Friday, February 3, 2023

A Wall Street Time Bomb by David Sirota

 


As public officials across America prepare to funnel even more of government workers’ savings to private equity moguls, an alarm just sounded for anyone bothering to listen. It is a warning that Wall Street executives want you to ignore as they skim fees off retirement nest-eggs – but the longer the warning goes unheeded, the bigger the financial time bomb may be for workers, retirees, and the governments that pay them.

Earlier this month, Pitchbook — the premiere news outlet for the private equity industry — declared that “private equity returns are a major threat to pension plans' ability to pay retirees in 2023.”


With more than one in ten public pension dollars invested in private equity assets — and with states continuing to keep their private equity contracts secret — Pitchbook cited a new study finding that losses from the investments may be on the horizon for retirement systems that support millions of teachers, firefighters, first responders, and other government employees.


“Private equity returns get reported on a lag of up to six months, and with each update in 2022 values were coming down — which means 2022 numbers were including overstated private equity asset valuations and 2023 numbers are going to incorporate those losses,” noted the study from the Equable Institute.


To comprehend this time bomb, you have to understand private equity’s business model.

In general, private equity firms use pension money to buy up and restructure companies to then sell them at a higher price than they were purchased. In between buying and selling, there are no transparent metrics for valuing the purchased asset — private equity firms can manufacture an alleged value to tell pension investors (and there’s evidence they inflate valuations when seeking new investments).

In a story about an investor receiving two different valuations for the same company, Institutional Investor underscored the absurdity: “Everyone Wants to Know What Private Assets Are Really Worth. The Truth: It’s Complicated.”


Meanwhile, valuation and fee terms in contracts between private equity firms and public pensions are kept secret, exempt from open records laws. With that in mind, the new warnings are simple: Private equity firms may have told their pension officials that their assets were worth much more than they actually are, all while the firms were skimming billions of dollars of fees off retirees’ money.


If writedowns now happen, it could mean that when it’s time to sell the assets to pay promised retiree benefits, pension funds would have far less money available than private equity firms led them to believe. At that point, there are three painful choices: cut retirement benefits, slash social programs to fund the benefits, or raise taxes to recoup the losses.


Signs of a doomsday scenario are already evident: Some of the world’s largest private equity firms have been reporting big declines in earnings, and federal regulators are reportedly intensifying their scrutiny of the industry’s writedowns of asset valuations. Meanwhile, one investment bank reported that in its 2021 transactions, private equity assets sold for just 86 percent of their stated value last year.


But while pensioners may be imperiled, Wall Street executives are protected thanks to their heads-we-win-tails-you-lose business model: Some of the firms managing pensioners’ money are reporting asset losses for investors, while raking in even more fees from investors and continuing to raise executives’ pay.


Meanwhile, even as some sophisticated private investors rush to get out of private equity, the world’s largest private equity firm, the Blackstone Group, recently reassured Wall Street analysts that state pension officials will continue using retirees’ savings to boost revenues for private equity firms, hedge funds, real estate funds, and other so-called “alternative investments.”


“The desire for alternatives remains very strong,” said Blackstone president Jon Gray in an investor call last week. “Here in the U.S., New York’s state legislature actually increased the allocation for the big three pension funds here by roughly a third.”


Gray was referring to New York Democratic lawmakers passing legislation significantly increasing the amount of retiree money that pension officials can deliver to Wall Street. The bill was championed by New York City Comptroller Brad Lander, just weeks after the Democrat won office promising he would be “reviewing the funds’ positions with risky and speculative assets including hedge funds, private equity, and private real estate funds.”


New York Gov. Kathy Hochul (D) quietly signed the legislation on the Saturday before Christmas, just weeks after the Wall Street Journal reported that analysts have started warning pension funds of looming private equity losses. New York lawmakers simultaneously rejected separate legislation that would have allowed workers and retirees to see the contracts signed between state pension officials and Wall Street firms managing their money.


The Empire State is hardly alone in continuing to use retirees’ money to enrich the planet’s wealthiest financial speculators — from California to Texas to Iowa, pension funds controlling hundreds of billions of dollars of workers’ retirement savings are planning to dump more money into private equity, while keeping the terms of the investments secret.


While globetrotting to elite conferences in exotic locales, pension officials have defended the high-fee investments by parroting Wall Street executives’ claim that private equity reliably outperforms low-fee stock index funds. At the same time, those officials continue to conceal the terms of the investments, raising the question: If the investments are so great, why are the details being hidden?


Perhaps because the investments aren’t as wonderful as advertised: In a landmark study entitled “Private Equity Returns & The Billionaire Factory,” Oxford University’s Ludovic Phalippou documented that private equity funds “have returned about the same as public equity indices since at least 2006,” while extracting nearly a quarter trillion dollars in fees from public pension systems.


In all, a Yahoo News analysis found that pension systems had paid more than $600 billion in fees for hedge fund, private equity, real estate and other alternative investments over a decade. “The big picture is that they’re getting a lot of money for what they’re doing, and they’re not delivering what they have promised or what they pretend they’re delivering,” Phalippou told The New York Times in 2021.


Even some on Wall Street admit the truth: A J.P. Morgan study in 2021 found that private equity has barely outperformed the stock market, but it remains unclear whether that “very thin” outperformance is worth the risk of opaque and illiquid investments whose actual value is often impossible to determine — investments that could crater when the money is most needed.


While the warnings have not halted the flood of pension cash to private equity, they have broken through in at least some corners of American politics. For instance: The Securities and Exchange Commission is right now considering new rules to require private equity firms to better disclose the fees they are charging.


Similarly, Ohio’s Republican Auditor Keith Faber just issued a report sounding an alarm about state pension officials keeping their private equity contracts concealed from retirees and the general public — a practice replicated in states across the country.


In New York, Democratic Assemblyman Ron Kim is preparing to reintroduce his bill ending the open records exemption for private equity contracts. And following a pension corruption scandal in Pennsylvania — whose state government oversees nearly $100 billion in pension money — there’s a potential financial earthquake: During his first week in office, Gov. Josh Shapiro (D) promised to reprise his move as a county executive and push to shift pensioners’ money out of the hands of Wall Street firms, which raked in more than $1.7 billion in fees in a single year from one of the state’s pension funds.


In perhaps the harshest language ever uttered on the topic by any governor, Shapiro told his state’s largest newspaper: “We need to get rid of these risky investments. We need to move away from relying on Wall Street money managers.”


Shapiro could face opposition not only from private equity moguls and their lobbyists — but also from the pension boards’ union-affiliated trustees. As the Philadelphia Inquirer reported: “Union members [on the boards] have mostly favored the old strategy of private investments, even when challenged by governors’ reps and the last couple of state treasurers.”


When investment returns were somewhat better, that unholy alliance between some unions and Wall Street firms flew under the radar, even as pension funds were ravaged by fees. Same thing for pension funds’ overall investment strategy that has been sending more and more retiree’ savings to private equity firms.


But with warnings of writedowns and losses getting louder — and with Wall Street’s own trade publications sounding alarms — the dynamic could change. Better late than never — though the later it gets, the bigger the risk for millions of workers and retirees.

-David Sirota, The Lever

 


What to Know About the Risks of Gas Stoves and Appliances

 


“As a climate reporter, I was well aware of the growing concern about the gas stoves in people’s homes leaking dangerous pollutants, like methane, a potent greenhouse gas and explosive hazard; nitrogen dioxide, which worsens asthma; and benzene, which causes cancer. But I was a renter who had no control over my appliances. So I mostly ignored it — until one day last fall when I smelled the rotten-egg odor of leaking natural gas while baking focaccia.

“I borrowed a $30 gas leak detector from a friend (a fellow climate reporter, of course). When I turned on the oven in my New York City apartment, the lights for a ‘significant’ leak lit up. My kitchen was filling up with methane. According to the user manual, that meant I should ‘VENTILATE THE AREA IMMEDIATELY and move to a safe location’ in case of an explosion.

“I opened the windows and ignored the evacuation advice (don’t follow my example), too intent on taking a video of the leak as proof for my landlord before turning off the oven. Then I vented my frustration by panic-texting friends and eating too much focaccia — after cutting it into pieces and baking it in my toaster oven. Luckily, my landlord replaced my faulty stove within days. I made sure to check the new stove (still gas, alas) for leaks after it was installed.

“‘People still don’t recognize that there are health downsides to cooking with gas in your home,’ said Regina LaRocque, a Harvard Medical School professor who does research on medicine and public health. ‘This is the 21st century, and we have better ways of cooking than over a fire.’

“The issue has caught national attention in recent weeks, as the U.S. Consumer Product Safety Commission considers regulating gas stoves. Public health experts and environmentalists have long warned of the risks of gas ranges. One study found that indoor gas stoves were responsible for roughly 13% of childhood asthma cases in the U.S. The American Public Health Association and American Medical Association have urged consumers to transition away from gas…”


Lisa Song Lisa Song reports on the environment, energy and climate change for ProPublica.

https://www.propublica.org/article/what-to-know-about-gas-stove-risks utm_source=sailthru&utm_medium=email&utm_campaign=majorinvestigations&utm_content=river


Thursday, February 2, 2023

"Is anyone surprised that I am somehow deemed unworthy to speak about American foreign policy? Frankly, it is expected, because when you push power, power pushes back," Rep. Ilhan Omar said.

 


House Republicans on Thursday voted to remove Rep. Ilhan Omar from the chamber's foreign affairs committee, a step that prompted fury from Democratic lawmakers who called the GOP's resolution an act of "unbelievable bigotry."

Speaking for herself in floor remarks ahead of the vote, Omar (D-Minn.)—a vocal defender of global human rights and trenchant critic of U.S. foreign policy—said that "this debate today is about who gets to be an American."

"What opinions do you have to have to be counted as American? This is what this debate is about," Omar continued. "There is this idea that you are suspect if you are an immigrant, or if you are from certain parts of the world, of a certain skin tone, or a Muslim."

"Is anyone surprised I'm being targeted?" Omar asked. "Is anyone surprised that I am somehow deemed unworthy to speak about American foreign policy? Frankly, it is expected, because when you push power, power pushes back."

The congresswoman ended her speech on a defiant note, declaring, "I didn't come to Congress to be silent... My leadership and voice will not diminish if I am not on this committee for one term."

Thursday's vote came after the handful of Republicans who had previously expressed opposition to removing Omar from the House Foreign Affairs Committee flipped their votes to yes. One Republican, Rep. Dave Joyce of Ohio, voted present.

Every House Democrat who voted opposed the GOP measure.

In the debate that preceded passage of the resolution, Democratic lawmakers rallied to Omar's defense, spotlighting the GOP's association with and embrace of neo-Nazis and condemning the resolution as a racist stunt veiled as a rebuke of antisemitism.

"Republicans are waging a blatantly Islamophobic and racist attack on Congresswoman Omar," said Rep. Cori Bush (D-Mo.). "This is despicable."

Rep. Jan Schakowsky (D-Ill.), who is Jewish, said in her impassioned remarks that she doesn't "need any of you to defend me from antisemitism," referring to the Republican side of the aisle.

Rep. Alexandria Ocasio-Cortez (D-N.Y.), a top ally of Omar's, dismissed the GOP's rationale for the resolution and characterized the vote as another act of "racism and incitement of violence against women of color in this body."

"Don't tell me that this is about a condemnation of antisemitic remarks when you have a member of the Republican caucus who has talked about Jewish space lasers," Ocasio-Cortez said, a reference to Rep. Marjorie Taylor Greene (R-Ga.).

Congressional Progressive Caucus Chair Rep. Pramila Jayapal (D-Wash.), for her part, cast the vote as an attempt to "distract the American people" from the GOP's lack of a serious legislative agenda.
Passage of the Republican resolution also drew outrage from advocacy groups.

In a statement, Wa’el Alzayat, CEO of the Muslim-American advocacy group Emgage Action, called the House's party-line vote "unacceptable" and said Republican attacks on Omar "are based in Islamophobia and bigotry."

"As the first Black, Muslim, refugee woman elected to Congress, Rep. Omar would have been an asset to continue to serve on the foreign affairs committee and its subpanel overseeing Africa," said Alzayat. "We need diverse voices when crafting impactful foreign policies and we should not cancel those voices because of partisan reasons."

Bend the Arc, a Jewish-American organization, tweeted that "this isn't about antisemitism—it's a cynical, partisan move."

"It's pure hypocrisy from Speaker Kevin McCarthy, who just gave committee posts back to Reps. Paul Gosar and Marjorie Taylor Greene," the group added. 

-Jake Johnson, Common Dreams
 


Americans Want Government-Run Health Care—What’s Standing in the Way?

 


Here’s one of many indicators about how broken the United States health care system is: Guns seem to be easier and cheaper to access than treatment for the wounds they cause. A survivor of the recent mass shooting in Half Moon Bay, California, reportedly said to Gov. Gavin Newsom that he needed to keep his hospital stay as short as possible in order to avoid a massive medical bill. Meanwhile, the suspected perpetrator seemed to have had few obstacles in his quest to legally obtain a semi-automatic weapon to commit deadly violence.

Americans are at the whim of a bewildering patchwork of employer-based private insurance plans, individual health plans via a government-run online marketplace, or government-run health care (for those lucky enough to be eligible). The coverage and costs of plans vary dramatically so that even if one has health insurance there is rarely a guarantee that there will be no out-of-pocket costs associated with accessing care.

It’s hardly surprising then that the latest Gallup poll about health care affirms what earlier polls have said: that a majority of Americans want their government to ensure health coverage for all. In fact, nearly three-quarters of all Democrats want a government-run system.

Gallup also found that a record high number of people put off addressing health concerns because of the cost of care. Thirty-eight percent of Americans said they delayed getting treatment in 2022—that’s 12 percentage points higher than the year before. Unsurprisingly, lower-income Americans were disproportionately affected.

Women are especially impacted, with more women than men delaying treatment as per the same Gallup poll. The findings were consistent with results published by researchers at New York University’s School of Global Public Health—that women’s health care was increasingly unaffordable, compared to men’s—in a study that solely focused on people with employer-based health coverage. Imagine how out-of-reach health care is for uninsured women.

Added to that, Republican-led abortion bans have made it even harder for American women to obtain reproductive health care. On the 50th anniversary of the recently overturned Supreme Court decision Roe v. Wadeabortion providers in Massachusetts, for example, reported a steady stream of people driving to their state—one where abortion remains legal—to access care.

President Joe Biden and the Democratic Party appear to think that this grim status quo is perfectly acceptable. Democrats’ reliance on the Obama-era Affordable Care Act (ACA) as a bulwark against Republican opposition to any government intervention in health care seems to be resoundingly successful—on paper. In December 2022, Biden touted the fact that 11.5 million Americans, a record high number, had signed up for ACA plans during the last enrollment period. He said, “Gains like these helped us drive down the uninsured rate to eight percent earlier this year, its lowest level in history.”

His administration, rather than working to fulfill what a majority of his party’s constituents want—a government-run health care system—has continued instead to tweak the ACA by extending a period of discounted monthly premiums for private insurance plans. Such tweaks are not permanent. Neither are they a panacea for accessing adequate care. If anything, they are a façade protecting profit-based private insurance companies.

survey by the Commonwealth Fund found that although the number of insured Americans is now at an all-time high, more than 40 percent of those who bought ACA plans and nearly 30 percent of those with employer-based plans were underinsured—that is, the plans were inadequate to cover their health care needs.

By focusing solely on the number of people who had health plans as a measure of success, the White House is participating in a great coverup of the ongoing American health care tragedy.

Meanwhile, just over the horizon from Biden’s celebration of record numbers of ACA signups is the fact that millions of people currently enrolled in the Medicaid government health plan could lose access because of the end of an emergency provision that allowed for “continuous enrollment.” That provision expires at the end of March 2023. If all Americans were automatically enrolled in government-provided health care regardless of eligibility, this would not be a concern.

Right-wing sources, so terrified that too many Americans want a government-run health system, are busy shaping public opinion against it. The Pacific Research Institute’s Sally Pipes published an op-ed about how Canada’s national health system was a good reason why the U.S. should not have a similar program. Using the deadly logic of a free marketeer, she wrote, “In Canada, health care is ‘free’ at the point of service. As a result, demand for care is sky-high.”

The implication is that charging people for service would reduce the demand, just as it would for, say, an electric vehicle. In Pipes’ world, people are accessing health care just for fun, and if they were charged money for it, their ailments might resolve themselves without treatment.

The Heritage Foundation also published an attack on Britain’s National Health Service (NHS), gleefully claiming that it is “cratering,” and warning that it is a lesson for American liberals who might support a similar “single-payer” system in the United States. The Wall Street Journal’s editorial board published a similar warning, claiming that the NHS was “failing patients, with deadly consequences.”

It’s puzzling why the Pacific Research Institute, Heritage Foundation, and Wall Street Journal appear unconcerned about the 330,000 Americans who lost their lives during the COVID-19 pandemic simply because they don’t live in a nation with a universal health care program.

The U.S. spends nearly twice as much per capita on health care than other comparable high-income nations. According to Health Affairs, excessive administrative costs are the main reason for this discrepancy—these are nonmedical costs associated with delivering health care in a patchwork system of employer-based private health and publicly subsidized plans. In fact, “administrative spending accounts for 15–30 percent of health care spending.”

Again, right-wing media outlets and think tanks appear unconcerned by this disturbing fact. They only want to convince Americans that a government-run health plan is a bad idea. And, sadly, the Democratic Party leaders like Biden seem to agree implicitly.

The National Union of Healthcare Workers together with Healthy California Now created an online calculator for individuals to determine how much money they would save if the U.S. had a single-payer system.

I have an employer-based health care plan that is considered very good. Using the calculator, I determined that I would save more than $16,000 if California, the state where I live, had a single-payer system. That’s money I could be saving for my children’s higher education or for my retirement.

The victims of mass shootings, like the Half Moon Bay survivor, are saddled with high costs of care on top of the trauma of having been shot. Every year, there are more than 80,000 survivors of injuries from firearms in the United States. Having a single-payer health care system would not fix our epidemic of gun violence. But it would certainly make it easier to bear.

Canada and Britain’s state-run systems of health care may be imperfect, but they are a vast improvement on the survival-of-the-fittest approach that the U.S. takes.


This article was produced by Economy for All, a project of the Independent Media Institute.

Sonali Kolhatkar is an award-winning multimedia journalist. She is the founder, host, and executive producer of “Rising Up With Sonali,” a weekly television and radio show that airs on Free Speech TV and Pacifica stations.

 


Tuesday, January 31, 2023

Your next infection could be the one that permanently disables you by George Monbiot

 


You could see Covid-19 as an empathy test. Who was prepared to suffer disruption and inconvenience for the sake of others, and who was not? The answer was often surprising. I can think, for instance, of five prominent environmentalists who denounced lockdowns, vaccines and even masks as intolerable intrusions on our liberties, while proposing no meaningful measures to prevent transmission of the virus. Four of them became active spreaders of disinformation.

If environmentalism means anything, it’s that our damaging gratifications should take second place to the interests of others. Yet these people immediately failed the test, placing their own convenience above the health and lives of others.

Now there are even fewer excuses, as we have become more aware of the costs of inaction. One of the justifications for selfishness was that liberating the virus would build herd immunity. But we now have plenty of evidence suggesting that exposure does not strengthen our immune system, but may weaken it. The virus attacks and depletes immune cells, ensuring that for some people, immune dysfunction persists for months after infection.

We also know that, with every new exposure, we are more likely to suffer adverse effects. A massive study in the US found that the risk of brain, nerve, heart, lung, blood, kidney, insulin and muscular disorders accumulates with every reinfection. The impacts of long Covid, according to health metrics researchers, are “as severe as the long-term effects of traumatic brain injury”. Now that we know how the virus attacks our cells, “traumatic brain injury” looks less like an analogy than a description. The outcomes can be devastating, ranging from extreme fatigue and breathlessness to brain fog, psychotic disorders, memory loss, epilepsy and dementia.

We are all playing Covid roulette. The next infection could be the one that permanently disables you. I’ve been hit three times so far, and feel lucky still to be active. But I’ve lost a little every time: stamina, lung capacity, sleep, general fitness, however diligently I’ve exercised since. In all three cases, it seems, the infection has come from school. For families with school-age children, the chamber turns more often than for those without. Yet, three years after the pandemic began, the government still does almost nothing to make schools safe.

There’s a powerful argument that just as cholera was stopped by cleaning the water, Covid will be stopped by cleaning the air. The virus thrives in badly ventilated, shared spaces – especially classrooms, where students sit together for long periods. One study found that mechanical ventilation systems in classrooms reduce the infection risk by 74%.

The importance of ventilation and filtration is not lost on our lords and masters. Parliament now has a sophisticated air filter system, incorporating electrostatic precipitators. According to the contractor that fitted them, they ensure airborne viruses and bacteria are “kept to an absolute minimum within the space”. The same goes for the government departments where ministers work. At the World Economic Forum in Davos this month, there were filtration systems in every room, in some cases protecting politicians who have denied them to their own people. It’s almost as if they believe their lives are more important than ours.

The clean air standards rich and powerful people demand for themselves should be universal, rolled out to all schools and other public buildings. Instead, while private schools have been able to invest in ventilation and filtration, state schools, many of which are close to bankruptcy, rely on government disbursements that are strictly rationed by a series of nonsensical conditions. It’s another classic false economy. The extra costs of healthcare caused by repeated waves of infection and the long – perhaps lifelong – impacts for many of those affected must greatly outweigh the investment in cleaner air.

But instead of taking simple and effective actions – proper (N95) masks in public places, filtration in shared spaces – we have steadily normalised a mass disabling agent. It’s likely, eventually, to reduce the number of quality years for almost everyone. Those who suffer the extreme version of this disablement, long Covid, are treated as an embarrassment we would prefer to forget.

You need only gently propose that we might return to wearing masks on public transport to provoke hundreds of people on social media to bray “freedom!” and denounce you as a tyrant. Against their tiniest of freedoms – keeping their faces uncovered on trains and buses – the trolls weigh freedom from disability and even death, and decide that their right to breathe germs on to other people is the indispensable liberty.

These are the people who, with their threats and conspiracy theories, may have helped drive Jacinda Ardern, the politician who arguably protected more people from the virus than any other, out of office. They are the people who, in some cases, have abused mask wearers in the street, and doctors and nurses in hospitals. If they have not yet been infected, they attribute their good fortune to “natural immunity”, rather than not getting out very much. An Old Testament ableism pervades the ideology: those who are ill deserve to be ill.

I’m not suggesting that everyone who fails to wear a mask on public transport fails the empathy test. That would now condemn almost the entire population. But, without direction from the government and the cultural shift this could provoke, even the kindest people end up behaving as if they have no regard for others.

“Move on”, “get over it”: these are the incantations of people who seek to shed responsibility for their actions. It’s what Tony Blair said after the Iraq war. It’s what Boris Johnson said after he was caught repeatedly breaking the rules. Of course we urgently want it to be over. But it isn’t. The virus is now embedded, and will continue to mutate to avoid our defences, grinding down – unless we treat each other with respect and demand universal standards of clean indoor air – our immune systems and our health, until everyone’s life is a shadow of what it might have been.

Do we really mean to sit and watch as this infection encroaches on our freedom to be well, brutal winter after brutal winter? Or do we step in where the government has failed, and normalise concern for the lives of others once more? Like all the other moral challenges we face, this is now on us.  

-The Guardian