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  1. Atypical is offline
    05-01-2011, 02:14 PM #51

    How Goldman Sachs Created the Food Crisis

    Don't blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street's at fault for the spiraling cost of food.


    Demand and supply certainly matter. But there's another reason why food across the world has become so expensive: Wall Street greed.

    It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there's value, there's money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).

    For just under a decade, the GSCI remained a relatively static investment vehicle, as bankers remained more interested in risk and collateralized debt than in anything that could be literally sowed or reaped. Then, in 1999, the Commodities Futures Trading Commission deregulated futures markets. All of a sudden, bankers could take as large a position in grains as they liked, an opportunity that had, since the Great Depression, only been available to those who actually had something to do with the production of our food.

    Change was coming to the great grain exchanges of Chicago, Minneapolis, and Kansas City -- which for 150 years had helped to moderate the peaks and valleys of global food prices. Farming may seem bucolic, but it is an inherently volatile industry, subject to the vicissitudes of weather, disease, and disaster. The grain futures trading system pioneered after the American Civil War by the founders of Archer Daniels Midland, General Mills, and Pillsbury helped to establish America as a financial juggernaut to rival and eventually surpass Europe. The grain markets also insulated American farmers and millers from the inherent risks of their profession. The basic idea was the "forward contract," an agreement between sellers and buyers of wheat for a reasonable bushel price -- even before that bushel had been grown. Not only did a grain "future" help to keep the price of a loaf of bread at the bakery -- or later, the supermarket -- stable, but the market allowed farmers to hedge against lean times, and to invest in their farms and businesses. The result: Over the course of the 20th century, the real price of wheat decreased (despite a hiccup or two, particularly during the 1970s inflationary spiral), spurring the development of American agribusiness. After World War II, the United States was routinely producing a grain surplus, which became an essential element of its Cold War political, economic, and humanitarian strategies -- not to mention the fact that American grain fed millions of hungry people across the world.

    Futures markets traditionally included two kinds of players. On one side were the farmers, the millers, and the warehousemen, market players who have a real, physical stake in wheat. This group not only includes corn growers in Iowa or wheat farmers in Nebraska, but major multinational corporations like Pizza Hut, Kraft, Nestlé, Sara Lee, Tyson Foods, and McDonald's -- whose New York Stock Exchange shares rise and fall on their ability to bring food to peoples' car windows, doorsteps, and supermarket shelves at competitive prices. These market participants are called "bona fide" hedgers, because they actually need to buy and sell cereals.

    On the other side is the speculator. The speculator neither produces nor consumes corn or soy or wheat, and wouldn't have a place to put the 20 tons of cereal he might buy at any given moment if ever it were delivered. Speculators make money through traditional market behavior, the arbitrage of buying low and selling high. And the physical stakeholders in grain futures have as a general rule welcomed traditional speculators to their market, for their endless stream of buy and sell orders gives the market its liquidity and provides bona fide hedgers a way to manage risk by allowing them to sell and buy just as they pleased.

    But Goldman's index perverted the symmetry of this system. The structure of the GSCI paid no heed to the centuries-old buy-sell/sell-buy patterns. This newfangled derivative product was "long only," which meant the product was constructed to buy commodities, and only buy. At the bottom of this "long-only" strategy lay an intent to transform an investment in commodities (previously the purview of specialists) into something that looked a great deal like an investment in a stock -- the kind of asset class wherein anyone could park their money and let it accrue for decades (along the lines of General Electric or Apple). Once the commodity market had been made to look more like the stock market, bankers could expect new influxes of ready cash. But the long-only strategy possessed a flaw, at least for those of us who eat. The GSCI did not include a mechanism to sell or "short" a commodity.

    This imbalance undermined the innate structure of the commodities markets, requiring bankers to buy and keep buying -- no matter what the price. Every time the due date of a long-only commodity index futures contract neared, bankers were required to "roll" their multi-billion dollar backlog of buy orders over into the next futures contract, two or three months down the line. And since the deflationary impact of shorting a position simply wasn't part of the GSCI, professional grain traders could make a killing by anticipating the market fluctuations these "rolls" would inevitably cause. "I make a living off the dumb money," commodity trader Emil van Essen told Businessweek last year. Commodity traders employed by the banks that had created the commodity index funds in the first place rode the tides of profit.

    Bankers recognized a good system when they saw it, and dozens of speculative non-physical hedgers followed Goldman's lead and joined the commodities index game, including Barclays, Deutsche Bank, Pimco, JP Morgan Chase, AIG, Bear Stearns, and Lehman Brothers, to name but a few purveyors of commodity index funds. The scene had been set for food inflation that would eventually catch unawares some of the largest milling, processing, and retailing corporations in the United States, and send shockwaves throughout the world.

    The money tells the story. Since the bursting of the tech bubble in 2000, there has been a 50-fold increase in dollars invested in commodity index funds. To put the phenomenon in real terms: In 2003, the commodities futures market still totaled a sleepy $13 billion. But when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities -- including food -- seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash. "You had people who had no clue what commodities were all about suddenly buying commodities," an analyst from the United States Department of Agriculture told me. In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since.

    The money flowed, and the bankers were ready with a sparkling new casino of food derivatives. Spearheaded by oil and gas prices (the dominant commodities of the index funds) the new investment products ignited the markets of all the other indexed commodities, which led to a problem familiar to those versed in the history of tulips, dot-coms, and cheap real estate: a food bubble. Hard red spring wheat, which usually trades in the $4 to $6 dollar range per 60-pound bushel, broke all previous records as the futures contract climbed into the teens and kept on going until it topped $25. And so, from 2005 to 2008, the worldwide price of food rose 80 percent -- and has kept rising. "It's unprecedented how much investment capital we've seen in commodity markets," Kendell Keith, president of the National Grain and Feed Association, told me. "There's no question there's been speculation." In a recently published briefing note, Olivier De Schutter, the U.N. Special Rapporteur on the Right to Food, concluded that in 2008 "a significant portion of the price spike was due to the emergence of a speculative bubble."

  2. Atypical is offline
    05-01-2011, 02:15 PM #52


    What was happening to the grain markets was not the result of "speculation" in the traditional sense of buying low and selling high. Today, along with the cumulative index, the Standard & Poors GSCI provides 219 distinct index "tickers," so investors can boot up their Bloomberg system and bet on everything from palladium to soybean oil, biofuels to feeder cattle. But the boom in new speculative opportunities in global grain, edible oil, and livestock markets has created a vicious cycle. The more the price of food commodities increases, the more money pours into the sector, and the higher prices rise. Indeed, from 2003 to 2008, the volume of index fund speculation increased by 1,900 percent. "What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets," hedge fund Michael Masters testified before Congress in the midst of the 2008 food crisis.

    The result of Wall Street's venture into grain and feed and livestock has been a shock to the global food production and delivery system. Not only does the world's food supply have to contend with constricted supply and increased demand for real grain, but investment bankers have engineered an artificial upward pull on the price of grain futures. The result: Imaginary wheat dominates the price of real wheat, as speculators (traditionally one-fifth of the market) now outnumber bona-fide hedgers four-to-one.

    Today, bankers and traders sit at the top of the food chain -- the carnivores of the system, devouring everyone and everything below. Near the bottom toils the farmer. For him, the rising price of grain should have been a windfall, but speculation has also created spikes in everything the farmer must buy to grow his grain -- from seed to fertilizer to diesel fuel. At the very bottom lies the consumer. The average American, who spends roughly 8 to 12 percent of her weekly paycheck on food, did not immediately feel the crunch of rising costs. But for the roughly 2-billion people across the world who spend more than 50 percent of their income on food, the effects have been staggering: 250 million people joined the ranks of the hungry in 2008, bringing the total of the world's "food insecure" to a peak of 1 billion -- a number never seen before.

    What's the solution? The last time I visited the Minneapolis Grain Exchange, I asked a handful of wheat brokers what would happen if the U.S. government simply outlawed long-only trading in food commodities for investment banks. Their reaction: laughter. One phone call to a bona-fide hedger like Cargill or Archer Daniels Midland and one secret swap of assets, and a bank's stake in the futures market is indistinguishable from that of an international wheat buyer. What if the government outlawed all long-only derivative products, I asked? Once again, laughter. Problem solved with another phone call, this time to a trading office in London or Hong Kong; the new food derivative markets have reached supranational proportions, beyond the reach of sovereign law.

    Volatility in the food markets has also trashed what might have been a great opportunity for global cooperation. The higher the cost of corn, soy, rice, and wheat, the more the grain producing-nations of the world should cooperate in order to ensure that panicked (and generally poorer) grain-importing nations do not spark ever more dramatic contagions of food inflation and political upheaval. Instead, nervous countries have responded instead with me-first policies, from export bans to grain hoarding to neo-mercantilist land grabs in Africa. And efforts by concerned activists or international agencies to curb grain speculation have gone nowhere. All the while, the index funds continue to prosper, the bankers pocket the profits, and the world's poor teeter on the brink of starvation.


    Whenever there is turmoil of any kind in the world, you will find the greedy wanting more money or power. They, of course, are usually combined into one desire.

    Since corporations exist for only one reason - to make a profit - one must be aware of the overwhelming pressure of greed and what will occur if it allowed to exist uncontrolled.

    Most humans are greedy. Most also like and want to obtain power. When there is opportunity to get either, watch out. Then we get screwed again, and again, and again, and...

  3. SiriuslyLong is offline
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    05-01-2011, 02:23 PM #53
    I'm greedy. I bought positions in gold and oil. Though I just want enough to pay my kids college bills.

    You know, this kind of undermines Krugman who argues that global demand is the reason for increasing commodity prices as opposed to the weak dollar being the cause.

  4. Atypical is offline
    05-06-2011, 12:53 PM #54

    Top 50 highest-paid CEOs in 2010

    The Associated Press

    The 50 highest-paid CEOs for 2010 in an Associated Press analysis for Standard & Poor's 500companies. The analysis includes companies that had the same CEO for all of 2009 and 2010and that filed proxy statements with the Securities and Exchange Commission between Jan. 1 and April 30. They are based on the AP's compensation formula, which adds up salary, perks, bonuses, preferential interest rates on pay set aside for later, and company estimates for the value of stock options and stock awards on the day they were granted last year.

    Philippe Dauman, Viacom, $84.5 million, up 149 percent

    Ray Irani, Occidental Petroleum, $76.1 million, up 142 percent

    Leslie Moonves, CBS, $56.9 million, up 32 percent

    David Zaslav, Discovery Communications, $42.6 million, up 265 percent

    Richard Adkerson, Freeport McMoran Copper & Gold, $35.3 million, up 76 percent

    John Lundgren, Stanley Black & Decker, $32.6 million, up 253 percent

    Brian Roberts, Comcast, $31 million, up 14 percent

    Robert Iger, Walt Disney, $28 million, up 30 percent

    Alan Mulally, Ford Motor, $26.5 million, up 48 percent

    Jeff Bewkes, Time Warner, $26.1 million, up 35 percent

    Sam Palmisano, IBM, $25.2 million, up 19 percent

    David Simon, Simon Property Group, $24.6 million, up 430 percent

    Gregg Steinhafel, Target Corp. $23.9 million, 83 percent

    Blackrock, Laurence Fink, $23.8 million, up 50 percent

    William Weldon, Johnson & Johnson, $23.2 million, down 9 percent

    Brian Goldner, Hasbro, $23 million, up 196 percent

    Howard Schultz, Starbucks, $21.7 million, up 45 percent

    Rex Tillerson, Exxon Mobil, $21.5 million, down 1 percent

    Kevin Sharer, Amgen, $21.1 million, up 38 percent

    Aubrey McClendon, Chesapeake Energy, $21 million, up 13 percent

    Gregory Case, Aon, $20.8 million, up 100 percent

    Jamie Dimon, JPMorgan Chase, $20.8 million, up 1,541 percent

    Michael Szymanczyk, Altria, $20.8 million, up 131 percent

    Louis Camilleri, Philip Morris International, $20.6 million, down 16 percent

    Leslie Wexner, Limited Brands, $20.5 million, up 90 percent

    Randall Stephenson, AT&T, $20.2 million, no change

    Miles White, Abbott Laboratories, $20 million, down 9 percent

    Jay Fishman, Traverlers, $19.8 million, down 2 percent

    George Buckley, 3M, $19.7 million, up 41 percent

    Louis Chenevert, United Technologies, $19.5 million, up 9 percent

    Robert Kelly, Bank of New York Mellon, $19.4 million, up 73 percent

    G. Steven Farris, Apache, $19.3 million, up 151 percent

    Carol Meyrowitz, TJX Companies, $19.3 million, up 30 percent

    Ahmet Kent, Coca-Cola, $19.2 million, up 30 percent

    Robert Stevens, Lockheed Martin, $19.1 million, down 7 percent

    John Brock, Coca-Cola Enterprises, $19.1 million, up 34 percent

    James Hackett, Anadarko Petroleum, $18.8 million, down 20 percent

    Michael Duke, Wal-Mart, $18.7 million, down 3 percent

    Ivan Seidenberg, Verizon Communications, $18.1 million, up 4 percent

    James Mulva, ConocoPhillips, $17.9 million, up 25 percent

    Andrew Liveris, Dow Chemical, $17.7 million, up 13 percent

    Paul Jacobs, Qualcomm, $17.6 million, up 1 percent

    John Stumpf, Wells Fargo, $17.6 million, down 6 percent

    Glenn Britt, Time Warner Cable, $17.3 million, up 10 percent

    H. Lawrence Culp, Danahar, $17 million, up 54 percent

    Susan Ivey, Reynolds American, $16.8 million, up 4 percent

    James Cracchiolo, $16.8 million, down 8 percent

    J. Brett Harvey, Consol Energy, $16.6 million, up 56 percent

    David Snow, Medco Health Solutions, $16.4 million, up 23 percent

    Kenneth Chenault, American Express, $16.3 million, down 3 percent

    Source: Equilar


    As I've said before; this doesn't piss me off.

    I prefer to focus on those making relatively little money. They are the ones we need to control. Their pensions, their union memberships, their support programs, all are in need of cancellation. I'm glad the repukes are finally doing something about these 'freeloaders'. And I'm also glad to see that the repukes are doing everything they can to prevent those above (and many others) and the companies they run from paying taxes. Why should we screw wiith these wildly successful people. They deserve even more, don't you think? Taxes are for losers. It is only right we make them pay for being losers.

    All over this great country, repukes are doing everything they can to preserve the wealthy's claim on the power and control they deserve.

    We should be happy we have such 'patriotic' politicians. They apparently don't mind being on their knees regularly. They get paid handsomely for it.

    What a wonderful country.

    Just came across this. Yaay! The repukes are earning their money. They want to stop a consumer protection agency from getting in the way of those above. Good job, repukes! F... everyone NOT on this list. These bastards are good!

    On Thursday, 44 Republican senators stood together to oppose a strong Consumer Financial Protection Bureau and vowed to block any presidential nominee to the new agency unless their demands are met. Republicans were careful not to attack the popular mission of the CFPB, instead focusing their attacks on its "unfettered authority."

    Last edited by Atypical; 05-06-2011 at 02:17 PM.

  5. Atypical is offline
    05-07-2011, 11:46 AM #55

    CEO pay exceeds pre-recession level

    By RACHEL BECK AP Business Writer

    NEW YORK (AP) - In the boardroom, it's as if the Great Recession never happened.

    CEOs at the nation's largest companies were paid better last year than they were in 2007, when the economy was booming, the stock market set a record high and unemployment was roughly half what it is today.

    The typical pay package for the head of a company in the Standard & Poor's 500 was $9 million in 2010, according to an analysis by The Associated Press using data provided by Equilar, an executive compensation research firm. That was 24 percent higher than a year earlier, reversing two years of declines.

    Executives were showered with more pay of all types - salaries, bonuses, stock, options and perks. The biggest gains came in cash bonuses: Two-thirds of executives got a bigger one than they had in 2009, some more than three times as big.

    CEOs were rewarded because corporate profits soared in 2010 as the economy gradually got stronger and companies continued to cut costs. Profit for the companies in the AP analysis rose 41 percent last year.

    The stock market also continued its climb. Stocks rose 13 percent in 2010 and have now almost doubled since March 2009. The market's two-year run has fattened executive bonuses because some CEOs are rewarded for how the company's stock does.

    Separately, the bull market has left CEOs enormous paper gains on stock and options they were granted as part of pay packages in 2009 and 2010. They are already worth $6.3 billion, 68 percent more than the companies thought they would be worth over the lifetime of the grants.

    The AP used the Equilar data to analyze CEO pay packages at 334 companies in the S&P 500 that had filed statements with federal regulators through April 29. Pay was analyzed at companies that had the same CEO in both 2009 and 2010. The AP's analysis is the most comprehensive of 2010 compensation.

    Among the other findings in the AP analysis:

    - The highest-paid CEO in 2010 was Philippe Dauman of Viacom, the entertainment company that owns MTV, Nickelodeon and Paramount Pictures. He received a pay package valued at $84.5 million, two and a half times what he made the year before. He signed a contract in April 2010 that included stock and options valued by the company at $54.2 million when they were granted.

    - Six of the 10 best-paid CEOs come from media or entertainment, industries helped by a recovery in advertising and innovations in digital distribution. Besides Dauman, they are Leslie Moonves of CBS, $56.9 million; David Zaslav of Discovery Communications, $42.6 million; Brian Roberts of Comcast, $31.1 million; Robert Iger of Walt Disney, $28 million; and Jeff Bewkes of Time Warner, $26.1 million.

    - The 10 highest-paid CEOs made $440 million in 2010, a third more than the top 10 made in 2009. Four CEOs - Dauman, Moonves, Roberts and Ray Irani of Occidental Petroleum - were on the Top 10 list both years.

    To calculate CEO pay, the AP adds an executive's salary, bonuses, perks, any interest on deferred pay that's above market interest rates, and the value a company places on stock and stock options awarded during the year.

    The median pay value of $9 million, calculated by Equilar, is the midpoint of the companies used in the AP analysis; half of the CEOs made more and half made less. In 2007, the median pay was $8.4 million. In 2008 it was $7.6 million, and in 2009 it was $7.2 million. The $9 million median for 2010 is the highest since the AP began the analysis in 2006.

    The economy gradually improved in 2010, the first full year of recovery after the Great Recession. The private sector added 1.2 million jobs after losing 5 million in 2009. The unemployment rate fell from 9.9 percent to 9.4 percent.

    For companies that the AP analyzed, revenue grew about 12 percent, according to data provider CapitalIQ. That helped lift earnings, as did companies' ability to hold down costs. Companies could limit raises for rank-and-file workers because of the weak labor market.

    The bigger profits helped push up the typical cash bonus given to a CEO by 39 percent in 2010, to $2 million, according to Equilar. Some companies, including Ford and JPMorgan Chase, didn't grant bonuses in 2009 but paid big sums last year as business made a strong comeback from the recession.

    Companies analyzed by AP granted their CEOs about $1.3 billion in stock in 2010, up about $300 million from the year before. They awarded stock options worth $702 million, or about $27 million more than the year before.

    Those figures are based on formulas the companies use to estimate what the stock and options will eventually be worth when a CEO receives the stock or cashes in the options.

    Meanwhile, pay for workers grew 3 percent in 2010, to an average of about $40,500. The percentage increase was twice the rate of inflation, but the average wage was less than one-half of one percent of what the typical CEO in the AP analysis made.

    Some critics of today's executive pay say boards should consider how much a CEO has accumulated over the years when they set the next year's pay.

    "Boards need to recognize that many CEOs already have enough in terms of motivation and lifetime wealth," says Jesse Brill, chair of the website and an expert on CEO pay. "It is very frustrating to see boards keep giving them more."

    As evidence, Brill points to stock and options given to CEOs the past two years. Boards at most companies grant those awards early in the year. In 2009, most were granted just as the stock market neared its lowest point in 12 years; today they are worth $2.2 billion more than the companies thought they would be over the lifetime of the grants.

    Then in 2010, CEOs in the AP analysis received another batch of stock and options. Those have already gained about $400 million in value on paper, based on current market prices.

    "The pendulum has swung back enough for many executives," says Doug Friske, an executive-compensation consultant at the firm Towers Watson. "Now boards are going to have to think about what they are going to do from here."

    Their decisions will be watched closely by shareholders. Government rules passed last year require almost every public company to give investors a vote at least once every three years on what it pays its executives. The votes aren't binding, but they can draw unwanted attention to a CEO's pay.

    So far this year, shareholders at only 12 companies have voted against pay plans. The low number reflects the fact that many institutional investors, such as mutual funds, tend to side with management on shareholder proposals.

    One company whose shareholders voted against the pay plan was Stanley Black & Decker. In 2010, it gave CEO John Lundgren compensation valued at $32.6 million, which made him the sixth-highest-paid on the AP's list. His pay included a one-time grant of 325,000 shares of stock valued at $18.7 million.

    Institutional Shareholder Services, which advises large investors on how to vote on corporate matters, had criticized Stanley Black & Decker for paying its executives better than competitors pay theirs and for its one-time stock awards.

    Companies that get negative votes on their pay plans will have to disclose, in the statements they file with regulators the next year, how the vote affected their decisions on pay. So in 2012, Stanley Black & Decker will have to say whether it changed Lundgren's pay because of the negative vote.

    "They don't have to make any changes to their pay plans, but they have to disclose what they did to respond to the negative vote, which could be nothing," says Mark Borges, a principal at the compensation consulting firm Compensia.

    Some companies are doing what they can to prevent an embarrassing "no" vote. Last month, General Electric revised the terms on 2 million stock options granted to CEO Jeff Immelt in 2010. The changes came after GE was criticized by ISS.

    Under the original terms of the grant, Immelt, 55, simply had to stay at GE until 2013 to get half the stock options and until 2015 to get the other half.

    Now, he can't exercise any of the options until 2015, and they depend on performance targets. For Immelt to get half the options, GE has to improve its cash flow, and for him to get the other half, the stock has to outperform the market.

    "Shareholders don't have any tools at the moment to force companies to make changes in pay, but there are plenty of companies making changes because they don't want the attention of a negative vote," Borges says.


    Ask yourself this question; if you were making millions every year, more than you could ever spend or really need, why would you need a RAISE. That extra amount is important? It really doesn't matter because you already have more than enough. If you say you do - you're probably a greedy conservative - it's never enough!

  6. Atypical is offline
    05-07-2011, 03:12 PM #56

    Are Health Insurers Writing Health Reform Regulations?

    Submitted by Wendell Potter on May 5, 2011 - 10:16am

    One of the reasons I wanted to return to journalism after a long career as an insurance company PR man was to keep an eye on the implementation of the new health reform law. Many journalists who covered the reform debate have moved on, and some consider the writing of regulations to implement the legislation boring and of little interest to the public.

    But insurance company lobbyists know the media are not paying much attention. And so they are able to influence what the regulations actually look like -- and how the law will be enforced -- with little scrutiny, much less awareness.

    At a January meeting of several hundred patient and consumer advocates in Washington, a top aide to Health and Human Services Secretary Kathleen Sebelius all but pleaded with those in the audience to bombard the Obama Administration with messages insisting that the law be implemented as Congress intended. Rest assured, he told them, that the insurance industry's lobbyists were relentless in their demands that the regulations be written to give them the maximum slack.

    One example: a section of the law expanding the rights of consumers to appeal adverse decisions made by their health plans.

    "The Affordable Care Act will help support and protect consumers and end some of the worst insurance company abuses," read an Obama administration fact sheet from last summer.

    The fact sheet went on to assure us that the new rules would guarantee consumer access to both internal and external appeals processes "that are clearly defined, impartial, and designed to ensure that, when health care is needed and covered, consumers get it."

    "In implementing this law, we have worked to end the worst insurance company abuses, preserve existing options and slow premium increases," an administration official said. "Through it all, protecting consumers has been -- and remains -- our top priority."

    The rules, originally scheduled to go into effect July 1, 2011, were actually written by the [[National Association of Insurance Commissioners|National Association of [State] Insurance Commissioners]] (NAIC), which was tasked by Congress to develop several important regulations required by the law. If the law is implemented as the NAIC recommends, patients will be able to get an external appeal of a broad range of coverage denials, including denials that result from an insurer's decision to rescind, or cancel, a patient's policy -- not just denials made on the basis of "medical necessity" as determined by the insurer.

    The NAIC's standards also say that insurers must provide consumers with clear information about their rights to both internal and external appeals, and that the companies must expedite the appeals process in urgent or emergency situations.

    Insurers Push Back Hard; is the White House Capitulating?

    Well, surprise, insurers don't like being told what to do by regulators. So they're pushing back hard. Consumer advocates who have been in meetings at the White House in recent weeks say they believe the administration is bending over backward to accommodate the insurers.

    "We have reason to fear that the external appeal regs won't be very consumer friendly," said Stephen Finan, senior director of policy for the American Cancer Society Action Network.

    Finan and representatives of several other consumer and patient rights organizations, including Consumers Union, the National Partnership for Women and Families and the American Diabetes Association, wrote officials in the Departments of Labor and Health and Human Services in late January pleading with them to "stand firm for consumers" in rejecting several of the insurance industry's demands.

    They expressed concern that the final regulations would allow insurers to stack the decks against patients by allowing health plans to deem a second-level internal appeal of a denial as meeting the requirement for an independent external appeal. They're also worried that health plans will not be required to provide clear and understandable information to policyholders about their denial decisions, that the plans will not provide adequate translation of written communications into other languages (insurers are claiming this would be too burdensome), and that they will be able to take as long as 72 hours (instead of the recommended 24) to decide an urgent appeal.

    Equally as frustrating for the consumer advocates is the administration's indication that they will give the insurers until January 1, 2012, rather than July 1, 2011, to comply with the regulations.

    Consumer advocates say the administration has told them that the reason it is proposing to delay the effective date of the new rules for half a year is to accommodate the health plans' enrollment cycles and marketing needs. Health plans do need adequate lead time to make changes to their systems and to prepare materials to inform their customers of new procedures, especially in multiple languages, so some of their push back is understandable. The new regulations will also add to the insurers' administrative costs, and the new law limits how much they can spend on overhead.

    But the consumer groups believe the administration itself has caused some of the problems by taking so long to finalize the regulations. The NAIC got its work done comparatively swiftly.

    "There is a clear pattern of leaning toward the insurance industry more than consumers," one of the patient advocates told me.

    Industry Lobbyists Outnumber Consumer Advocates 100 to 1

    The consumer advocates, most of whom not so long ago were applauding the Democrats for getting reform enacted, even if it fell short of their original goals, are becoming increasingly discouraged, partly because there are so many more lobbyists for the insurers than for consumers. It's hard to compete with them.

    "We're outnumbered 100 to 1," said one of the consumer advocates.

    It's clear," he added, "that the insurers are willing to make life more difficult for patients" by trying to weaken and delay the consumer protections.

    It's also clear that, at least for now, the insurers seem to have the upper hand in dealing with the White House.

    Author Wendell Potter is the former head of PR for CIGNA.


    Just another day in the United Corporate States of America.

    Let's see what the score is - Corporations 15,870,396 - consumers 2. Just about right!

  7. Atypical is offline
    05-13-2011, 01:13 PM #57

    Texas GOP rams Koch-backed "Loser Pays" bill through House, making it harder to sue


    By Travis Waldron, ThinkProgress

    As ThinkProgress has reported, brothers Charles and David Koch and their corporate giant, Koch Industries, have played an extensive role in the corporate takeover of government, both at the state and federal level. This weekend, another of the Kochs’ projects surfaced in Texas, as the state’s Republican lawmakers rammed through a Koch-backed bill that would make it harder for consumers, workers, and small business owners to bring civil suits against corporations.

    House Bill 274 — dubbed the “Loser Pays” bill — passed the state House Saturday with no amendments and no debate after Gov. Rick Perry (R) deemed it “emergency legislation,” rushing it to the top of the legislative agenda. Under the bill, those who sue corporations could be held responsible for the defendants’ legal fees if they lose the case — and in some instances, even if they win. If the court sides with the plaintiff, but awards a smaller amount than the defendant offered in a potential settlement, the plaintiff could be forced to pay the defendant’s court costs, even if those costs exceed the amount awarded to the plaintiff. For this reason, state Rep. Craig Eiland (D) wanted to rename the bill the “loser-pays-but-sometimes-the-winner pays-too” bill.

    The law could intimidate potential plaintiffs into avoiding lawsuits against corporations, because they could be on the hook for massive legal fees if the court ultimately doesn’t side with them.

    Not surprisingly, among the bill’s biggest proponents are large corporations, including Koch Industries, Chevron, and G.E., which all lobbied on its behalf. Also backing the bill is the Texas Public Policy Foundation, a non-profit front group funded largely by corporations, including Koch Industries and three other Koch-owned companies: Georgia Pacific, Invista, and Flint Hills Resources.

    These companies stand to gain tremendously from the legislation, as it could both reduce their legal fees in specific cases and have a chilling effect on lawsuits more generally. And Koch’s business practices have made them a frequent target of expensive lawsuits. In Texas, for example, Koch’s refinery in Corpus Cristi has a history of leaking Benzene, a hazardous chemical linked to cancer, and was indicted in 2000 on 97 counts for violating EPA rules.

    As the public interest group Texas Watch found, Florida experimented with its own version of the law, only to realize its ineffectiveness and abandon it just five years later:

    As the Duke Law Journal notes, proponents are “diplomatically silent about Florida’s unsuccessful experience.” A former president of the nation’s oldest association of civil defense lawyers put it bluntly: “They tried it in Florida, and it was a disaster.”

    The bill’s proponents also claim that the law is needed to curb frivolous lawsuits that are supposedly plaguing the Texas court system. But Texas already has sanctions regarding frivolous lawsuits, including the repayment of attorney fees, and a recent study by the Baylor Law Review found that 86 percent of Texas judges did not believe additional regulations were needed.

    Recent court proceedings in Texas provide a snapshot of exactly how a “loser pays” law could play out. Last week, the ultra-conservative Fifth Circuit Court of Appeals dismissed a lawsuit brought by a Texas cheerleader who refused to cheer for her alleged rapist and forced her to pay $45,000 in legal fees accrued by the school district she sued.

    If Texas Republicans, Koch Industries, and other corporations have their way and HB 274 is signed into law, similar results will become much more common.

    More and more power being taken from the consumer. Anybody care?

  8. Atypical is offline
    05-14-2011, 11:51 AM #58

    Actually, "the Rich" Don't "Create Jobs" -- We Do

    You hear it again and again, variation after variation on a core message: if you tax rich people it kills jobs. You hear about "job-killing tax hikes," or that "taxing the rich hurts jobs," "taxes kill jobs," "taxes take money out of the economy, "if you tax the rich they won't be able to provide jobs." ... on and on it goes. So do we really depend on "the rich" to "create" jobs? Or do jobs get created when they fill a need?

    Here is a recent typical example, Obama Touts Job-Killing Tax Plan, written by a "senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth,"

    Some people, in their pursuit of profit, benefit their fellow humans by creating new or better goods and services, and then by employing others. We call such people entrepreneurs and productive workers.

    Others are parasites who suck the blood and energy away from the productive. Such people are most often found in government.

    Perhaps the most vivid description of what happens to a society where the parasites become so numerous and powerful that they destroy their productive hosts is Ayn Rand’s classic novel “Atlas Shrugged.” ...

    Producers and Parasites

    The idea that there are producers and parasites as expressed in the example above has become a core philosophy of conservatives. They claim that wealthy people "produce" and are rich because they "produce." The rest of us are "parasites" who suck blood and energy from the productive rich, by taxing them. In this belief system, We, the People are basically just "the help" who are otherwise in the way, and taxing the producers to pay for our "entitlements." We "take money" from the producers through taxes, which are "redistributed" to the parasites. They repeat the slogan, "Taxes are theft," and take the "money we earned" by "force" (i.e. government.)

    Republican Speaker of the House John Boehner echoes this core philosophy of "producers" and "parasites," saying yesterday,

    I believe raising taxes on the very people that we expect to reinvest in our economy and to hire people is the wrong idea,” he said. “For those people to give that money to the government…means it wont get reinvested in our economy at a time when we’re trying to create jobs.”

    "The very people" who "hire people" shouldn't have to pay taxes because that money is then taken out of the productive economy and just given to the parasites -- "the help" -- meaning you and me...

    So is it true? Do "they" create jobs? Do we "depend on" the wealthy to "create jobs?"

    Demand Creates Jobs

    I used to own a business and have been in senior positions at other businesses, and I know many others who have started and operated businesses of all sizes. I can tell you from direct experience that I tried very hard to employ the right number of people. What I mean by this is that when there were lots of customers I would add people to meet the demand. And when demand slacked off I had to let people go.

    If I had extra money I wouldn't just hire people to sit around and read the paper. And if I had more customers than I could handle that -- the revenue generated by meeting the additional demand from the extra customers -- is what would pay for employing more people to meet the demand. It is a pretty simple equation: you employ the right number of people to meet the demand your business has.

    If you ask around you will find that every business tries to employ the right number of people to meet the demand. Any business owner or manager will tell you that they hire based on need, not on how much they have in the bank. (Read more here, in last year's Businesses Do Not Create Jobs.)

    Taxes make absolutely no difference in the hiring equation. In fact, paying taxes means you are already making money, which means you have already hired the right number of people. Taxes are based on subtracting your costs from your revenue, and if you have profits after you cover your costs, then you might be taxed. You don't even calculate your taxes until well after the hiring decision has been made. You don;t lay people off to "cover" your taxes. And even if you did lay people off to "cover' taxes it would lower your costs and you would have more profit, which means you would have more taxes... except that laying someone off when you had demand would cause you to have less revenue, ... and you see how ridiculous it is to associate taxes with hiring at all!

    People coming in the door and buying things is what creates jobs.

    The Rich Do Not Create Jobs

    Lots of regular people having money to spend is what creates jobs and businesses. That is the basic idea of demand-side economics and it works. In a consumer-driven economy designed to serve people, regular people with money in their pockets is what keeps everything going. And the equal opportunity of democracy with its reinvestment in infrastructure and education and the other fruits of democracy is fundamental to keeping a demand-side economy functioning.

    When all the money goes to a few at the top everything breaks down. Taxing the people at the top and reinvesting the money into the democratic society is fundamental to keeping things going.

    Democracy Creates Jobs

    This idea that a few wealthy people -- the "producers" -- hand everything down to the rest of us -- "the parasites" -- is fundamentally at odds with the concept of democracy. In a democracy we all have an equal voice and an equal stake in how our society and our economy does. We do not "depend" on the good graces of a favored few for our livelihoods. We all are supposed to have an equal opportunity, and equal rights. And there are things we are all entitled to -- "entitlements" -- that we get just because we were born here. But we all share in the responsibility to cover the costs of democracy -- with the rich having a greater responsibility than the rest of us because they receive the most benefit from it. This is why we have "progressive taxes" where the rates are supposed to go up as the income does.

    Taxes Are The Lifeblood Of Democracy And The Prosperity That Democracy Produces

    In a democracy the rich are supposed to pay more to cover things like building and maintaining the roads and schools because these are the things that enable their wealth. They actually do use the roads and schools more because the roads enable their businesses to prosper and the schools provide educated employees. But it isn't just that the rich use roads more, it is that everyone has a right to use roads and a right to transportation because we are a democracy and everyone has the same rights. And as a citizen in a democracy you have an obligation to pay your share for that.

    A democracy is supposed have a progressive tax structure that is in proportion to the means to pay. We do this because those who get more from the system do so because the democratic system offers them that ability. Their wealth is because of our system and therefore they owe back to the system in proportion. (Plus, history has taught the lesson that great wealth opposes democracy, so democracy must oppose the accumulation of great, disproportional wealth. In other words, part of the contract of living in a democracy is your obligation to protect the democracy and high taxes at the top is one of those protections.)

    The conservative "producer and parasite" anti-tax philosophy is fundamentally at odds with the concepts of democracy (which they proudly acknowledge - see more here, and here) and should be understood and criticized as such. Taxes do not "take money out of the economy" they enable the economy. The rich do not "create jobs, We, the People create jobs.

    By Dave Johnson | Sourced from Campaign for America's Future
    This article is about the BIG LIE - the one being used to prevent the wealthy from being taxed appropriately. When business propers and has profits, jobs can be created. No sales -no jobs. Econ 101.

  9. SiriuslyLong is offline
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    05-14-2011, 02:54 PM #59
    I was talking just yesterday to a guy who owns an IT business. We were taking about the reduction of taxes here in MI. He was elated for this reduction because budgetary constraints have kept him from growing at the pace he could grow. He views these "tax breaks" as a blessing. So in this factual case, the BIG LIE you cite, is a BIG LIE. He will hire new people and grow his business (says he will anyway). Those new hires will likely become consumers of goods and services creating demand. Now I'm sure his situation is not isolated to him. All taken collectively......................

    It's funny. If we think about supply and demand in the same way we think about the chicken or egg, all that is at discussion is the starting point. To say flatly, "demand create jobs" is only half the story. Disposible income creates demand as well. You many remember the doors I didn't buy or the contractor that didn't get that job because I had to use that money to square up with the IRS (check was cleared, got the statement today). This is factual, and real, and I'm not the only person effected.

    BTW - this is hateful, "The conservative "producer and parasite".............." This is exactly the negative discourse I was referring to, but unfortunately, it is the state of our union.

  10. Atypical is offline
    05-14-2011, 05:34 PM #60
    Folks, read post 54 in this thread, if you haven't already.

    And then, reflect on this.

    From 1979-2006 per the CBO, avg household income, (inflation adjusted) went from 47,900 to 71,900.
    Bottom quintile; 14,900 to 16,500 which includes, taxes, benefits incl private employment benefits.
    Middle quintile; 42,900 too 52,100.
    Top 1%; 337,100 to 1.2 million. 260% increase!!!

    Without extra hours worked in two income families, those in the lower and middle and upper middle would have increases that would have been barely noticeable. And, keep in mind, that the economy in those years expanded substantially.

    Anyone not concerned with these facts, or who dismisses them as a liberal plot, or who says I don't care, is an unfeeling and uncaring selfish conservative puke.

    Remember # 54 here. That is overwhelming evidence that something has to change in this country.

    Read, Winner-Take-All Politics, for additional details.
    Last edited by Atypical; 05-14-2011 at 05:39 PM.

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