[Photo by Piron Guillaume via Unsplash]

Vertical Demand Curve: When Your Money or Your Life Isn’t a Choice

[NB: Byline — check it. /~Rayne]

Hold this thought: depicted above is a gun.

Like nearly every freshman student, I took my Economics 101 along with Intro to Business, Accounting 101, Intro to Marketing my first year of B-school.

This is when the indoctrination begins, when these squeaky-new eager beavers departing their teens are slowly steeped in the toxins of American-style business.

I was an older than average student, though, having switched majors after working for a few years before I returned to school. I’d seen and done things before I returned to the classroom, squinting often at a blackboard in disbelief.

My first econ prof was fairly young himself; he was also an avowed libertarian. Everything he taught was colored with the perspective that government was a bad thing. My younger cohort went along without questioning this view.

And yet our prof had a difficult time saying government was bad when introducing us to  supply and demand curves.

More supply, price goes down. More demand, price goes up. The degree to which the market is sensitive to price or demand is reflected in elasticity. Basic.

But then we were presented with the vertical demand curve — when the buyer will pay anything for the available supply, when demand is perfectly inelastic.

This is the model for business in which the supplier demands your money or your life, a gun to one’s head, “Give me all your money or you’re dead,” a perfectly inelastic demand curve.

Libertarian prof called this extortion. The dutiful 18- and 19-year-olds in class nodded their heads, fighting a yawn. From the look of them none had experienced this caliber of threat.

Prof made a departure from “government is bad,” by insisting this is the point when government should regulate the market. He said it was illegal to base an exchange on forfeiting every claim to rights including one’s life; we prohibit extortion.

This is why health care should be regulated, he said. I was a little skeptical at the time; this was smack in the middle of the Reagan years and there wasn’t a lot of regulation on health care per se. If you got cancer there weren’t many options no matter how much money you had; doctors cut it out or tried to zap it with a limited range of therapies.

The risk then wasn’t the cost as much as the gamble of effectiveness. I lost a dear friend to the after-effects of available therapy; they survived a bone marrow transplant in the early 1980s but their immune system failed.

Decades later we have a sizable number of therapies for illnesses which are effective and keep people alive, but the number of people who suffer from some of these illnesses are so low that these drugs aren’t profitable. The Food and Drug Administration has helped in these cases — until now.

The “gun” in the image above is a money-or-your-life situation for patients with Lambert-Eaton Myasthenic Syndrome (LEMS), who may require permanent hospitalization or suffocate and die without this drug called Firdapse.

Thanks to the FDA calling Firdapse an “orphan drug,” the company which owns its intellectual property rights will now charge $375,000 a year for this medication.

One patient in Iowa said she’s willing to pay something for the medication but a year’s therapy is three times what her house is worth. She doesn’t know if her health care insurance will cover it.

This isn’t even your money or your life now — she doesn’t have the money.

She’s gotten the business end of the gun without any warning, after having benefited from the drug for years.

This is worse than extortion; it’s a death sentence for anyone who isn’t a billionaire. Yes, billionaire because someone worth a million can pay for a little more than two years of this drug and that’s it.

Why Catalyst, the company which owns Firdapse’s intellectual property, even bothered to buy this drug is beyond me. If the three million patients who currently rely on this drug can’t afford it, there’s no profit to be made, no recouping the cost expended to buy the rights to the drug.

With only a couple thousand billionaires in the world I find it hard to believe enough of them will develop LEMS and pay for Firdapse to make the acquisition worthwhile.

It’s not just an unethical business, creating a gun to hold and fire against the heads of LEMS patients.

It’s really stupid business to aim an economic gun at one’s self.

I wonder all these years later how many former B-school students struggle with the vertical demand curve lessons once they enter the real world.

And I wonder what the supply curve looks like when it comes to insulin, the price of which has jumped dramatically over the last few years so that it has become your-money-or-your-life proposition for many diabetics.

At what point is insulin no longer profitable — after 10, 25, or 50% of insulin-dependent patients die because they can’t afford it, is it no longer profitable to make insulin?

Treat this as an open thread.

[Photo by Piron Guillaume via Unsplash]

A Neoliberal Argument for Medicare for All

[NB: Note the byline, as always. /~Rayne]

The old white billionaire dudes lipping off about “un-American” expectations of fairness and equity in income distribution jogged something loose in me.

I’m so damned angry about their willingness to complain their ability to buy yet another fucking yacht may be diminished because the average working American has the chutzpah to demand health care for everyone on top of a living wage.

What really cheeses me off is the utter stupidity of these so-called business geniuses.

WHY ARE THEY IN THE HEALTH CARE BUSINESS AT ALL??

Let’s pick on Mr. Luxury Beverage’s business. His core competency is preparing beverages to meet Americans’ tastes in an appealing environment.

Why has he spent any of his corporation’s human resource dollars on health care programs? His corporation’s expertise is NOT health care or insurance; they’re only providing health care because competition for stable, healthy employees is tight and turnover costs a butt-load of money.

I know you’ll love that technical term ‘butt-load’ but seriously, turnover in low-wage jobs in which employers have invested considerable training eats away at profit margins. It can take a year or two for low-level employees to reach maximum productivity — like pouring the optimum level of crema on a double espresso and know the entire menu by heart while operating at full-speed during rush hour.

What does it cost the Luxury Beverage business if workers leave inside that first year because they can get health care elsewhere?

Ditto for Mr. Business News Provider. His core competency is gathering, reporting, distributing timely news preferred by businesses ahead of the rest of the competition; time matters greatly if stock trades on this corporation’s work product. Why is his corporation in the health care business at all?

And yet both disparate businesses — beverage purveyor and news distributor — expect a comparable level of health among their workforce. They aren’t factoring into SWOT analyses the possibility a competitor’s workforce might be more healthy and fit.

If we look at other industries like the automotive industry or construction, healthy workers who can handle physical demands becomes mission critical. Only so much work can be automated or eased with technology and equipment.

And yet the cost of negotiating and providing health care for their employees can be the difference between profitability and business failure.

The challenge is greater when competing with companies overseas as automakers do.  Health care costs for the Big Three here add a significant percentage to the cost of goods sold — far more than $2 billion a year — while their foreign competitors pay less because the costs is absorbed across all of society instead of their businesses’ experience. The costs are based on a population which has had uniform access to health care throughout their lives.

So why are industries which aren’t delivering health care in the business of providing health care at all?

It’s in the best interest of the country and its industries to use economies of scale to acquire good health care at lower cost, provide it to the entire country, so that the country’s businesses can focus solely on their core competencies as well as the features which differentiate them positively from competing overseas products.

This is exactly what the neoliberal “strong but impartial state” is for in concert with “free enterprise, the system of competition,” to provide what the people know is needed to establish economic justice, insure domestic peace, provide for the common defense against health and employment insecurity, promote the general welfare of all citizens and workers, while securing an optimum opportunity for businesses to compete.

The U.S. is going to spend $3.5 trillion on health care this year under this current system. This is nearly two times what comparable countries spend on average. It’s inflating the cost of everything we make and sell. Imagine the profits corporations could make and keep if they didn’t have to spend valuable time and resources on health care benefits management.

But, but socialism! — this is the immediate refrain offered as push back against institutionalizing health care as a federal program to be provided to all.

Do you see either Mr. Luxury Beverages or Mr. Business News Provider complaining about the federal government’s role in assuring baseline education across the country through its K-12 public school system? I would argue this is the most American federal program we have now or have ever had since its inception with the Pilgrims.

But socialized K-12 education!

Imagine having to argue as a presidential candidate that we can’t have education for all though this program has already directly benefited every business and our common defense in some way.

Imagine American corporations, each independently in isolation, spending billions each year on human resources to research and negotiate education programs as an offering for employees and their families. Ridiculous, right? It’d suffocate so many young businesses on the verge of scaling up.

But these old white male billionaires don’t see any problem with publicly-funded education for all which helped make them what they are today.

I can’t believe I’ve had to argue a neoliberal case for publicly-funded health care for all because a guy who grew up in public housing thinks such health care is “un-American.”

 

Treat this as an open thread.

Let Them Eat (Starbucks’ Coffee) Cake

A couple of older billionaire white dudes have been shooting off their mouths. One of them is partially clued in. The other one apparently lives on a different planet where the sky is a groovy coffee-colored plaid.

I’m sure I’m preaching to the choir when I point out these facts:

The links above include scolding by financial experts who say Americans need to do a better job of saving. But…

Don’t get me started on what college tuition and subsequent debt does to Americans’ ability to save.

We all know that health care costs have not improved and remain the leading cause of bankruptcy in the U.S. even though more Americans have health insurance under ACA.

And rich older white dudes are completely, utterly, hopelessly out of touch about the financial facts of life for nearly half of Americans let alone the next 2-3 deciles.

Like Wilbur Ross — our Commerce Secretary who lied about his assets and clearly knows nothing about Americans’ daily commerce — struggled to comprehend why federal employees might need to use a food bank after missing a paycheck.

Just get a loan, Ross thinks. Sure, sure, banks give signature loans to people without any collateral let alone a source of income all the time. Come on, Wilbur: would you invest in a bank offering those kinds of terms to the average Joe/Josephine off the street?

And then there’s Trump, who thinks we can just ask the grocer to extend some credit for an unspecified period of time. Right — a nationwide grocery chain clearing 1-3% a year in profits can afford to extend credit.

So goddamned clueless he is. I’m only surprised he didn’t tell furloughed federal workers he’d give them a 5% discount to play golf at one of his courses during their free time.

76-year-old billionaire Michael Bloomberg, who thinks he’s still young enough to run for president in 2020, trashed Sen. Elizabeth Warren’s wealth tax proposal as “probably unconstitutional,” thereby revealing his brain’s atrophy. If taxing higher levels of income wasn’t unconstitutional under Hoover, Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Carter, then it probably isn’t unconstitutional.

And then Seattle coffee magnate Howard Schultz popped off at Rep. Alexandria Ocasio-Cortez’ proposals to increase marginal tax rates on the uber-wealthy, calling her “a bit misinformed” and her proposal “un-American.”

Except the U.S. had higher tax rates on the wealthy, for most of the 20th century. The country could afford to build more infrastructure; it built a successful public school system and went to the moon. How nice for Schultz that he could grow up and become a young entrepreneur in that economic environment.

(Put a pin in here for future reference, as a reminder that Schultz not only called AOC “un-American” but Sen. Kamala Harris, too. It’s as if he has a problem with women of color…)

Schultz thinks he has become a billionaire all on his own, as if the increasingly fascist political system with its active suppression of younger, marginalized citizens played no role in his wealth accumulation.

As if the last two decades of stagnant wages due to employment monopsony, repressive Federal Reserve policies, and the real estate market haven’t helped line his pockets by assuring low-wage workers get locked in and unable to move to better paying jobs.

Schultz has been able to accumulate massive amounts of wealth on the backs of people who aren’t being paid living wages, out of the wallets of those whose limited resources allows them to buy a coffee but not a house or health care. He’s rolling in a sea of cash because minimum wage workers are living in little more than indentured servitude.

You know what’s really un-American?

An ungrateful and narrow-minded billionaire white dude who doesn’t think living wages and health care for everyone are fair, who thinks that higher taxes after his first $50 million are theft.

A purveyor of luxury beverage products unable to grasp the unselfish commitment it will take to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty for all the people.

At least Bloomberg sees the danger Schultz’s presidential candidacy poses to this country.

But Schultz isn’t in it for the country’s benefit. He’s in the race for himself. It’s clear he’s done the number crunching and determined that it’s cheaper to run for POTUS even if he were to cause Trump to win re-election. (I’ll bet he’s even figured out how to write off his exploratory trips around the country as a business expense.)

Because the campaign expenses are less than the cost to his personal wealth if he were taxed at a higher rate and if he were also forced to pay living wages to his workers.

What a pity Schultz hasn’t calculated how much more overpriced, excessively roasted coffee minimum wage workers can buy if they didn’t have to worry about health care expenses on top of their rent.

 

Treat this as an open thread.

Before Trump Did Nothing When Mohammed bin Salman Went After Jamal Khashoggi, He Did Nothing When MBS Went After Alwaleed bin Talal

There are a number of stories suggesting that the Trump administration will do nothing in response to the evidence that Mohammed bin Salman lured journalist Jamal Khashoggi to the Saudi consulate in Turkey to have him murdered and dismembered.

Trump has made a show of pretending to get to the bottom of things, while saying doing anything about it would hurt US-Saudi relations (meaning arms sales).

As outrage started to grow, MBS called Jared Kushner, with whom he has a close relationship sealed over all night conversations.

The White House said Wednesday that the powerful Saudi crown prince, Mohammed bin Salman, had spoken about Khashoggi the previous day with White House national security adviser John Bolton and Trump’s son-in-law and senior adviser Jared Kushner. Kushner and the crown prince, who is commonly referred to as MBS, are known to be close.

A former administration official told POLITICO that MBS had demanded the call earlier in the week after the top official at the U.S. Embassy in Riyadh asked MBS directly about the Khashoggi case. The crown prince denied any wrongdoing in his conversation with that embassy official, the former official said.

Neither the White House nor the State Department would comment on the Saudi crown prince’s demand or most other aspects of this story. But the former official said the crown prince’s insistence on talking directly to the White House indicates he is hoping to leverage his close ties with Kushner and others in Trump’s inner circle to avoid repercussions.

And the business community — including close Trump allies — seem prepared to head for an investors conference in Saudi Arabia in spite of the assassination.

But if it becomes clear that the prince ordered the assassination of Mr. Khashoggi or was connected to it in some way, it will provoke an outcry on Capitol Hill; embarrass American executives, dozens of whom are flocking to Riyadh for a conference next week where the crown prince is scheduled to speak; and put Mr. Kushner, who was once himself a newspaper publisher, in an extremely awkward position.

Among the prominent figures scheduled to take part are Jamie Dimon, the chief executive of JPMorgan Chase; Stephen A. Schwarzman, the chief executive of the Blackstone Group; and Dara Khosrowshahi, the chief executive of Uber.

Two other scheduled attendees have ties to Mr. Trump: Thomas J. Barrack Jr., a financier who is a friend of the president’s; and Dina H. Powell, a Goldman Sachs executive and former deputy national security adviser who worked closely with Mr. Kushner on Saudi Arabia and is a leading candidate to replace Nikki R. Haley as ambassador to the United Nations.

The Treasury Department said Mr. Mnuchin was still planning to attend.

While Congress has responded to this assassination by leveraging the Magnitsky Act, it seems the Administration would just like attention to the killing to fade.

Which really shouldn’t be a surprise.

The Administration did nothing last year when MBS targeted an even more prominent western-connected Saudi, Alwaleed bin Talal. Alwaleed was detained for 83 days by MBS until such time as he agreed to some kind of deal with the government, which may have involved handing over a substantial part of his fortune and acceptance of greater involvement in his business decisions.

Did you have to pay the government any money, did you have to hand over any land, did you have to surrender any shares?

When I say it’s a confidential and secret agreement, an arrangement based on a confirmed understanding between me and the government of Saudi Arabia, you have to respect that.

I’m a Saudi citizen. But I’m also a member of the royal family. The king is my uncle. Mohammed bin Salman is my cousin. So my interest is in maintaining the relationship between us and keeping it unscratched.

While Alwaleed is in no way a Saudi dissident, as Khashoggi was, he was a crucial cog not only in Saudi-US relations, but by virtue of his substantial investments in key US companies, in the US economy.

And western observers watched as MBS exerted some kind of influence over Alwaleed with only hushed complaints.

Far from criticizing the crackdown, Trump (and Jared, before the fact) appeared to sanction it.

Trump might do so not just because he has a fondness for authoritarianism. Starting fairly early in his presidential campaign, Trump had responded to Alwaleed’s criticisms of him with public mockery.

The Alwaleed-Trump tiff began in 2015, when candidate Trump called for curbing Muslim travel to the US in a bid to prevent terrorist attacks. Because of that, Alwaleed tweeted that the Republican front-runner was a “disgrace” and should bow out of the race. Mr. Trump responded that the prince was “dopey” and was seeking to “control our US politicians with daddy’s money.”

At one point, the future president tweeted a photo of Alwaleed alongside Megyn Kelly, then a Fox News correspondent who had clashed with Mr. Trump. It turned out that the image was a fake, and Mr. Trump falsely claimed that Alwaleed was “the co-owner of Fox News.” In fact, the prince had a stake in Fox’s (FOXA) sibling company, News Corp. (NWS), amounting to about 7 percent. He since has cut it drastically.

Alwaleed has countered Mr. Trump’s attacks by pointing out that he helped bail out the New York developer when the highly indebted Trump empire teetered on collapse in the early 1990s. First, the prince bought Mr. Trump’s 283-foot yacht for a bargain price of $18 million and with a partner bought out the Plaza, a storied New York hotel, which the Trump Organization owned.

Indeed, the Intercept reported that Jared provided intelligence from the Presidential Daily Brief to MBS on people he deemed disloyal to the regime.

In late October, Jared Kushner made an unannounced trip to Riyadh, catching some intelligence officials off guard. “The two princes are said to have stayed up until nearly 4 a.m. several nights, swapping stories and planning strategy,” the Washington Post’s David Ignatius reported at the time.

What exactly Kushner and the Saudi royal talked about in Riyadh may be known only to them, but after the meeting, Crown Prince Mohammed told confidants that Kushner had discussed the names of Saudis disloyal to the crown prince, according to three sources who have been in contact with members of the Saudi and Emirati royal families since the crackdown. Kushner, through his attorney’s spokesperson, denies having done so.

“Some questions by the media are so obviously false and ridiculous that they merit no response. This is one. The Intercept should know better,” said Peter Mirijanian, a spokesperson for Kushner’s lawyer Abbe Lowell.

On November 4, a week after Kushner returned to the U.S., the crown prince, known in official Washington by his initials MBS, launched what he called an anti-corruption crackdown. The Saudi government arrested dozens of members of the Saudi royal family and imprisoned them in the Ritz-Carlton Riyadh, which was first reported in English by The Intercept. The Saudi figures named in the President’s Daily Brief were among those rounded up; at least one was reportedly tortured.

While that story line of Trump’s response to the persecution was largely dropped as Alwaleed’s detention drew on early this year, I don’t doubt that Trump’s personal animosity to Alwaleed made him, if anything, at least comfortable if not enthusiastic about MBS’s power grab at Alwaleed’s expense. If so, MBS would have played to Trump’s own penchant for revenge to undercut what otherwise might have been more vocal criticism of the arbitrary treatment of a key international businessman (that said, the US made surprisingly little noise when MBS sidelined Mohammed bin Nayef, either).

And at that moment, MBS established that Trump would not interfere with any crackdown on opposition — because Trump has already bought into it.

[Photo: Annie Spratt via Unsplash]

What Happened To The Cultural Elites: Changes in the Conditions of Production

My series on Trumpian Motion concluded with the question “What happened to the cultural elites?”; meaning why did they not do a better job of resisting the conditions that produced Trump and the ugly Republican party. Of course there is no single answer, but there are several contributing explanations. It’s worth examining these partial explanations, if for no other reason than the hope that open discussion might lead to changes.

I use the term cultural elites in the sense of Pierre Bourdieu as explained in David Swartz’ book Culture and Power: The Sociology of Pierre Bourdieu. Swartz says Bourdieu believed that culture is largely created by cultural producers such as artists, writers, academics, intellectuals; movie and TV writers, actors and producers; and both social scientists and physical scientists. I assume today Bourdieu would include technologists, especially computer tech workers who design and produce web sites, games, and platforms and much else. The products of these workers shape our interactions with the world and society, and provide a structure through which we understand ourselves and our roles in society.

In the US we don’t have a separate category for intellectuals. We have experts, who have mastered a chunk of knowledge and are able to use it to advance that knowledge and to offer specific guidance where their knowledge is relevant. And we have pundits, who aren’t experts but who have great confidence in their ability to explain things to the rest of us. They too are cultural producers and maybe even cultural elites, people like Tom Friedman, and David Brooks and others I won’t mention; they aren’t all old, you know. There are plenty of these people scattered across the political and ideological spectrum.

In a section discussing the relationship between workers and intellectuals, based in large part on a book on French intellectuals Bourdieu wrote in the late 1980s,Swartz offers an idea that seems relevant to the issue of why cultural elites did not forcefully resist the rise of neoliberalism.

Finally, Bourdieu points to changes in the conditions of intellectual production as a source of ambiguity in political attitudes and behaviors among highly educated workers. He notes a significant decline in the numbers of French intellectuals working as self-employed artisans or entrepreneurs and their increasing integration as salaried employees within large bureaucratic organizations where they no longer claim full control over the means of their intellectual production. P. 239, cites omitted.

This change might encourage more aggressive efforts against the dominant culture, because cultural producers might rebel against their dominated status. But this seems more likely:

These new wage earners of research, [Bourdieu] charges, become more attentive to the norms of “bureaucratic reliability” than act as guardians of the “critical detachment from authority” afforded by the relative autonomy of the university. Moreover, their intellectual products bear the imprint of the “standardized norms of mass production” rather than those of the book or scientific article or the charismatic quality traditionally attached to the independent intellectual. P. 239-40, cites omitted.

This seems like a good partial explanation of the failure of cultural elites to respond to neoliberalism. It also partially explains a point Mike Konczal raised in his article Why Are There No Good Conservative Critiques of Trump’s Unified Government? And, it helps explain the rise of Trumpism as discussed here.

The trend Bourdieu describes is obvious in the US; in fact integration of research workers into the ranks of salaried workers seems even stronger than Swartz’ description. The trend is perhaps worse here because colleges and universities have become so infused with neoliberal business practices, primarily the use of adjuncts (the gig economy for teachers) who have little stability, little opportunity for sustained research, little protection from the gatekeepers of orthodoxy, and much less “critical distance from authority”. Nevertheless, I think (hope) there is still a large amount of independence in academia, especially among tenured faculty. That independence is centered around expertise in fields of study, where depth of knowledge in small areas is paramount. Many of those areas of study are far too specialized for the general public, and for policy-making.

Much of academic study is intermediated for the public and for policy-making by and through think tanks and similar groups. Of course, those organizations do some interesting research, but most of the worker’s time and energy is spent extracting useful ideas from the bowels of journals and academic books and rewriting it so that the rest of us can understand and maybe act on it.

These organizations are dependent on their rich donors, and don’t tolerate much from workers that conflicts with the interests of their donors. As an example, Barry Lynn was at New America Foundation, a prominent democratic think tank for years. He wrote often on the problems of monopoly and lack of competition in the US economy. Then he wrote an article critical of Google, one of the big sponsors of New America, and was driven out. He and a few of his associates started Open Markets Institute with funding from George Soros, another wealthy donor with his own agenda.

Charles and David Koch tried to take over the Cato Institute, which they funded, and which claims to be a libertarian think tank. This effort which was not completely successful, causing a lot of distress on the conservative side. Not much critical detachment from authority there.

Perhaps we should read this as an example of another phenomenon Bourdieu describes, the attempt to exchange cultural capital for economic capital. There is nothing inherently wrong with this of course. For example, in the university setting, getting tenure should involve both teaching and research. Competition for status and other resources in one’s field should be driven by these skills, and so should be a net gain. Good teachers and researchers should be rewarded with tenure and a steady income to support further study and teaching.

3It isn’t obvious that this will happen in the think tank world. Further it’s hard to imagine how the kind of competition we see in academic fields would work in the private sector, where there are powerful forces at work to limit the scope of intellectual activity and control access to influence.

There are similar patterns in other areas of cultural production: journalism, movies, TV, magazines, book publishing, and large parts of the music industry. Consolidation and business failures have increased the control of the few over cultural production. Where once there were many outlets for culture producers, today there are fewer, and most of them are more rigidly ideological.

It’s easy to see how people can lose their independence in these settings. They see themselves as brain workers, employees responding to the cues of their work environment, trying to do good work and advance themselves in a bureaucratic system. Institutional pressures dominate independent thinking critical of existing authority. It isn’t necessary to attribute bad motives to them to despair at the outcome.

Money by Kevin Dooley via Flickr

The New Bezzle

John Kenneth Galbraith gave us the term “the bezzle” in his 1955 book The Great Crash, 1929. Galbraith saw that there was often a long time between a financial crime and its discovery. In the interim holders of the financial asset involved in the crime experiences “psychic wealth”, because they are unaware of the actual losses. Eventually, something changes, and they find out. The Bernie Madoff case is a good example. Until he was exposed after the Great Crash, his loser investors thought they had $57 billion in their accounts. Turns out they had net recoveries of about $10 billion on the $17 billion they invested. That puts the bezzle at $47 billion.

Here’s another example. In the Antebellum South, there were nearly 4 million slaves with a value estimated at between $3.1 and $3.6 billion. After the war, that value went to zero. What was the net worth of the slavers in the late 1850s? They thought they were rich enough to battle the Union on equal terms, but the value of slaves wasn’t nearly equal to the value of the steel mills and industry of the northern states.

The problem of identifying the value of capital interests is very difficult. In Capital in the Twenty-First Century Piketty acknowledges the problem, and selects a solution appropriate to his purposes: the market valuations of the many forms capital can take. Here’s an excellent essay discussing this choice and its critics. By using this definition, Piketty simply ignores the problem of the bezzle, which makes sense in the terms of his project. Using Galbraith’s definition I suspect it wouldn’t make make a difference.

But I think the term leads us to a broader definition. The Great Crash provides a good example of what that new definition should be. The current estimate is that the Great Crash resulted in the loss of nearly 30% of household net worth between 2007 and 2010. The average household lost nearly $50 thousand in net worth between 2007 and 2010 according to the GAO report. Page 27 in the .pdf. By 2013, when markets were functioning — let’s say normally — the GAO estimated total household paper wealth losses at $9.1 trillion. Report here.

A large part of this paper loss was the decline in financial assets which affected people directly and through their pensions and retirement plans. Another large part was the result of lower house prices, which left many people with mortgage debt higher than the new prices. Here’s a priceless sentence from the report:

Economists we spoke with noted that precrisis asset prices may have reflected unsustainably high (or “bubble”) valuations and it may not be appropriate to consider the full amount of the overall decline in net worth as a loss associated with the crisis.

I bet the millions of people who lost that money don’t really care what economists think now, because none of the economists who could have made this stick before the Great Crash said this when it would have mattered. Far from it: the economics tribe insisted that markets were all-knowing and perfect in their understanding, and spent their days explaining why this time was different.

This superficial description shows that these households are in the same position as Madoff investors and Southern slavers: they thought they had something they didn’t, and they changed their behavior based on it.

I can just hear Paul Krugman explaining that bubbles and bezzles are really hard to model, and that’s why no one studies them. That’s probably true. Also, so what? Here’s my clever idea: look for data and see what it tells us. It worked for Piketty, who found that the historical record showed that inequality increases when r > g. Piketty and Saez, and Gabriel Zucman who did the estimate on tax shelters, didn’t have a model. They did have dusty records and big computer skills, just like all their contemporaries.

I hope that somewhere in academia there are young economists who look at Piketty, Saez and Zucman and their colleagues and say “I could do that”. And it’s just not that hard. Here are some hints.

1. There’s a big pile of student loan debt that isn’t going to be repaid. How much of that is on the books of the US Treasury, and how much is private sector? How much in the latter category is delinquent? Who holds it and in what form? If it’s in trusts, there isn’t going to be any enforcement, and the losses will fall on the owners of the securities. If it’s in the hands of originators, what happens to their balance sheets as this stuff cascades into default?

2. Every month we see another big business crash and burn. Often they fail because they are held by private equity investment firms. The crashes mean that a lot of debt isn’t going to be repaid. How big is that likely to be, and who’s going to eat that loss?

3. For the past 8 years or so, investors have been chasing yield. There’s some Galbraith bezzle in this stuff. How much dreck is sitting in their portfolios?

4. What does the rest of the mortgage overhang and related RMBS look like?

5. How much money is there in organized crime? A big part of the profits filters into the economy in the form of some kind of investment. How much of it is in the stock market? What happens when or if that ever gets traced and seized?

6. In the same way, how much have oligarchs and politicians stolen from other nations and moved into world financial markets? What happens if we got serious about that?

7. Another form of points 5 and 6: Rich people have stashed as much as $32 trillion in overseas tax shelters. If people got serious about this, their governments could seize this money and/or impose huge taxes on it. Say half of it, $16 trillion, got sucked up by taxation and seizure, and was removed from the financial markets and banks where it sits. What would happen then?

So, economists, just how big is the bezzle?

10 Years Out: What’s with the Bear in the Middle?

[NB: Check the byline — it’s me, Rayne. I am not a registered financial representative or a lawyer; this post is based on my own observations and opinions. As always, your mileage may vary.]

On a chilly March evening ten years ago tonight, I was yelling at loved ones: Sell. For gods’ sake, SELL.

My own household had moved its investments from a number of mutual funds to guaranteed income. Every fund in the portfolio to that point contained a chunk of an investment bank and was therefore exposed to what I felt was sure to come.

It was obvious to anyone who was really paying attention that something was really off. Trying to buy a house in 2004 was almost impossible where I live, in spite of the ongoing migration of manufacturing jobs offshore. In the target price range for a 2000-square foot house, there were only a handful of homes listed and they all needed more than $50K in improvements. The nearby farmers’ fields were full of a new crop: single-family homes, mostly 3-bedroom and up, had eaten acres and acres in less than a year. It was insanity — there was no way this pace could be maintained, not with my state’s problematic over-reliance on the automobile industry.

Instead of buying an existing home, I built a new one. It didn’t make sense to spend $50K on improvements requiring a lot of construction if I couldn’t guarantee I could hire a contractor when new construction was so hot. I didn’t build in the top end neighborhood, either. I left myself some room in case I had to leave the area quickly for a new job; I also left room for the market to improve.

Except it didn’t. The last landscaping contractor must have pulled away from my new home in 2005 just as the bubble began to deflate. There were signs it was going to get worse, too, what with fuel prices skyrocketing. Banks increasingly offered crazy terms on mortgages just so they could something, anything, not taking the hint the market was saturated. Given the number of people relying too heavily on adjustable rate mortgages with ridiculously low entry rates, the increased gasoline price costing the average family more than $1000 a year was certain to cause credit card defaults and foreclosures.

Something ugly was coming.

~ ~ ~

In March 2008 — almost exactly a month after the Washington Post published an op-ed by New York’s then-Governor Eliot Spitzer exhorting action on subprime mortgages — 85-year-old  American investment bank Bear Stearns crashed and burned.

After urgent, fancy foot work by the Federal Reserve Bank, J.P. Morgan and other key investors, settlements were made with bail out money and remnants of the firm were ultimately snapped up by J.P. Morgan for what amounted to the cost of Bear Stearn’s headquarters building, about $2 per share. By St. Patrick’s Day, Bear Stearns was no more, completely subsumed.

It would be another six months before the next large investment bank crashed — Lehman Brothers — taking the global economy with it.

~ ~ ~

At the time the crash was blamed on lax controls on lending to home buyers, encouraging an excess of subprime mortgages, combined with investment banks’ more recent taste for collateralized debt obligations bundling mortgages into tranches for slicing up and trading.

But not all of the trash loans were residential mortgages stuffed into tranches. Some of the loans were to developers and contractors who were building commercial facilities and multi-family buildings. Some of these loans were packaged into funds which were more like offshore corporations.

The two funds triggering Bear Stearns’ meltdown were just that: offshore funds incorporated in the Cayman Islands in 2003, holding various assets including tranches of poorly-collateralized mortgages, managed by Bear Stearns Asset Management (BSAM). What mortgages were in these two funds the public doesn’t really know; were they single-family residential mortgages or commercial facilities mortgages, or some combination? The information is out there somewhere but it’s not at the public’s fingertips.

The financial media still paints a messy picture even a decade later, blaming Bear Stearns management but not its own persistent failure to provide a more comprehensive and accessible picture of the financial industry’s health.

These two funds collapsed because too many mortgages within their CDOs failed; the effect on the bank was like pulling out two critical load-bearing pieces in a game of Jenga. The cascading demand for cash to resolve the failures may have pushed other investment banks’ equally sketchy funds to fail as well, crashing the entire heap nearly a decade ago.

~ ~ ~

It was a surprise blast from the unpleasant past to see Bear Stearns’ name pop up in the middle of recent testimony before the House Permanent Subcommittee on Intelligence. Fusion GPS’ Glenn Simpson cited the investment bank as a source of financing for Donald Trump and some sketchy condominium development.

[SIMPSON]… There’s the Trump vodka business that was earlier. And then ultimately, you know, what we came to realize was that the money was actually coming out of Russia and going into his properties in Florida and New York and Panama and Toronto and these other places.

And what we, you know, gradually begun to understand, which, you know, I suppose I should kick myself for not figuring out earlier, but I don’t know that much about the real estate business, which is I alluded to this earlier, so, you know, by 2003, 2004, Donald Trump was not able to get bank credit for — and if you’re a real estate developer and you can’t get bank loans, you know, you’ve got a problem.

And all these guys, they used leverage like, you know, — so there’s alternative systems of financing, and sometimes it’s — well, there’s a variety of alternative systems of financing. But in any case, you need alternative financing.

One of the things that we now know about how the condo projects were financed is that you have to — you can get credit if you can show that you’ve sold a certain number of units.

So it turns out that, you know, one of the most important things to look at is — this is especially true of the early overseas developments, like Toronto and Panama — you can get credit if you can show that you sold a certain percentage of your units.

And so the real trick is to get people who say they’ve bought those units, and that’s where the Russians are to be found, is in some of those pre-sales, is what they’re called. And that’s how, for instance, in Panama they got the credit of — they got a — Bear Stearns to issue a bond by telling Bear Stearns that they’d sold a bunch of units to a bunch of Russian gangsters.

And, of course, they didn’t put that in the underwriting information, they just said, we’ve sold a bunch of units and here’s who bought them, and that’s how they got the credit. So that’s sort of an example of the alternative financing. … [bold mine, excerpt pages 95-96]

The timing mentioned, 2003-2004, is very close to the time that Bear Stearns launched the two Cayman-based funds which failed first. Is it possible Trump’s financing provided by Bear Stearns ended up in the funds’ CDOs? Probably not — Simpson refers to bonds. But let’s look at a financial statement from one of the subject funds:

It’s difficult to tell what’s in any of the CDOs listed in this summary. Who knows what mortgages are in them or from where they originated without access to more details?

Note the bonds at the bottom — again, what’s in them? What percentage of these bonds consisted of dicey or outright fraudulent financing for construction related to money laundering? Again, we can’t tell without access to more granular details. We don’t know whether bond(s) offered to Trump developments were in Bear Stearns’ first two failed funds or if they helped cause the eventual financial pyroclastic flow toward Bear Stearns’ end.

~ ~ ~

Another thing sticks in my craw — a bit from Michael Lewis’ The Big Short:

The bond market, because it consisted mainly of big institutional investors, experienced no similarly populist political pressure. Even as it came to dwarf the stock market, the bond market eluded serious regulation. Bond salesmen could say and do anything without fear that they’d be reported to some authority. Bond traders could explore inside information without worrying that they would be caught. Bond technicians could dream up ever more complicated securities without worrying too much about government regulation — one reason why so many derivatives had been derived, one way or another, from bonds. … [bold mine]

In other words, nobody would look askance at all at bonds sold to finance a condominium development with rather thin commitment to payment. Nobody looked askance at the ratio of CDOs to bonds, either, though Bear Stearns would try to offset the CDOs’ losses by liquidating bonds. This fund as an example couldn’t manage this offset based on the ratio alone; it would have been catastrophically worse if the collateral beneath the bonds was as fraudulent as many subprime adjustable rate mortgages in CDOs were at the time.

The root cause of the 2008 crash remains the collapse of poorly collateralized as well as fraudulent mortgages. But I have to wonder:

— With so much attention on CDOs and mortgage defaults combined with a lack of bond market adequate monitoring, how much did crappy bonds, based on fraudulent representations of collateral, contribute to the crash?

— If there was so little regulation and oversight of the bond market, how much sketchy or fraudulent project financing was in bonds on the banks’ books — including projects like Trump’s, based on promises to pay made by offshore vehicles or non-U.S. citizens?

— With so little regulation and oversight, would it have been possible for one or more nation-states using offshore finance vehicles to “weaponize” banks’ books? How many of the crappy bonds contributing to the 2008 crash were based on poorly collateralized pre-sales to Russian oligarchs and gangsters?

— What assurances do we have today — especially with Mick Mulvaney defunding the Consumer Finance Protection Bureau and knocking off an opportunity to look more deeply into credit reporting by killing off the Equifax investigation — that investment banks have changed their practices and ensured legitimate projects are financed?

—What assurances do we have that our legislators see the slippery slip when they approve legislation like S. 2155 just this week, weakening Dodd-Frank reforms?

~ ~ ~

Recall the state of the economy between Bear Stearns’ and Lehman Brothers’ crashes. Oil prices rose to over $150/barrel, resulting in $4/gallon gasoline. Other commodity prices rose in tandem with fuel prices. The home buyers who could least afford any change in their household expenses were the same ones targeted for subprime mortgages with shady terms; it came down to paying for gas to get to work and feeding the family, or making the mortgage payment.

The price of oil at the time had been driven up by excess speculation. Legislation passed in June 2008 requiring all commodity futures trading to require a minimum of 30% margin upfront rather than 10%. Oil prices dropped drastically and reduced in volatility almost overnight, but it was already too late. Too many home buyers could no longer afford their payments and mortgage defaults began to snowball.

Which brings me to yet another question: if the bond market could have been “weaponized” at that time, could a volatile commodities market likewise have been used as a trigger?

Are there any other weak points in our market which could be “weaponized,” for that matter?

~ ~ ~

On this tenth anniversary after the crash began with Bear Stearns’ collapse, I feel more secure about my retirement portfolio. There were no frantic phone calls to family members exhorting moves to safety this evening. My exposure to the remaining weaknesses of investment banking have been minimized as much as possible, though I remain vulnerable because I have a mortgage. Real estate isn’t the sure return it once was. Only uber-wealthy investors buying into certain urban markets come out on top. But wealthy real estate investors can still cause self-inflicted damage.

Atlanta, Georgia’s market has turned around since the crash — but it was home to another failed Trump real estate project, a 363-unit Trump Tower which went into foreclosure with pre-sales of only 100 units. (In January 2017, Trump ranted about Atlanta as Rep. John Lewis’ district, calling it “falling apart” and “crime infested.” One wonders what crime he meant…)

Hollywood, Florida had a brush with a failed Trump project:

In 2006, he and billionaire condo king Jorge Perez began selling a 23-story apartment building near Mar-a-Lago, but the project was abandoned a year later because of slow sales. Another Perez-Trump deal, the 200-unit Hollywood oceanfront tower, was foreclosed in 2010 after selling less than 15% of its units. (The building eventually opened, still Trump-branded, but without Perez.)

So did the Miami, Florida area:

Trump Sunny Isles, a three-tower residential complex outside Miami, has also struggled. Trump partnered with Perez again and another developer named Gil Dezer to build the project, which targeted wealthy Latin Americans. . . .

Unfortunately, the last two towers of the development opened in the middle of the financial crisis, and Perez bailed on them. . . .

And Puerto Rico, too, was home to a Trump-branded golf course which failed in 2015.

Though with so many failures followed by continued attempts, it’s worth asking if this is a business model. How does Trump continue to benefit from so much failure? How do the backers he has benefit from staking Trump money or title?

Trump’s business alone wasn’t the cause of the 2008 crash. There were far more players involved — millions, if we want to blame residential homeowners who were misled by banks to believe they could safely contract a mortgage in spite of either inadequate collateral or income and ultimately forced into foreclosure. But at least one of Trump’s business projects was in the mix if Fusion’s Simpson’s testimony is truthful; what would keep Trump or real estate investors like Trump from contributing to (if not causing) another crash today?

We must ask when we see that Trump’s former campaign manager Paul Manafort and his former son-in-law Jeffrey Yohai were engaged in sketchy real estate development projects the community/regional Banc of California may have deterred by forcibly shutting their accounts.

And ask again when we see a community bank like The Federal Savings Bank of Chicago involved in another of Manafort’s bank frauds.

The damage could be even worse, in the case of Trump’s son-in-law Jared Kushner, who is over his head in debt on 666 Fifth Avenue and whose family business is distressed, possibly causing geopolitical turmoil to shakedown new financing.

How many of these flimsy real estate deals and junky mortgages, loans, and bonds are there in the system when we can now see these affiliated with the president and his campaign advisers? How many of them will it take to cause another crash if legislators continue to pick away at safeguards?

Let’s hope I’m not writing another financial postmortem like this one in March 2028.

Money by Kevin Dooley via Flickr

Senate Democrats Caving, May Roll Back Dodd-Frank Regulations

After the recent indictments of Paul Manafort and Rick Gates which included charges for bank fraud, it should be obvious there are still problems with smaller banks making loans based on sketchy collateralization.

It’s right there in the indictments.

After reading about the recent relationship between bank fraudster Rick Gates, an identity monitoring company, and one of the biggest credit monitoring firms, it should be obvious there’s no daylight between bank fraud and other consumer financial products.

It’s right there in publicly filed records and marketing statements.

After reading about Donald Trump’s and Jared Kushner’s repeated real estate development failures, whether he borrowed the money from investment banks (Bear Stearns in 2006, in Trump’s case; Citigroup and Deutsche Bank recently, in Jared’s) or whether he licensed his brand while managing failing properties (Taj Mahal casino, Puerto Rico golf course, Panama condos, etc. failing after 2008), it should be obvious the underlying threats setting 2008’s economic crash in motion didn’t end after Dodd-Frank regulatory reform was passed. (Goodness knows Trump and Kushner aren’t the only failures, just the most well-known.)

Again, all of this is public record.

Which is why it is absurd that Democratic Senators are caving in and rolling back Dodd-Frank regulatory reforms with S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Do community banks need some relief from the additional expenses of compliance? Perhaps — but how does rolling back part of Dodd-Franks ensure that bank frauds like Rick Gates and Paul Manafort are stopped? Something isn’t working; the answer may be more, not less regulation.

Do Too-Big-To-Fail banks need to ensure they can’t crash the economy by virtue of their size? Sure, but what has been done to prevent more piecemeal failures like those Trump’s circle exemplify?

The capper? The CBO score on this bill sucks:

– The bill would increase federal deficits by $671 million over the 2018-2027 period
– And “would increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.”

Read this piece by Mike Konzcal, Why Are Democrats Helping Trump Dismantle Dodd-Frank?

Also Matt Yglesias at Vox, and Molly Hensley-Clancy at BuzzFeed — the latter points out voters want more regulatory control on banks, not less.

See also Indivisible’s backgrounder-explainer and @Celeste_P’s call script on S.2155.

And then call your senators and tell them to vote against S.2155, then come up with a better solution to help community banks. Enlist friends and family to make calls; this bill is expected to go to a vote late today or first thing in the morning.

You might also point out to Senate Dems if smaller community banks fail because of Trump’s policies and his circle’s kleptocracy, it’ll be on them for aiding and abetting Trumpian nonsense when they are up for re-election.

EDIT: I forgot you may not have this phone number memorized as I do —

US Capitol Switchboard (202) 224-3121

Make the calls now!

Three Things: This Matin, Think Latin

I have three things cluttering up my notes — just big enough to give pause but not big enough for a full post. I’ll toss them out here for an open thread.

~ 3 ~
Aluminum -> Aeronautics -> Stock Market and Spies
I’ve spent quite a while researching the aeronautics industry over the couple of years, trying to make sense out of a snippet in the Buryakov spy case indictment. The three spies were at one point digging into an aeronautics company, but the limited amount of information in the indictment suggested they were looking at a non-U.S. company.

You can imagine my surprise on December 6, 2016, when then-president-elect tweeted about Boeing’s contract for the next Air Force One, complaining it was too expensive. Was it Boeing the spies were discussing? But the company didn’t fit what I could see in the indictment, though Boeing’s business is exposed to Russia, in terms of competition and in terms of components (titanium, in particular).

It didn’t help that Trump tweeted before the stock market opened and Boeing’s stock plummeted after the opening bell. There was plenty of time for dark pool operators to go in and take positions between Trump’s tweet and the market’s open. What an incredible bonanza for those who might be on their toes — or who knew in advance this was going to happen.

And, of course, the media explained this all away as Trump’s “Art of the Deal” tactics, ignoring the fact he wasn’t yet president and he was renegotiating the terms of a signed government contract before he took office. (Ignoring also this is not much different than renegotiating sanctions before taking office…)

I was surprised again only a couple weeks later about Boeing and Lockheed; this time I wasn’t the only person who saw the opportunity, though the timing of the tweet and market opening were different.

Again, the media took note of the change in stock prices before rolling over and playing dead before the holidays.

There have been a few other opportunities like this to “take advantage of the market,” though they are a bit more obscure. Look back at the NYSE and S&P trends whenever Trump has tweeted about North Korea; if one knew it was coming, they could make a fortune.

A human would only need the gap as long as that between a Fox and Friends’ mention of bad, bad North Korea and a corresponding Trump tweet to make the play (although one might have to watch that vomit-inducing program to do this). An algorithm monitoring FaF program and Trump tweets would need even less time.

Yesterday was somebody’s platinum opportunity even if Trump was dicking around with U.S. manufacturers (including aeronautics companies) and global aluminum and steel producers. His flip-flop on tariffs surely made somebody beaucoup bucks — maybe even an oligarch with a lot of money and a stake in one of the metals, assuming he knew in advance where Trump was going to end up by the close of the market day. The market this morning is still trying to make sense of his ridiculous premise that trade wars are good and winnable; too bad the market still believes this incredibly crappy businessman is fighting a war for U.S. trade.

Just for the heck of it, go to Google News, search for [trump tariffs -solar], look for Full Coverage, sort by date and not relevance. Note how many times you see Russia mentioned in the chronologically ordered feed — mine shows exactly zero while China, Korea, Germany are all over the feed. I sure hope somebody at the SEC is paying as much attention to this as cryptocurrency.

I suppose I have to spell this out: airplanes are made of aluminum and steel, capisce?

~ 2 ~
Italian Son
One niggling bit from Glenn Simpson’s testimony for Fusion GPS before the Senate Intelligence Committee has stuck with me. I wish I could time travel and leave Simpson a note before testimony and tell him, “TELL US WHAT YOU SEE, GLENN!” when he is presented with Paul Manafort’s handwritten notes. The recorder only types what was actually said and Glenn says only the sketchiest bit about what he sees. Reading this transcript, we have only the thinnest amount of context to piece together what he sees.

Q. Do any of the other entries in here mean anything to you in light of the research you’ve conducted or what you otherwise know about Mr. Browder?

A. I’m going to — I can only speculate about some of these things. I mean, sometimes —

MR. LEVY: Don’t speculate.

A. Just would be guesses.

Q. Okay.

A. I can skip down a couple. So “Value in Cyprus as inter,” I don’t know what that means.”Illici,” I don’t know what that means. “Active sponsors of RNC,” I don’t know what that means. “Browder hired Joanna Glover” is a mistaken reference to Juliana Glover, who was Dick Cheney’s press secretary during the Iraq war and associated with another foreign policy controversy. “Russian adoptions by American families” I assume is a reference to the adoption issue.

Q. And by “adoption issue” do you mean Russia prohibiting U.S. families from adopting Russian babies as a measure in response to the Magnitsky act?

A. I assume so.

Bold mine, to emphasis the bit which has been chewing away at me. “Illici” could be an interrupted “illicit”; the committee and Simpson use the word or a modifier, illicitly, eight times during the course of their closed door session. It’s not a word we use every day; the average American Joe/Josie is more likely to use “illegitimate” or the even more popular “illegal” to describe an unlawful or undesirable action or outcome.

(I’m skeptical Manafort was stupid enough to begin scratching out “illicit” and catch himself in time, but then I can’t believe how stupid much of this criminality has been.)

But the average American Joe/Josie doesn’t travel abroad, speak with Europeans often, or speak second languages. The average white Joe/Josie may be three or more generations from their immigrant antecedents.

Not so Mr. Manafort, who is second generation Italian on both sides of his family. He may speak some Italian since his grandfather was an immigrant — and quite likely Catholic, too. Hello, Latin masses in Italian American communities.

Did Manafort mean “illici,” a derivative of Latin “illicio,” which means to entice or seduce? Or was it a corrupted variant of Latin “illico,” which means immediately?

Or is Manafort a bad speller who really meant either “elici”, “elicio,” or “elicit,” meaning to draw out or entice?

Like Simpson, these are just guesses. Only Manafort really knows and I seriously doubt he’ll ever tell what he meant.

~ 1 ~
If you haven’t checked your personal online privacy and cybersecurity recently, give Privacy Haus’s checklist a look. Nearly all of the items I’ve already addressed but I tried one of the items suggested as a fix to an ongoing challenge. Good stuff!

~ 0 ~
That’s it, have at it in this open thread! One last thing: if you didn’t read Marcy’s op-ed, Has Jared Kushner Conspired to Defraud America? in Wednesday’s NYT, you should. You’re going to need it as part of a primer going forward.

Three Things: No, No, and Hell to the NO on the Tax Bill [UPDATED]

NB: Update at the bottom of this post.

I don’t have three things. I just have three (or more) layers of pure rage about the so-called tax reform bill now returned to the Senate floor.

There is not one good thing about this bill. Nothing, nada, zippo, nil. How anyone could possibly think adding $1 trillion to the deficit — ostensibly to raid Social Security, Medicare, and Medicaid in the near future — is a positive is simply beyond my grasp.

And yet Senate Republicans are willing to set fire to the economy, torch people’s health care, wreak ruin upon academia and research, just to stay on their donors’ good side.

Super-wealthy donors are extorting performance from the GOP by withholding donations until they get their tax cuts. They are literally demanding the GOP obtains campaign contributions from the lowest and middle classes by increasing taxes or reducing benefits and transferring the funding to the uppermost class which does not need it but will instead convert the tax cuts to campaign contributions.

If these corrupt GOP senators continue blindly supporting this tax bill, they will stem consumption by the true engine of economic growth while encouraging greater anger across the largest percentage of citizens. I am reminded of the economic troubles in Germany before the 1929 market crash, the following wave of mass unemployment and a banking crisis leading to domination of National Socialism.

We know how that turned out.

This is an open thread. Bring your tax bill rage and off-topic stuff here.

UPDATE — 4:45 PM EST —

Looks like Senate GOP has been inundated with lobbyists’ requests for favors (read: quid pro quos for future donations) now being tacked onto the tax bill without any final draft bill available for reading by either the Senate or the public. Totally corrupt bunch of hacks.

As @Celeste_pewter says, keep calling; even if Sen. ‘Turtlehead’ McConnell says the GOP has 51 votes, they still need to get through conference committee. Congressional switchboard is (202) 224-3121. Here’s a script for your use.

Thanks to Sen. Ron Wyden who continues to fight for the individual mandate.

Boos and rotten tomatoes to Sens. Susan Collins and Lisa Murkowski, who sold out for rather meager tidbits — state/local tax write-offs for Collins, and drilling more oil for Murkowski. The cost to constituents’ health and financial well-being is a lousy trade-off .

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