The Bankruptcy Reform I Told You So

Remember that one time in 2005 when Congress did the bidding of the credit card companies and passed a bankruptcy reform law? It was supposed to help credit card companies and other financiers of short term credit mitigate the abuses of the bankruptcy system. In return there was an explicit (by my recollection) reciprocation offered by said firms to lower rates and fees associated with their business line.

That seemed like a load of bull crap from the start but the GOP controlled Congress was on a roll back then and the bill written by the same firms that would benefit from its passage was passed and signed into law. It even had plenty of help from moderate Dems like some guy named Ted Strickland. The whole sordid affair of the influence peddling in the case of this wretched law has been well documented in books like The Broken Branch by Ornstein and Mann.

Fast forward to 2008 were the stories of our collective economic anxiety and oil price angst fill pages of newsprint on a daily basis. The NYT ran a piece on the strangle hold that credit providers maintain over their hapless borrowers and the massive growth of revenue generated from the endless credit cards and loans that we consumerist Americans seem to be so addicted to. The payoff is the empirical indication that the bankruptcy reform law did not save us money but rather made money for it's supporters. The article cites a study conducted at a little known institution called Harvard University:

Not surprisingly, such practices generated dazzling profits for the nation’s financial companies. And since 2005, when the bankruptcy law was changed, the credit card industry has increased its earnings 25 percent, according to a new study by Michael Simkovic, a former James M. Olin fellow in Law and Economics at Harvard Law School.

The“2005 bankruptcy reform benefited credit card companies and hurt their customers,” Mr. Simkovic concluded in his study. He said that even though sponsors of the bankruptcy bill promised that consumers would benefit from lower borrowing costs as delinquent borrowers were held more accountable, the cost of borrowing from credit card companies has actually increased anywhere from 5 percent to 17 percent.

What can we learn from this? The current economic malaise that hovers around us has some root in the supplication of special interests as was the clear case with the 2005 law on bankruptcy reform. The lobbyists and campaign advisers that candidate X prefers to surround themselves with makes a difference to the poor saps that may end up at the wrong end of special interest crafted policies. A real critical difference if you are just trying to ride out the current economic tempest.

Schools For Sewers Headed To Ballot

As reported by the ABJ Mayor Don has elected to put his sewer lease plan on the ballot this fall and let residents decide if it will float or not. The move will apparently preempt the grassroots group, Save Our Sewers, from placing their own measure on the ballot and give the City deference in deciding the ballot language. Who would have though there are people with an affintiy for sewers? Plusquellic's quotes in the ABJ story highlight his building mayoral indigence with the SOS people:

Plusquellic said he decided to ''call their [SOS's] bluff'' and ask City Council to put the issue on the November ballot before the group resubmitted its petitions.

***
Plusquellic called SOS a group of ''naysayers'' with ''no principles or morals'' that wants to make the city look bad.

The second statement sounds like a case of the final term blahs. These guys sometimes get more salty as their tenure begins to wind down. Each criticism of a proposal such as this elicits a nasty response and is perceived as a threat to their mayoral legacy. I remember seeing this type of reaction from Mike White during his last term as mayor of Cleveland. Although he tended to fire people when he was in a bad mood.

In the end let this thing go to vote. The SOS folks have a good point but I'm not sure it will resonate with voters. If the scholarship aspect is made to be the key element of the initiative and residents can be assured rates can be capped then this plan may get approved. The education facet of the plan is great but there is another side to this transaction.

If the opponents are sharp enough they will focus on the pitfalls of privatizing a City service and future impact on other services. Not to mention the chances it will be a foreign entity that assumes the operation. Would the water system be next? The questionable outcome of creating $200 million from a lease and then not expecting rates to increase should also be front and center. An investor may be willing to front $200 million to operate the system but only if they can get that investment and a sizable return back over time. Unless commonly known economic precepts have been altered that means sewer rate increases and cutting operating and capital expenses would be in order. Would maintenance be deferred as means of accelerating the return on investment? Do you want poorly maintained sewers running underneath your street? All good things to ponder during your next trip to the bathroom.

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Le Tour Needs Another Le Champ

The 95th Tour de France rolls to a start Saturday without some big names including last years winner Alberto Contador. Young Alberto and his team (including American Levi Leipheimer) were not invited to Le Tour this year. Something about doping scandals and last year's Astana squad being infiltrated by cheaters I guess. Never mind that because the Tour has always been bigger than the controversies and the individual racers that come and go.

Contrary to George Vecsey's article in the New York Times (carried by the ABJ) there are still plenty of cycling's well known in this year's TDF. Try Cadel Evans (2nd in 2007), Damiano Cunego (2004 Giro winner) and Alejandro Valverde to name few. Leaving Team Astana out does leave a gap in the field but not one that can't be filled by riders like these and others not mentioned. Also the UCI had no problem with this year's Astana squad. Contrary to what Vecsey reports it was the Tour organizing body ASO and TDF president Christian Prudhomme that elected to banish Astana from the Tour. Anyhow the show must go on and go on it will.

What Le Tour needs is a champion not another single year winner. We are in the midst of an interim period where there are no repeat champions to rescue the race. Take the time period between 1995, the year Indurain won his fifth and final Tour and 1999 when Lance claimed his first title. Those intervening years were not dominated by any one rider or team. The races in the late 1990's had an assortment of characters (Pantani) and scandal (The Festina affair) that highlighted the need for a champion.

So here we are again in a time period of no clear cut dominant team or repeat winner and the Tour has been beset with problems. These problems are to sure shake out as the the sport clears its baffles of drugs and cheating. The tour has survived a lot of problems including two world wars. Could the winnner of the 2008 TDF be the next repeat winner and bring austerity back the Maillot Jaune? That would be great start.

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Petroblogging: Another Senator Drillmore

Senator Voinovich was in Mansfield today commiserating with constituents on the high (oh so very high) price of oil. The senior senator from Ohio has a multi-pronged approach to getting us out of our oily predicament. He's all for the ever popular "Manhattan Project" for developing new energy sources as well as using less of the black crud. The crux of his plan though is the "drill the shit out of the North America" strategy that resonates with conservative lawmakers and oil tycoons alike. From his remarks carried by the Mansfield News Journal:

Of the President going to Saudi Arabia asking for more oil, Voinovich said he remarked, “If I were King Abdullah, I would have said, ‘Mr. President, you have this great source of oil in ... Alaska — why haven’t you looked into that? And how about the shale oil out west? You’ve got 800 billion barrels of proven reserves. You’ve got vast amounts of shale oil.’ Then I would say, ‘Mr. President, you can get tar sand oil from Canada. And by the way, don’t you have a lot of coal in the U.S.? Why not turn coal into liquids?’"

George starts out sounding good but his talk usually degenerates into the safe for GOP prime time talking points pulled right from the day's memo. He's done the very same with Iraq at times. All very predictable. Why can't our congress peoples, regardless of party, stand up and say there will be no more additional large scale drilling. Furthermore we are all being punished for being shortsighted and letting the thirst for oil money drive our civilization into the ground. That would be refreshing.

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