This Just In - The Dismal Political Economist Will be Posting All Day on Labor Day

Celebrating the American Worker by Skewering the Enemies of the American Working Family

Some Rare Kind and Gracious Words for Mitt Romney on His Ascension to the Republican Nomination

Finding Some Good Things to Say About a Seriously Flawed Candidate and Individual

Regular readers of this Forum will know of the problems we have with the political campaign of Mitt Romney and of the political persona of Mitt Romney.  But Mr. Romney has been officially running for President for six years, unofficially for two decades and as a nomination present we present some positive aspects of Mr. Romney.

1. Family Man:  Many Conservatives espouse family values without actually practicing them.  Mr. Romney seems to not only believe in those values but to adopt them to his own life.  There has never been a hint of scandal in his personal life, something few politicians of  Conservative bent can say.

2. Freedom of Religion:  Mr. Romney is a very devout person, and his dedication to his faith is similar to that of all dedicated fundamentalists.  But unlike fundamentalists of the Protestant, Catholic, Jewish and Islamic religions he is not trying to use government to force those who do not share his religion to observe its restrictions.  The type of Mormonism practiced by Mr. Romney forbids the intake of caffeine, but Mr. Romney is not on a crusade to close every Starbucks, or to ban Pepsi Cola.  This attitude of allowing non-Mormons to go freely in life without Mormon restrictions is an admirable trait.

3. Good government: As with his personal life, there is no hint of impropriety in Mr. Romney’s stint as Governor of Massachusetts.  No bribery scandals, no payoff scandals, nothing of the sort.  And Massachusetts is not exactly a squeaky clean political environment.

4. Uh, we’re working on Number 4.

So congratulations Mr. Romney, you have the nomination and if this Forum never ever says another positive word about you or your candidacy, then at least you have this to know that the criticism of your positions, your election strategy and everything else about your public life is not personal.  It’s about public policy, an effort to promote good government in spite of ourselves and our politicians.

Fox News Analyst Juan Williams Learns How They Treat Dissent at Fox News

They Don’t Tolerate It Very Well

Juan Williams is a journalist who is now employed by Fox News, but prior to that he was a news correspondent for NPR.  Mr. Williams was fired, wrongly in our opinion, for remarks he made concerning his reactions to finding an Arab on his airplane.  At most he should have been asked to be more polite, instead he lost his job.

Mr. Williams then made the mistake of running to Fox News, where for some reason he thought his independent attitudes would be welcome.  He has now learned that is not the case.  The lesson came when Mr. Williams was heavily criticized after he made these thoughtful comments on the speech Mrs. Romney gave at the convention.

“Mitt Romney’s wife, Ann Romney, on the other hand looked to me like a corporate wife,” Williams said on Fox News. “And you know the stories she told about struggle, eh, it’s hard for me to believe. She’s a very rich woman and I know that and America knows that.”

Williams said Ann Romney didn’t convince him she understood the struggles of average American women, and looked like “a woman whose husband takes care of her and she’s been very lucky and blessed in this life.”

And of course this was not the corporate line.  Brit Hume, for example just fawned over the speech.

One of Williams’ co-panelists, Brit Hume, labelled Romney’s address as “the single most effective political speech I’ve ever heard given by a political wife.”

in remarks that were crafted long before he heard or read the speech.  This is, of course, required for Fox News analysts, something Mr. Williams was apparently not aware of.

“This was intended as an analysis of the speech,” Williams said. “I think in the economic realm, from my mind, it was intended to appeal to American women where the Romney campaign has a deficit right now. And it would’ve been smarter, in my mind, if she had been able to say: ‘We know we’re blessed, but let me tell you how much we are doing for others. … Americans know that the Romney has extraordinarily rich people. And I don’t know that you can say ‘We’ve had the same struggles as everybody else,’ because people go, ‘Uh? I don’t know if that’s real.’”

It is easy to see why Fox News was upset.  Their job is to promote Mr. Romney, to humanize him, to portray the myth that Mr. Romney is just another working guy who wants to help everybody.  For someone to toss the truth into that dream must be very disturbing.  Don’t count on your Christmas card from Roger Ailes or Rupert Murdoch this year Mr. Williams..

North Carolina State Employees Pension Fund Another Victim of the Facebook Saga – And Another Purveyor of Conflicts of Interest

Exposing One Reason Public Pension Funds Don’t Do So Well

Because of a lawsuit, information was released about an investment in Facebook by the North Carolina state employee pension fund.  It is not a pretty picture, not even if it were posted on Facebook.

The state reported losing $4.1 million on its $26 million investment in the social networking company’s initial public offering in May, but the actual damage could be much larger. The state’s 618,137 remaining Facebook shares are now worth half the $38 it paid for each.

Of course the state Treasurer, Janet Cowell a Democrat, didn’t do it on her own. She had help.

A broker at the Virginia-based investment firm Sands Capital Management bought the Facebook stock for the state, the treasurer’s office acknowledged Friday after declining to name the buyer a day earlier. The investment firm is one of Facebook’s largest institutional investors, owning 11.65 million shares of the company as of June 30.

Okay, investments are risky and there is no guarantee a stock investment will make a profit.  But while a very small part of the pension fund, this whole deal has an ugly stink to it.

For example

The treasurer’s office provided a document showing the Sands Large Cap Growth fund produced returns of 3 percent for the year ending Dec. 31, and 31 percent over the three years prior.

which sounds good until one realizes these returns are far less than what one could get by just buying an index fund, with much less in fees than is paid an investment management firm.

And there is this.

The state declined to reveal how much money Sands Capital manages for the state and how much it is paid.

Yeah, just because it is a public agency handling public money doesn’t mean the public has a right to know about the details.

And there is this.

The state retirement system revealed its loss last week when it joined a class action lawsuit against Facebook and its underwriters, alleging it was misled and seeking damages.

And now the law firm chosen to represent the state is also generating questions. Bernstein Litowitz Berger and Grossmann gave Cowell’s campaign more than $75,000 since her 2008 election to the post, according to state records.

And how was the firm selected?

Cowell’s spokeswoman said officials from the treasurer’s office and state attorney general’s office reviewed proposals from six securities law firms on retainer and interviewed four before selecting Bernstein Litowitz and Labaton Sucharow, both of New York.

“It doesn’t pass muster,” said Steve Royal, a Republican certified public accountant challenging Cowell in the fall election. “They are looking for business. It’s pay to play.”

And there is this.

The questions compound other conflict-of-interest concerns raised in legal documents by a competing law firm about Cowell’s close connection to prominent N.C. Democrat Erskine Bowles, a board member at Facebook and Morgan Stanley, which is a named defendant in the state’s case.

Bowles’ wife hosted a major fundraiser for Cowell’s campaign, but he did not contribute. Cowell filed a legal document this week saying the state “is intent on zealously prosecuting this action against all viable defendants.”

Yep it smell alright, and you can smell the stink even if you don’t live in Raleigh.

Tens of $Billions of Federal Flood Protection Construction Saves New Orleans From Another Disaster – Of Course Anti-Government Conservatives Say They Built It, Not the Government

Memo to the People of New Orleans – A Nice Thank You to the American Taxpayers is All We Want in Return

The controversy over some rather stupid remarks by President Obama will continue throughout the campaign.  Mr. Obama in trying to make the point that no one is successful without massive help from others, including government seemed to imply that those who had built successful businesses did not contribute to their own success.

The recent events in New Orleans have illustrated what Mr. Obama should have said instead of what he did say.  The city of New Orleans was saved from destruction by U. S. government built and funded flood protection systems, systems costing over $10 billion and probably a lot more.  There is no clearer example of how and why successful government programs are needed in society.

Of course Louisiana is dominated by Conservatives, and they will never ever admit that the U. S. government had anything to do with helping New Orleans survive yet another storm.  In fact, look for them to blame the government for the storm coming to Louisiana, and look for them to claim the private sector was the source of all that flood protection.

After all, that’s what it looks like in their fantasy world.

Martin Feldstein, Harvard Economist Extraordinaire Is Able to Discern that the Romney Tax Cut Would Raise Revenues

Despite, as Mr. Feldstein Puts Says, “It is impossible to calculate the exact effects of the future reforms since Gov. Romney hasn't specified what he would do”

Yep, Conservative Economists Can Do the Impossible

One of the biggest criticisms of Mitt Romney’s tax policy is not a criticism of the tax policy.  In fact for the most part there is little valid criticism of the tax policy since Mr. Romney has not provided any details of his tax policy.  Instead he has adopted a “policy by assertion” rationale, that is, his tax plan of huge tax cuts for the wealthy will be revenue neutral because he says it will be revenue neutral.

Now this bogus claim has been exposed by a few analyses, most importantly the non-partisan Tax Policy Center which took assumptions most favorable to Mr. Romney’s plan and still were unable to conclude anything else but the fact that in order to be revenue neutral the plan had to raise taxes on low and middle income tax payers. 

But reality is not an answer for Conservatives, so Martin Feldstein, former Reagan economic adviser and economist at Harvard has presented an analysis in the Wall Street Journal that shows indeed that Mr. Romney’s plan will work.

Since broadening the tax base would produce enough revenue to pay for cutting everyone's tax rates, it is clear that the proposed Romney cuts wouldn't require any middle-class tax increase, nor would they produce a net windfall for high-income taxpayers. The Tax Policy Center and others are wrong to claim otherwise.

Wow, being a Harvard economist his analysis must be pretty rigorous.  Like this example at how eliminating the Estate Tax won’t reduce revenues.

More importantly, eliminating the estate tax could be a revenue gainer in the longer term. That's because its current high rates induce high-wealth individuals to bequeath most of their money to foundations, universities and other tax-exempt institutions where the future investment earnings are untaxed. If the estate tax were abolished, more of those funds would go to children and grandchildren, who in turn would generate higher income taxes for generations.

Okay everyone, stop laughing and consider this gem from Mr. Feldstein

But past experience shows that taxpayers do respond to lower marginal tax rates by acting in ways that increase their taxable incomes: increasing work effort, receiving more of their compensation in the form of taxable cash rather than untaxed fringe benefits, and spending less of their income on tax-favored forms of consumption that are deducted or excluded in calculating taxable income. More specifically, history shows that a tax cut that raises the after-tax share of earnings that an individual keeps by 10% raises taxable income by about 5%. This implies that the revenue loss from the 20% tax cut would be $148 billion, not $181 billion.

Hm, lets see what past experience really says.  Well in 1993 President Clinton raised marginal tax rates for wealthy individuals.  By the end of his term there was huge job creation and the budget was balanced.  The most recent experience, the Bush tax cuts took that budget surplus and turned it into a trillion dollar deficit which Mr. Bush deftly handed over to Mr. Obama.

And Mr. Feldstein’s impeccable math works this way.

The IRS data show that taxpayers with adjusted gross incomes over $100,000 (the top 21% of all taxpayers) made itemized deductions totaling $636 billion in 2009. Those high-income taxpayers paid marginal tax rates of 25% to 35%, with most $200,000-plus earners paying marginal rates of 33% or 35%.

And what do we get when we apply a 30% marginal tax rate to the $636 billion in itemized deductions? Extra revenue of $191 billion—more than enough to offset the revenue losses from the individual income tax cuts proposed by Gov. Romney.

Except of course he doesn’t want to eliminate all the itemized deductions.

This does not mean eliminating all deductions. My preference would be to retain all deductions but to limit their total tax benefit to a moderate percentage of each taxpayer's adjusted gross income.

Meaning of course that low and middle income taxpayers would be footing a part of the bill, exactly what the TPC study concluded.

Boy, Harvard must be really embarrassed.

And finally, if anybody is wondering, yes the TPC study is from an independent group.  Mr. Feldstein, not so much.

Mr. Feldstein, chairman of the Council of Economic Advisers under President Ronald Reagan, is a professor at Harvard and a member of The Wall Street Journal's board of contributors. He advises the Romney campaign.

Martin Feldstein, brought to you by the Wall Street Journal, a wholly owned subsidiary of the Mitt Romney campaign. 

What Kind of Nation Hauls Six Year Olds Before A Court with No Parents or Lawyers, and No One to Help Them?

China?  Russia?  Iran?  North Korea?  - No, It’s the United States

That U. S. immigration policy is a disaster is a given.  Even Mitt Romney has flip-flopped, no longer calling for ‘self deportation’ now that he has the anti-immigrant conservative vote locked up and needs pro-decency immigration vote to win the election.  Mr. Obama has made a major contribution to fixing things by using an executive order to allow children who have been raised in the United States to stay here.

But the policy of ‘catch and don’t release’ with respect to border policing still has major problems.  Consider this situation.

The immigrant who was facing deportation rose to his feet, in a clean T-shirt and khaki pants several sizes too large, with his name — JUAN — printed on a tag around his neck.

But the judge could not see him. Juan’s head did not rise above the court’s wooden benches.

Juan David Gonzalez was 6 years old. He was in the court, which would decide whether to expel him from the country, without a parent — and also without a lawyer.

Apparently thousands of children are traveling thousands of miles to try and reach the United States.  How are they getting here?

The young people, mostly from Mexico and Central America, ride to the border on the roofs of freight trains or the backs of buses. They cross the Rio Grande on inner tubes, or hike for days through extremes of heat and chill in Arizona deserts. The smallest children, like Juan, are most often brought by smugglers.

Liliana Muñoz, 6, was alone when Border Patrol officers 
caught her as she was being smuggled across the Rio Grande. Now
facing deportation, she’s also alone in Immigration Court without a lawyer.

To Conservatives This is a hardened criminal
To Decent People This is a Little Girl

And when they are caught (yes it is not that hard to catch a six year old) they face this.

Unlike in criminal or family courts, in immigration court there is no right to a lawyer paid by the government for people who cannot afford one. And immigration law contains few protections specifically for minors. So even a child as young as Juan has to go before an immigration judge — confronting a prosecutor and trying to fight deportation — without the help of a lawyer, if one is not privately provided.

So why can’t something be done, why can’t a decent and humane policy be developed?  The answer of course is politics.  Mr. Obama does not have the political courage or the political capital.   He cannot afford the charge of ‘coddling illegal immigrants’ (never mind if they are six years old) and Mr. Romney really doesn’t care because it is not an issue he can exploit for votes and also because he really doesn't care for any reason.

Greece is ‘Not Lost’ Say German Chancellor Merkel and French President Hollande – Meaning –

Greece Probably is Lost

Speaking of lost, lost in the domestic political news of the summer of 2012 is the continuing crisis in Europe.  After elections in Greece, the new government pledged to honor the existing austerity agreements, except it cannot do so.  Greece wants another two year delay in meeting its goals.  That probably will not happen.

Mr Samaras’ hopes of persuading eurozone partners to delay this goal for two years have alarmed German politicians, who fear it could lead to yet another rescue package for Greece. Many of Ms Merkel’s allies believe such a request would not win majority support in an increasingly restive Bundestag, the German parliament.

But events have been put on hold until September, when several things will happen including a report on the state of Greece by the ‘Troika’ (the IMF, the European Commission and the European Central Bank) who are nominally running things (and when did this Russian term become generally accepted?)

With the “Troika” expected to finish a report on Greek reforms only next month, Ms Merkel said her government would “not take any premature decisions”. Mr Samaras said the Troika’s progress report would show Greece was “delivering results”.

Of course, the Troika is not really running things, Germany is, and domestic politics in Germany are going to play a large role in the outcome.

Volker Kauder, parliamentary leader of Ms Merkel’s conservative Christian Democrats, said he was against changing “the timeframe or the content” of February’s bailout. “The phrase ‘time is money’ can hardly be more relevant than in this case,” he said, noting that Greece’s exit from the eurozone would “not be a problem”.

So everybody can rest easy, but only for a couple of weeks.  By late September we can all look forward to another replay of that great movie “Crisis in Europe”, except the reruns are getting stale and boring, and we all know the ending is not going to be all that great.

Political Pundits Finally Catching On – It’s Likely Voters That Count, Not Registered Voters

 What Took Them So Long?

This Forum has consistently argued that Mitt Romney was the favorite to win in November and that the contest was his to lose.  Yes, he does seem to be doing his best to lose the election, but given the monetary advantage, the fact that Republicans will say and do anything to win, and the general lack of enthusiasm for Mr. Obama one would argue that despite the polls, Mr. Romney is at least tied and probably in the lead.

One reason why the polls have shown Mr. Obama ahead is that until polling takes place near the election the polling is done with registered voters.  As the election nears, polling starts to count likely voters.  And from Taegan Goddard’s site here is the result.

August 24, 2012

Obama Holds Small National Lead

A new CNN/Opinion Research poll shows President Obama leading Mitt Romney by just two points among likely voters, 49% to 47%.

Josh Marshall: "If you look at the number for registered voters it's a 9 point Obama margin. What that means is that President Obama has actually gained a bit of ground (obviously within the margin of error) on last week's eye-popping poll showing him with a 7 point lead over Mitt Romney. But it also shows that turnout and propensity to vote are going to be the whole game going into November."

________________________________________________________________________

Yes, look at likely voters and you get a different picture.  The Romney team has always believed that if they were close prior to the convention, the convention itself would boost them into the lead.  Then the money and the debates would solidify their position. 

So far they are right on track.  And pollsters and people who believe in them are slowly learning the lesson.

Why This Forum Will Have Little to Comment on About the Republican and Democratic National Conventions

There is no There, There

Former Budget Director Peter Orszag Explains the Coming Tragedy in Medicaid Health Care for the Poor and Disabled

But Omits a Second Problem – Everyone’s Health Care Costs Will Rise

In its ongoing failing attempt to present a balanced editorial section the Washington Post has allowed former Obama Budget Director Peter Orszag space to write about the problems (misconceptions, lies, deceit, pick your term) in the Paul Ryan fiscal proposals.  Now Mr. Orszag is a partisan, so we don’t want to give his analysis more credence than other partisan analysis is given.  But there is one non-partisan conclusion that Mr. Orszag makes that is very important.

More fundamentally, if the Romney-Ryan ticket wins, their administration would probably have to choose one or two of the big three items: tax reform, Medicare changes or block-granting Medicaid.

Among the three, I’d bet on Medicaid, given how difficult the other two goals are. The fact that the harm from block-granting would be concentrated on the poor, and that Congress would get to leave it to governors to impose the pain, sadly makes that change more politically viable than the others.

There is almost nothing more certain then if the Romney-Ryan ticket prevails that Medicaid will be turned into a bock grant program to the states.  And it is absolutely certain that the states, not having the financial resources of the federal government, will gut these programs and that health care for the most vulnerable of citizens will be drastically reduced.  They may be kept alive, but just barely.

But what Mr. Orszag and others who support this change do not say is how this will impact the cost and availability of health care for the rest of us.  See the benefits of Medicaid flow to the very poor and the very old and the very disabled, but the money flows to the health care system.  With the absence of this money, and the health care system retaining much of the costs of treating Medicaid patients (they aren’t going to let them die) the additional funding needed will be made up by higher charges for non Medicaid patients. 

This means higher insurance premiums, higher out of pocket costs and less access to medical care for everyone.  The only beneficiary in all of this is high income taxpayers, as the savings to government, which should be passed on to the population as a whole, are used to fund tax cuts for high income individuals.  But this is part of the same policy of shifting the costs of Medicare onto the general population.  The theme is basic and simple, lower government spending on health care, higher costs for individuals to replace government spending and lower taxes on the very wealthy.

Does anyone think this is not deliberate?  Really, anyone?

Proctor and Gamble CEO Robert McDonald Suffers Nearly $1 million Cut in Pay Due to Poor Company Performance

But Wait, Don’t Feel Sorry for the Man Until You Read This

One of the aspects of corporate America that is so upsetting to ordinary citizens is that unlike ordinary citizens the denizens of the top positions in large companies never seem to have to pay for their mistakes or poor management.  About once a week a story comes out about the very high compensation of men and women who produce very poor results for a company and its shareholders.  And when one of these executives fail to such an extend that they are fired, they leave with millions of dollars in severance and benefits, in most cases, tens of millions.

So it is refreshing to see a story about a CEO who has to take a cut in pay because the company performance was weak.  Well, maybe not so refreshing.

Procter & Gamble's chief executive officer had a pay cut of 6.1% for the fiscal year ended June 30, according to a government filing available Friday.

Wow, a 6.1% pay decrease.  For a lot of Americans, indeed for most Americans that kind of drop in income would be at least a major hardship, and for some financially devastating.  But since this is corporate America the devastation for Mr. McDonald is not all that great.

Robert McDonald's pay fell $989,000 to $15.2 million as the consumer products giant missed growth targets amid a worldwide economic slowdown.

So here are the details on just what a CEO who failed to meet financial goals gets these days.

Highlights of McDonald's compensation:

• His salary remained unchanged at $1.6 million; 
• His bonus was $2.4 million, down $200,000, or 7.7 percent; 
• He received $10.8 million in stock and option awards, down $1.4 million, or 11.5 percent; 
• Other compensation rose 69.5 percent to more than $312,000.

Hm, lets see, his bonus was reduced.  Yes there are people who think that a bonus is paid for good performance, but at large companies bonuses are paid for bad performance.  If they were not, the feelings of people like Mr. McDonald might be hurt and they might work less (something that might actually improve performance at the company). 

Notice also that he received $312,000 in ‘other’ compensation.  In corporate America this is referred to as ‘chump change’.  Of course the chumps are the employees and shareholders.

Two Pieces of Good News in British Economy – The Decline Was Not as Severe as First Thought and

And The Really Good News, They Have Something Other Than Conservative Government Policy to Blame it On

They have released revised economic statistics in Britain for the second quarter and there is good news.  Well good news if one considers it good news when the economy declines but not as much as originally thought.

Britain’s economy has shrunk less than had been reported in the second quarter, but the message from the latest data is one of downbeat households and businesses that are unwilling to spend.

On Friday, the Office for National Statistics reported that gross domestic product in the three months to June fell 0.5 per cent quarter on quarter, in line with economists’ expectations and statements from the ONS signalling an upward revision. The ONS had initially reported a GDP contraction of 0.7 per cent in that period.

It turns out that Britain apparently had an extra holiday during the quarter.  Why is that important?  Because that extra holiday can take the blame for the economic fall.

The ONS said the poor weather and the unusual pattern of holidays, for the Queen’s diamond jubilee, may be responsible for some of the decline in GDP.

Vicky Redwood, an economist at Capital Economics, said: “The extra bank holiday in June probably accounted for all of the fall in GDP. But even without that, underlying output did no better than stagnate. GDP is still 1.1 per cent below its level at the start of the recent dip and 4.3 per cent below its peak in 2008.”

And what about the third quarter, the current one.  Well Britain is fortunate enough to have the Olympics.  If growth is negative the Olympics can be blamed.  If it is positive the government can take the credit. 

No wonder everyone in Britain loved the Olympics.  

Defending Mitt Romney’s ‘Birther’ Humor – Calm Down Democrats, It’s a Joke

A Rare Instance of This Forum Being on Mitt’s Side

The accusation by Conservatives that Barack Obama was not born in America and thus is not eligible to be President is one of the many fantasy ideas that Conservatives hold.  The public has long moved on, and the only reason that the issue is still alive is that regular and normal people (that is, non-Conservatives) cannot believe that those who argue the birther issue still do so.

So when Mitt Romney made a joke about the issue in Michigan, telling supporters

Noting that he and his wife, Ann, were born in Michigan hospitals, Romney said at a rally here: “No one’s ever asked to see my birth certificate. They know that this is the place where both of us were born and raised.”

the proper response should have been

1. ignoring the attempt at humor
2. recognizing that this was about as funny as Mitt can get
3. thinking, gee, that is pretty funny and Democrats ought to follow up by making jokes of their own.
4. None of the above

Well of course Democrats, like Republicans being politically tone deaf took the wrong answer, D, and for some idiotic reason decided to make an issue of this.

The Obama campaign seized on the remark to argue that Romney was embracing “strident” conservatives, including real estate mogul Donald Trump as well as Maricopa County Sheriff Joe Arpaio of Arizona and Kansas Secretary of State Kris Kobach, two of the most hard-line opponents of illegal immigration.

No, he wasn’t.  He was trying to be funny and entertaining, and measured by Mitt standards he was. 

“The governor has always said, and has repeatedly said, he believes the president was born here in the United States,” Romney adviser Kevin Madden said. “He was only referencing that Michigan, where he is campaigning today, is the state where he himself was born and raised.”

If Democrats had any political sense (they don’t, which is why the election is so close) they would have answered back with a few funny lines of their own, gotten the upper hand and given the impression that they, unlike the Republicans, were not a bunch of ultra-sensitive, uptight, humorless pols. 

So this Forum defends Mitt on this.  Savor it Mr. Romney, given your history and positions and statements we don’t think that will happen very much in the future.

In Scotland, People of Deeply Religious Faith Don’t Seem to Have Any

Freedom of Speech and Freedom of Religion Under Attack in Obscure Book Festival

This being the latter days of summer, topics to stir the outrage are becoming somewhat rare.  Apparently true indignation must also take a summer break.  So in an obscure story to stir the passions we report on a controversy in Scotland over the invitation of a scientist/writer to a book festival in the Hebrides.  We don’t know Richard Dawkins, don’t really care who he is, but he seems to be a writer who is also an atheist and under some sort of attack.

But the celebrity atheist is now facing one the most hostile receptions of his career – after an invitation to a Hebridean book festival sparked a battle for the soul of the Highlands

In one corner is Prof Dawkins, evolutionary biologist, best-selling author of The God Delusion and the world's most prominent secularist. In the other is the Free Church of Scotland – a devout and fundamentalist Christian group known locally as the Wee Frees.

It seems the fundamentalists involved, like almost all fundamentalists are so uncertain of their own faith that they cannot stand the presence of someone with a different opinion.  So their position is to try and ban any thought or speech that contradicts them.  In this case Mr. Dawkins has a great response.

Faced with clearly mounting outrage against his proposed visit, Prof Dawkins hit back. Writing in a local newspaper, the atheist and academic retorted: "I always marvel when I come up to the Highlands and encounter this kind of sheer, blind panic at the mere thought of me giving a talk.

"The region has a reputation for solid faith, but if that were really so, you might think it might be able to take a simple talk by an evolutionary scientist in its stride."

And as far as being willing to debate the faithful, Mr. Dawkins had this riposte.

It was at this point that the Wee Free spin machine went into operation and challenged Prof Dawkins to a debate.

His response – a deliberately antagonistic jibe on Twitter – did not go down well.

"As a great president of the Royal Society said, 'That would look great on your CV, not so good on mine,'" he tweeted.

And the festival sponsors, whoever they are apparently are willing to continue to let Mr. Dawkins speak. 

Our message to those who want to suppress thinking and thought, ‘Have a little faith’.

David Frum Celebrates Diversity at the GOP Convention - 11 Prime Time Speakers – 5 Women – 5 Minorities

And Even Includes the First Lady of Puerto Rico!

Here’s a very difficult final exam question in  Political Science 101.  List at least five policies of the Republican Party that are supportive of the goals and aspirations of women and minorities.  (Extra credit if you can name just one).  And here is the easiest final exam question for Poly Sci 101.  List at least 500 policies of the Republican Party that are detrimental to the goals and aspirations of women and minorities.

So it is no surprise that when the Republican party went to select their prime time lineup of speakers for their convention they had trouble finding Republican women and minorities who would fill the spots.  But they managed to do it.  So from David Frum we now have the convention lineup for prime time.

Eleven prime-time speakers at the Republican national convention. Five of them women. Five of them minorities.

Monday, August 27, 2012 – PRIMETIME LINE UP

• Governor Nikki Haley (SC)
• Governor Mike Huckabee
• Governor Jeb Bush

Tuesday, August 28, 2012 – PRIMETIME LINE UP

• Mrs. Ann Romney
• Mrs. Luce Vela Fortuno, First Lady of Puerto Rico
• Governor Chris Christie (NJ)

Wednesday, August 29, 2012 – PRIMETIME LINE UP

• Former Secretary of State Condoleezza Rice
• Governor Susana Martinez (NM)
• Vice presidential nominee Rep. Paul Ryan

Thursday, August 30, 2012 – PRIMETIME LINE UP

• U.S. Senator Marco Rubio
• Governor Mitt Romney

Wow, what a lineup!  They were even able to locate an African American! And notice that on Tuesday night we have the First Lady of Puerto Rico.  Now we do not know anything about Ms. Luce Vela Fortuno, and we can only assume that she is a decent, caring and loving person of great accomplishment.  But if anyone wonders why she is speaking, the answer is probably something like this fabricated story.

As Republican leaders planned their convention speakers they noticed that they had run out of women/Hispanic members of the party.  The group panicked, wondering what they were going to do when one member said that while he was not sure, he thought that maybe the wife of the Governor of Puerto Rico was a woman and an Hispanic.  After considerable research the group determined that was indeed the case, and designated Ms. Fortuno as a prime time speaker. 

Greatly relieved, several members noted that Ms. Fortuno filled two requirements. She was female and she had an Hispanic name.  More than one was quoted as saying that her selection as a speaker would surely convince almost all Hispanics to vote Republican and to ignore Republican support for laws that demand papers of Hispanics and want to throw every one of them in jail for being suspected of being the in country illegally.

As they left the meeting one member of the Republican leadership said “You know, we don’t have to fool all of the people all of the time, just 51% of them one day in November”.

Yep, that’s probably how it went.     

Morgan Stanley Mutual Funds Invest Heavily in Facebook -

Investors Pay Big Fees For That Kind of Expertise

The big story with respect to Facebook so far is the collapse of the stock price following its initial public offering.  This was not unexpected, after all the company raised billions of dollars on hype and hope, and really did not have a plan to utilize the money.  The main purpose of the IPO was to set up a public market for the shares so founders and early investors would have a way to cash in their shares.

Somebody forgot to tell all of this to Morgan Stanley, the investment bank that was a significant participant in floating the shares in the market.  Morgan Stanley made a nice piece of change in the deal.

Morgan Stanley had a crucial role in lining up orders for Facebook as the social-media company prepared to go public. It helped advise Facebook executives to increase the size and price of the IPO, despite warnings the company was making about its profit outlook. The New York securities firm, which declined to comment, took in $200 million in underwriting fees and trading profits, according to regulatory filings and people involved in the deal.

So Morgan Stanley was obviously pretty knowledgeable about the shares and the risks they carried. 

Well, maybe not.

New data show that eight of the top nine U.S. mutual funds with Facebook shares as a percentage of total assets are run by Morgan Stanley's asset-management arm, according to fund tracker Morningstar Inc.

Now this obviously raises all sorts of conflict of interest questions, but apparently Morgan did nothing illegal and did not violate any regulations.

Morgan Stanley's funds don't appear to have violated Securities and Exchange Commission rules limiting investments in offerings underwritten by an affiliate. SEC rules allow bank-affiliated mutual funds to participate in offerings in which the bank's investment bankers are advising the company, as long as the fund managers don't buy more than 25% of the deal and they buy the shares from a different bank.

And it may even be the fact that they were able to buy them before the IPO and at a lower price than the IPO price.  Of course none of that washes away the stink from the fact that a large purchaser of the shares also made a huge amount of money in the IPO.  But the problem here is not Morgan Stanley, it is in regulations which allow this sort of thing.  Certainly this part of the SEC rules didn’t hinder a company from making big bucks.

As for the investors, it would be nice to know whether or not they have a gain or a loss in their position in Facebook, but alas, regulations do not force release of that information.  See that would be regulating for the benefit of investors, and that is not what modern SEC regulations are doing.

As for Facebook, the $38.00 IPO price is just a little higher than the current price.  The current price is about $19.00 and change.  And yes for the math challenged, that is about 50% of the offering price.  But don’t worry, the fact that the stock has almost immediately lost half its value doesn’t mean Morgan Stanley has to give back any of the $200 million it made on the IPO. That wouldn’t be right. 

How Conservatives Win Arguments – Niall Ferguson Calls Fact Checking by Paul Krugman ‘Nit Picking’

It’s Okay, If Conservatives Had to Recognize Facts They Would Never Win a Discussion

At one time in U. S. history news magazines like Newsweek and Time were regarded as a reliable source of hard news.  In fact that’s why they called them news magazines.  Lately though they have joined the rest of the degradation of news, publishing puff pieces, writing extensively on entertainment and fashion and in some cases just making things up. 

Case in point is a lead article in Newsweek by Niall Ferguson.  Here is a summary of the problem by Paul Krugman.

There are multiple errors and misrepresentations in Niall Ferguson’s cover story in Newsweek — I guess they don’t do fact-checking — but this is the one that jumped out at me. Ferguson says:

The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period.

Okay, that is a pretty damning fact, one that is certainly newsworthy in this election season.  Or would be if it were true.

Readers are no doubt meant to interpret this as saying that CBO found that the Act will increase the deficit. But anyone who actually read, or even skimmed, the CBO report (pdf) knows that it found that the ACA would reduce, not increase, the deficit — because the insurance subsidies were fully paid for.

Now, people on the right like to argue that the CBO was wrong. But that’s not the argument Ferguson is making — he is deliberately misleading readers, conveying the impression that the CBO had actually rejected Obama’s claim that health reform is deficit-neutral, when in fact the opposite is true.

Oh darn, that is a problem isn’t it.  But Newsweek has a response, and here it is.

In an in-house interview yesterday, Newsweek executive editor Justine Rosenthal said Ferguson's controversial and heavily criticized cover story about President Obama was an opinion piece and did not reflect the opinions of Newsweek.

"This is not the opinion of Newsweek, this is the opinion of Niall Ferguson," Rosenthal said.

And that’s an almost acceptable response, because obviously writing without factual support is opinion.  But then there is this.

The interview was posted around the time Ferguson posted his own rebuttal to Krugman. Ferguson responded to other critics this morning, standing by his work and dismissing they're (sic) fact-checking as "nit-picking."

Yep, requiring a position to be supported by facts rather than being counter factual is ‘nit picking’.  Well nits are the eggs of head lice, and we all think it is fair to say that people like Mr. Ferguson are infected with lice.  After all there has to be some explanation of their warped thinking.

Why Mitt Romney Really Chose Rep. Paul Ryan for the VP Slot – He’s Abandons Earlier Positions When They Become Politically Inconvenient

Ryan Loved Ayn Rand Philosophy Before He Didn’t

The one key characteristic of Mitt Romney’s persona is that he is so dedicated to his ambition to be President and so willing to say and do anything to get there that he abandons any prior beliefs unhesitatingly when they are inconvenient.  For Mr. Romney a political belief is not a core value, it is simply a tactic to obtain whatever office or political goal he is seeking at that time.  If later the belief is an obstacle, it is just discarded.

No one in modern times will ever come close to matching Mr. Romney in insincerity.  But his chosen running mate, Rep. Paul Ryan has at least one set of beliefs that are Romneyesque in their ability to be jettisoned.  Apparently early on in his political career Mr. Ryan adored the philosophy of fiction author Ayn Rand.  Today Mr. Ryan dismisses the works of Ms. Rand with disdain.

“I reject her philosophy,” Ryan told Robert Costa of the National Review. “It’s an atheist philosophy. It reduces human interactions down to mere contracts and it is antithetical to my worldview.” He added that he had merely “enjoyed a couple of her novels,” which also included another bestseller, “The Fountainhead.”

Of course in the 20^th and 21^st centuries we now have recorded history.  So as far as Mr. Ryan’s current beliefs are concerned, there is a little conflict with his prior beliefs.

But Ryan made no bones about his philosophical influences just a few years ago. He told the Weekly Standard in 2003 that he gave his staffers copies of “Atlas Shrugged” as Christmas presents. Speaking to a group of Rand acolytes in 2005, Ryan said, “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand. And the fight we are in here, make no mistake about it, is a fight of individualism versus collectivism.”

Now no one, including The Dismal Political Economist really cares a whit whether or not Mr. Ryan loves or hates the works of Ayn Rand.  But some of us care whether or not a politician has even the least amount of intellectual integrity.  And given the state of American politics that level of acceptable integrity is very, very low.  Mr. Romney, of course is even below that and it may be that in selecting Mr. Ryan he has found someone at his same level.  No, that is not a compliment. 

Romney Medicare Plan to Increase Costs for Current Seniors – Because He Doesn’t Understand What He is Doing

But Will Claim He Does Anyway – Mitt is Very Generous with Your Money

To listen to the Romney – Ryan campaign one would think that Mr. Obama’s health care plans gut Medicare and that their plans keep Medicare costs to current recipients from rising.  The truth, it turns out, is jut the opposite.  If the Romney proposal to restore cuts in funding for various health care providers are restored, part of those higher payments will be paid by current recipients of Medicare.

This is a complicated issue, but the basic concepts are the following.

1. In exchange for obtaining universal health insurance coverage providers agreed to accept reductions in the reimbursements for service they provide under Medicare.
2. Restoring those cuts in reimbursements will result in higher Medicare expenses, some of which will be paid for by recipients.

Here is a better explanation.

Marilyn Moon, vice president and director of the health program at the American Institutes for Research, calculated that restoring the $716 billion in Medicare savings would increase premiums and co-payments for beneficiaries by $342 a year on average over the next decade; in 2022, the average increase would be $577.

Beneficiaries, through their premiums and co-payments, share the cost of Medicare with the government. If Medicare’s costs increase — for instance, by raising payments to health care providers — so, too, do beneficiaries’ contributions.

And those costs would be on top of the costs involved with a full repeal of the health care law, which would eliminate expanded coverage of prescription drugs, free wellness care and preventive checkups.

So what is going on here.  Politics, not reality nor integrity. 

“One can only wonder what’s going on inside their headquarters in Boston and among their policy people,” said John McDonough, the director of the Center for Public Health Leadership at Harvard. “But there are only two explanations: Either they don’t understand how the program works, which is hard to imagine, or there is some deliberate misrepresentation here because they know how politically potent this charge is.”

But Mr. McDonough is probably wrong.  What is going on here is both, the Romney people don’t understand the program, and as far as deliberate misrepresentation is concerned, well that’s the core of their campaign strategy on every issue.

But not to worry Romneyites, you can easily get away with all of this.  A combination of a compliant press corps and a complex issue is all you need.

In a rare circumstance where a politician can summarize things clearly, here is exactly what is going on.

“The bottom line,” said Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, which Mr. Ryan leads, “is that Romney is proposing to take more money from seniors in higher premiums and co-pays and hand it over to private insurance companies and other providers in the Medicare system.”

What, you expected something else?

Correction – The Name of the Augusta Golf Club is the Augusta NATIONAL Golf Club

But National is Not the Nation You May Think

This Forum was rather nasty, sarcastic and condescending in its criticism of the host golf club of the Master’s tournament which is the August National Golf Club.  Some folks have written in and expressed concern that proper respect and umbrage was not paid to an organization that is truly “National”, as noted by the term “National” in its name.  The implication was that in criticizing August National we were criticizing the nation of the United States.

So we want to take this opportunity to sincerely recognize that the Augusta National Golf Club is  indeed a ‘national’ golf club.  But we must note that the nation referred to is not the United States of America.  See this nation was founded on the concept of equality, really it was.  One can read all about it in the Declaration of Independence and in the various amendments to the Constitution which confirm and affirm the concept of equality.

The ‘nation’ that must be referred to by the term “National” in the name of the August National Golf Club must be some other nation.  It must refer to a nation where a group of rich men deny equality and equal status to women and minorities.  It must refer to the nation of Iran, or other countries that practice what August National preaches.

After careful consideration we think that Saudi Arabia is probably the nation referred to by the term ‘National’ in the name of the golf club.  The practices of the members of Augusta are certainly closer to the culture of that nation than any other.  But maybe we are being too severe on Augusta 'National'.  After all the Saudi's do not allow women to drive a car, and as far as we know the men of Augusta 'National' are willing to allow women to drive, as long as they do so by taking and picking up the kids, going to the grocery store or picking up their husband's dry cleaning.  They definitely need to be home in time to fix dinner.

UH – OH --- Warren Buffet Ends Holdings on Muni Bonds CDS – Unwilling to Take Risks on Munis

 A Problem Ahead, or Just a Scared Investor? - Doesn 't Matter, If This Particular Investor is Scared There is a Problem Ahead

Financier Warren Buffet has made a lot of money being right.  So when Mr. Buffet’s companies issued Credit Default Swaps, which are insurance against default on state and local debt everyone took this as a good thing.  But Mr. Buffet has just decided to end his exposure, and has closed out over $8 billion worth of these CDS’s, meaning he is no longer willing to provide insurance for municipal bonds.

The Omaha, Neb., company recently terminated credit-default swaps insuring $8.25 billion of municipal debt. The termination, disclosed in a quarterly filing with regulators this month, ended five years early a bullish bet that Mr. Buffett made before the financial crisis that more than a dozen U.S. states would keep paying their bills on time, according to a person familiar with the transaction.

The insurance-like contracts, which required Berkshire to pay in the event of bond defaults, were originally purchased by Lehman Brothers Holdings Inc. in 2007, more than a year before the Wall Street firm filed for bankruptcy, the person said.

Issuing CDS’s is a nice lucrative business, because the issuer gets to keep the premium paid for the CDS and doesn’t have to come up with any money unless the bond that is insured defaults.  With state and local debt this has been a very rare occurrence.  So when Mr. Buffet decided to end this lucrative business, possibly at a loss that is something to be worried about.  The problem is particularly severe in California, although Illinois is also in the danger zone.

Some investors said the decision to end the bet indicates that one of the world's savviest investors has doubts about the state of municipal finances. If so, the move could be a warning to investors who have purchased such debt. In canceling the contracts early, Mr. Buffett probably "doesn't want this exposure anymore and is getting out while he can," said Jeff Matthews, a hedge-fund manager who personally owns Berkshire shares.

A major series of defaults in the municipal sector would create a Greece like problem for the U. S, and while that is not likely, it is clear that one of the most savvy investors ever thinks the risks have risen.

Great, just another thing to be worried about. 

Memo to Mitt Romney: If you have to spend millions to portray yourself as warm, friendly and open isn’t that the problem

Clueless in Tampa

On the likeability issue Mitt Romney fails, for the simple reason that this is not a very likeable person.  All of us want to be wealthy and successful but Mr. Romney gives the impression that this is the only driving force in his life, and that accumulating great wealth regardless of its source or the negative impact on others is his sole defining trait.

To counter this his professional handlers in Tampa are planning to present the warm and fuzzy Mitt, and to spend unlimited resources in doing so.

Working from makeshift offices at a hockey arena here, a team of Romney advisers, producers and designers has been staging and scripting a program for the Republican National Convention that they say they hope will accomplish something a year of campaigning has failed to do: paint a full and revealing portrait of who Mitt Romney is.

And to do this they plan a truly mystifying approach.

Instead of glossing over Mr. Romney’s career as a private equity executive, they will highlight it in convention videos and speeches as the kind of experience that has prepared him to be the economic steward the country needs.

That’s right they plan to emphasize Mitt’s experience as an investor.  Not as a builder of businesses, not as a generator of jobs but as a greed driven executive in private equity, where his skills were using other people’s money to make a great fortune for himself.  Really, that’s the image they think has been missing from the campaign.  Here’s how they plan to convey it.

The most ambitious element of stagecraft, however, will be the podium — which features 13 different video screens — the largest about 29 feet by 12 feet, the smallest about 8 feet by 8 feet and movable. All the screens will be framed in dark wood.

“Even the frames are designed to give it a sense that you’re not looking at a stage, you’re looking into someone’s living room,” said Russ Schriefer, one of Mr. Romney’s senior advisers who is running the convention planning for the campaign.

Yeah, the living room of a mega millionaire who thinks he should be President because he managed the Olympics and served on term as Governor and turned his back on his one sole accomplishment while in the job.

The professional handlers will spare no expense.

The campaign aides are determined to overcome perceptions that Mr. Romney is stiff, aloof and distant. So they have built one of the most intricate set pieces ever designed for a convention — a $2.5 million Frank Lloyd Wright-inspired theatrical stage. From its dark-wood finish to the brightly glowing high-resolution screens in the rafters that look like skylights, every aspect of the stage has been designed to convey warmth, approachability and openness.

And the impression most voters will get – Here is a guy with a great interior decorator and the money to afford it.

Sorry Mitt, all of the above says why you are regarded as stiff, aloof and distant.  And it is because you are stiff, aloof and distant, no amount of paid staff and false image will convince anyone otherwise.  That doesn’t mean they won’t vote for you or even elect you, but nobody is ever going to like you.