A few days after print publication, Knight's syndicated newspaper column, which moves twice a week, will be posted. The most recent will appear at the top.

Sunday, November 23, 2014

Affordable Care, the Supreme Court and hope

Bill Knight column for Thurs., Fri., or Sat., Nov. 20, 21 or 22

It’s not yet Thanksgiving and last winter’s “polar vortex” has become this season’s “bomb cyclone” – meteorologists’ trendy term for an intense, fast-moving storm resulting from the jet stream shifting and sending frigid air roaring south into the United States, icing the roads and causing wind-chills to flirt with zero.

But the cold can’t last forever.

Just as cyclical are cynical political maelstroms, and though Washington Republicans recently won the Senate and a few governorships, it’s somehow difficult to believe that the momentary GOP resurgence will further disrespect President Obama through impeachment, or discount climate change to the peril of the planet, or discard the insured, the poor or immigrants.
Consider the Affordable Care Act (ACA). As another enrollment period starts, business magazines and groups have conceded that the law stopped the double-digit increases in health insurance premiums common a decade ago. In 2004, those premiums went up seven times faster than inflation, according to the nonpartisan League of Women Voters.

A study from PriceWaterhouse Coopers projects median premium increases for next year to be about 6 percent, a finding echoed in Bloomberg News, where Alex Wayne added, “While foes of the Affordable Care Act warned of double-digit rate increases, the costs of premiums seen so far is more modest.”

Forbes magazine’s Rick Ungar wrote about a report from the McKinsey Center for U.S. Health System Reform, which, Ungar said, “expects that a number of people purchasing higher price plans … will move to either the lowest or second lowest plan. For those people, the study suggests the mean increase will be less than 2 percent.”

Meanwhile, the number of insurers increased by 26 percent between 2014 and 2015, and the number of products grew 66 percent, Ungar said, adding, “It is going to be quite a stretch for Obamacare opponents to turn this data into bad news.”

OK, good news hasn’t stopped Obama-bashers. After all, as Lee Papa writes in The Rude Pundit blog, “Things seem to be progressing. Millions of people have health insurance who didn't have it before. The unemployment rate is below 6 percent, down from 10 percent in 2009. The deficit has shrunk to just 3 percent of GDP, down from 9.8 percent in 2009. Corporate profits are up. Oil imports are down. Alternative energy sources are finally growing. The crime rate is at a 20-year low, so low that Obama wants to try to roll back some of the ludicrous sentencing laws from the Clinton era. And how many states are we up to on same-sex marriage? And how many terrorist attacks in the United States since Obama's inauguration?”

So it’s no shock that an unexpected challenge to the ACA is now set to be heard by the U.S. Supreme Court in March for a June ruling. “King v. Burwell” disputes the federal government’s power to distribute tax credits to low- and middle-income people to aid the purchase of private insurance.

Four words in one sentence of a law of hundreds of pages makes millions of Americans eligible for federal subsidies to get insurance; abolishing that could mean between 4 million and 7 million people in 37 states left without the means to buy insurance.

Most federal judges tossed out the lawsuit, but the conservative-leaning court accepted the appeal.
Analysis by the RAND Corp. shows concern with the court threat.

“If subsidies are eliminated entirely, our research predicts substantial disruption in the individual health insurance market,” said RAND’s Christine Eibner.”Many people could not afford to enroll.”

In other words, fewer subsidies would mean more people dropping policies, which could force insurers to raise prices, which could cause others to drop coverage, etc.

A 5-4 decision killing this ACA provision would be terrible for consumers, hospitals and insurers – plus for the GOP, which purports to represent many people who are benefiting, like in Mitch McConnell’s Kentucky. In fact, the Kaiser Family Foundation has shown that the states hardest hit would be in the Republican-red South.

So we must stay aware, work to genuinely improve the ACA, and think of the coming Spring.

[PICTURED: Graphic from]

Thursday, November 20, 2014

Lane Evans was progressive champion

Bill Knight column for Mon., Tues. or Wed., Nov. 17, 18 or 19

Lane Evans had an easy smile, but downstate Illinois’ progressive champion for working people and veterans was a bit bashful and didn’t often laugh out loud. So as we grieve his death, it’s some comfort to recall when I sparked a gut-busting guffaw from the Quad Cities Democrat.

It was after an event in Canton, Ill., where Evans appeared with the great liberal governor of Texas, Ann Richards. A supporter complimented Lane’s new haircut and a face she said was becoming “Lincoln-esque.” He grinned. Then I said hello and added that a kid on the Little League team I coached thought his original haircut made him look like Jim Carrey in “Dumb and Dumber.”

He laughed out loud, shook his head and said, “A lot of us feel dumb and dumber sometimes.”

I made him laugh then. Now, his passing makes us cry.

The popular lawmaker, 63, died Nov. 5 due to complications from Parkinson’s disease.

A Marine, graduate of Augustana College and Georgetown University’s law school, and former Quad Cities legal aid lawyer, Lane served Illinois’17th Congressional District from 1983-2007.

Diagnosed with Parkinson’s in 1995, Lane served more than a decade more, fighting for unions, veterans and everyday people with solid constituent services and a strong ethic that emboldened him to stand up for rights – and for what was right – when more feeble or fearful Democrats fretted about popularity, polls or politics.

A co-founder of Congress’s Progressive Caucus, Lane was an early supporter of Barack Obama, first in 2004 for the U.S. Senate from Illinois, then for the White House in 2008.

Lane was my Congressman for about a year when I moved into western Peoria County, then redistricting changed his area, but we crossed paths frequently, mostly on labor issues but sometimes just because we were nearby. Whether at a picnic in Macomb or a rally in Galesburg, at meetings in offices in Moline or Washington, on picket lines or parades, Lane was a welcoming man, sleeves rolled up, tie loosened, chin dimpled, eyes front. For a time, he dated a Chicago woman I knew from mutual progressive pals. He helped me write a Mother’s Day feature, reflecting on his mom Joyce and their support of JFK. He helped another friend who also has Parkinson’s, with some fund raising.

Unlike a lot of political candidates, Lane didn’t exactly seem comfortable glad-handing strangers, but he was never standoffish either. And like many good politicians, he remembered names. He asked about my son more than once even though they’d only met a few times.

Lane was bright, sharp and witty. Once I was visiting with one of his Capitol Hill aides about mega-hog farms and related environmental concerns, and Lane interrupted his schedule, came in the conference room and joined the discussion, helping us come up with a gimmick to use at an upcoming hearing in Springfield: “SWINE,” he said, looking up from doodling on a yellow legal pad, his eyes twinkling.

“Huh?” I replied.

He explained: S is for Smell, W is for the Water that’s threatened, I is for the Indemnification against loss neighbors could suffer. N is for the Nutrient overload from too much manure spread on fields. E is for Enforcement of any regulation that might be passed.

He passed his last few years at Hope Creek Care Center in East Moline, staying as engaged as possible and indulging his love for British Invasion rock ’n’ roll, especially the Beatles but also the Kinks, he told me.

The heartbreaking sorrow that’s felt is tempered by the inspiration he engendered.

Before his burial at the National Cemetery at Rock Island Arsenal, his funeral Mass Nov. 10 at Moline’s Sacred Heart Catholic Church was celebrated by Father Mark DeSutter, a former Macomb and Morton priest. On 17th Avenue at 13th Street, with clocks on its bell tower and an entrance of three big doors, the stately church building was built of stones as gray as the threatening sky that morning. But the sun broke through the clouds and shone through the stained-glass windows facing south.

People smiled through tears, and you could almost hear the laughter of hope.

[PICTURED: Lane in the 1980s and in the '90s.]

Sunday, November 16, 2014

Bandits in suits eyeing your retirement

Bill Knight column for Thurs., Fri., or Sat., Nov. 13, 14 or 15

In cowboy shows, if folks were heading on a route where road agents lurked to rob folks of valuables, they wanted someone to ride shotgun, and in Illinois, AARP may be filling that role as Chicago’s conservative Civic Federation has suggested taxing retirement incomes.

That’s right: Don’t panic, but know that influential interests are eyeing your retirement to benefit their wealthy peers who object to the state’s current 5 percent income tax.

Although Republican governor-elect Bruce Rauner in July said he opposes taxing retirement income, the idea may look more attractive as he takes the reins of a government that has a poor track record of either raising revenues or cutting spending.

This week, a CBS News poll showed that most retirees depend on Social Security as their major source of income, and almost 4 in 10 say even that isn’t enough to live on. Some 64 percent are “anxious” about the amount of retirement savings they have, and 71 percent of those not yet retired say it’s already difficult to save for retirement and keep up with day-to-day expenses.

In Illinois, retirees don’t pay federal income taxes on their Social Security benefits if the sum of half of their benefits combined with all other income is less than $25,000 annually for individuals or $34,000 for couples.

However, adding a state tax would mean about 1.5 million Illinois retirees would have less money and therefore 1.5 million people less likely to be the consumers that the economy needs.

The Civic Federation proposes taxing all retirement income, from Social Security and private pensions to 401(k)s and Individual Retirement Accounts in order to ease the impact of the rollback of income tax rates.

Without legislative action, the state income tax rate of 5 percent will be reduced in January, and the state’s looking at a $4 billion deficit in its 2015 budget when that decrease happens.

AARP objects to a plan exclusively targeting any one group of citizens, especially its core constituency, retirees – people who hadn’t planned for such a reduction in their income when they retired. And the organization has pledged to lobby the General Assembly if the scheme is introduced in Springfield.

“My initial reaction was concern for those individuals who are living on fixed incomes and struggling with rising costs in other areas,” said AARP Illinois state director Bob Gallo. “This would be a double whammy for them.”

The private Civic Federation says, “The Illinois Comptroller estimates that this exemption of federally taxable retirement income reduced the State’s individual income tax revenues by $2 billion in Fiscal Year 2012. The cost of this exemption is expected to increase over time due to a population shift in Illinois. According to the Department of Commerce and Economic Opportunity, the number of senior citizens in Illinois is expected to grow considerably from 1.7 million in 2010 to 2.7 million by 2030.”

However, politically the idea may be a non-starter, especially considering the grassroots support in last week’s election for an alternative answer to the budget shortfall: a tax on millionaires The advisory referendum passed with more than 63 percent of the vote, some 2.1 million ballots.

Further, a new state tax on retirement income could tempt retirees to relocate to more welcoming climates – for finances as well as weather -- such as Florida, Mississippi, Nevada, Texas and Wyoming, none of which tax retirement or Social Security income, according to

It’s a treacherous path, but if Illinois’ “passengers” on the road to the future are armed with information and helped by advocates like AARP, retirees could arrive safely.

[PICTURED: Illinois AARP's Bob Gallo, from Active Transportation Alliance's web site]

Thursday, November 13, 2014

Election: more of the same lack of action?

Bill Knight column for Mon., Tues. or Wed., Nov. 10, 11 or 12

After Tuesday’s midterm election, Washington’s Republican leaders imagine their future as “Interstellar,” but it could be more like the unmanned space station supply rocket that blew up on liftoff Oct. 29, because most incumbents are returning.

Actually, what was mildly surprising last week wasn’t the GOP gaining a majority in the U.S. Senate, nor the mixed message of voters electing a few more Republicans while also overwhelmingly casting ballots for a host of progressive issues: a minimum wage hike, voting rights, progressive taxation, women’s health protection and more in Illinois, plus equal-pay, paid sick leave, due process for teachers, labor rights and legalized marijuana elsewhere.

What was a bit surprising was that despite Congress’ approval rating at its lowest in 40 years (16 percent, said Gallup – far worse than President Obama’s 45 percent, according to Rasmussen Reports on Nov. 2), almost all members of Congress got re-elected. Out of 435 members of the House of Representatives, only 8 to 17 seats were ever even “in play,” according to Cook Political Report, RealClearPolitics, Rothenberg Political Report and other analysts.

“Nearly three-quarters of Americans want to throw out most members of Congress, including their own Representative, yet the vast majority of incumbents will be returning to Capitol Hill in January,” said former U.S. Rep. Lee Hamilton, an Indiana Democrat who’s now at Indiana University.

“In other words, Americans scorn Congress but keep re-electing its members,” Hamilton said.

How’d this happen?

First, elected officials – even in Congress – are good politicians – that’s how they got elected initially. Now, they somehow separate themselves from the obstruction and inaction on Capitol Hill they help create, some even campaigning as “outsiders” from a Congress and government they belittle. A few may also claim a commitment to consensus, compromise and bipartisanship even though most incumbents have track records of voting how their party’s legislative leaders want.

Next, challenging an incumbent is tough. After all, office-holders have staff and salaries, exploit their higher profiles, benefit from favorable gerrymandering of their districts, and rely on the country’s terrible voter turnout. So few Americans vote, Congress is essentially picked by about 20 percent of eligible voters, and many of them make their choices based on one issue, name recognition, etc.

It’s not just Republicans. Illinois is one of a handful of states, along with Connecticut, Maryland and a few others, where Democrats controlled redistricting, and it favors those in power in the states, Republican or Democrat. It’s a destructive, anti-democratic practice, whoever does it.

“The biggest reason is that there are very few districts represented by an incumbent from the 'wrong' party," said Matthew Green, a professor at Catholic University of America who specializes in Congress. "Out of 435 congressional seats, perhaps 20 of them are held by a member whose district leans away from his or her party, with maybe a dozen more being true 'swing' districts. With those numbers, most House elections are bound to be boring affairs.”

This is far from what seems to have been envisioned by the Founders, who had House members run every other year to have elections reflect changing grassroots opinion, and Senate members every six years to shield them from momentary trends.

So: Those seeing change may be disappointed.

“Not much is likely to get done,” commented writer Michael Sean Winters, who covers religion and politics for “Distinctly Catholic.”

“The country will still not get the leadership it needs,” he added, “– only the leadership it has come to deserve.”

Another unpopular do-nothing Congress.

[PICTURED: Editorial cartoon by Steve Greenberg of the Marin Independent Journal, via]

Sunday, November 9, 2014

Even the Fed and the rich are worried about income inequality

Bill Knight column for Thurs., Fri., or Sat., Nov. 6, 7 or 8

Ongoing wage stagnation points to the continuing problem of income inequality that’s so troubling even a wealthy observer and the head of the Federal Reserve have expressed concern.

An Oct. 24 third-quarter report issued by the Bureau of Labor Statistics shows the news about Americans’ pay is disappointing.
Through September, the “median usual weekly earnings” of the country’s 107.8 million full-time wage and salary workers 16 years old and up is $790, a 2.4 percent increase from a year earlier, the BLS said. However, adjusted for inflation, the median is $332, BLS added – a 0.6 percent improvement from the year before. (Median is the midpoint, meaning an equal number of pay levels are above and below that figure.)

Different sectors varied in earnings and increases from 2013, of course. The Production/Transportation sector is $640/week, up 1.1 percent from last year’s third quarter; the Management/Professional sector is $1,131/week, up 1.3 percent; the Construction/Natural Resources sector is $755, up 1.4 percent; and the Service Occupations sector is $508/week, up 3.6 percent from 2013’s third quarter.

Meanwhile, however, the “trickle down” economic theory – enriching the wealthy by lowering their taxes to ostensibly result in rich people creating jobs – is increasingly suspect. It’s “a tenet of American economic beliefs and an article of faith for Republicans that is seldom contested by Democrats,” wrote multimillionaire venture capitalist Nick Hanauer in Bloomberg Business Week. “Trouble is, sometimes the things that we know to be true are dead wrong.”

The actual “job creators” are everyday Americans with enough money to become customers of businesses’ goods and services, he said.

“If no one can afford to buy what I have to sell, my business will soon fail,” said Hanauer, who’s started or helped dozens of companies in retail, manufacturing, software and medical services. “Without consumers, you can’t have entrepreneurs and investors.”

People financially unable to be consumers get that way because their incomes aren’t keeping pace with costs of living, much less gains by the 1%.

Income inequality exists, and it may be time to question it, according to Janet Yellen, Chair of the Board of Governors of the Federal Reserve System.

In an Oct. 20 speech at Boston’s Federal Reserve Bank, Yellen said, “By some estimates, income and wealth inequality are near their highest levels in the past 100 years, much higher than the average during that time and probably higher than for much of American history before then.

“It is no secret the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” she continued. “I think it is appropriate to ask whether this is compatible with values rooted in our history.”

The connection between addressing income inequality and strengthening the economy is explained by Hanauer, the Seattle resident who also wrote books including “The True Patriot.” He advocates raising taxes on the top and raising wages for the rest. Making more than $9 million a year, Hanauer buys a lot of goods and services, he said. However, he does not buy as much as would be purchased annually if the $9 million was spent by 9,000 Americans each earning an additional $1,000 a year.

“Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent,” he said, “while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the super-wealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.

“If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year,” he added. “Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.”

[PICTURED: Mike Konopacki cartoon from]

Thursday, November 6, 2014

‘The only thing we have to fear is fear itself’

Bill Knight column for Mon., Tues. or Wed., Nov. 3, 4 or 5

Genuine concerns exist in Illinois, the country and the world, from hunger and housing to the loss of rights and the rise of climate change.

But – dang! – the Chicken Littles on talk radio and Fox News not only scream fear, but in the run-up to this week’s election, they seemed to blame President Obama for everything from ISIS, Ebola, and lax Secret Service security, to sunspot activity, flat beer and maybe the St. Louis Cardinals’ playoff series.

Who could keep track?

These Voices for Fear warn that Ebola will mutate and become airborne-contagious (while ignoring actual public-health threats ranging from the flu and tuberculosis to obesity and car wrecks); that terrorists toting assault weapons will invade from Mexico; and that fraudulent voting endangers the republic (despite Reagan-appointed federal Judge Richard Posner flatly stating that “voter identification” laws are voter suppression).

Some problems are not imaginary, of course: lousy roads, loss of privacy, targeting of young African American men, unfair funding for public schools, eroding women’s rights, filling prisons to overcrowding with nonviolent offenders, the Chicago Bears’ meltdown…

But Obama (or Speaker of the House John Boehner, for that matter) isn’t to blame.

Such scare tactics are echoes of Ye Olde Fear-mongering.

Remember “weapons of mass destruction”? Gay-bashing and gun-nuttiness by the Tea Party and Glenn Beck?

In the ’60s it was the loony Ku Klux Klan and the John Birch Society (co-founded by the Koch brothers’ dad, Fred). In the ’50s, authorities blamed juvenile delinquency on comic books (or rock ’n’ roll).

Before that: How about the classic “Red Scare,” a la U.S. Sen. Joe McCarthy?

And even earlier, there were Huey Long and Father Charles Coughlin…

But any reasonable American should see the inherent goofiness in fomenting fear about supposed actions (or inactions) by Obama, his administration, or the federal government. In fact, a tenet of the Republican Party’s credo is cutting budgets and gutting the public sector across the board, from Washington to our communities – expressed by anti-government manipulator Grover Norquist, who said, “Our goal is to shrink government to the size where we can drown it in a bathtub.”

So, if that occurs, picture a nation reverting to a time without clean-water and clean-air protections, with some religious faiths promoted while others are repressed, or with neighborhoods patrolled by underpaid police without pensions. And what would the response then be to security at airports or borders? The George Zimmerman All-Volunteer Posse? Or, too, how could brave health practitioners deal with medical crises – use Paul Ryan vouchers for haz-mat suits?

The Right and its GOP marionettes come close to advocating authoritarianism.

However, everyday Americans don’t want some ruthless and dictatorial federal, state or local government imposing the will of Wall Street or profit-above-all corporations.

Regular people are pretty levelheaded and fair-minded. We want to deal with real problems with passion, cooperation and hope.
We don’t expect every election to go our way, but we want people to be able to vote.

We don’t want handouts; we want job opportunities.

We don’t want businesses do go broke, but we think they need to keep out of politics and governance.

We don’t want free medical coverage, just affordable insurance to protect ourselves and our families.

We don’t want the wealthy to pay for everything; we want the rich to pay their share like everyone else.

And for those against abortion, same-sex marriage, organized labor or guns: Don't have an abortion or marry a gay person or accept union-negotiated wages or buy a gun.

There’s nothing to fear there.

As Franklin D. Roosevelt said in his 1933 inauguration address, “The only thing we have to fear is fear itself.”

[PICTURED: Editorial cartoon by Jack Ohman, Sacramento Bee.]

Sunday, November 2, 2014

Illinois: The worst government money can buy?

Bill Knight column for Thurs., Fri., or Sat., Oct. 30, 31 or Nov. 1

Tuesday’s election will end one of the least substantive campaigns in terms of explaining specific ideas for governing, but one of the most expensive – one dominated by large contributors.

The race for Governor of Illinois will top $50 million, one of the priciest in the country, mirroring the national trend.

In the last 30 years, according to numbers from the Federal Election Commission and the nonpartisan Center for Responsive Politics, the money spent on election campaigns and outfits like Political Action Committees (PACs) has increased 500 percent – which outpaced cost escalations in health care (425 percent) and private college tuition (311 percent), much less the median household income (128 percent), according to a Time magazine analysis.

In Illinois, Republican Bruce Rauner is outspending Democratic Gov. Pat Quinn by more than two-to-one, according to quarterly campaign finance reports filed last week. Rauner says he ponied up $20 million July through September, and Quinn reported raising $8 million.

“Some argue about which party benefits the most from the new Wild West of campaign finance, or claim that so long as both major candidates in an election are well-financed, our democracy is working the way it should,” said Abe Scarr, from the Illinois Public Interest Research Group (PIRG). “But that misses the forest for the trees: small donors’ voices are increasingly drowned out by large donors, and ordinary citizens are the ones who lose out.

“Mega-donors shouldn’t get louder voices because they have deeper pockets,” he added.

The scale of spending isn’t limited to gubernatorial candidates. The Attorney General’s race has Democratic incumbent Lisa Madigan with about $4.2 million and Republican candidate Paul Schimpf with $7,000. The Secretary of State’s contest has Democratic incumbent Jesse White with $770,000 and Republican opponent Mike Webster with $1,000.

For Treasurer, Republican Tom Cross reporting $600,000 on hand and Democrat Michael Frerichs $400,000. And the Comptroller’s contest has incumbent Republican Judy Baar Topinka with $1.4 million and Democratic challenger Sheila Simon with $100,000.

PIRG’s analysis focused on individual donations, so it doesn’t include self-financing, PACs or “dark money” contributions that aren’t publicly disclosed. According to campaign reports, Rauner added $7.5 million from his personal wealth in the third quarter, with another $3 million pitched in this month -- adding to about $10 million previously spent.

Put into context, just 426 contributors gave as much money as 13,315 small donors combined, PIRG shows, making Illinois 13th in the country as far as the disparity between donors.

Answers to the skewed-influence dilemma range from state campaign-finance laws and outright public financing (and limited spending) to tax credit or public matching funds for small donation and an amendment to the U.S. Constitution essentially overriding U.S. Supreme Court decisions (“Citizens United v. Federal Election Campaign”),” “McCutcheon v. Federal Election Campaign”)

“Even candidates and some donors themselves are tired of the fundraising grind,” said Rey Lopez-Calderon, Executive Director of Common Cause Illinois. “Public financing systems encourage participating candidates to connect with average voters. And with a robust matching system, candidates can tell regular voters – with confidence – that their small contribution will make a difference.”

David Melton, Director of the Illinois Campaign for Political Reform (ICPR), said, “While small donor matching systems are not a panacea for the multiple problems created by our current campaign finance system,” said “they offer a path toward a significant improvement by giving politicians the opportunity to rely on average voters to fund their campaigns rather than relying on the ultra-rich or special interest money.”

ICPR advocates Small Donor Democracy, a system where candidates who reach a certain level of funding from small contributions become eligible for matching public funds. It’s been used in some cities, such as New York and Los Angeles, but also in smaller municipalities, and at the state level in several states.

“Small Donor Democracy makes it possible to run competitive campaigns based on contributions from average citizens,” Melton explained. “It removes personal wealth and pandering to special interests as prerequisites, and with a diminished need for fund-raising, there can be greater emphasis on substantive debates. By implementing Small Donor Democracy in Illinois communities, we can promote greater citizen engagement, expand the diversity of candidates, encourage meaningful policy discussions, and call for leaders who are beholden to constituents rather than deep-pocket donors.”

[PICTURED: Cartoon by Daryl Cagle from cagle,com

Thursday, October 30, 2014

Wall Street rolls dice, cries all the way to the bank

Bill Knight column for Mon., Tues. or Wed., Oct. 27, 28 or 29

Wall Street seems like a casino where the problem gamblers ARE the House, and they only bet on sure things. “Wall Street hates uncertainty,” analysts say.

So, recent volatility supposedly stemmed from worries over falling oil prices, or weakening economies in China and Europe, or a dip in retail sales, or tensions in Ukraine, or ISIS, or Ebola…

Isn’t such uncertainty the New Reality in the 21st century? In fact, wasn’t it ALWAYS?

Wall Street dates to 1792, when 24 New York merchants and stockbrokers signed an agreement and the New York Stock Exchange was born, according to the Library of Congress.

There certainly were many diseases, wars, financial anxieties and unknowns during those 222 years.

Besides calling BS on Wall Street’s excuses, here are two other points. First, the U.S. economy – viewed as a whole and not as a system that serves the majority of Americans – is in its best shape in years. Next, OIL?

In mid-October, the Dow Jones Industrial Average had declined about 6 percent for the year. Also, the price of oil by the barrel had fallen about 13 percent just since early summer, due to more fuel-efficient vehicles and technologies, less driving by penny-pinching motorists, competition from shale oil, etc.

But fuel prices at the pump dropped, too. The average gas price of $3.59 per gallon fell to less than $3 in much of Illinois. So consumers are expected to start spending that new-found $20 or $50 a month.

“For every 10-cent decrease in the price of gas, it adds about $11 billion to the national economy,” Busey Bank vice president Ed Scharlau told GateHouse business reporter Steve Tarter.

Stock prices for trucking, airline and other companies in the transportation sector have improved, and in other recent economic news, industrial production was up significantly last month, and initial unemployment claims fell to their lower level since 2000.

Oil prices seem more like an effect than a cause, and if there’s a cause it may be Wall Street greed stacking the deck. Please be tolerant with the following barrage of numbers, but consider this spot-check comparison of oil prices and Wall Street based on four S&P 500 “milestones” in the last year, showing the stock market has NOT suffered from plunging oil prices:

From August 1, 2013 (when the Dow Jones finished at 15,628.02, the S&P 1,706.87, NASDAQ 3,675.74 and price of oil was $107.93 a barrel) to Nov. 22, 2013 (Dow Jones 16,064.77, the S&P 1,804.76, NASDAQ 3,991.65 and price of oil was down to $94.53/barrel), oil had dropped 12.4 percent but the Dow improved +2.8 percent, the S&P +5.7 percent and NASDAQ +8.5 percent.
From Nov. 22, 2013 to May 23, 2014 (when the Dow Jones finished at 16,606.27, the S&P 1,900.53, NASDAQ 4,185.81 and price of oil was $105.01/barrel), oil had dropped 11 percent but the Dow improved +3.3 percent, the S&P +5.3 percent and NASDAQ +4.8 percent.

From May 23 to August 26, 2014, (when the Dow Jones finished at 17,106.70, the S&P 2,000.02, NASDAQ 4,570.64. and price of oil had dropped to $95.78), oil had dropped 8.4 percent but the Dow improved +3 percent, the S&P +5.2 percent and NASDAQ +9.1 percent.

The correlation looks to be the OPPOSITE of recent instability, with Wall Street RISING when oil prices fall. The stock market (like gas prices at the pump, arguably) is being manipulated. Oil or terrorists or natural disasters are excuses that are less significant than cooking the books for quarterly data, CEO raises, etc.

Viewing the stock market as a human being (like corporations, according to the Supreme Court, right?), it should be in therapy for pathological dishonesty or multiple personalities. Or possibly it should be treated as a sociopath, someone without a conscience who in this case thinks it’s a high roller although it’s really just a gambling addict.

If Wall Street wants certainty, maybe it should be subjected to the “shock therapy” of real financial regulations – or even price controls like Republican President Richard Nixon imposed in 1971 for a few years.

Such treatment may not fully heal Wall Street’s troubled personality, but it could protect from its manipulations all the neighbors hurt by its actions: the rest of us.

[PICTURED: Tony Auth editorial cartoon "Wall Street's monument to greed," from]