Financial Suicide – Privatizing Social Security 2012/11/20 By E.L. Beck

The clatter is starting up again over the privatization of Social Security. With this plan, the individual gets to decide how to invest their Social Security funds, something akin to a public 401k program. The bulk of this new-found investing activity, however, will go towards Wall Street and the stock exchanges.

The idea of being able to select one’s own investments sounds all well and good, but Americans may want to start asking themselves just what is at stake. In fact, if you’re investing in stocks, stock-driven mutual funds or a 401k, you stand no better chance in redeeming these investments at retirement from a privatized Social Security plan as you do from an increasingly at-risk public Social Security plan.

Originally writing on the topic of shadow markets in 2009, I then noted the increasing influence of high-frequency trading and ‘dark pools’ on stock markets. Three years later (this morning in fact), the Financial Times reports:

Trading of US equities on “dark pools” has grown by almost a half in the past three years to account for nearly a third of total market volume, according to research that underscores the 
challenge facing international regulators.

The shift from transparent public exchanges has highlighted growing concern among asset managers and global regulators about off-exchange trading, where prices are reported only after deals are executed.

Dark pools are venues where stock trades are hidden from public view, lowering the quality of publicly available information. Dark pools allow major traders, those holding large blocks of stock, to hide their identities and intentions, to avoid moving share prices. Dark pools have gained traction over the last decade as the average size of trades dramatically decreased on the transparent exchanges.

The United States has some 40 such venues dealing in dark pools and high-frequency trading, including Goldman Sachs, Getco, and Credit Suisse.

Reuters quoted Mary Schapiro, chairperson of the U.S. Securities and Exchange Commission (SEC), as saying dark pools are not dark to all participants but transmit electronic messages to select individuals that could convey valuable information about their available liquidity, leading to significant private markets that exclude public investors. In the fall of 2009, the SEC announced it was considering placing tougher limits on the amount of anonymous trading carried out in dark pools. The SEC understood shadow markets were increasing volatility in the public markets.

In 2009, Rosenblatt Securities estimated about 7% of all stock transactions occurred in a dark pool but the Tabb Group estimated that dark pools at Credit Suisse’s Crossfinder and Goldman Sachs’ Sigma X alone accounted for 9.4% of all US equity volume from 2006 to 2009.

Fast forward, this morning’s Financial Times‘ article reports that a “survey by the London-based CFA Institute found that trading of U.S. equities on dark pools had risen 48 per cent since the start of 2009 to account for about 31 per cent of total consolidated volume, as of March (2012).”

Dark pools, the Financial Times goes on to report, “have grown popular with asset managers as they minimize the risk of the market moving against them when executing a large order, or of seeing their order sliced up by high-frequency traders.”

High-frequency trading, in case you’re wondering, involves “powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange,” Charles Duhigg reported in a late July 2009 article of the New York Times,”(that enables) high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.”

In the wake of the May 6, 2010 “Flash Crash,” connections were being made between high-frequency trading and market volatility. And the proprietary trading desks of the Wall Street banks – which oversee high-frequency trading as part of their responsibilities – were thought to be disappearing in response to financial-reform regulations (a step eventually taken by Bank of America), but simply reappeared as wholly owned hedge funds, using the same threat with a different name.

The existence of shadow markets goes against everything we expect when investing: Shadow markets such as dark pools create private markets, asymmetrical information, unfair advantage, and certainly go against the grain of transparent markets.

Just understanding the basic workings of high-frequency trading and dark pools compels the small investor to question the wisdom of investing in stock-driven mutual funds and 401k programs when the cards are severely stacked against the small investor. It also raises serious questions about the recently renewed drive to privatize Social Security.

Sadly, high-frequency trading and dark pools may never be banned, as these two-edged swords have proven useful to banks, large investors and governments in manipulating stock markets during selloffs and rallies.

Question:  Do you still want to gamble with your SS funds?  At the age of 21 you might, but how about at age 65 or older?

Holiday Survival

How to survive family meals with conservatives at the table:

1. Eat - You cannot argue with a mouth full of Sweet Potato Puff. Focus on the food, limit discussions to your grandmother’s quiche and the proper way to brine a turkey.
2. Remember who won - No matter what anyone says, remember who won the election. The country spoke and it spoke Democratic. Don’t gloat or brag, just remember: in the end, your side won.
3. Reach across the table - Despite punditry to the opposite, there are more areas of common ground than differences. Attack Obama on an issue you disagree with (NDAA, drone strikes, etc.) to put them in the position of defending the president. Arm yourself with knowledge of talking points and facts before dinner.
4. Clean Up - Nobody wants to do the dishes or clear the table. Being the brave one to step forward and take one for the team will earn you brownie points. And nobody likes to argue with the person elbow deep in soap suds. Plus it excuses you from the conversation.
5. Be a huge football fan - If someone insists on turning the channel to Fox News, pester them for the football scores. It doesn’t matter if your last sporting event was a round of Halo 4, you are today the largest football fan in the room. So you know which games to ask for, the games on Thanksgiving are: 12:30 p.m. ET – CBS Houston Texans at Detroit Lions, 4:15 p.m. ET – FOX Washington Redskins at Dallas Cowboys, 8:20 p.m. ET – NFL Network New England Patriots at New York Jets. Go Team!
6. Be respectful - It doesn’t matter if your 80-year-old father-in-law is the loudest Ditto-head in the room, be respectful of him. Remember that you will be casting more ballots in the future than they will, and smile to yourself as they go on and on about the latest Photoshopped picture showing the President pledging allegiance with the wrong hand.
7. Volunteer - Can’t stand it? Give yourself the best excuse ever. Volunteer at your local soup kitchen, women’s shelter or similar charity. I know we all love Thanksgiving dinner, but having the excuse of helping the poor and unfortunate is the best excuse ever to miss it. Unless your relatives are selfish pricks, they will save you some leftovers as well.
8. Pick another subject - Just don’t talk politics. Discuss the weather, the library, your great aunt’s surgery, any topic but politics. If you have relatives like mine, you likely know the topics which will ensure hours of politics-free conversation. Never before has your uncle’s collection of antique fishing lures or your mother in-law’s classic 1948 Harley Davidson WLC been so useful. You know your family, use that knowledge to your advantage.

While this is a good humorous look at the dinner table, Thanksgiving dinner is a time to come together as a family, not to argue and quibble. We are liberals, we are better than that.

WILL IT NEVER END

WILL IT NEVER END?

Tea Party Leader Calls For Electoral College To Steal The Election For Romney

2012/11/21

By Nathaniel Downes

Election, shmelection — the Tea Party has the plan. Judson Phillips, head of the Tea Party Nation, has now called for the usurping of the US Constitution, and forcing their candidate for President to win despite his historic loss. After all, their earlier plan headed up by the Orca vote manipulation system was stopped by Anonymous resulting in Karl Rove’s public meltdown on election night, and the attempts to paint the re-election of President Obama as fraud fell apart as quickly as it was put together, so Mr. Phillips has set out to try and steal the election through another means.

In his editorial, Judson claims that a quorum of the Electoral College is required for the election of a president. In his proposal, he demands that GOP state legislatures refuse to send their electors to DC in order to prevent the formation of the quorum, forcing the vote instead to the House of Representatives, where he believes that the house would ignore the will of the people, and elect Mitt Romney to be president regardless. To him, it is a foolproof way to get rid of democracy and impose the theocratic dictatorship which seems to be his intent.

Of course, this plan has one small problem: the US Constitution. While he claims you need a quorum of electors for the Electoral College, the 12th amendment does not specify that at all. There is a quorum component, but it is for the House of Representatives, *not* for the Electoral College. The Electoral College does not require a quorum, only that the winner have at least half+1 of votes cast, which would still happen should Mr. Phillips get his wish.

This is a continuing issue with the Tea Party, what they believe does not match up with the document they claim to cherish. They fight for the right to impose their religious beliefs on the government, despite the US Constitution’s prohibition on it. They fight for the right to eliminate the right to vote for minorities, despite the US Constitution enshrining the right of the minority. And now they demand that the US Constitution be ignored, and attempt to force their ideas down the throat of the rest of the United States.

It is clear, the Tea Party as represented by Mr. Phillips is an anti-American anti-democracy group intent on dismantling the will of the people and imposing their own Iranian-style theocratic state. The idea of civil liberties, freedom, or the social contract is foreign to them. It is this group which was called by the ancient Greeks “idiothes,” was an epithet for a person who was self-centered to the point of actively unpatriotic; someone who put personal desires ahead of his family and city, refusing duty in favor of personal wealth and advancement. The ancient Greeks valued individual honor and responsibility, but overlapped them and made civic duty a cornerstone of both. Today we would call such a person a Libertarian or Objectivist. The word idiothes is the root for the word “idiot” in English today.
So, Mr. Phillips, you are an idiot, and proud of it.

Just when you thought they would fade away, another one pops up.  Kinda like those little animals in a shooting gallery.

More Right-Wingnut Crap from Bullshit Mountain

Questionable switch in election results

   “I consider it unimportant who will vote, or how, but consider it extremely important who counts the votes and how” — Joseph Stalin.     

On election night, I went upstairs at 8 p.m. while Romney was leading, and when I returned at 9 they were declaring that the leader of the present administration had “earned” re-election!    I remembered two years ago I was convinced that these “leaders” would do anything to stay in power. They did everything. Concentrating on the swing states, I believe they intimidated voters, fought hard to have no ID required in those states, “lost” the military ballots and voted more ballots than there were registered voters in many precincts.     

Computer software can be programmed to change a 51-49 split into a 49-51 split undetectable. All this combined, allowed a million-vote swing in the “swing” states, and the recorded votes showed a narrow victory for the incumbent. With Holder as attorney general, there is no recourse in the courts.     

I know God is in control of His universe and this is part of His plan. We must follow alongside Him. Those of us who still believe in our inalienable rights to life, liberty, and the pursuit of happiness will continue to claim those rights through all that comes our way. Stand firm for truth and the truth will set us free, no matter what the world does.     

We had a capitalist running against a combination socialist, fascist and Communist, and capitalism lost.    

I am looking forward to these next few years as an amateur historian. If we do not study history, we repeat it over and over and over again.     

Here we have, Hitler, Stalin and Mussolini all rolled into one.     
As in last month’s letter, I urge you to read: 1 Thes 5:16-22NLT    Glen Benedict, Nampa

Doncha just love all the terrible conspiracies out there to keep the GOP down?  Now it's all those terrible vote counters and rigged voting machines and idiot statistic folks who are undermining our wonderful country and, while doing it, are tearing it asunder.  Oh woe is me.  Alas and alack.  I've lost another election because I was too stupid to believe math.  I squandered my lead by belittling 47% of the voting public and said that there was a think called "Legitimate Rape."  Oh woe and depression.  I'm so down.  Those communists in the Democratic party have ruined MY AMERICA, I just don't know how I'll live for another 4 years until my GOP will crank up the machine again and piss off all the women and races -- except for the White Angle Saxon Males -- in the process.  How can you feel sorry for these numbskulls?
                                              AND....

We ‘extremists’ aren’t going to give up

So now that the entitlement crowd, the Hollywood “elite” and other seriously delusional folks have re-elected “The One,” we, the extremist element, are supposed to sit in class and reinvent our own philosophical views?    

I ask this in response to Donna Brazile, David Axelrod, Harry Reid, et al, setting themselves up as the new advisory committee to the conservatives, i.e. Republicans.     

Now that you sycophants are basking in the afterglow of what Obama describes as “the American people giving me a mandate for the future,” we are fully expected to pay attention to the fatherly advice spewed from the mouth of this cadre of the crème de la crème of the liberals in Washington?     

I have news for you. We “Tea Party extremists,” aren’t willing to give free reign to this socialist in the White House.     

You people haven’t paid attention to the history of those who would rule in contempt over the masses. Recall, if you will, Hitler, Mussolini, Caesar, Marie Antoinette and others who put on the iron glove of heavy-handed government.     

No, Barney Frank, Eric Holder, Nancy Pelosi, it can only go so far until these terrible right-wingers have had enough and will be pushed to the limit.     

Your eventual undoing will be of your own making. This petulant, narcissistic president will be the most miserable man to ever hold that office before his term is over.     

This is Nero at his fiddle once again. The only difference is that this guy, in the face of a crisis or difficulty, hops aboard Air Force One, off to a Third World country to bow and scrape to a tin-god dictator, taking our cash to subsidize their oil exploration.     

I know right from wrong. I’m a patriot, and we’re not willing to sacrifice freedom for a little security.  Jack Kindall, Nampa

Heil Hitler Mr. Jack Kindall.  The Nazi Party lives and breaths...oh, and by the way it drinks tea!  

I love this one: "petulant, narcissistic president".  Ain't it grand?  Did anyone see the debates?  Petulant and narcissitic?  Well, let's trot out ol Mitt who tried to bully and upstage and out volume the president and even the moderators.    My God man, are you a homophobe or what?  In the dictionary under Homophobia, it shows your picture.  No wonder your man lost, you piss off nearly everyone who has an ounce of education.  Crawl back in your hole and hibernate.  You don't belong in polite society with all your ranting and railing about how Socialistic this country is as you drive on your socialistic highways and cross your socialistic bridges and collect your Social Security [be it a voucher or not].  

If you hate this administration so much, leave!  Nobody'll miss you.  You're and embarrassment to every THINKING American out there.

Doncha just love women?

Doncha just love women?  This in today's paper...

In voting gender gap, men play crucial role

By CONNIE CASS    The Associated Press

WASHINGTON — Sorry, fellas, but President Barack Obama’s re-election makes it official: Women can overrule men at the ballot box.     

For the first time in research dating to 1952, a presidential candidate whom men chose decisively — Republican Mitt Romney — lost. More women voted for the other guy.     

But there has been a consistent thread of disagreement for decades over what role the government should play. It’s not a big gap, but it is statistically significant, about 4 percentage points or 5 points in many studies, Kellstedt said. As a group, women tend to like bigger government with more health and welfare programs; men lean toward smaller government that spends less, except on the military.     

Sort of the social safety net versus rugged individualism. Or Obama versus Romney.     

There are lots of possible reasons the genders see this differently.     

Besides women’s traditional role as family nurturers, they also live longer than men and so are more likely to rely on Social Security and Medicare. Women are more likely to be poor. They’re more likely to be single parents struggling to pay for child care, education and medical bills. Men may feel many social programs are expensive and won’t benefit them.     

“Women tend to believe that government has a role to play, that it should be a partner in their life,” said Democratic pollster Celinda Lake. “Men tend to think it’s been a good day when the government hasn’t done anything bad to you.” 

It’s surprising it didn’t happen sooner because women have been voting in larger numbers than men for almost three decades, exit polls show.     

But men, who make up less than half the U.S. population, always have exercised power greater than their numbers and they aren’t about to stop now.     

When it comes to elections, males as a group are more influential because they show less party loyalty than women, who skew Democratic.    

Despite all the focus on candidates courting Hispanics or the working class, men are the nation’s ultimate swing voters; they’re why Republican George W. Bush became president and Republican John McCain didn’t.     

Their move away from Obama this year expanded the voting “gender gap.” It wasn’t enough to determine the outcome, but came close.  

So presidential hopefuls staring into the gender gap in 2016 might want to look beyond the usual controversies over “women’s issues” such as abortion or the polling fads such as “Walmart moms.” Maybe it’s time to pause and consider the fickle male. Maybe it’s time to ask, “What do men want?”     

In the voting booth, that is.     

“I don’t think we fully understand it yet,” political scientist Christina Wolbrecht of the University of Notre Dame said about why men and women vote differently. But she said plenty of research on elections going back to the 1950s indicates it’s not because of issues such as equal pay, birth control coverage in health plans or Romney’s awkward reference to “binders full of women.”    

Paul Kellstedt has some ideas. A Texas A&M associate professor of political science, Kellstedt studies what American men and women want from their government and how that shifts over time.     

Like Wolbrecht, he noted that the sexes aren’t that different, at least when it comes to the issues.     

Studies have found that the opinions that separate liberals and conservatives, even on issues such as abortion, don’t divide the sexes much. Men and women are about as likely to fall on either side of those debates, and millions of each happily line up with each political party.     

It goes to prove what I've always said, women are people too.  By that I mean women are no longer in the shadows cooking and cleaning, they are more and more into mainstream politics and need to be accounted for in any upcoming election.  You cannot make stupid errors like talking about "Actual Rape and Fake Rape" or "Binders full of women."  Women cannot be made fun of anymore as being rattled brained or stupid or just plain unfit to run for office or vote.  The Good Ol Boy Network is no longer in power [if it ever was] and women are taking their rightful place in the battleground of state and federal politics.  I say viva la women.  I've always been on your side in social issues.  YOU ROCK!

Paul Krugman on China

America’s Chinese disease (not quite what you think)

Fed chairman are expected to speak in code, so that reading their remarks is a bit like watching the famous scene in Annie Hall where the conversation between the lovers is subtitled with what they’re really saying. So when Ben Bernanke says this:

Another set of lessons that Asian economies took from the crisis of the 1990s may be more problematic. Because strong export markets helped Asia recover from that crisis, and because many countries in the region were badly hurt by sharp reversals in capital flows, the crisis strengthened Asia’s commitment to export-led growth, backed up with large current account surpluses and mounting foreign exchange reserves. In many respects, that model has served Asia well, contributing to the rapid growth rates in the region over the past decade. In fact, it bears repeating that evidence from the world over shows trade openness to be an important source of economic growth. However, too great a reliance on external demand can also pose problems. In particular, trade surpluses achieved through policies that artificially enhance incentives for domestic saving and the production of export goods distort the mix of domestic industries and the allocation of resources, resulting in an economy that is less able to meet the needs of its own citizens in the longer term.

the subtitle reads

HEY, CHINA, STOP ACCUMULATING DOLLARS — IT’S TIME TO REVALUE YOUR CURRENCY

But does the United States dare put pressure on the Chinese to do that? People constantly say that we can’t risk it — that we’re dependent on China to keep buying our debt. Yet this is all wrong under current circumstances. 

How do I know it’s all wrong? Here’s one way to think about the issue that I haven’t seen anyone else put forth (if they have, I’ll be happy to give credit.)

Right now, we’re in a situation in which conventional monetary policy is hard up against the zero lower bound; rules of thumb that track past Fed behavior suggest that the short-term interest rate should be -5% or lower. To partially make up for its lack of traction, the Fed is engaged in massive “quantitative easing” — a misleading term, but I guess we’re stuck with it. What it basically means is that the Fed is selling Treasury bills or their equivalent (interest-paying excess bank reserves are essentially the same thing), while buying other assets, expanding its balance sheet enormously in the process.

What kinds of other assets? Mortgage-backed securities; securities backed by credit-card debt; longer-term government debt; etc..

One type of asset the Fed has not been buying is foreign short-term securities. But that’s not because such purchases would be ineffective. On the contrary, selling domestic short-term debt and buying its foreign-currency counterpart is the essence of a sterilized foreign-exchange-market intervention, which is a time-honored way of gaining a competitive advantage and helping your economy expand.

And some countries have, in fact, made foreign-currency purchases a part of their quantitative easing strategy — Switzerland in particular. The only reason the Fed isn’t doing this is that we’re a big player, and can’t be seen to be pursuing a beggar-thy-neighbor strategy.

But now ask the question: what would the effect be if China decided to sell a chunk of its Treasury bill holdings and put them in other currencies? The answer is that China would, in effect, be engaging in quantitative easing on behalf of the Fed. The Chinese would be doing us a favor! (And doing the Europeans and Japanese a lot of harm.)

Conversely, by continuing to buy dollars, the Chinese are in effect undermining part of the Fed’s efforts — they’re conducting quantitative diseasing, I guess you could say, hence the title of this post.

The point is that right now the United States has nothing to fear from Chinese threats to diversify out of the dollar. On the contrary, if the Chinese do decide to start selling dollars, Tim Geithner and Ben Bernanke should send them a nice thank-you note.

Paul Krugman, My Economist Hero

To those of you who don't know me and this is the first time you've ever read one of my blogs...hello.  To those of you who have not read a blog of mine and don't know anything about me...congratulations...you've dodged a bullet.  However, if you have read my posts and you like me STILL, I would like to introduce you to my Hero, Paul Krugman a Nobel Prize winning economist.

Basic Biography: 

Mr. Krugman received his B.A. from Yale University in 1974 and his Ph.D. from MIT in 1977. He has taught at Yale, MIT and Stanford. At MIT he became the Ford International Professor of Economics.

Mr. Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes. His professional reputation rests largely on work in international trade and finance; he is one of the founders of the "new trade theory," a major rethinking of the theory of international trade. In recognition of that work, in 1991 the American Economic Association awarded him its John Bates Clark medal, a prize given every two years to "that economist under forty who is adjudged to have made a significant contribution to economic knowledge." Mr. Krugman's current academic research is focused on economic and currency crises. 

I quote Paul on many of my posts and I have watched him be correct in his economic predictions time after time.  He predicted a Liberal win in the Obama v Romney election.  He said basically, when Paul Ryan was chosen as a VP, the election was lost by the Conservatives.  He has also predicted that the GOP will do one of two things in the future: 1.  Same old, same old which will cost them more losses in the future state legislatures and in the U.S. Congress and Senate, or 2. They will realign the entire GOP and move it more toward the center and moderation which the electorate demands.  Paul says that the biggest losing point in this election was the Right's non-understanding of simple math and the U.S. Census statistics.  They belittled over half of the voting non-whites in the country and over 3/4s of the women in the country and that was the final nail in the GOP's coffin.  Paul says they may not recover in this decade from those errors in judgement.

I'm a nerdy Statistic and Debate Man who took upper division stats in college and created a statistical survey instrument myself, I watch those idiots on Faux News abusing statistics so often I actually cringe every time I turn on their channel.  I've finally quit watching entirely to save my sanity.  They use the most stupid of statistical assumptions to prove their non-factual crap.  "Some people would say....,"  is Faux New's biggie to stun the poor guest and discount his actual and factual items.  "Well, Mr. So-and-so," The interviewer potificates,"  some people would say that what you just said is a pure hypothesis and has no basis in fact."  My God!  Who are those SOME PEOPLE and WHY DO THEY SAY THAT and WHERE ARE THEIR PROOFS?  The person being interviews just looks at the interviewer [Hannity, O'Reilly, etc.] in stunned silence because THERE IS NO ANSWER THEY CAN GIVE without looking like a fool too.  Paul Krugman says Fox News's idea of truth is couched in nonsense.

Let me give you an example of Krugman's common sense:

He is speaking of the present condition of the deficit.

Brad DeLong points us to Howard Davies, who accuses economists of being in denial, and of having had nothing useful to say in the crisis. The first part is definitely true for much of the profession; the second charge is just false. The truth is that basic macroeconomics, the stuff that is still taught in textbooks, has been very, very useful in this crisis. The problem is that half the profession and most policy makers turned their back on this kind of economics.

It’s especially ironic that Davies starts his piece by quoting Jean-Claude Trichet, of all people, complaining that the available tools were of no use. Trichet, some readers may recall, was one of the high priests of expansionary austerity, the assertion that slashing government spending in a depressed economy actually wouldn’t make the depression deeper:

As regards the economy, the idea that austerity measures could trigger stagnation is incorrect."

Incorrect?

“Yes. In fact, in these circumstances, everything that helps to increase the confidence of households, firms and investors in the sustainability of public finances is good for the consolidation of growth and job creation.

So standard economics told him that austerity would depress economies; he chose not to believe that, and go with the confidence fairy; and he was wrong, wrong, wrong. How is that a problem with the inadequacy of economics?

Now, what is true is that efficient markets and equilibrium business cycle theory have suffered what should be fatal blows to their credibility — but essentially nobody in that camp is even willing to admit that there is a problem. What that says, however, is that while we obviously need new thinking — we always do! — the biggest problem these days has been the rejection of knowledge we used to have.

Do you see why I like him?  No bull****, just the facts and facts that are easy for anyone to understand.  So, if you see me quoting Paul Krugman, you'll know of whom I quote.