to go to court, which is part of RESPA. Since he was arguably coerced (this was imposed after he bought the house), I don’t think it holds up, but it’s a nasty bit of business.

What Obama Wants Paul Krugman, New York Times. Krugman says (mildly) that Obama is not to be trusted.

Screwing America Under the Cover of Deficit Reductions Economic Populist

Asia rolling headlong to disaster –Consumptionomics: Asia’s Role in Reshaping Capitalism and Saving the Planet by Chandran Nair and Asking tough questions about capitalism Asia Times (hat tip reader May S)

Antidote du jour:

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  1. LeeAnne

    “Fed’s Feeble Swipe Fee Rule Is an Unauthorized Sop to Big Banks” – and to KKR. How is it that Kohlberg Kravis Roberts and Co., leverage kings of the hill escape criticism in this mess that celebrates the use of ‘leverage,’ nickle and diming in the $Billions to squeeze the life out of workers, consumers, companies and countries around the world?

    NY Post “Holding the cards
    KKR lobby effort yields edge in swipe-fee fight

    By JOSH KOSMAN Last Updated: 3:05 AM, April 5, 2011

    “While the bare-knuckle battle over $15 billion in debit-card swipe-fee legislation remains heated and ugly — with lobbyists for banks and retailers in full attack mode — executives at KKR, the massive New York buyout shop, and at First Data, its Atlanta-based debit-card processing company, think they are sitting pretty.”

    “Many retailers, when they have an option of two processors, program terminals to automatically choose the one with the lowest rates, and that often is not Visa’s Interlink, one source said.”

    “KKR’s First Data, with its Star Network, would be the chief beneficiary if issuers add a second processor to the back of its cards, a source noted. NYCE, Pulse and Mastercard’s Maestro would also benefit.”

    “To be sure, such a move would be barely noticed by consumers, most of whom barely look at the back of their debit cards and have not an inkling what the brands printed on the back mean, but it is critical for KKR and First Data.”

    “KKR needs its pushed-for piece of the Durbin Bill to survive the current battle to save what might be its biggest investment, a First Data insider said. KKR acquired First Data in a $27 billion buyout in 2007. The company carries a massive debt load and lost $847 million in 2010.”

    Read more: <a href=""<NY Post

  2. bmeisen

    The report on the FLA voting hack clicks with G. WAshington’s recent post on the 2-party system. The 2-party system perpetuates itself in part through control of the voting lists. The party in control locally controls the voting lists. As STalin noted, who gets elected is irrelevant – the key is who votes.

    The fact is that no one person or body in the USA knows how many eligible voters there are. The decentralized, “federal” system of voter registration lacked sufficient transparency long before e-voting. Now it’s a swamp crisscrossed by downed and live power lines.

    A solution is national citizen registration. Of course that would be un-American so the government installs secret server capacity and spies spies spies. Just a case of Americans shooting themselves in another foot.

  3. Carl

    That Chase story about the gentleman in Seattle being arrested has given me impetus to finally move my money to a local bank (which, incidentally, did not receive TARP funds or contribute to my rust belt city’s subprime implosion). My only dilemma is whether or not I should bother explaining my position to the local Chase manager in hopes that word makes it up the chain and encourages Chase to make good on disrupting the victim’s life and livelihood.

    1. ambrit

      Dear Carl;
      Your proposed action is laudable on many counts. If one cannot change a system by cutting of the head, starting the change from below, while slower and more labour intensive, is an equally acceptable solution. The top brass at Chase might never hear of your individual action, but the local Chase people certainly will. Enough of these small sharp shocks will start undermining the lower level functionaries confidence in the system they inhabit and turn them to thoughts of changing their own status simply out of fear for their own survival. This kind of rot is like rust; it never sleeps.
      Another, longer term strategy, is to tell everyone you know, friend and foe alike, your action and the reasons for it. If one of those people emulates your action, you’ve started the ball rolling. That’s progress in and of itself. Good luck!

    2. MyLessThanPrimeBeef

      For those who are interested, one concern is whether one risks being arrested for moving one’s money out, if writing a legit check is dangerous enough already.

      1. Dirk77

        That poor man. It’s like we live in a trap door society now where you seem to be fine until you step in the wrong spot and then you are totally hosed. If there is any justice left I hope he benefits quickly from it. I’m glad his local news is covering it.

  4. ambrit

    Re. the “Borrower Blasts Mortgage Servicer” post: The facts on the ground are bad enough, but also, the attitude displayed by the FOX functionary answering the question says it all. To put it bluntly; “Shut the H— up and do as you’re told!” A plain demonstration of the strategy of ‘manipulation’ of information for a pre-determined end; protedting the status quo. No wonder FOX is so despised.

  5. rjs

    dammit yves, i just had to shut you down again because one of your ads started playing “America the Beautiful” at me…

  6. Moopheus

    A couple of weeks ago my wife and I went to a local diner for breakfast and they had a sign up asking people to pay cash, because card fees cost them $5500 a month.

    Then last week I happened to chat with a neighborhood merchant (a bike mechanic), who told me that the new swipe fees would really save her a lot of money. She said the worst thing was rewards cards, cards with air miles and that sort of thing–the merchant is charged to cover the cost of the rewards. I have to say I didn’t know that, but of course I should have been able to guess that wasn’t coming out of the banks’ pockets.

    Personally, I need the diner and the bike shop more than I need the credit card processor.

    1. MIWill

      Same here. I enjoy going to a very small family owned diner and they don’t accept credit or debit cards. The prices are very reasonable and the food is, ahem, yummy.

      Unfortunately, larger businesses can’t pull this off (plastic is here to stay).

      I have long felt that the points and rewards programs were just participation in the spoils of a kind of extortion.

    2. MyLessThanPrimeBeef

      First, banks will lobby Congress to allow voters to borrow their future votes.

      For example, you can cast two votes in the next presidential election for the same person if you like, though you can do whatever you like as it’s a free country, but you will have to pay that one back later, with a small finance charge to your bank, of course.

      Later, credit card companies will come in and offer the same.

      It’s a very advanced concept. The public will need to be educated to take advantage of this revolutionary idea.

      1. Cedric Regula

        I’m very glad someone is thinking about what our real problems are.

        But this may work better if we worked in a campaign financing charge along with the swipe fee, and Capital One or whomever could take care of disbursements from there?

        And I wish the dummies at Cap One would realize that the iPhone camera is just a bar code scanner on steroids and write the software app that makes checkout lines obsolete.

  7. Bill C.

    Yves, where do I send an Antidote du Jour
    photo suggestion ? I can’t find your contact
    email on the site.

  8. alex

    Buffett: GOP Threatening To ‘Blow Your Brains Out’ Over Debt Ceiling

    I’ve never bought into Buffett’s carefully polished image or the Cult of St. Warren, but damnit this guy makes sense sometimes. You’d expect one of the world’s wealthiest men to support the Republicans, and indeed he does. Except the Republicans are now called Democrats, and the Republicans are the lunatics who’ve taken over the asylum.

    1. MyLessThanPrimeBeef

      The whole world is an asylum.

      We have all been committed as lunatics here by aliens from saner parts of the universe.

        1. Valissa

          “The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”
          – Marcel Proust

      1. Valissa

        “You shall know the truth, and the truth shall drive you mad.” — Aldous Huxley

        “What disturbs men’s minds is not events but their judgments on events.” -Epictetus

        “A small measure of craziness mixed with a reasonable amount of eccentricity is an attractive alternative to conformity” – J.D. Boatwood

  9. alex

    re: What Obama Wants (Paul Krugman)

    I’m starting to think the Hillary proponents were right, and this from someone who always thought “what’s the difference”. If anything I favored Obama because I don’t like political dynasties. Yeah, Bill helped destroy the Party Formerly Known as the Democrats, but could anyone be as feckless or as much of a fifth columnist as Obama?

  10. dearieme

    Voting for Obama – that International Man of Mystery – was a great gamble, but it might have come off. Whereas voting for Hellary, or for McCain, would pretty much have guaranteed a bad President. You might even feel like voting for O again, depending on who his opponent is. It’s all to do with the lesser of two evils, is’t it?

    1. Doug Terpstra

      ABO, Anybody but Obama. I can’t imagine voting for a candidate of either party ever again.

      Often what appears to the the lesser evil is in fact a wolf wearing well-tailored wool. As such, Obama has inflicted far more grievous carnage than any naked GOP predator could hope for. He tickles the ear with forked tongue like a devious serpent offering poisoned fruit.

    2. Valissa

      It is not the president’s job to save the country or to bring change (despite political propaganda otherwise). It is the president’s job to provide continuance and stability. Look at how completely different in so many ways Obama and Bush are and yet they have behaved in office virtually identically. That more people don’t understand what this shows is beyond me.

      IMO… had either Hillary or McCain been elected – since both have way more experience than Obama and understand the power game better than he does (and have old grievances to inspire them) – they would have likely picked one or two areas in which to seriously attempt to change/improve the gov’t and then followed along on most other trends same as Obama. One advantage of McCain as president would have been gridlock (it’s never good when the prez and congress are all from the same party). I have become a big fan of gridlock because it slows down the looting process a bit. Every large bill that comes out of congress is chock full of earmarks and unneeded expenditures, so anything that slows down the production of more kleptocratic legislation is a good think in my book.

      Please note that I’m not saying Hillary or McCain would have been better presidents than Obama, and I think I understand why neither was elected. Given all the deep structural problems I wonder what any president or cabinet appointee can accomplish/achieve other than riding the flow of the kleptocracy.

      It is unrealistic to have any idealistic expectations of any president. Even though I despise Obama, I’m glad he was elected so the so-called Left might finally wake up and smell the propaganda and maybe even start to do a little self reflection about how eager they were to cave in to the establishment and therefore have NO POWER to challenge it.

      If you want change to happen you have to start with REALITY, pick your battles carefully, develop implementation strategies and apply pressure as needed to induce the desired change. Sitting at home on your laptop complaining about the state of the world and hoping someone else will do something about it because you donated $50 to some Dem candidate won’t change anything. But “misery loves company” and complaining about politics and politicians is an ancient human bonding ritual. Change doesn’t happen because of “hope” it happens because people work hard at it from the grass roots up. Why does anyone believe in trickle-down change?

  11. Susan the other

    Good article on Asianomics becoming Consumptionomics and how to do it sustainably. It does call into question the very foundations of all economics to date. Because as Rees said yesterday – sustainable ecologies were never factored into any long term economic theories. Such hallucinations. My favorite word for it all. So the old theories really are simplistic and dangerous. Question: if you can’t find your cheese should you walk around in circles or start over with a new map. It is interesting to note, and maybe take exception with the article, that the military is oh-so planful. They never lose their cheese. They deconstruct it all down to elements. So then: If you reduce our capitalism down to its basic elements, what do we have? Where do we start?

    1. Ransome

      In primitive economies wealth is land, in industrial economies wealth is labor, in the New Age, wealth is money. It is land that provides surplus value. It is labor that provides surplus value and in monetarism, money makes money through the mechanism of wealth transfer. To the speculator, there is no difference.

      With financial innovation there is no reason to invest long term, in fact, long term investments are a liability in a free market. Monetarism converted everything to money, resources were costs, workers were costs, politicians were costs, buildings were costs but only in the shallowest sense, a cost set today by the market, a market controlled by speculators. This is Western business economics, money making money with money. It works for a while until the markets cannibalized each other. Servicing debt impacts consumption. Energy costs impact consumption. Internet access impacts consumption. A new equilibrium is established that impacts jobs and wages which impacts consumption. With no growth, for every basket of money Verizon makes, another will lose a basket. Media moguls expect a windfall profit as file sharing is blocked but there is no basket of money to transfer in the form of a windfall. Their profits will probably drop because they are stupid and greedy, they only understand money.

      To a monetarist, society was simply a collection of people, each paying his own way, where a displaced worker simply took another job and a worker’s wage depended solely on how competitive and productive she was. When the resources and capital of one country are exhausted, the speculators move to another.

    2. psychohistorian

      It is my belief that it all comes down to ones attitude about sharing. If you share or not is learned in your youth and impacts the way you construct in your mind how the world works. Folks that are not willing to share believe somehow that zero-sum-game competition is the only effective social interaction and the rest of us try and work out a reality that is not so extreme.

  12. Valissa

    Patient gets world’s first artificial trachea

    A patient will be discharged from a hospital in Sweden on Friday after his cancerous windpipe was removed and replaced by the world’s first artificial trachea, made of his own stem cells grown on a man-made plastic matrix. “This is the first permanent artificial organ ever,” says Paolo Macchiarini, professor of regenerative surgery at the Karolinksa Institute in Stockholm, who led an international team of researchers.

    Just as remarkable as the man-made windpipe, he says, is how quickly it was produced. Collaborators in Sweden, London and the U.S. created the trachea from scratch in just two days for a 36-year-old man whose cancer was so far advanced that only emergency surgery offered him any chance of survival. Rejection is unlikely because the new trachea was made of a special plastic polymer and the patient’s own cells, Macchiarini says.

  13. Anonymous Jones

    Enjoyed the Pettis article, as usual. The inverted balance sheet idea is one of the best from his book, The Volatility Machine, which is really a great read, if anyone is interested.

    I was slightly concerned with his framing of the conglomerate analysis. Surely, there is a problem with incentives, but at the same time, experience matters. Each individual industry can be highly competitive and small comparative advantages can have huge effects (binary, in fact, such as the difference between the life and death of the business). I can tell you that small differences in restaurant business experience often seem to explain the difference between those who fail in six months and those who last ten years. I don’t think we should entirely disregard the hypothesis that “good managers are good managers” is bunk. For example, a good factory manager would need *a lot* of training and experience before becoming a good restaurant manager. It’s not just understanding the business, but it’s also having the network of people to identify and choose the most talented labor available in that particular sector without overpaying. Business is difficult; overconfidence abounds. Just because you’re good at one thing, well, don’t assume…

  14. Susan the other

    Just went to the Krugman article on what Obama wants. Eyes glazed over. Who cares. We’ll see when we see if we can still see. But what caught my eye was David Brooks’ article The Unexamined Society. Don’t usually stop at David Brooks but this was really interesting. Skirting the accusation that in America everyone is free to starve to death, Brooks cites Shafir and Mullainathan who have the theory, after studying Indian sugar farmers, that “Scarcity creates its own psychology.” I’m tempted to say, Well Duh? But this sounds like a new tangent that will be interesting. Finally – the long awaited study of desperation.

  15. Max424

    Little rhinos are cute as hell. But you know what, even as the rhino gets older, and let’s face it, beastlier, they still maintain a certain — if not stately, then certainly leathery — charm.

    I wonder if they make good pets?

    They probably would make a good watch animal. Gun-toting good old boys would think twice about pulling up in your drive in an unpaid for, brand new shiny half ton, if they knew you could unleash a pet rhino, and have it horn mangle their surrogate manhood.

  16. financial matters

    The Carry Trade and Fed Swap Lines Ed Harrison

    I don’t see the value in measuring core inflation instead of headline inflation. Ignoring something doesn’t make it go away. And ignoring food and energy prices are pretty big things to ignore. Owner’s equivalent rent would seem a poor substitute.

    The damage of artificially low interest rates are showing up in the carry trade increasing prices of important commodities that are being ignored by policy makers. This doesn’t mean they’ll be ignored in realpolitik.

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