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Archive for October 1st, 2011

Late Late Night FDL: The Cat Came Back

Posted in Main Blog (All Posts) on October 1st, 2011 4:43 am by HL

Late Late Night FDL: The Cat Came Back
Rowlf The DogThe Cat Came Back, from episode 523 of The Muppet Show.

Rowlf The DogThe Cat Came Back, from episode 523 of The Muppet Show.

Grab your popcorn, put your feet up on the coffee table, and try to keep the spitballs off the screen please.  This is Late Late Night FireDogLake, where off topic is the topic … so dive in.  What’s on your mind?


A Peek at Henry A. Giroux’s ‘Education and the Crisis of Public Values’

Posted in Main Blog (All Posts) on October 1st, 2011 4:42 am by HL

A Peek at Henry A. Giroux’s ‘Education and the Crisis of Public Values’
“We are more than a nation in decline; we are a nation moving toward the bittersweet simplisms, policies and values of a new form of authoritarianism,” writes Henry Giroux, in an article adapted from his new book on America’s shift away from democratic values toward a rigid, market-driven uniformity.

“We are more than a nation in decline; we are a nation moving toward the bittersweet simplisms, policies and values of a new form of authoritarianism,” writes Henry Giroux, in an article adapted from his new book on America’s shift away from democratic values toward a rigid, market-driven uniformity.

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WATCH: Herman Cain Talks To Jay Leno About Muslims In Cabinet, Palin

Posted in Main Blog (All Posts) on October 1st, 2011 4:41 am by HL

WATCH: Herman Cain Talks To Jay Leno About Muslims In Cabinet, Palin
GOP presidential candidate Herman Cain sat down for a talk with Jay Leno Friday night on NBC’s “The Tonight Show.” SCROLL DOWN FOR VIDEO Cain…

Marian Wright Edelman: National and State Safety Nets Fail to Catch Millions of Children
Our child poverty statistics are morally and economically indefensible. Is this the best America can do? Is this the reflection of our values as a nation?

Dr. Prudence L. Gourguechon: Fantastic Objects, Excited Stories and Dreadful Politics
David Tuckett’s Minding the Markets may just give us hope for understanding the bewildering and dangerous large group political phenomena that are beleaguering and paralyzing our country.


Experts Point Out That Limits On Debit Card Transaction Fees Help Consumers

Posted in Main Blog (All Posts) on October 1st, 2011 4:40 am by HL

Experts Point Out That Limits On Debit Card Transaction Fees Help Consumers

A Wall Street Journal op-ed attacked a provision of the Wall Street Reform and Consumer Protection Act that limits the fees banks and credit card companies can charge retailers for debit card transactions because Bank of America has imposed a $5 per month fee on transactions as a result of the regulation. But as economist Dean Baker points out, making these costs transparent allows consumers to “decide for themselves whether they want to pay it” unlike the previous system in which the costs of debit cards were hidden from consumers.

WSJ Op-Ed: Regulation Of Debit Card Fees Hurts Consumers

WSJ Op-Ed: “Many-Low Income Consumers” Will Be Hurt By Regulations On Debit Card Interchange Fees. From a September 30 Wall Street Journal op-ed by Todd Zywicki:

This Saturday, government price controls on debit card interchange fees (which card issuers charge to merchants) go into effect. The controls are the result of the Durbin amendment to last year’s Dodd-Frank financial reform legislation. They were enacted at the behest of big-box retailers such as Wal-Mart and Walgreen’s, which stand to gain a multimillion-dollar windfall. But the controls are already transforming the retail banking landscape.

[…]

Faced with a dramatic cut in revenues (estimated to be $6.6 billion by Javelin Strategy & Research, a global financial services consultancy), banks have already imposed new monthly maintenance fees–usually from $36 to $60 per year–on standard checking and debit-card accounts, as well as new or higher fees on particular bank services. While wealthier consumers have avoided many of these new fees–for example, by maintaining a sufficiently high minimum balance–a Bankrate survey released this week reported that only 45% of traditional checking accounts are free, down 

Some consumers who previously banked for free will be unable or unwilling to pay these fees merely for the privilege of a bank account. As many as one million individuals will drop out of the mainstream banking system and turn to check cashers, pawn shops and high-fee prepaid cards, according to an estimate earlier this year by economists David Evans, Robert Litan and Richard Schmalensee. (Their study was supported by banks.)

Consumers will also be encouraged to shift from debit cards to more profitable alternatives such as credit cards, which remain outside the Durbin amendment’s price controls. According to news reports, Bank of America has made a concerted effort to shift customers from debit to credit cards, including plans to charge a $5 monthly fee for debit-card purchases. Citibank has increased its direct mail efforts to recruit new credit card customers frustrated by the increased cost and decreased benefits of debit cards.

[…]

Conceived of as a narrow special-interest giveaway to large retailers, the Durbin amendment will have long-term consequences for the consumer banking system. Wealthier consumers will be able to avoid the pinch of higher banking fees by increasing their use of credit cards. Many low-income consumers will not. Banking will become less innovative and consumer-friendly. [Wall Street Journal, 9/29/11]

But Reforms Increase Transparency For Consumers

CEPR’s Dean Baker: “Under The New System, The Cost Is Transparent And People Could Decide For Themselves Whether They Want To Pay It.” In an email to Media Matters, economist and co-director for the Center for Economic and Policy Research Dean Baker writes:

Debit cards have a cost, it makes sense to have the people who benefit from using them pay the cost. Under the former system, cash customers effectively were being taxed so that banks could allow people to use debit cards for free. Under the new system, the cost is transparent and people could decide for themselves whether they want to pay it. Market supporters should prefer the current system. [E-mail to Media Matters, 9/30/11]

American Banker: Other Banks Have “Chosen Not To Act” Like Bank Of America. From American Banker’s Jeff Horwitz:

The stresses on Bank of America are felt across the industry: restrictions on interchange fees guarantee that debit card revenue will undergo a multi-year plunge, and restrictions on overdraft fees have diminished the profitability of checking accounts connected to the product. But while Wells Fargo & Co is testing out a $3 monthly fee on debit cards in a few markets, Bank of America is one of the first banks, and the biggest, that felt an urgent need to directly compensate for the lost revenue by adding debit usage fees system-wide.

There’s a reason that other institutions have chosen not to act. The Durbin Amendment to last year’s Dodd-Frank Act will cost the banking industry more than $5 billion in annual debit interchange revenue next year, down from the 2010 peak of $18.8 billion, according to Mike Moebs of Moebs Services. But as badly as debit card revenue will be harmed by the new restrictions on the processing fees that banks can charge merchants, interchange still has a promising future.

Bank of America explained its decision on Thursday by saying the “economics of offering a debit card have changed with recent regulations.” But those economics may not have changed all that much in the long haul. Based on increasing debit card market penetration and rising transaction volumes, Moebs predicts that interchange revenue will rise to a new high by 2015.

In other words, as much as banks hated Durbin, they can wait it out. Per-customer revenues will recover. [American Banker, 9/29/11]

Reforms Make The Market More Competitive

Former Reagan FTC Chairman: Interchange Debit Card Fees Are “Textbook Evidence Of Monopolistic Price Discrimination.” James Miller III, who was appointed chairman of the Federal Trade Commission by President Ronald Reagan and also served as Reagan’s budget director and later became a consultant to the Retail Industry Leaders Association, wrote in Politico:

It’s textbook evidence of monopolistic price discrimination — price distinctions related more to demand than to costs. The result is that debit interchange is one of merchants’ largest costs of doing business — particularly small shops that are a major portion of the small-business sector and are so critical to local economies. While shoppers don’t see the monopoly directly, they feel its presence in the form of higher prices.

The Federal Reserve’s new rules would adjust this divergence, freeing up merchants’ choices to make this market more competitive. With retail competition so intense, all consumers are likely to benefit – users of cash, credit and debit. [Politico, 2/24/11]

Dean Baker: Limiting Interchange Fees Will Translate “Into An Additional $9.6 Billion A Year In Consumer Pockets.” From a May 9 news analysis by Baker:

There are two major debit card networks, MasterCard and Visa, who essentially are the market. Together they control more than 90 percent of the debit card market.

This control gives them enormous market power. There are few retailers who can refuse to accept the debit cards issued by these networks. They would lose a huge amount of business if they did. As a result, MasterCard, Visa and the banks with which they share their profits, are able to charge fees that far exceed the actual cost of a debit card transaction.

According to research from the Federal Reserve Board, the fees on debit card transactions average 48 cents. The Fed estimates that the networks can cover their overhead and operating costs with a fee of 12 cents per transaction. The difference, which comes to $12 billion a year, is pure frosting. It’s additional profits for the banks and credit card networks. (Some of this is shared with debit card customers with various rewards, like frequent flyer miles.)

The biggest losers in the current system are cash paying customers. Retailers are required by the companies to charge the same price to everyone. When they raise their prices to cover the debit card fees, they also must raise prices to customers who pay in cash, who tend to be poorer. So, we have a system in which low-income consumers pay higher prices to increase the profits of the big banks and give frequent flyer miles to higher income consumers.

This is where the big retailers come in. If they can lower the swipe fees, they hope to be able to pocket some of the savings, even if they end up passing most of the savings on to consumers. If the big retailers can pocket 20 percent of the savings, this gets them another $2.4 billion a year in profits. This is real money, certainly enough to get their attention. However, the other 80 percent translates into an additional $9.6 billion a year in consumers’ pockets.   

This is the reason that Wal-Mart is on the side of the angels. It is not being altruistic; it hopes to increase profits by lowering swipe fees. However, it will also be putting money into consumers’ pockets (and taking it away from banks), if it succeeds in this effort. [Truthout, 5/9/11]

Former IMF Chief Economist On Interchange Fees: “The United States Severely Lags Behind Comparable Countries In Terms Of How Consumers Are Treated By Banks.” From a post on The New York Times‘ Economix blog by former International Monetary Fund chief economist Simon Johnson:

The immediate issue is the so-called Durbin amendment — a requirement in the Dodd-Frank financial overhaul legislation that would lower what are known as the interchange fees that banks collect when anyone buys anything with a debit card. Retailers pay the fees, but these are then reflected in the prices faced by consumers.

The United States has very high debit-card fees, colloquially known as swipe fees — 44 cents on average (that amounts to 1.14 percent of the average purchase price of $39) and up to 98 cents for some kinds of cards. These fees are per transaction and although the formula is complex, the payment is a significant percentage of many purchases and poses a particular problem for smaller merchants. These fees are estimated to amount to $16 billion to $17 billion annually.

Other countries, including Australia and members of the European Union, have acted to reduce interchange fees – because the actual cost of such transactions is quite low. Think about it: the interchange fee for checks, which also draw directly on bank deposits, is zero.

The United States severely lags behind comparable countries in terms of how consumers are treated by banks in this regard.

[…]

But this is a badly broken market, as James C. Miller III, the budget director under President Reagan, has argued. Too-big-to-fail banks are not a market – they are a government subsidy scheme, because they are backed by implicit government bailout support (to be provided at below market cost whenever needed).

These subsidies enable megabanks to borrow more cheaply and grab market share relative to smaller banks (those with less than $10 billion of assets.) On top of this, and working closely with the biggest banks, Visa and MasterCard have around 90 percent of the market for debit cards – hardly conducive to reasonable competitive outcomes. [New York Times, 4/7/11]


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Posted in Main Blog (All Posts) on October 1st, 2011 4:39 am by HL

Presented By:

Key Ex-NOTW Reporter Tries For Whistleblower Status In Wrongful Termination Suit
A former News Of The World reporter, who is a central figure in the phone hacking scandal, is claiming whistleblower status in a wrongful termination lawsuit against the defunct tabloid’s parent company News International….


Inmate Allegedly Offered To Pay $500K For Kidnap Of Michigan State Representative
A prisoner in jail for witness intimidation, assault and first-degree home invasion allegedly tried to offer a hitman $500,000 to kidnap, torture and possibly murder Michigan State Rep. Barb Byrum (D), MLive.com reported.


The Capitalist Crack-Up

Posted in Main Blog (All Posts) on October 1st, 2011 4:37 am by HL

The Capitalist Crack-Up
Fitzgerald, by then deep into an inglorious relationship with Gin Rickeys, was lucid enough, in 1936, to explain that “all life is a process of breaking down, but the blows that do the dramatic side of the work – the…

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Rick Perry Kills an Innocent Man & Covers it up! And Save Troy Davis!Rick Perry’s record number of executions drew applause at last week’s GOP debate. Among the 234- whoops, make that?235?as of today, it’s hard to keep up- killed…



Bolton Endorses Yemeni Strongman Ali Abdullah Saleh: He?s ?Preferable To Anarchy?

Posted in Main Blog (All Posts) on October 1st, 2011 4:36 am by HL

Bolton Endorses Yemeni Strongman Ali Abdullah Saleh: He?s ?Preferable To Anarchy?
Former U.N. Ambassador John Bolton endorsed Yemeni President Ali Abdullah Saleh as “preferable to anarchy” in a Fox News appearance this morning. Bolton argued that Saleh — despite clinging to power for three decades, refusing to implement democratic reforms and overseeing a violent crackdown on pro-democracy demonstrators — is the key to preventing Al-Qaeda from […]

Former U.N. Ambassador John Bolton endorsed Yemeni President Ali Abdullah Saleh as “preferable to anarchy” in a Fox News appearance this morning. Bolton argued that Saleh — despite clinging to power for three decades, refusing to implement democratic reforms and overseeing a violent crackdown on pro-democracy demonstrators — is the key to preventing Al-Qaeda from sweeping from across Yemen. He said:

I think Saleh’s return is quite significant. For month’s people had been saying the Saudis were trying to talk him out of power — him and his family — and when he was wounded in that attempted assasination and had to go to Saudi Arabia for treatment, I think many people thought that was the easy way out, in effect, and he would never go back. And he obviously didn’t leave Saudi Arabia without their concurrence. So my guess is the Saudis have put more weight on stability in Yemen than perhaps we’re willing to. But in light of the killing of Awlaki, I think we have to look again at whether Saleh might not be preferable to anarchy, certaintly preferable to Al-Qaeda.

Watch it:

But Bolton’s apparent endorsement of Saleh’s iron-fisted rule as means to containing Al Qaeda isn’t backed up by the reported facts on the ground. Indeed, Saleh cooperated with U.S. efforts to pressure al Qaeda in the Arabian Peninsula (AQAP) but AQAP appears to have suffered a major setback with the death of Anwar al-Awlaki. The main coalition of opposition groups in Yemen have shown little sympathy for AQAP and claim that Saleh used al Qaeda’s presence as an excuse for harsh tactics against pro-democracy activists and his political opponents.

Minnesotan Whose Daughter Suffered A Stroke From E. Coli Asks Bachmann To Reconsider Her Food Safety Position
During a campaign stop in Iowa about two weeks ago, 2012 GOP presidential hopeful Michele Bachmann criticized the government’s regulatory “overkill” when it comes to food safety. “When they make it complicated, they make it expensive and so then you can no longer stay in business,” she said, while chopping beef at a Des Moines […]

During a campaign stop in Iowa about two weeks ago, 2012 GOP presidential hopeful Michele Bachmann criticized the government’s regulatory “overkill” when it comes to food safety. “When they make it complicated, they make it expensive and so then you can no longer stay in business,” she said, while chopping beef at a Des Moines meatpacking plant.

In the weeks following Bachmann’s statement, an outbreak of listeria tied to some Colorado cantaloupes has killed sixteen people — making it the deadliest foodborne illness outbreak in the U.S. in more than a decade — while four children in the district of Speaker of the House John Boehner (R-OH) were stricken with E. Coli from tainted meat. Today, in the Minnesapolis Star-Tribune, a mother from Bachmann’s home state of Minnesota whose daughter had a stroke due to E. Coli poisoning appealed to Bachmann to change her position:

I caught it on the news that you visited a meatpacking plant in Iowa last week and promised to reduce restrictions that ensure food safety, so that small businesses could create more jobs.

I am adamantly opposed to this idea.

According to CNN, the European outbreak of E. coli has killed 16 people; the New York Times reports an even higher number. To loosen rules for the meatpacking industry invites danger to innocent victims — like my 4-year-old daughter, Rachel.

Thanks to E. coli, my daughter has lived in a hospital since June 11. Thanks to E. coli, she experienced acute kidney failure.

Thanks to E. coli, she has also suffered a stroke, resulting in a brain injury on both hemispheres. She has lost her ability to walk, talk and move in a normal way.

Before E. coli, she was a perfectly healthy, active little girl.

The woman, Melissa Castino Reid, closed her letter by saying, “from one mother to another, I’m asking you to reverse your campaign promise and err on the side of safety. For my child. For your children. For everyone’s children. It’s just that simple.”

Every year, 3,000 people die from foodborne illness, according to the Department of Health and Human Services, while Georgetown University’s Produce Safety Project has found that foodborne illness costs the U.S. $152 billion annually. This month, the Agriculture Department announced that it “will ban the sale of ground beef tainted with six toxic strains of E. coli bacteria that are increasingly showing up as the cause of severe illness from food.” It’d be nice if Bachmann could see through her deregulatory zeal for just a moment to support these common-sense rules that protect families from going through the situation with which the Reids are struggling.

(HT: @JenniferJJacobs)


Obama pushes boundaries in targeting al-Aulaqi

Posted in Main Blog (All Posts) on October 1st, 2011 4:35 am by HL

Obama pushes boundaries in targeting al-Aulaqi

In authorizing the killing of an American citizen affiliated with al-Qaeda, President Obama has starkly affirmed his willingness to use high-risk, violent tactics against declared enemies.

The drone strike against Anwar al-Aulaqi, which the White House on Friday refused to acknowledge publicly, burnishes Obama’s national security credentials as he heads into an election year when the strength of his leadership will undoubtedly be questioned.

Read full article >>

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Solar projects get funding as deadline approaches

The Energy Department defied Republican critics Friday by announcing that it had committed an additional $4.7 billion in loan guarantees toward four big-dollar clean technology projects just hours before the program’s funding expired.

The announcement marked a dramatic ending for the $18 billion loan guarantee program, which has been central to the administration’s push to create jobs and promote green technology. Simultaneously, the program has come under fire for its handling of a half-billion-dollar loan to Solyndra, a solar company that collapsed in August.

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Iowa GOPers Give Romney New Look

Posted in Main Blog (All Posts) on October 1st, 2011 4:31 am by HL

Iowa GOPers Give Romney New Look
Jennifer Jacobs, Des Moines Register
Some Republicans in Iowa say they have new eyes for Mitt Romney.The presidential campaigns of Rick Perry and Michele Bachmann have tarnished, and Chris Christie and Sarah Palin remain camped on the sidelines. The result: Romney has fresh appeal.

Tina Brown & Co. Are Ditching Obama
Jonah Goldberg, National Review
President Obama's failure to fully achieve the liberal agenda and remain popular in the process is fueling dangerous radicalization in the oddest of places: the media establishment, which considers itself the guardian of the political center.I should say "the so-called center," because one of those most tedious "” yet meticulously maintained "” fictions is the claim that the establishment is, in fact, "centrist."Â If you've ever met these people and talked to them about how they see the world, heard them…

Regulations Aren’t to Blame for “Uncovery”
Ezra Klein, Washington Post
The Republican narrative on the economic recovery — or, as some are calling it, the “uncovery — is simple: It’s not Europe, or deleveraging, or lack of consumer demand. It’s government. Businesses, Speaker John Boehner has said, have been “slammed by uncertainty from the constant threat of new taxes, out-of-control spending and unnecessary regulation.” It is, for conservatives, a convenient narrative, as it argues for deregulation, tax cuts and spending cuts — policies that they have supported all along. But is it…

Is Obama Paving the Way for GOP Tax Reform?
Stephen Moore, WSJ
'Suddenly, liberal Democrats are making the same argument about the tax code that I've been making for 20 years,” laughs former Republican House Majority Leader Dick Armey. “Welcome to the party.” Mr. Armey, who along with Steve Forbes has been the torch bearer for the flat tax since the early 1990s, believes that the latest applause line from President Obama that “billionaires should pay the same tax rate as janitors” may be the political gateway to sweeping tax reform.Mr. Forbes sees an opening here too and says: “The flat tax is the perfect issue for…

Experts See Little Hope for Quick Fix in Europe
Bowley & Alderman, NYT
It has happened time and again in recent months as Europe’s debt crisis has played out. Stocks stage a strong comeback on expectations that a solution has been found. Then they quickly resume their decline as hopes dissipate, leaving investors puzzled and frazzled.What is going on?