Sunday, July 31, 2011

Can You Guess What This Is?


This is an example of 'rice-paddy' art. It's a rice field in Japan. Nothing is dyed. These are different color rice plants that have been strategically and meticulously placed to produce pictures like this when the rice plants are fully grown.

This very brief video shows how one rice paddy moves from newly planted to a work of art.

Same Old, Same Old

The Great Recession and the resulting 'corrective' legislation doesn't seem to have made many changes in the way financial organizations conduct business. Take GMAC, for instance.

GMAC was very actively involved in robo-signing mortgage documents; they may have been the leader. Now, ProPublica has discovered internal GMAC documents which seem to show that the company is willing to essentially forge documents.  For example, GMAC was missing documents needed to foreclose on a property. It did not appear they had all the necessary documents related to the mortgage which was originally issued by Ameriquest in 2005. The problem was exacerbated because Ameriquest went bust in 2007. No problem, GMAC produce the necessary documents for the courts; the missing documents were signed by a GMAC employee who was identified  as a "Limited Signing Officer" for Ameriquest Mortgage Company.

Saturday, July 30, 2011

Not Getting Better

That's what Stuart Bowen, Special Inspector General for Iraq Reconstruction (SIGIR), thinks.  He thinks Iraq is more dangerous now than it was a year ago. June was the deadliest month for our troops in two years. There seems to be more 'action' in the Green Zone than previously. Diyala Province is "very unstable". A few other tidbits from the 172-page report:

He doesn't come right out and say it but the police training program does not appear to have the necessary resources. There are 200 'advisers' and 400,000 policemen distributed over ten provinces.

There appears to be  a problem between the Dept. of State and SIGIR. State feels Bowen is butting into areas for which he is not authorized; Bowen disagrees.

One area for which SIGIR is authorized and is quite capable is corruption and fraud. He found a fair amount in the practices of Anham, LLC, our leading contractor in Iraq now; they have a $3.9 billion deal. SIGIR's auditors couldn't get answers with regard to 40% of the items they reviewed. Some of the questions concerned amounts billed to the U.S. by Anham, such as
• $900 for a control switch valued at $7.05 (a 12,666% difference)
• $80 for a small segment of drain pipe valued at $1.41 (a 5,574% difference)
• $75 for a different piece of plumbing equipment also valued at $1.41 (a 5,219% difference)
• $3,000 for a circuit breaker valued at $94.47 (a 3,076% difference)
• $4,500 for another kind of circuit breaker valued at $183.30 (a 2,355% difference).

The auditors also found problems with regard to funds not being spent on what the funds were authorized for. Training for people monitoring contracts was inadequate.

Thus far, SIGIR has been responsible for the indictment of 64 people, 54 of whom have been convicted. Not a bad ratio.

Friday, July 29, 2011

Fiddling While The Country Burns

The economy really sucks here and in Europe. Growth is minimal. Unemployment is high.  The middle class is vanishing.  Our manufacturing capabilities are close to vanishing. It looks like we're going into a second dip. We're engaged in two unwinnable wars. Child poverty is at its highest in fifty years. Our education system does not turn out as many talented kids as it used to. The world is running out of oil. Climate is changing not for the better. And one could go on and on about the current state of the world. Thus far, the 21st century has not been exactly a great one; it's on track to be worse than the 20th century.

What are our leaders doing about any of this? Trying to make it worse. Is the addiction to power so strong? Can people really be so stupid?

Should we listen to Dennis Blair?

He reached the level of Admiral in our Navy and was appointed Director of National Intelligence (DNI) by Mr. Obama. He didn't last long in that job; after 14 months Obama fired him. It's reported that Obama didn't want him to pursue an agreement with France re espionage in the U.S.and France. Plus, he was the DNI when the Ft. Hood shooting took place, the underwear bomber was caught and the Times Square plot was stopped. However, he was invited to the Aspen Security Forum, which features many household names in the world of security. So, maybe he's not all bad.

What he said at the Forum clearly reflected a very sensible viewpoint, at least to my eyes. The drone attacks are not strategically effective and damage our relations with countries in which we use them “because we’re treating countries just as places where we go attack groups that threaten us, we are threatening the prospects of long-term reform".  Blair also pointed out that - exclusive of Iraq and Afghanistan - we spend about $80 billion a year defending ourselves against terrorism. Yet, Al-Qaida and company have about 4,000 members, each one of which is worth spending $20,000,000 on. “What is it that justifies this amount of money on this narrow problem?” he asked.

We have met the enemy and...

he is us. Walt Kelly said this in his cartoon strip, Pogo, sometime in the 1950s. Umair Haque is saying basically the same thing in a HBR Blog in 2011, sixty years later. Haque's particular cause in this article is the state of our economy, not from a technical perspective, but from the perspective of how it is driven by our outsize appetites, rather than our intelligence. Our appetites are unchecked and result in such conditions as pollution, fantastically unequal distribution of wealth, a less than first rate educational system, excessive unemployment, etc.

He has a point, a significant point.

Another $58,500,000 Down The Drain

The government requires its contractors to provide appropriate insurance for its workers overseas. The government reimburses the contractors for these costs. Since 2005, these workers have been covered by a policy issued by CNA. The Special Inspector General for Afghanistan Reconstruction (SIGAR) recently audited the government's handling of this insurance. The auditors were not pleased with the handling.

First, they found that the premiums CNA charged were not based on actual losses; they were higher than they should have been. The government had the right to audit the figures on which the premiums were based; it chose not to do so.

The policies are actually taken out by the contractors. However, the audit found that some contractors had not taken out a policy, some had specified the wrong valuations, some did not renew their policies.

The big money was in the reimbursements. The auditors estimated that the government reimbursed the contractors $58,500,000 more than they should have.

How many Social Security checks could be cut for the amount of money? Do our representatives ever look at the reports of the numerous Inspectors General we are paying for?

Thursday, July 28, 2011

7,300 to be furloughed?

That's the question South Carolina will face if the debt limit question is not resolved. There are 7,300 state employees - out of 58,000 - who are paid by the federal government. Why that is the case I know not, but I wonder how many other states are in the same position. If this debt limit issue is not cleared up, I think that there will be a range of consequences that will be a surprise to many.

War News from Iraq

For quite a while Iraq Today has been keeping a daily log of death and destruction in both Iraq and Afghanistan. Here's a summary of today's log for Iraq:
  • Baghdad: A rocket attack was launched on the Green Zone. 8 were injured by a car bomb. 
  • Amarra: Our planes bombed a suspicious pick-up truck.
  • Tikrit: A suicide bomber killed 10 and wounded 30. A roadside bomb killed and wounded dozens of people.
  • Irbil Prv: Iran is involved against the PJAK rebel group; two Iranians and 21 rebels were killed.
  • Kirkuk: A sticky bomb wounded a policeman.
  • Mosul: Two Iraqi soldiers were killed by unknown gunmen. An insurgent was killed and a soldier wounded during a raid by the Iraqi army.
  • Anbar Province: A car bomb killed four.
All quiet on the Western front.

Defining Small Businesses

By and large the Small Business Administration (SBA) defines a small business as one with no more than 500 employees and average annual earnings of $7 million. I say "by and large" because there are exceptions for certain industries and whether a business is considered as being a wholesale or retail operation. These exceptions - or perhaps fraud - enable such companies as Raytheon, Lockheed and GE to be awarded small business contracts.  Because contracts to such firms are awarded by the SBA, the SBA counts them as helping it to achieve its goal of ensuring that 23% of all federal contracts go to small business.  And, like so many things in government, this is not a new phenomenon. The SBA IG has been pointing this situation out for at least five years.

DotCom Bubble 2.0

This bubble seems to have a subtitle:  social media. But subtitle or not, it's becoming to look a lot like dotcom bubble 1.0: companies very much in the public eye but not making any money, in fact, losing a lot going public. The question for them becomes what numbers can I use to convince someone to buy my stock. I can't use profits because I have none. Some can't use revenue because they have little. And I certainly can't use losses because there are too many.

Groupon's solution is to use "adjusted consolidated segment operating income," or adjusted CSOI. You know what that is, right? It may even be used by one other company in the world. Using conventional numbers, Groupon lost $98,000,000 in the first quarter of this year. However, investors should really look at CSOI. Using this the company made $81,600,000 in that period. That's why they are asking investors for $20 billion to buy into their IPO.

It's a wonderful country. What was it that Barnum said? There's a sucker born every minute?

Wednesday, July 27, 2011

This Is Not Martha's Vineyard


The photo above shows swimmers at Qingdao, China. They are swimming in an absolutely huge algae bloom; it covers 7,200 square miles and is still growing. This is not a new phenomenon. It first occurred in 2007.

The photo below shows a couple of swimmers in the crystal clear waters of Martha's Vineyard.

Maine: a bastion of democracy

Last year Portland, Maine, voters approved a switch to an elected mayor; previously the mayor had been selected from and by the City Council. It will also be a full-time and powerful position. The power alone would be enough to attract a few candidates. But there are 19 so far and there is another month for candidates to submit their papers. One of the main reasons for so many candidates is the method of voting for the mayor. It will be by what many call instant runoff or ranked choice; I know it as proportional representation, which is the system I grew up with in Cambridge. Basically, voters assign a rank to each candidate, a first choice, a second choice, etc. The person with the lowest first choice votes is eliminated and his second choice votes distributed to those named, etc.



There are some interesting characters running. One was arrested for domestic violence, another for harassment by telephone (who wants to legalize prostitution and marijuana). One has run for other offices as a Democrat, a Green Independent, and a simple Independent. A fourth was the president of United Bikers of Maine. A newcomer to politics and a tv cameraman has perhaps summed up the campaign best, “I think Portland is a freakishly awesome little city and it deserves a freakishly awesome little mayor.”

Tuesday, July 26, 2011

One a Month?

In late June I reported on a Russian woman who rose from the dead. Now in late July I tell you of a similar case in South Africa. This time the man was 'dead' longer than the woman, he was in the morgue for 21 hours before the funeral director heard his screams. Another difference: the woman was so surprised to wake up in a casket, she had a heart attack and died. The man went home.

Monday, July 25, 2011

Helping the Taliban

When you see a wrong, do you pretend it's not there because to publicize the wrong might disrupt what appears to be working well? That's the position of our Army in Afghanistan. We need to get supplies to our soldiers. We have hired Afghanistan companies to transport the supplies. However, the Taliban controls the roads. To get the job done, the transport companies pay the Taliban to let them use the roads. But the Taliban are not the only ones getting money from our transportation efforts; government workers, policemen and our friends, the Karzais, also share in the kickbacks. 

We have known about this issue for over a year, but have adopted a "see no evil, hear no evil" attitude. The argument for contracting transportation to Afghans has a couple of parts: it frees our troops up for soldiering, is less expensive and contributes to our counter-insurgency strategy. But how do you explain this to the family of a soldier killed by a weapon the Taliban bought with what is our money?

It's time to get out.

Sunday, July 24, 2011

This is the Barney Frank I Voted For


A Breath of Fresh Air - and from a Republican no less

Lou Zickar edits a Republican periodical, the Ripon Forum, put out by what is today considered a middle-of-the-road group, the Ripon Society. However you classify his beliefs, this piece makes a lot of sense to me.

He has a point

Jeff Jarvis, a professor at CUNY, may have convinced me to join Twitter. Last night Jarvis sent the following tweet: OK, my fellow citizens, it's up to you now. Jarvis struck a nerve as his tweet has launched a heck of a lot of tweets agreeing with Jarvis and giving an unbelievable number of examples of Washington's actions that frost the senders.

CBS has compiled some of them:
aNOLAamous: ... for over a million gallons of corexit dumped on coastal Louisiana.
aNOLAmous: ... for letting corporations steal our natural resources and sell them back to the people for profit.
amthewalrus: ... for forcing me to be a criminal by using #cannabis as the #medicine it is!
amyalkon: ... for violating my 4th Amend rights & having a govt lackey sexually assault me as a condition of normal biz travel this am.
bellelass: ... because the less you listen, the more radicalized we'll become. It starts here, just like Tunisia and Egypt.
dancegenie: ... as you hide behind your #political agendas while the #Equines suffer at your hand!
HedgefundPLAY: ... We don't care about any of your reelections.We just want our country to function.
i_magpie: ... for preaching "freedom & democracy" while ignoring, nay supporting crimes against humanity. #Syria
ILikeyouLloyd: ... for giving $3b to Israel when they continue to build illegal settlements & engage in human rights abuses
jmb2612: ... for putting party before country
kgosztola: ... for going after #WikiLeaks & #Anonymous but not Bush Admin officials for torture & destroying rule of law
poissonjensen: ... For almost driving the Earth to it's knees... #ThankYouWashington for giving ordinary decent people courage to speak up..
poissonjensen: ... For being arrogant...
poissonjensen: ... for lying to your constituency... WE the people?
poissonjensen: ... for making corruption legal...
skymama65: ... Because "made in America" was once what Walmart stood for & is now cheap plastic crap
timgummer: ... for not even considering serious #military cut$: 39% of your taxes and 43% of the world's war spending
USRevolution_v2: ... You would rather collapse the global economy than reinstate the normal tax on the 1%
windloochie: ... For proving the best way to get back into power is to sit on your hands and hope everything burns to the ground.
Wriseup: ... for setting up a fail so epic it's gonna make the Great Depression look like a damn Sunday School picnic.
YourAnonNews: ... for thinking activists are the same as terrorists.

Saturday, July 23, 2011

No Beer? Minnesota Can Solve That Problem


Minnesota's leaders could not agree on a budget by the time their new fiscal year began. So, they did what every legislator and governor does: shut down the state. So, who cares about the consequences, they had to stick to their principles. At least until word got around that there would be no beer available in Minnesota while the state was shut down. Liquor permits could not be issued. Distributors could not get approval from the state. MillerCoors could not get the state paperwork completed in time, it would have to pull all of its brands off the market; bars and liquor stores would not have any MillerLite. A major problem, right? Dedicated lawmakers can solve major problems. The budget was passed within 36 hours of MillerCoors announcement.

Appearances Do Matter or Do We Need 435 Reps and 100 Senators?

It does get hot in Washington. Many residents who can do leave for cooler climes. But, I'll bet there are people working today in DC, no matter what the weather. These are people who normally work on weekends or people who have problems to solve and want to use as much time as possible to solve them. Our Congressmen and Senators are not such people. They will not be working today unless they are meeting with the Supreme Leader.

Mr. Capuano, a Democrat from Somerville, MA, may have an alternative, "It’s symbolic anyway, We all know there are six people doing this. The rest of us are just out here like a rugby match, pushing and shoving.’’ Then, why don't we get rid of most of the 535 clowns who profess to be working for a better U.S.?

A View as to What Will Happen on August 3?

Since 2007 our congressional leaders have been arguing about the long-term funding of the FAA. So, every year since then, they have routed the money through short-term extensions. This year the game has changed

Some Republicans worry that a provision in the long-term funding bill will make it easier for unions to organize FAA workers. Unlike our Commander-in-Chief, Democrats won't give in. So, there will be an immediate cut of $16,500,000 in the FAA funds. This means that 4,000 people will be out of work and the federal tax on airline tickets will not be applicable. This tax is the money that pays for the 4,000 workers. Note that a week's tax amounts to about $200,000,000, which is just a little more than the $16,500,000 our leaders are fighting about.

Friday, July 22, 2011

Obama the Negotiator

From Daily Kos


From Krugman

Conceder In Chief

Amanda Marcotte is right: of course the big problem is the craziness of the GOP. That said, I am among those in a state of suppressed rage and panic over the president’s negotiating strategy.

I’d like to believe that it’s all 11-dimensional political chess; but at this point — after the midterm debacle, after the big concession on taxes without even getting a raise in the debt limit — what evidence do we have that Obama knows what he’s doing?

It’s very hard to avoid the impression that three things are going on:

1. Obama really just isn’t that into Democratic priorities. He really doesn’t much care about preserving Medicare for all seniors, keeping Social Security intact, and so on.

2. What he is into is his vision of himself as a figure who can transcend the partisan divide. He imagines that he can be the one who brings about a big transformation that settles disputes for decades to come — and has been unwilling to drop that vision no matter how many times the GOP shows itself utterly uninterested in anything except gaining the upper hand.

3. As a result, he can’t or won’t see what’s obvious to everyone else: that any Grand Bargain will last precisely as long as Democrats control the Senate and the White House, and will be torn up in favor of privatization and big tax cuts for the wealthy as soon as the GOP has the chance.

I hope I’m wrong about all this. But when has Obama given progressives any reason to believe they can trust him?

Another Place to Cut the Budget

Okay, we want to save Afghanistan and bring it into at least the 20th century. We have a comprehensive plan to do so. One part of our plan is to kill the bad guys. Another part is to improve that country's banking and financial system. The Special Inspector General for Afghanistan (SIGAR) has some opinions as to how well we are doing with the latter. His recent audit says not well.

The first problem is that we have more than one agency working on improving the banking system. They don't work well together - cooordination of their efforts is minimal - nor does any one of them do an outstanding job. For example, they do not record the serial numbers of cash disbursed to contractors and other recipients. They have difficulty tracking the money they pay their contractors, some of which winds up in hands we don't approve of.

And then there's the problem of dealing with the Afghan's historic way of doing things. For example, they are not too concerned with bringing thieves and fraudsters to court. Karzai doesn't allow our agents into the central bank. The banks can't or won't track electronic payments, so how do we know where the money is going. Afghan officials at the Kabul airport seem to want to make it difficult to track cash flowing out of the airport, especially that taken by VIPs.

Even if we get our house in order (which would save some money), there is little chance of us changing the way Afghans have lived for centuries. It's time to declare victory and leave.

Rendition Goes On?

Jeremy Scahill makes a pretty good argument that it is going on in Somalia. The CIA has built a new compound at which they are holding counterterrorism programs for Somali agents. The agency is also involved in interrogations of suspected terrorists, some arrested in Somalia, some elsewhere and brought to the prison. Somalia has been designated as an active haven for terrorists. Ergo, anything goes: renditions, intense interrogations, Special Ops raids, drone attacks.

I thank God every day that our nation is so determined to protect its people.

Thursday, July 21, 2011

How Not to Manage a Government Contract

Essentially the Marines allowed the contractor that produced the Mine Resistant Ambush Protected Vehicle (MRAP) to run the show when it came to monitoring the contract. These were not small potatoes items. They were designed to offset the impact of the IEDs that are now common in our battles in Iraq and Afghanistan. Plus, there was real money involved; the contracts, awarded to Jacobs Technology and SAIC (Science Applications International Corp), were worth $378,000,000. The whole MRAP program is expected to cost $17.6 billion. This is a vital and costly program, yet the military ceded control of the contract to the guys who were the recipients of the contract. Here are some excerpts from the report of the DOD IG (my emphases):
The officials inappropriately allowed the contractor to exert controls over functions that should have remained under the authority of the Federal Government when providing support to the MRAP vehicle program operations in Southwest Asia. The contractor performed inherently governmental functions by directing Government personnel, participating in disciplinary actions of Government personnel, and preparing and signing SOPs. The contractor also engaged in functions that may approach being inherently governmental by being involved in the development of contract requirements and participating in situations where the contractor personnel may be assumed to be Government representatives.
---------------------------------------------------------------------------------------------------------
In addition, the contracting officer did not assess organizational conflicts of interest prior to or during contract performance as required. Contractor employees were involved in providing program analysis and oversight while providing maintenance services. Contractor employees also were involved in activities in which they were unable or potentially unable to render impartial services and advice to the JPO MRAP because they were, in effect, monitoring their own performance. Also, the JPO MRAP officials created an organizational structure for JPO MRAP Forward that relied on contractor employees to provide support in both overseeing and performing maintenance and logistics activities, thereby generating potential organizational conflicts of interest. A single Government employee was assigned overseas to oversee a multimillion-dollar contract in three different countries, which greatly increased the risk for potential waste or abuse. Further, by relying on the contractor for functions that should have remained under the control of the Government, the officials increased the risk of improper execution of the contract and did not ensure that the contract for JLI services was in the best interest of DoD.
--------------------------------------------------------------------------------------------------------
The D&F and prior contract data did not adequately support the contracting officer’s decision for procuring commercial services using a T&M contract type. The contracting officer could have used information from the initial JLI effort to estimate the extent or duration of the work needed for the JLI follow-on effort. Instead, the contracting officer awarded the JLI follow-on effort as a T&M contract, which provides no positive profit incentive to the contractor for labor efficiency or cost control. When using this type of contract, the contracting activity should monitor and manage the contractor’s performance closely.
Do you think that there may be some cost savings in DOD?

Wednesday, July 20, 2011

A Frightful Photograph

The following is one of four photos documenting efforts to capture a leopard that came into a village in India. Several villagers were injured, none fatally. On the other hand the leopard died from its wounds.

Tip of the fedora to Business Insider.

Do what I say, not what I do

This is a mantra of many of our leaders. The NY Times lists a few examples today. Naturally, it focuses on Republicans and on those who are serving their first term. Here are some of the examples, all of which came from the candidates who vowed to cut government spending.
  • Tim Scott of South Carolina got the initial payment for dredging the harbor at Charleston. The cost of the dredging is expected to exceed $300,000,000. The Army Corp of Engineers opposed the project.
  • Jon Runyan of New Jersey opposed the Republican Study Committee and was able to convince his fellow legislators to spend $95,000,000 to replace sand on the beaches, a task usually the province of state and local governments.
  • Sean Duffy of Wisconsin was able to get approval for an unspecified amount of money to build a bridge which te National Park Service says violates the Wild and Scenic River Act by harming the river’s scenic and recreational qualities.
  • Steven Palazzo of Mississippi restored $180,000,000 for his district depite the fact that these funds had been cut earlier.

Privatizing the Military

Jeremy Scahill does a fine job elucidating where we - and our military - are now with regard to the world of the corporation.

Thanks to Foreign Policy in Focus.


Coalition of the Billing: An Interview with Jeremy Scahill from Cultures of Resistance on Vimeo.

Pistorius in 45.07 seconds


That's how fast Oscar Pistorius ran the 400 metres yesterday. In the leagues in which he wants to travel that is not a super-fast time; the world record is 43.18. But when you consider he has no legs, either he is pretty fast or the running blades really help him out. To me just the fact that he is competing in these leagues is enough.

On a Losing Streak

The idiots from Westboro Baptist have not been in the public eye for almost two months. Perhaps that's why they picketed a KISS concert in Springfield, Il. They don't like Gene Simmons because he is Jewish and has been active in a campaign opposing California's same sex marriage ban. Who will they protest again next in order to publicize their viewpoint?

Tuesday, July 19, 2011

Go See The Principal

That's how most teachers would deal with disciplinary problems in the classroom in the 1950s. Usually, seeing the principal was enough to straighten matters out. The offending pupil may have received a stern warning, been sentenced to detention or suspended from school for a day or two. In all my years in school the last - suspension - was very rarely invoked. It seems that this situation has changed, as have so many others in the 21st century.

The Council of State Government tracked the disciplinary experiences of every incoming Texas seventh grader over three years through high school. The results of the study are not pretty. Being asked to stay away from school for a period of time or forever was the fate of 31% of  the students; and this punishment was not a one time thing, on average it happened four time to each student. Adding in in-school suspensions brings the rate to 60%; some students were punished this way as many as eleven times. 

White students were punished in these ways less than non-whites. Russ Skiba, a professor who studied the report, said, “What we really need to do is go in to those districts and see if these really are choices being made. We don’t really know enough about the reasons for African-American and Latino over-representation in school discipline. We have enough data to show that it’s more than just poverty and any greater misbehavior. My guess is it’s very subtle interactional effects between some teachers and students.” Nonetheless, whatever the reason, these suspensions become part of the student's 'personal record', which likely complicates their further education. 

Why the change in student discipline? Are kids less well behaved? Are teachers more sensitive?

One Boat Made It Out Of Greece

The Gaza Flotilla has been stuck in Grecian harbors for weeks now, as the Greek government invents new reasons why the boats should not leave the harbor. Of course, the Greeks have not revealed the real reason: Israel has given Greece orders to keep the  boats from sailing. However, one boat, the Dignite-al Karama, was able to set sail for Gaza.



The boat made it to within forty miles of Gaza when it was boarded by Israeli troops. The ship was towed to Israel and the occupants turned over to the police.

A Different Bus Crash

This one looks as though the driver was not at fault; he was not tired, he had a good driving record, the bus was traveling during the day. Also, the bus appeared to be in good condition. Plus, the owner of the bus was forthcoming in speaking to the media. These circumstances have not been seen in the numerous other bus accidents in the past couple of years. In New York state alone there have been 446 moving violations issued to bus companies so far this year.

But accidents happen to all of us. The cause was a blown tire. Here's what the owner had to say about the tires, “We lease the tires on our buses. We pay by the mile. So there is no incentive to run a tire past its prime.”

Monday, July 18, 2011

Where Does Control Lie?

'Lie' is the operative word in the post's title. The Supreme Court has said that the big bosses cannot be held liable for statements made in literature distributed by a subsidiary beholden to the big guys. The case is Janus Capital Group v. First Derivative Traders.

Janus Investment Fund, a subsidiary of Janus Capital Group, "had given special treatment to a dozen insiders who were able to make quick profits by exploiting the price difference between a mutual fund and its underlying securities". The prospectus for the fund said this was a no-no. But the SEC has a rule which states that it is unlawful to “make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made … not misleading.”  The Court said that Janus did not violate any laws as the big guys were not responsible for the statements in the fund's prospectus. However, Justice  Breyer noted, “each of the Fund’s officers is a Janus Management employee. Janus Management, acting through those employees (and other of its employees), manages the purchase, sale, redemption, and distribution of the Fund’s investments … [and] carries out the Fund’s daily activities.” 

Doesn't this mean that the principals of Janus lied?Make any sense to you?

Oil Does Spill In China

On Friday an oil pipeline exploded in Dalian, China's second largest oil port. Oil leaked into the Yellow Sea and covered about 165 square miles of water. However, that's a small fraction of the BP spill, assuming Chinese officials are telling the truth.

Interestingly, China attacked the problem using "all staff under the age of 50" at its maritime affairs office. They closed the beaches and sent 40 special "oil-skimming" vessels, 800 boats, and oil-eating bacteria to clean up the ocean.

It was reported that operations were normal by Tuesday morning.

The Times They Are Changing

Most people  I know - most of whom are old - remark on the changes in the weather. Yes, the weather is a non-controversial topic of conversation for most of us, but the conversation is changing. Many of us talk - and think and wonder - about what seem to be weather patterns that are not quite what we expect. 

There seem to be a lot more tornadoes, more water activity (floods or droughts) than usual. Of course, the winter had its own anomalies.

Climate change?

Sophisticated Bidding

United States Air Force Boeing KC-135R Stratot...Image by Daves Portfolio via FlickrThere was quite a furor over the bidding for building new refueling tankers for the Air Force. It took ten years to award the contract. Boeing won the contract on the third iteration of the process. The Air Force thought it would cost $4.9 billion to build 18 of these planes. Boeing thought otherwise and bid $3.6 billion. How could they bid almost 25% less than the Air Force's estimate? 

Well, the name of the game with some defense contracts for new items is that the Air Force will share in any cost overruns, sometimes up to a certain limit. So, now only five months after the contract was awarded, Boeing is talking about an overrun from their $3.6 billion number. This overrun will cost us $300,000,000. Was Boeing's bid based on the cost sharing factor?Enhanced by Zemanta

Sunday, July 17, 2011

Good Grades Mean More Money

As we know, the No Child Left Behind Law has converted many schools into test-taking factories. The Atlanta schools were really worried that many of their students would have a great degree of difficulty with the standardized tests. So, they figured out a way to ensure high scores.

The teachers reviewed the tests before recording the scores. When they came across a wrong answer, they simply changed it to the correct answer. Or, they made sure that lower-performing students were seated near higher-performing students so that both students would do well on the test; the lower-performing students had very good eyesight. Basically, the school system cheated. And they did it since 2001.


Thus far, 82 teachers and principals have admitted that cheating was rampant. For many teachers, it was a case of cheat or lose your job.

There is something rotten in the state of Denmark.

Saturday, July 16, 2011

Where is the State Department?

Boycotts are now prohibited in Israel. That is, boycotts against Israel or the West Bank settlements are prohibited. If you organize or even support such a boycott, you can find yourself in court and possibly paying damage to the plaintiff, whether or not the plaintiff suffered any damages.

The Jewish Daily Forward printed an example of a prohibited article: The struck sentences would incur the wrath of the authorities.
So, for example, if we say something like: We can understand why reasonable people could advocate a boycott of products made in Israeli settlements in the West Bank because those settlements are deemed illegal under international law and because a boycott is a peaceful way of expressing a moral concern — well, if we say something like that, we could be sued and held liable in civil court. And that court could award financial recompense to the plaintiff not according to actual damage done to his income if, for instance, we suggested that people refrain from buying his oranges or his facial cream, but according to what he thinks he might lose in the future.

Our State Department, which has been lambasting China and other countries for restricting freedom of speech, believes that the law is “an internal Israeli matter” and noted that “Israel has a history of a healthy democracy, and this law is a product of the democratic process of Israel.” Other countries do not feel the same way.

An Example of Good Government

The Consumer Financial Protection Bureau (CFPB) has been soliciting input from you and me as the agency has moved to its operational status (which is this coming Thursday). Ron Lieber thinks that there have been a few suggestions made by the public that should be adopted by the bureau. His list of the suggestions he deems worthy:
 “Create standardized contract for credit cards for issuers to incorporate by reference, merely adjusting specific rates and fees.”
 “Limit the total number of words in consumer financial contracts. Disclosures are not transparent if their length is unlimited.”
“Hold a weekly public complaint essay contest called ‘Why You Should Fine My Bank.’ ”
“Stop predatory lawyers and car dealers from sending letters offering car loans to people waiting for their bankruptcy to discharge.” 
“Make all loan originators owe fiduciary duties to their clients.”
“Replace the TILA disclosure form. Most LOs can’t explain it and consumers can’t figure it out by themselves.” 
What other government agency has been asking for public input? Will they act on the best ideas? If Warren were in charge, the answer would be 'yes'.

No Guts

It should not be a surprise that the word is that Mr. Obama will not be appointing Elizabeth Warren to head the Consumer Financial Protection Bureau (CFPB). Why would he not appoint someone who was born for this role? Did she screw up as head of the TARP Oversight group? Did she not set up the CFPB in time? Is the agency staffed with losers? Is she new to the world of consumer finance?

One of my friends laments the fact that Obama has, in my friend's words, "no experience". I have pointed out the fact that he did work; he was a community organizer, a law professor. I'm starting to agree with my friend, although I would phrase it as "no business experience". He wouldn't last very long in the business world. His negotiating skills are non-existent. His hiring abilities have not been as bad as those of GW; Geithner is the only truly bad hire, but Summers was close behind. Now, he has the perfect person for the job and he won't hire her because the Republicans object. What does this guy really believe? What is he willing to fight for? By appointing Warren he may lose a battle, but he's more likely to win the war.

Friday, July 15, 2011

It Works on a Small Scale

Family Independence Initiative (FII) offers a new approach to getting people out of poverty. Notice that I did not use the word 'helping'. That's because FII's basic premise is that the poor can get themselves out of poverty.

What FII does is provide a structure. The word 'Family' in its title is one of the keys if you use its plural form, families. FII organizes small groups of families and gives them an opportunity to better themselves by using the talents, ideas and strengths of the families. A group is very goal-oriented. FII asks the group to write down its goals as a group, as a family, as an individual. When a goal is met, FII pays $30 (there is a maximum of $200 per month). FII supplies a computer so that they can fill in a monthly questionnaire devised by FII; the question tracks changes in their lives, such as income, debts, health, community endeavors, etc. The answers in the questionnaire are audited every three months.

In addition to setting their goals, each family meets at least monthly with the other families in their group to discuss goals and whatever else they think important. These monthly meetings are not organized by FII. Nor are they run by FII. In fact, FII does not even provide any advice to the group. Maurice Lim Miller, the founder of FII, says, "What we’re going to do is give you some resources and connections and we’re going to trust that you’ll do something,” he said. “You guys are in the power position. If you do nothing we’ll fail. If you do something we’ll all learn.”

Here's what FII says the results have been in Boston:
In June of 2010 152 individuals, including 81 children, from 35 families enrolled in FII’s Boston demonstration project. In just six months by working together they made tremendous progress toward the goals they set for themselves. Outcomes include:
  • 13% increase in average household income (excluding subsidies and FII payments)
  • 22% increase in average savings
  • 25% of children improved grades
  • 20% improved attendance
The families are pursuing a range of initiatives to move forward and are focused on quality of life issues like more time with their kids, for themselves, building relationships, better access to food, self care, and education. The families reported over 500 initiatives and positive “sparks” from June to December of 2010. Families are also taking steps to raise their credit rating by getting financial counseling, paying bills on time, and reducing debt.
Similar results have been achieved in San Francisco, Oakland and Hawaii. It appears as though this is not a get-rich-quick scheme or an attempt to exaggerate results.While the NY Times has been wrong before, there is a feature article on FII in today's paper.

Would it work on a large scale? I have my doubts, but, on whatever scale it does work, it is helping people and this country.

Investigating in Depth

We've heard a fair amount about attorneys general for most of the states - as well as the federal government - going after mortgage companies for the way they conducted themselves in the years leading up to the Great Recession. The authorities have been at it for nine months now and are pushing the companies for a settlement of $30 billion plus the companies swearing they will be good boys from now on. However, it looks as though the AGs don't have the detailed evidence they should have to make theirs a slam dunk settlement.

The investigators don't really know how many wrongful foreclosures have been attempted or the volume of fraudulent documents filed in courts or how many cases involve 'robo-signing'. Yes, the feds have inspected documents but not very many. For example, they've looked at .001 percent of those who received a foreclosure notice last year. At the five major banks they looked at only 200 loans at each bank; these banks hold over 50% of all home mortgages, valued at $5.7 trillion.

Sure the money is a big number, but the AGs really don't know how much that number should be. The banks have offered $5 billion, the AGs $30 billion. Given the limited knowledge the AGs now have, it seems to be quite risky to also absolve the banks of any future claims in these matters.

Thursday, July 14, 2011

Looking Backwards and Forwards

Lawrence Korb etal have tried a somewhat different tack in arguing for cuts in our defense spending. They look at how previous presidents have managed to trim the defense budget despite being in as difficult circumstances as Obama is now in.

First, they remind us that the defense budget is now at the same level (in inflation-adjusted dollars) as it was in WWII when we had an army of 12,000,000 and were fighting on three continents. It is now more than our budgets during the Cold War, about $250 billion more annually.

Korb & Co.'s proposal is modest in that it seeks to bring the proposed budget down by $100 billion so that it is at the same level as under Reagan, the Cold Warrior. It would require $250 - $300 billion to bring the budget to the level under Eisenhower.

Here is their proposal to cut the budget by $133 billion through 2015:
  •  Roll back post-September 11 efforts to grow the ground forces and reduce the number of civilian DOD personnel concomitant with the reduction in military end strength ($39.16 billion through 2015).
  •  Reduce active-duty troops in Europe and Asia by one-third ($42.5 billion through 2015).
  •  Cancel the V-22 Osprey program ($9.15 billion through 2015).
  •  Reform military health care ($42 billion through 2015).
  •  Limit procurement of the Virginia-class submarine and DDG-51 destroyer to one per year, and limit procurement of the littoral combat ship to two vessels per year ($20.04 billion through 2015).
  •  Cut procurement of the Navy and Marine F-35 Joint Strike Fighter variants ($16.43 billion through 2015).
  •  Institute an across-the-board reduction in research, development, test, and evaluation funding ($40 billion through 2015).
  •  Reform the military pay system as the 10th Quadrennial Review of Military Compensation recommends ($13.75 billion through 2015).
  •  Cancel procurement of the CVN-80 aircraft carrier and retire two existing carrier battle groups and associated air wings ($7.74 billion).
  •  Cut the U.S. nuclear arsenal to 311 operationally deployed strategic nuclear weapons ($33.72 billion).
 We are spending too much on defense. We must smarten up.

Clouds

For the first time I took a cruise down the Connecticut River. It was a wonderful day; the sun was shining but the temperature was only 80 or so. The river was peaceful. And the clouds were just gorgeous.

A Successor to Paul the Octopus

Last year I wrote about an octopus in Germany who was able to forecast the result of many of the World Cup games. Unfortunately, Paul the octopus died in October. Now Germany has a successor.


That's right. Nelly the elephant has been successful in forecasting the winners of the Women's World Cup. She does not predict an American champion.

Wednesday, July 13, 2011

A Turtle?

I visited a friend's turtle farm yesterday. She has a variety of turtles and tortoises. The strangest looking turtle was the mata mata. I took some photos of it but this video gives a much better picture of how strange this turtle looks.

Somewhere Over The Rainbow


I've putzed around enough trying to get these images to line up side by side and, since I'm somewhat impatient this evening, I've decided to stop trying. The important point is that for a few minutes tonight there was a rainbow over Duncaster. Rainbows today are a rare occurence. When I was a kid we'd see 8 - 12 rainbows every summer. But the world has changed.

Monday, July 11, 2011

Who'd Have Thunk It?

Herbert Hoover has risen from the grave. How much does this excerpt from a Hoover speech differ from Obama's comments today?

Herbert Hoover, January 8, 1932
Our first duty as a nation is to put our governmental house in order, national, state and local. With the return of prosperity the Government can undertake constructive projects both of social character and in public improvement. We cannot squander ourselves into prosperity. The people will, of course, provide against distress but the purpose of the nation must be to restore employment by economic recovery. The reduction in governmental expenditures and the stability of Government finance is the most fundamental step towards this end. It can contribute greatly to employment and the recovery of prosperity in agriculture. That must be our concentrated purpose.
Dismal Political Economist has the answer: Obama's really a Republican.
Given the President’s rhetoric both earlier in the discussions and at the news conference it has become clear to most observers that the President has given up on the Democratic Party and has secretly switched his affiliation so that he is now a moderate Republican.
The “Confidence Fairy” was invoked by Mr. Obama.  The Confidence Fairy is the fantasy that business investment will increase because business will gain more confidence in the economy from a deficit deal, even though the economic conditions that support investment are deteriorating.  The Confidence Fairy has long been a fixture in the imagination of Republicans.
Mark Thoma dissects Obama's comments.
First, I am disappointed that the president seems committed to doing whatever it takes to reach a deal. There are lines that ought to be drawn in the sand, but even when they are drawn the lines are erased and moved as needed. It looks like a deal will be reached, the only question at this point seems to be how much the president will give away to get it.
...................................................
Second, I am disappointed that Obama has adopted austerity as a valid means of stimulating the economy, something he made absolutely clear during his remarks. There is no evidence that this works in a situation like ours, i.e. that deficit cuts create so much confidence that they stimulate the economy. However, there is plenty of evidence that the fall in demand from the deficit cuts is harmful, and that such cuts are likely to impede the recovery.
....................................................
One thing the president said -- the third disappointment -- was particularly worrisome. He said we shouldn't be concerned about "job killing tax increases" because there won't be any tax increases until 2013 when the economy should be in better shape. Thus, he has adopted the Republican argument that we cannot raise taxes when the job picture is so bad. But how does that square with the phrase he uttered repeatedly, "if not now, when?" And more importantly, how does that square with the desire to cut spending? Why is he willing to implement spending cuts immediately but not tax increases?

Taxation Without Representation

That was one of the reasons for the Revolutionary War. It seems like we have reached that state once more if you assume that 'representation' means that the people in Congress and the White House act in the best interests of their constituents. Clearly, this has not been the case in the 21st century and for years earlier. And it does not look like it will get better, it will only get worse.

It may be time to really push for a new system of electing our Congressional leaders. A friend of mine has an interesting idea with regard to our representatives in Congress and elsewhere. Norm's premise is that the collective wisdom and judgment of the average person is superior to that of the average Congressman or Senator. So, he asks, why don't we pick our representatives by lottery, much as we pick people to sit on a jury? I think he has a point.

It's Only $168,000,000

That's how much our leaders have budgeted for the Defense Centers of Excellence for Psychological Health and Traumatic Brain Injury (DCOE). These centers are responsible for research into and treatment  of our military personnel who have been seriously damaged. DCOE was established in 2008 but has yet to really get off the ground from a financial point of view, so says the GAO.

Their strategic plan does not specify what the group's mission is, let alone how the plan components will enable attaining the mission. Their accounting has at least one minor flaw: it doesn't make sure that expenses are classified properly. In key planning areas there are hardly any written procedures to follow. The GAO found it hard to understand just what DCOE actually did.

The situation was so bad that GAO went back for a second crack at it last month. Again, little information was available. DCOE has 'component centers' that are external to DCOE. I guess they're really external as GAO could not get necessary information - like how much they spent last year or how much they owed - for these centers. Yet, the centers are an important part of DCOE.

How could our leaders countenance such shoddy performance? True, it is small change - to them.

Magic Is The Answer

Paul Krugman has an excellent summary of the lack of action - both effective and ineffective - on the part of our government re our financial crisis:
So let’s summarize: The economy isn’t fixing itself. Nor are there real obstacles to government action: both the bond vigilantes and structural unemployment exist only in the imaginations of pundits. And if stimulus seems to have failed, it’s because it was never actually tried.
Listening to what supposedly serious people say about the economy, you’d think the problem was “no, we can’t.” But the reality is “no, we won’t.” And every pundit who reinforces that destructive passivity is part of the problem.
And the way things are going we won't be seeing much constructive action any time soon. After all, the most important thing today is whether these guys will get reelected next year. Isn't it?  The suffering and problems of the people who vote for these narcissistic idiots matters not.

Sunday, July 10, 2011

SAM To The Rescue

"Marijuana Cigarette"Image via Wikipedia
In Philadelphia SAM stands for the Small Amount of Marijuana program. If you're arrested possessing 30 grams or less of marijuana, you are charged with a summary offense rather than a misdemeanor and must attend - and pay $200 for - a three-hour class about drug abuse. You leave the program without having a criminal record. and their record is expunged. With a misdemeanor conviction, you could spend up to thirty days in jail and pay a $500 fine; and maybe even hire a lawyer.

Those arrested make out better. And the city makes out better in that its costs are lowered substantially. Because there is no trial, there is no need for a judge, a court-appointed defense attorney, a prosecutor, lab tests to confirm the "leafy green substance" is actually marijuana, or cops getting paid overtime to testify. It is estimated that Philadelphia saved $2,000,000 in the last year.
Enhanced by Zemanta

Saturday, July 09, 2011

Making Spending Cuts? Not for the Pentagon

The House, which has been more vehement than the Senate with regards to spending cuts, apparently feels that we need to be more secure and the way that happens is to increase the Pentagon's budget.

The House has approved a $649 billion budget for the Pentagon for FY2012. The wars are 'only' $119 billion of the total, so $530 billion will be spent on such vital necessities as housing our garrisons in more than forty countries around the globe, keeping obsolete and very costly planes (such as the Osprey) in the air, supporting the bevy of private contractors doing military work, missile defense, etc. 

These cost-cutters approved the budget by almost 4 - 1 (336 - 87). There was not a word spoken about deficit reduction or spending cuts.

Friday, July 08, 2011

Look Ma, No Hands

The title is not meant to be funny. This guy is to be admired for his courage and perseverance.

The Odds Are Very Much Against My Going To Jail

At most, the company will have to pay a fine.

That seems to have become the mantra for corporate crooks since our Justice Department adopted a policy of 'deferred prosecutions', by which they mean that the Justice Department will not indict a company or its officers for criminal or civil violations as long as the company investigates the suspected crime, issues a report on its findings and promises not to do it again. This is such a popular policy at Justice - and, of course, at the accused companies - that the SEC is also practicing it. It's gotten so bad that in some cases Justice tells the company that the department is considering an investigation. Would the company do the investigation itself, please? Some of the companies that have benefited from this policy: Moody's, JP Morgan, Beazer Homes, AIG, Prudential, Bristol-Myers Squibb, Computer Associates.

The Justice Department cites their limited resources as one reason for the policy. Question: what have been the department's budget requests for the past five years?

Here's an apt comment from Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney, “If you do not punish crimes, there’s really no reason they won’t happen again. I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space.”

It's almost laughable

Ronald Dworkin recommends the following words of FDR to Mr. Obama. They come from a campaign speech of 1936.
For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up. We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred. I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.

I've emphasized the last two sentences because of the differences between the first administration of FDR and that of Obama. In his first administration Roosevelt created the CCC, RFC, SEC, AAA, TVA, WPA.  Social Security came into being and prohibition went out. GNP grew 32% from 1932 to 1936. Unemployment was down 25%. In his first administration, Obama got the new health law passed. Otherwise, he, more or less, carried out GW's agenda.

And Dworkin writes "We now have a President we can admire and respect." Really? Is there much hope that there will be significant change under our current president?

Thursday, July 07, 2011

A Sample of GAO Reports

The following is just a small sampling of what the GAO produces every month. Look through them. You'll see big numbers - our money - being wasted. You'll read about poor internal control, lack of oversight, poor management, outright theft, etc. And you'll see that the GAO is interested in more than saving money.

If Obama and company really want to save money, this is where they should start.

Top 10 List for June 2011

An alphabetical listing of the top 10 areas of significant work and the reports and testimonies in those areas issued in June 2011.

1. Auto Safety

Auto Safety: NHTSA Has Options to Improve the Safety Defect Recall Process
GAO-11-603, June 15, 2011

2. Combating Terrorism

Combating Terrorism: U.S. Government Should Improve Its Reporting on Terrorist Safe Havens
GAO-11-561, June 3, 2011

3. Diplomatic Security

Diplomatic Security: Expanded Missions and Inadequate Facilities Pose Critical Challenges to Training Efforts
GAO-11-780T, June 29, 2011
Diplomatic Security: Expanded Missions and Inadequate Facilities Pose Critical Challenges to Training Efforts
GAO-11-460, June 1, 2011

4. FEMA

FEMA: Action Needed to Improve Administration of the National Flood Insurance Program
GAO-11-297, June 9, 2011

5. Flood Insurance

Flood Insurance: Public Policy Goals Provide a Framework for Reform
GAO-11-670T, June 23, 2011

6. Influenza Pandemic

Influenza Pandemic: Lessons from the H1N1 Pandemic Should Be Incorporated into Future Planning
GAO-11-632, June 27, 2011

7. Influenza Vaccine

Influenza Vaccine: Federal Investments in Alternative Technologies and Challenges to Development and Licensure
GAO-11-435, June 27, 2011

8. Nuclear Waste

Nuclear Waste: Disposal Challenges and Lessons Learned from Yucca Mountain
GAO-11-731T, June 1, 2011

9. Recovery Act

Recovery Act: Funding Used for Transportation Infrastructure Projects, but Some Requirements Proved Challenging
GAO-11-600, June 29, 2011
Recovery Act: Funds Supported Many Water Projects, and Federal and State Monitoring Shows Few Compliance Problems
GAO-11-608, June 29, 2011

10. Taxes and Identity Theft

Taxes and Identity Theft: Status of IRS Initiatives to Help Victimized Taxpayers
GAO-11-721T, June 2, 2011

11. VA Health Care

VA Health Care: Actions Needed to Prevent Sexual Assaults and Other Safety Incidents
GAO-11-530, June 7, 2011
VA Health Care: Improvements Needed for Monitoring and Preventing Sexual Assaults and Other Safety Incidents
GAO-11-736T, June 13, 2011