Cuban Peers Dispute Ted Cruz’s Father’s Story of Fighting for Castro – The New York Times

So, Ted Cruz​ learned how to lie from this ‘revolutionary/not so much a revolutionary’ father. Apparently, old Rafael is about as mendacious as you would expect someone running a scam church to be.

Source: Cuban Peers Dispute Ted Cruz’s Father’s Story of Fighting for Castro – The New York Times

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The Financial Crisis: Lessons for the Next One | Center on Budget and Policy Priorities

The massive and multifaceted policy responses to the financial crisis and Great Recession — ranging from traditional fiscal stimulus to tools that policymakers invented on the fly — dramatically reduced the severity and length of the meltdown that began in 2008.

Source: The Financial Crisis: Lessons for the Next One | Center on Budget and Policy Priorities

This is the first systemic analysis I’ve seen that shows how beneficial the actions taken in the wake of the 2007-2009 recession were. This is for those of you out there who rail against bailouts… without them, things would have been much worse for us all.

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Greenland Is Melting Away – The New York Times

Amazing article on research being done to determine the rate of melting in Greenland.

Source: Greenland Is Melting Away – The New York Times

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Ain’t No Such Thing As A Free Lunch . . . | The Big Picture

Deep down inside, you already know this: There ain’t no such thing as a free lunch, financially or otherwise. Yes, of course, you understand that.

Source: Ain’t No Such Thing As A Free Lunch . . . | The Big Picture


Couldn’t resist sharing this… I’d like to make my own addition, that lottery tickets are NOT a retirement plan.

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What I heard at the #DemDebate

As a Democrat who works in financial services, I’m used to people looking at me like I’m crazy, especially those in both respective groups. From my perspective, it makes complete sense as Democrats are the most likely to advance common sense regulation (which creates a level and stable playing field for all competitors) and set tax policy that reduces income and wealth inequality, increasing the middle class and increasing the market of consumers to which I have access.

In short, I do better when EVERYONE in this country does better and when my competitors have to play by the same rules.

Over the last few years, I’ve grown increasingly uncomfortable because the ultra left and the ultra right are matched up perfectly in their complete demonization of everyone in financial services and of the industry. During the debate, I watched two candidates say that all of Wall Street was built on fraud and nothing could be further from the truth… it’s painting everyone in the industry with a broad brush that, quite frankly, isn’t deserved.

So, let’s go over a few things…

1) Leading up to the collapse in 2008, some of the banks and traders committed what would be called fraud by constructing and selling securities they knew were bad.
2) Some of the larger investment banks borrowed FAR in excess of their capacity. Some of them went bankrupt or were sold for less than book value, while others who had collateral received loans. Lehman Brothers, for example, had a balance sheet composed of roughly $26 billion in equity floating $689 billion in assets. As a general rule, you would want at least 10% of assets as equity, or $68.9 billion which means LEH was SEVERELY undercapitalized.
3) Federal programs to assist banks with capital infusions WERE repaid. Taxpayers are not out any money on capital assistance, they did lose on assistance to homeowners which was part of TARP.
4) There were a number of federal and commercial programs designed to help homeowners. Some of these still exist and allow homeowners to refinance at loan to value ratios far in excess of what a company would be able to do.
5) Glass Steagall’s repeal DID NOT cause the financial crisis, nor did it meaningfully make it worse… those risky investments were all rated TRIPLE A and banks were trading those before the repeal of G-S.
6) The Great Depression would not have been prevented by Glass-Steagall. The collapse of the stock market hurt, but not enough to collapse the economy as a whole. What did that was the Fed’s decision NOT to increase liquidity in the banking system which caused runs, which in turn led to the collapse of large numbers of banks, and completely froze credit in the United States. Without that credit, companies couldn’t finance operations and consumers couldn’t buy.
7) The economy is dependent on the financial system… think of it as the circulatory system of the economy. Through it’s arteries and veins flow the credit and cash to keep the economy growing.

These are written as statements of fact because they are true. It’s ridiculous to debate them, and I seriously doubt either Mr. O’Malley or Sen. Sanders would. Even Senator Warren would not
debate point five

Warren, meanwhile, confessed to New York Times reporter Andrew Ross Sorkin that Glass-Steagall would probably not have stopped the financial crisis, but that she was pushing to reinstate it because, in Sorkin’s words, “it is an easy issue for the public to understand and ‘you can build public attention behind.’”

The simple truth is that Glass didn’t keep us safe, what kept us safe was an active Fed, a post-World War 2 boom, and tax policy that incented investment over speculation. When President Carter kicked off deregulation of the S&Ls with DIDMCA and President Reagan effectively ended oversight, it was all within the Glass framework. In short, G-S existed almost 20 years after deregulation started and it did nothing to stop, for example, the S&L meltdown or any of the other problems we had between 1980 and 1999 in financial services.

As further evidence of the ridiculous idea that simply separating investment and commercial banking will eliminate risk, keep in mind that we’re the only ones that did it. In the rest of the world, such separation is rare.

So, if not the restoration of Glass, what then can we do? Well, the two primary factors in the collapse were

1) Securities that were rated far higher than they should have been and were shoddily constructed (sometimes intentionally).
2) Leverage was far in excess of any sane measure, though this was primarily in the investment banks.

Cure for these things and we can prevent future collapses or, at a minimum and more likely, make the next collapse far smaller and less systemic. Implementing point one, especially by creating a fiduciary duty between salesman and customer, would allow us to send people to jail. Add in what already exists, a prohibition on the use of insured deposits to speculate, and you have a regulatory framework that’s not only flexible but lasting.

Please bear in mind I work in the industry and have been through recessions and expansions, under various regulatory mechanisms, and have always made money. Whatever happens with regulation after January, 2017, I will still make money. My point in writing that is to show that my best interest won’t be effected by what ends up happening after January, 2017. I do care about the overall health of the US economy and feel it necessary to tell everyone who is invested in the restoration of Glass that it won’t do what you need it to do. It’s time to wake up and focus on pragmatic solutions that will give us a solid financial system rather than boilerplate nonsense and false security.

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Earth to dumb bitch…

This makes me think Mann Coulter is full of shit because we’ve been speculating she was TG for years and we’ve never been sued.

What I don’t understand is why she’d be so angry about being called TG, it’s far better than other things she’s been caled. It is funny how irritated she is about being called something she’s claims not to be when her entire schtick is based on that premise.

Also, there’s this… did you sue this guy, Mann?

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Understanding Tax Plans from Republican Candidates (rather than opting for self immolation)

With the release of Trumps tax plan, there are now four Republican candidates who have released their tax plans, Jeb!, Senator Rubio, Senator Paul and now Donald Trump.

The most striking thing about all these plans is that they all make the same basic assumption, that cutting taxes will stimulate the economy. Now, this sounds really comforting and vaguely familiar because it’s the same talking point Republican candidates have been using SINCE 1980. The idea is, itself, based on work done by Ibn Khaldun close to 700 years ago defining, essentially, the optimum level of taxation that allows for savings, investment, and economic growth while maximizing revenue for the government to provide services to the citizenry. Tax too much, people find a way to avoid any taxable activity, government revenue falls and government must run deficits to pay for services. Tax too little and people do just enough to get by or speculate, ruining economic growth and forcing the government to run deficits to finance needed services (sound familiar?). We are seeing the latter. During the Clinton years, we hit as close to optimal as we have come since the 1960s and since then, we’ve been sub-optimal, which means deficits and increasing federal debt as far as the eye can see.

Here are some of the numbers for what the Republicans tax plans will do to the deficit over the next 10 years…

Donald Trump – $12 trillion, Jeb Bush – $3.66 trillion, Sen. Marco Rubio – $4 trillion, Sen. Rand Paul – $3 trillion. These are all increases OVER current deficits.

The important thing to remember is that NONE of these plans will accelerate economic growth. In fact, they will likely reduce economic growth since more money will be placed into speculative activities rather than invested into the economy. As we saw during the credit crisis, which was largely driven by speculation on multiple levels, this usually leads to economic collapse. Given that these estimates are based in large part on the candidates own growth numbers, it’s entirely probable (not possible, probable) that these numbers are too low.

There’s also a feature, not a bug, in each of these plans that will heavily benefit those already in the upper income brackets while doing little if anything to benefit the bottom 95% of taxpayers. This will increase income and wealth inequality which I think we can all agree has a destabilizing effect on society as a whole. Massive inequality is how you get Communist revolutions.

So, if you’re a Republican voter who sincerely cares about the deficit and debt, you can’t support ANY of these plans. The only plan that makes sense is increasing taxes on the wealthiest 5%, investment income and eliminating a broad range of loopholes. We can talk about reducing the corporate tax rate all we want, but US corporations barely pay 17% effective on average so we’re already in a competitive position thanks to the loopholes and breaks already given to them. We really need to see corporations running about 22% with no loopholes.

Jobsanger has some great detail on the Trump plan and what it really means for the middle class.

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McBlogger’s Business Maxims #3890 Commodity businesses suck

You can really never say too many bad things about Carly Fiorina. She’s a thoroughgoing mess of a human being who took advantage of education and opportunity only to lay one of the largest goose eggs in American corporate history. People fuck up, but Carly didn’t just fuck up… she ultra superduper MEGA fucked up AND walked away very well paid for her time fucking up the lives of employees and shareholders alike, making her one of the most hated people in tech.

Carly was CEO of HP from around mid 1999 until early 2005. In that time, revenue growth collapsed from 7% to 3% (adjusted for foreign currency transactions). She doubled HPs revenue, basically by buying Compaq (we’ll get to that in a bit)… there was almost NO organic revenue growth. Carly said she created thousands of jobs, but she actually slashed about 30,000. She was such a disaster that the only one who’ll speak up for her is Tom Perkins, himself an absolute disaster of a man who thinks votes should be allocated by wealth. She did lie about all this last night and was justifiably defensive. It’s also worth noting that she’s had a checkered past at other companies, like Lucent which had to merge with Alcatel, largely due to financing gear for customers (something Carly encouraged and promoted), and is now set to become a part of Nokia. Then there was AT&T which performed so badly it was acquired by a former subsidiary (where Carly hadn’t been and so couldn’t fuck it up).

All of this is bad, but what made it one of the Legendary Business Fuckups Of All Time is the same thing that brings us to one of my business maxims, that commodity businesses suck…

Only a moron would double down on a low margin commodity business that any asshole could get in with minimal investment and in which your brand carries NO premium.

In 2001, that moron was Carly Fiorina. While Apple was busy differentiating itself by design (building a brand that would demand a premium in the market), Carly Fiorina decided to go another way… seek revenue and damn the profits. It’s a classic strategy if your desire is to hurt everyone except yourself. Most people, when they do shit this dumb, usually admit after the fact that they were on some sort of bender while this was going on. Carly never did … she owns it and is inexplicably PROUD of her performance at HP. Apple had a 15% of HP’s market cap in 2001 and now is worth around 10 times MORE than HP.

So, when by chance you run into Carly, make sure she knows how much she sucks.

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McB Breaks Down Whatever Dumbass Thing Was Said : Minimum Wage Edition

This morning on Bloomberg, former NYC Mayor Mike Bloomberg appeared with everyone’s favorite bank CEO, Lloyd Blankfein, to discuss the economy and Goldman’s small business lending program which is apparently a thing, not just some bullshit in a commercial. It was a pretty shitty piece but at one point Mike (and I can call him Mike because we’re totally friends like that) starts in on how he’s not a fan of raising the minimum wage and would instead like to raise the Earned Income Tax Credit to help the same people.

Now, there are some big problems with this… it does nothing to address inequality, lack of wage growth, and it explodes the deficit. Effectively, it’s a way of funneling money directly from the federal government to Wal Mart.

Raising the minimum wage consistently grows the economy, it doesn’t contract it or contract employment. It’s time to put the myths aside and get on with restoring wage growth.

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Pissing into the wind…

Governor Abbott Signs State Budget Into Law

AUSTIN – Governor Greg Abbott today signed HB 1, the General Appropriations Act, into law. Upon signing the 2016-2017 budget, Governor Abbott released the following statement:

“I am proud to sign a Texas budget that cuts taxes, provides a record amount of funding to secure the border, improves our schools and builds more roads. This budget proves that government can control its spending while ensuring the essential needs of its citizens are met.”

In order to further reduce our state’s debt burden and restrain growth in government, Governor Abbott has vetoed nearly $233 million in discretionary spending and made over $295 million in overall reductions.

The subject well covers my thoughts on this statement and the budget.

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