An Old-Fashioned Banker

It was refreshing to read the latest article by Joe Nocera. It was about Robert Wilmers, head of M&T Bank, which in today's bizarre so-called banking world is considered a quaint not with-it organization by its fellow large banks. Wilmers, at 77, is , I suppose, considered an old-fashioned banker. He believes in such things as restoring the Glass-Steagall Act. He thinks that the bank’s mission is to “find ways to continue to attract deposits, make sound loans and grow in accordance with our historic credit quality standards”. It is not designed to make tons of money trading securities, yet that's where the TBTF banks make most of their money. In Wilmer's view derivatives should be regulated. 

This old-fashioned banker has done very well for M&T. "When he took it over, M&T had $2 billion in assets; today, its assets exceed $68 billion, and it’s one of the most highly regarded regional bank holding companies. It has also been one of the best performing stocks in the Standard & Poor’s 500-stock index; indeed, M&T was one of only two banks in the S.& P. 500 that didn’t cut its dividend during the financial crisis."

We need - and need desperately - more bankers like Wilmers.

Westboro Baptist Loses Again

This time it was in Joplin, MO. Their planned protest never got off the ground. A group of bikers prevented them from assembling. This has to be the bikers weekend. First, the Rolling Thunder Rally (which publicizes the fate of POWs and MIAs) and now the stopping of the so-called Baptists.

She Has the Evidence

The evidence was a man's penis in a polythene bag. She claims he tried to rape her. He claims they were having an affair and she got upset because he wouldn't leave his wife. Whatever the reason, she cut off his penis.Doctors cannot reattach it; they are just trying to enable him to "urinate normally without the penis".

It is the Soldier

The following poem was read today at a Memorial Day service I attended.

It is the Soldier, not the minister
Who has given us freedom of religion.
It is the Soldier, not the reporter
Who has given us freedom of the press.
It is the Soldier, not the poet
Who has given us freedom of speech.
It is the Soldier, not the campus organizer
Who has given us freedom to protest.
It is the Soldier, not the lawyer
Who has given us the right to a fair trial.
It is the Soldier, not the politician
Who has given us the right to vote.
It is the Soldier who salutes the flag,
Who serves beneath the flag,
And whose coffin is draped by the flag,
Who allows the protester to burn the flag.

While it is important to have a strong military, I think we have gone overboard in this country in our praise of the military. We have a defense budget that will bankrupt us. We 'support the troops' because we know very few who actually serve in the military and, thus, are at risk. The continuous state of war in which we have been engaged for this entire century has hardly any direct impact on our lives, so we and are leaders accept it. There seems to be little effort on the part of our military and political leaders to bring this country back to days of peace. While we rebelled against England to gain the freedoms listed in the poem, the soldier does not grant us these freedoms, the Constitution does.

Boots on the Ground?

It looks  as though Al-Jazeera has been able to film some British 'advisers' to the Libyan rebels. The Guardian conjectures whether these advisers are helping NATO planes to hit Qaddafi forces. Do these advisers constitute "a foreign occupation force of any form on any part of Libyan territory", as prohibited by the UN resolution?

Knowledgeable Investors

That certainly seems to be the case with our Senators and Congressmen. In one study of the securities trading by Senators in the 1990s, the authors concluded that the senators did 12% than the market. Here's the authors' conclusion:

It seems unlikely that United States Senators as a group have such unique investment skills that they can outperform not only the market as a whole but also corporate insiders over an extended period. Instead, it seems more reasonable to assume that the superior returns found by Ziobrowski result from Senatorial access to—and use of —material nonpublic information about the companies in whose stock they traded: “Looking at the timing of cumulative returns, the senators also appeared to know exactly when to buy or sell their holdings. Senators would buy stocks just before the shares suddenly would outperform the market by more than 25%. Conversely, senators would sell stocks that had been beating the market by about 25% for the past year just when the shares would fall back in line with the market’s performance.”

The conclusion for a recent study of Congressmen by the same authors found:

A previous study suggests that U.S. Senators trade common stock with a substantial informational advantage compared to ordinary investors and even corporate insiders. We apply precisely the same methods to test for abnormal returns from the common stock investments of Members of the U.S. House of Representatives. We measure abnormal returns for more than 16,000 common stock transactions made by approximately 300 House delegates from 1985 to 2001. Consistent with the study of Senatorial trading activity, we find stocks purchased by Representatives also earn significant positive abnormal returns (albeit considerably smaller returns). A portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually).

What do you think?

Memorial Day 2011

Image via Wikipedia

Andrew Bacevich continues to lament the decline in this country's wish for and attempts to achieve peace.  Our attitude towards our soldiers has come 180 degrees from that of the Vietnam era. Now, we are almost dedicated to "supporting the troops", especially since this involves nothing on our part except paying our taxes, which is never mentioned in the same breath as supporting the troops.

And as for our leaders? Here's Bacevich, "For politicians sending soldiers into battle, generals presiding over long, drawn-out, inconclusive campaigns, and contractors reaping large profits as a consequence, this war-comes-first mentality is exceedingly agreeable".

Our indifference and our leaders' war-comes-first mentality results in the soldiers engaging in wars without end. None of our leaders has a plan for ending these wars or even seems to be looking for a way to end the wars. We are in a state of perpetual warfare. This is year 11 and we're still counting.

Bring back the draft!

Amazing Photos of the Joplin Tornado

The Daily Mail has some incredible before-and after photos of the devastation.

More Than A Big Book

This book is 12 feet long, 10 feet wide and contains 1,000 pages, but it's not the biggest book in the world according to Guiness. It is, however, the biggest book on peace in the world.

The book was written by students of Groton-Dunstable Regional Middle School over a period of 7 years. It's titled "Big Book: Pages for Peace". Writing it was fairly easy as the students wrote to people around the world asking three 'simple' questions: What is world peace? Will there ever be world peace? Where would you like to see the world in 20 years? The answers became the nucleus of the 1,000 pages of the book. 1,300 people responded, including the Dalai Lama, Nelson Mandela, Maya Angelou, professional skateboarder Tony Hawk, Jimmy Carter, and Senator Edward M. Kennedy.

Will We Regain Our Manufacturing Edge?

How bad is the job loss in manufacturing? Here's some data from the Information Technology and Information Foundation. It plots the job loss in manufacturing by quarter since 2000. Not exactly a pretty picture.

Is it getting any better? It sure doesn't look that way. Can we continue to be a major financial power if we are not making things? Not only are manufacturing jobs going away, our share of world exports has dropped from 17% to 11% since 2000. Do you think that there is a correlation here? Another major financial power, Germany, has been able to maintain its 17% share of world exports.

We need to regain our manufacturing edge. Most of our R&D dollars are spent in the manufacturing process. A good deal of our innovative techniques and processes come from the need to solve manufacturing problems.

Don't Make a Mistake in Italy

The Italian government apparently believes that earthquakes can be predicted with certainty. Since the scientists of the Major Risks Committee did not predict the major 2009 earthquake that killed 308 residents of L'Aquila, the scientists are being charged with manslaughter.

The Ideal Audit Committee

From a stockholder viewpoint it appears that Goldman Sachs does not have an ideal audit committee if you believe that this committee should have the independence and integrity needed to verify that the financial statements pass the 'smell' test. It looks as though half of the members of its audit committee should resign, as did Mr. Gupta, the friend of Mr. Rajaratnam, who has been convicted on insider-trading charges. 

The chairman of the committee led Price Waterhouse Coopers. During his tenure the SEC found that the firm had violated auditor-independence rules 8,000 times. The chairman also held stock in one of Price's clients. Another director was head of Fannie Mae which failed the smell test on his watch. A third director was on GM's audit committee at a time when it was accused by the SEC of misstating its results for several years. And then there is the former chairman of Goldman who is on the audit committee for Goldman.

Perhaps, there are other reasons beyond luck and talent that account for Goldman's financial successes.

Surprisingly Close

Yesterday the House voted on the Afghan Exit and Accountability Act, a proposal by Jim McGovern and Walter Jones to start getting us out of Afghanistan in a serious way. The bill would have us set a specific timetable for getting our troops out and establish a meaningful reporting system to measure progress.

The vote was surprisingly close, 215 - 204.

Making a Bet

GE and Rolls Royce are betting that their lobbyists will get us to continue to pay for their F-35 jet engine in FY2012. We stopped paying for it last month (FY2011), but the companies are willing to continue funding it, at least for the few months remaining in this fiscal year.

The Pentagon has been trying for five years to stop paying GE hundreds of millions of dollars a year for an engine the Pentagon does not want or need. Yet, our Congressional leaders vote for the program every year because they fear the loss of jobs in their district; nationwide there are 1,500 GE employees working on the program. If our leaders don't have the courage to eliminate what is essentially a boondoggle, how likely is it that they will do anything serious with regard to any spending which affects jobs?

Here, Mr. President....

Image via Wikipedia

Congress will cede its right - and duty - to declare war to you. Congress believes that you should be able to send troops anywhere for any purpose at any time. In the words of the ACLU, the National Defense Authorization Act (NDAA), which is being debated by Congress today, would allow the President to "commit the United States to a worldwide war without clear enemies, without any geographical boundaries (the use of military force within the United States could be permitted), and without any boundary relating to time or specific objective to be achieved".

The End of an Era

Matthew Israel, founder of the Judge Rotenberg Educational Center, faces criminal charges with regard to a prank by a former resident which resulted in up to 77 shock treatments being given to two residents of the center back in 2007. The charges are based on destruction of evidence, i.e., the surveillance tapes of the night in question. Israel has been at the center a long time and, earlier this month, he announced his retirement (at age 77). He has left quite a legacy; parents of most of the residents love him, the scientific and mental health establishment despise him.

It couldn't be seen

Harold Camping says that May 21 was "an invisible judgment day", whatever that means. Camping says it was a spiritual day rather than a physical day of earthquakes, etc. That day will occur on October 21, when the universe will disappear. And that's all he had to say on the matter. Let's see what he says in October.

Who is your someone?

Mine was Catherine.

An Open University

It appears as though Florida State University (FSU) prefers money rather than a reputation as an open university.

Example 1 - the Charles G. Koch Charitable Foundation gave FSU $1,500,000 with the understanding that the university would develop a program promoting “political economy and free enterprise” in the economics department and the foundation would have a say in the hiring of faculty to teach the program. And the foundation certainly has not been silent with regard to the second point. It has said no to 60% of the professors proposed for the program.

Example 2 - BB&T, a regional bank, gave $1,500,00 also. These funds were for the establishment a Program of Free Enterprise and a course entitled, "Free Enterprise and Ethics". "Atlas Shrugged" will be one of the core books for this course.

And I thought colleges were bastions of liberals.

Behind the PR

Image via Wikipedia

You may recall that last fall we sold hundreds of planes and helicopters plus missiles to our friends in Saudi Arabia. I suppose it was good for the economy. But the deal was more than selling arms, we also agreed “to protect the kingdom’s oil riches and future nuclear sites’’ with 35,000 of our troops, who would become another of our 'elite' forces. How much this would cost us is anybody's guess.

Where are the leaders?

Granted the current political climate is asphyxiating and Republicans are not trying to make it easy for Obama to fill appointments, but the situation is getting ridiculous with regards to financial appointments, so ridiculous that the modest changes Dodd-Frank brings may not see the light of day for many more months.

The chair of the FDIC will soon leave. Obama has yet to announce a candidate to head the Consumer Financial Products Board. The Office of the Controller of the Currency has been run by an interim head for almost a year. There is yet to be named the Vice Chairman for Banking Supervision.

Geithner has a large say in these appointments. Is he afraid that new faces may crowd him? Is Obama serious about financial 'reform'?

Whew!

It looks like we made it through another prediction of the end of the earth, or, more precisely, a prediction of the coming of the Lord. It's still possible that the universe will be destroyed on October 21, five months from now. If we're still here on October 22, then the Rev. Camping will have gone 0-for-three in his predictions of The End.

Sure, this whole thing is a joke for most people. But there were some believers who have to figure out what to do now that they have no money left. Maybe, the Reverend will help them out.

Why is the deficit so large?

The Center on Budget and Policy Priorities asserts that a good part of our deficit problem is due to Bush: tax cuts and wars. If the chart below is correct - and I think you'd have a problem pointing out any errors -, they prove their point. As I've often said, you need to consider revenue when budgeting. Our deficit hawks refuse to do so.

Another Posting About Water And Drilling For Gas

Image by Toban Black via Flickr

Earlier this month I wrote about a problem with drilling of some natural gas wells: the water from your faucet can be set on fire. Today's post is not about drilling per se. It's about the law in many states; in these states you don't have the right to prevent drilling on your land if most of your neighbors want drilling on their land. This situation is referred to as 'forced pooling'. It is quite common when drilling shale gas.

Most laws with regard to forced pooling do provide for the possibility of a royalty payment, but the size of the payment is unknown and when you'll get the payment is also unknown. During the drilling process and before any royalty is received you may find that your water has been polluted. There is no reimbursement for your costs in buying clean water to drink and wash with; over a year or two these costs can add up. But, the more important cost is the trampling of your rights as a landowner and citizen.

Who was really Linkedin?

You don't imagine the average Joe investor was, do you? Yes, Joe probably made some money on the IPO, but it's highly unlikely that he was able to buy his stock at the offering price of $45. As with most hot IPOs, the big funds were able to buy the stock at the offering price, but not Joe. The first chance Joe had was very likely at around $83.

The opening performance of the stock was considered "fantastic news for equities, for retail investors, for financials" by some professionals. Others were skeptical as the company's profit margin is less than 7%, growth seems to be slowing somewhat and competition increasing. Combine this performance with the noise about Facebook and one has to wonder whether we'll soon see another Internet stock bubble.

My Vineyard friend, Peter, clued me into this. Grazie, Pietro.

Economists and Sex

This is an especially good one.

!!!!

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One Day Later

 May 19 casualties in Iraq per Iraq Today:

• Baghdad       3 killed, 8 wounded
• Baquba         2 killed, 10 wounded
• Basra            rocket attacks
• Kirkuk         22 killed, 60 wounded
• Mosul          1 wounded
• Falluja         4 wounded

Please Pay $456,881 Plus Interest

That's how much two small counties in Kentucky owe the ACLU. for legal fees related to the counties posting in 1999 copies of the Ten Commandments in their courthouses. The ACLU sued relative to the separation of church and state and won in each court to which the counties appealed. The Supreme Court ruled in ACLU's favor in 2005. Still, the counties pursued their case. Having lost their most recent case, the counties, after 11 years, are finally considering ways to settle with the ACLU.

The List Grows

Three more allegations of sexual misconduct have been leveled against DSK: sexual assault against a domestic worker in Mexico, harassing a fellow politician and an affair with an Italian widow.

He also resigned from the IMF. Part of his resignation notice : “I think at this time first of my wife — whom I love more than anything — of my children, of my family, of my friends.” Who was he first thinking of when he was involved with the alleged incidents?

Thank the Lord

Image via WikipediaSomeone has had the sense and compassion to take care of the pets who are left behind on Saturday when the Rapture will occur. Eternal Earth-bound Pets has stepped up to the plate and offered to take care of the pets the Saved will unfortunately leave behind. For only $135 the organization will take care of and love any pets left behind. This fee is so low because we all know that there will be no more universe as of October 22, 2011. Supposedly, 259 people have signed up.

Was it P.T. Barnum who said something about a sucker being born every minute?

By the way, that is not a misprint on the poster above. End-of-earth forecasts have been made before.

Will the Feds File Suit Against Mortgage Companies?

It looks as though they have the ammunition to do so, as HUD has audited the five largest companies - Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial - and found them wanting in their handling of foreclosures on homes bought via FHA funds. HUD has referred its findings to DOJ. Will it act?

Essentially, the audits found that the mortgagors used defective and faulty documents to get reimbursement from us (FHA) for foreclosures that sold for less than the outstanding loan balance.

Can This Be Right?

At a hearing about the military's treatment of wounded soldiers, Scott Gould, the deputy secretary of the Department of Veterans Affairs, said veterans were benefiting from a suicide prevention crisis line, which has fielded more than 400,000 calls and led to more than 14,000 "rescues" since it began in July 2007.

To make it easy, let's say those are the numbers for a full 4 years. Gould is saying that they get 100,000 calls a year or about 275 a day and there are about 3,500 "rescues" a year or about 96 a day. How many people are in the military? Wikipedia says there were almost 1,500,000 in 2009 Then about 7% use the suicide prevention line every year and 1% of the members of the military are serious cases every year. That doesn't sound right to me.

If Gould is correct, that's another black mark against the volunteer army.

Just Another Day in Iraq

Iraq Today has been reporting on Iraq and Afghanistan casualties for quite a while. Here's some of the news for Iraq for May 18, 2011:

• In Baghdad - 3 killed, 11 wounded by bombs or IEDs.
• In Kut - 2 injured by an IED.
• In Riyadh - 2 injured by an IED.
• In Mosul - 1 killed, 2 wounded.

Peace in our time.

Tight Quarters, Very Tight

Can you imagine the conditions of 513 people traveling in two trailers? Mexican police stopped these two large but not that large trailers, which were filled with illegal immigrants to the U.S. Some had traveled from as far afield as India and China. The fee for this luxury travel? $7,000.

Problems Up The Wazoo

Image via Wikipedia

I could have titled this post "Nuclear Plant Problems" but that would have minimized the number and seriousness of (NRC) problems we and Japan have. Our biggest problem is a Nuclear Regulatory Commission that works for the industry. As I think about it, that's Japan's biggest problem also. My claim is supported by too many sources for me to post the references. If you've been following the news about Fukushima, you know what I'm talking about. We are learning more every week.

For example, the NRC has been unable to convince the industry to get real fire prevention and protection. The industry pleads financial hardship, the NRC says we agree. Many plants refuse to buy sprinklers and are relying on their staff to realize that there is a fire and they need to extinguish it. How remote is the possibility of fire? Our 104 plants report an average of 10 annually.

The NRC is also willing to take risks. "Instead of requiring repair of an identified problem, like faulty insulation on electrical cables, regulators will work with utilities to calculate the odds of something going wrong. If the risk is low enough, a repair will no longer be deemed critical to safety." But the NRC itself acknowledges the real difficulty in predicting conditions should a problem occur. The same generators that were used at Fukushima have failed at 69 plants here. Today, we learn that is very likely a problem with vents.

When will we get regulators that regulate rather than accept what the industry they regulate says? We are paying the regulators. However, at times, the regulators get more from those that they regulate.

A Tufted Titmouse Watching The Moon Rise

From the Boston Globe of May 16, 2011

Social Science or Medical Science?

William Easterly has another excellent article which questions the validity of the numbers used in social science studies published in medical journals. Here's his summary of the decision tree that some researchers use when deciding whether to publish in a medical or economics journal.

St. Paul?

This is probably today's joke but there is a story making the rounds that a Russian sect believes that Vladimir Putin is the reincarnation of St.Paul. The article that is the basis of this story is attributed to AFP, which most people would think refers to Agence France Presse. It refers to a website run by an unnamed Sobedednik weekly. Anyway, it's kind of cute and an innocuous story to start the day.

Can't Do Without It

Food, that is. Yet, we have a problem today and, if Lester Brown is right, a much bigger problem tomorrow. He's talking about food as possibly being the cause of future wars. Brown bases some of his argument on the fact that food prices, as measured by the U.N. Food Price Index, are at an all-time high and he doesn't see them coming down soon, if ever, unless we take action.

Fundamentally, it's a supply and demand issue. More people and the difficulty of increasing production to the necessary levels form the basis of his argument. We all know that the population is increasing, some see a population of 9 billion in 2050. Furthermore, as more countries move out of the development phase, they want to move up the food chain. Hence, the demand issue. The supply issue has a few more parts which can be summarized by the energy situation, climate change, wells running dry and mismanagement of soils.

Ethanol is one of the factors affecting supply as more and more land is being devoted to the raising of crops which will be converted to fuel. In 2000 16,000,000 tons of grain were converted to ethanol, today it's over 126,000,000 tons. Total grain supply has not increased a similar 8 times in that time period.

Scientists have a rule of thumb with regards to climate and production of grain: "for every 1 degree Celsius above the growing season optimum, farmers can expect a 10% decline in grain yields". We are seeing only the beginnings of climate change today. What will tomorrow bring?

More than half of the world lives in areas where the water table is falling. What happens when there is no water for crops?

There are now two new dust bowls, one in China, the other in central Africa. It's estimated that one-third of the world's farmland may wind up the same way due to overplowing and bad management of the land.

Tensions are also exacerbated by the actions of countries facing a lower supply of grain. Many of them have signed deals with good producing countries whereby these countries with poor supply can export the producer's grains. This bothers some people, to say the least.

It's not looking good.

Men with Three Names

I tend to look askance at men who use three names. Usually they seem to want to elevate themselves above we commoners and believe they have more rights than we do. The latest three-namer is Dominique Strauss-Kahn. He seems to have a hard time keeping it in his pants.

Over the past nine years he has now been publicly accused three times of sexual offenses. Granted accusations are just that, but when one is accused more than once of the same offense, there may be some truth behind the accusations. In 2008, the IMF, of which he is managing director, chastised him for having an affair with one of his subordinates. The current accusation of a hotel maid seems to have the ring of truth, but we have to wait for the forensics to be analyzed.

What's that saying about power?

Nakba Day 2011

This is a celebration of Nakba Day at the border between Syria and Israel.
 

Similar 'celebrations' were held in Lebanon, Gaza and the West Bank. Nakba Day is Commemoration Day for Palestinians. This is the 63rd anniversary of the establishment of Israel. It has been a bloody day. There are possibilities of more violence.

You have 7 days to repent

I have it on very high authority that the end of the world will begin on May 21. That's when, just before midnight Jerusalem time, Christ will come down from heaven and select those who will go back up with him. Five months later, on October 21, there will be no more earth or universe.

The fellow who has told me so is Harold Camping, who tells me this via his radio network. He hasn't told me to reveal this photograph of him, but you should be aware of what this forecaster looks like in case you meet him next Saturday.

This is Mr. Camping's second attempt to warn us of this catastrophe. He did tell us that the Rapture was due on September 6, 1994. He has admitted the error and assures us that this time he is right.

Making Beer

It's not just beer. It's Allagash Beer.

“Where have the police and military gone?”

That's the question Mohamed ElBaradei is asking, as a crime wave seems to be sweeping Egypt. There have been five attempted jailbreaks in Cairo in the past 2 weeks. We saw the battle between Muslims and Christians earlier this week. The grandniece of Sadat has been kidnapped. Police assigned to patrolling a soccer game vanished when a riot broke out. There was a riot in an upscale town. A policeman has been abducted. What used to be the peaceful streets of Cairo are now streets with few pedestrians as fear has come to Cairo.

Some believe that the police can no longer function as they had become indoctrinated in the old ways where they could run roughshod over the populace. Now,they retreat from confrontations. Others think the performance of the police is a stratagem to weaken the democracy.

Whatever the reason it does not bode well for the new Egypt.

Why not a Volunteer Army

It may be laid down as a primary position, and the basis of our system, that every Citizen who enjoys the protection of a free Government, owes not only a proportion of his property, but even of his personal services, to the defence of it.
George Washington

Is This What We Are Moving Toward?

In the Democratic Republic of the Congo, 48 women are raped every hour. How is that possible? Why is that possible? What the f**k kind of world are we living in?

Psst! I've Got a Secret

Raj Rajaratnam had many, most of which were told to him by people on the inside of imminent deals or announcements. Mr. Rajaratnam was convicted on 14 counts of securities fraud. Mr. Rajaratnam parlayed his involvement in the Southeast Asian community into a network of informants who would tell him of upcoming major announcements. He was not cheap and paid generously for these tips, which earned him millions.

The question is whether the government will pursue other cases, including cases involving the issues that led up to the Great Recession.

Analyzing Microsoft

Barry Ritholtz sees an emperor without many clothes. He contends that legal expertise and business acumen in Microsoft's early days was responsible for the company's growth and reputation. Microsoft was not a technological innovator then nor is it one now. In Ritholtz's words, "Microsoft has missed just about every major trend in computing over the past decade. They missed Search, they missed MP3 players, had to buy webmail, missed user generated content, maps,blogging, online video, cloud computing, location sensitive apps,  smart phones, Apps, texting, social networking, tablets, micro-blogging (ie, Twitter)."

The $3 Trillion Man

The National Journal has an interesting take on the killing of bin Laden. Tim Fernholz and Jim Tankersley try to calculate how much in dollars and cents bin Laden has costus. They estimate $3 trillion over 15 years.

They then compare the cost of the war on terrorism and to other conflagrations and the Oklahoma bombing of Timothy Mc Veigh. Finally, our 'regular' wars yielded economic benefits, the war on terror has yielded none. This chart, which I've had to blow up so that you can read the numbers (albeit with difficulty), summarizes the article.

Your Water Is Burning

You may be surprised that methane gas could cause your well to begin burning or even explode. It can also enable you to perform a trick of lighting a match as water comes out of your faucet and burn the water. These things have happened in some places in the United States. It tends to happen when the water well is as "close" as 3,000 feet (.6 mile) to a natural gas well.

A study by Duke scientists seems to place the blame for the burning water capability on the "hydraulic fracturing" which is used in 90% of natural gas wells; the fracturing, which involves pumping sand and chemicals into the natural gas well, breaks rocks so that gas can be released and enter the marketing chain. The amount of methane in the affected water wells is considered dangerous by the Interior Department and requires urgent “hazard mitigation” action.

One good thing coming from the study was that the wells were not contaminated.

It's a Male World

At least in the eyes of Der Tzitung, a Brooklyn-based Jewish newspaper. They airbrushed out Hillary Clinton and Audrey Tomason, the Director of Counterrorism, from the recent photo of the Obama brain trust watching the attack on Osama.

This is the 21st century is it not? The newspaper is based in Brooklyn, not Mecca.

Not All Quiet on the Egyptian Front

Now Christians and Muslims are battling each other. Twelve of them were killed in a battle over a story about a Muslim woman being held in a Christian church. It must have been a pretty wild scene as 190 were arrested.

One More Once

Jim McGovern and Walter Jones will soon be introducing the Afghan Exit and Accountability Act, which is an attempt by the Congressmen to get us out of Afghanistan. If the bill passes, the President would have to give Congress a timetable for withdrawing our troops by a date certain. Plus, he would have to submit quarterly reports to Congress on the progress of troop withdrawal, as well as the human and financial costs of continuing the war. The President would also have to report how much money U.S. taxpayers would save if the war were brought to an end in six months, instead of five, ten, or twenty years.

You wonder how much the administration will oppose this bill, as it is now talking about 2014 as the date Afghans take the lead, not necessarily the date we withdraw and they are pushing Afghanistan to accept a Permanent Bases Agreement which would keep our troops there until further notice.

McGovern has been pushing us to get out of our quagmires for quite a few years. He hasn't succeeded but that is not for lack of trying.

All Quiet on the Bahrain Front

In Bahrain, Shiites outnumber Sunnis 4 -1. However, the Sunnis are in power. They seem bent on wreaking havoc on the Shiites. One of their primary tools is destroying Shiite mosques. But, you know from the news, they are doing much more, even to the point of bringing in troops from Saudi Arabia. And, of course, they've started to shut down media that the state does not control.

And what does our country say? I guess our message varies depending upon what country is involved and how much we are beholden to them.

Houston, We have a problem

The St. Louis Fed has some interesting charts. This one illustrates quite clearly the depth of our employment problem.

Change the Measuring Stick

Walmart has not been doing that great for the past year or two. Yet, that has not stopped them from making sure the executives continue to make good money. Historically, one of the major components of the company's bonus plan has been same store sales, which has long been considered the basic measure for retail companies. However, Walmart has changed its mind as to the utility of same store sales and has shifted to total company sales as a standard for measuring the performance of its executives. One wonders whether the standard was changed because same store sales have been down for almost two years, while overall revenue has been up because of new stores.

Changes in the measuring stick have also been made in the time period being evaluated. Walmart used to use three years, now it's annually. Do you think the executives are worried about the company's future and want to get as much money as they can now?

At the same time the executives ares sweetening their pot, they are screwing the employees. They have ended the profit-sharing plan that had been in place for years.

Saying Arriverderci

Now that I've moved from Massachusetts I must say arriverderci to the license plate I've had for 56 years. It's been on many cars in those years. Some were great, my 1960 Corvette. Some were not so great, my Corvair and my Volkswagen. The number was always great; I never had a problem remembering it.

Criminal Aliens

The GAO has just released a study about criminal aliens. Some interesting numbers:

• 3.5% of the 10,800,0000 illegal immigrants are in jail, with drugs being the reason in many cases
• Most of the jailed illegals are Mexican
• It costs us about $1.5 billion a year to house these criminals. This number has been fairly constant for the past four years.

Quite a Maverick

Dina Rasor has been reporting on the Pentagon for almost thirty years; in that time her message has been fairly basic: we are wasting a lot of money with the present Pentagon systems. She has an interesting article on how some weapons never die, even if they have been failures from day 1. These weapons never die because they have developed a constituency in Congress; they bring jobs to the Congressmen's districts. One problem with these weapons is they are constantly being modified to meet the "current needs"; this is usually necessary because the weapons did not meet the needs for which they were originally intended.

Rasor discusses the Maverick missile as an example. This missile has been around for almost 40 years and has gone through six generations. One benefit to the defense companies when a new generation is built is that there is seldom any competition to develop a different type of weapon to meet the need; this usually translates into increased revenue for the companies and increased costs for us.

The Maverick is a "tactical, air-to-surface missile that is carried on the A-10 close air support plane, the F-15E and the F-16." It's job is to back up troops on the ground, which is exactly the same function that the guns on the A-10 do and at a much lower cost. Not only does the Maverick duplicate lower-cost functions, it does not work very well. The guidance system, kind of a key component, has never worked properly; questions about the system were raised as early as 1982. And naturally it costs a pretty penny to continually modify it so that one day it will work properly. 69,000 Mavericks have been built; we have used 6,000 in combat. Yet, we paid for 69,000 and we maintained 69,000. A wise use of our money?

As you have surmised, the Maverick is but one example of how our money is wasted. If our leaders want to lower the deficit, they must look carefully at the Pentagon.

$100,000 Not To Go To College

That's what Peter Thiel is offering to twenty people under twenty years old who don't want to go to college. Applicants for this grant, which also includes being mentored by a Silicon Valley luminary, answer two key questions:

• What is it about the world that you know is true that everyone else doesn't understand?
• Does understanding this fact help you to change the world? How?

Thiel wants to sponsor the next generation of tech visionaries. He doesn't think colleges will do this. In fact he thinks colleges represent the next bubble as housing represented the current bubble and high-tech companies the previous bubble. He may have a point. As my readers know, I don't believe that everybody should go to college. I am also coming around to Thiel's view. Others are also. See, for example, this article from New York Magazine. (Thanks to my NYC correspondent for sending me the article.)

Spending Our Money

There is such a government agency as the Commission on Wartime Contracting in Afghanistan and Iraq. It is an independent legislative commission established by Congress. Much of their work has involved identifying where we as taxpayers are getting cheated by contractors that we have hired to work in Iraq and Afghanistan.

Recent testimony of Pratap Chatterjee of the Center for American Progress summarizes the situation. Fundamentally,it sucks; the basic problem is a lack of good date and, in many cases, a lack of any data. In more detail here are some excerpts from Chatterjee's testimony:

• In my remarks I will touch on the lack of inventory tracking of weapons and ammunition that were supplied by contractors, and the theft and misuse of the weapons by security forces. I will describe the weapons and security startups like AEY and USPI that defrauded us. And I will tell you about the unqualified translators we hired through L-3/Titan, the inexperienced police officers through DynCorp, and the payments that Third Country Nationals have to make to labor brokers to get jobs on bases.
• In one meeting my translator overheard the Afghan police officials discussing in Dari how to answer my question because they did not have proper systems to track the guns, let alone the ammunition. The biggest problem they faced was the fact that most police officers are illiterate—at least 70 percent by the most optimistic estimate I heard and as much as 95 percent—and are unable to fill out forms to track the weapons. The second problem was that some company officials shortchanged the Afghans—such as Efraim Diveroli of AEY, who was sentenced to jail in March for supplying 50-year-old ammunition.
• Nor are guns the only items that are traded; it was common knowledge that one could buy Afghan police officer uniforms and boots at the Kohan Froshi market in downtown Kabul.
• Back in 2006 I commissioned and edited a report that revealed that a company called United States Protection and Investigations, or USPI, was hiring local thugs to protect U.S. construction contractors in Afghanistan working for USAID, thereby supplying money and weapons to some of the worst elements of society. Since then, Del and Barbara Spier, co-owners of USPI, pleaded guilty to defrauding the government, billing for nonexistent expenses from fictitious companies, and inflating the number of Afghan guards on their payroll.
• But what this tells us is that when we, as taxpayers, demand that our money is spent well on hiring the best security, the best cook, or even the best janitor, the contract officers we pay to pick the best contractor have almost no role in determining who we get. The actual decision is made by a third party—a labor broker collecting the fees—who almost certainly does not show up on any government contract.
• What connects these disparate incidents—the security guards in Kabul, the Bangladeshi janitors in Kuwait, the Fijian truck drivers in Iraq, and the Arabic translators who cannot translate—is the fact that we do not know who we are hiring. We don’t know if they are qualified, we don’t know if they paid bribes to get their jobs, we don’t know what they do with their weapons, and we have no way to find out. If we did, maybe we could have prevented AEY and USPI from defrauding the government. We should have audited L-3. We should not be tolerating bribery by labor brokers.

A Blessing in Disguise

Now Obama has a 'reason' to leave Afghanistan: he's eliminated the #1 terrorist in the world. Many are calling for us to leave, even our good friend Hamid Karzai. It would be wonderful to see yesterday's celebrants make the same noise about getting out of our quagmires.

A Reason for the Fuss

My friend, Peter, thinks that one reason for the celebration of Osama's death is the fact that this was truly a joint venture by many arms of our government - military, CIA, state department, presidency etc. And, in Peter's words, "It demonstrates that the US can get things done if all work together and hopefully this is repeated in the budget deficit and debt problems that the nation is facing. This is a confidence builder and hopefully will be repeated."

I hope he's right as to the possibility of our leaders working together.

Why all the fuss?

I really find it very hard to understand why people are celebrating in a most extreme way the death of Osama bin Laden. Some of the celebrations remind me of those of V-J Day. However, V-J Day was the end of WWII. We are nowhere through having to combat terrorists. Yet, people seem to be acting as though we have won and peace will rule the planet. It's been almost ten years since 9/11. What has Osama done in that time frame? Was he stronger or weaker in 2011 than he was in 2001? There are no quick fixes to the quandaries we find ourselves in.

More Gaming

Last week I wrote about colleges gaming the Title IX situation. This week I'd like to talk about law schools gaming incoming students. Yesterday's NY Times reported on what appears to be a common practice among law schools - granting full scholarships to incoming students with the implication that these scholarships will be good for the three years of law school. As you would expect, these scholarships are conditioned on the student having good grades (usually B) for all three years. Most students believe they are superior and will have no problem making the grade.

However, as with many things in life, it is important to know how things will be measured. The way many law schools measure is via a curve so that a finite number of students will receive A, another number will receive B, etc. So, even if the class had all geniuses, not all would meet the terms of the deal.

Why do law schools play this game? So they will improve their score on US News & World annual surveys of law schools. Ah, the wonders of the modern world.

The PR Game

We're living in a world in which companies are, by and large, focused on PR almost as much as they are focused on compensating their top executives. How else to explain banks acting reasonably responsibly to the foreclosure of homes owned by military personnel yet continue to screw we civilians?

Of course, it did take a law suit to get JP Morgan to act. There is something called the Service Members Civil Relief Act, which says that banks can't foreclose on military personnel and that banks are limited on how much interest they can charge. Well, JP decided to settle a lawsuit brought under this statute. The settlement calls for JP paying $12,000,000 to those foreclosed plus another $21,000,000 for additional damages. Beyond the settlement, JP has lowered interest rates to a number less than they can legally charge, given 1,000 homes to veterans,said it will hire 100,000 veterans over the next five years and, for those who experienced a wrongful foreclosure while serving overseas, give them back their homes for free, forgiving all remaining mortgage debt. Isn't JP Morgan really a good and fair company? Please don't remember that all this largesse was triggered by a law suit.

Wells Fargo, Morgan Stanley and BofA are instituting similar programs. The question is what are these banks doing for the millions of civilians who face foreclosure because of the greed of the banks and the mortgage service companies.

Meet the Deadline

We've signed an agreement with Iraq to remove all of our troops by the end of this year. Will George W. Obama honor that agreement? He and Mr. Gates are pushing Maliki to keep our soldiers there. Lawrence Korb thinks this is a bad idea for a couple of reasons:

• the Iraqis don't want us
• if we stay, it's likely that Maliki will go
• the Iraqi army is strong enough to  handle the insurgents.

I'm not sure that I agree with this last point, but I think the odds of our leaders pushing for us to stay there are very high.