George Carlin’s brutally patriotic criticism

The First Amendment isn’t worth a damn unless it is actually being used. If it is not being used, then politicians and their rich and powerful keepers will continue to utter long and loud streams of nonsense to financially screw the ordinary working people of America in dozens of ways. They will continue to feed us unending misinformation in order to justify their urges to wage unnecessary wars to help them retain their power. They will continue invading our houses and and minds thanks to their many stenographers in the commercial media. Those of us who have resisted drinking much of this country’s spiked elixir of Judeo-Christian-consumerist-warmongering-bigotry know that most of what we hear our authority figures uttering, even those authority figures who we want to believe to be on our side, is flawed. Much of it substantially untrue and quite a bit of it is absolute bullshit.  I hate to be writing these words, but I've lost a lot of faith in the United States in the past ten years.  Misinformation pours into the living rooms and cars of Americans every day, where it too often takes root, perhaps because it is uttered by people wearing fancy suits and flag pins. Americans need an antidote to this unending poison. They need the kinds of people who can effectively challenge these messages and messengers--someone who not only can challenge this propaganda but can do it with sharp fast pinpricks that deflate this bloviation on the spot.  They need much more than "news" reporters who don't have the tools, courage or motivation to challenge all the BS. They need someone who is old enough and thick-skinned enough that he/she doesn’t give a shit about being criticized for being unpatriotic. In fact, this type of person, of whom we actually need many, feeds on the criticism aimed at them by the powers-that-be and even gets even better under attack; he/she feels compelled to speak truth to power because it is the right thing to do, it's in the blood and it's the patriotic thing. The types of patriotic people we need to deliver this blitzkrieg criticism also need to be excellent entertainers in order to maintain the attention of large numbers of Americans. As comedians, they can hone their messages into comical memes that their audience members will pass around in viral fashion long after the original message was delivered. To the extent that these funny social critics portray themselves as jesters, they will have more access to the mass media, enabling them more effectively put their verbal swords in and out of those who own and run this country. Many conservatives consider this iconoclastic feedback to be unpatriotic. [More . . . ]

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Matt Taibbi challenges the notion of “rogue traders”

Swiss bank UBS recently announced that a "rogue trader" caused the bank to lose $2 billion. At Common Dreams, Matt Taibbi argues that what this "rogue trader" was doing was par for the course on Wall Street, even since the intentional destruction of the Glass-Steagall Act. Therefore, allegations that "rogue traders" cause losses at Wall Street banks is yet another fraud on behalf of these "banks."

Investment bankers do not see it as their jobs to tend to the dreary business of making sure Ma and Pa Main Street get their $8.03 in savings account interest every month. Nothing about traditional commercial banking – historically, the dullest of businesses, taking customer deposits and making conservative investments with them in search of a percentage point of profit here and there – turns them on. . . . Nonetheless, thanks to the Gramm-Leach-Bliley Act passed in 1998 with the help of Bob Rubin, Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and a host of other short-sighted politicians, we now have a situation where trillions in federally-insured commercial bank deposits have been wedded at the end of a shotgun to exactly such career investment bankers from places like Salomon Brothers (now part of Citi), Merrill Lynch (Bank of America), Bear Stearns (Chase), and so on. These marriages have been a disaster. The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That’s why I can’t stand the term "rogue trader," which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else’s money. They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling.
Reckless Wall Street "banks" are mostly not-banks. They only make about 15% of their money raising capital for businesses. Instead, they are gamblers who are using what's left of their bank function as a human shield so that when their reckless bets go bad they can call out to Congress for yet another mega-wad of cash to save them from going under. You can almost hear them shouting, "Save the banks! Save the banks!" If the federal government hadn't killed Glass-Steagall, Congress would be much better situated to respond to what would have been only a reckless gambler, "Sorry, but it's time you suffered the natural consequences of your actions . . . no federal money for you." If only Glass-Steagall were still in place, those stodgy and boring bank accounts of people like you and me would be safely segregated from the uncontrolled avarice of huge gambling corporations that currently call themselves "banks."

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Investing voodoo

I've followed the writings of Investment Advisor Dan Solin for several years.   After reading a half-dozen of his articles, he might start to sound like a guy who only sings one song, but it seems to be a damned good song.  Solin constantly rails at investment "experts" claim that they can actively manage your investments efficiently because they can "time the market"--they claim that they can figure out when and what to buy, such that you will make good returns on your investments. The problem, as Solin once again indicates in his latest article, is these experts who advocate active-management of funds are shams and charlatans because high-fee actively managed investment funds almost never beat low-fee passively-managed index funds.  In fact, almost all of these investment "experts" who set up think tanks, newsletters and websites end up out of business. Solin repeatedly tells us what the problem is and what to do about it: "Well-advised investors hold a globally diversified portfolio of low management fee stock and bond index funds in an asset allocation suitable for them." Repeat as necessary.  The evidence is clear that actively-managed plans consistently fail to beat the market as a whole (only 5% of actively managed funds will equal their benchmark index each year) and they cost a lot more money in management fees than index funds.  Passive funds run by Vanguard charge only .41% per year on average.  Actively managed funds typically charge 1% more than passive funds, and this difference can add up to huge numbers of dollars over the life of an investor. [caption id="attachment_19627" align="alignright" width="300" caption="Image by Vtupinamba at Dreamstime.com (with permission)"][/caption]

According to Vanguard, for the 10 years leading up to 2007, the majority of actively-managed U.S. stock funds underperformed the index they were seeking to outperform. For instance, 84% of actively-managed U.S. large blend funds underperformed their index, and 68% of actively-managed U.S. small value funds underperformed, as well. The case is even worse for actively-managed bond funds. In that case, almost 95% of actively-managed bond funds underperformed their indexes for the 10 years leading up to 2007.

Give the damning evidence Solin has offered over the years, it amazes me that so many of us are forced into 401K accounts that charge much bigger fees to hire people who claim that they can "time the market."  That might be changing.  Consider what happened to Kraft's plan administrators after they included actively managed funds in their plans:

In their lawsuit, the plaintiffs asserted the retention of two actively managed funds in the defined contribution plan violated Kraft's duty of prudence. They claimed the plan administrators in this plan should have followed the lead of the trustees in the defined benefit plan and dumped all actively managed funds.

In a stunning decision, Judge Ruben Castillo agreed to let this issue proceed to a jury trial. He held that, based on the conclusion of the Investment Committee for the defined benefit plan to drop all actively managed funds, a jury could conclude that the decision of the plan administrator and consultants to the defined contribution plan to retain two actively managed funds was a breach of fiduciary duty.

What is Smolin's advice for Plan Administrators or retirement plans?
This decision should be a wake-up call to all trustees and plan administrators of retirement plans. Either they should pay attention to the data and replace actively managed funds with index funds, or risk the possibility of being liable for the shortfall.

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Health care and death

Progressive sites are howling at the insensitivity of the Tea Party based on a hypothetical. This is how the conversation went down at a recent Republican debate:

Wolf Blitzer: A healthy 30 year old young man has a good job, makes a good living, but decides—you know what? I’m not going to spend $200 or $300 a month for health insurance because I’m healthy—I don’t need it. But something terrible happens … all of a sudden he needs it. Who’s going to pay for it if he goes into a coma. Ron Paul – He should do whatever he wants to do and assume responsibility for himself . . . My advise to him is to have a major medical policy . . . Blitzer: But he doesn’t have that and he needs intensive care for six months. Who pays? Ron Paul: That’s what freedom is about . . . taking your own risks. This whole idea that you have to compare and take care of everybody . . . Blitzer: Are you saying society should just let him die?" [A couple voices in the large crowd shout “Yes!”] Ron Paul: . . . The churches . . . [will help him]
Several things come to mind. The hypothetical was designed to make us not want to take care of this man. After all, if I am working overtime to scrape together huge payments for my family’s health insurance and the man in the hypothetical decides he won’t bother to pay even though he “makes a good living,” my gut feeling is he is trying to cheat the system, which makes me highly ambivalent about him, and much less sympathetic about his terrible situation. How much do I care about this man? I once told a friend of mine that I “cared” about a sad situation, and he said, “No you don’t. If you cared, you would do something to fix the problem and all you’re doing is complaining.” I think he was dead-on with that comment. If we care, we get involved. If we’re merely complaining, we don’t really care, no matter what we say. How do Americans often show they really care? By reaching into their pockets and giving money to the cause. With this in mind, allow me to offer a few of my own hypotheticals. [More . . .]

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