James Napoli: God’s Top Ten New Year’s Resolutions

Hey, everybody, God here. I may be omnipotent, but I am just as prone to taking stock as all of you, my long-suffering subjects. I trust you will find some inspiration for your own self-improvement in these, my philosophical musings, and I hope you enjoy this rare opportunity to, if you will, meet your maker.

James Napoli is an author and humorist. More of his comedy content for the Web can be found here.

Read more: Philosophy, NewYear's Resolutions, Betty White, Decision Points, Economy, Christopher Hitchens, George W. Bush, War, Ground Zero Mosque, God, Don't Ask Don't Tell, Credit Cards, Sex, Alcohol, Fitness, Workouts, New Year, Year in Review, Slidepollajax, Comedy News

Michael Bendetson: A Formula for Failure

While there has been much debate over proposed stimulus plans for our lethargic economy, little attention has been given as to what exactly we are trying to stimulate. The Great Recession has exposed a major flaw in the American economy beyond risky derivatives and Hoover-esque regulations. This crisis has exposed an incentive structure for our intellectual elite that has encouraged many of them to seek success at the expense of our society instead of through benefiting it. As China and India continue to funnel their college graduates into science, engineering, and other fields that set the pace for 21st century economic growth, America has opted for a formula based on investment bankers and lawyers that has already proven flawed.

Although the legal profession is often the butt of endless jokes, underlying this sentiment is a general albeit reluctant feeling that lawyers are necessary for any functioning society. This belief is further accentuated in light of recent events most notably the TSA’s increased “security” procedures and our continued desire to protect precious civil liberties during wartime. Investment banking is also a valuable asset to any free market economy, providing necessary capital for business growth. Yet as Mark Twain so eloquently observed, with the exception of good whiskey, too much of anything is bad.

If there is one profession that need not apply for a bailout it is indeed lawyers. The American Bar Association notes that at the end of last year there were around 1.14 million active attorneys in the United States, doubling the 1980 amount of 542,000. While the American population has grown sizably in the last 30 years, the increase in the number of lawyers has far outpaced society’s growth. One should only expect this trend to continue well into the next decade. The dream to work at Davis Polk & Wardwell in New York or Jenner & Block in Chicago has pushed both the quality and quantity of law school applicants to heights comparable to the firm’s skyscrapers themselves. Last year, total law school enrollment topped well over 152,000 students, a 21% increase from just three decades ago.

While the extent and impact of these trends has proven to be contentious issue, there is little doubt that the continuing influx of attorneys has altered American behavior. The increase in the number and size of these law firms has unsurprisingly led to a massive increase in litigation nationally. While in 1980 the number of civil cases filed in U.S. District Courts was approximately 150,000, recent years filings have totaled around 270,000. Although this disproportionate growth in lawsuits has produced animosity amongst many, it is important to acknowledge certain benefits from this activity. With new federal legislation on civil rights, occupational safety, and consumer protection, a portion of this influx can be contributed to new social welfare awareness.

However, a large percentage of these civil cases also fall into the frivolous category often at the expense of society itself. The quintessential example can be found in doctors’ offices all across the country with the issue of medical malpractice. With 10% of all healthcare costs spent on either on malpractice insurance or defensive medicine, the American patient and consumer is forced to pay an ever increasing annual premium. Beyond the financial impact, the surplus of malpractice litigation is creating a national dearth in medical care. New Jersey has proven to be the poster boy for this problem where malpractice rates are some of the highest in the nation. This “hostile environment” towards doctors is leading to a projected shortage of 2,800 physicians over the course of the next decade in the Garden State.

Although not as startling in terms of size as the growth of the legal industry, the growing desire of our nations brightest to work in finance, investment banking, and Wall Street is equally as concerning. According to the Bureau of Labor Statistics, the number of Americans employed in finance has drastically risen from approximately 5 million in 1980 to over 7.5 million today. The lure of working for McKinsey or Goldman Sachs has created an “Ivy-to-Wall Street pipeline.” A recent study conducted by Payscale Inc. concluded that a significantly higher proportion of Ivy League graduates enter finance than their peers at other institutions. Throughout most of this past decade, the percentage of Harvard graduates seeking employment in finance has hovered at around 1/3 of the class. While the number temporarily dropped last year, Wall Street’s recent revival has sparked a return to near pre-recession numbers as our nation’s best seek more to imitate Gordon Gekko than John Harvard.

Rehashing the dangers excessive and uncontrolled investment banking poses to our economy is superfluous; the American people are living with the repercussions. We are all familiar with the narrative of greedy “investors” using sub-prime loans and predatory lending in ongoing effort to outdue their competition for better bottom line profits. However, the larger danger to the economy has been the fundamental restructuring of both our concept of supply and demand and the role of production in goods and services. There has been no industry in the last several decades that has experienced greater profitability than investment banking and Wall Street. In 1980, financial firms represented 1/7 of all American business profit. By 2006, these same firms came to incorporate as high as 1/3 of all U.S. profit. As the New Yorker’s John Cassidy notes, “During a period in which American companies have created iPhones, Home Depot, and Lipitor, the best place to work has been in an industry that doesn’t design, build, or sell a single tangible thing.”

While much of the focus on the recent influx of lawyers and investors centers around the negative implications of this growing trend, America suffers more from the important fields our elites have ignored than from the lucrative ones they pursue. In response to the rapid rise of active attorney’s in the United States, Supreme Court Justice Antonin Scalia notes, “maybe we’re wasting some of our best minds.” Scalia adds that after reading impressive work by proceeding counsel, he often ponders, “Why isn’t he/she out inventing the automobile or, you know, doing something productive for this society?” In relation to his field, Harvard Economics Professor Benjamin Friedman notes a similar danger in the steep rise of our elite graduates in financial firms. Friedman contends, “At the individual level, no one can blame these graduates. But at the level of the aggregate economy, we are wasting one of our most precious resources. While some part of what they do helps to allocate our investment capital more effectively, much of their activity adds no economic value.”

Although other industrial powers have adapted to the 21st century economy of science and engineering, the United States continues to embrace its flawed formula of excess in lawyers and investors. This past year American undergraduate institutions awarded just 16% of their degrees in the natural sciences or engineering, in comparison to China’s 47% and South Korea’s 38%. The future Thomas Edison’s or Henry Ford’s appear to be found in the East and not in a nation that ranks 27th in graduating engineers. Although we are supposed to celebrate President Obama’s recent tax deal as good policy and a strong economic stimulus, the underlying problem remains wholly unaddressed. America suffers not from a lack of jobs, but from a lack of job makers. Until the latter replaces the former in U.S. policy, the country will continue in its Carter-esque and soon to be Obama-esque ‘malaise.’

Read more: President Obama, Medical Malpractice, Antonin Scalia, TSA Security, China, Investment Banks, Goldman Sachs, President Jimmy Carter, Wall Street, New Jersey, Harvard University, Bureau of Labor, South Korea, Great Recession, American Bar Association, India, Ivy League Schools, Politics News

Rising Oil Prices A Threat To The Recovery — Just Not Yet

The price we pay at the pump may eventually take a toll on the economic recovery.

The Financial Times reports this morning which suggests that “High oil prices threaten to derail the fragile economic recovery among developed nations this year.”

The warning is coming from the IEA, an energy watchdog group, who reported that oil import costs for the 34 countries in the Organisation for Economic Co-operation and Development, including the US, have risen up to $790 billion — a 30% increase.

“Oil prices are entering a dangerous zone for the global economy,” Fatih Birol, the IEA’s chief economist told FT. “The oil import bills are becoming a threat to the economic recovery. This is a wake-up call to the oil consuming countries and to the oil producers.”

But, in the U.S. at least, oil prices have yet to hit levels that would cause a noticeable drag on the economy, experts said.

“The recovery is what is driving the price of oil up,” Dr. John Parsons, Executive Director of the Center for Energy and Environmental Policy Research at MIT, said. “The price is the messenger: the message is that oil supply is relatively limited and that recovery and growth is going to have to expand in the non-oil intensive sectors.”

“It could be a drag on the recovery if oil prices went much higher, but that scenario seems very unlikely,” Greg Priddy of Eurasia Group told the Huffington Post. Priddy added that while high oil prices have been a problem in the past for consumers, we aren’t at that level yet.

The FT has a more detailed rundown of the numbers here.

Read more: Economists Oil Prices, Oil Prices Recovery, Oil Prices Rise, Economy, Global Economic Recovery, Business News, Oil Prices, Economic Recovery, Rising Oil Prices, Business News

Lawrence G. McDonald: What You Should Know About the New Congress

Later today, all of the members of the House and a third of the Senate will be sworn in and the new reality in Washington will officially set in. The initiatives that will roll out of each body in the coming days and weeks will be a radical departure from the Democratic dominance of the past years. However, we expect that the most serious proposals will also be strikingly different from the long list of priorities that existed for both parties during the last two shifts in power. In addition to the Congress, President Obama will begin to reveal selectively his reaction to the new political reality and what his priorities for the next year will look like.

Austerity, Spending Cuts, Deficit Reduction

No matter what wording you choose, the amount of money spent and collected by the federal government, as well as the amount of debt that is sold to cover the shortfall, will be the key driver of the 112th Congress. Several key flash points will arise in the coming months around this issue, which will also demonstrate the new balance of power and personalities in the new Congress.

Continuing Resolution and Rescission of Unspent Stimulus Funds

First, will be the Continuing Resolution that funds the government until March 4 coupled with a vote to increase the debt ceiling. These initial battles will highlight the conflicts of the new Washington reality, as Senate Minority Leader McConnell (R-KY) works to retain party unity — amidst promised efforts by Senator DeMint (R-SC) to lead opposition to any measures he and other like-minded Senators deem insufficient for reducing spending as well as the size and reach of government. Speaker Boehner (R-OH) and his House Leadership team will face similar issues in keeping the new class of Tea Party-backed freshmen Republicans happy, while attempting to craft legislation that has a chance of passing the Senate. One of the first areas where this dynamic will be at work is with the promised rescissions to already appropriated Federal spending from the Recovery Act (the stimulus).

Potential Grand Bargain on Spending

Other examples of the new reality will be the potential for closer cooperation between moderate Democrats and Republicans in the Senate. One of the key indicators to watch in this regard will be the reaction of other Senators to the introduction, by Mark Warner (D-VA) and Saxby Chambliss (R-GA), of the bi-partisan Deficit Commission’s findings in statutory language. The release of the President’s budget in February may also be an opportunity to outflank Republican Congressional leaders on deficit reduction and there are rumors it will contain cuts to defense spending that would certainly result in clear winners and losers in the sector. Secretary Gates is expected to announce these cuts, thought to be around $100 billion in size, as early as this week after receiving approval from the White House.

Attacks on Obama’s Health Care Policy

Second, is health care policy, notably the implementation of the Affordable Care Act (ACA). A repeal vote has already been scheduled in the House for January 12, but as we have said before, this will be simply symbolic and the Democratic Senate Leadership has already written to Republican House Leadership saying they will not take up the matter.

The real focus of Republicans, some Democrats, and the key variable in this debate, will be just how much opponents of the ACA will be able to chip away at funding through the Appropriations process and through small bi-partisan deals, such as small business expense reporting on 1099 IRS forms. New Ways and Means Committee Chair Dave Camp (R-MI) has already been making statements to this effect, and he may have a willing partner in Senate Finance Committee Chairman Baucus (D-MT), who attempted to repeal this portion of the ACA in the lame-duck period of the 111th Congress.

Neutering the EPA and FCC Third, House Energy and Commerce Committee Chair Fred Upton (R-MI) has indicated he will seek to use the Congressional Review Act to prevent the EPA from regulating greenhouse gases and the Federal Communications Commission (FCC) to enforce new “Net Neutrality” rules.

The biggest variable of all is how the Obama administration will adjust to the new reality

I believe that the President’s choice will be driven by the state of the economy. Should the Administration decide that “green shoots” have blossomed, unemployment is falling, and growth is in fact increasing, this will free the President to act in a more moderate and pro-active manner, working alongside the new dynamics in Congress. Rallying his base will be less important and he will be able to garner at least partial credit for economic recovery.

Washington and Wall St.

Indicators of this path include the potential appointment of Bill Daley from JP Morgan Chase as Obama’s Chief of Staff and rumors of a deal to reform Social Security along the lines of the Deficit Commission recommendations, as part of a grand compromise to ensure that the debt ceiling is increased and any spending cuts also hit traditional Republican priorities such as defense spending.

An initial move in one direction by the Administration does not necessarily preclude a later shift, should the economic or political situation change. Additionally, no matter what develops in terms of legislation, the Executive Branch agencies and regulators will continue to implement the President’s agenda, particularly the ACA and the Dodd-Frank Act. There may be disruptions of the funding needed to fully implement each act, but the rule-writing will continue nevertheless.

Agency Oversight/Investigations Another worry for the agencies besides funding, is the new Chair of the House Committee on Oversight and Government Reform Darrell Issa (R-CA), who has promised to hold hearings on several topics including: how regulation affects job creation; Fannie Mae, Freddie Mac and the FHA; as well as the Obama Administration’s foreclosure mitigation efforts; the disparate findings of the Financial Crisis Inquiry Commission; and the FDA’s food and drug safety review processes. Responding to these investigations is expected to divert a great deal of attention within Executive Branch agencies towards defending Administration actions and away from implementing new priorities.

Vacancies at Financial Regulators

The rising number of vacancies of key leadership positions at various financial agencies and regulators will also act as a yoke on rule making. Vacancies include the regulator of Fannie Mae and Freddie Mac, theFederal Housing Finance Agency (FHFA); the Office of the Comptroller of the Currency (OCC); the new Consumer Financial Protection Bureau (CFPB); the new Office of Financial Research at Treasury; the National Economic Council (NEC); the Federal Reserve Board of Governors; and other lower level but critical positions at the Treasury Department. The longer these positions go unfilled, the more implementation of regulations will be delayed — a potential point of leverage for Senate Republicans.

The bottom line for the next few weeks and months is that although Republicans will seek to roll back the legislative successes of the first two years of the Obama administration as much as possible, they will make little progress. The Senate holds potential for some bipartisan activity on select issues such as spending and social security, but the focus should be on the President’s choice of governing style for the last two years of his term. This, in turn, will define how he runs his reelection campaign.

Read more: Deficit, Debt, Congress, Wall Street, John Boehner, Health Care Reform, 112th Congress, Health Care, Politics News

AT&T plans 20 new phones, major Android push

LAS VEGAS (Reuters) – AT&T Inc plans to sell 20 phones sporting high-speed Web surfing this year, including a dozen running Google Inc software, in the U.S. carrier’s biggest push yet to lessen its dependence on Apple Inc’s iPhone.

Hiring surges in December, buoys economic outlook

NEW YORK (Reuters) – The number of U.S. private-sector jobs surged in December at a rate three times stronger than forecast, a hiring report showed, the most bullish signal in months that a recovery in the world’s biggest economy is shifting up a gear.


Intel’s new chips to yield one-third of 2011 revenue

LAS VEGAS (Reuters) – Intel Corp new “Sandy Bridge” microchips will yield about a third of its revenue in 2011 and help trigger more than $125 billion in sales for the struggling personal computer industry, Chief Executive Paul Otellini said on Wednesday.

Republicans take charge of House

The 112th US Congress convenes, starting a new legislative session in which resurgent Republicans aim to cut the size of government and spending.