Friday, February 25, 2011

Stan Chesley

This from the Wall Street Journal


A groundbreaking plaintiffs' attorney should be disbarred for bilking clients out of millions of dollars in the settlement of a 1998 diet-pill lawsuit, a Kentucky judicial official said.

Trial Commissioner William L. Graham's recommendation Tuesday that Stanley Chesley be stripped of his law license in Kentucky marks the latest legal twist following the suit filed by people who had taken fen-phen over the drug's alleged health risks. The suit ended in a $200 million settlement paid by drug maker American Home Products.

Stanley Chesley's attorneys plan to appeal a recommendation that he be disbarred in Kentucky.

Fee fights among plaintiffs' lawyers involved in the case began early on, and the Kentucky Bar Association was called to investigate alleged misrepresentations about the settlement. Two plaintiffs' attorneys eventually received prison sentences for defrauding clients, and the judge who handled the case stepped down from the bench.

American Home Products faced numerous federal and state suits over the drug, which was later banned for causing heart-valve problems. The company was eventually acquired by a company now part of Pfizer Inc. A Pfizer spokesman didn't respond to a request for comment.

Judge Graham accused Mr. Chesley of defrauding plaintiffs out of about $7.5 million in fees.

Mr. Chesley's actions were essentially "a cover-up of thievery," Judge Graham said in a report that demanded the return of the money. "His callous subordination of the interests of his clients to his own greed is both shocking and reprehensible," Judge Graham wrote.

Mr. Chesley's attorneys said they planned to appeal to the Kentucky Supreme Court, which will make a final determination on the commissioner's recommendation. The attorneys cited a federal probe of the case, which didn't result in charges against Mr. Chesley. "His findings are directly contrary to the findings of federal authorities, who fully investigated this case and never considered Mr. Chesley a target of their investigation," they said in a statement.

The trial commissioner's report accused Mr. Chesley of muscling into fen-phen litigation under way in Kentucky's Boone Circuit Court and strong-arming attorneys into sharing fees with him in exchange for his "expertise" in handling class actions.

The more than 400 plaintiffs weren't notified, at least initially, of Mr. Chesley's involvement nor were they ever told he had reached an agreement with their attorneys to share in 21% of attorneys' fees in the settlement, according to the report.

Mr. Chesley later convinced Boone Circuit Court Judge Joseph Bamberger to boost attorneys' cut to 49% of the total settlement in a February 2002 clandestine meeting in the courthouse jury room, according to the report. Clients weren't told of the new arrangement. And Mr. Chesley received an additional $4 million payment out of the fees, which Judge Graham said amounted to a bonus for securing such a big cut for his colleagues.

Mr. Chesley wound up being paid more than $20 million in fees, when his agreement called for him to earn roughly $12 million, the report said.

Mr. Chesley said he didn't recall the meeting with the judge, according to the report. Judge Bamberger, the trial judge who resigned, had testified he never would have approved the fees had the lawyers told him about prior fee arrangements.

Mr. Chesley, of Cincinnati, rose to fame in legal circles after representing families of those who died in the 1977 Beverly Hills Supper Club fire in Kentucky. In what was a new tactic, he filed suit against more than 1,000 defendants, most of them companies that had sold supplies or services to the club, eventually securing nearly $50 million in settlements and court awards. His strategy became a blueprint for how plaintiffs' attorneys pursue mass torts—gathering large numbers of plaintiffs and casting a wide net for potential defendants.

Thursday, February 24, 2011

Duke Energy Bills

This finishes the winter heating season and it looks like Duke's natural gas charges do in fact beat the aggregation option, as I predicted.

Stan Chesley

(c) 2011 F. Bruce Abel

There are two huge stories in my lifetime eminating from Cincinnati impacting my interests and crossing my practice: the law and business. One of them is Stan Chesley and what he accomplished/accomplishes. Being a trial lawyer I am jealous. For large cases there just wasn't anybody else on the plaintiff's side and the world knew it.

But give the man his due! I was discussing the case yesterday with a co-counsel and he said: "I saw him argue in federal court in favor of class action status and without any written legal authority all he did was say, 'Well in Utah I caused the court to do this and in New Jersey [I caused the court] did that.'"
And I said, "Yeah that's the point. When he spoke the judge knew that he was the master of this field and that he could rely on what Stan said."

The man just took the air out of the room for the rest of the plaintiffs' trial bar. So be it. I wish I were he.

And his wife is the best federal judge around.

The other story: Carl Lindner.

Friday, February 18, 2011

Tech Tips -- Beware of Hot Spots

New Hacking Tools Pose Bigger Threats to Wi-Fi Users

Published: February 16, 2011

You may think the only people capable of snooping on your Internet activity are government intelligence agents or possibly a talented teenage hacker holed up in his parents’ basement. But some simple software lets just about anyone sitting next to you at your local coffee shop watch you browse the Web and even assume your identity online.

“Like it or not, we are now living in a cyberpunk novel,” said Darren Kitchen, a systems administrator for an aerospace company in Richmond, Calif., and the host of Hak5, a video podcast about computer hacking and security. “When people find out how trivial and easy it is to see and even modify what you do online, they are shocked.”

Until recently, only determined and knowledgeable hackers with fancy tools and lots of time on their hands could spy while you used your laptop or smartphone at Wi-Fi hot spots. But a free program called Firesheep, released in October, has made it simple to see what other users of an unsecured Wi-Fi network are doing and then log on as them at the sites they visited.

Without issuing any warnings of the possible threat, Web site administrators have since been scrambling to provide added protections.

“I released Firesheep to show that a core and widespread issue in Web site security is being ignored,” said Eric Butler, a freelance software developer in Seattle who created the program. “It points out the lack of end-to-end encryption.”

What he means is that while the password you initially enter on Web sites like Facebook, Twitter, Flickr, Amazon, eBay and The New York Times is encrypted, the Web browser’s cookie, a bit of code that that identifies your computer, your settings on the site or other private information, is often not encrypted. Firesheep grabs that cookie, allowing nosy or malicious users to, in essence, be you on the site and have full access to your account.

More than a million people have downloaded the program in the last three months (including this reporter, who is not exactly a computer genius). And it is easy to use.

The only sites that are safe from snoopers are those that employ the cryptographic protocol transport layer security or its predecessor, secure sockets layer, throughout your session. PayPal and many banks do this, but a startling number of sites that people trust to safeguard their privacy do not. You know you are shielded from prying eyes if a little lock appears in the corner of your browser or the Web address starts with “https” rather than “http.”

“The usual reason Web sites give for not encrypting all communication is that it will slow down the site and would be a huge engineering expense,” said Chris Palmer, technology director at the Electronic Frontier Foundation, an electronic rights advocacy group based in San Francisco. “Yes, there are operational hurdles, but they are solvable.”

Indeed, Gmail made end-to-end encryption its default mode in January 2010. Facebook began to offer the same protection as an opt-in security feature last month, though it is so far available only to a small percentage of users and has limitations. For example, it doesn’t work with many third-party applications.

“It’s worth noting that Facebook took this step, but it’s too early to congratulate them,” said Mr. Butler, who is frustrated that “https” is not the site’s default setting. “Most people aren’t going to know about it or won’t think it’s important or won’t want to use it when they find out that it disables major applications.”

Joe Sullivan, chief security officer at Facebook, said the company was engaged in a “deliberative rollout process,” to access and address any unforeseen difficulties. “We hope to have it available for all users in the next several weeks,” he said, adding that the company was also working to address problems with third-party applications and to make “https” the default setting.

Many Web sites offer some support for encryption via “https,” but they make it difficult to use. To address these problems, the Electronic Frontier Foundation in collaboration with the Tor Project, another group concerned with Internet privacy, released in June an add-on to the browser Firefox, called Https Everywhere. The extension, which can be downloaded at, makes “https” the stubbornly unchangeable default on all sites that support it.

Since not all Web sites have “https” capability, Bill Pennington, chief strategy officer with the Web site risk management firm WhiteHat Security in Santa Clara, Calif., said: “I tell people that if you’re doing things with sensitive data, don’t do it at a Wi-Fi hot spot. Do it at home.”

But home wireless networks may not be all that safe either, because of free and widely available Wi-Fi cracking programs like Gerix WiFi Cracker, Aircrack-ng and Wifite. The programs work by faking legitimate user activity to collect a series of so-called weak keys or clues to the password. The process is wholly automated, said Mr. Kitchen at Hak5, allowing even techno-ignoramuses to recover a wireless router’s password in a matter of seconds. “I’ve yet to find a WEP-protected network not susceptible to this kind of attack,” Mr. Kitchen said.

A WEP-encrypted password (for wired equivalent privacy) is not as strong as a WPA (or Wi-Fi protected access) password, so it’s best to use a WPA password instead. Even so, hackers can use the same free software programs to get on WPA password-protected networks as well. It just takes much longer (think weeks) and more computer expertise.

Using such programs along with high-powered Wi-Fi antennas that cost less than $90, hackers can pull in signals from home networks two to three miles away. There are also some computerized cracking devices with built-in antennas on the market, like WifiRobin ($156). But experts said they were not as fast or effective as the latest free cracking programs, because the devices worked only on WEP-protected networks.

To protect yourself, changing the Service Set Identifier or SSID of your wireless network from the default name of your router (like Linksys or Netgear) to something less predictable helps, as does choosing a lengthy and complicated alphanumeric password.

Setting up a virtual private network, or V.P.N., which encrypts all communications you transmit wirelessly whether on your home network or at a hot spot, is even more secure. The data looks like gibberish to a snooper as it travels from your computer to a secure server before it is blasted onto the Internet.

Popular V.P.N. providers include VyperVPN, HotSpotVPN and LogMeIn Hamachi. Some are free; others are as much as $18 a month, depending on how much data is encrypted. Free versions tend to encrypt only Web activity and not e-mail exchanges.

However, Mr. Palmer at the Electronic Frontier Foundation blames poorly designed Web sites, not vulnerable Wi-Fi connections, for security lapses. “Many popular sites were not designed for security from the beginning, and now we are suffering the consequences,” he said. “People need to demand ‘https’ so Web sites will do the painful integration work that needs to be done.”

Thursday, February 17, 2011

Take the Time to Read This From Krugman

Op-Ed Columnist

Willie Sutton Wept


Published: February 17, 2011

There are three things you need to know about the current budget debate. First, it’s essentially fraudulent. Second, most people posing as deficit hawks are faking it. Third, while President Obama hasn’t fully avoided the fraudulence, he’s less bad than his opponents — and he deserves much more credit for fiscal responsibility than he’s getting.

About the fraudulence: Last month, Howard Gleckman of the Tax Policy Center described the president as the “anti-Willie Sutton,” after the holdup artist who reputedly said he robbed banks because that’s where the money is. Indeed, Mr. Obama has lately been going where the money isn’t, making a big deal out of a freeze on nonsecurity discretionary spending, which accounts for only 12 percent of the budget.

But that’s what everyone does. House Republicans talk big about spending cuts — but focus solely on that same small budget sliver.

And by proposing sharp spending cuts right away, Republicans aren’t just going where the money isn’t, they’re also going when the money isn’t. Slashing spending while the economy is still deeply depressed is a recipe for slower economic growth, which means lower tax receipts — so any deficit reduction from G.O.P. cuts would be at least partly offset by lower revenue.

The whole budget debate, then, is a sham. House Republicans, in particular, are literally stealing food from the mouths of babes — nutritional aid to pregnant women and very young children is one of the items on their cutting block — so they can pose, falsely, as deficit hawks.

What would a serious approach to our fiscal problems involve? I can summarize it in seven words: health care, health care, health care, revenue.

Notice that I said “health care,” not “entitlements.” People in Washington often talk as if there were a program called Socialsecuritymedicareandmedicaid, then focus on things like raising the retirement age. But that’s more anti-Willie Suttonism. Long-run projections suggest that spending on the major entitlement programs will rise sharply over the decades ahead, but the great bulk of that rise will come from the health insurance programs, not Social Security.

So anyone who is really serious about the budget should be focusing mainly on health care. And by focusing, I don’t mean writing down a number and expecting someone else to make that number happen — a dodge known in the trade as a “magic asterisk.” I mean getting behind specific actions to rein in costs.

By that standard, the Simpson-Bowles deficit commission, whose work is now being treated as if it were the gold standard of fiscal seriousness, was in fact deeply unserious. Its report “was one big magic asterisk,” Bob Greenstein of the Center on Budget and Policy Priorities told The Washington Post’s Ezra Klein. So is the much-hyped proposal by Paul Ryan, the G.O.P.’s supposed deep thinker du jour, to replace Medicare with vouchers whose value would systematically lag behind health care costs. What’s supposed to happen when seniors find that they can’t afford insurance?

What would real action on health look like? Well, it might include things like giving an independent commission the power to ensure that Medicare only pays for procedures with real medical value; rewarding health care providers for delivering quality care rather than simply paying a fixed sum for every procedure; limiting the tax deductibility of private insurance plans; and so on.

And what do these things have in common? They’re all in last year’s health reform bill.

That’s why I say that Mr. Obama gets too little credit. He has done more to rein in long-run deficits than any previous president. And if his opponents were serious about those deficits, they’d be backing his actions and calling for more; instead, they’ve been screaming about death panels.

Now, even if we manage to rein in health costs, we’ll still have a long-run deficit problem — a fundamental gap between the government’s spending and the amount it collects in taxes. So what should be done?

This brings me to the seventh word of my summary of the real fiscal issues: if you’re serious about the deficit, you should be willing to consider closing at least part of this gap with higher taxes. True, higher taxes aren’t popular, but neither are cuts in government programs. So we should add to the roster of fundamentally unserious people anyone who talks about the deficit — as most of our prominent deficit scolds do — as if it were purely a spending issue.

The bottom line, then, is that while the budget is all over the news, we’re not having a real debate; it’s all sound, fury, and posturing, telling us a lot about the cynicism of politicians but signifying nothing in terms of actual deficit reduction. And we shouldn’t indulge those politicians by pretending otherwise.

Tuesday, February 15, 2011

Smooth as Silk -- Another Good Brooks Piece

Op-Ed Columnist

The Experience EconomyBy DAVID BROOKS

Published: February 14, 2011

...“The Great Stagnation,” has become the most debated nonfiction book so far this year. Cowen’s core point is that up until sometime around 1974, the American economy was able to experience awesome growth by harvesting low-hanging fruit. There was cheap land to be exploited. There was the tremendous increase in education levels during the postwar world. There were technological revolutions occasioned by the spread of electricity, plastics and the car.

But that low-hanging fruit is exhausted, Cowen continues, and since 1974, the United States has experienced slower growth, slower increases in median income, slower job creation, slower productivity gains, slower life-expectancy improvements and slower rates of technological change.

Cowen’s data on these slowdowns are compelling and have withstood the scrutiny of the online reviewers. He argues that our society, for the moment, has hit a technological plateau.

But his evidence can also be used to tell a related story. It could be that the nature of technological change isn’t causing the slowdown but a shift in values. It could be that in an industrial economy people develop a materialist mind-set and believe that improving their income is the same thing as improving their quality of life. But in an affluent information-driven world, people embrace the postmaterialist mind-set. They realize they can improve their quality of life without actually producing more wealth.

For example, imagine a man we’ll call Sam, who was born in 1900 and died in 1974. Sam entered a world of iceboxes, horse-drawn buggies and, commonly, outhouses. He died in a world of air-conditioning, Chevy Camaros and Moon landings. His life was defined by dramatic material changes, and Sam worked feverishly hard to build a company that sold brake systems. Sam wasn’t the most refined person, but he understood that if he wanted to create a secure life for his family he had to create wealth.

Sam’s grandson, Jared, was born in 1978. Jared wasn’t really drawn to the brake-systems business, which was withering in America. He works at a company that organizes conferences. He brings together fascinating speakers for lifelong learning. He writes a blog on modern art and takes his family on vacations that are more daring and exciting than any Sam experienced.

Jared lives a much more intellectually diverse life than Sam. He loves Facebook, YouTube, Wikipedia and his iPhone apps. But many of these things are produced outside the conventional monetized economy. Most of the products are produced by people working for free. They cost nothing to consume.

They don’t even create many jobs. As Cowen notes in his book, the automobile industry produced millions of jobs, but Facebook employs about 2,000, Twitter 300 and eBay about 17,000. It takes only 14,000 employees to make and sell iPods, but that device also eliminates jobs for those people who make and distribute CDs, potentially leading to net job losses.

In other words, as Cowen makes clear, many of this era’s technological breakthroughs produce enormous happiness gains, but surprisingly little additional economic activity.

Jared’s other priorities also produce high quality-of-life gains without huge material and productivity improvements. He practically defines himself by what university he went to. Universities now have nicer dorms, gyms and dining facilities. These improvements have not led to huge increases in educational output.

Jared is very health conscious and part of a generation that has spent much more on health care. This may help Jared lead a vibrant life in retirement. But these investments have had surprisingly little effect on productivity or even longevity.

For Sam, income and living standards were synonymous. But for Jared, wealth and living standards have diverged. He is more interested in the latter than the former. This means that Jared has some rich and meaningful experiences, but it has also led to problems. Every few months, new gizmos come out. Jared feels his life is getting better. Because he doesn’t fully grasp the increasingly important distinction between wealth and standard of living, he has the impression that he is also getting richer. As a result, he lives beyond his means. As Cowen notes, many of our recent difficulties stem from the fact that many Americans think they are richer than they are.

Jared is also providing much less opportunity for those down the income scale than his grandfather did. Sam was more hardhearted, yet his feverish materialism created more jobs.

Jared worries about that. He also worries that the Chinese and others have a material drive that he and his cohort lacks. But he’s not changing. For the past few decades, Americans have devoted more of their energies to postmaterial arenas and less and less, for better and worse, to the sheer production of wealth.

During these years, commencement speakers have urged students to seek meaning and not money. Many people, it turns out, were listening.

Another Good Anticipatory Piece -- On Viewing Reagan

Reagan and RealityBy BOB HERBERT

Published: February 14, 2011

Early in Eugene Jarecki’s documentary, “Reagan,” you hear the voice of Ronald Reagan saying, “Someday it might be worthwhile to find out how images are created — and even more worthwhile to learn how false images come into being.”

Indeed. The image that many, perhaps most, Americans have of the nation’s 40th president is largely manufactured. Reagan has become this larger-than-life figure who all but single-handedly won the cold war, planted the Republican Party’s tax-cut philosophy in the resistant soil of the liberal Democrats and is the touchstone for all things allegedly conservative, no matter how wacky or extreme.

Mr. Jarecki’s documentary does a first-rate job of respectfully separating the real from the mythical, the significant from the nonsense. The truth is that Ronald Reagan, at one time or another, was all over the political map. Early on, he was a liberal Democrat and admirer of Franklin Roosevelt. Reagan’s family received much-needed help from the New Deal during the Depression.

It is well known that Reagan was the head of the Screen Actors Guild. And though he was staunchly anti-Communist, he did not finger anyone when he appeared before the rabid House Un-American Activities Committee. But Mr. Jarecki learned that at the height of the Red Scare, Reagan had been secretly cooperating with the F.B.I. He was registered officially as Informant T-10.

No less than other public figures, Reagan was complicated. He was neither the empty suit that his greatest detractors would have you believe nor the conservative god of his most slavish admirers. He was a tax-cutter who raised taxes in seven of the eight years of his presidency. He was a budget-cutter who nearly tripled the federal budget deficit.

The biggest problem with Reagan, as we look back at his presidency in search of clues that might help us meet the challenges of today, is that he presented himself — and has since been presented by his admirers — as someone committed to the best interests of ordinary, hard-working Americans. Yet his economic policies, Reaganomics, dealt a body blow to that very constituency.

Mark Hertsgaard, the author of “On Bended Knee: The Press and the Reagan Presidency,” says in the film, “You cannot be fair in your historical evaluation of Ronald Reagan if you don’t look at the terrible damage his economic policies did to this country.”

Paul Volcker, who served as chairman of the Federal Reserve during most of the Reagan years, commented in the film about the economist Arthur Laffer’s famous curve, which, incredibly, became a cornerstone of national economic policy. “The Laffer Curve,” said Mr. Volcker, “was presented as an intellectual support for the idea that reducing taxes would produce more revenues, and that was, I think, considered by most people a pretty extreme interpretation of what would happen.”

Toward the end of his comment, the former Fed chairman chuckled as if still amused by the idea that this was ever taken seriously.

What we get with Reagan are a series of disconnects and contradictions that have led us to a situation in which a president widely hailed as a hero of the working class set in motion policies that have been mind-bogglingly beneficial to the wealthy and devastating to working people and the poor.

“It is important that we stop idolizing our public figures, lionizing them,” said Mr. Jarecki, in an interview. He views Reagan as a gifted individual and does not give short shrift in the film to Reagan’s successes in his dealings with the Soviet Union and other elements of what Mr. Jarecki called “the positive side of Ronald Reagan.” The film also has interviews with many Reagan stalwarts, including James Baker and George Shultz.

But when all is said and done, it is the economic revolution that gained steam during the Reagan years and is still squeezing the life out of the middle class and the poor that is Reagan’s most significant legacy. A phony version of that legacy is relentlessly promoted by right-wingers who shamelessly pursue the interests of the very rich while invoking the Reagan brand to give the impression that they are in fact the champions of ordinary people.

Reagan’s son, Ron, says in the film that he believes his father “was vulnerable to the idea that poor people were somehow poor because it was their fault.” A clip is then shown of Ronald Reagan referring to, “The homeless who are homeless, you might say, by choice.”

“Reagan,” an HBO documentary, will be shown on Presidents’ Day to U.S. military personnel on the American Forces Network. It will be available soon in theaters and home video release. It is an important corrective to the fantasy of Reagan that has gotten such a purchase on American consciousness.

Another Krugman Worth Studying -- Eat Your Seed Corn!

This puts us on top of the problem which will be occupying Congress for the next month.  Its long-term effects are overwhelming, and it is articles such as this that point the lie to talk radio.

Eat the FutureBy PAUL KRUGMAN

Published: February 13, 2011

On Friday, House Republicans unveiled their proposal for immediate cuts in federal spending. Uncharacteristically, they failed to accompany the release with a catchy slogan. So I’d like to propose one:

Eat the Future.

I’ll explain in a minute. First, let’s talk about the dilemma the G.O.P. faces.

Republican leaders like to claim that the midterms gave them a mandate for sharp cuts in government spending. Some of us believe that the elections were less about spending than they were about persistent high unemployment, but whatever. The key point to understand is that while many voters say that they want lower spending, press the issue a bit further and it turns out that they only want to cut spending on other people.

That’s the lesson from a new survey by the Pew Research Center, in which Americans were asked whether they favored higher or lower spending in a variety of areas. It turns out that they want more, not less, spending on most things, including education and Medicare. They’re evenly divided about spending on aid to the unemployed and — surprise — defense.

The only thing they clearly want to cut is foreign aid, which most Americans believe, wrongly, accounts for a large share of the federal budget.

Pew also asked people how they would like to see states close their budget deficits. Do they favor cuts in either education or health care, the main expenses states face? No. Do they favor tax increases? No. The only deficit-reduction measure with significant support was cuts in public-employee pensions — and even there the public was evenly divided.

The moral is clear. Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.

How can voters be so ill informed? In their defense, bear in mind that they have jobs, children to raise, parents to take care of. They don’t have the time or the incentive to study the federal budget, let alone state budgets (which are by and large incomprehensible). So they rely on what they hear from seemingly authoritative figures.

And what they’ve been hearing ever since Ronald Reagan is that their hard-earned dollars are going to waste, paying for vast armies of useless bureaucrats (payroll is only 5 percent of federal spending) and welfare queens driving Cadillacs. How can we expect voters to appreciate fiscal reality when politicians consistently misrepresent that reality?

Which brings me back to the Republican dilemma. The new House majority promised to deliver $100 billion in spending cuts — and its members face the prospect of Tea Party primary challenges if they fail to deliver big cuts. Yet the public opposes cuts in programs it likes — and it likes almost everything. What’s a politician to do?

The answer, once you think about it, is obvious: sacrifice the future. Focus the cuts on programs whose benefits aren’t immediate; basically, eat America’s seed corn. There will be a huge price to pay, eventually — but for now, you can keep the base happy.

If you didn’t understand that logic, you might be puzzled by many items in the House G.O.P. proposal. Why cut a billion dollars from a highly successful program that provides supplemental nutrition to pregnant mothers, infants, and young children? Why cut $648 million from nuclear nonproliferation activities? (One terrorist nuke, assembled from stray ex-Soviet fissile material, can ruin your whole day.) Why cut $578 million from the I.R.S. enforcement budget? (Letting tax cheats run wild doesn’t exactly serve the cause of deficit reduction.)

Once you understand the imperatives Republicans face, however, it all makes sense. By slashing future-oriented programs, they can deliver the instant spending cuts Tea Partiers demand, without imposing too much immediate pain on voters. And as for the future costs — a population damaged by childhood malnutrition, an increased chance of terrorist attacks, a revenue system undermined by widespread tax evasion — well, tomorrow is another day.

In a better world, politicians would talk to voters as if they were adults. They would explain that discretionary spending has little to do with the long-run imbalance between spending and revenues. They would then explain that solving that long-run problem requires two main things: reining in health-care costs and, realistically, increasing taxes to pay for the programs that Americans really want.

But Republican leaders can’t do that, of course: they refuse to admit that taxes ever need to rise, and they spent much of the last two years screaming “death panels!” in response to even the most modest, sensible efforts to ensure that Medicare dollars are well spent.

And so they had to produce something like Friday’s proposal, a plan that would save remarkably little money but would do a remarkably large amount of harm.

Monday, February 14, 2011

Wall Street's Dead End

This article caught my fancy.  Why?  See the first bolded paragraph.

Wall Street’s Dead End


Published: February 13, 2011

THE stock market has been big news in recent days. Last week’s report that Deutsche Börse, a giant German exchange, intends to buy the New York Stock Exchange, creating a company worth some $24 billion, arrived shortly after the Dow broke the 12,000-point barrier for the first time since before the financial crisis.

These developments drew headlines because they seemed to exemplify significant trends in the American economy. But look at America’s stock exchanges more closely, and there’s less to them than meets the eye. In truth, the stock market is becoming increasingly irrelevant — a trend that threatens the core principles of American capitalism.

These days a healthy stock market doesn’t mean a healthy economy, as a glance at the high unemployment rate or the low labor-market participation rate will show. The Tea Party is right about one thing: What’s good for Wall Street isn’t necessarily good for Main Street. And the Germans aren’t buying the New York Stock Exchange for its commoditized, highly competitive and ultra-low-margin stock business, but rather for its lucrative derivatives operations.

The stock market is still huge, of course: the companies listed on American exchanges are valued at more than $17 trillion, and they’re not going to disappear in the foreseeable future.

But the glory days of publicly traded companies dominating the American business landscape may be over. The number of companies listed on the major domestic exchanges peaked in 1997 at more than 7,000, and it has been falling ever since. It’s now down to about 4,000 companies, and given its steep downward trend will surely continue to shrink.

Nor are the remaining stocks an obvious proxy for the health of the American economy. Innovative American companies like Apple and Google may be worth hundreds of billions of dollars, but most of them don’t pay dividends or employ many Americans, and their shares are essentially speculative investments for people making a bet on how we’re going to live in the future.

Put another way, as the number of initial public offerings steadily declines, the stock market is becoming little more than a place for speculators and algorithms to compete over who can trade his way to the most money.

What the market is not doing so well is its core public function: allocating capital efficiently. Apple, for instance, is hugely profitable and sits on an enormous pile of cash; it is thus very unlikely to use its highly rated stock to pay for any acquisitions. It hasn’t used the stock market to raise money since 1981, and there’s a good bet it never will again.

Meanwhile, the companies in which people most want to invest, technology stars like Facebook and Twitter, are managing to avoid the public markets entirely by raising hundreds of millions or even billions of dollars privately. You and I can’t buy into these companies; only very select institutions and well-connected individuals can. And companies prefer it that way.

A private company’s stock isn’t affected by the unpredictable waves of the stock market as a whole. Its chief executive can concentrate on running the company rather than answering endless questions from investors, analysts and the press.

There’s much less pressure to meet quarterly earnings targets. When the stock does trade, the deals can be negotiated quietly, in private markets, rather than fall victim to short-term speculation from the high-frequency traders who populate public markets. And companies love how private markets allow them to avoid much of the regulatory burden of being public.

That burden comes largely from the Securities and Exchange Commission, which was created in the wake of the 1929 stock-market crash to protect small investors. But if the move to private markets continues, small investors aren’t going to need much protection any more: they’ll be able to invest in only a relative handful of companies anyway.

Only the biggest and oldest companies are happy being listed on public markets today. As a result, the stock market as a whole increasingly fails to reflect the vibrancy and heterogeneity of the broader economy. To invest in younger, smaller companies, you increasingly need to be a member of the ultra-rich elite.

At risk, then, is the shareholder democracy that America forged, slowly, over the past 50 years. Civilians, rather than plutocrats, controlled corporate America, and that relationship improved standards of living and usually kept the worst of corporate abuses in check. With America Inc. owned by its citizens, the success of American business translated into large gains in the stock portfolios of anybody who put his savings in the market over most of the postwar period.

Today, however, stock markets, once the bedrock of American capitalism, are slowly becoming a noisy sideshow that churns out increasingly meager returns. The show still gets lots of attention, but the real business of the global economy is inexorably leaving the stock market — and the vast majority of us — behind.

Felix Salmon is the finance blogger at Reuters.

Calvin Trillin Quotes

Sleep -- Why We're Always Tired

In fact, writes Ekrich, before artificial light allowed for a later bedtime, people used to sleep in two shifts: the “first sleep,” with a break for ale or sex (or both – it’s Friday, my liege!), and then the “second” sleep until morning.

Saturday, February 12, 2011

Wednesday, February 9, 2011

Reading Today's Duke Energy Bill

First, I am on Time of Day rates.  As an experiment.  Second, remember that Rider FPP includes charges for all kwh, not just on-peak.