Tuesday, April 15, 2014

Another security breach

Would you believe that the software penetrated by the Heartbleed bug is supported by a team of four programmers, only one of whom works full-time? The software, OpenSSL, ensures that your connection to a website is encrypted. And it's used all over the globe. The federal government spends more than $50 billion a year on spying and intelligence, while the foundation that supports the OpenSSL Project receives $2,000 a year. Should the government throw a few dollars to the Project?

The Obama Administration has created a  which establishes guidelines for strengthening the defense of our technological infrastructure. But what funding does it provide to implement guidelines?

The first lunar eclipse of 2014

Photographer Tyler Leavitt of Las Vegas, Nevada, took this series of photos of the total lunar eclipse on April 15, 2014 as the moon appeared from his front driveway.

Photographer Fernando Rodriguez of the South Florida Amateur Astronomers Association captured this amazing view of the total lunar eclipse of April 15, 2014 during the totality phase at about 3:24 a.m. ET. 
Via Space.com

Monday, April 14, 2014

Kidney is not alone

Earlier today you may have seen James Kidney lambaste the SEC as he retired from the agency. Pam Martins cites a few other SEC prosecutors who accused the agency of not doing its job properly.

In 2006, Gary Aguirre, a former SEC attorney, testified before the U.S. Senate on the Judiciary. He wanted to subpoena John Mack, the powerful former official of Morgan Stanley, to take testimony about his potential involvement in insider trading. Aguirre was fired via a phone call while on vacation — just three days after contacting the Office of Special Counsel to discuss the filing of a complaint about the SEC’s protection of Mack.

In 2011, Darcy Flynn, another SEC attorney, told Congressional investigators and the SEC Inspector General that for at least 18 years, the SEC had been shredding documents and emails related to its investigations — documents that it was required under law to keep. The documents could be used at some point as ammunition in legal matters.

Also in 2011 a whistleblower alleged that:
 “…just before the staff’s recommendation was presented to the Commission, Enforcement Director Robert Khuzami had a ‘secret conversation’ with his ‘good friend’ and former colleague, a prominent defense counsel representing Citigroup, during which Khuzami agreed to drop the contested fraud charges against the second individual. The complaint further alleged that the Enforcement staff were ‘forced to drop the fraud charges that were part of the settlement with the other individual,’ and that both individuals were also represented by Khuzami’s friends and former colleagues, creating the appearance that Khuzami’s decision was ‘made as a special favor to them and perhaps to protect a Wall Street firm for political reasons.’

The SEC's Kidney

James Kidney was a prosecutor for the SEC. He just retired and gave the following interview to Bloomberg.

Doesn't this boost your faith in our government?

Terrorism is not our worst enemy

We are. By refusing to properly maintain, inspect and regulate our infrastructure we ignore the almost certain catastrophes that will, of necessity, ensue. We have thousands of nuclear weapons, toxic chemical dumps, radioactive waste storage facilities, complex pipelines and refineries, offshore oil rigs and many other potentially dangerous facilities that require constant maintenance and highly trained and motivated experts to keep them running safely. And we do little about ensuring their utility and safety.

We have a problem today in that we don’t have enough inspectors and regulators to engage in the work of assessing the safety and security of ports, bridges, pipelines, power plants and railways. We will have a problem tomorrow because our financial, educational and institutional infrastructures suck. And yet we continue to cut budgets for maintaining, inspecting and regulating our infrastructures that keep this country working.

Sunday, April 13, 2014

Is there anything worse than insider trading?

It looks as though the government does not think so. They have focused on the issue for several years and actually had 70 convictions. Its most recent conviction is SAC Capital, which admitted to wire fraud and securities fraud and agreed to pay a $900 million penalty and $300 million in disgorged profits. 

James Kwak points out that SAC was convicted because it implicitly encouraged its employees to commit insider trading and did nothing to prevent them from committing insider trading. That being the case why didn't the government go after the firms that encouraged its employees to buy loans they knew to be fraudulently underwritten; package loans that they knew did not comply with the description of the loans in the placement memorandum; lie to buy-side clients about the contents of the securities they were selling them; or sell Fannie and Freddie loans that they knew did not meet the criteria they claimed; push toxic loans onto poor people; mislead investors about the contents of CDOs; fraudulently foreclose on people when you don't even own the note for their mortgage loan.

Kwak makes a strong point.

Friday, April 11, 2014

Pam doesn't like Jamie

Pam Martens on Wall Street on Parade unloads once again on Jamie Dimon of JPMorgan. This time it's over Dimon's comments in the annual report.

Dimon writes that the year was “marred by significant legal settlements largely related to mortgages.”  Martens points out that mortgages had little to do with the legal settlements, which included Madoff, the London, Libor, rigging electric rates and abusing credit card customers.She berates him for not giving enough credit to American small businesses. Last year they got $19 billion, while consumer lending got $274 billion. 

Was Jesus married?

That's a question raised a couple of years ago by Karen King of Harvard's Divinity School. She had come across a papyrus that included the words “Jesus said to them, ‘My wife...”. King did not answer the question as she did not think the papyrus comment was proof that Christ was married. She thought that it did prove that early Christians were actively discussing celibacy, sex, marriage and discipleship.

Many criticized her on grounds that the content was controversial, the lettering was suspiciously splotchy, the grammar was poor, its provenance was uncertain, its owner insisted on anonymity and its ink had not been tested. Well, now the ink has been tested three different ways by professors from Columbia, Harvard and the Massachusetts Institute of Technology, who reported that it resembled other ancient papyri. They have concluded that the papyrus reported that it is not a forgery created in moderns times. It resembles other ancient papyri from the fourth to the eighth centuries.

An Egyptologist at Brown University, Dr. Leo Depuydt doesn't think the papyrus proves anything. However,  he saw “no need to inspect it" as testing the fragment was irrelevant. He came to this conclusion based on the first newspaper photograph which showed “gross grammatical errors,” and each word in it matched writing in the Gospel of Thomas, an early Christian text discovered in Nag Hammadi, Egypt, in 1945. “It couldn’t possibly be coincidence,” he said.

Have a lemon

Thursday, April 10, 2014

No more laughing

Long-time readers probably know that I am not a champion of the military. I think we have reached the stage where the military is venerated. I don't understand why, with today's volunteer army, we have a Veteran's Day for these volunteers but don't have a similar day where we honor others - such as doctors, firemen, policemen, teachers, etc. who also serve this country. Steven Walt may agree with me as he comments on the decline of humor re the military.

He lists a number of tv shows, books and movies of the 20th century which featured humor in a military context, such as Sgt. Bilko, McHale's Navy, No Time for Sergeants, ,Gomer Pyle, USMC, Hogan's Heroes, F Troop, M.A.S.H, Dr. Strangelove,Catch-22. Over the past several decades there have been very few similar demonstrations of humor with the military as the butt. Now we have such laudatory movies as An Officer and a Gentleman, Top Gun, A Few Good Men, Saving Private Ryan, Black Hawk Down, The Hurt Locker, Lone Survivor, Shooter, Under Siege, Tour of Duty, Call to Glory, JAG, Band of Brothers.

Walt thinks the fact of the all volunteer military is a primary reason for the change. Plus the focus on terrorism that has defined the 21st century.

Walt concludes:
Unfortunately, losing our ability to laugh at the military comes with a price. No human institution is perfect, and none should be given a free pass by the rest of society. Humor and ridicule are potent weapons when trying to keep powerful institutions under control, and giving them up makes it harder to keep those institutions on the straight and narrow. Capable armed forces are a regrettable necessity, but treating them with excessive deference and declining to joke about their foibles makes it more likely they will be indulged rather than improved.

Wednesday, April 09, 2014

Looking for proof

The political scientists, Martin Gilens and Benjamin Page, make a bold attempt to demonstrate political reality rather than simply provide their personal opinions as to various political policies. They do so by analyzing 1,779 policy outcomes over a period of more than 20 years. Their conclusion: “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.”

Their statistical analysis found that “economic elites” had as much as fifteen times  more influence on policies than did ordinary citizens.  When we united into an interest group our influence increased, but business interest groups had twice as much influence.


The Wait But Why website has the following very interesting chart plotting the number of deaths from various activities. I know that the entire chart does not show as it is covered by some standard stuff. 

Moving toward Transparency

The Centers for Medicare and Medicaid Services will release a database today that shows how many visits and procedures individual health professionals billed Medicare for in 2012, and how much they were paid. ProPublica has been studying the medical profession for quite a while and has also provided various databases that can be useful in making decisions about your doctors.  

While it is too soon to truly evaluate the Medicare database, the NY Times has found that about 2 percent of doctors account for about $15 billion in Medicare payments, roughly a quarter of the total. Only a quarter of the doctors are responsible for three-quarters of the spending. How successful in treating patients these doctors have been is another matter. But it's a start.

Tuesday, April 08, 2014

Please add Google to your “hands-off” list.

The title of this post is the start of an e-mail from Apple's VP of Human Resources. The e-mail continues, "We recently agreed not to recruit from one another so if you hear of any recruiting they are doing against us, please be sure to let me know. Please also be sure to honor our side of the deal."

Some of the companies engaged in this practice, which is now being investigated by the Department of Justice, include Google, Apple, Dell, IBM, Intel, eBay, Microsoft, Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.

High Frequency Trading

Pam Martens continues her campaign to have financial regulators actually regulate. She alleges that both the New York Stock Exchange and Nasdaq allow high frequency traders to co-locate their computers next to the main computers of the exchanges to gain a speed advantage over other customers. This has allowed them to bump the monthly fee for the HFT traders from $25,000 to $40,000. And the SEC is doing nothing about this largesse. 

The Securities Exchange Act of 1934 states that the SEC must ensure that exchanges maintain “the equitable allocation of reasonable…fees, and other charges among its members and issuers and other persons using its facilities.” It also requires “just and equitable principles of trade,” the removal of impediments to a “free and open market” and specifically states that an exchange shall not “permit unfair discrimination between customers.”

Is the SEC following the law?