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“The GOP’s Self-Inflicted Wounds”: Keep One Thing In Mind; The Party Establishment Brought This Plague Upon Itself

As the leading Republican presidential candidates rant and rave about deporting 11 million immigrants, fighting some kind of world war against Islam, implementing gimmicky tax plans that would bankrupt the nation and other such madness, keep one thing in mind: The party establishment brought this plague upon itself.

The self-harming was unintentional but inevitable — and should have been foreseeable. Donald Trump and Ben Carson didn’t come out of nowhere. Fully half of the party’s voters didn’t wake up one morning and decide, for no particular reason, that experience as a Republican elected official was the last thing they wanted in a presidential candidate.

The insurrection that has reduced Jeb Bush to single-digit support while Trump and Carson soar is nothing more than the understandable reaction of the jilted. Republican leaders have spent the years of the Obama presidency inflaming GOP base voters with extreme rhetoric and wooing them with empty promises. The establishment won its goal — electoral gains in Congress and many statehouses — but in the process may have lost the party.

Unrest was brewing among true-believer conservatives even before Barack Obama took office as the first African-American president. George W. Bush had angered the base with his budget-busting expenditures for Middle East wars and a new prescription drug benefit under Medicare. What had happened to the party’s commitment to fiscal responsibility?

The final straw for many came when the financial crisis hit in 2008 and Bush, in his final days, won authorization of the $700 billion Troubled Asset Relief Program — a massive bailout for the big Wall Street banks. It was a wholesale violation of conservative principles that helped inspire the birth of the tea party movement.

With the economy still in crisis, Obama took actions that further riled conservatives — pushing through Congress a messy economic stimulus package and rescuing General Motors and Chrysler. And then the president turned to health care, ultimately winning passage of the Affordable Care Act.

The GOP saw a golden political opportunity. Rather than work with Obama toward compromise, Republicans positioned themselves as implacable foes of the president and all he stood for.

As the tea party increasingly came to demonize Obama for being an alleged Muslim or socialist — and even to delegitimize him as supposedly having been born in Kenya — the Republican establishment shamefully played along despite knowing that none of this rubbish was true.

The result was a sweeping victory in the 2010 election. Republicans captured the House by electing dozens of tea party-backed candidates, who came to Washington with revolution on their minds.

Experienced GOP politicians who should have known better allowed this insurgency to push the party into a series of showdowns with Obama that Republicans could not possibly win. Having told the base that great things could be accomplished by shutting down the government or threatening default on the national debt, the establishment had to say, in effect, never mind.

Voters began to realize that they’d been had. The Republican leadership talked a good game at election time, but never delivered.

Is it any wonder, then, that 51 percent of Republican voters (according to the Real Clear Politics poll average) say they favor Trump, Carson or Carly Fiorina, none of whom has ever held public office? Or that another 11 percent support Ted Cruz, whose career in the Senate has consisted of vehemently opposing his own party’s leadership as a bunch of weak-kneed quislings?

If you add it up, roughly six of 10 GOP voters tell pollsters they reject any candidate the Republican establishment likes. That amounts to a party in open revolt.

There are those in the Republican establishment who look at prior elections and predict the outsider candidates will eventually fade. There are those who believe the fear of terrorism, post-Paris, will lead voters to choose safety over adventure. Perhaps this is something other than whistling past the graveyard, but that’s what it sounds like to me.

Are voters who have been on the raucous, anything-goes Trump bandwagon for months going to fall meekly in line behind someone like Bush or Marco Rubio? It gets harder and harder to imagine such a thing.

Meanwhile, the whole field is being pulled so far to the right on issues such as immigration and taxes that any of the likely nominees will have a hard time winning the general election. This is a fine mess the Republican Party has gotten itself into, and we won’t know until the early primaries whether there’s any hope of a way out.

 

By: Eugene Robinson, Opinion Writer, The Washington Post, November 26, 2015

November 29, 2015 Posted by | Donald Trump, GOP Base, GOP Establishment, GOP Presidential Candidates | , , , , , , , , | 3 Comments

“Europe The Unready”: Europe’s Ability To Protect Itself Turns Out To Have Been Undermined By Its Imperfect Union

Thanksgiving as we know it dates not to colonial days but to the middle of the Civil War, when Abraham Lincoln made it a federal holiday. It is, in other words, a celebration of national unity. And our national unity is indeed something to be thankful for.

To see why, consider the slow-motion disaster now overtaking the European project on multiple fronts.

For those not familiar with the term, the “European project” has a very specific meaning. It refers to the long-term effort to foster a peaceful, prosperous Europe through ever-closer economic and social integration, an effort that began more than 60 years ago with the formation of the Coal and Steel Community.

The effort continued with the creation of the Common Market in 1959; the expansion of that market to include newly democratic nations in southern Europe; the Single European Act, assuring free movement of people as well as goods; further extension of the European Union to former Communist nations; the Schengen agreement, which removed many border controls within the continent; and, of course, the creation of a common European currency.

Every weekday, get thought-provoking commentary from Op-Ed columnists, The Times editorial board and contributing writers from around the world.

One way to think about all these moves is that they were attempts to give Europe many of the attributes of a single nation without formal political union — at least not yet. The more or less explicit hope of many in the European elite was that technical and economic integration would gradually foster psychological unification, and eventually pave the way for a United States of Europe.

And for a long time the project worked very well, as Europe grew steadily more prosperous, peaceful, and free. But how would the process deal with setbacks? After all, the European project was creating ever-growing interdependence without creating either the institutions or, despite elite hopes, the sense of political legitimacy that would be needed to manage that interdependence if things went wrong.

Which brings me to the disasters.

At first sight, the financial crisis, the refugee crisis, and the terrorist attacks might not seem to have anything in common. But in each case Europe’s ability to protect itself turns out to have been undermined by its imperfect union.

On the financial crisis: There’s widespread consensus among economists (though not, alas, among politicians) that Europe’s woes were mainly caused by mood swings among private investors, who recklessly poured money into southern Europe after the creation of the euro, then abruptly reversed course a decade later. Yet something similar happened in America, too, where money first poured into mortgage lending in the “sand states” — Florida, Arizona, Nevada, California — then took flight. In the U.S., however, the pain of that reversal was limited by federal institutions, ranging from Social Security to deposit insurance. In Europe, unfortunately, the cost of bank bailouts and much more fell on national governments, so that private-sector overreach soon spilled over into fiscal crisis.

On refugees: the politics of immigration in general, and refugees in particular, are nasty everywhere — just listen to Donald Trump or Ted Cruz. But Europe is also trying to maintain open internal borders while leaving the management of external borders to national governments like that of impoverished, austerity-ravaged Greece. No wonder, then, that border controls are making a comeback.

And on terrorism: No free society can ever be perfectly secure from attack. But think about how much harder it gets when anti-terrorism is pretty much left up to national governments, whose capacity for policing varies greatly. Imagine how New Yorkers would feel if political paralysis in New Jersey were getting in the way of any effective anti-terrorist policy there, and you have a good idea of the problems Belgium has created for France.

Ideally, Europe would respond to these setbacks by strengthening its union, creating more of the institutions it needs to manage interdependence. But the political will for that kind of move forward seems lacking, even for the most obvious steps. For example, on Tuesday the European Commission proposed the gradual phase-in of a Europe-wide system of deposit insurance, which is the bare minimum needed to maintain stable banks within a currency union. Yet the plan faces furious opposition within Germany, which sees it as a giveaway to its spendthrift neighbors.

The alternative is to take a step back, which is already happening on border controls. European leaders are, rightly, concerned that each such move damages the whole European project. But what is the realistic alternative?

The truth is that I don’t know the answer. I’m just thankful that America has the kind of unity Europe can only dream of — at least for now. I guess we’ll see what’s left after President Trump gets done with it.

 

By: Paul Krugman, Op-Ed Columnist, Opinion Pages, The New York Times, November 27, 2015

November 28, 2015 Posted by | Europe, European Union | , , , , , , , | Leave a comment

“Deferred Prosecution Agreements”: Criminals Should Get Same Leniency As Corporations, Judge Says

For years, when corporations paid big fines to escape prosecution for their misdeeds, critics fumed. Why, they asked, shouldn’t big companies be treated like common criminals?

A federal judge turned that question on its head this week as he lamented being asked to approve yet another corporate settlement. Perhaps, he said, common criminals ought to be treated more like big companies.

Judge Emmet G. Sullivan, of the United States District Court for the District of Columbia, took aim at a favorite tool of the Obama administration for addressing corporate wrongdoing: a form of probation known as a deferred prosecution agreement. If companies behave for the length of the agreement, the matter is closed without any criminal record.

The judge said individual defendants should enjoy the same opportunities. While it is not uncommon for judges to criticize outcomes that they see as unjust, it is highly unusual for them to so explicitly advocate — and at such great length — a change in approach.

Judge Sullivan’s 84-page opinion — in what could have been a short, straightforward decision — is the latest influential voice to join a growing chorus of both liberals and conservatives who see the American criminal justice system as fundamentally unfair.

The ruling comes amid a rapidly changing environment: The White House is approving clemency applications at historically high rates; support is coalescing on Capitol Hill to ease sentencing laws; and law enforcement leaders around the country have declared that too many Americans are in prison for too long. Though the federal prison population has declined for the first time in decades, America remains the world’s largest jailer by far; its prison population nearly equals China’s and Russia’s combined.

Justice Department officials agree in principle with Judge Sullivan’s critique and have encouraged Congress to ease tough sentencing laws that were passed at the height of the crack epidemic. Emily Pierce, a department spokeswoman, noted that under an initiative begun in 2013, prosecutors were already ordered to prioritize more serious crimes, while looking for alternatives to prison for low-level offenders. Fewer low-level criminals being charged means fewer people eligible for deferred prosecution. The department has also strongly supported drug courts, which essentially offer the same second chance that companies are given.

At the same time, the Justice Department recently promised to get tough on corporate executives after years of criticism in the aftermath of the financial crisis that bankers, in particular, escaped punishment because their companies agreed to pay big fines. It was that promise, followed days later by a deferred-prosecution agreement with General Motors, that ignited Judge Sullivan’s fury.

Judge Sullivan was appointed to the federal bench by President Bill Clinton. He previously served as a municipal judge and a local appellate judge in Washington, having been appointed by Presidents Ronald Reagan and George Bush.

He called G.M.’s $900 million settlement “a shocking example of potentially culpable individuals not being criminally charged.” G.M. admitted that it misled the public about auto defects, but neither the company nor its executives were prosecuted, “despite the fact that the reprehensible conduct of its employees resulted in the deaths of many people.”

“The court is disappointed that deferred-prosecution agreements or other similar tools are not being used to provide the same opportunity to individual defendants to demonstrate their rehabilitation without triggering the devastating collateral consequences of a criminal conviction,” Judge Sullivan wrote.

Justice Department figures show deferred-prosecution agreements are rare for both individuals and companies. But the number of cases against organizations and companies is so tiny — 150 or so each year, compared with 160,000 or more individual prosecutions — that these deals occur at a much higher rate in corporate cases, which also tend to be higher profile.

Deferred-prosecution deals are attractive because they spare companies the consequence of criminal convictions, such as stock collapse and a loss of contracts. For people, the effects can be even more severe. The American Bar Association has identified tens of thousands of consequences of criminal conviction, which demonstrates how a single arrest can cost people their jobs and homes.

President Obama has indicated that he will make a criminal justice overhaul one of the most important issues of his remaining time in office. He became the first sitting president to visit a federal prison. On Thursday, he defended the Black Lives Matter movement, which has been criticized by police unions in particular as being anti-police. Mr. Obama plans to speak about changing the criminal justice system next week at the annual meeting of the International Association of Chiefs of Police in Chicago.

Much of the public debate has focused on reducing the prison population by cutting sentences for those serving long sentences for nonviolent crimes. Lost in the debate, Judge Sullivan said, has been the importance of keeping people out of jail in the first place. “This oversight is lamentable, to say the least!” he wrote.

He said criminal justice reform should offer people “the chance to demonstrate their true character and avoid the catastrophic consequences of felony convictions.”

While Judge Sullivan cannot make policy from the bench, the opinion shows the momentum behind efforts to improve the system, said Norman L. Reimer, the executive director of the National Association of Criminal Defense Lawyers.

“It has finally seeped into the public consciousness that there is something wrong,” he said. “All of a sudden, a nation wakes up and realizes we’ve created this unbelievable cadre of second-class citizens.”

 

By: Matt Apuzzo, The New York Times, October 23, 2015

October 25, 2015 Posted by | Corporate Crime, Corporations, Criminal Justice System, Deferred Prosecution Agreements | , , , , , , , | Leave a comment

“Democrats, Republicans And Wall Street Tycoons”: Financiers Resent Any Constraints On Ability To Gamble With Other People’s Money

Hillary Clinton and Bernie Sanders had an argument about financial regulation during Tuesday’s debate — but it wasn’t about whether to crack down on banks. Instead, it was about whose plan was tougher. The contrast with Republicans like Jeb Bush or Marco Rubio, who have pledged to reverse even the moderate financial reforms enacted in 2010, couldn’t be stronger.

For what it’s worth, Mrs. Clinton had the better case. Mr. Sanders has been focused on restoring Glass-Steagall, the rule that separated deposit-taking banks from riskier wheeling and dealing. And repealing Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t.

But is Mrs. Clinton’s promise to take a tough line on the financial industry credible? Or would she, once in the White House, return to the finance-friendly, deregulatory policies of the 1990s?

Well, if Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican.

To understand the politics of financial reform and regulation, we have to start by acknowledging that there was a time when Wall Street and Democrats got on just fine. Robert Rubin of Goldman Sachs became Bill Clinton’s most influential economic official; big banks had plenty of political access; and the industry by and large got what it wanted, including repeal of Glass-Steagall.

This cozy relationship was reflected in campaign contributions, with the securities industry splitting its donations more or less evenly between the parties, and hedge funds actually leaning Democratic.

But then came the financial crisis of 2008, and everything changed.

Many liberals feel that the Obama administration was far too lenient on the financial industry in the aftermath of the crisis. After all, runaway banks brought the economy to its knees, causing millions to lose their jobs, their homes, or both. What’s more, banks themselves were bailed out, at potentially large expense to taxpayers (although in the end the costs weren’t very large). Yet nobody went to jail, and the big banks weren’t broken up.

But the financiers didn’t feel grateful for getting off so lightly. On the contrary, they were and remain consumed with “Obama rage.”

Partly this reflects hurt feelings. By any normal standard, President Obama has been remarkably restrained in his criticisms of Wall Street. But with great wealth comes great pettiness: These are men accustomed to obsequious deference, and they took even mild comments about bad behavior by some of their number as an unforgivable insult.

Furthermore, while the Dodd-Frank financial regulation bill enacted in 2010 was much weaker than many reformers had wanted, it was far from toothless. The Consumer Financial Protection Bureau has proved highly effective, and the “too big to fail” subsidy appears to have mostly gone away. That is, big financial institutions that would probably be bailed out in a future crisis no longer seem to be able to raise funds more cheaply than smaller players, perhaps because “systemically important” institutions are now subject to extra regulations, including the requirement that they set aside more capital.

While this is good news for taxpayers and the economy, financiers bitterly resent any constraints on their ability to gamble with other people’s money, and they are voting with their checkbooks. Financial tycoons loom large among the tiny group of wealthy families that is dominating campaign finance this election cycle — a group that overwhelmingly supports Republicans. Hedge funds used to give the majority of their contributions to Democrats, but since 2010 they have flipped almost totally to the G.O.P.

As I said, this lopsided giving is an indication that Wall Street insiders take Democratic pledges to crack down on bankers’ excesses seriously. And it also means that a victorious Democrat wouldn’t owe much to the financial industry.

If a Democrat does win, does it matter much which one it is? Probably not. Any Democrat is likely to retain the financial reforms of 2010, and seek to stiffen them where possible. But major new reforms will be blocked until and unless Democrats regain control of both houses of Congress, which isn’t likely to happen for a long time.

In other words, while there are some differences in financial policy between Mrs. Clinton and Mr. Sanders, as a practical matter they’re trivial compared with the yawning gulf with Republicans.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, October 16, 2015

October 17, 2015 Posted by | Bernie Sanders, Financial Industry, Hillary Clinton | , , , , , , , | 1 Comment

“Kasich And Bush: The Lehman Brothers”: Mixing Investment Banking With Politics In A Robber Baron Era

Most of the stuff being written about soon-to-be official GOP presidential candidate John Kasich involves his struggle to qualify for the August 6 Fox News debate, though some observers really seem to think he’s a serious dark horse candidate if he can get his act together and deal with conservative anger at his decision to accept a Medicare expansion as governor of Ohio.

But an old problem for him is beginning to reemerge: his seven years as a managing director at Lehman Brothers, the firm whose meltdown in 2008 touched off the global financial crisis that in turn led to the Great Recession. Bloomberg Politics‘ Mark Niquette has the story:

Kasich’s Lehman career, which included deals for companies from Google Inc. to Cleveland-based manufacturer ParkOhio, will test the presidential campaign that the two-term Ohio governor plans to start this month.

While his opponents have depicted his stint at the doomed bank as a period during which he cashed in as millions suffered, Kasich makes the case that he gained finance experience that made him a better public official.

“If people want to attack me, I’ll tell them what I did, and I think it’s been great,” Kasich said in an interview Wednesday during a visit to South Carolina.

This is why Niquette describes Kasich’s Lehman tenure as representing a “Rorschach Test” for how one view’s Kasich’s career: did it taint him or enhance his long resume? The same could be asked of his service as one of Newt Gingrich’s lieutenants in the Republican Revolution of the 1990s.

As it happens, Kasich is not the only Republican candidate who worked extensively for Lehman Brothers. So did Jeb Bush, who was an “advisor” to the firm and then to its successor, another bank with a less than ideal reputation, Barclay’s. In a Daily Beast column last week, Charles Gasparino suggests that Bush’s refusal to answer questions about what he did for both banks could significantly undermine the claim of total transparency he made when releasing old tax returns.

Not much is known about what Bush actually did for Lehman—the firm that went belly-up in 2008 and sparked the wider financial crisis, and Barclays, the bank that purchased Lehman out of bankruptcy and continues to work out of its midtown Manhattan headquarters. He began working for the former after his term as Florida governor ended in 2007, and continued working for the latter until the end of 2014, when he decided to run for president.

The two banks were his biggest sources of income in recent years: Bush earned more than $14 million working for Lehman and then Barclays, which based on my understanding of simple math accounted for nearly half of the $29 million he made after he left government. Yet in Tuesday’s disclosure, and even in many of his public comments, Bush has downplayed his work for the two banks.

“I also was hired as a senior advisor to Barclays where I advised their clients on a wide range of global economic issues with a mind towards navigating government policies,” he writes in an essay that accompanied the tax returns. It is the only sentence that refers to his time at Barclays. And he doesn’t mention Lehman at all.

Bush has denied any responsibility for one bit of toxic Lehman Brothers fallout: the huge bath taken by Florida state agencies and local governments who invested their assets in a state fund managed by the bank when it folded. Despite the denials, suspicions remain thanks to this big coincidence noted by the Tampa Bay Times:

The storied bank hired former Gov. Jeb Bush as a consultant in June 2007, five months after he left office. As governor, Bush also served as a trustee for the State Board of Administration, which invests public money.

Lehman was the dominant Wall Street broker that sold the SBA $1.4 billion of risky, mortgage-related securities that started tanking in August 2007.

Bush has said he had nothing to do with those sales.

So there’s some smoke but no fire so far, but I doubt the association of two presidential candidates with a bank whose name is a byword for failed promises will entirely go away. Indeed, if Kasich’s campaign survives its early tests I wouldn’t be surprised if one of their many rivals starts referring to them together as the “Lehman Brothers.” No specific allegation will be necessary to make the line damaging. Them’s the breaks when you mix investment banking with politics in a Robber Baron era.

 

By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, July 9, 2015

July 10, 2015 Posted by | Jeb Bush, John Kasich, Lehman Brothers | , , , , , , | 1 Comment

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