As Wall Street tanks, S&P's downgrade reverberations abound, our S&P labeled dysfunctional government, legislators are fighting back. Beyond the mealy mouthed put downs coming from the administration, the Senate Banking Committee is doing something a little more serious. The Senate panel is now probing S&P for possible violations:
The U.S. Senate Banking Committee is looking into the decision by Standard & Poor’s to downgrade the nation’s credit rating for the first time in history, according a committee aide briefed on the matter.
Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, is gathering more information on the Aug. 5 decision, which has been criticized by Treasury Secretary Timothy F. Geithner and other officials in President Barack Obama’s administration, according to the aide, who declined to be identified because he wasn’t authorized to discuss the matter publicly.
Senate Banking Chair, Democrat Tim Johnson:
I am deeply disappointed in S&P’s decision to enter into the game of political punditry.
The thing is, the Senate already held hearings on the credit ratings agencies and they know how absolutely corrupt the system is.
They had a chance to reform them and basically did little. Yet, there are some ill defined new rules and an SEC Office of the Credit Ratings agencies.
From the Financial Reform bill summary (pdf):
New Requirements and Oversight of Credit Rating Agencies
- New Office, New Focus at SEC: Creates an Office of Credit Ratings at the SEC with its own compliance staff and the authority to fine agencies. The SEC is required to examine Nationally Recognized Statistical Ratings Organizations at least once a year and make key findings public.
- Disclosure: Requires Nationally Recognized Statistical Ratings Organizations to disclose their methodologies, their use of third parties for due diligence efforts, and their ratings track record.
- Independent Information: Requires agencies to consider information in their ratings that comes to their attention from a source other than the organizations being rated if they find it credible.
- Conflicts of Interest: Prohibits compliance officers from working on ratings, methodologies, or sales.
- Liability: Investors could bring private rights of action against ratings agencies for a knowing or reckless failure to conduct a reasonable investigation of the facts or to obtain analysis from an independent source.
- Right to Deregister: Gives the SEC the authority to deregister an agency for providing bad ratings over time.
- Education: Requires ratings analysts to pass qualifying exams and have continuing education.
- Reduce Reliance on Ratings: Requires the GAO study and requires regulators to remove unnecessary
references to NRSRO ratings in regulations.
Is it possible the Senate and this administration finally gets serious of credit rating agency reform, especially considering credit ratings agencies wield more power than nation-states? That credit ratings agencies were essential to create the global financial meltdown in 2008?
It's yet to be seen, but regardless of the right or wrong of S&P's current AA+ U.S. rating, it is obscene when a for profit, private agency has more economic power than a nation-state. That cannot possibly be a good thing.
S&P might have violated rules by disclosing to select parties
Naked Capitalism has a new story claiming S&P maybe in violation of rules by disclosing their downgrade to select parties before announcing.
This actually is quite serious because obviously beforehand knowledge would allow parties, if they have any vested interest in markets, to benefit by placing various trades and so on on the upcoming news.
I am shocked
As said Capt. Renault in the great classic 'Casablanca' (starring Humphrey Bogart and Ingrid Bergman) --
"I'm shocked, shocked to find that gambling is going on in here!"
Even more shocking to think that the game is rigged or that there are some playing partners.
US Congress vs Italian prosecutors
Well we can always count on our "deeply disappointed" congress people to "hold hearings" on anything that's a major news item. They will give and record their "opening statements" and send copies back to the local Rotary Club.
Meanwhile, last Thursday Huffington Report carried a Reuters article from Milan saying that:
“Italian prosecutors have seized documents at the offices of rating agencies Moody's and Standard & Poor's in a probe over suspected "anomalous" fluctuations in Italian share prices."
Big difference between "holding hearings" and "seizing documents".
we referenced Italy when S&P first announced
The real battle lies in saving social safety nets. That's the never ending attack and on the U.S. middle class. It's quite true Medicaid/Medicare, health care costs will break the bank but what's not true is why. It's costs, not benefits and they already blew it in tackling the system in "Obamacare".
We have not only the Tea Party but Wall Street, IMF foaming at the mouth to destroy social safety nets in the United States.
S&P seems, in part, motivated, to demand this government "reform" entitlements, which is codespeak for reduce or get rid of....
instead of going after the reasons why the United States pays three times more than other industrialized nations for health care.
Middle Class has the gov't and economy it wants
Interesting, you list all the forces working ‘against’ the middle class and none working for them – which is typical and significant. Nobody talks about the provable ‘elephant in the room’ – AFL-CIO. That is the only organization that can server as a counter force. And yet, the president of AFL-CIO Trumka is already campaigning for Obama. And, unbelievably the president of the nation teachers union (can’t remember the name (NEA?) has also endorsed him. Obama did nothing nothing to support teachers in Wisconsin and New Jersey.
Similarly, no group is getting hurt more than African-Americans and they also blindly support Democrats especially if they are Black.
I don’t cry for the middle class. They got the government and economy they want. AFL-CIO and African Americans could form a Labor Party in the morning. Unless and until they do, they will treated like an abused wife who refuses to leave her husband
Blacks, AFL-CIO, Obama
Well, most people are not in unions and blind support when you're right, blacks have depression level unemployment rates, ALL of their economic gains since civil rights as a group have been wiped out and you can bet they will probably vote for Obama 98%.
The real problem is we have NO CHOICE! It's corporate corrupt puppets vs. economically depraved and insane (GOP field).
We need someone sane to either challenge Obama in the primary or run as an independent.
You know it's bad when Donald Trump makes the most economic sense and that is the situation today.
I agree with you the AFL-CIO should not pour money into Presidential campaigns. They should just locate the key candidates who really would try to do something and then lobby for legislation. It's just a waste of union dues and effort.
The Real Problem
The real problem is that labor has nowhere else to go. The one party-two-party system has no competition. No matter who wins, the financial elite wins and labor loses. Perhaps it is time for a credible socialist alternative -- not the 19th century crazies that made Stalin possible, but people with a conscience who believe it immoral to allow people to starve so others can be mega-rich. In this country, we punish the poor because people hate the government -- the irony is that it may be the poor who hate the government as well as the rich who hate the government (at least the part that taxes them). When I get fund-raising appeals from candidates who are themselves rich and who are part of the SOP (Same Old Plutocracy), I feel no compunction at saying no. There are few candidates who make sense for America (Kucinich comes to mind), but I will not vote for Obama, nor will I vote for the SOP candidate. Will someone real please step forward and reclaim the party of FDR, so I can at least vote?
Frank T.
@Frank, what are you hoping
@Frank, what are you hoping to achieve by refusing to vote? What if everyone who saw things as you do refused to vote? I don't think that's the right way to direct your frustration at the two party system. Unless you honestly believe Obama would be no better (not even a little bit) than the Republican in any way, refusing to participate because it makes you feel impure puts you as much at fault as anyone else.
Pretending back in the USSR
Yes, I agree that suffering under the lesser of two evils is better than suffering under the greater evil ... and anyway you can at least hope that someone will notice that you are voting against a trend toward greater and greater evil ... even if the trend continues no matter what ... still you didn't go there willingly ...
ON THE OTHER HAND, it's getting here in the USA a lot like in the old USSR. Russians had a saying about it: "We pretend to work, and they pretend to pay us."
Now, in the USA, "We pretend to vote, and they pretend to count our votes."
The government we want?
You mean we get to choose between the pretender and the sock puppet every 4 years, and they get to borrow money in our name? They go to war because they can and because nukes are off the table for now. We nation build abroad while our own infrastructure rots. We get "Deciders in Chief" to tinker with the economy so old folks can get bupkus on their life savings, eat cat food, and work at Wal Mart or bag groceries if they're lucky enough to be still standing. Yes, this is definitely the economy I want -- I feel better off because everyone else has less. We're not quite to the lumpenproletariat yet -- oh wait, I forgot about China, India, and Mexico. Maybe we'll get there just as soon as our leaders cut taxes some more and abolish the minimum wage.
Frank T.
Lumpenproletariat
Long time since I have heard that term. Many years ago, when working short hoe in the fields of Central California, 'lumpenproletariat' came to mind when I would hear my Chicano co-workers at lunch break tuning into Paul Harvey's radio program, avidly approving a propaganda line that bore no sane relation to their self or 'class' interests.
I had earlier read Das Kapital and, btw, my literacy and such soon brought me a promotion to driver of the crew bus and, basically, 'front man' for the labor contractor.
It's like in many barber shops and gypo construction sites, a few years back, Rush Limbaugh would be on the radio in the background -- the presumed listening preference of the working man throughout much of White America. More recently, I have often overheard homeless people discussing the latest RNC propaganda (for example, a lot of talk about the corrupt mentality of 'entitlements') at a soup kitchen where I have contributed in a small way.
So, I'm not sure that "we're not quite to the lumpenproletariat yet (Frank T)." I think we've had that for a long time, and it exists today as a substantial percentage of the population, assuming we could nail the concept down for statistical purposes.
I'm not sure that any of Marx's class analysis would apply today. For example, would the lumpenproletariat include people who scam SSI income although actually able to work, except that there is no work? It's unfortunate that Marx's work has become so intertwined with "Marxism" (Stalinism, Maoism, etc.). IMO, if Marx were alive today -- working as a sociologist (as he would be) -- one of the first things he'd do would be to reject Marxism or at least recreate it on the basis of a class analysis rereconstructed from foundation on up.
President Obama has indicated one class that would have to be recognized in any new class analysis -- a class that Obama knows of close-up and personal, namely, the "professional left" (quoting Obama). That is, after all, not a term with no objective meaning, as is proven by the history of professional leftists who 'see the light' and become professional rightists when they see the money. I suppose that a large part of our 'professional lef' is on some government payroll or another and could be accurately included in the broad class category of 'lumpenproletariat'. Nonetheless, some of the 'professional left' might be sincere, worth listening to, and not available to be bought into the 'professional right', however much better the payscale is over there.
Going back before World War II (as I have learned from men I have been fortunate enough to know personally) when labor organizers were communists, by definition, and vice versa -- in the days of pitched battles on the waterfront between Strike Education Committee members and Pinkertons -- the pay of a professional leftist was generally a place to sleep for the night and enough soup kitchen food to eat.
According to Wikipedia article Lumpenproletariat --
We're both old enough to remember
the transition of workers to the middle class. That social mobility was the wonderful thing about America -- the GI Bill was a major engine, as was the National Defense Education Act. But I was using the term lumpenproletariat in the sense of a powerless class who had to "take it or leave it" in the labor market. They are too marginalized to find the avenues of mobility, and resentment is natural. "Working class authoritarianism" has been well documented. But the people I feel most keenly for are those who are long-term unemployed who want to work. Squeezed out of the middle class and maybe out of the labor force.
Frank T.
what do you suggest?
Are you suggesting John McCain would've done better for the AFL-CIO, African-Americans, the teachers unions and "the middle class" ? Are you suggesting Romney, Perry, Bachman, Huntsman, etc would?
VIP Plans and Chic-Chic Medicine
There is a trend among primary care physicians to start VIP plans where the wealthy patient put down a fixed annual premium, like $1500. None of the worries of dealing with insurance companies. But you pay this $1500 premium, per member, $6000 + emergency, plus clinical testing, it gets pricey.
PC physicians have had Medicare/Medicaid rates frozen since 1997 by HHS,private insurance, Medicare/aid. The money is going to the top of the private insurance companies and specialists, who demand ever more exotic treatments and drugs and equipment. More and more cannot afford $12,000 per year for private insurance
and Medicare/Medicaid is vanishing while the States cut back. Corporate plans contributing 80-90% of premiums 10 years ago, contribute 10 to 20% or none at all.
Burton Leed
Free ride 100% to Medical School
I think for one they should make medical school 100% state subsidized. The requirements are also absurd, you have to have a 4.0++++ GPA, yet some foreigner can pop over as a resident with god knows what GPA and training.
That's absurd and squeezes out Americans. Then, walking out of Medical school with I think it's now above $150k in student loans forces them to, right out of the gate, go for the most $$ they can get. The length of time is also horrific.
So, if they subsidized education and training, at least that's one problem knocked out and assuredly the investment versus the return are great. i.e. $200k investment, $1 million in reduced costs, more family docs, interns available type of ratio and still that MD would easily make 6 figures and be more than comfortable financially.
Cost of Medical School
The trouble with GPA is it screws the late bloomers. When I enrolled in college, I was given 38 semester hours transfer credit from the Army -- but they would only do it with a grade of C because they had no metric for grading service schools and their pass/fail testing. I got into grad school only because I had consistently high grades in my major and 99 percentile GRE. But I like the idea of setting cost to reflect national needs -- we could make law school and MBA programs VERY expensive and subsidize nursing and medical programs with a payback provision of national service (such as beginning practice in rural or underserved areas for a set period). For those going on to do residency in pricier areas of medicine, such as anasthesiology or cosmetic surgery, we might have them pay back student loans while discounting payback of those in family practice or pediatrics.
Frank T.