Puget Sound Liberals Weekly Newsletter #227
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Contents * Featured Articles Opportunities Petitions Communication to Our Members* Important Financial Regulations Are Being Made** Commentaries from Our Members Dave
Heywood: Support Richard Curtis for U.S. Senate Liberals and Democrats Links to the Beef Simple Explanation of Derivatives and Hedge Funds** Tuesday’s Congressional Contests** State and Local Links
to the Beef Help Get Income Tax Initiative Signatures* Richard Curtis Quits Race Against Patty Murray Nation and World Links to the Beef Featured Advocacy Group: ReclaimDemocracy.org Our Liberal Spirit Monitoring and Admitting Our Greed* Recommended Books Our
Political Priorities ·
Fair Clean
Elections and Open Government ·
Fair Taxes and
Competent Spending ·
Investment for
Productivity ·
Quality
Health, Education, Jobs, Income ·
Environmental
Protection and Energy Independence ·
Security and
Equal Rights ·
Justice and
Peace Everywhere ·
International
Cooperation and Leadership Conservatives oppose all of these Let’s
End Our National Nightmare
Let’s
Restore Our American Dream More on Conservative opposition to our
American Dream Washington State’s 5 Major Needs · Federal Funding for Health and Education · Substituting
a Progressive Income Tax · Replacing
Conservative Legislators Quote of the Week We continued to take
personal inventory and when we were wrong, admitted it. 10th Step of 12 Step Programs
Calendar of Events
Saturday, May 22 at 6:30 PM at Alki Congregational
United Church (61st SW and SW Hinds, Seattle) - InspireSeattle Potluck and Forum,
featuring Education – a Key for Building Peace in
Afghanistan
Wednesday, June 9 at 6:30 PM at the
Mercer Island Community Center (8236 Southeast 24th Street,
Mercer Island) - Northwest
Progressive Fundraising Gala. $45
Individual, $75 household. For more.
Opportunities
Commentaries
that have addressed major issues
Obtain
a free ‘Corporations Are Not People’ bumper sticker.
Petitions
Express
your support for Elena Kagan to become U.S. Supreme Court justice.
Tell
President Obama to stop offshore drilling now.
Communication
To Our Members
Important Financial
Regulation Decisions Are Being Made
A financial regulation bill will
hopefully be passed by Memorial Day (May 31st). Until then, passing or rejecting amendments
to it will be the most important political decisions. For more.
It appears that the financial regulation bill will pass without
including the major restrictions on Wall Street speculation:
·
Breaking up financial companies that are two
big to fail
·
Banning naked derivatives
·
Separating commercial and investment banks
The absence of these restrictions is largely due to senator Chris
Dodd with the acquiescence of the Obama Administration, thus allowing
Republicans to avoid the dilemma of supporting Wall Street or assisting the
passage of the bill. The result will be
that Wall Street speculation will continue to the detriment of Main
Street. Our Obama Administration
continues its sad failure to sufficiently regulate Wall Street and to act with
fiscal responsibility.
Commentaries
From Our Members
Dave Heywood: Support
Richard Curtis for U.S. Senate
If you have not received information yet from Richard Curtis for U.S. Senate please go to his web site www.richardcurtis4senate.org to learn more about him and sign on to receive his fairly regular messages. He is going to run against Sen. Patty Murray as an independent, not as Democrat or Republican. I am impressed with his messages. He is a bright person with good thoughts, well expressed, in my view. Dave Heywood
Jack Smith: Please
help with I-1077 (or I-1098)
PLEASE
help with the Income tax Initiative? Tomorrow evening planning meeting -
This is really the answer to thel questions in WA - Education and Health care
finance. Contact your friends - the fuse is short - It was put to
me another way - Put up or shut up - I WILL. I HOPE YOU DO! Jack
On Tue, May 18, 2010 at 1:59
PM, Conor Boylan for PDA WA <conor@pdamerica.org>
wrote:
|
Note: Initiative 1077 has been replaced by Initiative 1098.
Liberals
and Democrats
This
week is much like last week, as our Senate continues to consider amendments to
financial regulation reform bill. So
much of the following commentary is a repeat of last week’s commentary with a
few changes and additions. Since
controlling derivatives is so important to preventing another bubble, along
with breaking up ‘too big to fail’ financial companies and a financial
transaction fee, I have again included the commentary which distinguishes derivatives which serve a
useful purpose to hedge against financial harm to a legitimate enterprise and
naked derivatives which are simply bets with no such legitimate purpose.
Job Creation
In
spite of limited credit and demand for credit, more jobs are being created,
enough to provide jobs for people who are newly entering the job market and
some more, such that people who have quit looking for jobs are now looking
again. Even more jobs could be created
if state and local governments would adopt best practices of those state and
local governments which are stimulating job creation by encouraging successful
entrepreneurs to serve as advisors to would be entrepreneurs. And if people would transfer their savings
from stocks offered by Wall Street speculators to smaller local banks and
credit unions. In addition, the Obama
Administration could increase penalties for companies which use illegal means
to oppose unionization. And it could provide jobs
for young people through a program similar to the WPA program instituted by
President Roosevelt.
Simple Explanation of Derivatives and Hedge Funds
We
know what bets are. We make a contract
with someone else that something will happen, with the other person paying us a
certain amount if it happens and we pay the other person a certain amount if it
doesn’t happen. It happens or doesn’t happen
and hopefully the loser honors the contract by paying the other person. We often check each other’s ability to pay
before making the bet.
Insurance
is a form of bet. Believing that I will
suffer financially if my spouse dies, I buy insurance on my spouse’s life. I pay a life insurance company and if my
spouse dies, the life pays me a much larger sum. The life insurance company wins the bet if my
spouse doesn’t die. I win the bet my
spouse does die.
I am
allowed to insure my spouse because I will suffer financially if my spouse
dies. I am not allowed to insure a
stranger because the stranger’s death will not cause me financial harm. We say that I have an insurable interest in
my spouse, but not a stranger.
Like
an insurance policy, a derivative is a bet.
We allow farmers and others to buy insurance called a derivative to
ensure that they will not suffer harm if the price of their products or inputs
changes. The farmer is said to hedge
when he pays a small fee to obtain the larger reward of being able to receive his
inputs or sell his product at present prices.
The farmer or other person has an insurable interest, which makes his
derivative legitimate. But we have
allowed the buying of derivatives where no insurable interest occurs. Such naked derivatives are simply speculative
gambles, which serve no useful purpose except to make money for those who
arrange them.
For
example, mega-banks bought derivatives from insurance firms like AIG and from
hedge funds. They paid AIG or the hedge
funds small amounts of money to protect them from a drop in value of their
securities. It would appear that the mega-banks have an insurable interest. But they don’t. Just as we would not allow a bank robber or
other criminal or his wife to hedge against him getting caught, we should not allow
mega-banks to hedge against the failure of their securities which are based on
fraudulent mortgages, deceptively (fraudulently) packaged and fraudulently
rated. Mega-banks should
never have fraudulently sold securities based on toxic mortgage and should
never have had any insurable interest in whether housing prices dropped.
The cost
of the money which mega-banks paid AIG and hedge funds were passed on to those
who bought the mega-bank’s securities.
As long as housing prices continued to increase, AIG and hedge funds
made lots of money at the expense of those who bought securities based upon
toxic mortgages.
Since
AIG and hedge funds didn’t believe there was any chance that housing prices
would drop, such that the fraudulent securities would lose value, they didn’t build up reserves to be able to
pay claims. When housing prices dropped,
they couldn’t pay claims, the mega-banks and the customers to which they had
sold toxic securities were financially clobbered. The credit bubble collapsed. Our government bailed out the mega-banks and
bailed out AIG so it could pay its claims which further bailed out the mega-banks
and other hedge funds.
To
review, those mutual funds, pension funds, municipal funds, charities and others
who bought toxic securities paid the money that enabled naked derivatives. Then when the naked derivatives collapsed,
our tax payers bailed out those who were responsible for them. The general public was twice clobbered
financially, first as participants in the various funds and then as tax
payers. And so far, the mega-banks and
hedge funds are able to continue to create naked derivatives.
The
I
hope this commentary clarifies the distinction between hedging where there is
an insurable interest and where there is not and thus the distinction between
naked derivatives which aren’t based upon a legitimate insurable interest and
other derivatives which are based upon an insurable interest. There is justification for derivatives which
involve a legitimate insurable interest.
I don’t believe there is any
justification for naked derivatives, only an enormous cost to our
Regulating Wall Street
Hoping to finish by Memorial Day (May 31), our Senate
is considering various amendments to the Dodd measure to regulate Wall Street,
including:
1) Brown/Kaufman amendment to break up the too big to fail banks For
more.
2) Merkley amendment to ban conflict of interest trading by banks (PROP
Trading Act) For more.
3)
4) Paul/Sanders amendment to audit the Federal Reserve For
more. For
more. For
more.
5) Cantwell/McCain amendment to reinstate Glass-Steagall
The
Senate has rejected charging large financial companies a fee to fund any
bailouts which might be needed.
It
has also rejected breaking up large financial companies whose failure would
again drastically harm main street jobs (the Brown/Kaufman amendment) by a vote
of 61 to 33 with 6 abstentions, with the various senators voting as follows:
The
senate did vote
for the Paul/Sanders amendment to audit the Federal Reserve’s bailout of large
financial companies, including who received how much and under what
conditions, thereby rejecting the Federal Reserve’s contention that this would
harm its independence.
The
senate voted 64 to 35 for Democratic Senator Al Franken’s amendment
to reform credit rating agencies.
U.S.
senators voted 90-9 yesterday to void a provision in regulatory-overhaul
legislation that would have stripped our Federal Reserve of oversight of 5,000
banks with less than $50 billion in assets. A day earlier, senators rejected a
measure to allow continuous congressional audits of Fed policies. For
more.
Read
a summary of the 7 amendments that have passed, the three that have failed, and
others to be considered. Majority
Leader Harry Reid intends to complete consideration of amendments next week,
allowing the financial regulatory bill to be passed before Memorial Day. For
more.
It
remains to be seen whether the senate will accept the Merkley, Lincoln,
Cantwell/McCain or other amendments. As
of Tuesday, May 11th, only 18 senators have indicated support for
the Merkley amendment, with none indicating that they oppose it.
Promoted
by Senator Chris Dodd who said he didn’t understand the consequences, the
senate tabled, (by a vote of 56 to 38) North Dakota Democratic Senator Byron
Dorgan’s amendment to eliminate naked derivatives. It is obvious that Dodd didn’t understand the
consequences, which would impose a very important limit upon Wall Street
speculation. It
appears that the amended bill will allow Wall Street to continue its risky
speculation that harms Main Street. For
more.
Fiscal Responsibility
The
Obama Administration still shows no sign of increasing taxes on Wall Street and
other high income earners in order to reduce the federal deficit, thus
continuing to be vulnerable to concerns by Tea Bag Conservatives and others
about the high deficits. For more. For
more. Without raising taxes to
reduce deficits, the emphasis is upon reducing Social Security benefits. For
more. For
more. For
more. For
more.
I
believe that fiscal responsibility requires
increasing taxes on Wall Street and other high income earners. Dave Thomas
Defense
Secretary Robert Gates promotes eliminating wasteful Defense Department
spending. For
more. I believe many more reductions
should be made. We could greatly reduce
the number of troops that we have in Europe, South Korea and Japan and
eliminate perhaps 90% of our foreign military bases which exist more to further
American influence over other countries than to counter terrorism. We could also eliminate much other military
spending which is not useful with respect to any realistic assessment of
present and future enemies. Dave Thomas
Health Care Reform
Having
emphasized the benefits of health care reform immediately following its
passage, attention has shifted to regulating Wall Street speculation. But the Obama Administration will continue to
describe the benefits of health care reform before the fall elections.
Citizens in 18 states
are promoting state level single payer health care.
Immigration Reform
Passage of immigration reform appears impossible, due to
Republican opposition. If passed, it
would motivate Hispanics to vote for Democrats this fall. But simply knowing that Republicans are blocking
its passage may be enough to motivate them.
By a two-to-one margin Hispanics are more
strongly opposed than Americans overall to the recent immigration measure
signed in to law in Arizona that would make it a state crime to reside there
illegally. Seven in 10, 70%, of Hispanic
respondents said they are somewhat or strongly opposed to the law, compared
with 34% of all respondents in the latest Wall Street Journal/NBC
News poll set for release later today. Among
Hispanics, 27% are somewhat or strongly supportive of Arizona’s law; that
compares with 64%of respondents overall.
That sounds bad, but it’s long term
problem for the right. I sure hope they keep this up. After California Republican Governor Pete
Wilson ran an ad in 1994 to strongly sanction undocumented immigrants, the
The Republicans also have to be worrying
just a little bit about the fact that this issue falls way down the list of the
country’s biggest concerns. So, while a majority of Americans may think it’s appropriate
to racially profile and even treat legal immigrants (or people who just look
like them) like second class citizens, most
of them are unlikely to vote on that issue. On the other hand, young Hispanic Americans are unlikely to ever forget it. For
more.
Tuesday’s Congressional Contests
·
In
the special election for the Pennsylvania seat which is vacant due to the death
of John Murtha, his assistant Democrat Mark Critz beat Republican Tim Burns.
·
In
the Democratic primary, consistent Liberal Joe Sestak beat Arlen Specter, in
spite of Democratic establishment support for Specter for having changed from a
Republican to a Democrat to avoid losing to Tea Party Conservative Pat
Toomey. As occurred earlier in upstate New
York, a consistent Liberal such as Joe Sestak is likely to beat a Tea Party
Conservative like Pat Toomey.
·
In
the Kentucky Republican Primary, Tea Party Conservative Rand Paul won. Both of the candidates in the Democratic
primary received many more votes than Rand Paul. Even though Democratic voters in Kentucky
usually choose Republican congress members, the winning Democrat may beat Rand
Paul.
·
In
the Arkansas primary, consistent Liberal Bill Halter kept inconsistent Liberal
Democratic Senator Blanche Lincoln from winning 50%. They will now compete again without any other
candidate. Even if Bill Halter beats
Blanche Lincoln, he may be beaten in the general election by Republican John
Boozman. But his defeat of Blanch
Lincoln sends a message to other inconsistent Liberals.
Here’s the Beef
Non-commercial
investigative journalism reports abuses overlooked by commercial journalists.
Some
reasons why Republicans won’t gain many congressional seats this fall.
State and
Local
Help Get Signatures to Qualify Income Tax Initiative
I-1077 has been replaced by I-1098.
You can obtain petitions and volunteer to
help the campaign by calling 206-225-4610 or emailing it. The campaign website offers more information.
I-1098 offers sensible path to tax fairness for everyone
We all patronize our local small businesses. Owned and operated by our
neighbors, they provide our coffee, sandwiches and the small things to fix up
our homes. They fix up our cars, and sell us bicycles and books. Most of all,
they create the web of neighborhoods and community. One thing that irks small businesses is the
business tax. It is not a high rate, but it is onerous: You have to pay it even
when you lose money. The large corporations have figured out tax loopholes and
avoidance schemes so that their proportion of state and local taxes is about
half that paid by small businesses. So
if you run a small business, and you are offered an exemption from paying the
business tax, would you turn it down?
This time is the time of year when the semi-annual property tax bill comes due.
Property taxes are crucial for public services, for fire protection, public
safety, schools, roads, and most of the things we take for granted because we
don’t pay for them directly. But these taxes weigh heavily on homeowners and
businesses, especially in the middle of this great recession. So as a property
owner, if you were offered a cut in your property taxes, would you reject that?
If you are a parent and your kids are in public school, you are probably
worried about the cutbacks in education. Class sizes are going up, courses in
high school are disappearing, and you’re wondering if your kids are getting
shortchanged for their future. If you have lost your health coverage, you are
probably hoping that the funding for Basic Health will increase, so that you
can get coverage before something bad happens. So if you were offered a way to
decrease class sizes and expand health coverage, would you look the other way?
In all three instances, you might. That would be a bad case of ideological
blindness trumping common sense. But it does seem too good to be true. How
could we exempt four-fifths of all businesses from the business tax? How could
we afford an across-the-board cut in the property tax for homeowners and
businesses? How could we come up with the extra money for education and health?
It’s possible because in our state we have excused the wealthy from paying a
fair portion of their income to support public services. While middle class
families pay about 11 percent of their income in state and local taxes, and low
income families pay about 17 percent, the families in between the 95th
percentile and 99th percentile of income pay less than 5 percent and the top 1
percent of families pay only 2.6 percent. That means middle class families pay
quadruple the tax rate of the very wealthy.
Can we put all these pieces together to create a common sense solution? The
people behind Initiative 1098 and I am one of them, think so. What does this
initiative do? It cuts property taxes. In Snohomish County, that means on
average a $127 cut in property taxes for families and a $445 cut in property
taxes for businesses. The initiative also eliminates the business tax for the
vast majority of businesses, leaving the current tax in place only for the top one-thirteenth
of businesses.
It brings in $1 billion of new public revenue, dedicated to education,
expansion of Basic Health, public health and long-term care for the disabled
and elderly.
Where is the magic?
The magic is in the beginnings of a fair tax structure. Initiative 1098 puts in
place an income tax on the wealthy, the top 3 percent of families in our state,
those with incomes in excess of $400,000 a year. It is not a big tax. For a
family making $500,000, it amounts to $4,382 in net taxes, or less than 1
percent of their income. For a family making $1 million, it amounts to less
than 3 percent of income. Put all these contributions together from the
wealthiest 3 percent of families, and we have enough for the property and
business tax cuts and expansion of education and health care.
So this may be a good idea, but can it win? A poll by KING-TV showed 66 percent
support for this approach. We’ll see how that holds up.
We can put on our ideological and no-can-do blinders and dismiss Initiative 1098,
or we can engage in a vital discussion for our democracy. I am rooting for the
latter. John Burbank
There are three reasons to
support this initiative:
1.
Unless you have a
very high income, you will save money
2.
It will provide
money for our state to come closer to meeting the constitutional mandate that
it fund basic education
3.
It will make our
tax system fairer by making high income people pay for the legal, social and
political infrastructure that previous generations have created which enables
them to obtain high incomes, just as they must pay for the capital, equipment,
supplies and labor which enable their incomes.
For
more.
To qualify to be voted upon, 241,153
signatures by registered voters must be obtained by July 2. Education, labor and other groups which
benefit from state revenues should support this initiative and assist in
obtaining needed signatures. Many who
will not directly benefit from the increased revenues should support this
initiative because it makes our tax system fairer and will lower their
taxes. According to a King
5 news poll, two thirds of
I hope that all of our
members will sign the petition and obtain signatures of their Liberal relatives
and acquaintances. I hope you will also
volunteer to assist the campaign. You can obtain
petitions and volunteer to help the campaign by calling 206-225-4610 or emailing it. The campaign
website offers more information.
Dave Thomas
Richard Curtis Quits Race against Patty Murray
Richard Curtis has quit his race against Patty
Murray as an independent, commenting that he isn’t getting the Liberal support
he expected. Unfortunately, he has been
a seriously flawed candidate. A better
candidate is needed to challenge inconsistent Liberal Patty Murray who has
placed her political career in front of fiscal responsibility. She has repeatedly used earmarks to reward
campaign contributors and supported continuation of funding the F-22 fighter
planes that the Defense Department doesn’t want.
More Police Brutality
A recording of another
incident of police brutality have been publicly displayed, this time
involving 2 Seattle police officers, with others watching, but not interfering
to restrain the abusive officers. After
the recording was publicly displayed, one of the abusive Seattle policemen who
had also used ethnic slurs apologized.
The other one has not apologized, nor have we heard anything from the
other attending officers. For
more.
Except for the recording, no further action would
have been taken concerning the abuse, as no action has happened in many other
similar, but unrecorded incidents.
Fortunately, the acting Seattle Police Chief has indicated that the
examination of this incident will concern not only the two officers who
committed the abuse, but also the others who did nothing to stop or report it.
It is interesting that law enforcement officers
and juvenile gang members share two characteristics. Both react strongly to being
disrespected. Both refuse to inform on
their colleagues. Law enforcement
officers who enjoy a superiority of force should be held to a higher
standard. And it is in their interest as
the resentful climate that results sometimes motivates (usually mentally ill)
people to attack law enforcement officers.
For
more.
Here’s the Beef
Nation
and World
If BP were a human being …
What if BP were a
person, not a corporation? This person would have been married several
times (thanks to corporate mergers) and would have several aliases. The person
would be considered "a career criminal, a pathological liar and an
international serial killer with a rap sheet several times the size of the
Chicago Yellow Pages." Oh, the person also would be a flight risk. For
more.
Featured Advocacy Group
---------------------------------- ReclaimDemocracy.org
----------------------------
ReclaimDemocracy.org works
to create a representative democracy with an actively participating public,
where citizens don't merely choose from a menu of options determined by elites,
but play an active role in guiding the country and its political agenda. We
believe that one's influence should be a direct result of the quality of one's
ideas and the energy one puts into promoting these ideas, independent of wealth
or status.
It
inspires citizens to make conscious choices about what role corporations should
play in our society and to limit them to that role. It is a non-partisan,
non-profit (501c3) organization that welcomes the opportunity to work with all
who share our goals.
·
Democratize Politics – Change the law to ensure that political processes, including
elections, are controlled by citizens
·
Enact public financing for elections
·
Enact a constitutionally-protected
right to vote for all citizens
·
Ensure the integrity of election
results
·
Reverse Supreme Court dicta that
equates election spending with constitutionally protected speech (e.g., Buckley
v. Valeo and First National Bank of Boston v. Bellotti )
·
Change laws, policies, and
structures that allow current officeholders/parties to interfere with open and
fair competition
·
Ensure that all citizens retain the
ability to protect our democracy with their vigilance and to create change
where necessary to ensure its vibrancy
·
Protect citizen rights from
usurpation
·
Democratize the Economy – Change the law to create economic decentralization
·
Strengthen and vigorously enforce
anti-trust law
·
Eliminate laws that prevent
communities, states, and countries from governing businesses operating within
their jurisdictions
·
Strengthen and enforce corporate
crime laws
·
Enact legislation redefining
corporations to be legal constructs with enforced obligations and revocable
privileges rather than “persons” with inherent rights
·
Democratize Information Creation and
Dissemination – through working to ensure diverse
political and policy viewpoints are available via popular channels
·
Protect internet freedom and
neutrality
·
Eliminate media oligopolies
·
Create opportunity for independent
and public media
-------------------------------------------------------------------------------------------------------------------
Here’s the Beef
Our
Liberal Spirit
Monitoring and Admitting Our Greed
Last week’s commentary noted
our addiction to consumption and monetary greed necessary to pay for it. To deal with our addiction, we must first
become aware of it. We must quit
thinking that only some others are greedy.
We must quit denying our own greed.
We must examine our own lives to identify unsustainable
consumption. We must examine our own
lives to identify our own greed for more money to pay for our consumption. We must examine our own lives to identify
when we have lied, cheated and stolen to obtain more money. Or taken large risks to obtain more money,
ones that have often hurt us as when the stocks that we bought with our
retirement savings fell in value.
We must identify our
greed. We must quit denying it. We must then act to remove our greed. We must get rid of unnecessary stuff. We must quit obtaining unnecessary
stuff. We must create a lifestyle which
leaves a minimum resource footprint on the earth.
It is not enough to
personally leave a minimum footprint on the earth. We must encourage our family members,
relatives, acquaintances, neighbors and other to leave a minimum footprint on
the earth.
We must also promote
incentives for people to leave a minimum footprint on the earth. By making non-sustainable resources more
expensive. By making alternatives less
expensive. By publicly promoting
sustainable lifestyles.
We must accept that enjoying
our freedoms and opportunities does not include enjoying non-sustainable and
anti-social freedoms and opportunities at the expense of everyone now and in
the future.
Recommended Books – See our list of books for liberals
Roger Lowenstein, 2010, The End of Wall Street
Roger Lowenstein’s book is
much like Michael Lewis’ book (The Big
Short. Inside the Doomsday Machine)
which was presented in last week’s newsletter.
He presents a superficial description of our various bubbles and their
collapse. He fails to present
recommendations for preventing future bubbles.
I don’t recommend this book.