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Monday, November 5, 2012 – There is a Light at the End of the Tunnel

There is a Light at the End of the Tunnel
by Sinclair Noe
DOW + 19 = 13,112
SPX + 3 = 1417
NAS + 17 = 2999
10 YR YLD -.04 = 1.68%
OIL +.85 = 85.71
GOLD + 8.10 = 1686.00
SILV + .27 = 31.28
Tomorrow it will all be over, maybe; unless, it is too close to call, in which case, it might drag out interminably or it might be decided early tomorrow evening. The latest Reuters/Ipsos poll has Obama leading Romney 50% to 46% for the presidency of Ohio. If that holds up, then it’s a done deal; unless it isn’t. I think there might be a light at the end of the tunnel.
Election 2012 has been relentless; it seems like it has been going on forever. This is the season of discontent, no matter which side you support. In the October 2008 jobs report the economy lost 500,000. This month we gained about 170,000 and there were positive revisions for the previous two months. The future looks bright, but grim at the same time. A new report from the National Employment Law Project says that since 2001, employment has grown 8.7 percent in lower-wage jobs and 6.6 percent in high-wage ones but they’ve fallen more than 7% in mid-wage jobs. The situation since the financial Crisis of 2008 is similar: jobs in the mid-range paying $14 to $21 accounted for 60% of jobs lost but only 22% of the job gained while lower wage jobs paying a median wage ranging from $7.70 to $13.83 represented 58% of all new jobs.
The Republican drive to delegitimize President Barack Obama’s possible second term has started.
As recent polls have allowed for the possibility that Republican presidential nominee Mitt Romney could win the popular vote while the president carries the Electoral College, the conservative blogosphere has lit up not only with long-overdue attacks on the Electoral College but also with the specious argument that a popular-vote loss for Obama will undermine his mandate and justify continued obstruction by Republican lawmakers.
So, tomorrow we vote, and while you feel in your heart that this is a pure and patriotic act, you also get the sinking feeling that your vote is not much more than a grain of sand on the beach, and that politics is left to the highest bidder.
One thing is absolutely certain: this is the most expensive election ever. A new report by the Center for Responsive Politics places the total cost of the 2012 elections at an estimated $6 billion. For the first time, both candidates – President Obama and Republican nominee Romney both rejected federal public financing and each of them collected nearly as much as the entire field in 2004. The 2012 presidential election cycle marks the first since Citizens United, the Supreme Court ruling that removed key restrictions on money from corporations and the wealthy.
President Obama’s 4 million small donors have contributed online or even by text message. Obama has collected more than $210 million from small donors; Romney just a third that amount, but Romney has been more successful in luring big-money backers, including those who have made contributions of a million dollars or more, to superPACs and so-called social welfare organizations. The names of donors giving to social welfare groups is not required to be disclosed.
Not only is the total cost of the election record breaking, but the rate at which spending has increased and continues to increase, in the closing weeks of the election is as well. In particular, outside groups are spending furiously. Spending by these groups, for and against the two main presidential candidates, has grown from $19 million per week in early September to $33 million per week in early October to $70 million during the week beginning October 21. If nothing else, it has been a huge stimulus boost for TV and radio stations, especially in the swing states.
The presidential election alone accounts for $2.7 billion. In 2012, presidential candidates along with major party committees are expected to spend about $2 billion. Outside organizations that report spending to the Federal Election Commission are predicted to spend more than $528 million to influence the presidential race. Spending by the party convention host committees and public funding for the conventions totaled $142 million.
Spending in congressional races is projected to increase slightly in 2012. House and Senate candidates combined will spend about $1.82 billion, up from $1.81 in 2010. House campaign spending alone will total nearly $1.1 billion, a slight increase of 3 percent more over 2010. In the Senate, spending by candidates will approach $743 million, which is down about 7 percent compared to 2010. Republican candidates have raised more than their Democratic counterparts in both chambers this election cycle. Republican House candidates have also raised more on average — $712,000 to $594,000, –though Democrats did better than Republicans in the Senate, on average, raising $3.8 million to Republicans’ $2.6 million on average.
What remains unknown — and may never fully be accounted for — is how much money secretive “ shadow money” or “dark money” organizations spent, with some investing massive sums on ads, but also on unreported and purportedly “non-political” activities, as the election neared. It may take years to determine how much they spent. Furthermore, it likely will never be known who provided the vast majority of this money, which includes at least $203 million in the last two months. Dark-money groups not only mask their donors; they fail to even disclose all their spending. One thing we can say for certain is that the transparency the Supreme Court relied upon to justify this new framework has been sorely lacking,
Just to give you an idea of how this work’s or doesn’t work. California’s elections watchdog has been fighting for weeks to unmask a secretive group that spent $11 million to defeat Proposition 30, Gov. Jerry Brown’s temporary tax increase to fund schools, and to simultaneously pass Proposition 32, which would kneecap state labor unions. Americans for Responsible Leadership, a non-profit based out of Arizona, made the $11 million donation. California’s Fair Political Practices Commission sued to find find out the donors. ARL lost and had to name the donors. ARL’s $11 million came from a group called Americans for Job Security, which is run out of an office in Alexandria, Virginia. And the $11 million was funneled to Americans for Job Security from a group called the Center to protect Patient Rights. Who funds the Center to Protect Patient Rights? As a 501(c)(4) nonprofit, the group does not name its donors.
I don’t know where the money ultimately originated but you can bet the politicians know, and they are beholding. I have a very hard time believing this is anything but bribery, maybe money laundering.
If this sounds like money laundering; it is and it might even be illegal under California law. Whoever dreamed up this grand scheme, if the political gig doesn’t work, they might consider going to work for the Mexican Drug Cartel, or HSBC.
Fines for violating federal anti-money laundering laws could cost HSBC Holdings significantly more than $1.5 billion and is likely to lead to criminal charges as well. HSBC is the largest European bank. HSBC said the US investigation had damaged the bank’s reputation and forced it to set aside a further $800 million to cover a potential fine for breaches in anti-money laundering controls in Mexico and other violations. The provision was on top of $700 million it put aside in July.
A Senate report in July criticized HSBC for letting clients shift potentially illicit funds from countries such as Mexico, Iran, the Cayman Islands, Saudi Arabia and Syria. HSBC had warned earlier in the year it could face criminal or civil charges as part of the investigation. HSBC’s problems involve not just sanctions issues but also major apparent lapses in money laundering controls.
Any settlement with U.S. prosecutors is likely to come in the form of a deferred prosecution agreement, which would allow the company to avoid a formal indictment. Deferred prosecutions have become an increasingly popular way for federal prosecutors to penalize companies without running the risk of forcing them out of business by indicting them. US regulators usually resolve corporate criminal cases by imposing fines and requiring changes to a compliance program but dismisses the charges if all requirements are met. The Justice Department has entered into 27 such agreements so far this year. HSBC said a deferred agreement was not certain, however, and authorities have “substantial discretion” to do what they want. Of course, if you or I steal a loaf of bread, we would end up in the hoosegow for an extended stay.
Oh well, if this banking stuff doesn’t work out, the bankers can get a job in politics running one of the SuperPacs.
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