Tag Archives: capital

Trump’s Economic Adviser Said the Economy Was Fine—Right Before It Imploded

by Ezekiel2332 Posted on August 5, 2016

Mother Jones

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Following a tumultuous week in which Donald Trump’s poll numbers tanked and reports of staff unrest dogged his campaign, the GOP nominee is trying to change the conversation by focusing on his economic vision. On Friday, ahead of a big economic policy speech Trump is expected to deliver next week, the Trump campaign released a list of his economic advisers. The roster of 13 men—all are men and five are named Steven or Stephen—includes a handful of billionaires and financial moguls, several of them longtime Trump friends. Also on Trump’s economic brain trust is an economist, David Malpass, who downplayed concerns about the economy shortly before his firm collapsed and the economy cratered.

Malpass is a former economic adviser to Ronald Reagan whom the Trump campaign touts as having “extensive private sector experience.” That experience includes serving for 15 years as the chief economist for Bear Stearns—the Wall Street firm that was deeply enmeshed in the subprime mortgage market—in the lead-up to the investment bank’s spectacular March 2008 collapse.

The fall of Bear Sterns lit the fuse on the economic crisis. And perhaps more so than its competitors, the 85-year-old investment bank came to exemplify the excesses and short-sighted economics that led to the financial meltdown. If Trump is counting on Malpass for economic advice, he had better hope it’s an improvement on the wisdom the economist dispensed as the financial system hurtled toward a cliff. Nine months before his company fell apart, Malpass wrote a column for the Wall Street Journal titled “Don’t Panic About Credit Markets.” He derided the “hyperventilation over the coming U.S. economic slowdown” and wrote:

The slowdown talk weighing on equities also reflects the Wall Street view that debt, mortgage and takeover businesses have replaced General Motors as the economy’s bellwether. According to the bears: As goes the credit market, so goes the economy. Fortunately, Main Street is not that fickle. Housing and debt markets are not that big a part of the U.S. economy, or of job creation. It’s more likely the economy is sturdy and will grow solidly in coming months, and perhaps years.

So, that was wrong.

Malpass did fine, though. He currently sits on the board of New Mountain Capital, a multi-billion-dollar private investment firm, and runs his own market research firm.

Malpass is not the only person on Trump’s list of economic advisers who played a controversial role during the economic crisis.

In July 2008, several months after Bear Sterns fell apart, the federal government was forced to take over Indy Mac, which was overwhelmed by the bad mortgages it had issued. The government was eager to get rid of the bank’s assets, and Steve Mnuchin, who serves as the Trump campaign’s finance co-chairman and is a member of his economic team, swooped in. Mnuchin, a former Goldman Sachs banker and hedge funder, made much of his current fortune by organizing a new bank, called OneWest, to buy IndyMac’s portfolio of mortgages. Part of the deal was that the federal government and taxpayers would cover any losses if more mortgages went bad, and OneWest would make the profits on anything that didn’t. Mnuchin’s bank would become infamous for its hardball tactics and willingness to foreclose on struggling homeowners.

Perhaps the biggest name on Trump’s economic team is John Paulson, a hedge fund manager whose firm foresaw the subprime mortgage meltdown and made billions betting against the big banks that were heavily invested in mortgage-backed securities. In 2010, Paulson’s fund made more than $5 billion, setting a record. Previously, Paulson was a major donor and fundraiser for Mitt Romney and the super-PAC backing his 2012 presidential run.

The defining characteristic of Trump’s team of economic advisers seems to be that they are friends of the GOP nominee, financial backers of his campaign, or both. That includes Tom Barrack, who has been friends with Trump for decades, ever since negotiating the sale of the Plaza Hotel in New York City to Trump. Barrack is well known in financial circles for getting involved with unorthodox deals—in one case, he arranged oil sales between Saudi princes and Haitian dictator Baby Doc Duvalier, giving the autocrat his watch to help smooth the deal.

It’s unclear how extensively Trump will be relying on the counsel of his brain trust. Last year, when asked whom he consults with on foreign policy matters, Trump remarked that his top adviser was himself.

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Trump’s Economic Adviser Said the Economy Was Fine—Right Before It Imploded

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Here’s the Best News We’ve Gotten All Year

by AlfonzoIRKZ Posted on June 2, 2016

Mother Jones

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No joke. This may be boring as hell, but it really and truly is great news:

Federal Reserve officials strongly signaled they will toughen big-bank capital requirements even more than they have since the 2008 crisis, a move that will add to the pressure on the largest U.S. banks to consider shrinking. Fed governors Daniel Tarullo and Jerome Powell, in separate public comments on Thursday, said the Fed would require eight of the largest U.S. banks to maintain more equity to pass the central bank’s annual “stress tests.”

“Effectively, this will be a significant increase in capital,” Mr. Tarullo said on Bloomberg television….Mr. Powell said at a banking conference that the Fed’s move would make big banks “fully internalize the risk” they pose to the economy.

“I have not reached any conclusion that a particular bank needs to be broken up or anything like that,” he said. The point is to “raise capital requirements to the point at which it becomes a question that banks have to ask themselves.”

Bernie Sanders has campaigned heavily on the idea of breaking up big banks. But that shouldn’t be our goal. Our goal should be to make banks safer and to reduce the likelihood that they need to be bailed out in the future. That’s what higher capital requirements do: they force banks to carry a bigger buffer against losses, which makes them less likely to fail in any future downturn.

As it happens, new regulations put in place since the financial meltdown of 2008 have already increased capital requirements, but big banks still have an unfair advantage in the market: their funding costs are lower because investors figure they’ll be bailed out if they ever implode in the future. To make up for this, big banks should, as Tarullo said, “fully internalize the risk” they pose to the economy. In other words, if big banks have an automatic advantage simply because taxpayers have little choice but to rescue them in case they fail, they should be required to pay higher insurance premiums against failure. That’s essentially what higher capital requirements do.

This is fair. However, higher capital requirements also make big banks less profitable, which in turn gives them a strong incentive to downsize all on their own. And that’s how it should be. There’s no reason for the Fed or anyone else to pick and choose banks to break up. We just need to make sure they’re reasonably safe and are operating on a level playing field. If we do this, we’re providing an organic incentive to downsize. The banks themselves get to decide whether and how to do it.

The only bad news here is that the Fed is unlikely to raise capital requirements enough to suit me. Nonetheless, this is very much another step in the right direction.

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Here’s the Best News We’ve Gotten All Year

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Kansas Becomes the Latest State To Freak Out Over Syrian Refugees

by IssacG42rrwyqu Posted on April 26, 2016

Mother Jones

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Kansas Gov. Sam Brownback announced on Tuesday that Kansas is withdrawing from the federal government’s refugee resettlement program over concerns that Syrian refugees could be security threats.

“Because the federal government has failed to provide adequate assurances regarding refugees it is settling in Kansas, we have no option but to end our cooperation with and participation in the federal refugee resettlement program,” Brownback said in a press release.

Brownback had already issued an executive order in November stating that “no department, commission, board, or agency of the government of the State of Kansas shall aid, cooperate with, or assist in any way the relocation of refugees from Syria to the State of Kansas.” Tuesday’s announcement would apply to refugees from any country. But while the move sounds drastic, it’s mostly a symbolic act that will have little on-the-ground impact for refugees or public safety.

For one, pulling out of the federal resettlement program doesn’t mean refugees won’t be allowed to live in Kansas. While Indiana and other states have tried to bar Syrians from entering their borders, they aren’t actually able to do so. Like any other visa holders, refugees are able to go anywhere the United States they’d like. It also doesn’t mean that support for refugees who are currently living in Kansas or may move there will dry up. The funds that state agencies use for refugee aid are almost entirely federal money, and the Department of Health and Human Services retains control over the funds even if state employees or agencies don’t take part. In those cases, Health and Human Services simply appoints another organization to administer the money. “This is the situation in some other states, usually because their resettlement program is very small,” says Stacie Blake, the director of government and community relations at the US Committee for Refugees and Immigrants, one of the nonprofit groups that resettles refugees. “The money is not ‘lost.'”

According to data from the State Department, only five Syrians have settled in Kansas since October of last year.

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Kansas Becomes the Latest State To Freak Out Over Syrian Refugees

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Oh Wait—Donald Trump Decides He Has a Foreign Policy Team After All

by MargareHutchens Posted on March 21, 2016

Mother Jones

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After finally telling us that he didn’t need a foreign policy team because he was his own team, Donald Trump made yet another U-turn today and announced his foreign policy team. It’s enough to make you dizzy. I’ll let Robert Costa introduce them:

Keith Kellogg…executive vice president at CACI International, a Virginia-based intelligence and information technology consulting firm…. Joseph Schmitz….Blackwater Worldwide…. George Papadopoulos…international energy center at the London Center of International Law Practice…. Walid Phares…National Defense University and Daniel Morgan Academy in Washington…. Carter Page…managing partner of Global Energy Capital and longtime energy industry executive.

This is quite a team. Kellogg was COO of the Coalition Provisional Authority in 2003-04 under Paul Bremer, and we all know how that turned out. Schmitz is the son of noted Southern California crackpot John Schmitz—which I suppose I can’t hold against him—and served as inspector general of the Defense Department under George Bush. He resigned in 2005 following charges that he “slowed or blocked investigations of senior Bush administration officials, spent taxpayer money on pet projects and accepted gifts that may have violated ethics guidelines.”

Papadopoulos is on his second presidential campaign this year, having previously found a home with Ben Carson. Phares is well known to all Fox News viewers for his regular appearances there—and for his background during the 80s as a “high ranking political official in a sectarian religious militia responsible for massacres during Lebanon’s brutal, 15-year civil war.”

Page I don’t know much about. Apparently he’s the head of an investment fund “focused on energy investments worldwide,” and that’s good enough for Trump.

So….this is a helluva C-list crew Trump has assembled. A guy who worked for Paul Bremer; the son of John Schmitz; a former Ben Carson advisor; a Fox News talking head; and a guy who specializes in torts.

As for Trump’s actual foreign policy, apparently it’s the same as always: he’s super militaristic, but he doesn’t want to actually use the American military for much of anything. He’d like other countries to start taking care of Ukraine and NATO and the South China Sea—or, if they insist on America doing it, he’d like them to pay us for it. Apparently Trump’s ambition is to sit at the head of a vast American tribute empire.

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Oh Wait—Donald Trump Decides He Has a Foreign Policy Team After All

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ISIS Had a Good Year in PR, Not So Good on the Ground

by Aaleyah William Posted on December 22, 2015

Mother Jones

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Iraqi forces are fighting to retake control of Ramadi, a city of half a million about an hour west of Baghdad:

“I think the fall of Ramadi is inevitable,” said Col. Steven H. Warren, the United States military spokesman here. “The end is coming.” But he added: “That said, it’s going to be a tough fight.”

….If Iraqi forces manage to reassert control over Ramadi — the capital and largest city in Iraq’s western Anbar Province — it will be the latest in a series of military setbacks for the Islamic State. President Obama said recently that the militant group had lost 40 percent of the Iraqi territory it had seized in the middle of last year, as the United States and its allies have intensified their aerial bombardment against the group. In October, Iraqi forces and Shiite militias retook control of the northern city of Baiji and its oil refinery, and last month, Kurdish and Yazidi forces expelled the Islamic State out of the northern city of Sinjar.

Progress is slow but steady. The map below, from IHS, shows the territory lost by ISIS over the past year. There’s still a long way to go.

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ISIS Had a Good Year in PR, Not So Good on the Ground

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Gunmen Take 170 Hostages Inside Mali Hotel

by TanyaSwope28921 Posted on November 20, 2015

Mother Jones

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At least three people are dead after gunmen—reportedly shouting “Allahu Akbar,” or “God is great”—seized control on Friday of a Radisson Blu hotel in Bamako, Mali, where 170 people were taken hostage.

Security forces launched a counterassault mission, reportedly freeing 80 out of the initial 170 hostages as of this time.

The Times reports that the gunmen are also releasing Muslims but continuing to hold non-Muslims inside.

The hostage situation in Mali comes just one week after the deadly terrorist attacks in Paris. On Friday, French President Francois Hollande showed his solidarity with the Malian people.

“With the means we have in the area, we will do what is possible to obtain the freedom of the hostage,” Hollande said. “Once again, terrorists want to mark with their barbaric presence all places where they can kill or massacre.”

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Gunmen Take 170 Hostages Inside Mali Hotel

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Is Mitt Romney Mellowing on Obamacare?

by DTHRamon724778 Posted on October 23, 2015

Mother Jones

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Tom Stemberg, one of the cofounders of Staples, died today. His company was famously funded by Bain Capital, and Stemberg became good friends with Mitt Romney:

Romney recalled that shortly after he was elected, Mr. Stemberg asked him why he ran for governor. Romney said he wanted to help people, and Mr. Stemberg replied that if he really wanted to help, he should give everyone access to health care, which Romney said he hadn’t really considered before.

“Without Tom pushing it, I don’t think we would have had Romneycare,” Romney said. “Without Romneycare, I don’t think we would have Obamacare. So without Tom, a lot of people wouldn’t have health insurance.”

That sure doesn’t sound like a guy who’s a diehard opponent of Obamacare, does it? I wonder if a decade from now Romney will be taking credit for kickstarting national health care in the United States?

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Is Mitt Romney Mellowing on Obamacare?

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Huckabee Says He’d Consider Using Federal Troops to Stop Abortions

by Elden8028teuc Posted on July 31, 2015

Mother Jones

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Republican presidential candidate Mike Huckabee told supporters in Iowa on Thursday that if he were elected president he would consider using the FBI or National Guard to end abortion by force. Per the Topeka Capital-Journal:

“I will not pretend there is nothing we can do to stop this,” Huckabee said at the event, where a Topeka Capital-Journal correspondent was present.

At his next stop, in Rockwell City, Huckabee answered follow-up questions from the correspondent, saying: “All American citizens should be protected.”

Asked by another reporter how he would stop abortion, and whether this would mean using the FBI or federal forces to accomplish this, Huckabee replied: “We’ll see if I get to be president.”

That’s crazy. The right to an abortion has been upheld by the Supreme Court. Huckabee is saying he might simply disregard the judicial branch and stop the practice unilaterally—that is, he’d remove the checks from “checks and balances.” It’s not the first time he’s proposed a constitutional crisis as an antidote to things he doesn’t like. Huckabee has also said states should practice civil disobedience by ignoring the Supreme Court’s decision on same-sex marriage.

And to think, we’re still nearly a week away from the first primary debate.

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Huckabee Says He’d Consider Using Federal Troops to Stop Abortions

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The NYPD Is Editing the Wikipedia Pages of Eric Garner, Sean Bell

by HildegaHarms Posted on March 13, 2015

Mother Jones

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Edits to the Wikipedia entries of several high-profile police brutality cases, including those of Eric Garner, Amadou Diallo, and Sean Bell, trace back to the headquarters of the New York Police Department, Capital New York reports this morning. The pages have been edited to cast the NYPD in a more favorable light and lessen allegations of police misconduct. The edits are currently the subject of an NYPD internal review.

In the case of Garner, who died while placed in a chokehold by a NYPD officer last summer, the word “chokehold” was swapped for “respiratory distress” and the line “Garner, who was considerably larger than any of the officers, continued to struggle with them” was added. The changes ostensibly suggest Garner’s death was his own fault.

Such modifications echo the views of NYPD supporters, including Rep. Peter King (R-N.Y.) who adamantly declared Garner would not have died had he not been so “obese.” In August, the city’s medical examiner officially ruled Garner’s death a homicide due to the chokehold.

The Wikipedia activity brewing at 1 Police Plaza took a distinctly more bizarre turn with edits to the pages “Ice Cream Soda,” “Who Moved My Cheese?” “Chumbawamba,” and “Stone Cold Steve Austin.”

Following Capital New York’s story on Friday, the Twitter account “NYPD Edits” was created to keep tabs on any future changes authored by the NYPD.

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The NYPD Is Editing the Wikipedia Pages of Eric Garner, Sean Bell

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Grover Norquist Turns on His Anti-Tax Bae Sam Brownback

by ColemanCroteau Posted on January 30, 2015

Mother Jones

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Grover Norquist—the president of Americans for Tax Reform and the man who for decades has served as conservatives’ leading anti-tax zealot —had seemingly found his ideal politician in Kansas Gov. Sam Brownback. After Brownback was elected governor in 2010, he went on a mission to eradicate his state’s income tax—slashing rates across the board in two rounds of cuts and setting rates to drop further over the coming years—eventually to zero if everything clicked in place.

Read more about how Sam Brownback created a Kochtopia in Kansas.

Norquist loved it. He visited Topeka in 2013 to show his support during Brownback’s State of the State address. In an interview with National Review a year ago, Norquist touted Brownback as a strong contender for the 2016 presidential nomination.

But political allies often prove fickle. Brownback’s tax cuts have wrecked the state budget and forced the governor to propose raising taxes in order to avert fiscal calamity. And Norquist is now rallying conservatives in the Kansas Legislature to oppose the Republican governor’s plan.

Earlier this week, Norquist penned a letter to state lawmakers encouraging them to thwart Brownback’s proposal to raise taxes on liquor sales and tobacco products. Although Norquist hewed to his normal claims that taxes end up hurting the state’s bottom line, he also adopted a tactic that you’d normally hear from liberals: Don’t raise these specific taxes because they overburden the poor. “The fact is, so called ‘sin taxes’ like the cigarette tax and alcohol tax disproportionately impact consumers who can afford the tax increase least. A pack-a-day smoker would end up paying an extra $547.50 in taxes a year,” Norquist wrote in the letter, according to the Topeka Capital-Journal. “Kansans living along the Missouri border may opt to avoid the tax altogether by purchasing their tobacco products in Missouri—where the tax would be lower.”

A spokesperson for Americans for Tax Reform didn’t respond to several interview requests.

It’s a bit rich for Norquist to show concern for plight of low-income Kansans now. Spending on social services plummeted during Brownback’s first term in office. And the tax cuts that Norquist praised predominantly favored the state’s wealthy citizens—particularly thanks to a decision to zero-out taxes for nearly 200,000 privately held companies. An analysis by the Center on Budget and Policy Priorities last year noted that the total effects of all the tax code changes in Kansas in fact raised taxes by 1.3 percent on the bottom 20 percent of the state’s earners.

And although slashing state income taxes may have earned Brownback praise from the likes of Norquist and Reagan taxmaster Arthur Laffer, they left the governor in a tricky spot. There’s a $710 million hole in the state’s budget through June 2016. Brownback isn’t relying on tobacco and liquor taxes alone to close that gap. He has also proposed slowing down planned decreases in the state’s income-tax rates. But Brownback still vowed to stick with his original endgame. “We will continue our march to zero income taxes,” he said in this year’s State of the State address. Even when the evidence might suggest otherwise, conservatives like Brownback must still bow before the infallible altar of trickle-down economics.

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Grover Norquist Turns on His Anti-Tax Bae Sam Brownback

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