Category: Consumer Protection

Monday Wake Up Call – December 20, 2021

The Daily Escape:

Early snowstorm, Yosemite NP, CA – December 2021 photo by Don Smith Photography

Everyone’s speeding. Drive any highway in the US and cars are going really, really fast. It’s also true on local roads. For the past 20 years, speeding has been involved in approximately one-third of all motor vehicle fatalities.

In 2020, an estimated 38,680 people died in traffic crashes, the highest since 2007, according to the federal National Highway Safety Administration. That represented a 7% increase in nationwide fatalities at a time when Covid reduced driving activity by 13%. Henry Grabar, a staff writer at Slate, wrote last week about how Americans became obsessed with driving fast, no matter the cost. He quotes a Connecticut state trooper:

“Covid was midnight on the day shift.”

We all experienced how empty the roads were at the height of Covid. Despite the empty roads, in the first six months of 2021, traffic fatalities in the US rose by 18%, the largest increase since the US Department of Transportation started counting, and double the rate of the previous year. And the National Traffic Safety Administration (NTSA) reports that drivers were hitting higher speeds on empty roads. They reported that as trips taken decreased by 50%, speeding increased by 45%. They also reported an approximate one-third increase in speeding above pre-pandemic levels from November 2020 through March 2021.

It’s a paradox: We have laws about driving speeds that no one obeys. We have police who enforce speeding laws without trying to catch everyone. More from Grabar: (emphasis by Wrongo)

“Speeding is a national health problem and a big reason why this country is increasingly an outlier on traffic safety in the developed world. More than 1 in 4 fatal crashes in the US involve at least one speeding driver, making speeding a factor in nearly 10,000 deaths each year….Thousands of car crash victims are on foot….The odds of a pedestrian being killed in a collision rise from 10% at 23 mph to 75% at 50 mph.”

This isn’t going away. Americans love driving fast and apparently, have confidence in their own abilities. Grabar reports that about half of drivers admit to going more than 15 mph over the speed limit in the past month. But those same drivers regard other drivers’ speeding as a threat to their own safety.

Distracted driving, particularly involving mobile phones, is a huge problem as well. Cambridge Mobile Telematics reported data from more than 300 million trips, measured between January 2019 and July 2021. They showed that phone distraction jumped by more than 17% in the first month of the pandemic. On weekday evening commutes, it was higher by more than 31%.

Separately, Zendrive presented an analysis showing increases in cell phone use among drivers after the mid-March 2020 start of the public health emergency. Their analyses showed that in more than 16% of the crashes, a cell phone was manipulated less than five seconds before impact.

America has once again landed in the worst of both worlds: Drivers believe in their own skill, but not that of other drivers. We have thousands of speed-related deaths and a system of enforcement that isn’t designed to change behavior all that much.

Let’s leave the last words to Grabar:

“The nation’s most disobeyed law is dysfunctional from top to bottom. The speed limit is alternately too low on interstate highways, giving police discretion to make stops at will, and too high on local roads, creating carnage on neighborhood streets….the lack of political will to do something about it tracks with George Carlin’s famous observation that everybody going faster than you is a maniac and everybody going slower than you is an idiot. The consensus is: Enforce the speed limit. But not on me, please. Because while it would be nice to save 10,000 lives a year, it sure is fun to drive fast.”

Time to wake up America! Maybe you like driving fast while scrolling the internet on your phone, but it may make your life (or the life of a family member, or someone you’ve never met) end badly.

To help you wake up, listen to Queen do their song “Thank God It’s Christmas” originally released in November 1984. It was re-released last week by Brian May and Roger Taylor. They have it right, it’s been a long hard year:

Sample Lyrics:

Oh my love we’ve had our share of tears
Oh my friend we’ve had our hopes and fears
Oh my friends it’s been a long hard year
But now it’s Christmas
Yes it’s Christmas
Thank God it’s Christmas

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Will We Ever Bring the Wealthy to Justice in America?

The Daily Escape:

Evening mist, Southampton, MA – July 4, 2021 photo by Kendall Lavoie

From Patrick Radden Keefe in the NYT:

“In 2016, a small-time drug dealer in Leesburg, Va., named Darnell Washington sold a customer a batch of what he thought was heroin. It turned out to be fentanyl. The customer shared it with a friend, and the friend died from an overdose….prosecutors have begun treating overdose deaths not as accidents but as crimes, using tough statutes to charge the dealers who sold the drugs. Mr. Washington had never met the person who overdosed. But, facing a mandatory minimum prison sentence of 20 years for distribution resulting in death, he pleaded guilty to the lesser charge of distribution and is now serving a 15-year sentence in federal prison.”

Shouldn’t that same level of criminal liability also be directed at Purdue Pharma, the company that makes OxyContin? After all, according to the US Department of Health and Human Services:

“More than 760,000 people have died since 1999 from a drug overdose. Two out of three drug overdose deaths in 2018 involved an opioid.”

And OxyContin is an opioid. It should be clear that the members of the billionaire Sackler family who own a controlling stake in Purdue, must also face the music. But, that isn’t happening. The Sacklers are likely to receive a sweeping grant of immunity from all litigation relating to their role in helping precipitate and prolong America’s opioid crisis. From NPR: (brackets by Wrongo)

“As part of the bankruptcy talks, they’ve [the Sacklers] offered to give up control of the company and pay roughly $4.2 billion. In exchange, under the current deal on the table, the Sacklers would keep much of their wealth, admit no wrongdoing and be sheltered from future opioid lawsuits.”

It’s interesting that state DAs and DOJ attorneys can charge dealers with drug induced homicide in overdose cases and yet can’t (or won’t) charge the executives or owners in the Purdue/Sackler case.

In October 2020, during the dying days of the Trump administration, the Sacklers reached a settlement agreement with the US DOJ. Forty states have now agreed to this plan, although significant holdouts remain. Connecticut has filed an objection to the bankruptcy exit plan and has been joined by eight other states: California, Delaware, the District of Columbia, Maryland, Oregon, Rhode Island, Vermont, and Washington.

According to the formal objection:

“…the attorneys general oppose a provision in the bankruptcy plan that would grant the Sacklers lifetime immunity from all liability, which would prevent the states from bringing consumer protection lawsuits against the family. And they highlighted a recent New York Times editorial that showed the Sacklers will continue to earn interest on their $4.3 billion as the settlement is paid out over nine years, thus ensuring they will be wealthier than they were when they started.”

In response, the Sacklers threatened a motion for sanctions against five of the dissenting states for allegedly false statements in the states’ proofs of claim, only to withdraw their 201 page motion the next day. That big memo probably cost a fortune for the lawyers to produce, but hey, it’s the Sacklers! More than anything, it shows that the Sacklers have no sense of contrition for their role in the OxyContin debacle.

There is still some reason to hope that the Bankruptcy Judge Robert Drain won’t agree to the blanket immunity for the Sacklers. This week, the DOJ made two separate court filings that raised Constitutional and other concerns about the settlement. From NPR:

“US Trustee William Harrington….accused the Sacklers and their associates of using the bankruptcy system to avoid liability for ‘alleged wrongdoing in concocting and perpetuating for profit one of the most severe public health crises ever experienced in the United States’”

Their argument is technical, and the saga is far from over. In the light of Harrington’s objections, and the arguments made by the state AG holdouts, it may be difficult for Judge Drain to sign off on the immunities as they now stand, especially since the Sacklers are retaining the bulk of their fortune, and that no individual executives were charged, even with misdemeanors.

Where’s the justice? What people really want, more than compensation for harm done to them, is justice. They want proof that the rich and their corporations can’t just commit crimes that harm or kill people on a massive scale, and then use their wealth and political connections to evade the consequences.

Worse, the victims won’t blame Purdue or the Sacklers if/when they’re betrayed. People expect companies or the wealthy to defend themselves to the best of their ability.

They will blame the government, for feigning helplessness in this case, just like they did with the banks in 2009.

And for allowing a separate standard of justice for the wealthy to prevail. Again.

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College Enrollment is Down, Student Debt is Way Up

The Daily Escape:

Cathedral Rock at sunset, Sedona AZ – 2019 photo by microadventures

The Student Clearing House reports that the college student headcount of undergraduate and graduate students combined fell by 1.3% in the fall semester of 2019 over the same semester last year. That equals 231,000 fewer students compared to 2018.

This is the continuation of a long decline. The peak year was the fall semester of 2011, when 20.14 million students were enrolled. Since then, enrollment has dropped by 10.8%, or by 2.17 million students. Here’s a helpful graph by Wolf Richter:

The report covers 97% of enrollments at degree-granting post secondary institutions that are eligible to receive federal financial aid. It does not include international students, who account for just under 5% of total student enrollment in the US.

Women by far outnumbered men in total enrollment in the fall semester of 2019 with 10.63 million women enrolled, compared to 7.61 million men, meaning that overall there are now 40% more women in college than men.

Inside Higher Ed reports that community college enrollments declined by 3.4%. Four-year public institutions saw a drop of 0.9%. Four-year private institutions bucked the trend with an increase of 3.2%. However, the Student Clearing House said most of this increase was due to the conversion of large for-profit institutions to nonprofit status. Grand Canyon University, for example, successfully made the transition last year.

Wolf Richter says that the 10.8% decline in enrollment since 2011 comes even as student loan balances have surged 74% over the same period, from $940 billion to $1.64 trillion:

Looking at the two charts, it’s clear that over the last eight years, enrollment has declined in a straight line at about 1.35% per year. And over the same eight years, student loan debt has increased in a straight line at nearly $90 billion per year!

We’re seeing three trends: First, the decline in enrollments. Second the decline in men attending college. Third, the soaring costs of college leading to soaring student debt.

No one has the answers to all three, but the decline in enrollments may have a demographic element. We are approaching the tail end of the college-aged millennial generation. Higher education has been facing demographic headwinds for a decade. The post-millennial generation is simply smaller than the previous generation.

Meanwhile, a big part of the enrollment peak spike in 2009-2012 period was due to people choosing education to avoid unemployment during the Great Recession. And 25% of the enrollment decline is due to the for-profit diploma mills losing their government support after years of robbing their “students” blind.

The rapidly increasing costs of college are a burden that can also drive down enrollments. The numbers do not favor investing in a college degree as much as they used to. Back in the day, a good entry level job’s salary was about 4 times the annual tuition. Now it’s under 2 times. If you check out some of the terrible numbers for 20-year net Return on Investment (ROI) on payscale.com, it’s clear that many colleges and universities have negative or relatively small ROIs.

OTOH, there’s still a massive income gap between people with a college degree and those without one. And outside of a few small business owners, there’s no way around it. College is the only reliable way to get into the middle class, and stay there.

The college industrial complex knows that it has a stranglehold on your future, and it will try to suck as much money out of you as possible.

The solutions involve some of the things that Sanders, Warren and others are talking about. Wrongo is for making college free for all. He isn’t for debt forgiveness, but for granting interest-free loans to students. Those loans should be carried only by the federal government.

Cost containment is the biggest issue. Online education is now readily available, and saves on both tuition and room and board. The economy is stronger, so on-the-job training is returning, and a lot of specific how-to knowledge is now available online.

Except for the male-female imbalance, much of this is solvable.

Finally, higher education serves many purposes in our society. As a people, we need it for its practical value, but also for sharpening our ideals, nurturing our growth, advancing our knowledge, and our arts.

Despite a popular subculture of anti-intellectualism and doubt, we should still know that a people without ideals are lost.

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Auto Loan Delinquencies Are Rising

The Daily Escape:

Tetons twilight from Snake River overlook, WY – November 2019 photo by timtamtoosh. Ansel Adams once shot a picture from this spot.

From Wolf Richter:

“Serious auto-loan delinquencies – auto loans that are 90 days or more past due – in the third quarter of 2019, after an amazing trajectory, reached a historic high of $62 billion, according to data from the New York Fed today….”

Total outstanding balances of auto loans and leases in Q3, according to the New York Fed, rose to $1.32 trillion. That $62 billion of seriously delinquent loan balances are what auto lenders, particularly those who specialize in subprime auto loans, are now attempting to either get to current status, or to repossess. If they cannot cure the delinquency, they’re hiring specialized companies to repossess the vehicles, which will then be sold at auction. And the repo business is booming!

The difference between the loan balance and the proceeds from the auction, plus all of the costs involved, are what a lender stands to lose on each delinquent loan.

Worse, lenders are still making new subprime loans, and a portion of those loans will also become delinquent, and a smaller portion of them will default. Wolf helpfully adds a chart that shows today’s level of delinquencies as a percentage of the auto loan portfolio is the same as it was in 2009, when we were in the middle of the Great Recession:

It’s useful to remember that in 2009 and 2010, the US was confronting the worst unemployment crisis since the Great Depression. People were defaulting on their auto loans because they’d lost their jobs. That isn’t the case today, we’re near full employment.

Let’s differentiate “Prime” auto loans and leases from “Subprime”. Prime auto loans have minuscule default rates. Of the total of $1.3 billion in auto loans and leases outstanding, according to Fitch, Prime auto loans currently have a 60-day delinquency rate hovering at a historically low 0.28%.

That means that most of the delinquencies are in the subprime category. In fact Wolf says: (emphasis by Wrongo)

“Of the $1.32 trillion in auto loans outstanding, about 22% are subprime, so about $300 billion. Of them roughly, $62 billion are seriously delinquent…around 20% of all subprime loans outstanding.

We know that the subprime delinquencies are not caused by an employment crisis or, by the brutal recession we endured during the 2008 financial crisis. Employment is still growing, and unemployment claims are near historic lows. But subprime auto loans are defaulting at very high rates.

What’s going on? It’s car dealers’ greed. They’re striving to sell more cars. Customers with a subprime credit rating have already been turned down when they try to buy things on credit. But, when they walk on a car lot, their bad credit rating is magically no longer an issue.

The dealers know they’re sitting ducks, who won’t negotiate. They accept the price, the monthly payment, and the trade-in value. They’re just happy to be in a new car. When they drive off the lot, they have a high monthly payment, which, since they already have trouble making ends meet, will soon be late, or in default.

The subprime car buyers really have little choice if they need a car to get to work. Poor people are smart about doing what it takes to survive: If you don’t have a down payment or a good credit rating, and need a car to keep your job, it means a bad deal is better than no deal.

They take the bad deal because if things get worse, they probably will only lose the car.

The kicker is that auto loans aren’t the loan category with the highest delinquencies. Student loans have even higher delinquencies:

  • Outstanding student debt stood at $1.50 trillion in the third quarter of 2019, an increase of $20 billion from Q2 2019
  • 9% of aggregate student debt was 90+ days delinquent or in default in Q3 2019

The student loans total of about $1.5 trillion, is higher than the $1.32 trillion of auto loans.

The system is broken. Someday soon, the job market will deteriorate. We’ll be back listening to why we should bail out lenders and investors who lend, securitize, and sell these loans to investors who are chasing yeild.

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Boeing: Poster Child for Capitalism Reform

The Daily Escape:

La Sal Mountains in background, Canyonlands NP and Colorado River in foreground, UT – 2019 photo by Larnek

The Boeing 737 MAX story is getting worse. Just when you thought you had the whole story, you find more ugliness underneath. Ralph Nader published an open letter to Dennis A. Muilenburg, CEO of Boeing, and it’s quite the takedown, capturing the essence of Boeing’s problem:

“Aircraft should be stall-proof, not stall-prone.”

The stall-prone MAX was supposedly fixed, but then it failed. Nader has a personal interest in the MAX’s problems, since his niece, 24-year-old Samya Stumo, was among the 157 victims of an Ethiopian Airlines flight crash last month. Here’s a part of his letter:

“Your narrow-body passenger aircraft – namely, the long series of 737’s that began in the nineteen sixties was past its prime. How long could Boeing avoid making the investment needed to produce a “clean-sheet” aircraft and, instead, in the words of Bloomberg Businessweek “push an aging design beyond its limits?” Answer: As long as Boeing could get away with it and keep necessary pilot training and other costs low…as a sales incentive.”

Nader draws a connection between Boeing’s decision to “push an aging design” and their financial engineering.

“Did you use the $30 billion surplus from 2009 to 2017 to reinvest in R&D, in new narrow-body passenger aircraft? Or did you, instead, essentially burn this surplus with self-serving stock buybacks of $30 billion in that period?”

Nader notes that Boeing is one of the companies that MarketWatch labelled as “Five companies that spent lavishly on stock buybacks while pension funding lagged.” Their pension fund is only 79.6% funded. More:

“Incredibly, your buybacks of $9.24 billion in 2017 comprised 109% of annual earnings….in 2018, buybacks of $9 billion constituted 86% of annual earnings….in December 2018, you arranged for your rubberstamp Board of Directors to approve $20 billion more in buybacks.”

Nader’s focus on stock buybacks shows that Boeing had the capital to invest in developing a new plane. From Bloomberg in 2019:

”For Boeing and Airbus, committing to an all-new aircraft is a once-in-a-decade event. Costs are prohibitive, delays are the norm and payoff can take years to materialize. Boeing could easily spend more than $15 billion on the NMA, according to Ken Herbert, analyst with Canaccord Genuity….”

NMA means the New Middle-of-the-Market Aircraft. Boeing has already spent a total of $30 billion in share repurchases, with another $8 billion to come in 2019. A new aircraft would have cost half of that amount.

The main reason may have been Boeing’s earlier problems with the launch of the 787:

“In the summer of 2011, the 787 Dreamliner wasn’t yet done after billions invested and years of delays. More than 800 airplanes later…each 787 costs less to build than sell, but it’s still running a $23 billion production cost deficit.…”

The 737 MAX was Boeing’s answer. It allowed them to continue their share buybacks while paying for the 787 cost overruns. Abandoning the 737 for a new plane would’ve meant walking away from its financial golden goose. OTOH, someone should be responsible for the 346 deaths Boeing’s MAX has caused.

Finally, there are reports that some pilots are giving the MAX a vote of no confidence. The FAA has opened another 737 Max investigation based on reports on the FAA whistleblower hotline:

“A source familiar with the matter says the hotline submissions involve current and former Boeing employees describing issues related to the angle of attack sensor — a vane that measures the plane’s angle in the air — and the anti-stall system called MCAS, which is unique to Boeing’s newest plane.”

Reuters says:

“American Airlines pilots have warned that Boeing’s draft training proposals for the MAX do not go far enough to address their concerns, according to written comments submitted to the FAA.”

Stock buybacks like Boeing’s were once illegal because they are a type of stock market manipulation.

But in 1982, then President Reagan wanted to do his banker buddies a favor. So his Securities and Exchange Commission passed rule 10b-18, which created a legal process for share buybacks. That opened the floodgates for companies to start repurchasing their stock en masse.

Is it too much to ask that the Boeing CEO be asked to resign, even if he did kill a lot of people?

After all, wasn’t he only trying to maximize shareholder value?

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Trump is Deregulating Pork Inspections

The Daily Escape

Zhongshuge Bookshop in Chongqing, China. There is a mirrored ceiling that enhances the visual effect of the stairs that might have been inspired by an MC Escher painting.

Under Trump, the executive branch has been policing its own damn self, and that’s working out splendidly! Think Mar-a-Lago’s security. And if Boeing inspecting themselves isn’t bad enough, the Trump administration is outsourcing much of the responsibility for food safety inspections in hog plants to the pork industry.

Trump will cut the number of federal inspectors by about 40%, and will replace them with plant employees. This could make trichinosis great again! From the WaPo (paywalled): (emphasis by Wrongo)

“Under the proposed new inspection system, the responsibility for identifying diseased and contaminated pork would be shared with plant employees, whose training would be at the discretion of plant owners. There would be no limits on slaughter-line speeds.”

This accelerates the Department of Agriculture’s plan to delegate on-site inspections to the livestock industry. It started under Obama, when poultry plant owners were given more power over safety inspections. One difference is that the Obama administration didn’t allow higher line speeds. The Trump administration starting last year, has allowed some poultry plants to increase line speeds.

WaPo says that The Trump administration is working to also shift inspection of beef to plant owners:

 ”Agriculture Department officials are scheduled next month to discuss the proposed changes with the meat industry. “

If you are a Trump fan, these moves are part of his administration’s plans to reduce regulations that large corporations want totally eliminated.

It’s standard-issue Republican Party pandering to their corporate base. And it’s ongoing, despite the administration coming under fire for delegating aircraft safety oversight responsibilities to Boeing, developer of the 737 Max jets that have crashed twice in the past six months. While FAA certification of the two aircraft involved in the crashes took place under President Trump, the major shift toward delegating key aspects of aviation oversight began under GW Bush.

Letting food producers regulate themselves: What could go wrong? That whole Listeria thing is way overblown, and the spinach growers are sure to guarantee that there’s no E Coli contamination in their produce.

Until there is.

Industry self-regulation is really no regulation at all. There’s only one case where private “regulation” has some teeth: FINRA, the not-for-profit that protects America’s investors by making sure the broker-dealer industry operates fairly and honestly. But, that’s the only example Wrongo can think of.

The real irony in this is that one of the key reasons food recalls have gotten so frequent is the cutbacks in inspections that have been going on for some time. It means that every time something IS discovered, they have to pull everything that went out since the last government inspection.

The longer the time between inspections, the more stuff that has to be pulled off the shelves.

You can be sure that if a pork plant contaminates their meat products and hundreds of people are poisoned, the free market will take care of the poor corporation. How? By letting the corporation declare bankruptcy to avoid paying victims and their next of kin. Then, the law allows them to quietly reorganize under a different business name, and sell more pork.

Of course, maybe a Boeing Max Jet will fall out of the sky, and land on one of these self-inspected pork producers.

Thomas Hobbes, in his “Leviathan”, in 1651, described what life would be without government:

“In such condition, there is no place for industry; because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving, and removing, such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.”

Sounds like a Republican paradise!

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Monday Wake Up Call – December 3, 2018

The Daily Escape:

Boston Public Library – photo by joethommas

The NYT’s David Brooks:

We’re enjoying one of the best economies of our lifetime. The GDP is growing at about 3.5% a year, which is about a point faster than many experts thought possible. We’re in the middle of the second-longest recovery in American history, and if it lasts for another eight months it will be the longest ever.

So everything’s good, no? Not really. More from Brooks: (emphasis by Wrongo)

Researchers with the Gallup-Sharecare Well-Being Index interviewed 160,000 adults in 2017 to ask about their financial security, social relationships, sense of purpose and connectedness to community. Last year turned out to be the worst year for well-being of any since the study began 10 years ago.

And people’s faith in capitalism has declined, especially among the young. Only 45% of those between 18 and 29 see capitalism positively, a lower rate than in 2010.

Brooks’ conclusion? It’s not the economy, we all just need more community connections.

His is another attempt to dress up the now-failing neoliberal economics. Things look good today from some perspectives, but our economy is crushingly cruel from others. Brooks seems to think that millions of Americans are struggling to pay their rent or mortgage, education loans, health care insurance or buy groceries because they have failed to master the art of networking in their neighborhoods.

Alienation is behind the rise of Trumpism, and the rise of populism across the world. In that sense, Brooks is correct, but the leading cause of people’s alienation is economic inequality.

And the leading cause of economic inequality is corporate America’s free rein, supported by their helpmates in Washington. Last week, Wrongo wrote about the exceptional market concentration that has taken place in the US in the past few years. He suggested America needs a revitalized anti-trust initiative. In The Myth of Capitalism, authors Jonathan Tepper and Denise Hearns write:

Capitalism without competition is not capitalism.

For decades, most economists dismissed antitrust actions as superfluous, so long as consumers were not the victims of price-gouging. Monopoly capitalism is back, and it’s harmful, even if a company’s core product (like Google’s and Facebook’s) is free to consumers. As we wrote last week, there’s excessive corporate concentration in most industries, including air travel, banking, beer, health insurance, cell service, and even in the funeral industry.

All of this has led to a huge and growing inequality gap. That means there is little or no economic security for a large and growing section of the American population. People see their communities stagnating, or dying. They feel hopeless, angry, and yes, alienated.

One consequence is that we’ve seen three years of declining life expectancy, linked to growing drug use and suicides. We seem to be on the edge of a social catastrophe.

But our real worry has to be political. People could become so desperate for change that they are willing to do anything to get it. The worry then, is that few vote and a minority elects a strong man populist leader, simply because he/she tells them what they want to hear. That leader can then go out and wreak havoc on our Constitutional Republic.

After that, anything could happen.

Despite what Brooks thinks, we don’t have a crisis of connections. It’s a crisis of poorly paying jobs, job insecurity, and poverty. When people look at their economic prospects, they despair for their children. Doesn’t it matter that in America, health care, education, and transportation all lag behind other developed countries?

The unbridled ideology of free markets is the enemy. Our problem isn’t that individual entrepreneurs went out and took all the gains for themselves, leaving the rest of us holding the bag. It’s more about how neoliberal economics is used both by government and corporations to justify an anti-tax and anti-trust approach that has led to extreme wealth and income concentration in the top 1% of Americans.

The reality is that the nation’s wealth has become the exclusive property of the already prosperous.

We need to wake up America! We have to stop for a second, and think about how we can dig out of this mess. When America bought in to FDR’s New Deal programs 75 years ago, we entered an era we now think back on nostalgically as “great”.

And it isn’t enough to talk about how we can look to Sweden or Norway as economic models. Both have populations of under 10 million, and our society is far less homogeneous than theirs.

We need a uniquely American solution to this problem. It will involve reforming capitalism, starting with tax reform, and enforcing anti-trust legislation.

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Saturday Soother – April 21, 2018

The Daily Escape:

Bluebells in Hallerbos, Belgium – April 2018 photo by shinbaninja. Bluebells bloom only for about 10 days.

Welcome to the weekend. Let’s take a detour from the continuous drip, drip, drip, of Comey, Stormy, Syria, Cohen, Russia, and North Korea. Instead, take a look at an example of GOP maliciousness that passed under the radar, like a cruise missile, but aimed at American consumers.

The NYT’s Thursday business section reported about Senate Republicans passing a piece of legislation that will eviscerate a little bit more of the Consumer Financial Protection Bureau’s (Bureau) supervision in the financial sector: (emphasis, brackets and link by Wrongo)

The Senate voted on Wednesday to overturn an Obama-era rule that restricted automobile lenders from discriminating against minorities by charging them higher fees for car loans, in the latest attempt by Republican lawmakers to roll back financial regulations.

Republican lawmakers, along with one Democrat, Senator Joe Manchin of West Virginia, seized on the Congressional Review Act to overturn guidance issued in 2013 by the Consumer Financial Protection Bureau. The 1996 law [Congressional Review Act] gives Congress the power to nullify rules formulated by government agencies but has primarily been used to void recently enacted rules.

After the Government Accountability Office determined late last year that the consumer bureau’s 2013 guidance on auto lending was technically a rule that could be rolled back, Republicans, led by Senator Patrick J. Toomey (R-PA), targeted it for rescission by using the Congressional Review Act. The House is expected to follow suit and also use the Congressional Review Act to void the guidance.

Republicans have been against the Bureau, which was established under the 2010 Dodd-Frank law since it was passed. Trump’s pick to lead the agency, at least on an interim basis, Mick Mulvaney, has largely frozen its rule-making and enforcement.

Democrats and consumer watchdogs criticized the Senate’s move. Rion Dennis of Americans for Financial Reform, said:

By voting to roll back the CFPB’s work, senators have emboldened banks and finance companies to engage in racial discrimination by charging millions of people of color more for a car loan than is justified….Lawmakers have also opened the door to challenging longstanding agency actions that are crucial to protecting workers, consumers, civil rights, the environment and the economy.

Senator Richard Blumenthal, (D-CT) warned that rescinding the Bureau’s guidance would lead to a flood of unfair, predatory lending:

This truly repugnant resolution ignores the unacceptable, undeniable truth that consumers’ interest rates are regularly marked up based on their race or ethnicity — a disgusting practice that continues to run rampant across the country…

A 2011 report from the Center for Responsible Lending analyzed loan level data and found that African-Americans and Latinos were receiving higher numbers of interest rate markups on their car loans than white consumers. The Bureau issued guidance in 2013 urging auto lenders to curb discriminatory lending practices and used that guidance to justify lawsuits that they brought against auto finance companies.

The Department of Justice can still bring lawsuits against auto lenders for discriminatory practices, even if the guidance is nullified. But legal experts say the government could be less successful in bringing such cases without the guidance from a government agency saying the practices are viewed as improper.

Why are Republicans so mean-spirited? This is just gratuitous maliciousness towards African-Americans and other people of color. Who benefits, except a few huge GOP donors in the financial services industry?

This is another example of why TURNOUT in November is all that we have left to save the Republic.

No way to spin it, we’ve had another tough week, so it’s time for a Saturday Soother. Let’s start by brewing a yuuge cup of Sumatra Tano Batak ($21/12 oz.). The beans come from the northern part of the Indonesian island of Sumatra, and are valued for their complex earth and fruit notes. That comes from using unorthodox fruit removal and drying practices called “wet-hulling.” Then the beans are roasted by PT’s Coffee in Topeka, Kansas. According to them, drinking it invokes the experience of eating cherries in a flower garden next to a patch of fresh, fragrant, just-turned earth.

Sounds like it could be the Fields of Wrong on a warm April day.

Now settle back in a comfy chair and listen to the most underappreciated jazz singer, Johnny Hartman. He’s Wrongo’s favorite of that era. Here he is singing “I’ll Remember April” from his 1955 album, “Songs from the Heart”. It was Hartman’s debut album:

Those who read the Wrongologist in email can view the video here.

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Saturday Soother – September 9, 2017

The Daily Escape:

Stepwell, Rahasthan India – photo by Victoria Lautman. Stepwells were carved to make it possible to bring water up from deep wells. Only about 250 stepwells remain.

Big week. Trump cozies up to Schumer and Pelosi, earning the enmity of Ryan and McConnell. Hurricane Irma slices through the Caribbean, and is making landfall in Florida as Wrongo writes this. The Wrong family offers its best wishes to those who are still in the path of the storm.

But, there is another storm brewing over at Equifax, who was nailed by a breach that could have essentially exposed everyone with a credit record in the US:

Equifax, a provider of consumer credit reports, said it experienced a data breach affecting as many as 143 million US people after criminals exploited a vulnerability on its website. The US population is about 324 million people, so that’s about 44% of its population.

Equifax said:

Criminals exploited a US website application vulnerability to gain access to certain files…

Probably yours, 143 million credit records were exposed. Equifax is offering free credit monitoring to anyone affected, but that’s a cheap make-good for compromising the credit information of almost everyone in the US with an Equifax credit file. That includes anybody who ever had a credit card, or completed a loan application in the past 25 years.

Needless to say, consider your identity compromised, and take steps before Equifax strikes again. If you’re wondering whether heads will roll at Equifax, don’t fret. It looks like they knew what was coming, and acted in their own self-interest:

Three Equifax Inc. senior executives sold shares worth almost $1.8 million in the days after the company discovered a security breach that may have compromised information on about 143 million U.S. consumers.

Equifax says that it discovered the intrusion on July 29.

Regulatory filings show that three days later, Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of US information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2. None of these transactions were listed as part of 10b5-1 pre-scheduled trading plans, so they most likely were spur-of-the-moment.

In other words, these titans of capitalism knew for over a month, but didn’t tell anyone, and then sold shares before revealing the breach. BTW, Equifax’s stock crashed on the news. We used to call that insider trading, but we no longer expect corporate America to pay for its mistakes.

In a society that respected its laws, these guys would be already in jail. Not only have they hidden the attacks, giving people less time to react, but they have also sold their shares using privileged information.

The corporate rats always jump ship before the boat sinks.

In honor of Hurricane Irma, and to help those who have boarded up, filled the tank and moved out, we have two pieces of music today. For the fans of popular music, here is “Ridin’ The Storm Out”, from the 1973 album of the same name, by REO Speedwagon:

Takeaway Lyric:
The wind outside is frightening

But it’s kinder than the lightning

Life in the city it’s a hard life to live

But it gives back what you give

Those who read the Wrongologist in email can view the video here.

And for those who wish to be contemplative while experiencing the devastation, or awaiting news of it, grab a hot steaming cup of Georgio’s Colombia Pink Bourbon Los Cedrol coffee. Now, put on your headphones, and listen to Rossini’s “La Tempesta – VI Sonata a quattro in D major” for two violins, violoncello and double bass. Rossini wrote this in 1804, when he was 12 years old. Go ahead, eat your heart out, you’re unlikely to be that good, ever. This version is performed by Orchestra Atalanta Fugiens, conducted by Vanni Moretto:

 

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Houston’s Petrochemical Industry Fails to Protect City

The Daily Escape:

Ranwu Lake Campsite, Tibet – photo by Arch-exist Photography. Ranwu Lake is a tourist attraction in SE Tibet, and is called the “Tibetan Switzerland”.

Life in the age of corporatism resembles life in the food chain. In a potentially disastrous outcome from the Harvey flooding, a chemical plant in Crosby, Texas belonging to French industrial giant Arkema, has had several explosions of peroxide and other volatile chemicals. From the NYT:

The company had already ordered all workers to leave the damaged plant, and Harris County ordered the evacuation of residents within a 1.5-mile radius.

These chemicals have to be refrigerated and stored in safe Storemasta containers to avoid further damage. When the plant’s warehouses lost power, they transferred the product to diesel-powered refrigerated containers. But later, the backup generators were swamped by flood waters, so cooling was lost, and the explosions began. On Tuesday, the company released a statement:

Refrigeration on some of our back-up product storage containers has been compromised due to extremely high water, which is unprecedented in the Crosby area. We are monitoring the temperature of each refrigeration container remotely….while we do not believe there is any imminent danger, the potential for a chemical reaction leading to a fire and/or explosion within the site confines is real.

The rains are over, but the chemical fires linger. Richard Rowe, the CEO of Arkema’s American operations said:

The company has no way of preventing chemicals from catching fire or exploding at its heavily flooded plant…the company has no way to prevent…this worst case outcome.

The CEO says, “No way to prevent explosion“. Back in the olden days, that would be known as a “major design flaw”. Most engineers would have recommended placing the generator sets above at least the 100-year high water mark, just to prevent this kind of fun event. They would also put the diesel tanks above that water line.

Maybe next time. The Houston Chronicle had this amazing map of chemical plants in the Houston area:

In case it is hard to read the map legend, the yellow markers are for petrochemical plants that have a “medium” potential for harm based on their location within the 100-year flood plain. The red markers have a “high” risk for harm. Houston’s ship channel and the surrounding area along the Gulf coast represent about 40% of U.S. petrochemical manufacturing. At least 25 Houston-area plants have either shut down, or experienced production issues due to Hurricane Harvey’s flooding.

Any guesses that the concentration of plants in the Houston flood zone will cause our corporate overlords to think about relocation of a few of these sites? Or, how they best secure them from the next 500-year flood, which looks like it will happen in say, the next five years? From Forbes:

Harvey was a wake-up call, reminding us that it is time to take a more serious look to ensure the safety of the petrochemical industry and the public at large, just as the nuclear power industry has done in reaction to the Fukushima disaster.

But Arkema has worked hard to change EPA rules in their favor. David Sirota reports that the new rules, which were set to go into effect this year, were halted by the Trump administration after a lobbying campaign by Crosby plant owner Arkema and its affiliated trade association, the American Chemistry Council:

Those rules – which would have taken effect on March 14 – were blocked by EPA administrator Scott Pruitt. The move was a big win for the chemical industry that has spent more than $100 million supporting federal lawmakers since 2008.

Apparently, sacrifices must be made in the name of making America great.

The closures are not just disrupting markets; they’re also causing the release of toxic pollutants that pose a threat to human health. The NYT reports that damaged refineries and oil facilities have already released more than two million pounds of hazardous substances into the air. Facilities within hazardous industries should implement safety measures such as a high speed safety door to ensure hazardous materials are contained.

The sheer number of facilities around Houston that have to come back online at the same time creates another huge emissions problem. From City Lab:

The real problem is that the plants are allowed to operate so close to residential areas in the first place. Houston’s lack of zoning regulations have been front-and-center in discussions about why Harvey has been so terrible for the city, and that’s no different in the discussion about air pollution.

Not to worry, Houston, your petrochemical corporations will be fine. They have insurance. They will get to write off any damage against their profits. They will get tax incentives to rebuild, or if they choose to move, tax credits from the town down the road.

The people? Most will have no insurance to rebuild their homes or to purchase new furniture.

And the pollution impact? A cost of doing business for the petrochemical industry.

Unfortunately, for the people, pollution’s about their health. And there will be no help forthcoming for the most vulnerable Houstonians.

Have a slice of Texas-themed music: Here is Robert Earl Keen, doing “Corpus Christi Bay” from his 1993 album “A Bigger Piece of Sky”:

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