Saturday, March 30, 2019

The "Chicken Shit" Theory Of Why Mueller Didn't Call Out Trump's Crimes Is The Best So Far.

"That the Wall Street titans who blew up the financial system suffered little more than slight reductions in their bonuses only reinforced the perception that the “system” is 'rigged'—with the consequences we know only too well. Many people simply want to live in a world that is fair. As Eisinger shows, this one isn’t."—James Kwak, The New York Times Book Review

"Any book that can definitively answer the question of why no executives have gone to jail for the Financial Crisis deserves our attention. And in this case a Pulitzer Prize. The Chickens--t Club is a fast moving, fly on the wall, disheartening look at the deterioration of the Justice Department and the Securities and Exchange Commission, written sympathetically, thoroughly, but mostly - engagingly. It is a book of superheroes.

There are 94 US Attorney offices around the country. They operate on their own, independent of the Justice Department, their dotted line overseers. They fight over cases, work (and fight) with the FBI and the SEC, or work around them, and seem to take their cues from the news. From the 60s to the 90s, they developed into the good guys, fighting the good fight and taking great pride in their accomplishments. They turned up clues, did forensic accounting, and turned (“flipped”) lower level criminals to get the executives. They were saving the country from itself. But the days of young aggressive lawyers nailing an Ivan Boesky or a Michael Milken are gone."  Reviewer on Amazon

Bill Maher was nearly apoplectic on Real Time last night about how no crimes - including collusion and obstruction of justice -  were definitively identified by Special Prosecutor Robert Mueller.  Barely containing his rage,  he bellowed at the panel:

"You know I'm right. You know these are illegal things. 'We have dirt from Russia, I love it, let's meet'.  Eight Russians show up. Or: 'Hi, I've got polling data. You close to Putin? We give you the polling data' . What the fuck? Are you kidding me?"

Former SDNY  prosecutor Preet Bharara did correct him on the first, noting that the statute is for conspiracy, not collusion.   But Maher dug in, he wasn't budging that whatever the name for the deeds committed they ought to be named crimes, not flouting  norms.  Others also have puzzled as to why Mueller could consume 22 months using 500 search warrants, 19 lawyers  and generate over 400 pages in his report,  but basically come up with nothing definitive on Trump.

But blogger Larry Beinhart, for my money, remains the one with the best hypothesis to explain Mueller's punt.   He called it a theory - 'The Chickenshit theory'-   taken from the title of the book 'The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives,'  by Jesse Eisinger.  As Beinhart writes in a recent blog post on

"White collar cases are the toughest to make and there are multiple reasons for this. They tend to take place in linguistic fogs. Instead of money taken at the point of a gun, it's taken by promises and claims that can be made to appear as merely over-ambitious, misunderstandings of complex rules, just careless, or actually made by underlings."

As related by Eisinger,  it's all about manipulating the language so that - by the end of the judicial process- there is no clear proof "beyond a reasonable doubt" by which to rest a case.  In other words, like the agnotologists who muddied the waters on the causes of climate change - delaying action by sowing doubts for decades-  it's nearly impossible to prove a crime attributed to a white collar crook. Especially one with tons of cash to toss around, i.e. to buy the best lawyers, meaning the best at manipulating the language for their client's own ends.

Reading  a WSJ piece  from today (p. A3, Parents Talk Plea In College Case') it occurred to me the 33 white collar, elite  parents charged with "honest services fraud" will also get off any prison time thanks to high paid lawyers (like Brian Kelly ) who will make their defense by parsing the language of the allegations to such an extent the jury will be too bleary brained to know which way to turn. Hence, to find for a reduced transgression - or even a slap on the wrist.   As noted in the piece:

"Mr. William McGashlan's attorney Jack Pirozzolo said he 'wanted to make crystal clear that the defense contests 'the way the government characterized and explained the allegations.""

Of course he will, because that's how so many white collar criminals and executives have gotten off!  The language manipulation succeeds because it questions whether the prosecutors "really" had firm evidence of the "intentions" of the accused.  How could they know, after all, what was actually going on inside their craniums? Might they not merely have had the interests of their offspring and their future service to the nation at heart?

Colorado Springs Independent columnist Mike Littwin has dug even more deeply into the parsing of language for the elites, in order for them to be 'teflon-protected' against any and all accusations.  As he writes (COS Indy, March 25-29, p. 4):

"As for collusion it is fair to ask, as Washington Post anti-Trumper Max Boot does: If Mueller determined that Trump had not 'conspired' or 'coordinated' with the Russians isn't it obvious, from Trump's own statements, that he welcomed Russian interference?"

Just to remind readers, the most outrageous statement to that effect was (July 27, 2016):

"I will tell you this, Russia if you're listening, I hope that you're able to find the 30,000 emails that are missing. You will probably be rewarded mightily by our press. Let's see if that happens."

But again, Trump's lawyers could parse that event and the words a hundred different ways, just like the lawyers for the bankers who got off in the wake of the 2008 derivatives fiasco that led to the credit crisis.  For example, they might have told Mueller: "That was just his typical braggadocio - nothing serious with malicious intent. He says stuff like that all the time. Look at his campaign rallies!"

Don't forget also, as Beinhart notes, Mueller already telegraphed  he'd capitulated to the chickenshit idiom before the report was released, e.g.:

"Special Counsel Robert Mueller sent out clear - though silent - signals before the release of the report that he had joined the chickensh** club. He didn't indict Donald Trump, Jr and Jared Kushner for possible offences they may have committed, like lying to Congress and failing to disclose foreign contacts, and then interview them, if they were to be charged. That would have set up an interview with the president himself."

Then what could  Mueller have done, if he couldn't get inside Trump's head, and never forced him to answer questions in real life, in real time, one on one?

How much would Mueller have needed to get to a crime? Littwin avers:

"Trump's Fifth Avenue shooting hypothesis still holds."

Meaning he'd virtually have to plug some one on one of New York's busiest streets to be found guilty. A true "smoking gun".   Anything less, as Littwin and Eisinger explain, can be dissolved with enough fuzzy lingo or semantics.

Littwin' conclusion - like that of Beinhart - is that "the impeach and replace movement was never going to happen."

That does not mean, of course, that the Dems just roll over for Barr and Trump.  No, they need to get the entire Mueller report released to see what was actually found, not what Barr claims was found in his brief (4 page) memo-summary.

That means keeping the April 2nd deadline ironclad, given the more time allowed for Barr to delay the more Trump's specious "vindication" road show can do damage. If need be, the Dems need to haul Barr (and Mueller) before open hearings, as well as subpoena any redacted versions of the report that emerge.  This is not a game, but the future of a constitutional democracy at stake. And you can be damned sure if the shoe was on the other foot, and an Obama (or Hillary-appointed) AG had just done the summary dump that Barr did, the Repukes would be like rabid rats demanding everything.  Oh, and holding hearings that would put their Benghazi side show to shame.

No way now or ever would they follow the advice they've given House Democrats, to "just move on."

See also:
by Laura Flanders | March 30, 2019 - 6:31am | permalink


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Friday, March 29, 2019

Why Is AOC Such A Lightning Rod For The Right's Vitriol And Death Threats?

View image on TwitterImage may contain: 1 person, smiling
"DOH! AOC a moron cuz she a commie and gots dumb ideas 'bout  warmin'!"

Even as Trump last night  disgorged verbal diarrhea at a Michigan rally,  in turn  "profane, insulting, delusional, and absurd" in the words of one blogger, we saw how bereft of control and sense he really is. For example, even taking aim (wittingly or otherwise) at his own base, e.g. 
Trump jokes (?) about someone in the audience named Stanley who he says needs "plenty" of prescription drugs
The foul, fungal imp - and worst excuse for a human since Hitler -  also recruited his Russkie-colluding spawn Don Jr. to pound on Alexandra Ocasio -Cortez, the Dems' new rising star.  In the wake of  his verbal spatter  the gathered deplorables bawled "AOC sucks!"   Of course, as I will show in this post, the 29-year old novice House Dem Rep  has become the Right's number one "boogie girl"  as they circle the drain in AOC derangement syndrome.

Consider the cover of the recent (April 1st) TIME magazine. When I showed it to Janice she was pleased that such a bright young Dem star had achieved prominence so quickly.  When I  then showed her the opening paragraph  of the accompanying article on the assassination threats, i.e.  

 "In her first three months in congress, enough people have threatened to murder Ocasio Cortez that Capitol Police trained her staff to do risk assessments of visitors."

She was repelled and outraged.  "What the hell is wrong with these people?" Janice asked, her face red.   I  offered my opinion that most were doubtless imps incited by the crazed Right, including Limbaugh, Hannity and the other FOX assholes.  She agreed,  including  that the country has finally gone down the rabbit hole of  ultimate insanity. (Evoking the words of comedian Larry Charles on  Bill Maher's Real Time last Friday night: "The country is now in a battle between logic and madness.")

In the article, Charlotte Alter describes Ocasio-Cortez as the “Wonder Woman of the left, Wicked Witch of the right,”.  But why is she the Right's  "wicked witch" and why the need for death threats? Why the hyper-paranoid reactions across the board?  

One reason is the continuous stream of rabid  fulminations from the radical Right's media trolls, especially on FOX News.  But there are ancillary trolls and assorted knuckle -draggers dispersed throughout the Right's media axis.Take for instance this paranoid claptrap spouted in The Daily Caller:

"Both Fox News’ Brian Kilmeade and former Arkansas Republican Gov. Mike Huckabee have called Ocasio-Cortez’s authenticity into question suggesting that there are “forces” behind her. Huckabee said Thursday, “I know there has been some allegations that she was almost like the Manchurian candidate, recruited, prepared.”

Puh-leeze!  "Forces"?  Seriously? Where's the proof, nitwits?   Then there is this sort of twaddle from the imps at the Independent Sentinel which vented its spleen in typical fascist fashion,

"The cute communist Alexandria Ocasio-Cortez has made the cover of Time Magazine. According to Brian Stelter, the author, Charlette Alter describes AOC as “the second-most talked about politician in America.....Her idiotic statements, her communist policies, and her anti-capitalist and anti-amazon failures to date went unmentioned. For them, she is a humble do-gooder going after the bad guys — Republicans (hush money, Citizens United, and so on)."

BWAAAAHAAA. Cry me a river.  Poor little rightist troglodytes  can't handle being one- upped on TIME by a 29 year old Latina Socialist. .They're mostly bawling because the only images shown of their traitor hero Trump were depraved. Oh, and totally justified .e.g.

Image result for Time cover with Trump -Putin FAceImage result for Time cover with Trump -Putin FAceImage result for Time cover with Trump -Putin FAce
Image result for Time cover with Trump -Putin FAce

But the histrionic reactions to AOC span the pundit-political  spectrum,  not only with the death threats from Reich wing nuts, trolls, cranks and  QAnon zombies, but the assorted rabid blurtations emanating from their garden variety deplorables, errr….base, e.g.

No, you can't make this stuff up.  These folks really do lack a life, such that they need to consume almost every waking hour to take all their sundry grievances out on AOC.  She is the hated symbol for all they lack, including: brains, confidence, moral vision, and power.

Then there are the hyperventilating pundits ensconced in the mainstream media, filling column space with gibberish castigating AOC.  Bear in mind these are supposed to be the intelligent, college-educated people who ought to know better, unlike the bozos cited above. (Recall that Harvey Mansfield - a Professor of Government at Harvard-  had referred to Trump voters as the "lower half of the IQ curve.")

Peggy Noonan's recent WSJ op-ed ('Dem Mean Girls Are Trump's Offspring', March 23-24, p. A13) is a case in point.  Like the extremist Right slackers, trolls and conspiracy mongers it leaves a lot to be desired.  Most especially regarding her egregious analogy of the new young female House Dems (i.e. Rep. Ilian Omar, Alexandria Ocasio-Cortex) to Trump, and calumniating them as Trump's "offspring".  

Peggy, Peggy, Trump already has offspring (Ivanka, Don Jr., Eric) with whom we can compare your claims and they don't hold up. I mean comparing the likes of goofball Eric, and dolt Don Jr. to AOC, are you mad?  Just as bad, comparing bubble- head bimbo Ivanka to AOC or Ilian Omar, i.e. as Trump "spawn"?  You've been sucking too much vape effluent - or snacking to excess on  MJ candy bars.

Noonan actually had the nerve to write:

"When Chelsea Clinton was accosted by a New York University student the student herself reminded me of Ms. Ocasio -Cortez in her certitude, self-rightouesness and chic."

Fair enough (Noonan got the 'chic' right), but  OTOH, how can anyone compare an NYU student's verbal  unloading on Chelsea to AOC's  death threats?  I mean we're talking about apples and oranges here, chalk and cheese. So how in hell can Peggy claim any remote basis for AOC being "like an angry student" - when at least that student never uttered a death threat against Chelsea the way the FOX-stoked zombies have unleashed them on AOC?

Noonan and other critics also seemed to have missed the memo that AOC is actually an intellectual voice. As noted in the same TIME article, her "2017 high school microbiology project - on the effects of anti-oxidants on roundworms - won 2nd place at the Intel Engineering and Science Fair."

Can any of the dolts and twerps who photo-shopped the insulting TIME parody cover of her (as a "Moron", in previous link) say as much? No, I doubt it. I doubt any of these goobers even took a high school science course - or if they did, passed it.

Noonan thereby made her biggest error in even remotely trying  to paint the new crop of Dem House reps as behavioral (or verbal) spinoffs of Trump.  Yes, they may be outspoken,  but at least they all possess higher order working brains and can articulate their positions, as well as criticisms - whether of Ronald Reagan or capitalism.  This as opposed to bombastic tirades or babbling incoherently like street drunks. Indeed, AOC's recent roasting of the idiot Utah GOP rep Mike Lee was classic, e.g.

Then there was Neolib tool Patricia Murphy,  in one Roll Call piece from 2 months ago,  who actually had the blind temerity to compare AOC's popularity and personality projection to Anthony Weiner's,  E.g.

 “Ugh. Eye rolls. 'How long until she crashes and burns?'  'It’s not whether she’ll blow up, it’s how and when.'  And this was from the Democrats... Famous blowhard and former Rep. Anthony Weiner had already alienated most of his Democratic colleagues by yelling on the floor and showing up on MSNBC most nights well before he ended up in jail for inappropriate texts with a 15-year-old girl. It’s hard to say which came first — the gigantic egos that made these men make horrible decisions or the press attention that fueled the egos. Either way, their heat-seeking personalities won them few allies."

But AOC is not a "heat seeking personality". She is an intelligent and energetic freshman legislator not prepared to stay quiet or roll over in the face of Trumpite tyranny while most pols punt and mutate into poltroons.  One thing no one, no critic can say - in the pantheon of epithets- is that Alexandria is a poltroon. (If you don't know the meaning, look it up).  To her credit, Ms. Murphy does concede:

"The AOC challenge for Democrats is unique. On the one hand, the congresswoman is a boon — she’s an Insta-savvy bundle of energy and enthusiasm who can bring millions of voters into the Democratic fold. Hers is also an essential voice for the Democratic leadership to hear from as a young, Latina progressive like the voters they most need in the future.

But for every interview that the congresswoman does from now on, they are also finding themselves called on to respond to, explain, defend or rebut her statements as a democratic socialist. Hours after she suggested to Anderson Cooper that some amount of income over $10 million could be subject to a 70 percent tax rate in the future, presidential hopeful Julian Castro was asked by ABC’s George Stephanopoulos if 70 percent was a realistic tax rate. Castro threw out 90 percent."

Oh, and don't forget Eisenhower, aka Ike, that good old socialist who had 90 percent to marginal tax rate in actuality!   Further, Sweden has a 70% top tax rate and consistently remains near the top of happiest nations in yearly surveys. Go figure!    Besides which, if Dem candidates are truly serious about proposals like Medicare for all, Medicare buy- ins, or even a public option (to the ACA) they will have to get serious about higher taxes to pay for them.

What we need is for all the Dem candidates  who are championing these new Medicare programs to do is to come clean about the need for new, higher taxes. I suspect at least increased to the 35 % marginal rate. Oh, and no more tax cuts!  Do that, be honest and you won't have to "respond to, explain, rebut or apologize"   for AOC's remarks.  You will instead develop a coherent narrative as to why we NEED higher taxes to secure the benefits that our citizens (who are not among the one percent) need, especially health care.  See e.g.

Note: Alexandra Ocasio- Cortez will be on MSNBC 'All In' tonight, talking about the Green New Deal and related issues.

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Thursday, March 28, 2019

Yield Curve Inversion Occurs - But Is Anyone Paying Attention?

Fed chief Jerome Powell and yield curve for March 25, 2019 (from T. Rowe Price Investor Bulletin, December, 2018)

For some time now, over the past 4 months, I've warned of potential yield curve inversion and how it's often signaled recession or massive downturn  I noted recessions tend to occur once the "flat" yield curve becomes "inverted" - with short term (e.g. 2 -year)  bond rates higher than long term (e.g. 10 year) rates. As a recent T. Rowe Price Investor Bulletin warned (p. 4) this condition has transpired before each of the past nine recessions dating back to 1955.  Hence, while it isn't a 100% absolute predictor, it is a significant historical marker..

The T. Rowe warning - assuming one can take it as such - is (ibid.):

"The yield curve is not flat yet ...but it could be by next March if the Fed maintains its 0.25 percent per quarter pace of rate hikes and the 10-year Treasury continues to meet resistance above the 3.0 percent level.  Starting the historical average 16-month clock from the spring of 2019 would raise the specter of a major downturn by 2020."

Interestingly, last Thursday we learned (WSJ, 'Treasury Yields Tumble After Fed Restraint', p. B12)  that "the yield on the two year Treasury notesettled at 2.402% on the day before compared with 2.471 % Tuesday. This marked the biggest one day slide since the start of the year, according to Dow Jones Market data."

 Given what happened March 21st, it shouldn't have been totally surprising the yield curve might actually have inverted on Friday - March 22nd - which it did.   One of my favorite go-to financial forecast sources, James Mackintosh in the Wall Street Journal wrote:   

"The market’s most reliable recession indicator is finally flashing red. With the Treasury yield curve inverting on Friday—the 10-year yield fell sharply to be lower than the three-month for the first time since 2007—is it finally time to prepare for an economic downturn?

Good question! I believe so, as I've written before given I suspect the correlations over time (see graphic are almost as reliable as sunspot activity curves in predicting large flares.   It is therefore of interest to inspect the yield curve for March 25th, with Treasury bills designated along the abscissa, e.g. with bond terms from less than five years to 30.  Note also the curve behavior and how it changes with the specific bonds.
No photo description available.

Look carefully and you will see the evidence for yield curve inversion, rates, hence the freak out for may. Subsequently economist and NY Times columnist Paul Krugman wrote the following in a tweet:
Image may contain: 1 person

Mackintosh, for his part, has always been somewhat agnostic on the value of the yield curve as forecaster of recession. He writes, for example:

The yield curve might be less reliable than its recent U.S. history suggests. It has a terrible record internationally, for instance. It flat-out hasn’t worked in Japan, also has a poor record in the U.K. and in Germany provided no advance warning of the 2008 recession, the worst since reunification. At the moment the curve isn’t inverted in any of them thanks to superlow or negative interest rates, even though all are struggling with greater economic troubles than the U.S.

In other words, one needs to bring to bear skepticism as to the historical evidence.

But then in subsequent text  we behold some very crucial points:

Previous inversions took place at much higher short rates — 5 or 6 percent, versus 2.5 percent now.”

He continued: “So this inversion actually reflects a worse outlook for the economy than the number itself suggests. Again, it’s not a direct read on the economy; it’s a read on what the average bond investor thinks is happening to the economy. But still not encouraging.

We should also bear in mind what Mackintosh wrote back on July 3, 2017, as regards the assumption that bear markets only come with recessions, i.e.:

"Investors believe that bear markets only come with recessions, and so reassure themselves that there is no sign a recession is imminent, repeating the mantra that 'economic cycles don't die of old age'. Unfortunately, this is both wrong and useless.

First, 20 percent drops happen outside recessions, as in 1987 and 1966. Second, economic cycles can be killed by a financial crash, and as the late Hyman Minsky pointed out, the longer a financial cycle goes on, the more likely it is to turn to excess and end badly. Worse, there is no reliable method of forecasting a recession, so even if it were true that only a recession can end a bull market, that isn't a lot of use to investors."

Put aside yield curve inversion, as yields fell and the curve merely flattened, "investors punished bank stocks ... A flatter yield curve hurts banks stocks because it narrows the gap between what lenders pay on deposits and lend on loans- a spread known as the net interest margin."  (WSJ, Mar. 22,  p. B10 ).  What especially bothered me even earlier (than seeing the yield curve inversion) was reading WSJ columnist Greg Ip's March 21  warning piece:

The Fed's New 'Normal' Looks Worrisome - WSJ

And how we needed to be wary of the Fed's sudden dovish inclination. Quoting Mr. Ip, which I believe is important to get the context:

"The Federal Reserve now believes its monetary policy is back to normal. That should worry you.  If this is normal then the Fed has precious little ammunition for when economic conditions again turn abnormal."

Ip then goes on to note that since 2005 the Fed had been 'normalizing' monetary policy by raising interest rates and shrinking its bond holdings."  (From the quantitative easing or QE policy.)

But:   "This week it declared the process all but done"  Adding to this,  the Fed big wigs see "no more rate increases this year"  and "they will stop shrinking the balance sheet".   This is nothing short of mind boggling, given almost $4 trillion of toxic bond assets remains on its balance sheets.   Even by September the bond balance will only be down to $3.5 trillion or 17 % of GDP.

Also, ceasing to increase interest rates puts the screws to millions of senior savers - who'd been saddled with pathetic low rates for over a decade. As one of the few segments of the ordinary citizen financial demographic with money to spend, this is not a sound move.   Ip also warns  (ibid., this is all from the original print version, not the digital update):

"Should the economy stumble again, the Fed won't have much ammunition with which to respond."

Well, unless it resorts to the "negative interest rate'"  route which the Swiss also attempted with adverse results, and millions actually stuffing money (cash) under their mattresses. I mean, who the hell wants to keep it in the bank and lose $$?

But perhaps there is method to the Fed's madness. As James Piereson writes ('How Debt Makes The Markets Volatile',  Feb. 28, p. A17):  "Stocks are becoming more sensitive to interest rate hikes because the global economy is over-leveraged."

Something I've also addressed before, in conjunction with IMF warnings and : 

"Vitor Gaspar, the director of fiscal affairs at the  IMF, singled out the U.S. for criticism, saying that it was the only advanced country that was not planning to reduce its debt pile - with the recent tax cuts keeping public borrowing high.  

The fund urged policymakers to stop 'providing unnecessary stimulus when economic activity is already pacing up' and called on the U.S. to 'recalibrate' its fiscal policy and increase taxes to start cutting its debt." 

So no, the GOP-Trump tax cuts - which effects are driving millions crazy now in terms of low or  no tax refunds -  did not help the situation. Assorted experts have estimated $1.5- 2 trillion in added deficits. And as the WSJ's Gerald Seib put it (Feb. 19, p. A4): "As the accumulated debt rises, the bill to pay the interest on the debt rises too."   See e.g.

Brane Space: IMF Debt Warning Ought To Send Chills Through Every ...