Politics,Economics and The Struggle To Survive In America

The time is now, the revolution is upon us. Our childrens, children need our resolve in this fight. Take the blinders off and get out of the"Matrix". By JJP 


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America's Biggest Problem Is Concentrated Poverty, Not Inequality

Posted by Jerrald J President on August 24, 2017 at 5:25 AM Comments comments (0)



  This is what happens when you compound 300 plus years of SLAVERY and 100 years of legal SEGREGATION! By JJP


America's Biggest Problem Is Concentrated Poverty, Not Inequality


Addressing income inequality is important, but worsening economic segregation has far more compounding effects.

Thanks to New York Mayor Bill de Blasio, economist Thomas Piketty, and, of course, the Occupy Movement, inequality is firmly on the national agenda. While income inequality has worsened considerably over the past couple of decades, America and its cities face a far deeper problem of increasing racial and economic segregation, along with concentrated poverty. Urban sociologists like Harvard’s Robert Sampson and NYU’s Patrick Sharkey have shown how concentrated neighborhood poverty shapes everything from higher crime rates to limited social mobility for the people—and especially the children—who live in these neighborhoods.


As my Atlantic colleague Alana Semuels has detailed, a new Century Foundation study from Paul Jargowsky, director of the Center for Urban Research and Urban Education at Rutgers University, reveals the devastating growth of geographically concentrated poverty and its connection to race across America. To get at this, Jargowsky used detailed data on more than 70,000 Census tracts from the American Community Survey and the decennial Census to track the change in concentrated poverty between 1990 and 2013. Concentrated poverty is defined as neighborhoods or tracts where 40 percent or more of residents fall below the federal poverty threshold (currently $24,000 for a family of four). The study looks at this change across the nation as a whole and within its major metropolitan areas.


The Statistics

The number of people living in concentrated poverty has grown staggeringly since 2000, nearly doubling from 7.2 million in 2000 to 13.8 million people by 2013—the highest figure ever recorded. This is a troubling reversal of previous trends, particularly of the previous decade of 1990 to 2000, where Jargowsky’s own research found that concentrated poverty declined.


Concentrated poverty also overlaps with race in deeply distressing ways. One in four black Americans and one in six Hispanic Americans live in high-poverty neighborhoods, compared to just one in thirteen of their white counterparts.



The table below shows the percentage of inhabitants in high-poverty neighborhoods by age, as well as race and poverty status. Jargowsky finds that poor children are even more likely to live in high-poverty neighborhoods than poor adults. Poor black children under six years of age demonstrate the widest gap in poverty concentration (28 percent). In contrast, poor white children were less likely to live in high-poverty neighborhoods than poor white adults, and saw only a 6.2 percent gap in poverty concentration.



The report delves deeply into the geography of concentrated poverty. The Midwest (or North Central region), hard hit by deindustrialization and the economic crisis, has seen by far the largest increases in concentrated poverty, as the graph below from the report shows. Jargowsky notes that concentrated poverty more than tripled in Detroit, where the number of high poverty neighborhoods or tracts grew from 51 in 2000 to 184 by 2013. Over this time, concentrated poverty spilled out of the city and into the suburbs.



The map below tracks changes in the black concentration of poverty since 2000. On the map, dark red signifies an increase of 10 percent or more in the concentration of poverty, while light grey signifies a ten percent decrease in poverty concentration. Red is splayed across a good deal of the map, indicating that concentrated poverty has grown in neighborhoods across the country.



While we think of ghettos and barrios as the province of big urban centers, concentrated poverty grew much faster in small and medium sized metros of 500,000 to a million people, as shown on the graph below. Concentrated black poverty has increased the fastest in places like Syracuse, New York; Dayton, Ohio; Gary, Indiana; and Wilmington, Delaware, while it has actually declined in larger metros like New York, Los Angeles, Atlanta, and Washington, D.C.



The graph below shows the metros with the highest levels of concentrated black poverty. These are mainly all Rustbelt metros. Syracuse, New York, tops the list, followed by the Detroit metro area; Toledo, Ohio; and Rochester, New York.



The next one shows the metros with the highest levels of Hispanic concentrated poverty. Syracuse tops this list as well, followed by Philadelphia; McAllen, Texas; and Detroit.



The last one shows the metros with the highest levels of concentration of non-Hispanic white poverty. This time, McAllen tops the list, followed by Detroit; Poughkeepsie, New York; and Toledo, Ohio.



But all three lists are troublingly similar. McAllen, Buffalo, Cleveland, Milwaukee, and Rochester are on two of the lists, while Detroit and Syracuse appear on three. Racially concentrated poverty strikes hardest at economically distressed Rustbelt metros.


Housing Reform and More

As Jargowsky sees it, the rise of concentrated poverty is the consequence of deep and fundamental changes in the spatial organization of America, and the sorting of its population across cities and suburbs. As he explains it:


“Suburbs have grown so fast that their growth was cannibalistic: it came at the expense of the central city and older suburbs. In virtually all metropolitan areas, suburban rings grew much faster than was needed to accommodate metropolitan population growth, so that the central cities and inner-ring suburbs saw massive population declines. The recent trend toward gentrification is barely a ripple compared to the massive surge to the suburbs since about 1970.”

He then adds, “Public and assisted housing units were often constructed in ways that reinforced existing spatial disparities.”


As a consequence, the geography of concentrated poverty is no longer the exclusive province of the urban core, but has spread to the suburbs as well. The geography of concentrated poverty also reflects the rise of an increasingly spiky and uneven geography of economic growth, with small and medium-sized metros in the Midwest and parts of the Sunbelt being left furthest behind.


Jargowsky notes that concentrated poverty is not inevitable, but rather the result of “choices” our society makes. To deal with it, he suggests two broad changes. On the one hand, he urges higher levels of government to implement controls over suburban development that can ensure that new housing construction is in line with the growth of a metro population. On the other, he suggests that these controls also ensure that new housing development matches the income distribution in the metropolitan area as a whole. “To some, this suggestion may seem like a massive intervention in the housing market,” Jargowsky writes. “In fact, exclusionary zoning is already a massive intervention in the housing market that impedes a more equitable distribution of affordable housing.”


In addition to these critical housing reforms, I would add three things. First, we not only need to build more housing, but to build affordable housing in increasingly unaffordable urban centers—something that is in line with Jargowsky’s suggested reforms. Second, we need to act on the income side of the affordability equation by raising the minimum wage to reflect local living costs, while working hard to upgrade the wages and working conditions of the nation’s more than 60 million poorly paid service workers. And third, we need to invest in transit to connect disadvantaged areas in both the urban center and the suburbs to areas of jobs and opportunity.


In short, concentrated poverty is deepening. Far more troubling than simple income inequality, our nation is being turned into a patchwork of concentrated advantage juxtaposed with concentrated disadvantage. The incomes and lives of generation after generation are being locked into terrifyingly divergent trajectories. Now more than ever, America is in need of new 21st century urban policy.

Libor Funeral Set for 2021 as FCA Abandons Scandal-Tarred Rate

Posted by Jerrald J President on August 24, 2017 at 5:15 AM Comments comments (0)



  "$350 trillion in securities" and counting and yet the American people have no idea; the city of London owns America... By JJP


Libor Funeral Set for 2021 as FCA Abandons Scandal-Tarred Rate

By Suzi Ring

July 27, 2017, 4:00 AM EDT July 27, 2017, 8:30 AM EDT

Bank lending no longer ‘sufficiently active’ to sustain Libor

FCA’s Bailey says decision not linked to past manipulation


Andrew Bailey, chief executive officer at Financial Conduct Authority, explains the decision to end Libor in 2021 in favor of a more-reliable system. He speaks with Bloomberg's Francine Lacqua on 'Bloomberg Surveillance.' (Source: Bloomberg)

Libor, the nearly 50-year-old global borrowing benchmark that became a byword for corruption, is headed for the trash heap of history.


The U.K. Financial Conduct Authority will phase out the key interest-rate indicator by the end of 2021 after it became clear there wasn’t enough meaningful data to sustain the benchmark that underpins more than $350 trillion in securities, Andrew Bailey, the head of the regulator, said in a speech Thursday at Bloomberg’s London office.


The end of the London interbank offered rate, or Libor, is welcome on many levels for regulators. It was tied to some of the banking industry’s biggest scandals, leading to about $9 billion in fines and the conviction of several bankers for manipulating the rate. Relying on the opinions of industry insiders to set the daily estimates based on interbank lending -- some in markets that saw fewer than 20 transactions annually -- was unacceptable, Bailey said.


"Libor is trying to do too many things: it’s trying to be a measure of bank risk and it’s trying to substitute for interest-rate risk markets where really it would be better to use a risk-free rate," said Bailey in an interview with Bloomberg News before the speech. "It’s had to come to a conclusion."



Bailey said setting a firm schedule will help banks and finance companies manage the transition from Libor, which is behind securities including student loans and mortgages.


Read more: What Is Libor and Why It Will Soon Be History


The benchmark is the average rate a group of 20 banks estimate they’d be able to borrow funds from each other in five different currencies across seven time periods, submitted by a panel of lenders every morning. Its administration was overhauled in the wake of the scandal, with Intercontinental Exchange Inc. taking over from the then-named British Bankers’ Association with the aim of making the rate more transaction-based.


But the 58-year-old Bailey said the market supporting Libor -- where banks provide each other with unsecured lending -- was no longer "sufficiently active" to determine a reliable rate and alternatives must be found. For one currency and lending period there were only 15 transactions in 2016, he said.


Serious Question


"The absence of active underlying markets raises a serious question about the sustainability of the Libor benchmarks," said Bailey, who is widely seen as a candidate to be the next governor of the Bank of England. "If an active market does not exist, how can even the best run benchmark measure it?"


The search for a new benchmark may lead to tighter swap markets, lower rates and richer attorneys as contracts need to be rewritten and adjusted to remove Libor.


“The impact of this decision from the FCA is to put uncertainty into all Libor-based swap rates,” said Peter Chatwell, head of European Rates Strategy at Mizuho International Plc in London. “The market will need guidance as to what a replacement could be and this will lead to increased volatility and possibly reduced liquidity in the near term.”


The FCA only started regulating Libor in 2013, the same year legislation was passed making it a criminal offense to take any misleading action in relation to financial benchmarks.



The FCA chief said the regulator has spent a lot of time persuading banks to continue submitting rates, something the agency has the power to enforce, but the lack of liquidity makes this impossible to maintain and leaves it open to manipulation.


However, he told Bloomberg Thursday the proposed change didn’t excuse the abuse of the benchmark that has seen five former bankers jailed in the U.K. and a number of others convicted in the U.S.


"The issues that we’re dealing with today do not in any sense excuse or mitigate what went on," Bailey said. "Those who say that this demonstrates that what went on in the past is somehow understandable because the system was broken, I’m afraid that is not an argument that this justifies at all."


The FCA has spoken to the panel banks over recent months about ending the use of Libor and how much time it would take to wind-down, Bailey said. While it would be tough, most said it could be done in four or five years, and the FCA has asked banks to continue submitting rates until the end of 2021.


Push from Authorities


Bailey said he could see a situation where there is more than one benchmark, with some including bank credit risk while others exclude that data. While discussions with banks and other users of Libor are at early stages, he said it may take a “push” from authorities to move the process forward at times.


“We’ve had no conversations about using capital tools,” Bailey said in response to questions after his speech. “But you can take it for granted that if we don’t see the progress that we need to see to hit this time scale, then in the broader sense there will be a ‘push’ from authorities.”


The development comes as a number of groups have been considering alternatives to Libor.



Bank of England Governor Mark Carney said earlier this month that Libor is no longer suitable. The central bank said in April that a swaps-industry working group had proposed replacing Libor in contracts with the Sterling Overnight Index Average, or Sonia, a near risk-free alternative derivatives reference rate that reflects bank and building societies’ overnight funding rates in the sterling unsecured market.


The bank had no further comment when contacted on Thursday.


Concerns have mounted in the euro area over Euribor, the benchmark interest rate for $180 trillion a year of intra-bank lending, as banks pull out of rate-setting panels in the wake of the Libor-rigging scandal. The European Central Bank acknowledges the shortcomings of the mechanism but wants the financial industry to take the lead in finding a solution.


In June, a U.S. government body, the Alternative Reference Rates Committee, recommended replacing Libor with a new, broad Treasuries repo rate, linked to the cost of borrowing cash secured against U.S. government debt.


Switzerland is replacing its own key swaps rate, TOIS, with a new benchmark on Dec. 29.


Asked whether this transition away from Libor should have happened earlier, Bailey said it would have been hard to predict five years ago that the world would still be in an environment of quantitative easing and low interest rates.


"I’m not criticizing the reforms, they were done with good intent and with a view that the market would return," Bailey told Bloomberg. "We are where we are."



Exchange Stabilization Fund

Posted by Jerrald J President on August 24, 2017 at 5:10 AM Comments comments (0)



 The Man behind the Man. By JJP


Exchange Stabilization Fund

The Treasury Department's Exchange Stabilization Fund (ESF) buys and sells foreign currency to promote exchange rate stability and counter disorderly conditions in the foreign exchange market.

The ESF is used to provide short-term credit to foreign governments and monetary authorities and to hold and administer Special Drawing Rights.

ESF operations are normally conducted through the Federal Reserve Bank of New York in its capacity as fiscal agent for the Treasury Department.

The Exchange Stabilization Fund (ESF) of the United States Treasury was created and originally financed by the Gold Reserve Act of 1934 to contribute to exchange rate stability and counter disorderly conditions in the foreign exchange market. The Act authorized the Secretary of the Treasury, to deal in gold, foreign exchange, securities, and instruments of credit, under the exclusive control of the Secretary of the Treasury subject to the approval of the President.

When the United States adopted the revised articles of agreement of the International Monetary Fund (IMF) in 1978, Congress amended the Gold Reserve Act to provide that the dealings of the ESF were to be consistent with U.S. obligations to the IMF. The ESF also may provide short-term credit to foreign governments and monetary authorities. These ESF "bridge loans" are financed through swaps. That is, the dollars held by the ESF are made available to a country through its central bank in exchange for the same value of that country's currency.

The ESF is used to hold and administer Special Drawing Rights (SDRs), which are assets created by the IMF that the IMF lends to countries that need help to finance balance-of-payment deficits. SDRs were created to increase international liquidity and are permanent resources of the ESF after they are allocated to, or otherwise acquired by, the United States Treasury.

The Federal Reserve and the ESF

ESF operations are conducted through the Federal Reserve Bank of New York in its capacity as fiscal agent for the Treasury. The New York Fed, which executes foreign operations on behalf of the Federal Reserve System and the Treasury, acts as an intermediary for the parties involved when the ESF provides short-term financing to foreign governments. However, it neither guarantees, nor profits from, the loans.

Several times each day, the foreign exchange trading desk of the New York Fed provides current information on market conditions to the Treasury. Whenever necessary, the trading desk buys or sells foreign currencies on behalf of the Treasury, through the ESF, for intervention purposes. Treasury and Federal Reserve foreign exchange operations are closely coordinated and typically are conducted jointly. Operations on behalf of the Treasury are made under the legal authority of the Secretary of the Treasury and those for the Federal Reserve System under the legal authority of the Federal Open Market Committee, the central bank's policy-making group. The ESF does not provide financing to the Federal Reserve System for foreign exchange operations. Rather, the Federal Reserve participates with its own funds. The Treasury reimburses the New York Fed for expenses incurred in carrying out Treasury actions.

Since 1963, the Federal Reserve occasionally engaged in "warehousing" transactions with the ESF. In warehousing a transaction, the ESF sells foreign currencies to the Federal Reserve for dollars and simultaneously arranges to repurchase them, typically within a year. The dollars are immediately credited to the Treasury's account at the New York Fed, and the Federal Reserve invests the warehoused foreign currency, separate from its regular accounts, to earn a market rate of return. Any effect warehousing has on domestic bank reserves is offset by open market operations.

ESF accounts and activities are subject to Congressional oversight. The Treasury provides monthly reports on U.S. intervention activities and a monthly financial statement of the ESF to Congress on a confidential basis. In addition, the quarterly report to Congress by the New York Fed's manager of foreign operations, covering Treasury and Federal Reserve foreign exchange operations, is issued publicly by the New York Fed.

ESF Financing

The ESF was structured to be self-financing. Its resources, which are held in both dollars and foreign currency, include its original Congressional appropriation and retained earnings. The Gold Reserve Act of 1934 initially funded the ESF with resources resulting from the devaluation of the dollar, in terms of gold. Congress appropriated $2 billion of the resulting valuation gain to the ESF; $1.8 billion of that was later used to fulfill the initial U.S. quota subscription to the IMF.

Currently, the New York Fed invests ESF foreign currency balances in instruments that yield market-related rates of return and have a high degree of liquidity and credit quality, such as securities issued by foreign governments. In addition to interest earned on assets, the ESF's balance sheet also includes gains or losses on exchange operations.

As of March 31, 2007, total assets were $45.9 billion and included $20.8 billion in foreign currencies, $9 billion in SDRs, and $16.1 billion in U.S. Government securities.

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1934-1968: FHA Mortgage Insurance Requirements Utilize Redlining

Posted by Jerrald J President on August 14, 2017 at 10:10 PM Comments comments (0)




A typical covenant included the following:

“…hereafter no part of said property or any portion thereof shall be…occupied by ay person not of the Caucasian race, it being intended hereby to restrict the use of said property…against occupancy as owners or tenants of any portion of said property for resident or other purposes by people of the Negro or Mongolian race.”


1934–1968: FHA Mortgage Insurance Requirements Utilize Redlining

Race and ethnicity are used to determine mortgage eligibility in communities such as Roxbury, Dorchester and Hyde Park, thus perpetuating housing segregation.

The Federal Housing Administration (FHA) Institutionalizes Racism

Through an overt practice of denying mortgages based upon race and ethnicity, the FHA played a significant role in the legalization and institutionalization of racism and segregation. The Underwriting Manual established the FHA’s mortgage lending requirements, ultimately institutionalizing racism and segregation within the housing industry. The following presents information about the national context of redlining and is not specific to Greater Boston.

The FHA was instrumental in alleviating the home ownership crisis. However, despite it’s positive impact, the FHA also had significant negative effects. FHA insurance often was isolated to new residential developments on the edges of metropolitan areas that were considered safer investments, not to inner city neighborhoods. This stripped the inner city of many of their middle class inhabitants, thus hastening the decay of inner city neighborhoods. Loans for the repair of existing structures were small and for short duration, which meant that families could more easily purchase a new home than modernize an old one, leading to the abandonment of many older inner city properties.



The FHA also explicitly practiced a policy of “redlining” when determining which neighborhoods to approve mortgages in. Redlining is the practice of denying or limiting financial services to certain neighborhoods based on racial or ethnic composition without regard to the residents’ qualifications or creditworthiness. The term “redlining” refers to the practice of using a red line on a map to delineate the area where financial institutions would not invest (see residential security maps).

The FHA allowed personal and agency bias in favor of all white suburban subdivisions to affect the kinds of loans it guaranteed, as applicants in these subdivisions were generally considered better credit risks. In fact, according to James Loewen in his 2006 book Sundown Towns, FHA publications implied that different races should not share neighborhoods, and repeatedly listed neighborhood characteristics like “inharmonious racial or nationality groups” alongside such noxious disseminates as “smoke, odors, and fog.” One example of the harm done by the FHA is as follows:

In the late 1930’s, as Detroit grew outward, white families began to settle near a black enclave adjacent to Eight Mile Road. By 1940, the blacks were surrounded, but neither they nor the whites could get FHA insurance because of the proximity of an inharmonious racial group. So, in 1941, an enterprising white developer built a concrete wall between the white and black areas. The FHA appraisers then took another look and approved the mortgages on the white properties.

1920s-1948: Racially Restrictive Covenants

Posted by Jerrald J President on August 14, 2017 at 10:00 PM Comments comments (0)



The practice of using racial covenants became so socially acceptable that in “1937 a leading magazine of nationwide circulation awarded 10 communities a ‘shield of honor’ for an umbrella of restrictions against the ‘wrong kind of people’.1 The practice was so widespread that by 1940, 80% of property in Chicago and Los Angeles carried restrictive covenants barring black families.2  This is the America that's never talked about !!!! By JJP


1920s–1948: Racially Restrictive Covenants

Used nationwide to prevent people of color from purchasing homes in white communities.


Although it is unclear how widespread the practice of racial covenants was in Massachusetts specifically, the following presents a national context.


What is a racially restricted covenant?

A covenant is a legally enforceable “contract” imposed in a deed upon the buyer of property. Owners who violate the terms of the covenant risk forfeiting the property. Most covenants “run with the land” and are legally enforceable on future buyers of the property.


Racially restrictive covenants refer to contractual agreements that prohibit the purchase, lease, or occupation of a piece of property by a particular group of people, usually African Americans. Racially restrictive covenants were not only mutual agreements between property owners in a neighborhood not to sell to certain people, but were also agreements enforced through the cooperation of real estate boards and neighborhood associations. Racially restrictive covenants became common after 1926 after the U.S. Supreme Court decision, Corrigan v. Buckley, which validated their use.


How did racial covenants originate?

The practice of private, racially restrictive covenants evolved as a reaction to the Great Migration of Southern blacks and in response to the 1917 Court ruling (see Buchanan v. Warley) which declared municipally mandated racial zoning unconstitutional. Buchanan dealt only with legal statutes, thus leaving the door open for private agreements, such as restrictive covenants, to continue to perpetuate residential segregation.


A typical covenant included the following:


“…hereafter no part of said property or any portion thereof shall be…occupied by ay person not of the Caucasian race, it being intended hereby to restrict the use of said property…against occupancy as owners or tenants of any portion of said property for resident or other purposes by people of the Negro or Mongolian race.”


The practice of using racial covenants became so socially acceptable that in “1937 a leading magazine of nationwide circulation awarded 10 communities a ‘shield of honor’ for an umbrella of restrictions against the ‘wrong kind of people’.1 The practice was so widespread that by 1940, 80% of property in Chicago and Los Angeles carried restrictive covenants barring black families.2

Iran 1953: State Department Finally Releases Updated Official History of Mosaddeq Coup

Posted by Jerrald J President on August 14, 2017 at 2:20 PM Comments comments (0)


64 Years Later, CIA Finally Releases Details of Iranian Coup

Posted by Jerrald J President on August 14, 2017 at 2:05 PM Comments comments (0)



  "They hate "US" because of our VALUES!!!! Really America? By JJP


64 Years Later, CIA Finally Releases Details of Iranian Coup


New documents reveal how the CIA attempted to call off the failing coup — only to be salvaged at the last minute by an insubordinate spy.


Declassified documents released last week shed light on the Central Intelligence Agency’s central role in the 1953 coup that brought down Iranian Prime Minister Muhammad Mossadegh, fueling a surge of nationalism which culminated in the 1979 Iranian Revolution and poisoning U.S.-Iran relations into the 21st century.


The approximately 1,000 pages of documents also reveal for the first time the details of how the CIA attempted to call off the failing coup — only to be salvaged at the last minute by an insubordinate spy on the ground.


Known as Operation Ajax, the CIA plot was ultimately about oil. Western firms had for decades controlled the region’s oil wealth, whether Arabian-American Oil Company in Saudi Arabia, or the Anglo-Iranian Oil Company in Iran. When the U.S. firm in Saudi Arabia bowed to pressure in late 1950 and agreed to share oil revenues evenly with Riyadh, the British concession in Iran came under intense pressure to follow suit. But London adamantly refused.


So in early 1951, amid great popular acclaim, Mossadegh nationalized Iran’s oil industry. A fuming United Kingdom began conspiring with U.S. intelligence services to overthrow Mossadegh and restore the monarchy under the shah. (Though some in the U.S. State Department, the newly released cables show, blamed British intransigence for the tensions and sought to work with Mossadegh.)


The coup attempt began on August 15 but was swiftly thwarted. Mossadegh made dozens of arrests. Gen. Fazlollah Zahedi, a top conspirator, went into hiding, and the shah fled the country.


The CIA, believing the coup to have failed, called it off.


“Operation has been tried and failed and we should not participate in any operation against Mossadegh which could be traced back to US,” CIA headquarters wrote to its station chief in Iran in a newly declassified cable sent on Aug. 18, 1953. “Operations against Mossadegh should be discontinued.”


That is the cable which Kermit Roosevelt, top CIA officer in Iran, purportedly and famously ignored, according to Malcolm Byrne, who directs the U.S.-Iran Relations Project at the National Security Archive at George Washington University.


At least “one guy was in the room with Kermit Roosevelt when he got this cable,” Byrne told Foreign Policy. “[Roosevelt] said no — we’re not done here.” It was already known that Roosevelt had not carried out an order from Langley to cease and desist. But the cable itself and its contents were not previously published.


The consequences of his decision were momentous. The next day, on August 19, 1953, with the aid of “rented” crowds widely believed to have been arranged with CIA assistance, the coup succeeded. Iran’s nationalist hero was jailed, the monarchy restored under the Western-friendly shah, and Anglo-Iranian oil — renamed British Petroleum — tried to get its fields back. (But didn’t really: Despite the coup, nationalist pushback against a return to foreign control of oil was too much, leaving BP and other majors to share Iran’s oil wealth with Tehran.)


Operation Ajax has long been a bogeyman for conservatives in Iran — but also for liberals. The coup fanned the flames of anti-Western sentiment, which reached a crescendo in 1979 with the U.S. hostage crisis, the final overthrow of the shah, and the creation of the Islamic Republic to counter the “Great Satan.”


The coup alienated liberals in Iran as well. Mossadegh is widely considered to be the closest thing Iran has ever had to a democratic leader. He openly championed democratic values and hoped to establish a democracy in Iran. The elected parliament selected him as prime minister, a position he used to reduce the power of the shah, thus bringing Iran closer in line with the political traditions that had developed in Europe. But any further democratic development was stymied on Aug. 19.


The U.S government long denied involvement in the coup. The State Department first released coup-related documents in 1989, but edited out any reference to CIA involvement. Public outrage coaxed a government promise to release a more complete edition, and some material came out in 2013. Two years later, the full installment of declassified material was scheduled — but might have interfered with Iran nuclear talks and were delayed again, Byrne said. They were finally released last week, though numerous original CIA telegrams from that period are known to have disappeared or been destroyed long ago.


Byrne said that the long delay is due to several factors. Intelligence services are always concerned about protecting “sources and methods,” said Byrne, meaning the secret spycraft that enables them to operate on the ground. The CIA also needed to protect its relationship with British intelligence, which may have wished some of the material remain safeguarded.


Beyond final proof of CIA involvement, there’s another very interesting takeaway in the documents, said Abbas Milani, a professor of Iranian studies at Stanford University: New details on the true political leanings of Ayatollah Abol-Ghasem Kashani, a cleric and leading political figure in the 1950s.


In the Islamic Republic, clerics are always the good guys. Kashani has long been seen as one of the heroes of nationalism during that period. As recently as January of this year, Iran’s supreme leader praised Kashani’s role in the nationalization of oil.


Kashani’s eventual split from Mossadegh is widely known. Religious leaders in the country feared the growing power of the communist Tudeh Party, and believed that Mossadegh was too weak to save the country from the socialist threat.


But the newly released documents show that Kashani wasn’t just opposed to Mossadegh — he was also in close communication with the Americans throughout the period leading up to the coup, and he actually appears to have requested financial assistance from the United States, though there is no record of him receiving any money. His request was not previously known.


On the make-or-break day of Aug. 19, “Kashani was critical,” said Milani. “On that day Kashani’s forces were out in full force to defeat Mossadegh.”


Clarification, June 21, 2017: This piece has been clarified to state that at least one person was in the room when Roosevelt received the August 18 cable, and that the cable was unpublished until now.


A New Role for the Exchange Stabilization Fund

Posted by Jerrald J President on July 28, 2017 at 12:05 AM Comments comments (0)




 The Man behind the Man!!!! The truth is not hidden America; you just refuse to accept the truth. By JJP

  A New Role for the Exchange Stabilization Fund


Recently, the U.S. Treasury announced a new, temporary insurance program for U.S. money-market mutual funds. To guarantee payment of these funds’ liabilities, the Treasury will use the assets of its Exchange Stabilization Fund. Created in the 1930s to stabilize the exchange value of the dollar, it has been tapped on occasion to supply loans to foreign countries in financial distress. This latest use of ESF assets is unlike anything the Fund has been used for before.

The U.S. Treasury acted recently to preempt problems in another area of the financial system weakened by the current crisis—U.S. money-market mutual funds.


Money-market mutual funds invest in highly rated short-term securities, notably commercial paper, and allow investors to remove their funds quickly. Consequently, many investors have viewed the funds as essentially risk-free checking accounts. But lately, some of these mutual funds are finding the value of their assets below—or perilously close to—the value of their liabilities, a situation more worrisome in the current environment because investors’ deposits are not insured.


Runs on money-market mutual funds could have far-reaching effects, particularly for the commercial paper market, where many corporations find operating funds. So in September 2008 the Treasury announced it would create a temporary insurance program for them. Money-market mutual funds can enter this insurance program for a fee.


The Treasury will use the near $50 billion worth of assets of a little known agency within the department, the Exchange Stabilization Fund (ESF), to guarantee payments of money-market-mutual-fund liabilities for up to one year. The ESF is a small agency whose traditional activities have consisted of foreign-exchange intervention and temporary stabilization loans to developing countries. For most people who heard the Treasury’s recent announcement, the fund’s obscurity was its most distinguishing feature, but for those who study central banks and monetary economics, the ESF is better known—and somewhat controversial.


Details about the new insurance program are not yet available, but a look at the origin and history of the ESF reveals how different such a role is from any use the ESF has been put to before.


ESF Origins

The Roosevelt administration and the U.S. Congress created the ESF in 1934, capitalizing it with $2 billion derived from an increase in the official price of U.S. gold. Ostensibly, Congress established the ESF to stabilize the exchange value of the dollar by buying or selling foreign currencies and gold. At the time, the administration was worried that a similar British stabilization fund might attempt to manipulate exchange rates to its own advantage and wanted to throw a counter punch, if necessary.


Over the years, the ESF has intervened chiefly to influence the dollar’s exchange rate against currencies of the major developed countries, primarily the German mark and Japanese yen. The ESF, however, also interpreted its directive—to stabilize the exchange rate value of the dollar—much more broadly, as I explain below.


Congress allowed the ESF to be self-financing and to exist outside of the annual appropriations process. Doing so guarded the agency’s secrecy, a precious commodity when charged with fending off currency speculators. In a like vein, Congress gave the secretary of the treasury full control over ESF operations. Responding quickly is also essential for successful foreign-exchange operations. Aside from the president, no other officer of the U.S. government has authority to review the Treasury’s decisions regarding ESF operations. Since the late 1970s, Congress has imposed some oversight on operations and on the financing of the ESF, but these are largely after-the-fact reporting requirements. Fund operations remain squarely within the purview of the Treasury.


Foreign-Exchange Intervention

The Gold Reserve Act authorizes the ESF to stabilize dollar exchange rates. As Anna Schwartz details in her history of the ESF, the Fund’s early foreign exchange operations were fairly limited. It truly became active in 1961 when it attempted to shore up the Bretton Woods system. The United States and other large industrial countries had fixed their exchange rates under the Bretton Woods Agreement Act in 1945, but the system did not become fully functional until the end of 1958. Shortly thereafter, the dollar faced fairly persistent downward pressures. The ESF acted in both the spot and forward exchange markets to stabilize the dollar, but the Fund quickly found its resources insufficient for the task. To alleviate the shortfall, the Federal Reserve System began to intervene along with the ESF in 1962. The Federal Reserve Bank of New York, which had always intervened as the agent of the ESF, now acted on behalf of both the ESF’s account and the Fed’s own account.


While the Federal Reserve and the ESF have separate legal authority to intervene, most observers recognize the Treasury as having primary responsibility for these operations. The Treasury probably cannot compel the Fed to intervene, but the Fed has only rarely refused. Appearing not to cooperate in a legitimate policy operation of the administration would raise market uncertainty about the operation and could sabotage its chances for success.


The Federal Reserve’s decision to intervene on its own account raised some eyebrows in 1962, and it has occasionally done so ever since. For one thing, U.S. foreign-exchange operations, as routinely conducted, do not alter fundamental macroeconomic determinants of exchange rates, like U.S. bank reserves. Consequently, intervention cannot systematically influence exchange rates. At best, intervention seems to sometimes affect the market’s perception of these fundamentals. This small, uncertain gain, however, may come at a cost.


Many wonder if it is appropriate for an independent central bank to act in concert with a government’s fiscal authority in an action that may seem at odds with the goals of monetary policy. Often, during the 1980s and early 1990s, the dollar appreciated as the FOMC tightened monetary policy. The Treasury and the Fed then intervened to offset the dollar’s appreciation by buying foreign exchange. While the operations did not directly interfere with monetary policy, many FOMC members felt that they created confusion in the markets about the Fed’s near-term policy objectives and reduced the long-term credibility of monetary policy.


One specific aspect of this relationship, called warehousing, became a particular flashpoint. To understand the controversy, one needs first to understand what the ESF does besides directly intervening in the foreign-exchange market.


Stabilization Loans

In addition to foreign-exchange intervention, the ESF has provided temporary stabilization loans to select developing countries. Most of these have been Latin American countries, with Mexico being the most persistent recipient.


While these operations conform broadly to the ESF’s directive of stabilizing dollar exchange rates—many of these countries pegged their currencies to the dollar—the recipients need not use these funds directly in their exchange markets. Some, for example, have dressed up their foreign exchange reserves on reporting dates. Consequently, the loans often have a distinct foreign-aid and foreign-policy flavor. In the summers of 1988 and 1990, for example, the ESF made temporary stabilization loans to Yugoslavia and to Hungary, respectively, whose currencies were of little economic importance to the United States, but the loans fostered foreign-policy objectives.


The ESF usually extends these stabilization loans by setting up a swap line. Swap lines are temporary facilities through which the ESF can “swap” U.S. dollars for the currency of a foreign country. Essentially, they are short-term loans in which the borrowing country’s currency acts as collateral. Occasionally, as in the Mexican peso crisis of 1995, other collateral is required. The borrowing country gets to use the U.S. funds, and the lender automatically invests the foreign currency in an interest-earning asset.



The ESF’s ability to acquire foreign exchange either through interventions or by extending swap loans to developing countries is limited by the amount of dollar-denominated assets in its portfolio. In August 2008, the ESF had nearly $50 billion in assets and $40 billion in capital (assets less liabilities). As figure 1 indicates, fewer than $17 billion of these assets are denominated in dollars.


Figure 1. Currency Denominations of ESF Assets

Figure 1. Currency Denominations of ESF Assets

Notes: ESF assets are total assets and SDRs less SDR certificates, valued in billions of dollars, following Osterberg and Thomson (1999). SDRs are special drawing rights, an international reserve currency created by the International Monetary Fund.


The ESF currently holds $9.5 billion worth of Special Drawing Rights (SDRs). SDRs were created by the International Monetary Fund (IMF) in 1969 to serve as an international reserve asset. At the time, the world needed a reserve asset besides gold, the dollar, or some other national currency to sustain the Bretton Woods system, but by the time the IMF created the SDR, Bretton Woods was beyond repair. It collapsed in August 1971. Nevertheless, the SDR still exists as an international reserve asset.


The ESF can monetize—change into dollars—its SDRs. With the authorization of the Treasury secretary, the ESF creates a “swap certificate,” a liability on its balance sheet, and sells it to the Federal Reserve for dollars. The Federal Reserve is legally obliged to accept SDR certificates.


The ESF can also obtain dollars by warehousing foreign exchange with the Federal Reserve. Warehousing is a currency swap in which the Federal Reserve buys foreign currency from the ESF in a spot transaction and sells it back to the ESF in a forward transaction. The duration typically has been 12 months, but some have unwound early and some have rolled over. Because the Federal Reserve undertakes the spot and forward portions of these swaps at the same exchange rate, unanticipated exchange-rate movements have no financial consequences for the Fed. The Fed earns interest from any foreign-currency denominated assets that it holds as a consequence of the swap, but loses interest on the Treasury securities that it might have to sell to offset any monetary impacts from the ESF’s dollar sales.


Many FOMC participants have viewed warehousing as a temporary loan from the Federal Reserve to the ESF, collateralized with foreign exchange. The Federal Reserve Act does not include such lending authority, and the Banking Act of 1935 prohibits the Federal Reserve from purchasing U.S. government obligations, except in the open (or secondary) market. The U.S. Congress granted the Federal Reserve authority to lend up to $5 billion to the Treasury for short durations in 1942, but this authority expired in 1981. Opponents of warehousing argue that in the absence of clear ongoing lending authority, the Fed should not warehouse currencies for the ESF, especially given the foreign-policy nature of many ESF stabilization loans.


Proponents view warehousing as a temporary exchange of assets—not as a loan. Moreover, because the Treasury does not issue German marks or Japanese yen—as it does U.S. government securities—the Treasury constitutes part of the open market for foreign exchange. They sometimes point to parallels between warehousing and the acceptance of SDR certificates. Hence, proponents contend warehousing foreign exchange is wholly acceptable.


The FOMC currently authorizes the Fed to warehouse up to $5 billion in foreign exchange for the ESF. During the Mexican peso crisis of 1995, the limit was increased to $20 billion. However, no funds have been warehoused since 1992.


No matter how one characterizes warehousing operations—as a loan or an asset exchange—opponents worry that it allows the Treasury to skirt the Congressional appropriations process. Of the original $2 billion appropriated by Congress to the ESF, all but $200 million was later used to pay the United States’ subscription to the IMF. The ESF retains interest and capital gains on the domestic and foreign assets that it holds, but if it needs more funds for intervention or for lending, opponents of warehousing contend that the ESF should seek a Congressional appropriation.


New Avenues, Old Problems

The Treasury’s surprising decision to offer insurance to money-market mutual funds through the ESF is clearly a broad extension of the Fund’s traditional role, but one that Treasury could undertake quickly and easily in anxious times. The existence of this insurance—like insurance for bank deposits—should stem fears and prevent a run on money-market mutual funds. The ESF has nearly $17 billion in dollar-denominated assets readily available to backstop money-market mutual funds. Beyond that, the ESF would need to convert foreign-currency denominated assets into dollars, either by selling them to the market or foreign central banks or by exchanging them for dollars with the Federal Reserve System. The latter prospect risks awakening some long-dormant controversies.



Nearly 300 Congress Members Declare Commitment to 'Unbreakable' U.S.-Israel Bond

Posted by Jerrald J President on July 28, 2017 at 12:00 AM Comments comments (0)



  Follow the Money America! By JJP

Nearly 300 Congress Members Declare Commitment to 'Unbreakable' U.S.-Israel Bond

Letter to Clinton underscores Biden remarks that there is 'no space' when it comes to Israel's security.


Nearly 300 members of Congress have signed on to a declaration reaffirming their commitment to "the unbreakable bond that exists between [U.S.] and the State of Israel", in a letter to Secretary of State Hillary Clinton.


The letter was sent in the wake of the severe recent tensions between Israel and the U.S. over the prior's decision to construct more than 1,600 new housing units in East Jerusalem, a project it announced during U.S. Vice President Joe Biden's visit to the region.


Prime Minister Benjamin Netanyahu took advantage of his trip to the United States this week to try to mend the rift with the Obama administration, but he was greeted with cold welcome by the White House.


Netanyahu also met during his visit with members of Congress, who welcomed him with significantly more warmth.


The letter from Congress expresses its "deep concern" over the U.S.-Israel crisis, and emphasizes that lawmakers had received assurances from Netanyahu that the events leading up to the recent tensions would not be repeated.


Letter from members of Congress


Dear Secretary Clinton:


We are writing to reaffirm our commitment to the unbreakable bond that exists between our country and the State of Israel and to express to you our deep concern over recent tension. In every important relationship, there will be occasional misunderstandings and conflicts.


The announcement during Vice President Biden's visit was, as Israel's Prime Minister said in an apology to the United States, "a regrettable incident that was done in all innocence and was hurtful, and which certainly should not have occurred." We are reassured that Prime Minister Netanyahu's commitment to put in place new procedures will ensure that such surprises, however unintended, will not recur.


The United States and Israel are close allies whose people share a deep and abiding friendship based on a shared commitment to core values including democracy, human rights and freedom of the press and religion. Our two countries are partners in the fight against terrorism and share an important strategic relationship.


A strong Israel is an asset to the national security of the United States and brings stability to the Middle East. We are concerned that the highly publicized tensions in the relationship will not advance the interests the U.S. and Israel share. Above all, we must remain focused on the threat posed by the Iranian nuclear weapons program to Middle East peace and stability.


From the moment of Israel's creation, successive U.S. administrations have appreciated the special bond between the U.S. and Israel.


For decades, strong, bipartisan Congressional support for Israel, including security assistance and other important measures, have been eloquent testimony to our commitment to Israel's security, which remains unswerving.


It is the very strength of this relationship that has, in fact, made Arab-Israeli peace agreements possible, both because it convinced those who sought Israel?s destruction to abandon any such hope and because it gave successive Israeli governments the confidence to take calculated risks for peace.


In its declaration of independence 62 years ago, Israel declared: "We extend our hand to all neighboring states and their peoples in an offer of peace and good neighborliness, and appeal to them to establish bonds of cooperation and mutual help with the sovereign Jewish people settled in its own land."


In the decades since, despite constantly having to defend itself from attack, Israel has repeatedly made good on that pledge by offering to undertake painful risks to reach peace with its neighbors.


Our valuable bilateral relationship with Israel needs and deserves constant reinforcement.


As the Vice-President said during his recent visit to Israel: "Progress occurs in the Middle East when everyone knows there is simply no space between the U.S. and Israel when it comes to security, none. No space."


Steadfast American backing has helped lead to Israeli peace treaties with Egypt and Jordan. And American involvement continues to be critical to the effort to achieve peace between Israel and the Palestinians.


We recognize that, despite the extraordinary closeness between our country and Israel, there will be differences over issues both large and small.


Our view is that such differences are best resolved quietly, in trust and confidence, as befits longstanding strategic allies. We hope and expect that, with mutual effort and good faith, the United States and Israel will move beyond this disruption quickly, to the lasting benefit of both nations.


We believe, as President Obama said, that "Israel's security is paramount" in our Middle East policy and that "it is in U.S. national security interests to assure that Israel?s security as an independent Jewish state is maintained."


In that spirit, we look forward to working with you to achieve the common objectives of the U.S. and Israel, especially regional security and peace.









U.S. Lawmakers Seek to Criminally Outlaw Support for Boycott Campaign Against Israel

Posted by Jerrald J President on July 27, 2017 at 11:55 AM Comments comments (0)



  Problem-Reaction-Solution... By JJP

  U.S. Lawmakers Seek to Criminally Outlaw Support for Boycott Campaign Against Israel


The criminalization of political speech and activism against Israel has become one of the gravest threats to free speech in the West. In France, activists have been arrested and prosecuted for wearing T-shirts advocating a boycott of Israel. The U.K. has enacted a series of measures designed to outlaw such activism. In the U.S., governors compete with one another over who can implement the most extreme regulations to bar businesses from participating in any boycotts aimed even at Israeli settlements, which the world regards as illegal. On U.S. campuses, punishment of pro-Palestinian students for expressing criticisms of Israel is so commonplace that the Center for Constitutional Rights refers to it as “the Palestine Exception” to free speech.


But now, a group of 43 senators — 29 Republicans and 14 Democrats — wants to implement a law that would make it a felony for Americans to support the international boycott against Israel, which was launched in protest of that country’s decades-old occupation of Palestine. The two primary sponsors of the bill are Democrat Ben Cardin of Maryland and Republican Rob Portman of Ohio. Perhaps the most shocking aspect is the punishment: Anyone guilty of violating the prohibitions will face a minimum civil penalty of $250,000 and a maximum criminal penalty of $1 million and 20 years in prison.


The proposed measure, called the Israel Anti-Boycott Act (S. 720), was introduced by Cardin on March 23. The Jewish Telegraphic Agency reports that the bill “was drafted with the assistance of the American Israel Public Affairs Committee.” Indeed, AIPAC, in its 2017 lobbying agenda, identified passage of this bill as one of its top lobbying priorities for the year:



The bill’s co-sponsors include the senior Democrat in Washington, Minority Leader Chuck Schumer, his New York colleague Kirsten Gillibrand, and several of the Senate’s more liberal members, such as Ron Wyden of Oregon, Richard Blumenthal of Connecticut, and Maria Cantwell of Washington. Illustrating the bipartisanship that AIPAC typically summons, it also includes several of the most right-wing senators such as Ted Cruz of Texas, Ben Sasse of Nebraska, and Marco Rubio of Florida.


[Update – July 20, 2017: Glen Caplin, senior advisor to Gillibrand, sends along the following statement: “We have a different read of the specific bill language, however, due to the ACLU’s concerns, the Senator has extended an invitation to them to meet with her and discuss their concerns.”]


A similar measure was introduced in the House on the same date by two Republicans and one Democrat. It has already amassed 234 co-sponsors: 63 Democrats and 174 Republicans. As in the Senate, AIPAC has assembled an impressive ideological diversity among supporters, predictably including many of the most right-wing House members — Jason Chaffetz, Liz Cheney, Peter King — along with the second-ranking Democrat in the House, Steny Hoyer.


Among the co-sponsors of the bill are several of the politicians who have become political celebrities by positioning themselves as media leaders of the anti-Trump #Resistance, including three California House members who have become heroes to Democrats and staples of the cable news circuit: Ted Lieu, Adam Schiff, and Eric Swalwell. These politicians, who have built a wide public following by posturing as opponents of authoritarianism, are sponsoring one of the most oppressive and authoritarian bills that has pended before Congress in quite some time.



Last night, the ACLU posted a letter it sent to all members of the Senate urging them to oppose this bill. Warning that “proponents of the bill are seeking additional co-sponsors,” the civil liberties group explained that “it would punish individuals for no reason other than their political beliefs.” The letter detailed what makes this bill so particularly threatening to basic civic freedoms:


It is no small thing for the ACLU to insert itself into this controversy. One of the most traumatic events in the organization’s history was when it lost large numbers of donors and supporters in the late 1970s after it defended the free speech rights of neo-Nazis to march through Skokie, Illinois, a town with a large community of Holocaust survivors.


Even the bravest of organizations often steadfastly avoid any controversies relating to Israel. Yet here, while appropriately pointing out that the ACLU “takes no position for or against the effort to boycott Israel or any foreign country,” the group categorically denounces this AIPAC-sponsored proposal for what it is: a bill that “seeks only to punish the exercise of constitutional rights.”


The ACLU has similarly opposed bipartisan efforts at the state level to punish businesses that participate in the boycott, pointing out that “boycotts to achieve political goals are a form of expression that the Supreme Court has ruled are protected by the First Amendment’s protections of freedom of speech, assembly, and petition,” and that such bills “place unconstitutional conditions on the exercise of constitutional rights.” The bill now co-sponsored in Congress by more than half of the House and close to half of the Senate is far more extreme than those.



Thus far, not a single member of Congress has joined the ACLU in denouncing this bill. The Intercept this morning sent inquiries to numerous non-committed members of the Senate and House who have yet to speak on this bill. We also sent inquiries to several co-sponsors of the bill — such as Rep. Lieu — who have positioned themselves as civil liberties champions and opponents of authoritarianism, asking:


Congressman Lieu: Last night, the ACLU vehemently denounced a bill that you are co-sponsoring — to criminalize support for a boycott of Israel — as a grave attack on free speech. Do you have any comment on the ACLU’s denunciation? You’ve been an outspoken champion for civil liberties; how can you reconcile that record with an effort to make it a felony for Americans to engage in activism that protests a foreign government’s actions? We’re writing about this today; any statement would be appreciated.


This morning, Lieu responded: “Thank you for sharing the letter. The bill has been around since March and this is the first time I have seen this issue raised. We will look into it.” (The Intercept will post any response from Rep. Lieu, or any late responses from others, as soon as they are received.)


Sen. Cantwell told The Intercept she is “a strong supporter of free speech rights” and will be reviewing the bill for First Amendment concerns in light of the ACLU statement.


Democratic Sen. Chris Coons of Delaware, when asked by The Intercept about the ACLU’s warning that the bill he is co-sponsoring criminalizes free speech, affirmed his support for the bill by responding: “I continue to support a strong U.S./Israel relationship.”


Meanwhile, some co-sponsors seemed not to have any idea what they co-sponsored — almost as though they reflexively sign whatever comes from AIPAC without having any idea what’s in it. Democratic Sen. Gary Peters of Michigan, for instance, seemed genuinely bewildered when told of the ACLU’s letter, saying, “What’s the Act? You’ll have to get back to me on that.”


A similar exchange took place with another co-sponsor, one of AIPAC’s most reliable allies, Democratic Sen. Bob Menendez of New Jersey, who said: “I’d want to read it. … I’d really have to look at it.”


Sen. Claire McCaskill, D-Mo., a co-sponsor, said she hadn’t seen the ACLU letter but would give it a look. “I certainly will take their position into consideration, just like I take everybody’s position into consideration,” she said.


Gillibrand, the only senator in the 2020 presidential mix to co-sponsor the bill, told The Intercept she would have a statement to provide, which we’ll add as soon as it’s provided.


Perhaps most stunning is our interview with the primary sponsor of the bill, Democratic Sen. Benjamin Cardin, who seemed to have no idea what was in his bill, particularly insisting that it contains no criminal penalties.


But as the ACLU put it, “Violations would be subject to a minimum civil penalty of $250,000 and a maximum criminal penalty of $1 million and 20 years in prison.”


That’s because, as Josh Ruebner expertly detailed when the bill was first unveiled, “the bill seeks to amend two laws — the Export Administration Act of 1979 and the Export-Import Bank Act of 1945,” and “the potential penalties for violating this bill are steep: a minimum $250,000 civil penalty and a maximum criminal penalty of $1 million and 20 years imprisonment, as stipulated in the International Emergency Economic Powers Act.”


Indeed, to see how serious the penalties are, and how clear it is that those penalties are imposed by this bill, one can just compare the bill’s text in Section 8(a), which provides that violators will be “fined in accordance with Section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705),” to the penalty provisions of that law, which state:


That the bill refers to the fine, but not the prison sentence, is not enough to prevent a judge from applying the statute’s prison term, because the bill brings the statute into play, said Faiz Shakir, the ACLU’s political director, who authored the letter to the Senate. “The referral to the statute keeps criminal penalties in play, regardless of what their preference for punishment might be,” said Shakir.


The bill also extends the current prohibition on participating in boycotts sponsored by foreign governments to cover boycotts from international organizations such as the U.N. and the European Union. It also explicitly extends the boycott ban from Israel generally to any parts of Israel, including the settlements. For that reason, Ruebner explains, the bill — by design — would outlaw “campaigns by the Palestine solidarity movement to pressure corporations to cut ties to Israel or even with Israeli settlements.”



This pernicious bill highlights many vital yet typically ignored dynamics in Washington. First, journalists love to lament the lack of bipartisanship in Washington, yet the very mention of the word “Israel” causes most members of both parties to quickly snap into line in a show of unanimity that would make the regime of North Korea blush with envy. Even when virtually the entire world condemns Israeli aggression, or declares settlements illegal, the U.S. Congress — across party and ideological lines — finds virtually complete harmony in uniting against the world consensus and in defense of the Israeli government.


Sen. Ben Cardin, D-Md., speaks to reporters following a briefing on Syria on Capitol Hill in Washington, Friday, April 7, 2017. Amid measured support for the U.S. cruise missile attack on a Syrian air base, some vocal Republicans and Democrats are reprimanding the White House for launching the strike without first getting congressional approval.(AP Photo/Susan Walsh)


Sen. Ben Cardin, D-Md.


Photo: Susan Walsh/AP

Second, the free speech debate in the U.S. is incredibly selective and warped. Pundits and political officials love to crusade as free speech champions — when doing so involves defending mainstream ideas or attacking marginalized, powerless groups such as minority college students. But when it comes to one of the most systemic, powerful, and dangerous assaults on free speech in the U.S. and the West generally — the growing attempt to literally criminalize speech and activism aimed at the Israeli government’s occupation — these free speech warriors typically fall silent.


Third, AIPAC continues to be one of the most powerful, and pernicious, lobbying forces in the country. In what conceivable sense is it of benefit to Americans to turn them into felons for the crime of engaging in political activism in protest of a foreign nation’s government? And this is hardly the first time they have attempted to do this through their most devoted congressional loyalists; Cardin, for instance, had previously succeeded in inserting into trade bills provisions that would disfavor anyone who supports a boycott of Israel.


Finally, it is hard to put into words the irony of watching many of the most celebrated and beloved congressional leaders of the anti-authoritarian Resistance — Gillibrand, Schiff, Swalwell, and Lieu — sponsor one of the most oppressive and authoritarian bills to appear in Congress in many years. How can one credibly inveigh against “authoritarianism” while sponsoring a bill that dictates to American citizens what political views they are and are not allowed to espouse under threat of criminal prosecution? Whatever labels one might want to apply to the sponsors of this bill, “anti-authoritarianism” should not be among them.

18 states sue Education Secretary DeVos for rescinding student protection rules

Posted by Jerrald J President on July 13, 2017 at 9:00 PM Comments comments (0)



 Did you really think she was installed in that position to help you? She's just the fall-girl; FOLLOW THE MONEY! By JJP

18 states sue Education Secretary DeVos for rescinding student protection rules


A coalition of 18 states and the District of Columbia sued the Education Department and Secretary Betsy DeVos Thursday for rescinding Obama-era rules aimed at protecting students from predatory colleges.


The "borrower defense" rule — scheduled to take effect on July 1 — allowed student loan borrowers to apply for loan forgiveness if they were defrauded by for-profit schools. It also largely prohibited schools that participate in the federal student loan program from forcing students to use arbitration to settle legal disputes and waive their class-action rights.


The states' complaint alleges that the Education Department violated federal law by rescinding the rules, which were finalized by the Obama administration in November. About 16,000 borrower defense claims are currently being processed, the Education Department said last month.


The Education Department canceled the rule "without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process," according to the states' complaint.




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In a statement, Education Department Press Secretary Liz Hill called the states' complaint an "ideologically driven suit."



"The state attorneys general are saying to regulate first, and ask the legal questions later," she said.


DeVos' move was partly based on a lawsuit filed in May by the California Association of Private Postsecondary Schools, which argued that the borrower defense rules exceeded the Education’s Department’s statutory authority and were devised with erroneous data. “The Department cannot simply dismiss these allegations,” Hill said.


The Trump administration has been clear about wanting to eliminate what it considers to be burdensome regulations for the private sector. Since taking the helm at the Education Department earlier this year, DeVos, the daughter-in-law of Amway founder Richard DeVos and a strong proponent of charter schools, has been chipping away at the student protection rules enacted by the Obama administration.


“Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans,” said Massachusetts Attorney General Maura Healey, who led the lawsuit.


Regulators in the Obama administration particularly focused their enforcement on fraudulent for-profit schools that charge thousands in tuition and fees while advertising misleading or inaccurate statements about graduates' prospects for finding jobs in their fields of study.


For-profit schools depend heavily on federal student loans and grants. In 2009, the 15 publicly traded for-profit education companies received 86% of their revenues from taxpayer-funded loans, according to the lawsuit.


Even though they make up a small percentage of all post-secondary schools in the country, students at for-profit colleges accounted for about one-third of loan defaults in the three-year period starting in 2013, according to the Department of Education. About 44 million people in the U.S. hold $1.34 trillion in student loan debt, says data from the New York Fed Consumer Credit Panel/Equifax. That’s more than all credit card or car loan debt currently held by American consumers.


Amid the crackdown, several for-profit schools, including Corinthian Colleges and ITT Technical Institute, have shut down, driving the industry to step up lobbying efforts for regulatory relief after Trump's victory in November.


In May, DeVos signaled her intent to target the borrower defense rule and subsequently said that its implementation would be delayed. The Education Department also announced its intent to issue a new rule to replace the borrower defense rule.


In enacting the borrower defense rule last year, the Obama administration reviewed more than 10,000 comments from students, school officials and consumer advocates, and gave schools more than six months to prepare for the implementation.


Last Friday, the Department of Education also delayed the implementation of the so-called gainful employment rule by a year to July 1, 2018.


Finalized by the Obama administration in 2014, the rule requires colleges offering career education programs to provide information to students to help them assess the value of the education they would receive. The required information includes on-time graduation rates, percentage of students that land jobs in the chosen field, typical wages for graduates and debt amounts students can expect.


The worst-performing programs cited by the Department of Education — those that consistently leave their graduates with more debt than they can repay – are required to show evidence of improvement or lose eligibility for federal funding.


Student and teacher advocate groups approved the lawsuit filing Thursday. “It is no surprise that these regulations have been strongly opposed by for-profit schools, which have saddled students with crushing debts for college degrees," said Lily Eskelsen García, president of the National Education Association, an lobbying group for public school teachers. "Some of the degrees provided by these for-profit institutions ... are often not even worth the paper on which they’re printed."


Other state attorneys general joining the lawsuit are from California, Connecticut, Delaware, Hawaii, Iowa, Illinois, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia.






Microsoft to lay off thousands in sales, marketing reshuffle

Posted by Jerrald J President on July 13, 2017 at 8:55 PM Comments comments (0)



 The world's alleged richest man, is laying off THOUSANDS! Think about that America.. By JJP

Microsoft to lay off thousands in sales, marketing reshuffle


SAN FRANCISCO — Microsoft plans to shed thousands of jobs in a major reboot to focus on its fast-growing cloud-computing business.


"Microsoft is implementing changes to better serve our customers and partners," Microsoft said in a statement to USA TODAY. "Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated. Like all companies, we evaluate our business on a regular basis. This can result in increased investment in some places and, from time-to-time, re-deployment in others."


The software giant did not specify how many jobs would be cut. When asked about cuts during a conference call, Microsoft President Brad Smith had no comment Thursday morning.


The restructuring largely affects the software giant's sales operations outside the U.S. under chief marketing officer Chris Capossela, executive vice presidents Judson Althoff and Jean-Philippe Courtois. All three executives on Monday notified employees of a reorganization, but did not mention layoffs.


Microsoft employs 121,567 people worldwide, and 71,594 in the U.S.


Microsoft shares fell 0.7%, to $68.57.


Disappointing sales of Microsoft's Surface computer line — they plunged 26%, dragging down PC sales 7% — undercut fiscal third quarter results, announced in April, while its Azure cloud revenue nearly doubled. A man walks past a Microsoft sign at the annual Microsoft

A man walks past a Microsoft sign at the annual Microsoft shareholders meeting in Bellevue, Wash., on Nov. 30, 2016. On July 7, 2017, Microsoft announced plans to shed thousands of jobs in a major reboot to focus on its fast-growing cloud-computing business. Elaine Thompson, AP

 Microsoft: the evolution of a tech giant

The Redmond, Wash. company's profits overall soared 28% to $4.8 billion. Sales rose 8% to $22 billion.


Microsoft gets dinged by hardware - this time, it's Surface

Strong cloud-based sales made up for the drop in PC revenue, making good on Althoff's pledge for Microsoft's Azure cloud-computing service to be the centerpiece of the company's sales strategy.


Microsoft's change in strategy had a ripple effect on its sales, prompting a move from on-site support to telephone support, says long-time Microsoft analyst Jack Gold.


"This is not the first realignment Microsoft is undertaking due to the shift to cloud, and it's unlikely to be the last one," Gold says.

The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide

Posted by Jerrald J President on July 13, 2017 at 8:45 PM Comments comments (0)



 The truth is so intoxicating America. Please take a sip.... By JJP

The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide

Growing concerns about wealth inequality and the expanding racial wealth gap have in recent years become central to the debate over whether our nation is on a sustainable economic path. This report provides critical new information about what has fueled the racial wealth gap and points to policy approaches that will set our country in a more equitable and prosperous direction. All families need wealth to be economically secure and create opportunities for the next generation. Wealth - what we own minus what we owe—allows families to move forward by moving to better and safer neighborhoods, investing in businesses, saving for retirement, and supporting their children’s college aspirations. Having a financial cushion also provides a measure of security when a job loss or other crisis strikes. The Great Recession of 2007-2009 devastated the wealth of all families except for those with the most. The unprecedented wealth destruction during that period, accompanied by long-term high unemployment, underscores the critical importance wealth plays in weathering emergencies and helping families move along a path toward long-term financial security and opportunity. Extreme wealth inequality not only hurts family well-being, it hampers economic growth in our communities and in the nation as a whole. In the U.S. today, the richest 1 percent of households owns 37 percent of all wealth. This toxic inequality has historical underpinnings but is perpetuated by policies and tax preferences that continue to favor the affluent. Most strikingly, it has resulted in an enormous wealth gap between white households and households of color. In 2009, a representative survey of American households revealed that the median wealth of white families was $113,149 compared with $6,325 for Latino families and $5,677 for black families.1 Looking at the same set of families over a 25-year period (1984-2009), our research offers key insight into how policy and the real, lived-experience of families in schools, communities, and at work affect wealth accumulation. Tracing the same households during that period, the total wealth gap between white and African-American families nearly triples, increasing from $85,000 in 1984 to $236,500 in 20092 (see Figure 1). To discover the major drivers behind this dramatic $152,000 increase, we tested a wide range of possible explanations, including family, labor market, and wealth characteristics. This allowed us, for the first time, to identify the primary forces behind the racial wealth gap. Our analysis found little evidence to support common perceptions about what underlies the ability to build wealth, including the notion that personal attributes and behavioral choices are key pieces of the equation. Instead, the evidence points to policy and the configuration of both opportunities and barriers in workplaces, schools, and communities that reinforce deeply entrenched racial dynamics in how wealth is accumulated and that continue to permeate the most KEY FINDINGS 1. Tracing the same households over 25 years, the total wealth gap between white and African-American families nearly triples, increasing from $85,000 in 1984 to $236,500 in 2009. 2. The biggest drivers of the growing racial wealth gap are: • Years of homeownership • Household income • Unemployment, which is much more prominent among African- American families • A college education • Inheritance, financial supports by families or friends, and preexisting family wealth 3. Equal achievements, such as income gains, yield unequal wealth rewards for whites and African-Americans. Knowledge advancing security, opportunity, and equity

important spheres of everyday life. Data for this analysis derived from the Panel Study of Income Dynamics (PSID), a nationally representative longitudinal study that began in 1968. We followed nearly 1,700 working-age households from 1984 through 2009. Tracking these families provides a unique opportunity to understand what happened to the wealth gap over the course of a generation and the effect of policy and institutional decision-making on how average families accumulate wealth. Unfortunately, there were not enough data that tracked wealth information in a sufficient number of Latino, Asian American, or immigrant households to include in this report. As a result, the specific focus here is on black-white differences. Yet, while each group shares different histories and experiences, we believe this examination captures important dynamics that can be applied across communities of color. Figure 1. Median net worth by race, 1984-2009 We started our analysis with an overriding question: Why has economic inequality become so entrenched in our post-Civil Rights era of supposed legal equality? The first step was to identify the critical aspects of contemporary society that are driving this inequality (Figure 2).3 Next, we sought to determine whether equal accomplishments are producing equal wealth gains for whites and African-Americans (Figure 3)4. This approach allows for an evidence- based examination of whether the growing racial wealth gap is primarily the result of individual choices and cultural characteristics or policies and institutional practices that create different opportunities for increasing wealth in white and black families. Among households with positive wealth growth5 during the 25-year study period, as shown in Figure 2, the number of years of homeownership accounts for 27 percent of the difference in relative wealth growth between white and African-American families, the largest portion of the growing wealth gap. The second largest share of the increase, accounting for 20 percent, is average family income. Highly educated households correlate strongly with larger wealth portfolios, but similar college degrees produce more wealth for whites, contributing 5 percent of the proportional increase in the racial wealth gap. Inheritance and financial support from family combine for another 5 percent of the increasing gap. How much wealth a family started out with in 1984 also predicts a portion (3 percent) of family wealth 25 years later. Unemployment, the only significant factor that depleted wealth since it forced families to draw upon their nest eggs, -2- The wealth trends depicted in Figure 1 beg the question of what caused such dramatic racial wealth inequities. With a gap of close to a quarter of a million dollars, virtually every possible explanation will have some degree of accuracy, no matter how miniscule a factor. The challenge is to identify the major evidence-based factors affecting the growing racial wealth gap. To discover the major drivers behind the $152,000 increase in the racial wealth gap, we tested a wide range of possible explanations that included family, labor market, demographic, and wealth characteristics, and we have determined how different factors affect the widening racial wealth gap over a generation. The compelling evidence-based story is that policy shaping opportunities and rewards where we live, where we learn, and where we work propels the large majority of the widening racial wealth gap. The Foundations of Inequality 

FIGURE 2: WHAT’S DRIVING THE INCREASING RACIAL WEALTH GAP explains an additional 9 percent of the growing racial wealth gap. In addition to continuing discrimination, labor market instability affectes African- Americans more negatively than whites. The evidence we present to examine the racial wealth gap points to institutional and policy dynamics in important spheres of American life: homeownership, work and increased earnings, employment stability, college education, and family financial support and inheritance. Together, these fundamental factors account for nearly two-thirds (66 percent) of the proportional increase in the wealth gap. In the social sciences, this is a very high level of explanatory power and provides a firm foundation for policy and reform aimed at closing the gap. The $152,000 Question: What Drove the Growing Gap? Having identified the major drivers of the racial wealth gap, we now can dig deeper into each one—homeownership, income, college education, inheritance, and unemployment—to determine how similar accomplishments grow wealth differentially by race. Figure 3 provides a close look at how these factors, as well as marriage, which we will discuss later, translate into differences in wealth accumulation for black and white families. We know that wealth increases through accomplishments such as job promotions, pay increases, or the purchase of a home, as well as important life and family events including receiving an inheritance and getting married. Figure 3 highlights how similar accomplishments and life events lead to unequal wealth gains for white and African-American families. The result is that while wealth grew for African-Americans as they achieve life advances, that growth is at a considerably lower rate than it is for whites experiencing the same accomplishments. This leads to an increase in the wealth gap. homeownership The number of years families owned their homes was the largest predictor of the gap in wealth growth by race (Figure 2). Residential segregation by government design has a long legacy in this country and underpins many of the challenges African-American families face in buying homes and increasing equity. There are several reasons why home equity rises so much more for whites than African-Americans: • Because residential segregation artificially lowers demand, placing a forced ceiling on home equity for African- Americans who own homes in non-white neighborhoods6; • Because whites are far more able to give inheritances or family assistance for down payments due to historical wealth accumulation, white families buy homes and start acquiring equity an average eight years earlier than black families7; • Because whites are far more able to give family financial assistance, larger up-front payments by white homeowners lower interest rates and lending costs; and • Due to historic differences in access to credit, typically lower incomes, and factors such as residential segregation, the homeownership rate for white families is 28.4 percent higher than the homeownership rate for black families8. Homes are the largest investment that most American families make and by far the biggest item in their wealth portfolio. Homeownership is an even greater part of wealth composition for black families, amounting to 53 percent of wealth for blacks and 39 percent for whites9. Yet, for many years, redlining, discriminatory mortgage-lending -3- 

practices, lack of access to credit, and lower incomes have blocked the homeownership path for African- Americans while creating and reinforcing communities segregated by race. African-Americans, therefore, are more recent homeowners and more likely to have high-risk mortgages, hence they are more vulnerable to foreclosure and volatile housing prices. Figure 1 shows households losing wealth between 2007 and 2009 (12 percent for white families, 21 percent for African-American families), which reflects the destruction of housing wealth resulting from the foreclosure crisis and imploded housing market. Overall, half the collective wealth of African-American families was stripped away during the Great Recession due to the dominant role of home equity in their wealth portfolios and the prevalence of predatory high-risk loans in communities of color. The Latino community lost an astounding 67 percent of its total wealth during the housing collapse10. Unfortunately the end to this story has yet to be written. Since 2007, 10.9 million homes went into foreclosure. While the majority of the affected families are white, borrowers of color are more than twice as likely to lose their homes. These higher foreclosure rates reflect a disturbing reality: borrowers of color were consistently more likely to receive high-interest risky loan products, even after accounting for income and credit scores11. Foreclosures not only have a direct impact on families, they also result in severe collateral damage to surrounding neighborhoods. One report estimates that this collateral destruction led to nearly $2 trillion in lost property wealth for communities across the country. More than half of this loss is associated with communities of color, reflecting concentrations of high-risk loans, subsequent higher foreclosure rates, and volatile housing prices12. FIGURE 3: HOW WEALTH IS ACCUMULATED* *This table shows how key life advances and events (an increase in income, inheritance, family financial support, homeownership and marriage) translate into the ability to increase wealth. Even with equal advances, wealth grows at far lower rates for black households, who typically need to use financial gains for everyday needs rather than long-term savings and assets. **Regression estimates at the median change in wealth over the 25-year study period conducted separately for white and black households While homeownership has played a critical role in the development of wealth for communities of color in this country, the return on investment is far greater for white households, significantly contributing to the expanding racial wealth gap shown in Figure 1. The paradox is that even as homeownership has been the main avenue to building wealth for African-Americans, it has also increased the wealth disparity between whites and blacks. income and employment Not surprisingly, increases in income are a major source of wealth accumulation for many US families. However, income gains for whites and African-Americans have a very different impact on wealth. At the respective wealth medians, every dollar increase in average income over the 25-year study period added $5.19 wealth13 for white households (see Figure 3), while the same income gain only added 69 cents of wealth for African American households. The dramatic difference in wealth accumulation from similar income gains has its roots in long-standing patterns of discrimination in hiring, training, promoting, and access to benefits that have made it much harder for African- Americans to save and build assets. Due to discriminatory factors, black workers predominate in fields that are -4- 

least likely to have employer-based retirement plans and other benefits, such as administration and support and food services. As a result, wealth in black families tends to be close to what is needed to cover emergency savings while wealth in white families is well beyond the emergency threshold and can be saved or invested more readily. The statistics cited above compare change in wealth over the 25 years at the median wealth for typical white and black households. Yet we already know that the average white family starts out with abundantly more wealth and significantly higher incomes than the average black family. When whites and blacks start off on an equal playing field with a similar wealth portfolio, their wealth returns from similar income gains narrow considerably.14 Black families under this scenario see a return of $4.03 for each dollar increase in income – a considerable closing of the wealth breach. This analysis also captured the devastation of unemployment on wealth accumulation. Unemployment affects all workers but due to the discriminatory factors listed above, black workers are hit harder, more often, and for longer periods of time. With much lower beginning wealth levels and unequal returns on income, it is a greater challenge for African-Americans to grow their family wealth holdings in the face of work instability. inheritance Most Americans inherit very little or no money, but among the families followed for 25 years whites were five times more likely to inherit than African-Americans (36 percent to 7 percent, respectively). Among those receiving an inheritance, whites received about ten times more wealth than African-Americans. Our findings show that inheritances converted to wealth more readily for white than black families: each inherited dollar contributed to 91 cents of wealth for white families compared with 20 cents for African-American families. Inheritance is more likely to add wealth to the considerably larger portfolio whites start out with since blacks, as discussed above, typically need to reserve their wealth for emergency savings. college education In the 21st century, obtaining a college degree is vital to economic success and translates into substantially greater lifetime income and wealth. Education is supposed to be the great equalizer, but current research tells a different story. The achievement and college completion gaps are growing, as family financial resources like income and wealth appear to be large predictors of educational success. While current research identifies a narrowing black-white achievement gap, race and class intersect to widen the educational opportunity deficit at a time when workers without higher-level skills are increasingly likely to languish in the job market. College readiness is greatly dependent on quality K - 12 education. As a result of neighborhood segregation, lower-income students—especially students of color—are too often isolated and concentrated in lower-quality schools. Neighborhoods have grown more segregated, leaving lower-income students—especially students of color—isolated and concentrated in lower-quality schools, and less academically prepared both to enter and complete college. Further, costs at public universities have risen 60 percent in the past two decades, with many low-income and students of color forced to hold down jobs rather than attend college full time and graduating in deep debt. Average student debt for the class of 2011 was $26,600. Student debt is an issue that affects most graduates, but black graduates are far more vulnerable: 80 percent of black students graduate with debt compared with 64 percent of white students.15 More blacks than whites do not finish their undergraduate studies because financial considerations force them to leave school and earn a steady income to support themselves and their families.16 The context of broad class and race educational inequity helps us better understand why a college education produces more wealth for white than black households, accounting for a 5 percent share of the widening racial wealth gap (see Figure 2). In the past 30 years, the gap between students from low- and high-income families who earn bachelor’s degrees has grown from 31 percent to 45 percent.17 Although both groups are completing -5- 

college at higher rates today, affluent students (predominantly white) improved much more, widening their already sizable lead. In 1972, upper-income Americans spent five times as much per child on college as low-income families. By 2007, the difference in spending between the two groups had grown to nine to one; upper-income families more than doubled how much they spent on each child, while spending by low-income families grew by just 20 percent.18 social and cultural Factors As part of this analysis we set out to test notions about the role social and cultural factors play in widening or closing the racial wealth gap. To determine how these factors might affect wealth, we zeroed in on the role of marriage in perpetuating the racial wealth gap. We find that getting married over the 25-year study period significantly increases the wealth holdings for white families by $75,635 but have no statistically significant impact on African-Americans. Single whites are much more likely to possess positive net worth, most likely due to benefits from substantial family financial assistance, higher paying jobs, and homeownership. Hence, marriages that combine modest wealth profiles seem to move whites past emergency-level savings to opportunities to invest and build wealth. By contrast, marriage among African-Americans typically combines two comparatively low-level wealth portfolios and, unlike white households, does not significantly elevate the family’s wealth. While the number of household wage earners bringing in resources does correlate to higher wealth, the impact of marriage is not statistically significant for blacks and the reality is that most do not marry out of the racial wealth gap. Closing the Racial Wealth Gap Public policy can play a critical role in creating a more equitable society and helping all Americans build wealth. College loans, preferential homeownership, and retirement tax policies helped build opportunities and wealth for America’s middle class. Medicare and Social Security have protected that wealth. While the bold vision of policymakers, advocates, and others interested in social and racial justice is needed to develop a precise policy agenda, we believe the following broad public policy and institutional changes are critical to closing the gap: • Homeownership - The data in this report clearly target homeownership as the biggest driver of the racial wealth gap. We need to ensure that mortgage and lending policies and fair housing policies are enforced and strengthened so that the legacy of residential segregation no longer confers greater wealth opportunities to white homeowners than it does to black homeowners. As our nation moves towards a majority people of color population, increasingly diverse neighborhoods must deliver equitable opportunities for growing home equity. • Income - This report identifies the importance of stable, family-supporting jobs and increasing incomes as a prime avenue for building wealth. To address the gap caused by income disparity, proven tools should be fully implemented at the national, state, and local levels, including raising the minimum wage, enforcing equal pay provisions, and strengthening employer-based retirement plans and other benefits. • Education - It is clear that differential educational opportunities and rewards are further widening the racial wealth gap. We need to invest in affordable high-quality childcare and early childhood development so every child is healthy and prepared for school. We need to support policies that help more students from low-and moderate-income families and families of color attend college and graduate. And we need to value education as a public good and invest in policies that do not leave students strapped with huge debt or a reason to drop out. • Inheritance - Due to the unearned advantages it transmits across generations, inheritance widens inequality and is a key driver of the racial wealth gap. If we truly value merit and not unearned preferences, then we need to diminish the advantages passed along to a small number of families. Preferential tax treatment for large estates costs taxpayers and provides huge benefits to less than 1 percent of the population while diverting vital resources from schools, housing, infrastructure, and jobs. Preferential tax treatment for -6- 

dividends and interests are weighted toward wealthy investors as is the home mortgage deduction and tax shielding benefits from retirement savings. It is time for a portfolio shift in public investment to grow wealth for all, not just a tiny minority. Without that shift the wealth gap between white and black households has little prospect of significantly narrowing. A healthy, fair, and equitable society cannot continue to follow such an economically unsustainable trajectory. 

October Smashes Merger Records as Companies Turn to Megadeals

Posted by Jerrald J President on July 4, 2017 at 2:25 PM Comments comments (0)



October Smashes Merger Records as Companies Turn to Megadeals


Forget merger Monday: October as a whole was a record month for dealmaking, with almost half a trillion dollars of mergers and acquisitions announced globally.


CenturyLink Inc.’s $34 billion acquisition of Level 3 Communications Inc., as well as General Electric Co.’s deal to combine its oil and gas division with Baker Hughes Inc., pushed October’s deal volumes to about $489 billion, according to data compiled by Bloomberg. That’s the highest amount for at least 12 years, topping the previous record of $471 billion in April 2007, the data show.



“Every weekend recently has been busy,” Bob Profusek, partner and chair of the global M&A practice at law firm Jones Day, said in an interview Monday on Bloomberg Television.


“The fundamental drivers are still there,” Profusek said. “Low growth -- which is bad for most things, but it’s good for M&A because that’s how you get growth -- and very accommodating capital markets.”


Profusek worked for Potash Corp. on its merger with Agrium Inc., and is advising Reynolds American Inc. on British American Tobacco Plc’s $47 billion bid for the rest of the company.


To watch Bob Profusek talk about oil and gas M&A, click here


More Megadeals


Just eight transactions account for more than $300 billion of the October total as megadeals continue to find favor among dealmakers. The biggest deal of the year, AT&T Inc.’s $85.4 billion bid for Time Warner Inc., was revealed on Oct. 22 in a rare Saturday deal announcement.


So far this year, 32 deals valued at more than $10 billion have been struck. That puts 2016 on track to beat every year since 2007 except for last year, when a bumper 52 transactions of that size or more were announced.



“Size matters,” said Profusek, “particularly because we’re in a very challenging regulatory environment right now.”


Almost 30 deals announced since the start of 2015 have not yet closed, including Dow Chemical Co.’s $59 billion merger with DuPont Co., which was pushed back until next year.


The two health insurance megadeals -- Anthem Inc.’s bid for Cigna Corp. and Aetna Inc.’s offer for Humana Inc. -- are also still pending. Both those deals are currently trading with at least $40 gaps between the offer price and the target’s current share price, indicating investors are pessimistic they will close.


Despite currency and equity markets reacting skittishly to poll results and news sentiment in the final days before the U.S. presidential election, M&A activity is forging ahead.


“I don’t hear boards or management really putting the election high on their list of concerns,” Frank Aquila, partner at law firm Sullivan & Cromwell LLP, said in a telephone interview. “Unless there is some sort of regulatory deadline or tax deadline that people are working to, deals get there when they get there.”



UPS will freeze pensions for thousands of nonunion employees

Posted by Jerrald J President on July 3, 2017 at 10:35 AM Comments comments (0)



 The squeeze is upon "US", the noose is going to get tighter and tighter America. The 1/10 of 1percent is making a mad dash to unsnare us all. By JJP

UPS will freeze pensions for thousands of nonunion employees


UPS on Wednesday told some workers that the company plans to freeze their pensions, joining the ranks of other large employers that are moving away from the defined benefit plans.


UPS is notifying more than 70,000 nonunion workers this week that the change will take place in five years as part of a move to reduce expenses and help curb a long-term funding shortfall. As of December, UPS was about $7 billion short of the $25.3 billion needed to pay future benefits for the workers in that plan, said Steve Gaut, a company spokesman.


The affected workers will stop accruing pension benefits on Jan. 1, 2023. After then, they will only be able to receive the pension benefits they have earned up until that point. UPS will switch to contributing between 5 percent and 8 percent of workers’ salaries into a 401(k) savings account, where workers will be responsible for deciding how the money is invested. Some employees who were hired before 2008 may be eligible for additional contributions, Gaut said.

Pensions, in which employers are responsible for making predetermined payouts to employees after they retire or reach a certain age, have been on the decline over the past several decades. Only 20 percent of Fortune 500 companies offered some sort of pension to new hires in 2015, down from 59 percent in 1998, according to a report from the research firm Willis Towers Watson.



Since the financial crisis, more companies have either closed off plans for new hires or frozen benefits, according to the report. By 2015, 39 percent of employers had frozen benefits for pension plans, up from 21 percent in 2009.


Companies are struggling to afford pension plans as people live longer, which increases the amount of benefits they receive. Funding those benefits has also become more difficult in an era of low bond yields and weaker stock market returns. Because of this, more companies are focusing to defined contribution plans, such as 401(k) accounts, where costs can be more predictable. With these retirement accounts, companies can agree to make a contribution up front that is often based on the worker’s salary and contribution amount.


The changes at UPS apply primarily to employees in managerial or administrative roles and do not affect the roughly 270,000 drivers and other employees covered by the International Brotherhood of Teamsters union. Their retirement benefits are covered by a contract that won’t expire until July of next year. Gaut said it was “premature” to comment on the upcoming negotiations that will affect those workers.



UPS said it wanted to give workers five years to plan for the changes to their retirement benefits. Some employees may choose to save more over the next several years to make up for some of the difference, Gaut said. People who retire before the changes are rolled out in 2023 won’t see a difference in their benefits, he adds.

Global Wealth 2017: Transforming the Client Experience

Posted by Jerrald J President on July 1, 2017 at 4:00 PM Comments comments (0)



 This is why the "Rich stay Rich". It's a rigged system Period-Point-Blank.. By JJP



Global Wealth 2017: Transforming the Client Experience

The overall growth of global private wealth picked up momentum in 2016, allowing for a good deal of regional variation. All regions experienced positive growth, with North America, Western Europe, Latin America, and the Middle East and Africa posting stronger expansion than in the previous year, and Asia-Pacific, Eastern Europe, and Japan growing at slower rates. Asia-Pacific was nonetheless the most robust region, achieving an increase that was just shy of double digits. We expect sizable growth to continue.


This report, The Boston Consulting Group’s 17th annual analysis of the global wealth management industry, includes two topics that we reexamine every year—the global market-sizing review and the wealth manager benchmarking study—as well as a special chapter about the impact of digital technology on the industry.


The market-sizing chapter outlines the evolution of private wealth from both global and regional perspectives, including viewpoints on different client segments and offshore centers, and takes a fresh look at private-banking revenue pools. The benchmarking analysis stems from a survey of more than 125 wealth managers and involves more than 1,000 performance indicators related to growth, financial performance, operating models, sales excellence, employee efficiency, client segments, products, and trends in different markets.


In our benchmarking, we focused on issues surrounding the decline of what for many years was a highly profitable wealth management business, lightly regulated and with low capital requirements. To be sure, since the financial crisis of 2007–2008, institutions have been dealing with more sophisticated and circumspect investors who demand reduced fees and commissions in order to increase returns in a low-yield world. Wealth managers have tried to reduce costs to ease the squeeze on profit margins, but a more forward-looking approach will be required in the future. On the positive side, we have observed an inflection point over the past year, with more wealth managers beginning to increase strategic investments to transform their businesses.


Our benchmarking chapter also takes a detailed look at the ever-evolving role of the relationship manager and how that critical position is shifting—indeed, how it must shift—in the search for competitive advantage. Overall, it is our view that wealth management, despite considerable challenges, will remain a very attractive business as long as institutions take steps to adapt to the changing environment. Determining investment priorities and following through on them will be critical to success.


In our discussion of digital technology, we highlight how digital has become a key accelerator for future change in wealth management. The problem is that most players, so far, have pursued digital innovation primarily as a feature selection exercise, centering on what their existing technology can provide along with what competitors (and, to some extent, fintechs) may intend to offer. Many of their digital launches have been realized opportunistically, stemming from one-off task forces, thus producing basic, largely disconnected, or insufficiently embedded digital capabilities. In order to make a step change in digital advancement and leapfrog the competition—to truly transform the client experience—wealth managers need to introduce a new approach to client journeys, upgrading to a next-generation, 2.0 version.


In preparing this report, we used traditional segment nomenclature that will be familiar to most wealth management institutions, dividing the client base into the following categories: affluent, lower high net worth (HNW), upper HNW, and ultra-high net worth (UHNW). These wealth bands tend to vary from player to player. We based segments on the following measures of private wealth:


Affluent: between $250,000 and $1 million

Lower HNW: between $1 million and $20 million

Upper HNW: between $20 million and $100 million

UHNW: Over $100 million

Moreover, in order to clearly gauge the evolution of global private wealth, we have updated and fine-tuned our market-sizing methodology, incorporating newly available data for countries where information previously had been difficult to obtain. The report also introduces our revenue pools model, which can be used to estimate banking market sizes and potential total banking revenue. Our revenue pools methodology calculates market-specific results for the largest 18 markets (covering 80% of total global wealth). Results for the remaining markets are based on regional averages. All growth rates are nominal, with fixed exchange rates.


As always with our annual global wealth reports, our goal is to present a clear and complete portrait of the business, as well as to offer thought-provoking analyses of issues that will affect all types of players as they pursue their growth and profitability ambitions in the years to come. We take a holistic view of the entire wealth management ecosystem, emphasizing how the market, institutions, and clients interact and identifying where the best opportunities for wealth managers can be found.

Fed gives big U.S. banks a green light for buyback, dividend plans

Posted by Jerrald J President on July 1, 2017 at 3:50 PM Comments comments (0)



  This is why "BANK'S" need to be non-profit entities and owned by the citizens of the community they serve. The system is rigged, did you forget they where BAILED-OUT by the tax payers! By JJP

Fed gives big U.S. banks a green light for buyback, dividend plans


The Federal Reserve has approved plans from the 34 largest U.S. banks to use extra capital for stock buybacks, dividends and other purposes beyond being a cushion against catastrophe.


On Wednesday, the Fed said those lenders, including household names like JPMorgan Chase & Co and Bank of America Corp, had passed the second, tougher part of its annual stress test. The results showed that many have not only built up adequate capital buffers, but improved risk management procedures as well.


One bank, Capital One Financial Corp, must resubmit its scheme by year-end, though the Fed is still allowing it to go forward with its capital plan in the meantime.


Fed Governor Jerome Powell, who is acting as regulatory lead for the U.S. central bank, said the process "has motivated all of the largest banks to achieve healthy capital levels and most to substantially improve their capital planning processes."


Altogether, banks that went through the tests will be able to pay out 100 percent of their projected net income over the next four quarters, compared with 65 percent after last year’s results, a senior Fed official said. It would be the first time since the 2008 financial crisis that banks return at least as much money to shareholders as they produce in annual profit.


The verdict marks a significant victory for the banking industry, which has worked for years to regain its stature. The green light could also serve as a watershed moment for Wall Street, which is eager to get a lighter regulatory touch from policymakers in Washington.


After the Fed's announcement, banks began to release details on how they plan to use their extra capital. Apart from Capital One, bank stocks rose in after-hours trading.


Citigroup Inc won a particularly notable victory, gaining permission to return nearly $19 billion to shareholders, or about 125 percent of projected earnings over the next four quarters - a big bump from last year, and more than analysts had expected.


Capital One must resubmit plans because it did not appropriately account for risks in "one of its most material businesses," the Fed said. Concerns centered around internal controls and whether senior management and the bank’s board of directors would be informed about problems in a timely and appropriate way, the Fed official said.


The Fed did not identify which business was ill-prepared. Capital One's most significant business is credit card lending. It has also built up a presence in auto lending. Both areas have been flagged by bankers and analysts as showing signs of weakness lately.


Capital One has until year-end to deliver an improved submission. In the interim, the bank can go ahead with its plan to repurchase up to $1.85 billion worth of stock, but the Fed can still object if the problems are not fixed.


Capital One had already reduced its capital request after the first set of stress-test results was released last week.


American Express Co had also resubmitted a plan with reduced requests, which was approved.


Other big banks, including Wells Fargo & Co, Goldman Sachs Group Inc and Morgan Stanley, also cleared the Fed's bar, and most issued press releases detailing big increases in shareholder payouts.


In a twist, Bank of America's planned dividend hike could lead Warren Buffett's Berkshire Hathaway Inc to convert a large preferred stake into common stock, which would turn it into the bank's largest shareholder.

This year was the first time all banks undergoing stress tests passed, although it was also the first time most were excluded from the "qualitative" component that Capital One failed. Only 13 of the 34 lenders were subject to that part, which bankers have criticized as being too opaque and subjective.


In response to those complaints, the Fed has now started to give banks more specific details on why they fail or where they need to improve, even if they sail through the tests.


To offer clarity to the public, the Fed also cited examples of where unnamed banks had stumbled in the past.


For instance, one lender failed the qualitative component in a prior year because senior management had told the board of directors and the Fed that a problem related to capital planning had been solved when it had not. Another management team had relied too heavily on experiences during the financial crisis, even though the bank's business and risk profile had changed dramatically since then.


Although all the banks passed, some came close to missing a key financial hurdle known as the supplementary leverage ratio in the toughest part of the exam. That metric fell to as low as 3.1 percent at Goldman Sachs, just above the required minimum of 3 percent. JPMorgan, Morgan Stanley and State Street Corp also reported ratios below 4 percent.


The ratio's requirements are not fully phased in, but the minimum is slated to move even higher over time. Wall Street has slammed the capital rule as overly burdensome, and it is being watched closely for change as part of the broader deregulation push in Washington.

Now Just Five Men Own Almost as Much Wealth as Half the World's Population

Posted by Jerrald J President on June 17, 2017 at 9:05 PM Comments comments (0)



  You can't make this America! Still believe in the American Dream? By JJP

Now Just Five Men Own Almost as Much Wealth as Half the World's Population


Last year it was 8 men, then down to 6, and now almost 5.


While Americans fixate on Trump, the super-rich are absconding with our wealth, and the plague of inequality continues to grow. An analysis of 2016 data found that the poorest five deciles of the world population own about $410 billion in total wealth. As of 06/08/17, the world's richest five men owned over $400 billion in wealth. Thus, on average, each man owns nearly as much as 750 million people.


Why Do We Let a Few People Shift Great Portions of the World's Wealth to Themselves?


Most of the super-super-rich are Americans. We the American people created the Internet, developed and funded Artificial Intelligence, and built a massive transportation infrastructure, yet we let just a few individuals take almost all the credit, along with hundreds of billions of dollars.

Defenders of the out-of-control wealth gap insist that all is OK, because, after all, America is a 'meritocracy' in which the super-wealthy have 'earned' all they have. They heed the words of Warren Buffett: "The genius of the American economy, our emphasis on a meritocracy and a market system and a rule of law has enabled generation after generation to live better than their parents did."


But it's not a meritocracy. Children are no longer living better than their parents did. In the eight years since the recession the Wilshire Total Market valuation has more than TRIPLED, rising from a little over $8 trillion to nearly $25 trillion. The great majority of it has gone to the very richest Americans. In 2016 alone, the richest 1% effectively shifted nearly $4 trillion in wealth away from the rest of the nation to themselves, with nearly half of the wealth transfer ($1.94 trillion) coming from the nation's poorest 90%—the middle and lower classes. That's over $17,000 in housing and savings per lower-to-middle-class household lost to the super-rich.


A meritocracy? Bill Gates, Mark Zuckerberg, and Jeff Bezos have done little that wouldn't have happened anyway. ALL modern U.S. technology started with—and to a great extent continues with—our tax dollars and our research institutes and our subsidies to corporations.

Why Do We Let Unqualified Rich People Tell Us How To Live? Especially Bill Gates!


In 1975, at the age of 20, Bill Gates founded Microsoft with high school buddy Paul Allen. At the time Gary Kildall's CP/M operating system was the industry standard. Even Gates' company used it. But Kildall was an innovator, not a businessman, and when IBM came calling for an OS for the new IBM PC, his delays drove the big mainframe company to Gates. Even though the newly established Microsoft company couldn't fill IBM's needs, Gates and Allen saw an opportunity, and so they hurriedly bought the rights to another local company's OS -- which was based on Kildall's CP/M system. Kildall wanted to sue, but intellectual property law for software had not yet been established. Kildall was a maker who got taken.


So Bill Gates took from others to become the richest man in the world. And now, because of his great wealth and the meritocracy myth, MANY PEOPLE LOOK TO HIM FOR SOLUTIONS IN VITAL AREAS OF HUMAN NEED, such as education and global food production.

—Gates on Education: He has promoted galvanic skin response monitors to measure the biological reactions of students, and the videotaping of teachers to evaluate their performances. About schools he said, "The best results have come in cities where the mayor is in charge of the school system. So you have one executive, and the school board isn’t as powerful. 

—Gates on Africa: With investments in or deals with Monsanto, Cargill, and Merck, Gates has demonstrated his preference for corporate control over poor countries deemed unable to help themselves. But no problem—according to Gates, "By 2035, there will be almost no poor countries left in the world."

Warren Buffett: Demanding To Be Taxed at a Higher Rate (As Long As His Own Company Doesn't Have To Pay) 

Warren Buffett has advocated for higher taxes on the rich and a reasonable estate tax. But his company Berkshire Hathaway has used "hypothetical amounts" to 'pay' its taxes while actually deferring $77 billion in real taxes.

Jeff Bezos: $50 Billion in Less Than Two Years, and Fighting Taxes All the Way


Since the end of 2015 Jeff Bezos has accumulated enough wealth to cover the entire $50 billion U.S. housing budget, which serves five million Americans. Bezos, who has profited greatly from the Internet and the infrastructure built up over many years by many people with many of our tax dollars, has used tax havens and high-priced lobbyists to avoid the taxes owed by his company.

Mark Zuckerberg (6th Richest in World, 4th Richest in America)


While Zuckerberg was developing his version of social networking at Harvard, Columbia University students Adam Goldberg and Wayne Ting built a system called Campus Network, which was much more sophisticated than the early versions of Facebook. But Zuckerberg had the Harvard name and better financial support. It was also alleged that Zuckerberg hacked into competitors' computers to compromise user data.


Now with his billions he has created a 'charitable' foundation, which in reality is a tax-exempt limited liability company, leaving him free to make political donations or sell his holdings, all without paying taxes.


Everything has fallen into place for young Zuckerberg. Nothing left to do but run for president.

The False Promise of Philanthropy

Many super-rich individuals have pledged the majority of their fortunes to philanthropic causes. That's very generous, if they keep their promises. But that's not really the point.


American billionaires all made their money because of the research and innovation and infrastructure that make up the foundation of our modern technologies. They have taken credit, along with their massive fortunes, for successes that derive from society rather than from a few individuals. It should not be any one person's decision about the proper use of that wealth. Instead a significant portion of annual national wealth gains should be promised to education, housing, health research, and infrastructure. That is what Americans and their parents and grandparents have earned after a half-century of hard work and productivity.

Borrowing on Borrowed Time

Posted by Jerrald J President on June 17, 2017 at 4:50 PM Comments comments (0)




"The federal government has borrowed so much that there are few places left on the planet where it can borrow more. Take a look at who has loaned the most money to the U.S. government. At the top of the list are the Social Security, Medicare and various federal pension trust funds. For decades, these trust funds have collected more money than they have paid out to retirees – in total, over $5 trillion more. But every time the trust funds generated surpluses, the federal government would borrow and spend them. That makes American retirees are the government's largest creditor". Stop allowing them to manipulate your mind! By JJP


Borrowing on Borrowed Time

 The official federal debt will soon cross the $20 trillion mark for the first time in American history. That's six times the federal government's annual income. While the official debt reached seven times the federal government's annual income at the end of World War II, that was prior to the days of unfunded liabilities. The official debt and the actual debt were thus the same.


But when the government started promising future Social Security benefits that it wouldn't be able to afford, the official debt became just the tip of a monumental iceberg. Today, unfunded liabilities add another $100 trillion to $200 trillion to the federal debt. This makes the federal government's total financial obligations at least 36 times its annual income.


Gargantuan debt is old news though, and politicians know it. They are keenly aware that voters have stopped paying attention, which means they can keep borrowing with impunity. But there's a new financial problem looming that will soon gain people's attention: The U.S. government is running out of places to borrow.


The federal government has borrowed so much that there are few places left on the planet where it can borrow more. Take a look at who has loaned the most money to the U.S. government. At the top of the list are the Social Security, Medicare and various federal pension trust funds. For decades, these trust funds have collected more money than they have paid out to retirees – in total, over $5 trillion more. But every time the trust funds generated surpluses, the federal government would borrow and spend them. That makes American retirees the government's largest creditor.


The second largest creditor, the Federal Reserve, owns a bit less than $3 trillion of the government's debt. Foreign governments own $4 trillion of the government's debt. Foreign people and corporations own another $2 trillion. American citizens, companies, and local and state governments own the remaining $6 trillion.


Of these four groups – foreigners, Americans, the Federal Reserve and the trust funds – three have been cutting back on their lending to the federal government for some time.



Since 2000, the federal debt has grown at an average annual rate of 8.2 percent. (6.7 percent excluding the Great Recession years). That's about twice the average annual rate at which the economy has grown. Over just the past eight years, the federal debt has doubled from $10 trillion to just shy of $20 trillion. But while the government has been steadily borrowing more, lenders have been steadily lending less.


Foreign investors have slowed the growth in their lending from over 20 percent per year in the early 2000s to less than 3 percent per year today. Foreign investors are no longer interested in loaning our government seemingly limitless amounts of money. And there is every indication that their willingness to lend will continue to wane.


Things are even more dire with Social Security. This year, for the first time since the program was established, the Social Security trust fund will generate a deficit – it will pay retirees more money than it collects from workers. For 80 years, the federal government borrowed Social Security surpluses to fund its profligate spending. Unless Congress overhauls Social Security, the program will never again generate a surplus for the government to borrow. In fact, the situation will reverse because the government must now start paying back to Social Security those trillions of dollars it borrowed. Growth in lending from the trust funds has slowed from 10 percent per year in the early 2000s to 4 percent today, and is projected to head into the negative numbers as early as this year. There is simply no money left there for the government to borrow.


Before the Great Recession, American investors were lending the federal government 10 percent less each year. The uncertainty of the recession caused a flight back to the perceived safety of Treasury bonds, but that quickly dissipated. Since 2001 and excluding the recession years, American investors have been lending the federal government an average of 2 percent less each year.



Growth in Federal Debt Held by US Investors

Growth in Federal Debt Held by US Investors Antony Davies and James R. Harrigan


If federal borrowing is growing steadily at an average pace of 6 percent per year, yet foreign and American investors are slowing their lending, and the trust funds have no surpluses left to lend, where is the government getting the money it's borrowing? And where will it get more in the future?


The answer is the Federal Reserve. Prior to the Great Recession, the Fed was increasing its annual lending to the US government by almost 6 percent per year. The Fed then dramatically increased its lending during the recession – that's what all the "quantitative easing" talk was about. On average, since 2001, the Fed has increased its lending to the federal government by over 11 percent annually.


Growth in Federal Debt Held by the Federal Reserve

Growth in Federal Debt Held by the Federal Reserve Antony Davies and James R. Harrigan


The U.S. government has borrowed more money than any government in human history. Politicians have convinced voters that government debt doesn't matter or that, by the time it does, some magical solution will present itself. The ugly truth, though, is that there simply aren't enough investors left on the planet willing to loan the U.S. government enough to maintain its spending habits. So the Federal Reserve takes up the slack. And this is where things go from bad to worse, because the Federal Reserve prints the money it loans.


When the Fed prints more money, every one of the dollars already in circulation, from those in people's savings accounts to those in their pockets, loses some value. Prices go up in response. That's inflation.


Since the end of World War II, inflation in the U.S. has averaged less than 4 percent per year. When the Fed starts printing money in earnest because the government can't obtain loans elsewhere, inflation will rise dramatically. How far is difficult to say, but we do have some recent examples of countries that tried to finance runaway government spending by printing money.


Starting in 1975, Greece tried to jumpstart its economy through stimulus spending, which it paid for by printing money. For 15 years, the Greeks suffered 20 percent inflation. Following the breakup of the Soviet Union, Russia printed money to keep its government apparatus running. The result was five years over which inflation averaged 750 percent and peaked at 2,500 percent. Today, in the face of a collapsing economy, Venezuela's government has resorted to printing money to pay its bills. The result is nearly 200 percent inflation, which the International Monetary Fund expects to reach 1,600 percent in 2017. And here, after the U.S. abandoned the gold standard in 1971, the Fed ramped up its money printing. The result was 10 percent to 15 percent inflation for much of the 1970s.


For nearly a century, politicians have treated deficit spending as a magic wand. In a recession? Government must spend more money! In an expansion? There's more tax revenue, so government can spend more money! Always and everywhere, politicians argued only about how much to increase spending, never whether to increase spending. Past politicians left massive deficits, and the debt they created, for future generations to fix. The future has now arrived. There is simply no one left from whom to borrow.

The U.S. Is Where the Rich Are the Richest

Posted by Jerrald J President on June 17, 2017 at 4:45 PM Comments comments (0)




"1 percent of the world’s population hold 45 percent of the world’s $166.5 trillion in wealth. They will control more than half the world's wealth by 2021". 

The U.S. Is Where the Rich Are the Richest

Things are looking rosy for American billionaires and millionaires as wealth accumulation goes into overdrive.


It’s an excellent time to be rich, especially in the U.S.


Around the world, the number of millionaires and billionaires is surging right along with the value of their holdings. Even as economic growth has slowed, the rich have managed to gain a larger slice of the world’s wealth.


Globally, almost 18 million households control more than $1 million in wealth, according to a new report from the Boston Consulting Group. These rich folk represent just 1 percent of the world’s population, but they hold 45 percent of the world’s $166.5 trillion in wealth. They will control more than half the world's wealth by 2021, BCG said.


Rising inequality is of course no surprise. Reams of data have shown that in recent decades the rich have been taking ever-larger shares of wealth and income—especially in the U.S., where corporate profits are nearing records while wages for the workforce remain stagnant.

In fact, while global inequality is simply accelerating, in America it’s gone into overdrive. The share of income going to the top 1 percent in the U.S. has more than doubled in the last 35 years, after dropping in the decades after World War II (when the rich were taxed at high double-digit rates). The tide shifted in the 1980s under Republican President Ronald Reagan, a decade when “trickle-down economics” saw tax rates for the rich fall, union membership shrink, and stock markets spike.


Now, those policies and their progeny have helped put 63 percent of America’s private wealth in the hands of U.S. millionaires and billionaires, BCG said. By 2021, their share of the nation’s wealth will rise to an estimated 70 percent.



Boston Consulting Group Global Wealth Report 2017

The world’s wealth “gained momentum” last year, BCG concluded, rising 5.3 percent globally from 2015 to 2016. The firm expects growth to accelerate to about 6 percent annually for the next five years, in both the U.S. and globally. But a lot of that can again be attributed to the rich. The wealth held by everyone else is just barely growing.



Boston Consulting Group Global Wealth Report 2017

Where is all this wealth coming from? The sources are slightly different in the U.S. compared with the rest of the world. Globally, about half of new wealth comes from existing financial assets—rising stock prices or yields on bonds and bank deposits—held predominately by the already well-off. The rest of the world’s new wealth comes from what BCG classifies as “new wealth creation,” from people saving money they’ve earned through labor or entrepreneurship.


In the U.S., the creation of “new” wealth is a minor factor, making up just 28 percent of the nation’s wealth increase last year. It’s even lower in Japan, at 21 percent. In the rest of the Asia Pacific region, meanwhile, two-thirds of the rise is driven by new wealth creation.



Boston Consulting Group Global Wealth Report 2017

Political changes could boost the riches of American millionaires even further. After the 2016 election, U.S. stocks rose as investors hoped Republican President Donald Trump and a Republican Congress would agree to eliminate regulations and lower corporate tax rates. The wealthy may also get a tax cut as part of the bargain. For example, the American Health Care Act, passed by the U.S. House of Representatives to repeal and replace Obamacare, includes the elimination of taxes paid almost exclusively by the top 1 percent.


“No one knows” what kind of tax changes will become law, said BCG senior partner Bruce Holley. However, “this could buoy the [growth in U.S. wealth] that we are predicting.”



World Wealth & Income Database

Unsurprisingly, for a country where almost a quarter of income goes to the rich and where they hold the highest concentration of wealth, a big chunk of the world’s richest call America home. Two out of five millionaires and billionaires live there, and their ranks are growing fast. There are now about 7 million Americans with more than $1 million, and BCG expects 10.4 million millionaires and billionaires in the U.S. by 2021. That’s an annual growth rate of 8 percent, or about 670,000 new millionaires each year.


Millionaires are far rarer in the rest of the world than in the U.S., where 5.7 percent of all households own more than $1 million in assets. The only countries with a higher concentration of millionaires are much smaller nations, such as Bahrain, Liechtenstein, and Switzerland, most with a reputations as havens for the wealthy. China has the second most millionaires and billionaires, at 2.1 million, though its population is four times the size of America.