Monday, September 16, 2013

The Forbes 400: The Richest People in America

Bill Gates is the richest American for the 20th year in a row and has reclaimed the title of world’s richest person from Mexico’s Carlos Slim with a net worth of $72 billion. Warren Buffett, again number two, was the year’s biggest dollar gainer, having added $12.5 billion to his fortune. Facebook’s hot stock pumped up Mark Zuckerberg’s fortune by $9.6 billion and put him back into the top 20 after missing the top cut last year; Carl Icahn lost his battle to stop Dell from going private but he had a great year and moves back in the top 20 for the first time since 2008. The biggest percentage gainer was Workday’s David Duffield, whose fortune more than tripled to $6.4 billion, and just behind him in terms of percentage jumps was the entrepreneur Elon Musk, now worth $6.7 billion and ranked 61st.

[More from Forbes: Meet The 20 Newcomers To The Forbes 400]

The 400 wealthiest Americans are worth a record $2.02 trillion, roughly equivalent to the GDP of Russia. That is a gain of $300 billion from a year ago, and more than double a decade ago. The average net worth of list members is a staggering $5 billion, $800 million more than a year ago. The minimum net worth needed to make the 400 list was $1.3 billion. The last time it was that high was in 2007 and 2008, just before the financial crisis. Because the bar is so high, 61 American billionaires didn’t make the cut.

There are 20 newcomers to the list. Among the notables are Michael Rubin, whose online sports merchandise retailer Fanatics, recently attracted venture capital investors at a sky-high valuation; Jeff Sutton, who owns a number of the priciest store fronts on Fifth Avenue and Times Square, and  35-year-old Robert Pera, one of just nine under 40, whose wireless networking gear maker Ubiquiti Networks surged after a strong earnings announcement in August. At the time he tweeted this lyric from a Jay-Z song: “And as for the critics, tell me I don't get it. Everybody can tell you how to do it, they never did it.”

Only 30 people from last year’s list are poorer than a year ago. Twenty-nine people dropped out of the ranks and four people died. Of those 29, only 15 saw their fortunes drop, including T. Boone Pickens, whose costly bets on wind energy lost him his billionaire status, and Manoj Bhargava, whose 5-Hour Energy drink firm has been hit by lawsuits and falling revenues. The rest simply couldn’t keep up with the rising tide. Washington Redskins owner Dan Snyder is one of the billionaires who didn’t qualify and, in his case, even with a rise in his fortune, just didn’t have enough to stay in the club.

[More from Forbes: Falling Fortunes: The Ones That Dropped Off The Forbes 400]

The ranks are a snapshot of wealth taken on August 23, the day we locked in stock prices.

1. Bill Gates

Stefan Postles/Getty Images $72 billion Up
Source: Microsoft, investments
Age: 57
Residence: Medina, Wash.

Gates remains atop The Forbes 400, a perch he’s held since 1994, despite giving
away $28 billion, most of it to the Bill & Melinda Gates Foundation. He’s also again the world’s richest person, having reclaimed that title from Mexico’s Carlos Slim earlier this year. He bolstered his foundation’s efforts to eradicate polio in April, securing $335 million in pledges from six billionaire comrades, including $100 million each from Slim and Mike Bloomberg. Shares of Microsoft jumped in late August on news that Steve Ballmer will step down as CEO, but Gates will remain chairman of the software company he cofounded in 1975 with Paul Allen. Microsoft represents less than a fifth of his fortune. Gates’ investment firm, Cascade, owns chunks of tractormaker Deere & Co., Canadian National Railway and Mexican Coke bottler Femsa.

2. Warren Buffett

AP Photo/Nati Harnik $58.5 billion Up
Source: Berkshire Hathaway
Age: 83 
Residence: Omaha

Neither age nor prostate cancer slows Buffett down: a year after completing radiation treatment, he is still doing huge deals. His Berkshire Hathaway picked up iconic ketchupmaker H.J. Heinz for $23.2 billion in June in a deal with Brazilian billionaire Jorge Paulo Lemann. A Berkshire subsidiary is buying Nevada’s NV Energy for $5.6 billion in cash. He gave away another $2 billion of Berkshire stock to the Gates Foundation in July, bringing his lifetime giving to nearly $20 billion. Despite the gift, he saw his fortune rise $12.5 billion, more than any other member of The Forbes 400, thanks to a 34% increase in Berkshire shares.

3. Larry Ellison

REUTERS/Stephen Lam/Files $41 billion Even
Source: Oracle
Age: 69
Residence: Woodside, Calif. 

Little gets in the way of Larry Ellison’s ambition—or mouth. In a TV ­interview in August the Oracle founder said that Apple’s best days are behind it after the passing of Steve Jobs, a close friend, and that Google’s alleged infringement on Oracle’s patents in its Android software was “absolutely evil.” His dream of a winning second America’s Cup sailing trophy was dealt a serious blow in September when a jury found the Oracle team guilty of cheating and docked it two points. He collects houses on Malibu’s Carbon Beach and also owns of 98% of Hawaii’s Lanai island. In his quest for youth he has donated $445 million to his medical foundation to support research on aging and age-related diseases.

4. Charles Koch

(Jamie Kripke) $36 billion Up
Source: Diversified 
Age: 77
Residence: Wichita, Kans.
Inherited & Growing

Charles is chairman and CEO of Koch Industries, the country’s second largest private company with sales of $115 billion, a post he’s held since 1967. He and his brother David, with whom he shares the fortune, failed to unseat Barack Obama as President in 2012 but keep finding ways to drive liberals crazy. The latest frenzy was over Charles and younger brother David’s widely reported (but never confirmed) interest in buying Los Angeles Times and Chicago Tribune as platforms for their libertarian views. His net worth is up $5 billion this year as Koch Industries  steadily expands. The company agreed to buy electronics-components maker Molex for $7.2 billion and cellulose fibers producer Buckeye Technologies for $1.5 billion. They invested $1.5 billion in glassmaker Guardian Industries. The thrifty brothers reinvest 90% of earnings in the business. He studied nuclear and chemical engineering at MIT.

4. David Koch

REUTERS/Brendan McDermid $36 billion Up
Source: Diversified 
Age: 73
Residence: New York City
Inherited & growing

David is New York City’s richest resident. He and his brother Charles, with whom he shares the fortune, failed to unseat Barack Obama as President in 2012 but keep finding ways to drive liberals crazy. The latest frenzy was over Charles and younger brother David’s widely reported (but never confirmed) interest in buying Los Angeles Times and Chicago Tribune as platforms for their libertarian views. His net worth is up $5 billion this year as Koch Industries steadily expands. The company agreed to buy electronics-components maker Molex for $7.2 billion and cellulose fibers producer Buckeye Technologies for $1.5 billion. They invested $1.5 billion in glassmaker Guardian Industries. The thrifty brothers reinvest 90% of earnings in the business. David is a prostate cancer survivor, and he’s contributed more than $200 million to finding a cure. Like his brother, he studied chemical engineering while at MIT.

6. Christy Walton & family

Forbes $35.4 billion Up
Source: Wal-Mart  Age: 58
Residence: Jackson, Wyo.

Christy is once again the richest woman in the world. She inherited her wealth when husband, John Walton, a Green Beret and medic in Vietnam War, died in an airplane crash in 2005. She got a huge chunk of Wal-Mart shares. But it is his side investment in First Solar that boosts her fortune ahead of all the other Waltons. That lead, which had narrowed when the stock tanked a couple of years ago, has once again widened, as First Solar shares rose 57% in past year.

7. Jim Walton

Jim Walton and Alice Walton (AP Photo/April L. Brown) $33.8 billion Up
Source: Wal-Mart  Age: 65
Residence: Bentonville, Ark.

The combined fortune of Sam Walton’s heirs is up 27%, or $28.9 billion, from a year ago due to a change in control of the shares held by their late mother’s (d. 2007) trust. Shares of Wal-Mart are up only 2%. Their father Sam and uncle James started the giant retailer in 1962, which  now employs 2.2 million people in 11,000 stores worldwide. The siblings have split more than $1.4 billion in dividends after taxes so far in 2013. Jim, Sam’s youngest son, is the CEO of the family’s Arvest Bank, which is worth $1.8 billion and has branches in Arkansas, Kansas, Oklahoma and Missouri.

8. Alice Walton

Jim Walton, Alice Walton and Robson Walton (AP Photo/April L. Brown) $33.5 billion Up
Source: Wal-Mart  Age: 63
Residence: Fort Worth, Tex.

Alice’s Crystal Bridges Museum of American Art -- which she founded in 2011 -- has eclipsed 1 million visitors in under two years of operation. The Bentonville, Ark., museum includes works spanning five centuries from icons like Andy Warhol, Norman Rockwell and Georgia O'Keeffe.   The combined fortune of Sam Walton’s heirs is up 27%, or $28.9 billion, from a year ago due to a change in control of the shares held by their late mother’s (d. 2007) trust. Shares of Wal-Mart are up only 2%. Their father Sam and uncle James started the giant retailer in 1962, which now employs 2.2 million people in 11,000 stores worldwide. The siblings have split more than $1.4 billion in dividends after taxes so far in 2013.

9. S. Robson Walton

Jim Walton, Alice Walton and Robson Walton (AP Photo/April L. Brown) $33.3 billion Up
Source: Wal-Mart  Age: 69
Residence: Bentonville, Ark.

While the Waltons and Wal-mart continue to get richer, it hasn't been all smiles this past year for S. Robson, the eldest sibling, who has been chairman of the $469 billion (sales) retailer since 1962. Employees organized protests against low wages in 15 cities across the U.S. Wal-Mart also endured criticism for its connection to a bribery scandal in Mexico. The combined fortune of Sam Walton’s heirs is up 27%, or $28.9 billion, from a year ago due to a change in control of the shares held by their late mother’s (d. 2007) trust. Shares of Wal-Mart are up only 2%. Their father Sam and uncle James started the giant retailer in 1962, which now employs 2.2 million people in 11,000 stores worldwide. The siblings have split more than $1.4 billion in dividends after taxes so far in 2013.

10. Michael Bloomberg

REUTERS/Brendan McDermid $31 billion Up
Source: Bloomberg LP
Age: 71
Residence: New York City 

The world’s richest mayor ends a 12-year run atop the Big Apple in December. His next act is anyone’s guess, but he will likely continue to exert his political influence on the national debate over gun control. His fortune is up $6 billion since last year, thanks to the performance of Bloomberg LP, the financial data firm he founded in 1982 after being fired from Salomon Brothers. He owns 88% of the company, which generated $7.9 billion in 2012 revenue. He also owns at least 10 homes in Manhattan, Westchester County, Bermuda, Vail and the Hamptons. His lifetime philanthropic giving is at $2.8 billion, including a recent $100 million pledge to the Gates Foundation to help Bill Gates eradicate polio.

Forming Malaysia - 10 things you need to know

The road leading to the formation of Malaysia on September 16,1963 was a bumpy one, and as we discovered, more than just feathers were ruffled in the long struggle to create a new country.

We pored through history books, United Nations reports and dozens of legislation to find interesting nuggets about this development, allowing us to reflect on the bumpy journey Malaysia faced as it became a new nation. 

Peninsular Malaysia and Borneo Island were merged – physically!

Even before Malaysia was formally created as a nation, the island of Borneo and the peninsular area of what is known as West Malaysia, was connected – physically. About 50,000 years ago, the island and peninsula were part of a larger Sunda Shelf, which was exposed during the Ice Age. 

This area, known as Sundaland, had included Java and Sumatra, as well as surrounding islands such as Bali.  Rising sea levels then caused major floods which massively submerged the Sunda continent, creating the South China and Java seas, and physically separating the Borneo island from the peninsula.

Evidence showed that similar species of animal and plants existed in Sabah and Java, despite having great distances between them.
Assuming if these areas were spared from the great floods, you could have possibly walked from Kuala Lumpur all the way to Bali!

Announcement of Malayan merger to journalists -  in Singapore.
The news of a merger with Sabah and Sarawak was made public, ironically in Singapore. Malaysia's first Prime Minister Tunku Abdul Rahman announced the merger at an event hosted by the Society of Foreign Press in a hotel in Singapore on May 27, 1961. 

He had suggested that the formation include the Federation of Malaya, Singapore, Brunei, Sabah and Sarawak.  This speech made headlines in the national papers the next day, with reports calling it Tunku's 'Big “Unity” Plan'. 

September 16 is Singapore's founder Lee Kuan Yew's birthday.

Call it coincidence or fate, Malaysia shares the same birthday as the Father of Singapore.
He turned 40 when Malaysia was 'born'. 

Balancing out the Chinese communities, fighting communism.   
One of the main reasons why a merger with Sabah and Sarawak was introduced was to allow for better control by the central government on communist activities. 
Soon after the second World War, the Federation of Malaya and Singapore had to fight long and hard battles against the communists. 

The merger meant that the Chinese majority could be balanced out with Malay and  indigenous communities in Sabah and Sarawak. If Malaya and Singapore stayed together, without Sabah and Sarawak, Malaysia (or perhaps by another name) could have had a population with a Chinese majority. 

READ: Malaysia - turning points in a nation's history

READ: Tunku's Merdeka vision and today's reality
READ: Malaysia Day and Merdeka: How to celebrate two days
WATCH: What kids love about Malaysia? Errr...nasi lemak?
WATCH: What's the difference between Merdeka Day and Malaysia Day?

Malayan merger caused Sultan of Brunei to abdicate.
Tunku had the agreement of the Sultan of Brunei, Sultan Omar Ali Saifuddien, for Brunei to join the three territories. But it was not to be. 

Most of the Sultan's subjects were against the initiative. This then led to a revolt in December 1962. Relations between Malaya and Brunei worsened and after the revolt and the Sultan laid claim to Limbang in Sarawak. 

Tensions were high and Brunei became involved in the Malaysia – Indonesia Confrontation at that time. With pressure from the British to join Malaysia, the Sultan stuck to his decision, and later abdicated the throne in 1967 in favour of his son Sultan Hassanal Bolkiah Muzzaddien Waddaullah. 

Over 80 % of people in Sabah and Sarawak said yes to Malaysia – but not in a referendum.    
A special commission was set up and it found that over 80% of people in the two states wanted to join with Malaya.  But this result did not come from a voting process or referendum.   

Instead, the Cobbold Commission, led by the ex-governor of the Bank of England Lord Cobbold, gathered the views from some 4,000 people and studied over 2,000 memorandums.
These memorandums were from the public, various political parties, members of Government and Legislative Assemblies, municipal councils, religious leaders and trade unions. 

Lord Cobbold worked with the ex-chief minister of Penang Wong Pow Nee, ex-Sarawak governor Anthony Abell, former chief secretary of Malaya David Watherston.  Permanent secretary to the Foreign Affairs     Ministry Mohammed Ghazali Shafie or popularly known as King Ghaz was also part of this team. 

Calling Malaysia something else?    
Malaysia may have been known by another name, if the Cobbold Commission sided with a few     communities in Sarawak. 

Non-Muslims from that state were anxious about the name Malaysia, reflecting similar anxieties about the decision of Malaysia's religion, language and head of Federation. 
These communities felt that they may be pushed to an inferior position compared to the Malays and Muslims as a result of some of these decisions.

The Cobbold Commission however, stuck to 'Malaysia', as no others would do. In its recommendation report, the commission said Malaysia was appropriate, “in view of the geographical-historical relevance and its wide current usages.” 

Citizens of Melayu Raya or Maphilindo?    
There was a movement to merge Malaya with Brunei and Indonesia to unite the Malay race. This was an idea mooted in the 1920s by students and graduates of the Sultan Idris Training College for Malay Teachers, and then by Indonesian leader Sukarno in the 1950s.  

If that had happened, we would have  been known as Melayu Raya.  When the Malaysian idea was suggested in the 1960s, the concept of Maphilindo emerged, with calls to unite Malaya with the Philippines and Indonesia, but critics slammed it for being a tactic to hinder the formation of Malaysia. 

Malaysia's real birthday on August 31.
Malaysia would have been 'born' on August 31, 1963, to coincide with Malaya's fifth year of independence from the British administration. But Philippines and Indonesia strongly objected the merger, delaying the process of creating the new country.
Both countries initiated different campaigns to unite with Malaya and made claims of different territories in the region. 

The Philippines laid claim to Sabah, and Indonesia leader Sukarno  declared that he was going to 'crush' Malaysia.  In the same year that Malaysia was being created, Sukarno launched an confrontation campaign using the Ganyang Malaysia slogan.
He was concerned that once Malaysia was formed, it would affect Indonesian rule as it could be turned into an extension of the British rule in the region.  

The United Nations (UN) steps in.    
We found correspondence from the Foreign Office of the United States, which expressed concern over the delays faced by the governments in uniting these territories.

Tensions  in the region led to strong calls for a UN or independently administered referendum in Sabah and Sarawak.

A referendum would have allowed people in Sabah and Sarawak to vote for or against the merger, despite  the Cobbold Commission's recommendations to go ahead with the union.  Even Singapore held a referendum, which saw more than 70% of the population agreeing to the merger.  Leaders in Sabah and Sarawak argued that too few people in the two states were asked if they wanted to merge with Malaya.        

To diffuse the situation, the Manila Accord was signed under UN principles. Indonesian and Filipino governments supported the merger, “provided the support of the people of the Borneo territories is ascertained by an independent and impartial authority - the Secretary-General of the United Nations or his representative.”      

But, instead of a referendum, the UN Secretary-General U Thant spent 10 days in Sarawak in early September 1963 and later toured Sabah. He spoke to elected representatives of the people, leaders of political parties and organisations, and according to him, “every effort was made to reach special groups like political detainees.”      
In his final report dated September 14, 1963, he wrote, “the majority of the peoples of the two territories, having taken them into account, wish to engage, with the peoples of the Federation of Malaya and Singapore, in an enlarged Federation of Malaysia through which they can strive together to realise the fulfillment of their destiny".

September 2008: Wall Street’s Plunge Into Chaos

It doesn't have a catchy name like "Black Friday" and the losses during the trading session weren't historic, but Monday September 15, 2008 was the day all hope was lost in containing the Financial Crisis. It was just after midnight on the morning of the 15th that Lehman Brothers was forced to file bankruptcy, putting 26,000 employees out of work and ending 158 years of operations.
The bankruptcy had become fait accompli the prior day when the UK regulators had refused to backstop a deal for Barclays (BCS) to acquire Lehman, ending any hope for a White Knight to save the day. The U.S. government, already on the hook for Fannie Mae and Freddie Mac, had little legal authority or desire got involved further in non-government sponsored entities like Lehman.
Though CEO Dick Fuld's hubris and lack of common sense is now legendary, it wasn't entirely irrational at the time. The government had been extending similar lifelines for months.
Bear Stearns had faced related problems in March of 2008. Ultimately the government pushed for a shotgun marriage between Bear and JPMorgan (JPM). Bear was taken out for $10 a share, well below its 52-week high in the $130s but better than a wholesale liquidation. Fuld maintains to this day that he was right to hold out for more than $17.50 a share in exchange for control of the bank less than a month prior to its total collapse. According to then-Secretary of the Treasury Hank Paulson, Dick Fuld had "been in denial for a long time" over the ultimate fate of the bank, unable to accept that the company he was overseeing could be so toxic.
"The truth of the matter is the moral hazard got set up with the Bear Stearns deal several months before," says Jay Richards, the author Infiltrated: How to Stop the Insiders and Activists Who are Exploiting The Financial Crisis to Control Our Lives and Our Fortunes.Regardless of what the government should have done, it became apparent that there was no safety net beneath the teetering financial system. The U.S. was effectively making up rules as it went along as banking officials tried to plug an endless series of leaks. Once Lehman went down liquidity seized for all institutions.
A day later, on September 16th the Federal Reserve bailed out American International Group (AIG), backstopping it with $85 billion of taxpayer money in exchange for nearly 80% of AIG's equity thus sparing its CDS partners from their own collapse.
By the end of the week there was chaos. At an obvious loss of what to do the government decided to suspect the free market by banning short selling on the stocks of 799 financial institutions on September 19th. The move works for exactly one day. The Select Sector SPDR Financial ETF (XLF) closed at $22.38 on the 19th, 15% higher than where it is today.
Exactly two weeks after Lehman filed for bankruptcy, September 29th, the house rejected the Bush administration's $700 billion bailout plan, triggering a 777 point loss in the Dow. To this day it's the largest point loss in history. The following day the Dow recorded it's third largest one-day point GAIN on hopes that a different version may be passed. Over the next five months the Dow would lose more than 30% of its value, finally bottoming in early March of 2009.
When Lehman went down interbank lending simply ceased. Financial institutions knew they were holding toxic garbage on their books but there was the distinct possibility their potential trading partners were in worse shape. Lehman introduced the notion that failure was actually possible, which caused a virtual seizure in the system.
Bad laws are better than anarchy. As Richards maintains, if the government had simply let Bear Stearns, fail Dick Fuld and other bank heads wouldn't have so blithely continued levering themselves to the hilt right up until the system collapsed. To Fuld's point, saving Lehman would have involved escalated moral hazard but at least it would have been predictably lunacy. When the government started rescuing some banks and letting others collapse all bets were off. Wall Street is always a casino but at least the gamblers know the rules.
September 15, 2008 marked the day it became obvious that the house was making things up as it went along, plunging the entire system into chaos.
Patient investors outside of the bank stocks were rewarded handsomely if they had the courage to hang on. It took more than two years for the Dow to close higher than where it was at the start of September 2009, but if you bought and held at the end of this month in 2008 you've made than 40% on your investment so far. In terms of a basic trust in the fairness of the financial system it's debatable as to whether or not such a thing is possible.

Wall St. set to rally at open on Summers' exit from Fed race

By Angela Moon
NEW YORK (Reuters) - Wall Street was set to rise 1 percent at the open on Monday as investor bets that the former Treasury Secretary Lawrence Summers' withdrawal as a candidate for Federal Reserve chairman could mean slower tapering of stimulus by the Fed.
Summers' surprise decision on Sunday came two days before the U.S. central bank will meet to decide when and by how much to scale back its bond purchases from the current pace of $85 billion a month.
S&P 500 futures rose 16.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 167 points, and Nasdaq 100 futures added 25.3 points.
"Stock index futures have reached a record high - although the cash market still has some work to do - as investors warm to a late Summers rally," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
"His passing as a contender for the top role has left in its wake a significant risk-on rally."
Treasuries prices and European shares rose while the dollar fell near a four-week low (.DXY) against other major currencies on the news.
Of the two leading candidates for the Fed chairmanship, Summers was regarded as more eager to scale back the Fed's $85 million a month bond buying. Janet Yellen, the Fed's vice chairwoman and the other leading candidate to succeed Fed chief Ben Bernanke. Yellen is perceived as favoring a more gradual easing of stimulus to accelerate the lowering of the unemployment rate.
The gains in futures come after the Dow Jones industrial average (.DJI) on Friday registered its best weekly gain since January, though trading was subdued before the Fed's meeting, which is expected to result in the start of tapering.
Further whetting risk appetite, the United States reached a deal with Assad's ally, Russia, on chemical weapons that could avert U.S. strikes on Syria.
In economic news, the pace of growth in New York state's manufacturing sector unexpectedly slowed this month, but firms' outlook brightened. Market reaction was muted.
In company news, Saudi billionaire Prince Alwaleed bin Talal says he will not sell any of his shares in microblogging site Twitter Inc when it goes public, and expects the firm's IPO to hit the market later this year or in early 2014.
A handful of potential bidders, including private equity firms, are lining up to look at BlackBerry Ltd (BBRY.O) (BB.TO), but initial indications suggest that interest is tepid and buyers are eyeing parts of the Canadian smartphone maker rather than the whole company, several sources familiar with the situation said.
(Reporting by Angela Moon, Editing by W Simon and Kenneth Barry)

Why Larry Summers Bailed on the Fed

Late Sunday afternoon, Larry Summers, the presumed frontrunner to replace Ben Bernanke at the Federal Reserve, withdrew his name from consideration in a letter to President Obama. The news came as a shock — but perhaps it shouldn’t have. Although Summers’s combative reputation helped sink his chances, he’s actually been a team player at key points throughout Obama’s presidency.
When Obama passed him over to choose Tim Geithner as Treasury Secretary, Summers accepted a job as director of the National Economic Council that was a step down. When Obama passed him over for Fed chairman and nominated Bernanke to a second term, Summers kept quiet. When it became clear last week that his nomination to succeed Bernanke might not survive the Senate, Summers did the honorable thing and withdrew, sparing Obama from having to expend still more political capital and sparing both of them the embarrassment of a failed vote.
Much of the initial reaction to Summers’s withdrawal focused on his problems with Senate Democrats, three of whom had signaled in recent days that they were going to oppose his nomination. A fourth, Massachusetts Sen. Elizabeth Warren, had yet to weigh in publicly, but is scheduled to give a big speech on the five-year anniversary of the financial collapse that could have made things even tougher.
But Summers’s real problem was going to be with the GOP: Even if he’d unified Democrats, he’d have needed at least a handful of Republicans to amass a filibuster-proof majority. That may well have proved impossible because Summers’s resume seems tailor-made to antagonize Republicans. Consider how he embodies nearly every Republican bugaboo:
1. He was president of Harvard, reviled by the right wing as the leading bastion of smug, liberal elitism.
2. He was an architect of the dreaded stimulus, Dodd-Frank, and Obamacare.
3. He supported the auto bailout, the locus classicus of unwarranted state interference in private markets.
4. He’s a defender of “Too Big to Fail” banks (and a paid consultant to one of them), which have drawn growing conservative opposition.
5. He’s flamboyantly arrogant, in the manner that conservatives imagine most liberals to be.
Summers may be a brilliant economist, but even a mediocre one could do the math. Better to withdraw gracefully and preserve the possibility of a role in a future Democratic administration that to risk losing a Senate confirmation vote and see his political career come to a swift and decisive end.

Chin Peng dies in Bangkok

Former Malayan communist chief Chin Peng (pic) died in Bangkok today, Thai newspaper Bangkok Post reported. He would have turned 90 this October 21.
The daily said his relatives will conduct religious rites this Friday.
Chin Peng led the Communist Party of Malaya (CPM) guerrilla insurgency and fought against British and Commonwealth forces to establish an independent Communist state.
Chin Peng, whose real name was Ong Boon Hua, had been living in exile, mostly in Thailand, after the party signed an agreement in Haadyai in 1989 to end hostilities.
The Haadyai agreement was inked on December 2, 1989 by CPM leaders and senior government officials representing Malaysia and Thailand and signalled the end of the decades-long jungle war in the two countries.
The agreement also allowed for CPM members to return home, if they so desired, but till the end, Putrajaya refused to allow him back.
He first applied to return to Malaysia in late 1990, but the application was rejected in December the following year.
After some of his CPM comrades were given permission to return home, including Rashid Mydin and Shamsiah Fakeh, Chin Peng made further efforts to see his hometown of Sitiawan after being away for decades.
He personally wrote to then prime minister Tun Abdullah Ahmad Badawi on June 14, 2004, but the letter never received a response. It was among the correspondence by Chin Peng, which his lawyers and the government tendered in court during the hearing for his 2005 application to be permitted to enter and live in Malaysia.
He told Malaysian journalists at a press session in Haadyai on November 27, 2009, that he believed he was “tricked” and “played” by the Malaysian government.
“I don’t dare to assume that it was intentional... [Whether] it happened in 1992 or much earlier, I can’t remember exactly. I think I was being tricked to go for an interview. They asked me to go to this place, and then the government side didn’t turn up. Then they asked me to go to another place... from one place to another. As far as I can remember, I was being played by them,” he reportedly said.
Then Home Affairs Ministry secretary-general Tan Sri Abdul Aziz Mohd Yusof, who is today the Election Commission chairman, wrote to Chin Peng’s lawyers on October 25, 2004, informing them without explanation, that his request to enter Malaysia was rejected.
Chin Peng then began turning to the courts. He lost his final bid in the Federal Court on April 30, 2009.
Of interest is the explanation given by then deputy defence minister Datuk Dr Abdul Latiff Ahmad in Parliament on why Chin Peng was still listed as an enemy of the country.
Abdul Latiff was quoted by Bernama as saying: “This is because during the signing of the peace accord with the CPM in 1989, he did not sign the agreement to lay down arms. Only the CPM agreed to do so and not Chin Peng.” - September 16, 2013.

When Michelle Yeoh nearly missed the cut for Hari Malaysia

Bond girl Michelle Yeoh just barely made it in Malaysian filmmaker-singer Pete Teo's ambitious Hari Malaysia video today, a week after a Putrajaya media aide told her the clip could be used as opposition propaganda.
The Ipoh-born Hollywood actress is one of many famous Malaysian personalities, including politicians, whose faces were superimposed on scenes from both the 1957 Merdeka declaration and the Malaysia declaration of 1963.
The Malaysian Insider understands Yeoh asked to see the final cut of the 4.25-minute video clip just over a week before it was broadcast today to decide whether she wanted to be part of the clip.
"She has a two-second appearance. In the end, she decided to stay on," a source told The Malaysian Insider.
It was learnt that the Putrajaya media aide, who is involved in the government's branding campaigns, warned Yeoh that her appearance in the video clip would jeopardise her image as opposition leaders were also featured.
"The video clip features many Malaysians but the aide just focused on one of them to frighten her that it would be used by the opposition," the source said, noting that Yeoh had appeared in the Barisan Nasional (BN) campaign for the May 5 general election.
"They thought it was inappropriate. But she decided otherwise," he added.
When contacted, Teo said all the living personalities who appeared on the video had signed release forms for their images to be used, while the families of those who had passed on also signed consent forms.
He said production of the video took five months and was completed just days before two versions, with songs in English or Bahasa Malaysia, were to be uploaded on YouTube today.
The Bahasa song, Kembara, was sung by Asmidar while the English version features the song Slipstream sung by Melina William.
The Hari Malaysia video clip was made in remembrance of Malaysia's founding prime minister, Tunku Abdul Rahman, who worked with the respective leaders of Sabah, Sarawak and Singapore to form Malaysia on September 16, 1963.
Singapore left the federation in August 1965 when it was ejected by the Malaysian parliament with a 126-0 vote.
Apart from Yeoh, those appearing in the video clip are Umno's Tengku Razaleigh Hamzah, Datuk Saifuddin Abdullah and MCA deputy president Datuk Seri Liow Tiong Lai.
Others include DAP leader Lim Kit Siang, PKR vice-president Nurul Izzah Anwar, Bersih co-chair Datuk Ambiga Sreenevasan, actress-director Jo Kukathas, dancer Ramli Ibrahim, singer David Arumugam, rapper Namewee, activist Datuk Paduka Marina Mahathir and veteran footballer Santokh Singh.
The video clip also features CIMB group chief executive Datuk Seri Nazir Razak, who is the younger brother of Prime Minister Datuk Seri Najib Razak.
There are several notable scenes in the video clip including Tengku Razaleigh and Lim sitting together in the stadium when Merdeka was declared and also Izzah with Marina in a street scene during Malaysia's formation in 1963.
Also featured is famed Malaysian filmmaker Yasmin Ahmad, who passed away in 2009. She had also appeared in another Teo film, Here In My Home, that was broadcast on YouTube in 2008.
The Hari Malaysia video clip was financed by Teo and his friends and supporters. The clip and songs are based on the underlying theme of reconciliation in the country. – September 16, 2013.

BREAKING: Stock Futures Soar to All-Time High after Larry Summers Withdraws from Fed Chairman Race

“The (potential) hawk is dead, long live the doves,” appears the chorus of approving ‘traders’ who have just bid the S&P 500 futures up over 1% to a new all-time high. The USD is getting monkey-hammered, Gold futures jumped $20 and Silver futures are up 3.5% (from the Friday PM fix) but are fading back close to the Friday trading close. Treasury futures open up over 1 point (implying 30Y -4bps, 10Y -8bps, 5Y -11bps) – jubilant at the money-printing to come – oh and WTI crude is -1.3% at $107.
And just like that, the Summers of the democrats’ discontent is gone (who for some reason saw Larry as the more hawkish of the two Fed candidates, when in reality it would have been Summers that would unleash Bernanke’s money choppers), as are all those unbooked profits by Paddy Power betters who saw Summers as a 85% odds on favorite to become the next Fed chair, and are now left with nothing.
Full Summers letter:
Dear Mr. President,
I am writing to withdraw my name for consideration to be Chairman of the Federal Reserve.
It has been a privilege to work with you since the beginning of your Administration as you led the nation through a severe recession into a sustained economic recovery built on policies to promote employment and strengthen the middle class.
This is a complex moment in our national life. I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.
I look forward to continuing to support your efforts to strengthen our national economy by creating a broad based prosperity and to reform our financial system so that no President ever again faces what you and your economic team faced upon taking office in 2009.
Sincerely yours,
Lawrence Summers
And the actual letter in its original, Harvard letterhead regalia:
More Official Reactions To Summers’ Stunner
Bill Gross, who is understandably delighted by the Summers resignation for the conventional reason that it means more QEasing is on deck, was prompt to put his thoughts to twitter, and conclude that not only is Larry-Off very Risk-On but it would benefit the belly of the curve, and lead to further 5s30s steepening as the 5 is bought.
Dollar slumps as Summers is out
The decision by Larry Summers to withdraw from the race to succeed Bernanke as Fed Chairman has undermined the dollar sharply at the beginning of the Asian session on Sunday evening US time. The dollar had gained support late last week on news reports that Summers was set to be appointed at the end of this week and has weakened sharply on the news with EUR/USD moving above the 1.3350 level.
more at :
The Australian dollar rallied on Monday morning as US President Barack Obama confirmed he had accepted Mr Summers’ decision to withdraw his candidacy to become the next Fed chairman. “As the US data continued to improve, Mr Summers would be considered to be much more likely to remove the stimulus quicker.
“The fact that he has pulled out would suggest we are less likely to have a quick exit from monetary policy stimulus in the US.”
More at :
Dow futures up 166. Fair Value up 192.
Gold up 25.

Growth of High Frequency Quote Spam in the Stock Market

2 millisecond peak message traffic for every 10 minute period between market open (9:30) and close (16:00) in Tapes A and B (CQS) for each trading day from September 2009 through September 13, 2013. CQS, the consolidated quote data feed carries quotes for NYSE, NYSE-Mkt, and NYSE-Arca listed securities.
The vertical scale is in quotes per second which was at 1000/second in 1999, and is now approaching 2 million/second. The gaping is when network capacity was increased.

Host speechless after Barney Frank asks about high salaries for 'poor' bankers

Federal agency seeks to monitor 80 percent of U.S. consumer credit card transactions in 2013

In a controversial move, the Consumer Financial Protection Bureau (CFPB) is reportedly seeking to monitor 80 percent of consumer credit card transactions in the United States in 2013, totaling up to 42 billion transactions.
If accomplished, this would be yet another massive federal database containing the private information of Americans. It would also be an additional database the government can’t protect.
The data mining program was revealed in a CFPB planning document for fiscal years 2013-17 obtained by the Washington Examiner.
The “markets monitoring” program would collect information on some 42 billion transactions made with around 933 million credit cards.
The CFPB, established in 2011, came under fire soon after its inception.
In June 2012 the entire agency’s constitutionality was challenged in a lawsuit. In July of this year, a company pressured to turn over millions of consumer records to the CFPB also filed a lawsuit.
Even the Richard Cordray, the newly-appointed director, acknowledged the many concerns.
“People aren’t sure what to make of it,” Cordray said to The Washington Post. “They’re worried about a new agency and how it will exercise authority.”
Cordray defended the CFPB data mining practice at a House Financial services Committee hearing on Wednesday. He said the agency is monitoring the use of credit cards at 110 banks.
“This is one step closer to a Big Brother form of government where they know everything about us,” said Rep. Sean Duffy, R-Wis.
Rep. Jeb Hensarling (R-Texas) was also quite critical of the agency, noting that it is “designed to operate outside the usual system of checks and balances that applies to every other government agency.”
Rep Patrick McHenry (R-N.C.) pointed out the apparent conflict of interest in the issuing of a $5 million contract by CFPB to a company co-founded by the agency’s Office of Research.
Duffy attempted to get Cordray to say exactly how many credit cards are being monitored by the CFPB but Cordray reportedly refused multiple times until he listed just five major institutions.
Cordray identified “Morgan Chase, Bank of America, Capital One, Discover and American Express,” according to the Washington Examiner.
“The agency has never given us a number of how many Americans have been surveilled,” Duffy said. “However, we’ve seen in their disclosures they are collecting 80 percent of credit cards in America, 1.16 billion credit cards, which means that they are collecting information on just under a billion credit cards in America. That’s a scary number.”
On top of monitoring credit card transactions, the agency also reportedly hopes to monitor 95 percent of all mortgage transactions by 2014.
An interesting aspect of the recent criticism of the CFPB is that it seems to largely come from Republicans or otherwise conservative individuals.
This isn’t at all surprising, given the wild partisanship of individuals in Washington. In the case of the National Security Agency’s surveillance program, democrats largely opposed it under George W. Bush then completely flip-flopped to support it under Obama.
If a republican happened to be in office and a similar agency was employing similar tactics, it is almost certain that the same people now supporting the CFPB would oppose it and vice versa.

Who Spends Two-Thirds of Their Salary on Guns and War? The US Government, That's Who

GoldCoinImagine that you get up every morning, go off to work, work your butt off all week and then wait in happy anticipation for your paycheck on Friday. And then it arrives. But instead of getting the full amount that you'd been eagerly expecting, you only get one-third of it. "Yikes!" you exclaim in dismay. "What happened to the rest!"
"But don't you remember," says your company's payroll clerk with a yawn, having heard all this stuff before from other employees time and again, "that you spent all the rest of your money on guns." Guns? I bought guns? "Sure you did."
"But what am I going to do about my rent money and my cable bill and paying off student loans and my trips to the mall and, er, not to mention food?"
"Sorry, guy, but our records show that for the past 60 years, you have definitely -- and apparently voluntarily -- spent at least two-thirds of your income on guns." 60 years? The last whole freaking 60 years? I did?
"But how come I've never noticed it before?"
If something like this has just happened to you, you might justifiably still be in shock. But here's some good news. You are not alone! Every single other citizen in America right now is in your exact same boat. For approximately the last 60 years, two-thirds of America's national hard-earned income has been spent exclusively on guns. Two-thirds of all our taxes. And two-thirds of all America's credit-card debts too.
"But if I had spent all that money on guns for all those years, then where are they?" you might also ask. Good question. For all the trillions of dollars that we Americans have spent on guns in the last 60 years, you would think that every single one of us would have at least one or two Glocks, a couple of semi-automatics or at least even a Deringer stashed in the back of our closets or under our beds, right?
Then you would be wrong. We've got nothing to show for our rash 60-year spending spree except for a couple of million corpses, a goodly part of which are women and children. And who wants a pile of dead babies stinking up the house!
PS: Actually, the annual American tax budget allotment for guns is only 57% -- that we know of. But who the freak even knows how much we also spend on black budgets and covert ops and foreign rendition prisions and spying on evil-doers like you and me.
(Photo: United States Mint)

Shocking New Research Reveals Obama's Legacy Could Be an America of Aristocrats and Peons

Inequality experts Thomas Piketty and Emmanuel Saez reveal the biggest gap between rich and poor ever recorded by economists.
Photo Credit:
Warning: This story is going to make you very angry.
New research from inequality experts Thomas Piketty and Emmanuel Saez has revealed that we now have the biggest gap between the rich and rest of America since economists began tracking data a century ago.
This isn’t supposed to happen following an economic crisis. After the Great Depression, Roosevelt’s New Deal programs worked to prevent wealth from piling back up at the top. And over the past two decades, the percentage of income claimed by the wealthy dropped after each recession. But in the aftermath of the Great Recession, the top 1 percent has gobbled up nearly all of the income gains in the first three years of the “recovery" — a stupifying 95 percent. Economic inequality is even worse than it was before the crash. In fact, last year the rich took home the largest share of income since 1917 with the exception of only one year: 1928.
Is this an accident?
Let's take a look at the years from 2009 -2012. While working people were sweating it, the richest Americans have enjoyed a fabulous ride. For example, if you were in the top 1 percent in 2012, lucky you — your income soared on average by 20 percent . And if you were in the top 0.01 percent, you probably bought a bigger yacht because your income was up by more than 32 percent on average .   As for everybody else? They shared a measly 1 percent rise.   
In other words, the rich are getting richer, and the rest of us are frozen in economic purgatory.
For despite all the talk of the Federal Reserve’s “quantitative easing” driving soaring stock markets and a post-crisis economic boom, 99 percenters have seen their real incomes going down and their living standards depressed. Ordinary, hard-working people are not getting a slice of the pie, they're barely getting a sliver. (Cue Obama’s apparent pick for the next Federal Reserve chair, the crony capitalist, bank-loving Larry Summers.)
The bailouts, which handed boatloads of money to bankers, can’t be blamed entirely on President Obama. But ever since then, the policies of his administration have pretty much fixed things so that those who caused the crisis have benefited, while those who didn’t paid for it. He has surrounded himself with Wall Street apologists as economic advisors, despite the existence of extraordinary economic minds like Nobel laureate Joseph Stiglitz who could offer sound and sensible guidance. Every chance Obama has to correct this mistake, he seems to double down and brings on another 1 percenter.
To be fair, Republicans have been the most ardent promoters of “trickle-down” economics and austerity policies that leave regular people behind. But centrist Democrats have done little to forge a different path. A few courageous progressive voices, like Elizabeth Warren's, get drowned out by a chorus of “Let’s Make a Deal” politicians eager to screw the bulk of the population and reward the rich while filling their campaign coffers. Policies like cutting our social insurance programs and allowing the rich to evade taxes are hidden behind clever marketing campaigns: For hedge fund billionaire Pete Peterson, for example, who counts deficit committee co-chairs Alan Simpson and Erskine Bowles as his errand boys, the name of the game is “fixing the debt.”
What these plutocrats are really doing is fixing your financial future so that more money can be sucked out of your pockets to line theirs. Obama’s decision to focus on deficit reduction rather than job creation is the sure sign his administration sings the tune of the wealthy. The wealthy wanted deficit reduction, while the rest of us wanted investment in jobs, schools and infrastructure, as Northwestern University’s Benjamin Page and his team of social scientists have shown in their extensive research on public opinon. But we didn’t get it. Instead we got job insecurity and nightmare retirement prospects.

Rigged: Wall St. Exploits Ethanol Credits, and Prices Spike

It was supposed to help clean the air, reduce dependence on foreign oil and bolster agriculture. But a little known market in ethanol credits has also become a hot new game on Wall Street.
The federal government created the market in special credits tied to ethanol eight years ago when it required refiners to mix ethanol into gasoline or buy credits from companies that do so. The idea was to push refiners to use the cleaner, renewable fuel, or force them to buy the credits.
A few worried that Wall Street would set out to exploit this young market, fears the government dismissed. But many people believe that is what happened this year when the price of the ethanol credits skyrocketed 20-fold in just six months, according to an analysis of regulatory documents and interviews with more than 40 people involved in the market, including industry executives, brokers, traders and analysts.
Traders for big banks and other financial institutions, these people say, amassed millions of the credits just as refiners were looking to buy more of them to meet an expanding federal requirement. Industry executives familiar with JPMorgan Chase’s activities, for example, told The Times that the bank offered to sell them hundreds of millions of the credits earlier this summer. When asked how the bank had amassed such a stake, the executives said they were told by the bank that it had stockpiled the credits.

The Insider’s Economic Dictionary: D Is for Debt

By Michael Hudson
This piece first appeared at University of Missouri, Kansas City economist Michael Hudson’s website. See the rest of the Insider’s Economic Dictionary here.
Debt: Only pure assets and equity ownership exist without corresponding debt. For financial saving, one party’s saving deposit, loan or credit appears as another party’s debt on the opposite side of the balance sheet. (Even net worth appears on the liabilities side of the balance sheet.)
Debt bondage: The obligation of debtors to provide their own labor and/or that of family members to creditors to carry the interest and principal charges on loans or other financial claims. In today’s postindustrial economy this obligation takes the form of homeowners and employees spending their working lives paying off their mortgages and other personal debts in an attempt to improve or merely to maintain their economic position.
Debt drag: Like fiscal drag, the rate at which leakage from the production-and-consumption sector to the FIRE sector.
Debt deflation: A diversion of the circular flow of spending between producers and consumers to pay creditors. Revenue diverted in this way is channeled into yet more lending, imposing yet higher debt-servicing charges which aggravate the debt deflation. Debt deflation and asset-price inflation usually go together in a symbiotic financial relationship as creditors use their receipt of debt service to make new loans that tend to further inflate asset prices. (See Compound Interest.)
Debt overhead: The cost of carrying debts (and hence, savings), including interest and dividends, amortization and other financial charges (late fees and overdraft penalties, which now absorb nearly as much as interest charges for U.S. credit-card companies). This overhead, which creditors euphemize as wealth creation, grows exponentially at compound interest. (See Fragility.)
Debt peonage: Ambrose Bierce observed: “Debt is an ingenious substitute for the chain and whip of the slave driver.”
Debt pollution: Much as environmental pollutants such as DDT distort nature’s environmental balance and block the reproduction of life, so the buildup of debt halts economic expansion by absorbing income otherwise available for new investment and living. Debt pollution in the form of interest and amortization charges absorbs the economy’s surplus, preventing it from being used to replace capital, to say nothing of expanding the means of production and raising living standards. (See Conditionalities, Environment, IMF and Parasitism.)
Debt, public: The alternative to money and credit creation by the national Treasury, resulting in the need to tax the economy to pay carrying charges on the debt.
Decline of the West: This decline first occurred with the collapse of the Roman Empire under the debt burden that ended up stripping its capital and reducing economic life to the Dark Ages of local self-sufficiency (see feudalism). It threatens to recur today as a result of the postindustrial economy’s debt deflation and asset stripping.
Decontextualization: The tendency for Chicago School, Austrian and neoclassical economists to take markets and business behavior out of their social, institutional and historical context so as to exclude the effect of finance and property on production, consumption and general economic welfare. This methodological shortcoming results in Junk Science. (Contrast with Externality and Systems Analysis.)
Democracy: The political stage preceding oligarchy, according to Aristotle. It is now a term applied to any pro-American regime that supports the Washington Consensus, regardless of its political stripe but typically run by a client oligarchy, often using the slogans of free choice and self-determination. When Russia’s Vladimir Putin is called anti-democratic, for instance, what really is meant is anti-oligarch. This would seem to confirm the association between democracy and oligarchy. A safely democratic economy is one where big business moguls rather than the State own the TV stations, magazines and the popular press. Thus in Russia the Yeltsin junta spoke of its critics as “undermining democracy” during the election period, when the oligarchs’ TV steered voters away from any critical response.
Depreciation: The theory of depreciation as an element of value was developed by none other than Karl Marx in his critique of Quesnay’s Tableau Économique. He likened depreciation of capital equipment to that portion of the agricultural crop that had to be set aside as seed-grain for the next year’s crop. It follows that for buildings and other capital improvements, real-estate investors are allowed to recapture their original outlay in the form of depreciation allowances without having to pay income taxes, because depreciation is a return of capital, not a return on capital (profit).
The depreciation rate is supposed to reflect the rate at which machinery, buildings or other capital goods wear out or become technologically obsolescent as a result of being less productive than new higher-productivity equipment or other capital. However, the lifetime of buildings tends to be infinite, while their reproduction costs increase and their site value rises even more rapidly as a result of asset-price inflation. (See Over-depreciation.)
Dependency: The loss of choice. Establishing a world system based on foreign dependency is the aim of the Washington Consensus. This is achieved by indebting foreign countries, making them dependent on meeting IMF conditionalities to obtain the resources to avoid defaulting on their loans and seeing the market price of their currency fall (and with it the price of their labor and the domestic-currency cost of servicing dollar-denominated debts). The essence of dollar hegemony is to maximize U.S. choice by minimizing the choice of foreign economies to pursue policies not deemed in the interest of the United States, obliging them to depend on the United States for new dollar credit, food and technology.
Deregulation: A dismantling of anti-monopoly rules and safeguards so as to shift planning into the corporate sector run primarily by its financial managers for their benefit, not to maximize long-term growth and new investment as is so often portrayed. Inasmuch as the essence of rulers and government is rule-setting, deregulation represents an undoing of public power in society’s broad interests, on the ground that public power is inherently corrupt and run in the bureaucracy’s narrowly self-serving interest.
Developing country: A patronizing term for former European colonies hitherto called backward, aiming to cast their backwardness, economic polarization and international dependency in a favorable semantic light by implying a teleological tendency toward food dependency and financial dependency as a byproduct of the gains from trade resulting from the international division of labor. A less euphemistic synonym is “third-world countries.”
Development: As applied by economists to third-world countries, a process of specialization leading to food and credit dependency, usually the result of colonialism in the past and most recently, of predatory global financial behavior under Dollar Hegemony. See Stages of Development.
Devil: A special interest that usually works best unseen. As the poet Baudelaire noted, “The devil wins at the point he convinces people that he doesn’t exist.” Financial wealth long was called “invisible wealth,” in contrast to “visible” wealth in the form of landed property. Operating on the principle that what is not seen will not be taxed or regulated, real estate interests have blocked government attempts to collect and publish statistics on property values. (See Invisible Hand.)
Diminishing rate of understanding: As society grows so much more complex as to be “thing-oriented,” people tend to lose the ability to integrate the overall system. Perception is broken down into a series of sensations. Culture turns into a way of “amusing ourselves to death,” as Postman put it, rather than as a key to understanding the world’s structure and how individuals and society interact. But the main cause of a diminishing rate of understanding the economy results from analysis becoming a public-relations exercise based on euphemisms promoted by the vested interests to represent their behavior in a positive light and under no circumstances to be a zero-sum activity or otherwise exploitative and rent-seeking.
Diminishing returns: The idea, popularized by David Ricardo, that food production became increasingly costly as population expanded and forced recourse to less fertile (and more distant) soils. The effect was to increase food prices at the high-cost extensive margin of production. This price rise would increase economic rent on the more fertile soils already cultivated, Ricardo warned. It was to minimize this economic rent that he urged Britain to adopt free trade in grain. (Malthus countered that landlords would increase farm productivity at the intensive margin by investing their rent in capital improvements.)
Subsequent economists have assumed diminishing returns not for empirical reasons but because only this assumption enables them to close their mathematical models with a single determinate solution, which they have taken as the badge of true science. (Increasing returns have not simple determinate solution, but tend to change the economic environment and hence leave the realm of post-classical economic logic.) (See S-curve.)
Discretionary income: Income that recipients can spend at their own discretion after meeting non-discretionary obligations headed by debt service, rent and payment for basic necessities such as food and transportation. In government budgets, interest payments are classified as non-discretionary, while social welfare and other long-term programs are categorized as discretionary, meaning that they can be cut back as being of secondary priority to financial claims and those of political insiders generally.
Dismal science: A term coined by Thomas Carlyle to characterize classical political economy, based as it was on a combination of the Ricardian assumption of diminishing returns in agriculture (ironically formulated just at the time when Justus von Liebig, Ludwig Thaer and other agricultural chemists were discovering ways to chemically increase soil fertility, and while agriculture was being mechanized), and Malthusian population theory postulating that higher incomes would lead the working classes to procreate more rapidly (just at a time when national demographic statistics were showing that the higher the income group in any country, the slower the rate of population growth tended to be).
Dollar Hegemony: America’s ability to export dollars in exchange for foreign goods, services and asset ownership, as if these U.S. Treasury IOUs had an intrinsic value that would end up being worth something to their holders, e.g. as gold or other hard assets. (See Balance of Payments and Chartalism.) The basic principle is that U.S. consumer demand and military spending should be the “engine” that drives foreign production, rather than production abroad driving domestic consumption (as in Say’s Law). (See Parasitism.)
Dollar standard: An international arrangement in which central banks agree to hold their international savings in the form of loans to the U.S. Treasury rather than in gold or other assets.
Doubling time: The time it takes for an interest-bearing loan, savings deposit or debt (or other rate of increase, such as price inflation) to double. (See Compound Interest and Rule of 72.)
Dutch disease: The term refers to a country richly endowed with natural resources whose export pushes up its exchange rate, putting its manufacturing at a price disadvantage with respect to foreign competitors. In the 1960s and ‘70s the Dutch discovered natural-gas deposits that could be pumped out of the ground at low cost. Export of this gas led Holland’s currency to be overvalued relative to that of other countries. Wages were pushed up and the manufacturing sector lost competitiveness. Since it was the first time that this mechanism was observed at such a scale in a relatively developed country, it was called “Dutch disease.” (The phenomenon soon spread to Norway following that country’s discovery of North Sea deposits.)
Dutch finance: The term coined after Britain’s 1688 Revolution for the new royal policy of financing wars or other fiscal deficits by borrowing, especially from foreigners (in this case the Dutch), rather than by taxing property on a pay-as-you-go basis or creating its own credit. Interest charges on the bonds are serviced out of special taxes typically levied on essentials. Adam Smith opposed this taxation, the government debt that led to it, and the wars and colonial rivalries that led to this debt. Pointing out that Dutch finance was a means of making the war’s actual economic cost less visible to the population by stretching out its expense over time, Smith concluded that financing wars on a pay-as-you-go basis would deter popular support for royal military adventures.
Dystopia: A social system that leads to economic polarization and shrinkage, held together by repressive authoritarian or imperial policies. (See Inner Contradiction.)
*Sally M* (CC BY-SA 2.0)

Copyright: TruthDig

I'm a college graduate who had to go on food stamps

The GOP wants to cut welfare again. Too often, we talk about poverty in the abstract, rather than people with ordinary problems
Grocery store in South Dakota fruit
Snap recipients are real people with ordinary problems. Photograph: Elisha Page/AP
When I first heard a friend of mine from college was on food stamps, I was shocked. We were both recent graduates of a top liberal arts college, and I could not fathom that someone from my school was in such a "desperate" situation. Not long after, I was on food stamps as well.
The past year since I left graduate school has pretty much been: job application, job application, job application, interview, rejection, another job application, temp work, job application, another temp job, more job applications. For nearly eight months, I was unable to secure opportunities that weren't sporadic or temporary, making it difficult to pay rent and buy food. I remember the night I decided to apply for food stamps: I put my hand into my change jar – the one I used to casually toss coins into so I wouldn't have to carry them around in my pockets – and I felt the bottom of the jar. I was taking my final quarters, dimes and nickels to a fast food restaurant, hoping I had enough for a burger and fries.
With Congress now back in session, House Republicans – with Eric Cantor leading the charge – are pushing hard for more than $40bn in cuts to food stamps (officially dubbed Supplemental Nutrition Assistance Program or "Snap"). If they get what they want, 4-6 million Americans could lose benefits.
Social welfare programs are always a political flash-point. When President Clinton's administration passed "welfare reform" in the 90s, the left strongly criticized him for gutting the social safety net, and high-ranking officials in the department of health and human services resigned, including two assistant secretaries. During the 2012 election, then GOP presidential candidate Newt Gingrich referred to President Obama as "the food stamp president". Many pointed out that, without explicitly mentioning race, Gingrich was trying to leverage existing racial prejudice by accusing a black president of allowing poor people who lack "personal responsibility" – that is, in rightwing terms, black people – to swell the US welfare rolls.
The rhetoric advocating cuts to programs like Snap – and, in fact, the broader discourse over anti-poverty and social assistance programs – carry racial overtones and a stigma about the kinds of people who use these programs: "lazy", "freeloading", "welfare queens" who drive Cadillacs and have plasma TVs. Lately, young white people on Snap are criticized for what they buy. Apparently, there are "hipsters" on food stamps who purchase organic, grass-fed hamburger or other items deemed too "bourgie" for someone on welfare.
The most shocking thing for me this past year was not the harshness of the current economy or the level of competition for jobs I coveted, but when I realized that I, too, used to view myself as different from and better than people on food stamps. I have long been an advocate for a strong safety net, but I never thought I would be "one of those people" on it. Too often, we talk about people in poverty in the abstract, rather than as Americans with ordinary problems.
The reality, particularly in the current economy, is that many hardworking people from a variety of backgrounds find themselves in a position where they could, and should, use government assistance. As a report summaries of Snap participation rates from the US department of agriculture (which administers the program) points out:
When eligible individuals do not participate, they lose out on nutrition assistance that could stretch their food dollars at the grocery store, and their communities lose out on the economic benefits provided by new Snap dollars flowing into local markets.
The point is that any individual who qualifies for Snap should use it regardless of race, background, education, gender identity, or misplaced sense of pride. The more this view is socially accepted, the more we can have an honest conversation about the safety net without prejudice and stereotypes.
Were I given the opportunity to speak to Eric Cantor, Newt Gingrich, or other critics perpetuating myths about Snap, I would share my personal story. Food stamps kept me from going hungry, and gave me the support necessary to eventually secure an internship at the Guardian.
People on food stamps are people; with friends and family, difficulties and aspirations. People also have pride. When we perpetuate myths about social assistance, we discourage those who are eligible from enrolling. America shouldn't let people go hungry. Assistance programs should be about giving people a hand up, not about putting them down.

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