CBO: Stimulus Hurts Economy in the Long Run

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run – by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two-tenths of a percent is actually deeper than the agency predicted back then.

Read the rest here.

(Reuters) – Chinese factories battled with their weakest activity in 32 months in November, a preliminary purchasing managers’ survey showed, reviving worries that China may be skidding toward an economic hard landing and compounding global recession fears.

The HSBC flash manufacturing purchasing managers’ index (PMI), the earliest indicator of China’s industrial activity, slumped in November to 48, a low not seen since March 2009.

The data showed the world’s growth engine is not immune to economic troubles abroad, and could further unnerve financial markets already roiled by Europe’s deteriorating debt crisis.

November’s flash reading is a sharp three-point fall from October’s final figure of 51 and indicated Chinese factory output shrank on the month in November. A PMI reading of 50 demarcates expansion from contraction.

The last time the PMI slipped below 50 was in September, when the index hit 49.9.

“Industrial production growth is likely to slow further to 11-12 percent year-on-year in coming months as domestic demand cools and external demand is set to weaken,” said Qu Hongbin, a HSBC economist.

In line with the dismal headline number, the flash output sub-index tumbled to a 32-month low of 46.7, a steep drop from October’s final reading of 51.4.

Read the rest here.

By Ambrose Evans-Pritchard, International business editor

7:39PM GMT 22 Nov 2011

Federal Reserve Chairman Ben Bernanke’s apologetic take on the Fed’s negative role in causing the Great Depression may translate into a willingness to bail out Europe, writes economics blogger James Pethokoukis.

Bernanke will not be willing to let the European Central Bank’s ineffectiveness infect U.S. banks and destroy the global economy.

He points to statements from well-known independent economist Ed Yardeni to elaborate on that idea:

Given the ECB’s reluctance to act, I suspect that the Fed will spearhead the formation of a Global Liquidity Facility (GLF) to avert a global financial meltdown. Fed Chairman Ben Bernanke demonstrated that he is a master at putting together such emergency measures back in 2008. In effect, it would act as the world’s central bank. Mr. Bernanke is clearly very worried about the prospect that the European sovereign debt crisis is a contagion that could spread to the US, as evidenced by his bizarre town hall meeting with troops returning from Iraq on November 10. The GLF would receive deposits from the Fed and other participating central banks, including the ECB. The funds would be used to buy the bonds of debt-challenged governments that would be required to accept strict supervision of their fiscal and regulatory policies by the IMF.

Source.

http://www.youtube.com/watch?feature=player_embedded&v=E7jKKZTpzh4

Perhaps someone will translate what she is saying when she does it. Watch at the 15 second mark.

By Frank Hassler, via ETF Prophet:

The two-day mean-reversion trade, i.e. RSI-2 or DV-2 has become very popular. Though  the performance of this trade has weakened lately (during late 2010-2011). So the twenty thousand dollar question becomes:  Is the edge of this trade gone or is it about to resume?

With this post I want to share an observation I’ve made by tracking my Trend Strength Indicator (TSI). TSI is a non-directional trend strength indicator. A lower TSI is indicating a tendency to mean-reversion while a higher TSI is indicating follow-through action. Read more about TSI [here].
Let’s start with some “chart porn”.

Above you see a SPY chart from 1998 until today (Nov. 2011). Prior 2009 TSI spent most of it’s time bellow 1.6. Post financial crisis 2008 it raised to the highest value ever of >2.0 and it allays maintained the level of > 1.6. However what you also can notice is the trend strength decrease lately. I can also confirm that by simply looking at the performance of my mean reversion strategy over the last few month.

Read the rest here, including a sample mean reversion strategy using TSI as a filter.

Perhaps Biden can find the time to call Corzine and ask him where the 600 million of client money went.

BigGovernment.com has obtained records of Massachusetts Democrat Senator John Kerry and his wife Teresa Heinz’s stock portfolios that show almost perfectly timed pharmaceutical stock trades during the Obamacare debate, which fattened their already enormous personal fortune.

The documents further support allegations of suspicious trading leveled during Sunday’s 60 Minutes report about the explosive new book by investigative reporter and Breitbart News editor Peter Schweizer, Throw Them All Out.

Sen. John Kerry’s position on the powerful Senate Finance Committee’s Health Subcommittee gives him direct access to critical information regarding health care policy. In July 2009, pharmaceutical industry representatives met with key members of Congress to flesh out the Obamacare bill. Then, in November 2009, with the bill’s passage was looking more likely, the Kerrys’ portfolios reflect a drug stock buying spree.

First, $750,000 worth of stock in drug maker Teva Pharmaceuticals was added to their portfolios at around $50 a share. Once Obamacare passed, the value of the stock rose to $62 per share. Subsequently, in 2010, a portion of Teva holdings was dumped from the Kerry portfolio, resulting in tens of thousands of dollars in capital gains (exact profits are unclear because politicians are only required to report ranges, not exact dollar amounts).

Next, at least $200,000 of stock in medical device manufacturer ResMed was purchased in the $20 to $25 per share range. After Obamacare passed, ResMed jumped to $34, an increase of as much as 71%. “ResMed was a winner in the health care reform legislation—as Reuters declared—thanks in part to John Kerry’s efforts,” says Schweizer. The reason: earlier versions of the Obamacare bill would have slapped companies like ResMed with an “industry fee” tax. Kerry opposed the higher taxes on medical device companies and helped delay the taxes until 2013.

Next, between $250,000 and $500,000 worth Thermo Fisher Scientific were added to the Kerry family portfolios at around $35 per share. After Obamacare’s passage, the stock skyrocketed to more than $50 a share.

Even as their portfolios reflected aggressive purchasing of drug company stocks, Sen. Kerry was dumping investments in health insurance companies. At the end of June 2009, all United Health shares were unloaded from their portfolios. Their Wellpoint stocks were also sold. Six weeks later, he then introduced an amendment to tax generous health care plans, a move sure to hurt companies like United Health and Wellpoint.

To read the rest and see Kerry’s actual trades, go here.

Via WattsUpWithThat

Guest Post by Willis Eschenbach

Sounds like a scam, huh? But it’s real. Let me explain how people (no, not you or me, don’t be foolish) can make a guaranteed 29% return on their investment. However, to make it clear, I’ll need to take a short digression. I ran across a National Geographic article on where the world gets its electricity. Here are their figures:

Figure 1. World electricity production by fuel type. Renewables (defined by AGW activists as solar-, geothermal-, wind-, and biomass-generated electricity, but not hydroelectricity) are 2.7% of the total electricity use. Data from National Geographic 

You can see why the AGW supporters’ heads are exploding as the Durban climate party approaches. It is obvious from the chart that years and years of subsidies and tax breaks and IPCC reports and various urgings by well-meaning but clueless pundits and billions in wasted taxpayer dollars have not succeeded in getting renewables up to even 3% of the total electricity generated. Less than 3%. It must drive them round the twist to contemplate their stunning lack of success at making water flow uphill.

Despite that history, you know how they say on those TV commercials, “But wait! There’s even more!”? In this case, it’s “But wait! There’s even less!”

And I don’t mean just a bit of money to get them over the hump. Huge subsidies. Because of the total failure of renewables to penetrate the market, the AGW supporters are desperately throwing money at renewable technologies. The New York Times showed a graphic for one such power plant in California. Their graphic is reproduced below as Figure 3.

Figure 3. Federal and State Subsidies for the California Valley Solar Ranch.

Unfortunately, the Times didn’t really discuss the business implications of this chart, so let me remedy that omission.

First, how much money did the investors have to put in? Since the project will start earning money once the key is turned and the market is guaranteed, the investors only had to put up the total capital outlay of $1.6 billion. Less, of course, the generous government grant of nearly half a billion dollars. Total invested, therefore, is $1,170 million dollars.

On that money, the investors stand to make a net present value of $334 million dollars … which means that due to the screwing of the taxpayers and ratepayers, a few very wealthy investors are GUARANTEED A RETURN OF 29% ON THEIR INVESTMENT!!!

How is this fair in any sane universe? AGW supporters talk about the 1% having too much money, and here the same folks are shoveling the money into the one percenters’ pockets. The 1% weren’t rich enough already, so I have to foot the bill for them to get a GUARANTEED 29% RETURN on their investment?

Note also that a huge part of the money, some $462 billion dollars, is coming from the California electricity ratepayers, including yours truly, through increased charges for electricity. This means that these solar scam artists are being allowed to sell their power at 50% ABOVE MARKET PRICES!!! Not just a little bit above market. Fifty percent above the market price! Where is the California Public Utilities Commission whose job is to protect the consumer? Oh, I see … the are the ones who agreed to the 50% above market rate hike … for shame.

Read the rest here.

Presented without comment, merely to confirm that the market as we know it, no longer exists.

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

Read the rest here.

60 Minutes Story Sparks Examination

WASHINGTON – Homeland Security and Governmental Affairs Committee Chairman Joe Lieberman, ID-Conn., and Ranking Member Susan Collins, R-Maine, announced Wednesday they would hold a hearing to examine how insider trading laws apply to Congress.

 The hearing, requested by Committee Member Scott Brown, R-Mass., and sparked by a 60 Minutes report, is intended to clarify the laws and rules that govern members of Congress who may profit personally from non-public information they learn in the course of their work.

“Insider trading by members of Congress – if it occurs — is a serious breach of the public trust,” said Lieberman. “No one in Congress should be enriching themselves based on information to which the general public has no access. Our hearing will set the record straight about how existing laws and ethics rules apply to Congress and whether they are sufficient to prevent unethical market trading.”

Collins said: “Elected office is a place for public service, not personal gain.  We have a duty to examine and address practices that can create the appearance of wrongdoing or undermine the public’s confidence in decisions made by Congress.  

“I appreciate Senator Scott Brown’s leadership on this important issue.  We need to assure the American people that the decisions we make are decisions of integrity, in which their interests are put first.”

Senator Brown has introduced legislation intended to prevent members of Congress from profiting on information to which only they are privy.  That bill has been referred to HSGAC. Senator Kirsten Gillibrand, D-N.Y., will introduce similar legislation soon. House members have introduced similar bills.

Source.

Bill Frezza, Contributor

Would a farmer who put out a trough of slop be surprised if it attracted a bunch of pigs? Then why are activists who promote enlarging the size and scope of government shocked when one program after another is hijacked by corporations that find it easier to seek favors in Washington than customers in the marketplace? And, knowing that such corruption is inevitable, why do mainstream media dismiss those who advocate curtailing government powers as corporate stooges?

What leads anyone to believe that unconstrained power can be channeled in ways that don’t favor the politically connected? And why are the politicians who repeatedly put out the slop troughs, then theatrically rail against the pigs, rarely penalized at the polls?

How long will people continue to believe the “too big to fail” fear-mongering propaganda which both parties use to justify squandering public funds to socialize losses and privatize gains? How many times does a court economist have to be wrong about the impact of expensive economic interventions before we add him to the unemployment rolls?

If protestors are angry that Wall Street interests control the government, why do they want to increase the government’s role in the economy rather than decrease it? What makes them think that banging on drums and spouting incoherent slogans is a more effective way to influence politicians than the proven practice of putting them on the payroll? What would happen to the flow of campaign contributions from crony capitalists if money could no longer buy legislative and regulatory favors? And why do anti-corporate activists keep fruitlessly trying to cut off the flow of money instead of working to ban the favors that attract it?

How does the failure to distinguish between honestly earning profits by meeting customers’ needs and getting rich by looting the public treasury make it possible to end the latter practice without destroying the former? And if we cannot define and promote a sustainable form of capitalism weaned from government corruption, where are all the jobs the nation needs supposed to come from?

How disorderly can class warfare-inspired protests grow, while police are instructed to look the other way, before violence becomes a widespread means of political expression? Will Oakland, Portland, and other cities burn when springtime rekindles the Obamaville encampments that serve as the most potent symbol of this failed presidency? How can politicians, union leaders, and other opportunists not realize that encouraging this mindless thuggery will eventually blow up in their faces? Will the American public recoil when innocent people are killed solely because they work for politically disfavored corporations, or will they shrug it off as collateral damage, as did the Greeks?

When the government hands out other people’s money to crony capitalists promising “green” jobs, does this magically turn them into effective innovators? How are experimental technologies based on ideological fantasies supposed to achieve commercial sustainability by being rushed to market for purely political considerations? How does crippling the evolution of proven energy businesses through capricious regulations and endless environmental reviews make our energy future more secure, our economy more robust, or high paying jobs more plentiful?

Read the rest here.

via Bespoke:

Monday, November 14, 2011 at 12:05PM

The recent bankruptcy of financial stalwart and Wall Street casino failure MF Global in the US, has claimed a new and unlikely victim. Following the company’s glorious collapse, Trends Research founder Gerald Celente had his own six figure gold investment account completely looted by chapter 11 trustees, and he is fighting to get it back.

http://www.youtube.com/watch?feature=player_embedded&v=kt-mVWYvOm0

Source.

In the wake of the $700 billion TARP bailout, Warren Buffett apparently shaped a plan to clean up toxic assets that Treasury Secretary Tim Geithner later adopted–resulting in massive profits for Buffett.

That’s the latest bombshell revelation from investigative journalist and Breitbart editor Peter Schweizer’s sensational new book, Throw Them All Out.

According to Schweizer, after the bailout bill’s passage, Warren Buffett sat down and wrote then-Treasury Secretary Henry Paulson a four-page private letter laying out a plan to clean up the toxic assets plaguing numerous financial institutions.  Buffett proposed something he called a “public-private partnership fund.”  For every $10 billion the private sector invested, Buffett said the government should put up $40 billion.

After Paulson’s exit, incoming Treasury Secretary Tim Geithner tweaked the plan and rolled it out in March 2009. But according to quarterly reports from Buffett’s holdings company, Berkshire Hathaway, between the time the billionaire crafted his plan and Geithner adopted it, Buffett quietly purchased 12.4 million shares of Wells Fargo stock and 1.5 million shares of U.S. Bancorp. Once the government unveiled its “Public-Private Investment Program,” bank stocks jumped, resulting in large profits for Buffett.

How much Buffett profited is hard to calculate, since there’s no way to know what his purchase price was. But prior to the government adopting Buffett’s plan, Wells Fargo had been trading at roughly $20 a share. In the weeks after Geithner’s announcement, the stock jumped to $30 a share. Likewise, U.S. Bancorp went from $8 in February 2009 to more than $20 a share by May.

Schweizer’s revelations contradict the image Warren Buffett has worked hard to create as that of a folksy, grandfatherly figure who stays above the political fray and rarely gets mired in the muck of partisan politics. Indeed, Throw Them All Out uncovers other alarming acts of apparent crony capitalism performed by the so-called “Oracle of Omaha.”

For example, Schweizer examines Buffett’s intense private lobbying efforts and deftly-timed stock buys that leveraged TARP bailout monies to create up to $3.7 billion in windfall profits for Berkshire Hathaway.

In September of 2008, Buffett invested $5 billion in the over-leveraged investment house of Goldman Sachs, having obtained impressive terms: Berkshire Hathaway would receive preferred stock with a 10% dividend yield, and the option to buy another $5 billion at $115 a share.

As the political debates surrounding the proposed $700 billion TARP bailout bill heated up, Buffett maintained an appearance of naivete, an “aw shucks” shtick that deferred to the judgment of politicians.  “I’m not brave enough to try to influence the Congress,” Buffett told the New York Times.

Behind closed doors, however, Buffett had become a shrewd political entrepreneur. With his Goldman bet in place, the billionaire exerted his considerable political influence in a private conference call with then-Speaker of the House Nancy Pelosi and House Democrats. During the meeting, Buffett strongly urged Democratic members to pass the $700 billion TARP bill to avert what he warned would otherwise be “the biggest financial meltdown in American history.”

Read the rest here.

U.S. Representative Spencer Bachus (R-AL) had access to highly sensitive financial information during the 2008 bailout debates that may have helped him earn tens of thousands of dollars by trading stock options, even as most Americans’ portfolios took a beating.

On Sunday, Rep. Bachus’s trading behavior came under fire in a 60 Minutes report based on Throw Them All Out, the book by investigative journalist and Breitbart editor that has triggered a political earthquake in Washington. Schweizer, who is also a Breitbart editor, devotes a significant portion of the book to exposing possible congressional insider trading.

Bachus’s trades during debate over the Troubled Asset Relief Program (TARP) raise serious questions about whether he invested based on information he acquired as a result of his political power.

“Here’s the rub: all too often his trades coincided with his congressional work,” says Schweizer. “Bachus was neck-deep in crucial financial decision-making at the highest levels.”

BigGovernment.com has obtained and reviewed Rep. Bachus’s Fidelity stock options trading records. The dates of the congressman’s trading patterns paint a troubling picture.

Read the rest, including actual Fidelity records of Bachus’s trades, here.

(CBS News)

Washington, D.C. is a town that runs on inside information – but should our elected officials be able to use that information to pad their own pockets? As Steve Kroft reports, members of Congress and their aides have regular access to powerful political intelligence, and many have made well-timed stock market trades in the very industries they regulate. For now, the practice is perfectly legal, but some say it’s time for the law to change.

The following is a script of “Insiders” which aired on Nov. 13, 2011. Steve Kroft is correspondent, Ira Rosen and Gabrielle Schonder, producers.

The next national election is now less than a year away and congressmen and senators are expending much of their time and their energy raising the millions of dollars in campaign funds they’ll need just to hold onto a job that pays $174,000 a year.

Few of them are doing it for the salary and all of them will say they are doing it to serve the public. But there are other benefits: Power, prestige, and the opportunity to become a Washington insider with access to information and connections that no one else has, in an environment of privilege where rules that govern the rest of the country, don’t always apply to them.

Questioning Pelosi: Steve Kroft heads to D.C.
When Nancy Pelosi, John Boehner, and other lawmakers wouldn’t answer Steve Kroft’s questions, he headed to Washington to get some answers about their stock trades.

Most former congressmen and senators manage to leave Washington – if they ever leave Washington – with more money in their pockets than they had when they arrived, and as you are about to see, the biggest challenge is often avoiding temptation.

Peter Schweizer: This is a venture opportunity. This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family.

Peter Schweizer is a fellow at the Hoover Institution, a conservative think tank at Stanford University. A year ago he began working on a book about soft corruption in Washington with a team of eight student researchers, who reviewed financial disclosure records. It became a jumping off point for our own story, and we have independently verified the material we’ve used.

Schweizer says he wanted to know why some congressmen and senators managed to accumulate significant wealth beyond their salaries, and proved particularly adept at buying and selling stocks.

Schweizer: There are all sorts of forms of honest grafts that congressmen engage in that allow them to become very, very wealthy. So it’s not illegal, but I think it’s highly unethical, I think it’s highly offensive, and wrong.

Steve Kroft: What do you mean honest graft?

Schweizer: For example insider trading on the stock market. If you are a member of Congress, those laws are deemed not to apply.

Kroft: So congressman get a pass on insider trading?

Schweizer: They do. The fact is, if you sit on a healthcare committee and you know that Medicare, for example, is– is considering not reimbursing for a certain drug that’s market moving information. And if you can trade stock on– off of that information and do so legally, that’s a great profit making opportunity. And that sort of behavior goes on.

Kroft: Why does Congress get a pass on this?

Schweizer: It’s really the way the rules have been defined. And the people who make the rules are the political class in Washington. And they’ve conveniently written them in such a way that they don’t apply to themselves.

The buying and selling of stock by corporate insiders who have access to non-public information that could affect the stock price can be a criminal offense, just ask hedge fund manager Raj Rajaratnam who recently got 11 years in prison for doing it. But, congressional lawmakers have no corporate responsibilities and have long been considered exempt from insider trading laws, even though they have daily access to non-public information and plenty of opportunities to trade on it.

Schweizer: We know that during the healthcare debate people were trading healthcare stocks. We know that during the financial crisis of 2008 they were getting out of the market before the rest of America really knew what was going on.

In mid September 2008 with the Dow Jones Industrial average still above ten thousand, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were holding closed door briefings with congressional leaders, and privately warning them that a global financial meltdown could occur within a few days. One of those attending was Alabama Representative Spencer Bachus, then the ranking Republican member on the House Financial Services Committee and now its chairman.

Schweizer: These meetings were so sensitive– that they would actually confiscate cell phones and Blackberries going into those meetings. What we know is that those meetings were held one day and literally the next day Congressman Bachus would engage in buying stock options based on apocalyptic briefings he had the day before from the Fed chairman and treasury secretary. I mean, talk about a stock tip.

While Congressman Bachus was publicly trying to keep the economy from cratering, he was privately betting that it would, buying option funds that would go up in value if the market went down. He would make a variety of trades and profited at a time when most Americans were losing their shirts.

Congressman Bachus declined to talk to us, so we went to his office and ran into his Press Secretary Tim Johnson.

Read the rest here.

Former Speaker of the House–and current Minority Leader–Nancy Pelosi apparently bought $1 million to $5 million of Visa stock in one of the most sought-after and profitable initial public offerings (IPO) in American history, thwarted serious credit card reform for two years, and then watched her investment skyrocket 203%.

The revelation appears in Throw Them All Out, the new book by investigative journalist and Breitbart editor Peter Schweizer, which was the focus of 60 Minutes on CBS this evening, and which is featured in this week’s issue of Newsweek.

Schweizer’s investigation of Pelosi and other members of Congress–from both parties–raises a critical question:  should it be legal for lawmakers to buy stocks in companies directly affected by their legislative efforts?

In early 2008, Nancy Pelosi and her real estate developer husband, Paul, were given an opportunity to buy into a Visa IPO. It was a nearly impossible feat–one that average citizens almost certainly could never achieve. The vast majority of purchase opportunities went to institutional investors, large mutual funds, or pension funds.

Despite Pelosi’s consistent railing against credit card companies, on March 18, 2008, the Pelosis bought between $1 million and $5 million (politicians do not have to report the exact amounts, only ranges) worth of Visa stock at the IPO price of $44 per share. Two days later, the stock price rocketed to $65 per share, yielding a 50% profit. The Pelosis then bought Visa twice more. By their third purchase on June 4, 2008, Visa was worth $85 per share.

How did Nancy Pelosi snag one of the most coveted initial public offerings in history? The facts are still emerging. Yet according to Schweizer, corporations that wish to build congressional allies will sometimes hand-pick members of Congress to receive IPOs. Pelosi received her Visa IPO almost two weeks after a potentially damaging piece of legislation for Visa, the Credit Card Fair Fee Act, had been introduced in the House. If passed, the bill would have cut into Visa’s profits substantially by lowering so-called “interchange fees,” the 1% to 3% charge retailers pay Visa when customers use Visa cards for purchases. Interchange fees are a critical source of revenue for the four credit card companies–$48 billion in 2008, to be exact.

If the Credit Card Fair Fee Act had been passed into effect, it would have amended antitrust laws to require credit card companies to enter negotiations with merchants over interchange fees, and it would have given the Justice Department and the Federal Trade Commission the power to arbitrate if the two sides failed to come to an agreement. For that reason, Visa and the other credit card companies strongly opposed the bill.

The Credit Card Fair Fee Act was exactly the kind of bill one would think then-Speaker Pelosi would have backed. “She had been outspoken about antitrust problems posed by insurance, oil, and pharmaceutical companies,” Schweizer notes, “and she was vocal about the need for controlling interest rates individual banks charged to use their credit cards.”

Initially, the Credit Card Fair Fee Act cleared the Judiciary Committee on a 19-16 vote, and the National Association of Convenience Stores began lobbying for a vote on the floor of the House. “It is imperative to tell your Representatives to request a vote on the House Floor from Nancy Pelosi,” the association urged its members. Still, with at least ten percent of the Pelosi family’s entire stock portfolio invested in a single stock, Nancy Pelosi clearly had a vested interest in ensuring that Visa’s profits were protected. And that is exactly what she accomplished. Despite broad public support for the bill—77% in one study—Pelosi saw to it that the bill never made it to the House floor.

Shortly thereafter, a second bill limiting collusion by the credit card companies on interchange fees was proposed. The Credit Card Interchange Fee Act of 2008, while not as strong as the first bill, would have required greater transparency from credit card companies in informing customers how much they were paying in interchange fees. Yet again, reports Schweizer, “this second bill suffered the same fate as the first, never making it to the House floor.”

By 2009, both bills had garnered even broader bipartisan support and were reintroduced. Under Speaker Pelosi, however, neither bill lived to see a vote on the House floor.

Read the rest here.

Occupy Portland Overdoses and Public Safety Information – 11/12/11
On November 11, 2011, Portland Police officers assigned to the Occupy Portland encampments were contacted by people inside the camps about improvised weapons being found. Officers also received information that a man was going to damage police cars parked outside the encampments.

Officers made contact with the man and he relinquished his six foot long bamboo pole. No damage was done to any patrol cars and no arrests were necessary.

The Portland Police Bureau appreciates the ongoing efforts of people within the encampments to share information with officers about people committing crimes and stockpiling improvised weapons. Anyone with this kind of information should immediately share it with a police officer. Attached are two photos of items turned over to police from people within the Occupy Portland encampments.

Officers continue to see people packing up and leaving the encampments and officers are sharing information about shelter options with people in the encampments.

Teams of outreach workers continue to walk through the encampments and are providing information and assistance to homeless adults and youth in locating safe shelter space. Groups from Janus Youth Programs, JOIN, Transition Projects, Yellow Brick Road, Cascadia, and Can We Help have all been actively working with city officials and police to insure that people in need of services know where to go and how to obtain them.

The Portland Police Bureau anticipates that cooperation will continue with many people at the encampments and is encouraged by efforts to have a peaceful transition out of Chapman and Lownsdale Square parks. The Portland Parks Bureau is onsite and assisting people with clean up efforts of debris and unwanted property.

Friday afternoon at approximately 4:30 p.m., officers and medical personnel assisted a man suffering from a drug overdose in the middle of Lownsdale Square. The man was revived and transported to an area hospital for treatment.

This morning, Saturday November 12, at approximately 8:30 a.m., officers and medical personnel assisted a young woman suffering from a drug overdose. The woman, believed to be in her 20s, was revived and has been transported to an area hospital for treatment.

Attached are updated crime stats for the police patrol districts around the Occupy Portland encampments.

Source

Former porn star Sasha Grey says she will not withdraw from an elementary school reading program despite outcry from angry parents, according to a report from TMZ.

Earlier Friday, news broke that  a Los Angeles area elementary school is facing some major criticism from parents after the district invited Grey to read to a group of first graders as part of the Read Across America program.

“I committed to this program with the understanding that people would have their own opinions about what I have done, who I am and what I represent,” she said in a statement.

“I am an actor. I am an artist. I am a daughter. I am a sister. I am a partner. I have a past that some people may not agree with, but it does not define who I am.

“I believe in the future of our children, and I will remain an active supporter and participant in education-focused initiatives.”