Trump Panic Hits Wall Street

Donald Trump continues to bloviate about all the miraculous things he would do for the American economy - giving almost no specifics, of course - and those brainwashed by Fox News, Breitbart and other "news outlets" that create a fantasy world detached from objective reality, buy the lies hook, line and sinker.   Meanwhile, with Trump seemingly doing better in the polls, Wall Street and the international financial markets are going back into panic mode.   Equally frightening is the significant market drop anticipated should Trump win on Tuesday.  A piece in Salon looks at what those who really know about the economy and economic trends think of Trump.  Here are highlights: 

Investors are bracing for what could be the most volatile post-election trading day ever.

According to a Credit Suisse analysis of index options (financial derivatives that allow investors to bet on the future value of a market index), the benchmark S&P 500 index of America’s biggest companies could rise or fall by 3.3 percent on Wednesday in reaction to the election results. Such an election-related swing in the market would be unprecedented, well above the average 1.1 percent move that follows a normal presidential race. Other estimates are less sanguine: Citi analysts warn of an immediate 5 percent drop should Trump win the election. Others suggest the decline could be even greater.

As Election Day approaches, anxieties are running high, leading to one of the longest selloffs of stocks in the S&P 500 index since the financial crisis eight years ago. Friday’s upbeat monthly U.S. jobs report, which showed robust gains in both hiring and wage growth, helped to lift U.S. markets during intra-day trading, but the S&P 500 ended Friday down a slight 0.17 percent, its ninth consecutive decline and the longest losing streak since 1980.

The U.S. election jitters aren’t limited to the U.S.: Asian and European stock markets fell Friday, too, while the benchmark Euro Stoxx 600 shed 3.5 percent this week, touching its lowest level since July.

Safe-haven bets — low-yield, highly stable investments — have risen, too. U.S. Treasury funds gained $2.3 billion in five days, the largest influx of cash since the first week of July following the Brexit vote, as investors fled volatile markets to the safety of low-yield U.S. government debt. On Friday, the price of a troy ounce of gold was up about $30 from Monday (gold prices tend to rise when investors are on edge).

By some measures, Trump’s bold propositions — such as starting trade wars with China and Mexico and crippling the U.S. budget with massive tax breaks for the rich — would be a disaster for the U.S. and global economies. 

Let's be honest.  Those supporting Trump are really doing so because they want race relations and many social issues to revert back to the 1950's status, a time when white privilege was unchallenged and women, gays and many others were second class citizens or worse.

Economists: A Trump Win Would Tank the Financial Markets

As some - who in my opinion are delusional - continue to claim that Donald Trump is a good businessman, there's one test that they utterly ignore: Trump's numerous bankruptcies and the fact that no American bank will make a loan to him and/or his entities. Trump has gamed the system, screwed over lenders and bond holders and other investors with abandon, always making sure that he flees the sinking ship, saving himself as others perish financially.  It's as if he were Sir Cosmo Duff-Gordon leaving the Titanic in a lifeboat with only 12 people in it, he and his wife's luggage included, leaving dozens to die who might have lived had the lifeboat been even remotely filled to capacity. The financial markets and bankers know Trump well, and economists predict that should he somehow win, the world's financial markets will tank, wiping out Americans' savings, IRA's and retirement funds.  A piece in Politico looks at the likely wreckage.   Here are highlights:  

NEW YORK — Wall Street is set up for a major crash if Donald Trump shocks the world on Election Day and wins the White House.

New research out on Friday suggests that financial markets strongly prefer a Hillary Clinton presidency and could react with panicked selling should Trump defy the polls and deliver a shocking upset on Nov. 8.

“Wall Street clearly prefers a Clinton win certainly from the prospective of equity prices,” said Dartmouth College’s Eric Zitzewitz, one of the authors of the new study along with the University of Michigan’s Justin Wolfers. “You saw Clinton win the first debate and her odds jumped and stocks moved right along with it. Should Trump somehow manage to win you could see major Brexit-style selling.”

Stock prices around the world tanked over the summer when British voters surprised pundits and voted in favor of pulling the country out of the European Union. Trump himself now talks about his own upset prospects as “another Brexit.”

The report also shows where investors around the world are making big money on the 2016 campaign. Traders betting on the Mexican peso to take a beating under a President Trump, who has promised a trade crackdown, have lost big following debates in which Clinton did well.

The Trump effect also shows up for traders betting on market volatility. Futures contracts for the VIX index, which tracks market volatility, fell sharply during the first debate, suggesting investors expect much less volatility under a Clinton White House than a Trump White House.

Oil prices rose during the first debate and gold fell. Gold tends to be a safe haven when investors are worried about possible economic and financial instability. And oil tends to go up when investors expect stronger economic growth and more demand for energy.

Michael Obuchowski of Merlin Asset Management has watched every move in the campaign closely— including all the WikiLeaks email dumps on Clinton — and made two calls based on it: that Clinton will win and that she won’t go as far left as some investors initially feared.

“I always assumed Trump would eventually collapse so that meant staying in equities and going away from certain high-dividend stocks assuming Clinton is going to win and try and tax those dividends at a higher rate,” he said.

The new report suggests that the stock market is worth 11 percent more under a Clinton presidency than a Trump presidency. This is a highly unusual circumstance because markets historically prefer Republican policies on taxes, regulation and trade to those of Democrats. . . . . Current market action is the direct reverse of what happened in 2012 when President Barack Obama was running for reelection against former Massachusetts Gov. Mitt Romney. 

Investors now clearly back a Clinton presidency and by a large margin.

The Trump effect is also global.  Britain’s FTSE 100 traced U.S. stock prices higher following the first debate. Currencies in Canada, South Korea, Australia and New Zealand — all major U.S. trading partners — tend to rise when it appears Clinton is doing well and headed to victory.

“All told, these movements suggest that financial markets expect a generally healthier domestic and international economy under a President Clinton than under a President Trump,” Wolfers and Zitzewitz write in their new paper.

This also suggests that a shock Trump victory next month could crush stock prices, perhaps by as much as 10 percent, and send the peso and other currencies sharply lower while ushering in a period of intense market volatility as investors try and discern how Trump would govern and whether he would make good on his pledge to start trade wars with Mexico and China and deport 11 million current undocumented immigrants.

“You would see incredible pressure on stock prices if Trump wins and everyone flooding into rare metals like gold and into bonds” in the U.S., Germany and the United Kingdom, said Erik Jones, professor at the Johns Hopkins University School of Advanced International Studies.

Overall, the authors of the new paper envision a massive global market shock should Trump win. “Given the magnitude of the price movements, we estimate that market participants believe that a Trump victory would reduce the value of the S&P 500, the UK, and Asian stock markets by 10-15%,” they write and “would reduce the oil price by $4, would lead to a 25% decline in the Mexican Peso, and would significantly increase expected future stock market volatility.”

Bottom line?  By supporting Trump, many of his followers will be voting against their own financial best interest, falling once again to the GOP ploy of suckering them in by calls to their racism and xenophobia.  

Wall Street Begins to Freak Out About Donald Trump

With some polls showing a tightening in the presidential race, Wall Street, which seems to have never believed Trump could be actually elected, is beginning to freak out at the thought of a Trump presidency and the disaster that it would unleash on the financial markets, international trade and a host of other issues.  The irony is that Trump claims incessantly that he is such an amazing businessman, yet by many reports he is being propped up by Russian monies from questionable sources and Wall Street sees him as not being up to the task of the presidency.  A scripted reality TV and running a super power are vastly different, not that the narcissistic Trump seem able to grasp the difference.  A piece in New York Magazine looks at the growing angst and fear on Wall Street.  Here are highlights:

The U.S. stock market, seven years into an almost nonstop bull run, went on a wild ride last week: The Dow Jones Industrial Average swung between 100 and 200 points — up one day, down the next — on four separate days. There hasn’t been such a bout of volatility since late June, when the U.K.’s surprise vote to exit the European Union sent markets on a roller-coaster ride. Volatility is not just apparent in the stock market either. Wall Street strategists say it’s also cropping up in the bond and foreign-exchange markets.

Global markets are jittery about many things right now, but one fear seems to override all others: The polls in the presidential race have suddenly tightened, and Donald Trump might actually become president of the United States of America — with unknown, but possibly very negative, implications for everything from trade policy to foreign relations to monetary policy.

In short, a Trump presidency is the very definition of what markets hate: uncertainty. “Trump is widely considered to be reckless and Clinton is widely considered to be a friend to Wall Street,” explains Chris Irons, an analyst with the equity research firm GeoInvesting.

Société Générale analysts call it the “Trump factor.” They argue that the tightening of the polls between Trump and Clinton is a big reason for a sell-off in global bonds in September, which has led to the unease in equity markets, Bloomberg reported on Tuesday. Rates on both long-term Treasury and Japanese bonds have been rising since the polls started tightening, SocGen says.

A tightening of the race is normal, and might seem inevitable after the huge lead Clinton took following the Democratic National Convention and the Khizr Khan affair. But investors seemed to start selling when Trump took the lead in the crucial swing states of Ohio and Florida. 

In general, markets prefer a Clinton victory. In a new CNBC survey of economists, fund managers, and strategists, 53 percent think Clinton is better for the stock market than Trump — because she’s a known quantity, and a person whose ability to relate to foreign leaders is comforting. Only 26 percent of those surveyed think Trump is better for stocks, down from 32 percent the prior month. Some market prognosticators have suggested a win by Trump could send the stock market down at least 10 percent.

“I don’t know what the U.S. dollar is worth with a Trump victory. I don’t know what it does to foreign flows into the U.S.,” says Josh Brown, CEO of financial adviser Ritzholtz Wealth Management. “Are foreign corporations as desirous of owning US dollars with someone so erratic in the White House?”

[T]he concern on Wall Street is whether or not Trump knows what he is talking about — or even cares. In recent weeks, for example, he has been bashing Fed Chair Janet Yellen, blaming the Fed for creating a “false economy” and an “artificial stock market” in an interview with Reuters, saying the Fed needs to raise rates. But Trump also says the economy is a disaster. “Which is it?” asks Brown, noting that if the economy is truly a disaster, rates would need to stay low. (Trump also changes his mind a lot, which Wall Street doesn’t like. This spring, he said raising rates would be “scary.”)

Wall Street economists have long warned that a Trump presidency could increase the chances for a recession. In an August 25 research note, Citigroup chief economist Willem Buiter wrote that “a Trump victory could prolong and perhaps exacerbate policy uncertainty and deliver a shock (though perhaps short-lived) to financial markets. Tightening financial conditions and further rises in uncertainty could trigger a significant slowdown in U.S., but also global growth.” 

“When you lay out the possibilities of what can happen with Clinton, it’s far more predictable. When you lay out what could happen with Trump, we could be at war with Canada.”

Despite such fears, the ignorance embracing Christofascists, white supremacist and economically challenged white males are putting their hopes in a vulgar carnival barker.   

Wall Street Shuns Trump's "Shit Show" Cleveland Convention

Traditionally big business and Wall Street firms are viewed as the stalwart supporters of the Republican Party and often send personnel in droves to the GOP conventions.  Not so this year based on a piece in Politico.  It seems that many corporate CEO's and Wall Street players see the GOP convention in Cleveland as potentially too toxic and potentially insulting to potential clients.  Indeed, one Goldman Sachs referred to the coming convention as a "shit show" to be avoided. In addition to Trump's own divisiveness, the GOP platform as it has emerged so far is the most extreme and hate-filled of  any ever put forward.  Here are highlights from the Politico piece:

Wall Street executives are hitting the sell button on the GOP convention in Cleveland next week.

Bankers typically use the quadrennial Republican Party gathering to schmooze clients, host parties and flaunt their connections to the nominee and other senior officials. In 2012, they flooded the Tampa Bay area to celebrate one of the industry’s favorite sons, Mitt Romney, getting the nomination.

But with real estate mogul Donald Trump running on an anti-trade, populist platform — while sporting sky-high unpopularity ratings — many bankers and traders want nothing to do with the convention this year.

Neither do most corporate CEOs. The prospect of Trump bashing trade deals and talking about building a wall with Mexico, coupled with the threat of potentially disruptive protests, is largely keeping the financial world away from Cleveland.

“With Trump you have what is a fairly divisive campaign and you have the potential of unnecessarily offending a whole bunch of people if you show up there in a prominent way,” said Matt McDonald, a partner at consulting firm Hamilton Place Strategies, which does business with some of the nation’s biggest banks. “On top of that, a lot of the people that you might want to get in front of for one reason or another are not going to be there.”

McDonald cited the long roster of senior Republican lawmakers skipping the convention as one major reason financial executives don’t feel the need to raise the flag in Cleveland.

So far, no major Wall Street CEOs have said they plan to attend the convention. JPMorgan Chase, which played a sponsorship role in 2012, declined to do so this year. Goldman Sachs will also be largely absent, as will Morgan Stanley and Bank of America. Citigroup plans only a low-key presence.

And unlike in 2012, when rank-and-file Wall Streeters were all over Tampa, many bankers and lobbyists who typically make the rounds will be taking a pass. “I’m just going to skip it because, frankly, I don’t see the point in going,” said a senior lobbyist for one of the largest banks in the nation. “Usually there is pressure to at least show up, but with Trump you get a pass. No one is going to care if you don’t go.”

At Goldman, typically one of the most politically engaged banks on Wall Street, there may be almost no one at all going to Cleveland. “I asked around and couldn’t find a single person who planned to be there,” said one Goldman executive who declined to be quoted by name. “Most people who want to see someone from the Trump campaign can do it some other place at some other time. And the potential is there for Cleveland to be a complete shit show. It’s a real problem for executives because if you go, you are certainly going to offend women and minority groups within your own company.”

Corporate unease with the GOP convention extends well beyond Wall Street. Google and Coca-Cola, after playing significant roles at Romney’s convention in 2012, backed away this year after pressure from activists.

But from a fundraising perspective, Wall Street's absence from Cleveland could be the most ominous sign for the Trump campaign. Because while Trump may not want high-profile Wall Street executives endorsing him — he has run as a populist who wants to fix a “rigged” system — he desperately needs their money.

Wall Street is typically a fundraising bonanza for GOP presidential candidates. Romney, a former executive at private equity firm Bain Capital, raised over $60 million from the financial industry in 2012, compared with just over $20 million for President Barack Obama.

Many Wall Street executives staying away from Cleveland are taking their cues from some of the biggest names in the industry who have distanced themselves from Trump. Paul Singer, founder of giant hedge-fund group Elliott Management and among the most influential donors in the GOP, said at the Aspen Ideas conference in Colorado last month that a Trump presidency would be a disaster.

“The most impactful of the economic policies that I recall him coming out for are these anti-trade policies,” he said. “And I think if he actually stuck to those policies and gets elected president, it’s close to a guarantee of a global depression, widespread global depression.”

Hank Paulson, the former CEO of Goldman Sachs and Treasury secretary under George W. Bush, also recently said he could not back Trump and would instead be supporting Clinton. . . . Paulson wrote in a Washington Post op-ed. “The GOP, in putting Trump at the top of the ticket, is endorsing a brand of populism rooted in ignorance, prejudice, fear and isolationism.”

The risk of violence in the convention is secondary as security will be strong inside the perimeter. This is more a function of whether Mr. Trump and the ideas he most represents are homogenous with a company's brand and business plan."

But Clinton is hoovering up Wall Street cash as bankers hedge against the risks of a Trump presidency. Clinton and groups supporting her campaign raised $32 million from the securities and investment industry through June to virtually nothing for Trump.

And Philadelphia is likely to be friendlier terrain for bank lobbyists and industry executives hoping to play roles in a Clinton White House. “I’m skipping Cleveland but going to Philly,” the senior lobbyist from the large bank said. “But that’s partly just because Philly is on the way to visit my kids at camp.”

Elizabeth Warren Escalates Her Attacks on "Small, Insecure" Trump

While Bernie Sanders continues his ego driven campaign that cannot be won, the other darling of liberal Democrats, Elizabeth Warren, recognized the battle that needs to be won is the one in November against Donald Trump.  Thus, while Sanders continues his tantrums, Warren is in attack mode stressing all of the negatives and false statements and positions of Trump.  And the woman definitely knows how to pull out the barbs.  Politico looks at Warrens's justified attacks on Trump leaving one to wonder if an when Sanders will get his head out of his ass and focus fire at Trump rather than Clinton.  Here are article highlights:

Elizabeth Warren is taking her war with Donald Trump to a new level, and it goes well beyond her usual 140-character Twitter attacks on the likely GOP presidential nominee.

The Massachusetts senator on Tuesday night dedicated a speech to rallying opposition against Trump — calling him a "small, insecure moneygrubber" who she said is "kissing the fannies of poor, misunderstood Wall Street bankers."

"He inherited a fortune from his father, and kept it going by scamming people, declaring bankruptcy and skipping out on what he owed," Warren said in prepared remarks, calling into question Trump's bona fides as a populist champion.

The assaults on Trump are becoming Warren's signature contribution to the Democratic Party's attempt to retake the White House. The speech was the second time Tuesday that she stepped into the national political fray, a sign that she's becoming increasingly vocal in the presidential race, positioning herself as a power player for the progressive left. Warren is expected to play a big role in uniting the party after the presidential primary.

The speech marked an escalation in the fight that Warren and Trump have been waging over social media since it became clear that the real estate developer and reality TV star had a clear path to the Republican nomination. Trump has called her "goofy" and has tried to revive controversy from her 2012 Senate campaign related to what she has said is her Native American heritage.

Warren called into question whether Trump is looking out for the best interests of economically downtrodden voters that he has claimed to champion. She tried to link him with the powerful corporate interest she has spent so much time vilifying: Wall Street.

Warren cited Trump's comments that he is planning to dismantle the 2010 Dodd-Frank law that overhauled the regulation of banks and markets in the wake of the 2008 financial crisis. She questioned whether he can "even name three things" the law accomplished.

"Now that he's sewn up the Republican nomination, Donald Trump is dropping the pretense" of being tough on Wall Street, Warren said. "Now he's kissing the fannies of poor, misunderstood Wall Street bankers. But the American people are not looking for a bait and switch."

Warren suggested Trump is not releasing his tax returns because he is a "lousy businessman who doesn't want you to find out that he's worth a lot less money than he claims." She cited Trump's 2007 comment that he was "excited" about the prospect of making money during the real estate market crash.

"What kind of a man does that?" she said. "I’ll tell you exactly what kind — a man who cares about no one but himself. A small, insecure moneygrubber who doesn’t care who gets hurt, so long as he makes some money off it. What kind of man does that? A man who will never be president of the United States." 

Panic Grips Clinton Campaign

While things on the GOP side of the aisle in presidential campaigns can only be described as insane, on the Democrat side, there is unexpected turmoil and Hillary Clinton's cake walk to the party nomination is seemingly burned to a crisp.  The result is what some describe as panic in the Clinton campaign as attempts are made to figure out what went wrong.  Here are highlights from one piece that argues that Hillary's problems stem from her own actions and bad choices, both past  - e.g., the freaking private e-mail server - and present:

Panic now grips the Clinton campaign. Polls show Bernie Sanders surging to a dramatic lead in New Hampshire and closing in Iowa. The Washington Post reports that Hillary's national numbers are dropping faster now than they did in 2008. The Clinton campaign has started throwing everything and the kitchen sink at Sanders, with the gutter award captured, thus far, by Senator Claire McCaskill who smeared him with the "hammer and sickle," transparently attributing the red-baiting to future Republican attacks of her own imagination.

But the question isn't what's wrong with Bernie -- he's soaring beyond all expectations. The question is what's wrong with Hillary? She has universal name recognition, unparalleled experience, the support of the big money and the political gatekeepers, the Hollywood glitz, the best political operatives, the pollsters, the ad makers, the establishment policy mavens, and political press coverage. Having learned from 2008, she's got the best ground operation in the history of Iowa caucuses that still may rescue her there. But she's sinking rapidly against a 73-year-old political maverick who is still just introducing himself to the American people.

Already the inevitable Clinton circular firing squad has begun firing its salvos: We should have gone negative on Bernie earlier. We should have used Bill more... or less. We shouldn't have bet the house on the first four primaries. Woulda, shoulda, coulda.

Inevitably, any Clinton campaign carries a lot of baggage that simply has to be overcome. . . . What is plaguing the Clinton campaign are less the sins of the past than the strategic choices of the present -- particularly her decision to be the candidate of big money.

Her ability to raise money helped scare away other potential contenders. Her continued commitment to this path is symbolized by the $33,400 a plate dinner Warren Buffet is hosting for her in Washington, D.C. on the eve of the Iowa caucuses. People who can afford $33,400 for one seat at the table aren't exactly the working people Hillary claims to champion.

Sanders, of course, made a different decision. . . . . He doesn't have anything like a traditional campaign fundraising operation. That independence gives both force and integrity to his core message that it is time to take back our democracy from the "billionaire class," the entrenched interests, and the Wall Street banksters.

Clinton argues that she favors fundamental campaign finance reform, but she can't "unilaterally disarm." Deep pocket Republicans are amassing huge war chests to assault her. She has to be armed with big money to defend herself.

But in doing so, Clinton "unilaterally disarmed" her own credibility. The Clinton family foundation and the family fortune have been built with large contributions and lavish "speaking fees," significantly from the biggest financial interests in the country. Wall Street made Hillary herself a millionaire . . . . 

The result is corrosive. When Clinton insists that her Wall Street reforms are far tougher than those of Bernie Sanders and Martin O'Malley, it rings false. She attacks Sanders for supporting Medicare for All which naturally is the bête noire of the private health insurance and drug companies.

When Sanders invoked the $600,000 Clinton received from Goldman Sachs alone in speaking fees (a bank that just agreed to pay $5 billion essentially for mortgage fraud) in the last debate, her only defense was to suggest that a similar criticism would apply to Barack Obama who also raised money from Wall Street.

This helps explain the remarkable excitement that Sanders has generated among the young. He passionately champions popular big reforms -- tuition free college, a $15 minimum wage, Medicare for all, a bold climate change agenda, breaking up the big banks and more. And his integrity and credibility are affirmed by his commitment to funding his campaign with the support of millions of citizens, not the big money of special interests.

As Greg Sargent of the Washington Post notes, Hillary's credibility gulf also undermines her argument about "electability." Democrats have a natural majority among the electorate, but only if they turn out. Even the Clinton campaign has been worried about whether HRC can generate the excitement among the rising American electorate to get them to the polls. Now, they worry about whether Sanders will generate so much excitement that he will flood the Iowa caucuses and primaries with a wave of new voters.

There's more.  Ultimately, the issue is one of electing a Democrat in November.  Either Hillary or Bernie will be light years better than any of the GOP contenders, all of whom would lessen my - and may other people's - legal rights. 

Ted Cruz Failed to Disclose $1 Million in Campaign Loans

The ever slimy (and in my view, highly dishonest) Ted Cruz has had another welcomed wrinkle thrown into his campaign: a $1 million Wall Street loan that was not disclosed as required by election laws.  Cruz is ludicrously claiming that the failure to disclose the loan was "inadvertent."   As if a $1 million dollars is so easily over looked.  Making the disclosure failure all the more suspect is the way in which Cruz has railed against Wall Street and big banks even as his wife holds a position as managing member of Goldman Sachs.  In short, the Cruz excuses lack any credibility and the goal seems to have been to hide Cruz's Wall Street ties.  Here are highlights from the New York Times:

As Ted Cruz tells it, the story of how he financed his upstart campaign for the United States Senate four years ago is an endearing example of loyalty and shared sacrifice between a married couple.

“Sweetheart, I’d like us to liquidate our entire net worth, liquid net worth, and put it into the campaign,” he says he told his wife, Heidi, who readily agreed.

But the couple’s decision to pump more than $1 million into Mr. Cruz’s successful Tea Party-darling Senate bid in Texas was made easier by a large loan from Goldman Sachs, where Mrs. Cruz works. That loan was not disclosed in campaign finance reports.

Those reports show that in the critical weeks before the May 2012 Republican primary, Mr. Cruz — currently a leading contender for his party’s presidential nomination — put “personal funds” totaling $960,000 into his Senate campaign. Two months later, shortly before a scheduled runoff election, he added more, bringing the total to $1.2 million — “which is all we had saved,” as Mr. Cruz described it in an interview with The New York Times several years ago.

A review of personal financial disclosures that Mr. Cruz filed later with the Senate does not find a liquidation of assets that would have accounted for all the money he spent on his campaign. 

What it does show, however, is that in the first half of 2012, Ted and Heidi Cruz obtained the low-interest loan from Goldman Sachs, as well as another one from Citibank. The loans totaled as much as $750,000 and eventually increased to a maximum of $1 million before being paid down later that year. There is no explanation of their purpose.

Neither loan appears in reports the Ted Cruz for Senate Committee filed with the Federal Election Commission, in which candidates are required to disclose the source of money they borrow to finance their campaigns.

Kenneth A. Gross, a former election commission lawyer who specializes in campaign finance law, said that listing a bank loan in an annual Senate ethics report — which deals only with personal finances — would not satisfy the requirement that it be promptly disclosed to election officials during a campaign.

“They’re two different reporting regimes,” he said. “The law says if you get a loan for the purpose of funding a campaign, you have to show the original source of the loan, the terms of the loan and you even have to provide a copy of the loan document to the Federal Election Commission.”

All told, the value of their cash and securities in 2012 saw a net increase of as much as $400,000 — even as the Cruzes were supposedly liquidating everything to finance Mr. Cruz’s Senate campaign.

The biggest change in the Cruzes’ finances in 2012 was the addition of the two bank loans, each valued at $250,000 to $500,000, during the first half of the year.

The federal guide to campaign finance reporting for congressional candidates makes it clear that if the original source of money for a candidate’s personal loan was a margin loan or a line of credit, it must be disclosed.

“Bank loans to candidates and loans derived from advances on a candidate’s brokerage accounts, credit cards, home equity line of credit, or other lines of credit obtained for use in connection with his or her campaign must be reported by the committee,” according to the guide.

I suspect that Donald Trump will rightly have a field day with this new disclosure of Cruz's seemingly deliberate dishonesty and failure to disclose his Wall Street loans.  

Democrats, Republicans and Reining in Corporate Greed

Almost every Republican presidential candidate has released some version of a "tax policy" plan and each plan calls for basically the same thing: large tax cuts for the rich, reductions in the corporate tax rate - never mind that many huge corporations already pay no taxes - and elimination of the estate tax, a tax that only impacts estates above $5.35 million.  Little is said in these plans as to where the lost revenues will be made up, but it doesn't take a rocket scientist to figure out that it will be by slashing programs that benefit most Americans.  On top of this, regulations of big business will be slashed so that vulture capitalism can run rampant.  So how will the GOP sell the same failed voodoo economics they have pushed for the last 35 years?  By pandering to racial fears, religious extremism, and other dog whistle issues, of course, to convince the ignorant to vote against their own best interests.  A column in the New York Times looks at the huge divide between the GOP proposals and the Democrat alternatives. Here are highlights:

Hillary Clinton and Bernie Sanders had an argument about financial regulation during Tuesday’s debate — but it wasn’t about whether to crack down on banks. Instead, it was about whose plan was tougher. The contrast with Republicans like Jeb Bush or Marco Rubio, who have pledged to reverse even the moderate financial reforms enacted in 2010, couldn’t be stronger.

For what it’s worth, Mrs. Clinton had the better case. Mr. Sanders has been focused on restoring Glass-Steagall, the rule that separated deposit-taking banks from riskier wheeling and dealing. And repealing Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t.

But is Mrs. Clinton’s promise to take a tough line on the financial industry credible? Or would she, once in the White House, return to the finance-friendly, deregulatory policies of the 1990s?

Well, if Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican.

Many liberals feel that the Obama administration was far too lenient on the financial industry in the aftermath of the crisis. After all, runaway banks brought the economy to its knees, causing millions to lose their jobs, their homes, or both. What’s more, banks themselves were bailed out, at potentially large expense to taxpayers (although in the end the costs weren’t very large). Yet nobody went to jail, and the big banks weren’t broken up.

But the financiers didn’t feel grateful for getting off so lightly. On the contrary, they were and remain consumed with “Obama rage.”

By any normal standard, President Obama has been remarkably restrained in his criticisms of Wall Street. But with great wealth comes great pettiness: These are men accustomed to obsequious deference, and they took even mild comments about bad behavior by some of their number as an unforgivable insult.

The Consumer Financial Protection Bureau has proved highly effective, and the “too big to fail” subsidy appears to have mostly gone away. That is, big financial institutions that would probably be bailed out in a future crisis no longer seem to be able to raise funds more cheaply than smaller players, perhaps because “systemically important” institutions are now subject to extra regulations, including the requirement that they set aside more capital.

While this is good news for taxpayers and the economy, financiers bitterly resent any constraints on their ability to gamble with other people’s money, and they are voting with their checkbooks. Financial tycoons loom large among the tiny group of wealthy families that is dominating campaign finance this election cycle — a group that overwhelmingly supports Republicans.  

[T]his lopsided giving is an indication that Wall Street insiders take Democratic pledges to crack down on bankers’ excesses seriously. And it also means that a victorious Democrat wouldn’t owe much to the financial industry.

If a Democrat does win, does it matter much which one it is? Probably not. Any Democrat is likely to retain the financial reforms of 2010, and seek to stiffen them where possible. 

[W]hile there are some differences in financial policy between Mrs. Clinton and Mr. Sanders, as a practical matter they’re trivial compared with the yawning gulf with Republicans.

Conservatives' Seriously Bad Ideas

Like the SBC, today's Republican Party and its conservative allies overseas cling to an outdated - indeed, fairy tale - vision of objective reality and continues to push policies that have been proven to be failures by facts and reality.  Dogma trumps facts and actual experience.  And no admission can ever be made that the policies and those who trumpet them were wrong - terribly wrong.  The result?  Here at home in America we see the GOP still pushing economic and social policies that have the opposite effect of the claimed objectives and which continue to make matters only worse for all except the most wealthy.  The same is happening in Britain where the same Kool-Aid is being consumed.  A column in the New York Times looks at this continued embrace of truly bad ideas.  Here are excerpts:

One thing we’ve learned in the years since the financial crisis is that seriously bad ideas — by which I mean bad ideas that appeal to the prejudices of Very Serious People — have remarkable staying power. No matter how much contrary evidence comes in, no matter how often and how badly predictions based on those ideas are proved wrong, the bad ideas just keep coming back. And they retain the power to warp policy.

So the true story of economic disaster, which is that it was caused by an inadequately regulated financial industry run wild and perpetuated by wrongheaded austerity policies, won’t do. Instead, the story must involve things like a skills gap — it’s not lack of jobs; we have the wrong workers for this high-technology globalized era, etc., etc. — even if there’s no evidence at all that such a gap is impeding recovery.

And the ultimate example of a seriously bad idea is the determination, in the teeth of all the evidence, to declare government spending that helps the less fortunate a crucial cause of our economic problems.

[A]ll these claims of irresponsibility involve rewriting history, because on the eve of crisis nobody thought Britain was being profligate: debt was low by historical standards and the deficit fairly small. Finally, Britain’s supposedly disastrous fiscal position has never worried the markets, which have remained happy to buy British bonds despite historically low yields.Nonetheless, that’s the story, generally reported not as opinion but as fact. And the really bad news is that Britain’s leaders seem to believe their own propaganda.

Nobody fully understands either why this slump has happened or how to reverse it, but surely the combination of a still-weak economy, terrible productivity performance and negative borrowing costs says that this is a time to increase investment in things like infrastructure. (Passenger trains here make rail service in the United States look good, and traffic congestion is getting ever worse.) Yet the Osborne proposal would kill any such initiative.

Now, some readers are probably thinking that I’m giving the likes of Mr. Osborne too much credit for sincerity. Isn’t all this deficit obsession just an excuse to slash social programs? And I’m sure that’s part of it. But I don’t think that’s the whole story. Seriously bad ideas, I’d argue, have a life of their own. And they rule our world.

Is Corporate America About to Kick Social Conservatives to the Curb?

The twin pillars of the Republican Party over the last 30 years or more have been big business on the one hand and so-called social conservatives - those I call the Christofascists.  As a piece in Salon traces out, the union of big business and the Christofascists within the Republican tent was a marriage of convenience with big business and Republican candidates using social issues to turn out voters to vote ultimately against their own best interests.   The marriage of convenience first arose out of the use of racism and reaction to desegregation and later trended toward issues such as abortion and gays, not that racism and anti-immigrant bias ever disappeared from the mix.  Now, however, with the ranks of the Christofascists dwindling and social disapproval of the stridency and general hatefulness of the Christofascists growing, the marriage of convenience may be headed for divorce.  Here are excerpts from the article that focus on the hopefully coming divorce:

Louisiana Gov. Bobby Jindal’s op-ed in the New York Times marks the whimpering end of an unholy alliance. The letter itself was a ham-handed attempt to capture the 2016 evangelical vote before Sen. Ted Cruz does. But the very crudity of his piece revealed that the union at the heart of Movement Conservatism is ripping apart.

In his op-ed, Jindal undertook to explain to business leaders how Movement Conservatism works. Its political strategy, he lectured, “requires populist social conservatives to ally with the business community on economic matters and corporate titans to side with social conservatives on cultural matters.” The governor is right: Since the 1980s big business interests have managed to secure policies that have concentrated wealth at the very top of the economic ladder, and they have managed their coup only with the help of the votes of social conservatives.
 
But Jindal’s hyperbolic posturing as he warns “any corporation” “bullying” social conservatives into accepting same-sex marriage to “Save your breath,” reveals a touchstone moment: This grand alliance is over.

[I]ts stability depended on convincing evangelicals and social conservatives that slashing taxes and destroying business regulation served their social ends. Since 1980, those economic policies have concentrated wealth upward and left values voters with less and less. Rumblings of discontent have disturbed the coalition as real wages have stagnated and tax burdens have shifted down the ladder. Movement Conservatives continued to be able to rally support from evangelicals as they limited women’s reproductive choices and attacked minorities and immigrants as lazy criminals, but their power has slipped as the programs they slash increasingly harm values voters. Same-sex marriage marks the beginning of the divorce. Big business Movement Conservatives were happy to pay lip service to right-wing populism so long as it kept Republicans in power. But supporting it now will do the opposite, as most Americans swing behind non-discrimination.

Jindal’s op-ed offers Republicans a great opportunity. It employs the same rhetorical techniques Buckley did in 1951 — turning the popular majority in favor of equal rights into “the radical left,” for example — but now those techniques seem transparently, almost laughably, disingenuous. Seeing such a caricature of the bargain that made Movement Conservatism succeed could create the magical moment in which the party finally rejects the devil’s bargain it struck in the 1950s.

Could Elizabeth Warren Beat Hillary for the Nomination?

There are some who would like to see Senator Elizabeth Warren run for the 2016 Democrat presidential nomination.   For now, she is saying that she will not run.  Yet some, including David Brooks, a New York Times columnist who has spoken to "family values" hate groups, are saying that Warren could win over Hillary Clinton.  Whether Brooks is merely being duplicitous (i.e., secretly wanting a weaker candidate to face whoever the GOP selects from its clown car of would be nominees) is hard to say.   Here are excerpts from his column that looks at Warren and her message that could appeal to many:

Her biggest adult fight has been against the banks, against what she saw as their rapacious exploitation of the poor and vulnerable. The crucial distinction Warren makes is this one: It’s not just social conditions like globalization and technological change that threaten the middle class. It’s an active conspiracy by the rich and powerful. The game is rigged. The proper response is not just policy-making; it’s indignation and combat.

The political class has been wondering if Warren, a United States senator from Massachusetts, will take on Hillary Clinton for the Democratic presidential nomination. This speculation is usually based on the premise that Warren couldn’t actually win, but that she could move the party in her direction. But, today, even for those of us who disagree with Warren fundamentally, it seems clear that she does have a significant and growing chance of being nominated.

Her chances are rising because of that word “fight.” The emotional register of the Democratic Party is growing more combative. There’s an underlying and sometimes vituperative sense of frustration toward President Obama, and especially his supposed inability to go to the mat.

Events like the Brown case in Ferguson and the Garner case in New York have raised indignation levels across the progressive spectrum. Judging by recent polls, the midterm defeat has not scared Democrats into supporting the safe option; it’s made them angrier about the whole system. As the party slips more into opposition status, with the next Congress, this aggressive outsider spirit will only grow.

In this era of bad feelings, parties are organized more around what they oppose rather than what they are for. Republicans are against government. Democrats are coalescing around opposition to Wall Street and corporate power. In 2001, 51 percent of Democrats were dissatisfied with the rise of corporate power, according to Gallup surveys. By 2011, 79 percent of Democrats were. According to an NBC News/Wall Street Journal poll last month, 58 percent of Democrats said they believed that the economic and political systems were stacked against them.

Clinton is obviously tough, but she just can’t speak with a clear voice against Wall Street and Washington insiders. Warren’s wing shows increasing passion and strength, both in opposing certain Obama nominees and in last week’s budget fight.

The history of populist candidates is that they never actually get the nomination. The establishment wins. That’s still likely. But there is something in the air. The fundamental truth is that every structural and historical advantage favors Clinton, but every day more Democrats embrace the emotion and view defined by Warren.

Who Will Save the Democratic Party From Itself?

After its disastrous experience in the 2014 midterm elections, some think that the Democratic Party needs to refocus itself and return to some of its historic roots as a champion of the working and middle classes.  One such person is former Virginia Senator James Webb who has announced an exploratory effort on a run for the Democratic presidential nomination in 2016.  There are positive aspects to Webb's vision, but the question is whether he or anyone else can cause the party to recalibrate itself and/or force Hillary Clinton to do so.  The Democrats need a stirring theme and agenda and just saying that they are not crazy and/or a bunch of hate merchants like the Republicans - true as that may be - isn't enough to recapture the battered middle class.  We need to reignite social mobility for the younger voters and give parents an ability to once again believe their children have a better future.  Here are highlights from a New York Times editorial:

Not everyone agrees that Hillary Clinton’s selection as the Democratic nominee is unstoppable. The first to challenge her is Jim Webb, a one-term former senator from Virginia.

Here is the case for the Democratic Party renegade.  When Webb, who served as secretary of the Navy under Ronald Reagan, announced the formation of a presidential exploratory committee on Nov. 19, he sought to capitalize on Democratic discontent. Taking a swipe at both Wall Street and Clinton’s potential bid for the nomination, Webb declared:

Our Constitution established a government not to protect the dominance of an aristocratic elite, but under the principle that there should be no permanent aristocracy, that every single American should have equal protection under the law, and a fair opportunity to achieve at the very highest levels.

Webb suggested that he could bring working class whites back into the Democratic fold and restore the biracial Democratic coalition:

We have drifted to the fringes of allowing the very inequalities that our Constitution was supposed to prevent. Walk into some of our inner cities if you dare, and see the stagnation, poverty, crime and lack of opportunity that still affects so many African-Americans. Or travel to the Appalachian Mountains, where my own ancestors settled and whose cultural values I still share, and view the poorest counties in America – who happen to be more than 90 percent white, and who live in the reality that “if you’re poor and white you’re out of sight.”

Webb’s exploration of a presidential bid is based on the premise that he can tap into a crucial but alienated segment of the electorate.

This bloc includes voters convinced that Wall Street owns both parties, voters tired of politicians submitting to partisan orthodoxy and voters seeking to replace “identity group” politics with a restored middle- and working-class agenda.

Webb is one answer to the weaknesses of today’s center-left, the so-called “upstairs-downstairs” coalition described by Joel Kotkin, presidential fellow in Urban Futures at Chapman University. Kotkin argues in his recently published book, “The New Class Conflict,” that the Democratic Party has been taken over by what he calls “gentry liberals,” an elite that has undermined the historic purpose of the Democratic Party.  Kotkin contends that

The great raison d'être for left-wing politics – advocating for the middle- and working classes – has been refocused to attend more closely to the policy imperatives and interests of small, highly affluent classes, as well as the powerful public sector.

I asked Kotkin what he thought of the themes Webb intends to raise, and he wrote back “I think he’s onto something.”

Al Hunt, a Bloomberg columnist, warned that Webb “could be Hillary Clinton’s worst nightmare,” noting that Webb

seems an improbable candidate. He has taken illiberal positions, was President Ronald Reagan’s Navy secretary, has few relationships within the Democratic Party, and has no serious fund-raising network. What he does possess is a long-held and forceful opposition to U.S. interventions in Iraq and Libya, and potentially Syria, as well as solid anti-Wall Street credentials. In Democratic primaries, these may be Clinton’s greatest impediments to rallying a hard-core activist base.

To gauge Webb’s prospects, I looked at the exit poll data for the 2006 Virginia Senate race, when he unseated George Allen, the favored Republican. I then compared Webb’s performance among key constituencies to the performance of all House Democrats running nationwide in the same year.

The results of this comparison do not support the portrayal of Webb as a candidate equipped to win over key white constituencies.

What are the prospects of winning the presidential nomination for a candidate who challenges current Democratic Party strategic orthodoxy? This strategy calls for identity group, rather than class-based, mobilization, on the assumption that turning out single women, the young, and racial and ethnic minorities is more effective than an uphill struggle to revive support in the recalcitrant white middle and working class.

As much as such a shift to a class-based strategy might result in economic policies more beneficial to less affluent Democratic constituencies, and therefore to more votes in the long haul, so far there has been insufficient intraparty pressure to force a change in strategic orientation.

It is not lost on Democratic strategists that President Obama won twice deploying a group-based rather than a class-based strategy. Even if the next Democratic nominee does not inspire the high minority turnout levels of 2008 and 2012, the 2016 electorate will be less Republican than it was in 2012. Every four years, the heavily Republican white share of voters drops by a little over 2 percent, and the disproportionately Democratic minority share grows by the same amount.

Insofar as the Republican Party tempers its retrograde stance on social-sexual and moral-racial issues, Democratic campaigns stressing alleged threats from conservatives — the threat to freedom and privacy posed by the Christian right; the threat to Hispanic family unity posed by anti-immigrant activists; the threat to programs serving the poor posed by deficit hawks — will run out of gas.

Democrats, according to Pew, retained an advantage on less tangible qualities such as empathy, honesty and a willingness to compromise.  As attractive as those characteristics are, they are not top priorities for voters. . . . . voters’ top priorities consistently include bread-and-butter issues, jobs and the economy.

The Democrats’ lack of credibility on economic issues will hobble, if not extinguish, the party’s prospects. Unless the Democrats develop a coherent, comprehensive strategy for the have-nots, it won’t matter whether the party’s nominee is Clinton, Webb or anyone else.