This week, the Securities and Exchange Commission approved a rule that is designed to make it much easier for large shareholders to force out corporate directors. The rule allows a big shareholder to nominate his own board slate and have those its board nominees listed on a company-mailed “proxy” ballot alongside the candidates favored by management.On one hand, the rule seems pretty reasonable, why shouldn’t the average shareholder have a choice in who to vote for? Its the American way.This rule, however has nothing to do with the average shareholder, in fact it probably guarantees the average shareholder will have less to say about the direction of the company.

The new SEC rule gives an investor or group of investors owning at least 3% of a company’s stock for at least three years the right to place its candidates on the company’s ballot. Who fits into this category? Generally we are talking about institutional investors (like state retirement plans)  and union pension funds. As a consequence corporate America will now be beholden to state politicians who only care about where their next vote is coming from, and Union Leaders who in many cases are promoting Socialism rather than Capitalism.

Even President Obama, whose decisions usually favor big labor is opposed to the new rule:

Barney Frank and his House colleagues are standing strong against a White House effort to block shareholders from having proxy access to governance issues in corporations in which they have a stake. Investors, pension funds and labor unions reacted with alarm when Sen. Chris Dodd (D-Conn.) introduced the Senate proposal that would effectively deny so-called “proxy access.” The provision had not been approved by either the Senate or the House and several sources, both in Congress and in the industry, said the White House is pushing the measure. The White House proposal would require a shareholder to hold a five percent stake in order to have proxy access — a level met by virtually no institutional investors.

Corporate Directors are supposed to make decisions based on what is best for the company, and its shareholders(even if its not the best thing for the company’s employees).  Union sponsored directors will be tied to their small constituency, union members. America could be nearing the day when  a corporate director telling a negotiating manager, give the unions what they want or you are fired!

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On August 28, 2010, Fox News host Glenn Beck held his “Restoring Honor” rally at the foot of the Lincoln Memorial in Washington, D.C. The aim of the event, explained the lachrymose TV personality, was to “come celebrate America by honoring our heroes, our heritage and our future.”

As the Washington Post reports,

“For too long, this country has wandered in darkness, and we have wandered in darkness in periods from the beginning,” Beck said, at times pacing at the memorial. “We have had moments of brilliance and moments of darkness. But this country has spent far too long worried about scars and thinking about the scars and concentrating on the scars.

“Today,” he continued, “we are going to concentrate on the good things in America, the things that we have accomplished – and the things that we can do tomorrow. The story of America is the story of humankind.”

Despite the presence of former Gov. Sarah Palin and many Tea Party trappings, the event was not political, or at least not in any conventional sense. Rather, the speakers called for bringing religion into the public square and using it as the guiding force in all aspects of American life.

Reason.tv was on hand to take in the day and talk with some of the thousands of people who showed up (crowd estimates were unavailable at the time of this writing, though the crowd felt thinner than the one at last year’s Tea Party rally). Most of the people we talked to were openly skeptical of politicians of both major parties and agreed strongly with the religious bent of the rally, often arguing that some sort of religious orientation was necessary for what that saw as a return to national greatness.

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The British Parliament does it, why can’t we? Rob and Peter (Lileks is at the Minnesota State Fair this week) answer your questions — when Peter is not answering his wife’s phone — and later, talk to author, columnist, and all around smart guy Shelby Steele. He’s got some fascinating insights about Obama and what the future may hold for him, and us.

For links and discussion on this week’s podcast, please visit us at Ricochet.com.

Regime uncertainty has gained increasing recognition as the current economic troubles have persisted with little or no improvement since the economy reached a cyclical trough early in 2009. As described in my 1997 paper, regime uncertainty pertains to

the likelihood that investors’ private property rights in their capital and the income it yields will be attenuated further by government action. Such attenuations can arise from many sources, ranging from simple tax-rate increases, to the imposition of new kinds of taxes, to outright confiscation of private property. Many intermediate threats can arise from various sorts of regulation, for instance, of securities markets, labor markets, and product markets. In any event, the security of private property rights rests not so much on the letter of the law as on the character of the government that enforces, or threatens, presumptive rights.

In the latter half of the 1930s, many investors feared that the government would destroy the private enterprise system and replace it with fascism, socialism, or some other extreme transformation of the existing economic order.

In testing my hypothesis, I marshaled three distinct types of evidence: historical documentation of government actions and public reactions; findings of public opinion surveys, especially surveys of businessmen; and evidence from financial markets. The latter seems to some observers, especially to economists, to be the most telling because it is relatively “hard” and quantitative. In any event, it is the sort of evidence economists are accustomed to analyzing.

My most striking financial evidence for the New Deal episode pertains to the yield curve for corporate bonds, that is, to the spreads between the effective yields on high-grade corporate bonds with various terms to maturity. I found that this yield curve became suddenly much steeper sometime between the first quarter of 1934 and the first quarter of 1935 (a period when the New Deal lurched from its first, or business tolerant, phase to its second, or business hostile, phase) and remained very steep until sometime between the first quarter of 1941 and the first quarter of 1942 (a period when the New Deal handed over the reins to the military and the big businessmen who, along with the president himself, ran the war-command economy for the duration). I interpreted these extreme spreads as risk premiums on longer-term investments caused by regime uncertainty.

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Today, in 2005, Hurricane Katrina made landfall in Louisiana. The rest, as they say, is history.

From The Hill:

President Obama should use the anniversary of Hurricane Katrina to inject new energy into the unfinished task of repairing New Orleans, according to officials from the region.

Obama will deliver a speech here Sunday to mark five years to the day that Katrina made landfall, devastating the city and tarnishing the presidency of George W. Bush.

Showcasing the progress in New Orleans under his administration could also help boost the president’s sagging approval ratings, and with it the fortunes of his party in November. His speech, officials say, should offer a way to find balance between further oil exploration and protecting the region’s sensitive coastline.

“We’re also going to impress upon him how difficult this recovery is going to be,” Sen. Mary Landrieu (D-La.) told The Hill. “We’re going to remind him about the importance of coastal restoration and accelerating revenue sharing.”

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Democrat California gubernatorial nominee Atty. Gen. Jerry Brown mocked as ’silly’ the concerns raised by a retired Marine Corps colonel about Brown attending a fundraiser at the home of terrorist supporter and Code Pink co-founder Jodie Evans. Speaking to reporters Wednesday evening at a campaign rally at the Santa Rosa Veterans Memorial Building, Brown labeled the call by Col. Bucky Peterson to return the money from the fundraiser “dishonest” and “the sillies(t) thing I’ve ever heard.” Peterson’s statement was released by Brown’s opponent, Republican nominee Meg Whitman.

The San Francisco Chronicle reported Brown’s comments.

“Asked about the fundraiser by Evans, who is also a co-founder of Code Pink, Brown said that he has no connection to that group. “That’s the sillies (sic) thing I’ve ever heard..Jodie worked in my (presidential) campaign,” he said. The weekend event in Los Angeles had “nothing to do with Code Pink. That was Jody and campaign workers over many decades and they came to her house.”

“For Whitman to distort that…it’s dishonest,” he said, charging that it was “within that same pattern of dishonesty” he has seen in the GOP candidate’s campaign.”

“Whitman’s campaign Wednesday released a statement from one of the GOP candidate’s supporters, retired Colonel Bucky Peterson, a 31 year veteran of the U.S. Marines, who called on Brown to return the money from the fundraiser.”

Contrary to Brown’s claim, the fundraiser was not a Code Pink event.  The entrance to the fundraiser was adorned with large Code Pink banners.

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Putting more and more wolves in charge of guarding the henhouse might characterize the big problems we’ve now created for ourselves.

Government is growing.  The private economy is shrinking. Those wielding political power see fewer and fewer problems they believe private citizens can solve on our own.   Soon, each one of us will have our own personal guardian bureaucrat.

The real difference between us and the hens is that the hens are not paying for the wolves’ salaries and benefits.

This past week new rules governing our credit cards kicked in, following passage of the Credit Card Accountability and Responsibility Act, signed into law last year.

The point of the CARD Act is to protect us consumers from the scheming bankers from whom we get our credit cards.

As result of these new protections, consumers can be grateful that credit card interest rates are the only interest rates that are not now dropping.  According to the Wall Street Journal, the average card interest rate is now 1.6% higher than last year and the gap between credit card rates and the prime lending interest rate is the highest it’s been in 22 years.

More good news for consumers is that there is less credit available.  The average credit limit on new cards being issued is down 11% from last year.

And, because the CARD Act implements new rules limiting the flexibility that banks have, for example, in changing rates on balances of overdue accounts or on exceeding credit limits, banks are simply finding new ways to raise revenue.

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Unless you’ve been pulling a Rip Van Winkle for the past few years, you know that your state is more busted than Larry Craig in an airport toilet. The only possible exception is the state of Denial, and it closed its borders to new arrivals sometime in late 2008.

One of the main drivers of this sorry state of affairs is the massive disparity between public-sector and private-sector compensation, especially when it comes to benefits such as pensions. Various studies have found anywhere between a 70 percent and a 34 percent differential in total compensation, with public-sector employees getting not just more pay and benefits but near-absolute job security and early retirement. Consider California:

A bipartisan bill…passed virtually without debate unleashed the odious “3 percent at 50” retirement plan in 1999. Under this plan, at age 50 many categories of public employees are eligible for 3 percent of their final year’s pay multiplied by the number of years they’ve worked. So if a police officer starts working at age 20, he can retire at 50 with 90 percent of his final salary until he dies, and then his spouse receives that money for the rest of her life. Even during the economic crisis, “3 percent at 50” and the forces behind it have only become more entrenched.

In the midst of California’s 2008–09 fiscal meltdown, with the impact of deluxe public pensions making daily headlines, the city of Fullerton nevertheless sought to retroactively increase the defined-benefit retirement plan for its city employees by a jaw-dropping 25 percent. What’s more, the Fullerton City Council negotiated the increase in closed session, outside public view.

More on that here.

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This week, 30-year-old Albert Pujols became just the 47th player in Major League Baseball history to hit 400 career home runs–he’s the third-youngest player ever to reach the milestone.  We just got word how he plans to celebrate.  From the Associated Press:

Cardinals manager Tony La Russa and slugger Albert Pujols plan to attend a rally hosted by conservative pundit Glenn Beck on Saturday, the St. Louis Post-Dispatch reports.

The newspaper posted a story on its website Friday that says the manager will introduce Pujols at the gathering by the steps of the Lincoln Memorial on the anniversary of Martin Luther King’s “I Have a Dream” speech.

The Cardinals are in Washington to play the Nationals.

La Russa and Pujols met with Beck in the Cardinals clubhouse two months ago. (more…)

Remember Audi’s absurd “Green Police” Super Bowl commercial where green cops arrest citizens for using plastic bags, plastic water bottles and sort through the community’s trash cans to ensure they’re recycling? Well, the absurdity is about to hit the streets of Cleveland.

Cleveland.com reports,

“It would be a stretch to say that Big Brother will hang out in Clevelanders’ trash cans, but the city plans to sort through curbside trash to make sure residents are recycling—and fine them $100 if they don’t. The move is part of a high-tech collection system the city will roll out next year with new trash and recycling carts embedded with radio frequency identification chips and bar codes.

The chips will allow city workers to monitor how often residents roll carts to the curb for collection. If a chip show a recyclable cart hasn’t been brought to the curb in weeks, a trash supervisor will sort through the trash for recyclables.”

The high-tech collection system is an expansion of a 15,000-resident pilot program that commenced in 2007. Proponents of the program argue that not only is the $2.5 million program good for the environment, but because the city will collect revenue from the fines and from recycled goods, the trash police will eventually raise revenue.

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Last week, Capitol Confidential reported on a new scheme being pursued by California Democrats to force out-of-state, online retailers to collect and remit California sales taxes.

But in a new development, it is now being reported that the proposal has attracted support from Republican State Sen. Roy Ashburn, making it technically bipartisan.

In addition, while proponents have been arguing that if pursued, this tax maneuver will not hurt smaller, online retailers, Capitol Confidential has learned that the preferred language of some movers and shakers in fact fails to exempt smaller retailers and would draw a surprising category of those selling to consumers online into the California sales tax net: Out-of-state small and medium-sized businesses that market through eBay.

Those familiar with one proposal floated this week say it would exempt from the requirement to collect and pay out California sales tax retailers who advertise with or market through California-based websites and who have not sold $10,000 or more worth of goods in aggregate to Californians during the prior 12 months.

However, even in a rough economy, experts say many small businesses who sell through California-based eBay could exceed that threshold.

If that is correct, such individuals speculate that it could hurt eBay, a big employer in the state, in addition to about 25,000 small online advertising businesses who carry ads by the likes of Amazon.com and Overstock.com.

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In this week’s edition of Coffee and Markets, featuring The New Ledger’s Francis Cianfrocca, we’re talking about the Recovery Summer that wasn’t, Ben Bernanke’s remarks at Jackson Hole, and Steven Malanga’s views on the coming municipal bailout. We’re brought to you as always by BigGovernment.com and Stephen Clouse and Associates.

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You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

TNL: How Obama Crushed the Recovery Summer
Malanga: The Coming Muni Bailout
WSJ: Bernanke on the Recovery
TNL: Bill Gross and Mortgage Rates

From Election Law Center blog:

A few days ago we blogged how the Houston voter registrar had a press conference announcing widespread voter fraud and thousands of illegal and phony voter registrations submitted by an ACORN-like organization called “Houston Votes.” Those stories are here and here.

Harris County Tax Assessor Collector [and voter registrar] Leo Vasquez accused the group of submitting thousands of bogus voter registration applications in recent months in what he said appears to be a campaign to taint the voter rolls.

Well this morning Mr. Vasquez’s warehouse containing all of the voting machines, supplies and equipment burned to the ground.

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Here’s a sampling of what the AFL-CIO leader said about Sarah Palin:

And down in Tyler, Texas, she’s talking about — and I quote — ‘union thugs.’ What? Her husband’s a union man. Is she calling him a thug? Sarah Palin ought to know what union men and women are,” Trumka will say. “That’s poisonous. There’s history behind that rhetoric. That’s how bosses and politicians in decades past justified the terrorizing of workers, the murdering of organizers…..She’s using crosshairs to illustrate targeted legislators. She’s on the wrong side of the line there. She’s getting close to calling for violence. And some of her fans take that stuff seriously. We’ve got legislators in America who have been living with death threats since the health care votes.

Governor Palin responded to Trumka on her Facebook page:

Trumka purposely misquoted something I said in a speech I gave in Texas a few months ago. Let me clarify things for him: I never called union members “thugs.” You lie. I called some union leaders “thugs.” And I refuse to apologize for that because they have acted like thugs – at least in this day and age.

The Governor was being too kind.

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I would like to invite everyone who is in Washington, DC to attend a townhall with me and several other prominent guests. Our outdoor event will be held next to the Washington Monument, at 15th Street & Constitution. We will be starting on Saturday at 1:30pm. This will be a great forum for individuals who wish to make their voices heard. Please join me for this free event!

L’Affaire Sherrod provided a rare peek into a potential legal and government boondoogle: The Pigford Settlement. The Settlement arose out of a handful of credible claims of racism by black farmers against the U.S. Department of Agriculture. Tens of thousands of claims later, the final chunk of money to pay off the settlement, about $1.5 billion, awaits action by the U.S. Senate.

Soon after Shirley Sherrod was fired by the USDA, it was revealed that she and her husband were among the biggest recipients of Pigford, personally receiving hundreds of thousands of dollars for ‘pain and suffering’, while their collective farm was tapped to get over $13 million. It also emerged that Ms. Sherrod was hired by the USDA just days after her settlement was announced. Hmm.

In the video below, Fox News begins to explore several issues related to the Pigford settlement.

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Recently, I wrote an article stating that our national political discussion has moved beyond philosophy.  Many voters think that government has lost any semblance of common sense when it comes to spending.  Economically, the discussion lacks common sense as well and there is no place where that is more evident than California.  So much so that, in my view, the election of Jerry Brown and Barbara Boxer – along with Barack Obama – will lead to unemployment north of 16%.

Now, the prediction business is, of course, fraught with danger – but not looking ahead is a worse crime in my view.  Two years ago, I said that the economy would be bad for 6 years if Obama was elected.  I said that because the markets understood then and know now that a big government agenda was not the cure that was needed.  They intimately understood what Ayn Rand said years ago that “the cure that is always offered . . . is more of the same poisons that caused the disasters.”  Sure enough, the same poisons have been tried for the last two years and the consensus among the fair minded is that the US economy will be bad for years to come.

One overlooked reason for the national trouble ahead is what government has done to the California economy. The California economy has been crippled because its #1 industry, agriculture, has been crippled by environmental policies that have placed the fate of an imported bait fish over the needs of farmers, employees and families.  By shutting off the water supply to farmers, government is strangling Central Valley farming which is why locals state that “Water = Jobs.”   But the effect hardly stops there.  California is over 16% of the national economy.  So the real equation is “Water = Farming = Jobs = the California Economy ≈ National Economy.”  Put another way, you cannot cripple the California economy and expect the National economy to recover.  All combined, Jerry Brown, Barbara Boxer, the Democrat controlled Congress and Barack Obama will only makes things worse.

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