Treasury asks for control of derivatives market
By ANNE FLAHERTY, Associated Press Writer Anne Flaherty, Associated Press Writer
Wed May 13, 6:40 pm ET
WASHINGTON – The Obama administration is asking Congress to extend its oversight of the financial system to include the shadowy market of derivatives, the kind of complex financial instruments that helped bring down the giant insurer AIG.
In a two-page letter sent Wednesday to congressional leaders, Treasury Secretary Timothy Geithner said he wants to create a central electronic-based system that would track the buying and selling of derivatives. He also wants to ensure that financial firms selling the instruments have enough capital on hand in case they default and subject them to stringent standards of conduct and new reporting requirements.
The legislative proposal is the administration's first major step in overhauling the nation's financial regulatory system.
"All (over-the-counter) derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation," Geithner wrote in his letter.
"Key elements of that robust regulatory regime must include conservative capital requirements, business conduct standards, reporting requirements and conservative requirements relating to initial margins on counterparty credit exposures," he adds.
New rules would deter financial firms from taking undue risk, prevent fraud and ensure they are marketed appropriately, according to the letter.
Current law largely excludes regulation of the instruments, which are referred to as "over-the-counter" derivatives because they are traded privately rather than through commodity exchanges now regulated by the Commodity Futures Trading Commission.
It was unclear how the rules would affect hedge funds, which are large, mostly unregulated entities that use complex trading tactics to earn big returns for high-dollar investors. Many hedge funds use derivatives contracts to offset risk on other transactions.
The proposal is strikingly similar to legislation proposed by a small group of major Wall Street banks. Critics of that proposal say the regime would give the same banks that contributed to the financial meltdown exclusive control over a larger part of the derivatives market.
The plan was received warmly by House Democrats who share oversight of the issue.
Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee, and Rep. Colin Peterson, D-Minn., chairman of the Agriculture Committee, said in a joint statement that they agree there should be "strong, comprehensive and consistent regulation" of the derivatives market and promised to work toward that end.
The value of over-the-counter derivatives hinges on an underlying figure or commodity — ranging from currency rate "swaps" to oil futures and inflation bets. The derivative reduces the risk of loss from the underlying asset. The global business world holds a staggering $600 trillion of these contracts.
One of the most infamous examples of the derivatives were credit-default swaps sold by American International Group Inc. AIG sold the swaps to investors as a kind of insurance to protect against defaults on mortgage-backed securities. But the company had to accept a hefty federal bailout after it became unable to support the contracts.
Under Treasury's new plan, companies like AIG would have to prove they have enough reserve capital to support the sale of derivatives.
Geithner said in congressional testimony in March that his plan would force the system to be more transparent.
"Let me be clear: The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end," he said.
Under the plan, the CFTC would establish an "audit trail" for the derivatives and have "clear unimpeded authority to police fraud, market manipulation and other market abuses" involving the derivatives. The Securities and Exchange Commission would be given comparable authority, including tools to prevent insider trading.
The new system should enable the regulators to "detect and deter all such market abuses," Geithner stated in his letter.
Investors are betting that exchanges like CME Group Inc., the parent company of the Chicago Board of Trade and the Chicago Mercantile Exchange, would benefit under the new regulation.
Shares of CME soared more than 6 percent Wednesday even as most other stocks fell.
___
Thursday, May 14, 2009
Wednesday, March 11, 2009
Why the Current Economic Mess? Summary Explanation
The core of the issue started with the government's desire to broaden the home ownership in this country. The belief was that certain minorities were at an unfair advantage and the playing field needed to be leveled.
This was done at multiple levels by both parties. The Fed also fed into this housing bubble by keeping interest rates too low, too long.
The banking industry really didn't like these new loans and found ways to get rid of them, they sold them in whole or in part and also looked to insure them. As the housing bubble continued, greed no doubt took over. There was money to be made. Entire companies were made and prospered selling essentially junk paper all of it was 'backed' by the government.
They banks were greedy and the banks were stupid but they didn't break any rules, no amount of oversight (which there was and is still plenty) would have affected things because the government goal of increasing home ownership was being met.
The basic rule of banking is to have a certain amount of assets backing what you are lending, those rules have been lessened (by the government) but we still within reasonable limits, if and ONLY if you assumed those assets were stable like cash. The fact that much of the asset base was based on home values which were at the top of a huge bubble was a system destined to crash and crash hard.
Words of warning did start going out in 2005 and 2006, the Bush administation itself tried to enact more regulation and oversight as it started to see (better late than never) the problems brewing. They were shut down, because of the false belief that were just trying to keep the poor folk from owning homes.
The administration should have yelled louder, Congress should have listened in the first place, big banks should have been so stupid and greedy and individuals should have been more cautious and not gotten into something they couldn't afford.
When the entire system breaks down, it is impossible to lay the blame on one thing, one man or one party. This was a problem in the making for over 20 years.
This was done at multiple levels by both parties. The Fed also fed into this housing bubble by keeping interest rates too low, too long.
The banking industry really didn't like these new loans and found ways to get rid of them, they sold them in whole or in part and also looked to insure them. As the housing bubble continued, greed no doubt took over. There was money to be made. Entire companies were made and prospered selling essentially junk paper all of it was 'backed' by the government.
They banks were greedy and the banks were stupid but they didn't break any rules, no amount of oversight (which there was and is still plenty) would have affected things because the government goal of increasing home ownership was being met.
The basic rule of banking is to have a certain amount of assets backing what you are lending, those rules have been lessened (by the government) but we still within reasonable limits, if and ONLY if you assumed those assets were stable like cash. The fact that much of the asset base was based on home values which were at the top of a huge bubble was a system destined to crash and crash hard.
Words of warning did start going out in 2005 and 2006, the Bush administation itself tried to enact more regulation and oversight as it started to see (better late than never) the problems brewing. They were shut down, because of the false belief that were just trying to keep the poor folk from owning homes.
The administration should have yelled louder, Congress should have listened in the first place, big banks should have been so stupid and greedy and individuals should have been more cautious and not gotten into something they couldn't afford.
When the entire system breaks down, it is impossible to lay the blame on one thing, one man or one party. This was a problem in the making for over 20 years.
Friday, February 6, 2009
oh and you need a forth - kindness
“It is passion, admiration and respect,” he told her. “If you have two, you have enough. If you have three, you don’t have to die to go to heaven.”
and you need a forth kindness
and you need a forth kindness
What is love? one man's quote ...
“It is passion, admiration and respect,” he told her. “If you have two, you have enough. If you have three, you don’t have to die to go to heaven.”
Restraining orders out of control - misused
from newamerican.com
Restraining Orders Out of Control
In America today, restraining orders are not only overused, but abused in such a way as to threaten the concept of justice.
One day in December of 2005, Colleen Nestler came to Santa Fe County District Court in New Mexico with a bizarre seven-page typed statement and requested a domestic-abuse restraining order against late-night TV host David Letterman.
She stated, under oath, that Letterman seriously abused her by causing her bankruptcy, mental cruelty, and sleep deprivation since 1994. Nestler also alleged that he sent her secret signals “in code words” through his television program for many years and that he “responded to my thoughts of love” by expressing that he wanted to marry her.
Judge Daniel Sanchez issued a restraining order against Letterman based on those allegations. By doing so, it put Letterman on a national list of domestic abusers, gave him a criminal record, took away several of his constitutionally protected rights, and subjected him to criminal prosecution if he contacted Nestler directly or indirectly, or possessed a firearm.
Letterman had never met Colleen Nestler, and this all happened without his knowledge. Nonetheless, she requested that the order include an injunction requiring him not to “think of me, and release me from his mental harassment and hammering.” Asked to explain why he had issued a restraining order on the basis of such an unusual complaint, Judge Sanchez answered that Nestler had filled out the restraining-order request form correctly. After much national ridicule, the judge finally dismissed the order against Letterman. Those who don’t have a TV program and deep pockets are rarely so fortunate.
Is This American Justice?
Letterman’s experience is replicated in state courts around the country thousands of times daily. Consider what happened to Todd, whose estranged wife went to court secretly and obtained a
restraining order against him. She swore that three men dressed in purple Fathers for Justice camouflage uniforms broke into her apartment, pushed her violently onto her couch, choked her severely, and threatened her, telling her that she better not go back to court. She complained that these were agents of the husband, as he belonged to that group. She did not call the police, but decided to go to work. Later she collapsed near the entrance of a hospital emergency room in a dramatic flourish.
As Todd’s lawyer, I provided evidence that her story was as phony as the one about David Letterman. The wife lived in a large apartment building on a main road with a busy lobby and a nosy superintendent across the hall from her. However, no one saw or heard the three strangely dressed intruders enter or leave during rush hour. The hospital records showed no bruises or evidence of physical assault. The court vacated the order against Todd.
Courts are easily manipulated by those pretending to seek protection from abuse because the political climate reinforces that men are abusers, and there is no penalty for false claims. Thus, they embolden applicants to use them for ulterior motives, such as to gain an advantage in divorce, to get custody of children easily without a family court hearing, or as a quick eviction process. Sometimes the motive is revenge or worse. For example, an order was issued against Brendan, father of two daughters, because he brought flowers to his child’s home for her 10th birthday right after he sought enforcement of a custody order that the mother was routinely violating. Brendan was literally accused of “sneaking” into the yard to deliver flowers, nothing more, yet a restraining order was filed against him. This order was later vacated by a court.
An applicant can get a domestic-abuse restraining order for just about any reason. A report from an organization called Respecting Accuracy in Domestic Abuse Reporting (RADAR) suggests that it is as easy to obtain a restraining order as a hunting or fishing license. You fill out the forms and tell the judge you are afraid, and you get an order almost automatically. RADAR states: “The law defines almost any interpersonal maladjustment as ‘domestic violence,’ the courts then establish procedures to expedite the issuance of these orders.”
The restraining-order laws of the several states are remarkably similar in their wording, as though an invisible hand were guiding them. They allow a woman to come to court secretly and claim that she feels fearful of “abuse” from a family member or person she lives with. The accused person is not there, and there is no requirement to notify him. There are no traditional rules of evidence, no opportunity for cross examination, no burden of proof beyond a reasonable doubt, no jury, nor even a necessity to have a story that makes sense.
The definition of “abuse” set forth in these state laws is always subjective, rather than requiring an injury or genuine threat. They all include a clause that expands abuse to include “fear of harm,” often including even “emotional harm.” Courts routinely issue orders on sworn statements like, “I just don’t know what he may do,” or, “he has a long history of verbal and emotional abuse.”
A week after the initial secret hearing, a “return” hearing is held, where the defendant gets to tell his side of the story. He is usually allowed to present evidence and testimony, but it is often difficult to assemble needed documents and witnesses in that short period. Most of the temporary orders are extended for a year, regardless of the evidence, alibi, or witnesses offered.
To some judges, evidence is irrelevant; they just issue orders. Professor Stephen Baskerville, in his book Taken Into Custody, quotes Judge Richard Russell of Ocean City, New Jersey, at a restraining-order training seminar:
Throw him out on the street, give him the clothes on his back and tell him, “See ya around.”... The woman needs this protection because the statute granted her that protection.... They have declared domestic violence to be an evil in our society. So we don’t have to worry about the rights. Grant every order. That is the safest thing to do.
My client Mr. L’s experience is a perfect example of this. I filed a motion to vacate the restraining order his ex-wife had against him, and she filed one to extend it, so the judge held a hearing to consider both motions — sort of. Here is the pertinent part of the actual transcript of the hearing to vacate the order:
Mr. Hession: Can you please state your name and your address for the record? [The Court argues with counsel as to whether Mr. L can testify.]
The Court: I don’t believe I need to hear any evidence from your client. I’m going to deny your request to vacate the restraining order.
The hearing on whether to extend the order was no better:
The Court: Mrs. L_____, do you remain fearful of your husband?
Mrs. L_____: Yes. [Weeping]
The Court: Thank you.
The judge then extended the restraining order for a year, without Mr. L uttering his name on the witness stand, and with one generalized question to the wife about “fear.” Judges who conduct hearings like this violate their oath to apply the law impartially and encourage the filing a false complaints — which is an enormous problem.
According to professor of accountancy Benjamin P. Foster, Ph.D, CPA, CMA, of the 4,796 emergency protective-order petitions issued in West Virginia in 2006, an estimated 80.6 percent “are false or unnecessary.” Foster acknowledges the duplicitous nature of many of the complaints: “In divorce and child custody cases, a party generally obtains favorable treatment when the other party has engaged in domestic violence.” In West Virginia, one incident of domestic violence, “which includes ‘reasonable apprehension of physical harm’ and ‘creating fear of physical harm by harassment, psychological abuse,’... could impact the Parenting plan approved by the Family Court.” On the other hand, a “parent must have repeatedly made fraudulent reports of domestic violence or child abuse” to lose favor with a court. (Emphasis added.) Just the “identifiable costs” — the cost for the state, not the victims — for these false reports was in excess of $18,200,000 in 2006.
Drastic Punishment
Falsely issued restraining orders are of great concern because the punishment that is meted out to defendants is so drastic. After an initial secret restraining order is issued, the clerk faxes it to the local police, who then serve it on the defendant. Since most orders contain a “no contact” provision, the first thing the police do is remove the man from his home, with little more than the shirt on his back, just as Judge Richard Russell urged in his judicial training. Utterly taken by surprise, the man usually has no idea that the hearing took place, that the order was granted, or what he may have done to deserve it. The police are rarely sympathetic.
Most restraining orders require that the defendant may not contact the plaintiff directly or indirectly or get within some distance, usually 100 yards, of the alleged “victim.” Often, wives place the children as “co-victims” on these orders, so the defendant cannot contact his children either. “No contact” means no phone calls, cards, letters, or even incidentally running into the person.
No reconciliation is possible once an order is issued because any contact is a crime and subjects the violator to immediate arrest and jail. Even indirect contact is a crime, such as asking a relative to help work things out. Many men have sent flowers to a spouse or a birthday card to a child, only to end up in prison. Once an order is in place, the state becomes the father in the family, pushing out the real one.
Most district attorneys, prompted by feminist political pressure, have a “no-drop” policy on prosecuting all violations of restraining orders, no matter how minor. Joseph found that out the hard way. His wife obtained a restraining order after telling the judge he had kicked a plastic cooler and slammed the door while leaving his house. She omitted the part about telling him she had found another man.
No abuse or threat had occurred, but an order was issued against Joseph anyway. While it was in place, the wife made 14 false criminal complaints about violations of the order, which resulted in some arrests. I had to go to court with Joseph again and again, and we somehow managed to beat every case. Only a dysfunctional system allows a complainant to continue to make such false allegations without any accountability whatsoever.
Restraining orders also interfere with Second Amendment rights. Each state’s laws require that a defendant surrender all guns and ammunition, and violation of this provision is not only a state crime, but a federal one, under the Violence Against Women Act of 1994.
“Mike” was an Air Force officer in charge of a military police unit on base. When his ex-wife got a restraining order against him, he lost his right to carry a weapon and had to take a desk job. He had custody of their child, which the mother resented. She came to a child’s doctor appointment and attempted to create an incident, but was unsuccessful. However, the mother went to the local police to help her get an order. She told the police that there was no abuse and no history of abuse, so they wouldn’t get involved. She then went to the court in the adjoining state where she lived and claimed that there was abuse, and obtained a restraining order. Then, to cover her tracks, she went back to the police in the husband’s state and requested that they change her statement about no abuse. Eventually, he was able to remove the order, after hiring an expensive lawyer in the wife’s state.
Many police officers and military personnel who carry firearms are not so lucky, and have had careers permanently ruined by false allegations on restraining orders. In many places, once an order issues, even if it is eventually vacated, it is often impossible to get a gun license back.
Restraining orders especially impact the children. These orders are frequently used as a quick and dirty custody hearing, without the trouble of going to family court. In one minute, the father can lose the right to see his children for a year or longer. Children often get used as pawns in these situations, without any rebuke from a judge. While judges certainly know that falsely obtained orders are pervasive, they care little for the well-being of the children who are harmed by losing their father for long periods. The children often have no understanding of why they are being kept from their father because the father cannot even speak to them.
If dad works from home, as more people are now doing, additional problems arise. Under any order, he will be summarily evicted, and thus lose access to phones, business records, and equipment, without recourse. As a RADAR report puts it: “The man, now homeless and distraught, has only a few days to find a lawyer and prepare a defense.” When a home business is involved, he now cannot earn income, although he may be ordered to pay child support, needs alternate living quarters, and may have had his bank account emptied by his wife.
The case of Bob, who worked from home, shows the misuse of orders against self-employed persons. His wife got a restraining order against him, based on “a long history of verbal and emotional abuse,” which is not a legal basis for an order. After it was issued, Bob had to leave the home he owned prior to his marriage, in which he had his home-based business. Eventually, he was allowed to do business in one half of the home, while his wife and children lived in the other half. Despite her alleged “fear,” the wife came within a few feet of Bob on a regular basis. Meanwhile, the disruption of his business, the stress involved, and support payments destroyed him financially. He could not pay the huge child and spousal support assessments ordered by the court, which totaled triple his net income, and he was jailed twice. His business suffered, and he has still not recovered from the experience.
Skewed View of Abuse
The domestic-abuse industry has become a multi-billion dollar business during the last three decades, fueled by large influxes of government money and bolstered by media hysteria about abuse. Retired Massachusetts Judge Milton Raphaelson has stated, however, that there is not an epidemic of domestic violence, but rather an epidemic of hysteria about domestic violence.
State restraining-order laws suddenly sprang up in every state during the 1970s, at the insistence of radical feminist groups who had gained political ascendency. Family abuse was indeed a problem. However, the feminists identified the problem wrongly and proposed a solution that made it worse.
Building on the sensationalism of certain well-publicized cases, feminists built an “identity politics” view of abuse. It is true that some men still ascribed to the chauvinist notion that women were chattel and could be maltreated with impunity, but the feminists exploited that fact and got laws that harmed, not just men, but families. They declared that men were abusers and women were victims. Abused women were shown off at legislative hearings to manipulate the mostly male legislators into passing restraining-order laws.
For the first time, we now have laws that penalize people before they are proven to be criminals, for something they only might do. The laws are paradigms of pragmatism over principle, as they jettison centuries of highly developed legal theory and substitute a subjective and weak new legal framework which allows baseless allegations, while making it very difficult to defend against them. They allow a woman to claim “fear” of abuse, even if none has happened, leading to a classic “he said, she said,” where she holds all the cards.
While many persons involved in passing these laws may have been well-meaning, thinking they were going to help stop abuse, the unintended (or perhaps intended) consequences have been to change the very fabric of the legal system, and to decimate millions of families. In my experience, little abuse has been prevented by these laws. Stats back this up. For example, in West Virginia between 1981 and 1992, “domestic violence claims increased 466% from 1,065 to 6,029” and in Puerto Rico after a comprehensive domestic violence law was instituted in 1989, violence claims “did not decline or level off,” according to Professor Foster.
Answer to Domestic Violence?
Domestic-abuse restraining orders came about because a certain number of abusers really do assault and batter their partners. Scores of studies have attempted to understand the problem and find practical solutions, but domestic-abuse restraining orders are a flawed solution that has made the problem worse.
First, they have identified the wrong culprit. Women commit abuse more than men do. The U.S. Centers for Disease Control and Prevention reports, “In nonreciprocally violent relationships, women were the perpetrators in more than 70 percent of the cases. Reciprocity was associated with more frequent violence among women, but not men.” Psychologist John Archer reviewed hundreds of studies and concluded, “Women were slightly more likely than men to use one or more acts of physical aggression and to use such acts more frequently.” While men are more often the victims of abuse, women are injured more often and more severely than men. Moreover, about two-thirds of the reported cases are minor, such as throwing a pillow.
Has anyone vilified Hillary Clinton for throwing household objects at Bill, or singer Amy Winehouse for using her husband as a “punch bag”? We are desensitized to violence against men. In domestic arrest situations, it is almost always the man who is arrested, even if he is the only one injured. None of this is to justify abuse by anyone, only to show the fallacy of focusing solely on the abuse of women. Such unequal application of the law has likely led to more trauma and abuse than it purports to prevent, as well as destroyed respect for the system among fair-minded persons.
Whenever lawmakers respond to political pressure, a bad law is the usual result. Law has the properly limited purpose of insuring restitution to victims of those who intrude on the person or property of others. It has never been preventative, as domestic-abuse restraining-order laws seek to be, nor should it be. If true abuse does occur — a relative or non-relative threatens to batter or kill you or actually does physically attack — you are already able to make a criminal complaint for assault (which is defined as a threat to batter) and battery. And a criminal restraining order will likely be set in place. These new restraining-order laws seek to prevent crime by identifying persons who may commit one, and stop it before it happens. However, this is entirely speculative, and cannot identify perpetrators with any reliability.
In our imperfect world, we settle for an imperfect system that uses fear of punishment, rather than preemption, as its primary deterrent, but look at the alternative. With unjust restraining-order laws, we are creating a legal system that victimizes large groups of innocent people. We need to develop a better system, before we completely lose control of the present one. Thomas Reed, Speaker of the House of Representatives in the late 19th century, said, “One of the greatest delusions in the world is the hope that the evils in this world are to be cured by legislation.” Domestic-abuse
Restraining Orders Out of Control
In America today, restraining orders are not only overused, but abused in such a way as to threaten the concept of justice.
One day in December of 2005, Colleen Nestler came to Santa Fe County District Court in New Mexico with a bizarre seven-page typed statement and requested a domestic-abuse restraining order against late-night TV host David Letterman.
She stated, under oath, that Letterman seriously abused her by causing her bankruptcy, mental cruelty, and sleep deprivation since 1994. Nestler also alleged that he sent her secret signals “in code words” through his television program for many years and that he “responded to my thoughts of love” by expressing that he wanted to marry her.
Judge Daniel Sanchez issued a restraining order against Letterman based on those allegations. By doing so, it put Letterman on a national list of domestic abusers, gave him a criminal record, took away several of his constitutionally protected rights, and subjected him to criminal prosecution if he contacted Nestler directly or indirectly, or possessed a firearm.
Letterman had never met Colleen Nestler, and this all happened without his knowledge. Nonetheless, she requested that the order include an injunction requiring him not to “think of me, and release me from his mental harassment and hammering.” Asked to explain why he had issued a restraining order on the basis of such an unusual complaint, Judge Sanchez answered that Nestler had filled out the restraining-order request form correctly. After much national ridicule, the judge finally dismissed the order against Letterman. Those who don’t have a TV program and deep pockets are rarely so fortunate.
Is This American Justice?
Letterman’s experience is replicated in state courts around the country thousands of times daily. Consider what happened to Todd, whose estranged wife went to court secretly and obtained a
restraining order against him. She swore that three men dressed in purple Fathers for Justice camouflage uniforms broke into her apartment, pushed her violently onto her couch, choked her severely, and threatened her, telling her that she better not go back to court. She complained that these were agents of the husband, as he belonged to that group. She did not call the police, but decided to go to work. Later she collapsed near the entrance of a hospital emergency room in a dramatic flourish.
As Todd’s lawyer, I provided evidence that her story was as phony as the one about David Letterman. The wife lived in a large apartment building on a main road with a busy lobby and a nosy superintendent across the hall from her. However, no one saw or heard the three strangely dressed intruders enter or leave during rush hour. The hospital records showed no bruises or evidence of physical assault. The court vacated the order against Todd.
Courts are easily manipulated by those pretending to seek protection from abuse because the political climate reinforces that men are abusers, and there is no penalty for false claims. Thus, they embolden applicants to use them for ulterior motives, such as to gain an advantage in divorce, to get custody of children easily without a family court hearing, or as a quick eviction process. Sometimes the motive is revenge or worse. For example, an order was issued against Brendan, father of two daughters, because he brought flowers to his child’s home for her 10th birthday right after he sought enforcement of a custody order that the mother was routinely violating. Brendan was literally accused of “sneaking” into the yard to deliver flowers, nothing more, yet a restraining order was filed against him. This order was later vacated by a court.
An applicant can get a domestic-abuse restraining order for just about any reason. A report from an organization called Respecting Accuracy in Domestic Abuse Reporting (RADAR) suggests that it is as easy to obtain a restraining order as a hunting or fishing license. You fill out the forms and tell the judge you are afraid, and you get an order almost automatically. RADAR states: “The law defines almost any interpersonal maladjustment as ‘domestic violence,’ the courts then establish procedures to expedite the issuance of these orders.”
The restraining-order laws of the several states are remarkably similar in their wording, as though an invisible hand were guiding them. They allow a woman to come to court secretly and claim that she feels fearful of “abuse” from a family member or person she lives with. The accused person is not there, and there is no requirement to notify him. There are no traditional rules of evidence, no opportunity for cross examination, no burden of proof beyond a reasonable doubt, no jury, nor even a necessity to have a story that makes sense.
The definition of “abuse” set forth in these state laws is always subjective, rather than requiring an injury or genuine threat. They all include a clause that expands abuse to include “fear of harm,” often including even “emotional harm.” Courts routinely issue orders on sworn statements like, “I just don’t know what he may do,” or, “he has a long history of verbal and emotional abuse.”
A week after the initial secret hearing, a “return” hearing is held, where the defendant gets to tell his side of the story. He is usually allowed to present evidence and testimony, but it is often difficult to assemble needed documents and witnesses in that short period. Most of the temporary orders are extended for a year, regardless of the evidence, alibi, or witnesses offered.
To some judges, evidence is irrelevant; they just issue orders. Professor Stephen Baskerville, in his book Taken Into Custody, quotes Judge Richard Russell of Ocean City, New Jersey, at a restraining-order training seminar:
Throw him out on the street, give him the clothes on his back and tell him, “See ya around.”... The woman needs this protection because the statute granted her that protection.... They have declared domestic violence to be an evil in our society. So we don’t have to worry about the rights. Grant every order. That is the safest thing to do.
My client Mr. L’s experience is a perfect example of this. I filed a motion to vacate the restraining order his ex-wife had against him, and she filed one to extend it, so the judge held a hearing to consider both motions — sort of. Here is the pertinent part of the actual transcript of the hearing to vacate the order:
Mr. Hession: Can you please state your name and your address for the record? [The Court argues with counsel as to whether Mr. L can testify.]
The Court: I don’t believe I need to hear any evidence from your client. I’m going to deny your request to vacate the restraining order.
The hearing on whether to extend the order was no better:
The Court: Mrs. L_____, do you remain fearful of your husband?
Mrs. L_____: Yes. [Weeping]
The Court: Thank you.
The judge then extended the restraining order for a year, without Mr. L uttering his name on the witness stand, and with one generalized question to the wife about “fear.” Judges who conduct hearings like this violate their oath to apply the law impartially and encourage the filing a false complaints — which is an enormous problem.
According to professor of accountancy Benjamin P. Foster, Ph.D, CPA, CMA, of the 4,796 emergency protective-order petitions issued in West Virginia in 2006, an estimated 80.6 percent “are false or unnecessary.” Foster acknowledges the duplicitous nature of many of the complaints: “In divorce and child custody cases, a party generally obtains favorable treatment when the other party has engaged in domestic violence.” In West Virginia, one incident of domestic violence, “which includes ‘reasonable apprehension of physical harm’ and ‘creating fear of physical harm by harassment, psychological abuse,’... could impact the Parenting plan approved by the Family Court.” On the other hand, a “parent must have repeatedly made fraudulent reports of domestic violence or child abuse” to lose favor with a court. (Emphasis added.) Just the “identifiable costs” — the cost for the state, not the victims — for these false reports was in excess of $18,200,000 in 2006.
Drastic Punishment
Falsely issued restraining orders are of great concern because the punishment that is meted out to defendants is so drastic. After an initial secret restraining order is issued, the clerk faxes it to the local police, who then serve it on the defendant. Since most orders contain a “no contact” provision, the first thing the police do is remove the man from his home, with little more than the shirt on his back, just as Judge Richard Russell urged in his judicial training. Utterly taken by surprise, the man usually has no idea that the hearing took place, that the order was granted, or what he may have done to deserve it. The police are rarely sympathetic.
Most restraining orders require that the defendant may not contact the plaintiff directly or indirectly or get within some distance, usually 100 yards, of the alleged “victim.” Often, wives place the children as “co-victims” on these orders, so the defendant cannot contact his children either. “No contact” means no phone calls, cards, letters, or even incidentally running into the person.
No reconciliation is possible once an order is issued because any contact is a crime and subjects the violator to immediate arrest and jail. Even indirect contact is a crime, such as asking a relative to help work things out. Many men have sent flowers to a spouse or a birthday card to a child, only to end up in prison. Once an order is in place, the state becomes the father in the family, pushing out the real one.
Most district attorneys, prompted by feminist political pressure, have a “no-drop” policy on prosecuting all violations of restraining orders, no matter how minor. Joseph found that out the hard way. His wife obtained a restraining order after telling the judge he had kicked a plastic cooler and slammed the door while leaving his house. She omitted the part about telling him she had found another man.
No abuse or threat had occurred, but an order was issued against Joseph anyway. While it was in place, the wife made 14 false criminal complaints about violations of the order, which resulted in some arrests. I had to go to court with Joseph again and again, and we somehow managed to beat every case. Only a dysfunctional system allows a complainant to continue to make such false allegations without any accountability whatsoever.
Restraining orders also interfere with Second Amendment rights. Each state’s laws require that a defendant surrender all guns and ammunition, and violation of this provision is not only a state crime, but a federal one, under the Violence Against Women Act of 1994.
“Mike” was an Air Force officer in charge of a military police unit on base. When his ex-wife got a restraining order against him, he lost his right to carry a weapon and had to take a desk job. He had custody of their child, which the mother resented. She came to a child’s doctor appointment and attempted to create an incident, but was unsuccessful. However, the mother went to the local police to help her get an order. She told the police that there was no abuse and no history of abuse, so they wouldn’t get involved. She then went to the court in the adjoining state where she lived and claimed that there was abuse, and obtained a restraining order. Then, to cover her tracks, she went back to the police in the husband’s state and requested that they change her statement about no abuse. Eventually, he was able to remove the order, after hiring an expensive lawyer in the wife’s state.
Many police officers and military personnel who carry firearms are not so lucky, and have had careers permanently ruined by false allegations on restraining orders. In many places, once an order issues, even if it is eventually vacated, it is often impossible to get a gun license back.
Restraining orders especially impact the children. These orders are frequently used as a quick and dirty custody hearing, without the trouble of going to family court. In one minute, the father can lose the right to see his children for a year or longer. Children often get used as pawns in these situations, without any rebuke from a judge. While judges certainly know that falsely obtained orders are pervasive, they care little for the well-being of the children who are harmed by losing their father for long periods. The children often have no understanding of why they are being kept from their father because the father cannot even speak to them.
If dad works from home, as more people are now doing, additional problems arise. Under any order, he will be summarily evicted, and thus lose access to phones, business records, and equipment, without recourse. As a RADAR report puts it: “The man, now homeless and distraught, has only a few days to find a lawyer and prepare a defense.” When a home business is involved, he now cannot earn income, although he may be ordered to pay child support, needs alternate living quarters, and may have had his bank account emptied by his wife.
The case of Bob, who worked from home, shows the misuse of orders against self-employed persons. His wife got a restraining order against him, based on “a long history of verbal and emotional abuse,” which is not a legal basis for an order. After it was issued, Bob had to leave the home he owned prior to his marriage, in which he had his home-based business. Eventually, he was allowed to do business in one half of the home, while his wife and children lived in the other half. Despite her alleged “fear,” the wife came within a few feet of Bob on a regular basis. Meanwhile, the disruption of his business, the stress involved, and support payments destroyed him financially. He could not pay the huge child and spousal support assessments ordered by the court, which totaled triple his net income, and he was jailed twice. His business suffered, and he has still not recovered from the experience.
Skewed View of Abuse
The domestic-abuse industry has become a multi-billion dollar business during the last three decades, fueled by large influxes of government money and bolstered by media hysteria about abuse. Retired Massachusetts Judge Milton Raphaelson has stated, however, that there is not an epidemic of domestic violence, but rather an epidemic of hysteria about domestic violence.
State restraining-order laws suddenly sprang up in every state during the 1970s, at the insistence of radical feminist groups who had gained political ascendency. Family abuse was indeed a problem. However, the feminists identified the problem wrongly and proposed a solution that made it worse.
Building on the sensationalism of certain well-publicized cases, feminists built an “identity politics” view of abuse. It is true that some men still ascribed to the chauvinist notion that women were chattel and could be maltreated with impunity, but the feminists exploited that fact and got laws that harmed, not just men, but families. They declared that men were abusers and women were victims. Abused women were shown off at legislative hearings to manipulate the mostly male legislators into passing restraining-order laws.
For the first time, we now have laws that penalize people before they are proven to be criminals, for something they only might do. The laws are paradigms of pragmatism over principle, as they jettison centuries of highly developed legal theory and substitute a subjective and weak new legal framework which allows baseless allegations, while making it very difficult to defend against them. They allow a woman to claim “fear” of abuse, even if none has happened, leading to a classic “he said, she said,” where she holds all the cards.
While many persons involved in passing these laws may have been well-meaning, thinking they were going to help stop abuse, the unintended (or perhaps intended) consequences have been to change the very fabric of the legal system, and to decimate millions of families. In my experience, little abuse has been prevented by these laws. Stats back this up. For example, in West Virginia between 1981 and 1992, “domestic violence claims increased 466% from 1,065 to 6,029” and in Puerto Rico after a comprehensive domestic violence law was instituted in 1989, violence claims “did not decline or level off,” according to Professor Foster.
Answer to Domestic Violence?
Domestic-abuse restraining orders came about because a certain number of abusers really do assault and batter their partners. Scores of studies have attempted to understand the problem and find practical solutions, but domestic-abuse restraining orders are a flawed solution that has made the problem worse.
First, they have identified the wrong culprit. Women commit abuse more than men do. The U.S. Centers for Disease Control and Prevention reports, “In nonreciprocally violent relationships, women were the perpetrators in more than 70 percent of the cases. Reciprocity was associated with more frequent violence among women, but not men.” Psychologist John Archer reviewed hundreds of studies and concluded, “Women were slightly more likely than men to use one or more acts of physical aggression and to use such acts more frequently.” While men are more often the victims of abuse, women are injured more often and more severely than men. Moreover, about two-thirds of the reported cases are minor, such as throwing a pillow.
Has anyone vilified Hillary Clinton for throwing household objects at Bill, or singer Amy Winehouse for using her husband as a “punch bag”? We are desensitized to violence against men. In domestic arrest situations, it is almost always the man who is arrested, even if he is the only one injured. None of this is to justify abuse by anyone, only to show the fallacy of focusing solely on the abuse of women. Such unequal application of the law has likely led to more trauma and abuse than it purports to prevent, as well as destroyed respect for the system among fair-minded persons.
Whenever lawmakers respond to political pressure, a bad law is the usual result. Law has the properly limited purpose of insuring restitution to victims of those who intrude on the person or property of others. It has never been preventative, as domestic-abuse restraining-order laws seek to be, nor should it be. If true abuse does occur — a relative or non-relative threatens to batter or kill you or actually does physically attack — you are already able to make a criminal complaint for assault (which is defined as a threat to batter) and battery. And a criminal restraining order will likely be set in place. These new restraining-order laws seek to prevent crime by identifying persons who may commit one, and stop it before it happens. However, this is entirely speculative, and cannot identify perpetrators with any reliability.
In our imperfect world, we settle for an imperfect system that uses fear of punishment, rather than preemption, as its primary deterrent, but look at the alternative. With unjust restraining-order laws, we are creating a legal system that victimizes large groups of innocent people. We need to develop a better system, before we completely lose control of the present one. Thomas Reed, Speaker of the House of Representatives in the late 19th century, said, “One of the greatest delusions in the world is the hope that the evils in this world are to be cured by legislation.” Domestic-abuse
Friday, January 30, 2009
The Paradox of Our Times
The paradox of our time in history is that we have taller buildings but shorter tempers, wider Freeways, but narrower viewpoints. We spend more, but have less, we buy more, but enjoy less. We have bigger houses and smaller families, more conveniences, but less time. We have more degrees but less sense, more knowledge, but less judgment, more experts, yet more problems, more medicine, but less wellness. We drink too much, smoke too much, spend too recklessly, laugh too little, drive too fast, get too angry, stay up too late, get up too tired, read too little, watch TV too much, and pray too seldom.
We have multiplied our possessions, but reduced our values. We talk too much, love too seldom, and hate too often. We've learned how to make a living, but not a life. We've added years to life not life to years. We've been all the way to the moon and back, but have trouble crossing the street to meet a new neighbor. We conquered outer space but not inner space. We've done larger things, but not better things. We've cleaned up the air, but polluted the soul.
We've conquered the atom, but not our prejudice. We write more, but learn less. We plan more, but accomplish less. We've learned to rush, but not to wait. We build more computers to hold more information, to produce more copies than ever, but we communicate less and less.
These are the times of fast foods and slow digestion, big men and small character, steep profits and shallow relationships. These are the days of two incomes but more divorce, fancier houses, but broken homes. These are days of quick trips, disposable diapers, throwaway morality, one night stands, overweight bodies, and pills that do everything from cheer, to quiet, to kill.
It is a time when there is much in the showroom window and nothing in the stockroom. A time when technology can bring this letter to you. Remember to spend some time with your loved ones because they are not going to be around forever! Remember, say a kind word to someone who looks up to you in awe, because that little person soon will grow up and leave your side. Remember, to give a warm hug to the one next to you, because that is the only treasure you can give with your heart and it doesn't cost a cent.
Remember, to say, 'I love you' to your partner and your loved ones, but most of all mean it. A kiss and an embrace will mend hurt when it comes from deep inside of you. Remember to hold hands and cherish the moment for someday that person will not be there again. Give time to love, give time to speak! And give time to share the precious thoughts in your mind. And always remember: Life is not measured by the number of breaths we take, but by the moments that take our breath away.
We have multiplied our possessions, but reduced our values. We talk too much, love too seldom, and hate too often. We've learned how to make a living, but not a life. We've added years to life not life to years. We've been all the way to the moon and back, but have trouble crossing the street to meet a new neighbor. We conquered outer space but not inner space. We've done larger things, but not better things. We've cleaned up the air, but polluted the soul.
We've conquered the atom, but not our prejudice. We write more, but learn less. We plan more, but accomplish less. We've learned to rush, but not to wait. We build more computers to hold more information, to produce more copies than ever, but we communicate less and less.
These are the times of fast foods and slow digestion, big men and small character, steep profits and shallow relationships. These are the days of two incomes but more divorce, fancier houses, but broken homes. These are days of quick trips, disposable diapers, throwaway morality, one night stands, overweight bodies, and pills that do everything from cheer, to quiet, to kill.
It is a time when there is much in the showroom window and nothing in the stockroom. A time when technology can bring this letter to you. Remember to spend some time with your loved ones because they are not going to be around forever! Remember, say a kind word to someone who looks up to you in awe, because that little person soon will grow up and leave your side. Remember, to give a warm hug to the one next to you, because that is the only treasure you can give with your heart and it doesn't cost a cent.
Remember, to say, 'I love you' to your partner and your loved ones, but most of all mean it. A kiss and an embrace will mend hurt when it comes from deep inside of you. Remember to hold hands and cherish the moment for someday that person will not be there again. Give time to love, give time to speak! And give time to share the precious thoughts in your mind. And always remember: Life is not measured by the number of breaths we take, but by the moments that take our breath away.
Friday, January 23, 2009
Effects of deregulation and unenforced regulation => current crisis
Taking Stock: Government largesse drives capitalism
--------------------------------------------------------------------------------
By MALCOLM BERKO
Creators Syndicate
Posted Dec 27, 2008 @ 04:48 PM
--------------------------------------------------------------------------------
BOCA RATON, Fla. — Dear Mr. Berko: I find it hard to believe that the government is tossing money around like ticker tape at a parade. At some point we or our children will have to pay for the big mess created by Wall Street greed. Ordinary people like us have no choice in the matter and are forced to go with the flow. We get nothing out of this $750 billion giveaway and are forced to lump it or like it. It seems that most Americans are paying for this Wall Street greed twice. We lost our homes, independent retirement accounts, pension funds and our jobs. Now, we have to pay for the losses caused by the hedge funds and big New York Stock Exchange brokerage firms. Meanwhile, they got bailed out with money from our pockets while we get kicked out of our homes, our businesses and are forced to declare bankruptcy. Merrill Lynch, Lehman Brothers, AIG, Citigroup, and Bear Stearns and others stole hundreds of billions from workers like my friends and me and now we have to pay them back. This makes millions of Americans angry. But we can’t do a thing about it. It’s like we are serfs and they are the masters. We have been victims of Wall Street greed for the last eight years, while the suits on Wall Street pay themselves hundreds of billions of dollars in salaries and bonuses. I know many people who think like this, and we are bitter. Does this make sense to you, or do you think all of us are out in left field? — D.P., Columbus, Ohio
Dear D.P.: You’re right as rainbows, daffodils and sunshine. The last few years have witnessed the stink and rank perfidy of unfettered capitalism. Even former Federal Reserve Board Chairman Alan “The Mumbler” Greenspan admits he misjudged Wall Street’s intent to self-regulate. Wouldn’t it be nice to see the executives at AIG, Merrill Lynch, Bear Stearns, Lehman Brothers, Goldman Sachs and their hedge-fund affiliates take a perp walk with their alma maters prominently displayed on the front and back of their orange prison coveralls. Harvard, Yale, Stanford, Duke, Wharton, etc. would be so proud.
The following was written several years ago and is relevant today. It clearly explains how Wall Street favors the wealthy and snickers at the poor. Its compelling explanation is derived from a 2005 discussion group in which I participated.
Business activity cannot be sustained unless the rich get richer. And the best way for this to happen is to give more money to the poor! This is where Uncle Sam becomes a modern day Robin Hood and it works like this:
Uncle Sam borrows money from the rich so it can be given to the poor so the poor can continue losing it to the rich. This is the reason why there will always be a budget deficit and an increasing national debt.
To illustrate, let’s assume that there are two classes of people: rich and poor. Rich folks are those with above-medium incomes and poor folks are everyone below. The simple reason the rich must get richer is that they must make an after-tax profit if they wish to continue employing the poor to produce goods and services.
The rich cannot profit from traditional trading among themselves. For example, if there are 10 rich people in a closed room and they have a total of $10 million in cash, they can wheel and deal and trade among themselves to their heart’s content. But at year’s end they still only have $10 million. The value of their real estate or stocks might rise or fall, but that $10 million dollars won’t increase unless another group loses money to them.
Think about it. Capitalism is like a game of poker. The strong players win from the weak, or the rich win from the poor. However, the poor have a finite amount of money to lose, which means our poker game would come to a halt unless a designated patsy can be found. And that designated patsy is the U.S. government. I know it sounds farfetched but listen up and watch the bouncing ball.
Economists who follow money transfers note that in 2006, for example, the poor paid approximately $780 billion more to the rich for rent, food, cars, health care, tools, beer, etc. than they received for their labors at McDonald’s, Wal-Mart, doing yard work, washing dishes or cleaning hotel rooms. So, in order to keep the poor from going completely broke, the government, through taxes, took $320 billion from the rich and returned it to the poor via welfare, Social Security programs and other subsidies. Then, to return the additional $460 billion to the poor so their purchasing power remains intact, the government borrows $460 billion from the rich by issuing new Treasury bonds.
So, after taxes and transfer payments were complete in 2006, the rich made $460 billion, the government lost $460 billion, which was the deficit, and the poor broke even. In effect, the budget deficit equals what the rich keep after taxes. So, if the budget is balanced, the rich can’t make any more money. And if the rich can’t make more money, their incentive to produce will falter, unemployment will skyrocket and the economy will collapse.
I wish I could claim this was my idea, because I think this premise is worth a Noble Prize in economics.
Address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at malber@comcast.net. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit www.creators.com.
==========================
==================================================
LANCE DICKIE: FAITH CRISIS FOR TRUE BELIEVERS IN MARKET
Comments (3) Recommend (0)
BY LANCE DICKIE
Seattle Times
There are true believers suffering a real crisis of faith. They have been worshipping at the Church of the Free Market, and their doubts run deeper than stockbrokers not answering prayers or returning calls.
For decades, their prophets have preached that economic markets function best when left to themselves, unfettered by government regulation or oversight.
Businesses, investors and traditional market forces would self-regulate, self-correct and self-enforce. Oops.
The collapse of the housing and stock markets trace their way back to decisions and choices made at the highest levels of government and commerce. The rest of us get swept along for the ride, both up and down, and suffer the consequences of hubris, incompetence and criminality.
To hear the humbled apostles for markets free of disclosure and rules begin to mumble about the need for government regulation is extraordinary. Chief among the apostates is former Federal Reserve Chairman Alan Greenspan, who humbly confessed his wonderment at mortgage-lending practices to a congressional committee:
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief."
He was reminded he had the authority to prevent the lending practices behind the subprime mortgage crisis -- was advised to do so -- and refused to act. Greenspan is contrite. Millions more are in foreclosure.
Three years ago, a handful of regulators were waving red flags about hedge funds and credit derivatives. Lightly regulated exemptions from most rules, they placed enormous bets -- literally -- around the planet. Dense and esoteric, these trillion-dollar segments of the markets seemed pretty remote until ordinary mutual funds -- yours and mine -- began investing in them.
The effects of deregulation and unenforced regulation were cumulative. In 1994, the Financial Accounting Standards Board changed its rule that stock options must be treated as a company expense.
A year later, Congress limited the rights of investors to sue, let accounting firms off the hook in fraud cases and fudged reporting practices. In 1999, the repeal of lessons-learned regulations from the Depression fuzzed the lines between retail banking and investment banks.
Every opportunity to push the limit was taken, as allowed or ignored by law. Industry lobbyists on Washington's K Street had their back.
My favorite bit of apostasy revealed itself ever so quietly in a New York Times column by Ben Stein, a lawyer, writer, actor and economist. And cheerleader. For Stein, the resilient economy was always peachy keen.
Last month, reality set in for Stein. Near the end of a column about fear and foolishness, he slipped in a hope that President-elect Barack Obama will put meaningful regulation in place -- maybe even repeal the private securities law against suing companies. Oh, and maybe inspire a more vigilant Federal Reserve.
Dare I say, there has been an epiphany. People who understand the complexities and see the connections acknowledge how precarious economic conditions truly are.
Lance Dickie is a columnist for the Seattle Times.
--------------------------------------------------------------------------------
By MALCOLM BERKO
Creators Syndicate
Posted Dec 27, 2008 @ 04:48 PM
--------------------------------------------------------------------------------
BOCA RATON, Fla. — Dear Mr. Berko: I find it hard to believe that the government is tossing money around like ticker tape at a parade. At some point we or our children will have to pay for the big mess created by Wall Street greed. Ordinary people like us have no choice in the matter and are forced to go with the flow. We get nothing out of this $750 billion giveaway and are forced to lump it or like it. It seems that most Americans are paying for this Wall Street greed twice. We lost our homes, independent retirement accounts, pension funds and our jobs. Now, we have to pay for the losses caused by the hedge funds and big New York Stock Exchange brokerage firms. Meanwhile, they got bailed out with money from our pockets while we get kicked out of our homes, our businesses and are forced to declare bankruptcy. Merrill Lynch, Lehman Brothers, AIG, Citigroup, and Bear Stearns and others stole hundreds of billions from workers like my friends and me and now we have to pay them back. This makes millions of Americans angry. But we can’t do a thing about it. It’s like we are serfs and they are the masters. We have been victims of Wall Street greed for the last eight years, while the suits on Wall Street pay themselves hundreds of billions of dollars in salaries and bonuses. I know many people who think like this, and we are bitter. Does this make sense to you, or do you think all of us are out in left field? — D.P., Columbus, Ohio
Dear D.P.: You’re right as rainbows, daffodils and sunshine. The last few years have witnessed the stink and rank perfidy of unfettered capitalism. Even former Federal Reserve Board Chairman Alan “The Mumbler” Greenspan admits he misjudged Wall Street’s intent to self-regulate. Wouldn’t it be nice to see the executives at AIG, Merrill Lynch, Bear Stearns, Lehman Brothers, Goldman Sachs and their hedge-fund affiliates take a perp walk with their alma maters prominently displayed on the front and back of their orange prison coveralls. Harvard, Yale, Stanford, Duke, Wharton, etc. would be so proud.
The following was written several years ago and is relevant today. It clearly explains how Wall Street favors the wealthy and snickers at the poor. Its compelling explanation is derived from a 2005 discussion group in which I participated.
Business activity cannot be sustained unless the rich get richer. And the best way for this to happen is to give more money to the poor! This is where Uncle Sam becomes a modern day Robin Hood and it works like this:
Uncle Sam borrows money from the rich so it can be given to the poor so the poor can continue losing it to the rich. This is the reason why there will always be a budget deficit and an increasing national debt.
To illustrate, let’s assume that there are two classes of people: rich and poor. Rich folks are those with above-medium incomes and poor folks are everyone below. The simple reason the rich must get richer is that they must make an after-tax profit if they wish to continue employing the poor to produce goods and services.
The rich cannot profit from traditional trading among themselves. For example, if there are 10 rich people in a closed room and they have a total of $10 million in cash, they can wheel and deal and trade among themselves to their heart’s content. But at year’s end they still only have $10 million. The value of their real estate or stocks might rise or fall, but that $10 million dollars won’t increase unless another group loses money to them.
Think about it. Capitalism is like a game of poker. The strong players win from the weak, or the rich win from the poor. However, the poor have a finite amount of money to lose, which means our poker game would come to a halt unless a designated patsy can be found. And that designated patsy is the U.S. government. I know it sounds farfetched but listen up and watch the bouncing ball.
Economists who follow money transfers note that in 2006, for example, the poor paid approximately $780 billion more to the rich for rent, food, cars, health care, tools, beer, etc. than they received for their labors at McDonald’s, Wal-Mart, doing yard work, washing dishes or cleaning hotel rooms. So, in order to keep the poor from going completely broke, the government, through taxes, took $320 billion from the rich and returned it to the poor via welfare, Social Security programs and other subsidies. Then, to return the additional $460 billion to the poor so their purchasing power remains intact, the government borrows $460 billion from the rich by issuing new Treasury bonds.
So, after taxes and transfer payments were complete in 2006, the rich made $460 billion, the government lost $460 billion, which was the deficit, and the poor broke even. In effect, the budget deficit equals what the rich keep after taxes. So, if the budget is balanced, the rich can’t make any more money. And if the rich can’t make more money, their incentive to produce will falter, unemployment will skyrocket and the economy will collapse.
I wish I could claim this was my idea, because I think this premise is worth a Noble Prize in economics.
Address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at malber@comcast.net. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit www.creators.com.
==========================
==================================================
LANCE DICKIE: FAITH CRISIS FOR TRUE BELIEVERS IN MARKET
Comments (3) Recommend (0)
BY LANCE DICKIE
Seattle Times
There are true believers suffering a real crisis of faith. They have been worshipping at the Church of the Free Market, and their doubts run deeper than stockbrokers not answering prayers or returning calls.
For decades, their prophets have preached that economic markets function best when left to themselves, unfettered by government regulation or oversight.
Businesses, investors and traditional market forces would self-regulate, self-correct and self-enforce. Oops.
The collapse of the housing and stock markets trace their way back to decisions and choices made at the highest levels of government and commerce. The rest of us get swept along for the ride, both up and down, and suffer the consequences of hubris, incompetence and criminality.
To hear the humbled apostles for markets free of disclosure and rules begin to mumble about the need for government regulation is extraordinary. Chief among the apostates is former Federal Reserve Chairman Alan Greenspan, who humbly confessed his wonderment at mortgage-lending practices to a congressional committee:
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief."
He was reminded he had the authority to prevent the lending practices behind the subprime mortgage crisis -- was advised to do so -- and refused to act. Greenspan is contrite. Millions more are in foreclosure.
Three years ago, a handful of regulators were waving red flags about hedge funds and credit derivatives. Lightly regulated exemptions from most rules, they placed enormous bets -- literally -- around the planet. Dense and esoteric, these trillion-dollar segments of the markets seemed pretty remote until ordinary mutual funds -- yours and mine -- began investing in them.
The effects of deregulation and unenforced regulation were cumulative. In 1994, the Financial Accounting Standards Board changed its rule that stock options must be treated as a company expense.
A year later, Congress limited the rights of investors to sue, let accounting firms off the hook in fraud cases and fudged reporting practices. In 1999, the repeal of lessons-learned regulations from the Depression fuzzed the lines between retail banking and investment banks.
Every opportunity to push the limit was taken, as allowed or ignored by law. Industry lobbyists on Washington's K Street had their back.
My favorite bit of apostasy revealed itself ever so quietly in a New York Times column by Ben Stein, a lawyer, writer, actor and economist. And cheerleader. For Stein, the resilient economy was always peachy keen.
Last month, reality set in for Stein. Near the end of a column about fear and foolishness, he slipped in a hope that President-elect Barack Obama will put meaningful regulation in place -- maybe even repeal the private securities law against suing companies. Oh, and maybe inspire a more vigilant Federal Reserve.
Dare I say, there has been an epiphany. People who understand the complexities and see the connections acknowledge how precarious economic conditions truly are.
Lance Dickie is a columnist for the Seattle Times.
Subscribe to:
Posts (Atom)