An Introduction

This is from another web site involved with Occupy Wall Street:

Allow Us to Introduce Ourselves

Who are we? Well, who are you? If you’re reading this, there’s a 99 percent chance that you’re one of us.

You’re someone who doesn’t know whether there’s going to be enough money to make this month’s rent. You’re someone who gets sick and toughs it out because you’ll never afford the hospital bills. You’re someone who’s trying to move a mountain of debt that never seems to get any smaller no matter how hard you try. You do all the things you’re supposed to do. You buy store brands. You get a second job. You take classes to improve your skills. But it’s not enough. It’s never enough. The anxiety, the frustration, the powerlessness is still there, hovering like a storm crow. Every month you make it is a victory, but a Pyrrhic one — once you’re over the hump, all you can do is think about the next one and how much harder it’s all going to be.

They say it’s because you’re lazy. They say it’s because you make poor choices. They say it’s because you’re spoiled. If you’d only apply yourself a little more, worked a little harder, planned a little better, things would go well for you. Why do you need more help? Haven’t they helped you enough? They say you have no one to blame but yourself. They say it’s all your fault.

They are the 1 percent. They are the banks, the mortgage industry, the insurance industry. They are the important ones. They need help and get bailed out and are praised as job creators. We need help and get nothing and are called entitled. We live in a society made for them, not for us. It’s their world, not ours. If we’re lucky, they’ll let us work in it so long as we don’t question the extent of their charity.

We are the 99 percent. We are everyone else. And we will no longer be silent. It’s time the 1 percent got to know us a little better. On Sept. 17, 2011, the 99 percent will converge on Wall Street to let the 1 percent know just how frustrated they are with living in a world made for someone else. Let us know why you’ll be there. Let us know how you are the 99 percent.

There are powerful stories on their home page. While the protesters are not yet as articulate as they need to be, they are getting there. Today they were covered by the Washington Post. Boston and DC have joined the battle.

California Withdraws

The Attorney general of California has withdrawn from the group of states seeking a settlement with banks relative to mortgages. They join New York in going it alone. Both think the states are being shafted.

You flunked. Here's your bonus.

Is it only truly large corporations that reward failure? I know that if the CEO leads a small company to the brink of failure he does not walk away with a bonus; oftentimes, he is the owner of the company and he walks away in debt. But the Fortune 500 firm with billions in assets is a different creature. Here, if you fail, you still walk away with enough money to retire in splendor. Here are some examples:

Hewlett Packard - its latest casualty, Leo Apotheker, walked away with $13,200,000 plus moving costs back to Europe plus covering any loss up to $300,000 on the sale of his house.This is in addition to a signing bonus of $10,000,000 plus costs of $2,900,000 to move him from Europe to California. Mr. Apotheker worked eleven months at HP. His predecessors worked longer than that but they were rewarded just as well. Hurd got $12,200,000 and Fiorina $21,000,000. How many people is HP firing?

Bank of New York Mellon - Robert Kelly $17,200,000.

Yahoo - Carol Bartz $10,000,000

Burger King - John Chidsey $20,000,000

Massey Energy Baxter Phillips $14,000,000

It's a great country. We reward those who flunk, provided that they have the correct title. These are the 'job creators' who should pay less in taxes than you and me?

The Ig Nobel Prize

Beetles love beer bottles. They love them so much they make love to them, provided the bottles are brown and have a particular form of "stipples" on them. That's what scientists Darryl Gwynne and David Rentz discovered thirty years ago. For this discovery they were awarded the Ig Nobel Prize in Biology.

The Ig Nobel Prizes are awarded by "Annals of Improbable Research", which, if you can believe it is a science humor magazine. They have come to be seen as an "alternative" version to the rather more sober Nobel awards announced in Sweden next week.

Here is a list of the prizes and the winners. Note that a winner of the mathematics prize is our old friend, Harold Camping, whose end-of-the-world prediction failed to come true this year (wait till next year).

Physiology Prize: Anna Wilkinson, from the University of Lincoln, and colleagues for their study in the journal Current Zoology titled "No Evidence of Contagious Yawning in the Red-Footed Tortoise".
Chemistry Prize: A team led from Shiga University, Japan, that determined the ideal density of airborne wasabi to awaken sleeping people in case of a fire or other emergency, and for applying this knowledge to invent the wasabi alarm. Patent pending.
Medicine Prize: Shared by two teams whose independent research jointly established that people make better decisions about some kinds of things, but worse decisions about other kinds of things‚ when they have a strong urge to urinate.
Psychology Prize: Karl Halvor Teigen of the University of Oslo, Norway, for trying to understand why, in everyday life, people sigh.
Literature Prize: John Perry of Stanford University, US, for his Theory of Structured Procrastination, which says: To be a high achiever, always work on something important, using it as a way to avoid doing something that's even more important.
Biology Prize: Darryl Gwynne and David Rentz for discovering that a certain kind of beetle mates with a certain kind of Australian beer bottle. The pair have published two papers on the topic.
Physics Prize: Philippe Perrin and colleagues for determining why discus throwers become dizzy, and why hammer throwers don't.
Peace Prize: Arturas Zuokas, the mayor of Vilnius, Lithuania, for demonstrating that the problem of illegally parked luxury cars can be solved by running them over with an armoured tank.
Public Safety Prize: John Senders of the University of Toronto, Canada, for conducting a series of safety experiments in which a person drives an automobile on a major highway while a visor repeatedly flaps down over his face, blinding him.
Mathematics Prize: Shared by a group of doom-mongers for teaching the world to be careful when making mathematical assumptions and calculations -

• Dorothy Martin of the US who predicted the world would end in 1954
• Pat Robertson of the US who predicted the world would end in 1982
• Elizabeth Clare Prophet of the US who predicted the world would end in 1990
• Lee Jang Rim of Korea who predicted the world would end in 1992
• Credonia Mwerinde of Uganda who predicted the world would end in 1999
• Harold Camping of the US who predicted the world would end in 1994 and then later in 2011

A Politician Endorses Occupy Wall Street

Of course, as you might expect that politician is Bernie Sanders. But he does make some good points in this video.

It's Growing

Occupy Wall Street is growing. Now we have labor and community groups joining the protest.  

Groups that will start protesting next week include United Federation of Teachers, SEIU, Workers United, Transport Workers Union Local 100, Working Families Party, MoveOn.org, Make the Road New York, the Coalition for the Homeless, the Alliance for Quality Education and Community Voices Heard, United New York and Strong Economy For All. And you've had the "pinko" celebrities speaking out: Michael Moore, Susan Sarandon, Russell Simmons and Cornel West.

As important as the support of labor and community groups is the fact that the group is getting more specific. They will support New York Attorney General Eric Schneiderman's position that a proposed settlement between banks and attorneys general over troubled mortgage pools is too lenient.

And they will call for an extension of the so-called millionaires' tax and a roll-back of state budget cuts.

And another city has joined the battle - Lexington, KY

A Little More Attention to Occupy Wall Street

Still At It After 20 Years

That's DOD's ability to keep financial records so that they can be audited. Here's what the GAO said last week, DOD "lacks the financial management processes and capabilities it needs to track and report on the cost of weapon systems in a reliable manner. We reported on this issue over 20 years ago, but the problems continue to persist.....

Long-standing and pervasive weaknesses in DoD's financial management and related business processes and systems have (1) resulted in a lack of reliable information needed to make sound decisions and report on the financial status and cost of DoD activities to Congress and DoD decision makers; (2) adversely impacted its operational efficiency and mission performance in areas of major weapons system support and logistics; and (3) left the department vulnerable to fraud, waste, and abuse"....

Thanks to Dina Rasor at Truthout.

Trade Surplus Means More Jobs

That's the argument of C. Fred Bergsten, Assistant Treasury Secretary under Carter and now Director of the Petersen Institute. He thinks the rest of the world should allow us to pursue what he acknowledges is an aggressive trade policy. He wants a weaker dollar plus our really, really pushing China to revalue the renminbi. He's willing to bring China before the WTO and even adopt a protectionist policy similar to that of China. His other points are less aggressive.

Bergsten believes that we are a power in services, where we are running a surplus (as compared to our trade deficit). He wants other countries to loosen the regulations which limit our exporting of services and he wants us to sign a few more liberal trade agreements.

His final point concerns intellectual property. Bergsten wants us to get a lot more aggressive in defending this property.  Unlawful appropriation of our innovative methods is rampant in Asia. I know this from personal experience. Our Japanese agent converted our IBM software to run on a different computer without our approval; in fact, we found out about it only by chance. Asians do have different ideas about what is right and wrong in the world of business.

If we follow Bergsten's policies, he thinks we can add 3-4,000,000 jobs with no cost to us. Interesting ideas but it will take a lot of chutzpah on Obama's part to make them reality.

Fix the bridges

Our infrastructure sucks. Some studies have shown we waste $195 billion a year because of this. As I've said before, fixing our infrastructure would be a worthwhile project to reduce unemployment. Even though there will be a time lag in many cases, there are some projects that are ready to go today.

Donna Cooper thinks we should begin with bridges. The Federal Highway Administration has flagged 150,000 of them as being deficient. Bridges contribute $8 billion of the wasted $195 billion and they are in every state. Here's a list of the states which have the most deficient bridges. Cooper has listed the number of unemployed in each state and a simplistic ratio of unemployed worker per bridge in need of repair.

Twisting the knife

Israel plans to expand a settlement. And it's not exactly a small expansion - 1,100 homes. This, less than a week after Palestine applied for admission to the UN. This, while the UN is discussing the issue.  Essentially, what our friend and ally is saying is F.U.

1984 Comes To NYC

The New York Police Department is like a mini-CIA. It does not restrict its activities to NYC. It spies on U.S. citizens without obtaining legal authority. It works hand-in-glove with the CIA so that one is unsure what is domestic and what is foreign spying. And very few know where the money goes; the cost is close to $3 billion and rising. This mini-CIA was established by CIA officers, some retired, some still active officers.

The in-depth report by the AP is mind-boggling.

It has to get worse before the Fed turns on all the burners

That's Tim Duy's opinion after reading 2003 Bernanke's speech on Japanese monetary policy. In that speech Bernanke basically eliminated just about all objections to the Japanese government acting in a very big way to get out of its economic funk.

Duy asks why Bernanke has not followed his own advice. Duy's answer: "only obvious evidence of deflation jusifies the use of aggressive policy. And with downward nominal wage rigidities, the US outcome may very well be one of persistent low inflation, not outright deflation like Japan". So, if we stay in this world of low inflation, Ben will hold off firing all his guns no matter how many people are suffering.

A Trillion Here, A Trillion There

The world of derivatives does not deal in small amounts of money. Looking at the top 25 commercial banks, they have $250 trillion in derivatives outstanding. And, this $250 trillion is largely held by 4 banks; the banks with 96% of the $250 market are JP Morgan, Citicorp, BofA and Goldman Sachs. In the latest quarter they increased their holdings of these truly scary securities by $5 trillion.

If one of these banks fail - let's say BofA with $53 trillion in derivatives - you might want to move to your bomb shelter as systemic collapse will be upon us. 

It's good that Tim is on the case. He will prevent anything bad from happening.

Do as I say, Not as I do - Part 2

"In Europe... you know, they have not fully healed from the crisis back in 2007 and never fully dealt with all the challenges that their banking system faced," so sayeth Barack Obama on September 26, 2011. Certainly, we have performed admirably in dealing with our banking challenges. 

Obama, part 2 ".. they're trying to take responsible actions, but those actions haven't been quite as quick as they need to be," as, of course, ours have.

And then he put down his rose-colored glasses as nothing is our fault. It's all those bad Europeans that are bringing our economy to its knees.

Restore Our Community...

...to the good old Christian town it used to be. That's the goal of Bay Minette, Alabama. Anyone convicted of a non-violent offense for the first time has a choice - jail or attending church services for a year.  Offenders would have to prove they attended church each week. Pastors would report every week to the chief of police.

It's really great that this small town in Alabama is showing the nation the way to a better world.

Independent Redistricting

It's quite clear that we need to get rid of most of the people we have elected at the federal level and probably the state and city level as well. This is going to be nearly impossible with the system of redistricting that is prevalent in most states: state legislators decide on redistricting, which occurs every ten years. So, it shall be coming up soon. And, because 'redistricting' is such a powerful weapon in getting your person elected. a number of supposedly independent organizations have popped up to do just that - elect their man. These organizations are not subject to the campaign finance laws and have organized as a 501(c)4 legal entity, the beauty of which is that they do not have to divulge where their money comes from. So, organizations of the left, right and center have sprung up with the sole purpose of  strongly influencing the redistricting process. 

Of course, these organizations are in bed with those subject to campaign finance laws, but this connection is denied. ProPublica has the skinny on these organizations; it's a very sad commentary on how low we have sunk. We need to take the redistricting process out of the hands of the politicians.

Will we ever return to a more honest and representative government?

The 60s protests redux?

Today's NY Times has a fairly negative article on Occupy Wall Street. Ginia Bellafante does not think that the protesters know what they are talking about and her quotes from some of the protesters support her argument. In any movement, especially in the early days, you'll find participants who are in it for fun. I think she could write the same article about the early anti-war protesters of the 1960s. There were a lot of kids on the streets; many of them had little idea of what they were doing other than expressing a gut feeling that the Vietnam War was wrong. Eventually, the protesters became more organized and knowledgeable and they won.

The protesters - however weak and ignorant they may be today - have been able to keep it up for over a week. And they may be building support. There was a small sympathy protest in LA today. People are coming to NYC from other parts of the country. And the arrest of 80 of them yesterday will likely help this movement. As will the following interview with Chris Hedges.

I wonder what Bellafante would say about that.

Strange Accounting

Groupon's plans to go public certainly stirred a lot of excitement at first. However, that excitement appears to be waning. The first problem was its contention that “adjusted consolidated segment operating income” - which essentially turned a substantial loss under GAAP into a profit largely by ignoring many costs - was a meaningful metric to evaluate the company. The latest accounting wonder is their turning $713,000,000 of revenue into $313,000,000. It seems that Groupon counted the total value of the deal as revenue, although the company's revenue from each deal was a portion of the total deal value. So, they now have reported both erroneous profits and revenue.

How could the broker(s) handling this deal have failed to see these issues when they started negotiating with Groupon?

The problems are increasing as its COO has left after only five months.

A Great Photo from the NY Times

Do as I say, Not as I do

Comments from Mr. Geithner:

"The most important thing that needs to happen now is to see a more decisive signal from the European leaders, that they have a strategy that can restore confidence in their will to assault this."

And what, pray tell, is our strategy? What decisive signal have we received from our leaders?

"These things have the classic dynamic that the longer you wait, the harder it is to solve, the more expensive it is to solve. There's a huge premium on early action."

We're in the third year of the Great Recession and Tim has finally learned taking your time can cost you a lot. Gee, that's news to me.

But, Tim is a straight shooter and does acknowledge a failure or two.

"We're hardly in a position to cast aspersions on the quality of political action you're seeing around the world because our politics are so difficult.

"And of course we did a lot of damage to the world in the early stages of the crisis, but we also responded with force and alacrity."

I'm glad we responded with force and alacrity.

Some jokes illuminate truth

The following is via our Bloomfield correspondent.

So you're a sick senior citizen and the government says there is no nursing home available for you, what do you do?

Our plan gives anyone 65 years or older a gun and 4 bullets. You are allowed to shoot any four Congressman of your choice.

Of course, this means you will be sent to prison, where you will get three meals a day, a roof over your head, central heating, air conditioning and all the health care you need! Need new teeth? No problem. Need glasses? That's great. Need a new hip, knees, kidney, lungs or heart? They're all covered. And, as an added bonus, your kids and gran kids can come and visit you as often as they do now.

And who will be paying for all of this? It's the same government that just told you that you they cannot afford for you to receive treatment or to go into a healthcare home.

Plus, because you are a prisoner, you don't have to pay any income taxes anymore.

Is this a great country or what?

Goats Who Climb Trees

Earlier this month I posted a photo of a moose up a tree. This moose was drunk and could not get down from the tree. Climbing and returning to earth are not problems for the Tamri goats of Morocco. 

It's the berries of the Argan trees that tempt the goats. Apparently, these goats and the trees are beloved by the local farmers Even stranger still, the goats' droppings contain seed kernels which the farmers use to produce cooking oil and cosmetics.

Hat tip to our NYC correspondent.

Making It Up

If this report by Michael Hudson is true, Countrywide Financial was truly a home for fraudsters.  Hudson's report is based primarily on the account of Eileen Foster, who was in charge of the company's investigation of fraud. He also has quotes from other former Countrywide employees. 

I tend to believe that Foster is telling the truth. After being fired by Countrywide, she proceeded to fire back through the Department of Labor. Foster claimed that she was fired because she exposed the company's fraudulent practices. Her case was settled last week. BofA, which bought Countrywide, was ordered to reinstate her and pay her almost $1,000,000. And, I assume, that she was free to publicize her case as BofA is unwilling to discuss the matter.

Some of the claims seem fantastical. For example, "branch employees had used scissors, tape and Wite-Out to create fake bank statements, inflated property appraisals and other phony paperwork. ... workers had, as a matter of routine, literally cut and pasted the address for one home onto an appraisal for a completely different piece of property".

Some of Foster's other claims:

• She claims Countrywide’s management protected big loan producers who used fraud to put up big sales numbers. If they were caught, she says, they frequently avoided termination.
• Foster claims Countrywide’s subprime lending division concealed from her the level of “suspicious activity reports.” This in turn reduced the number of fraud reports Countrywide gave to the U.S. Treasury’s Financial Crimes Enforcement Network.
• Foster claims Countrywide failed to notify investors when it discovered fraud or other problems with loans that it had sold as the underlying assets in “mortgage-backed” securities. When she created a report designed to document these loans on a regular basis going forward, she says, she was “shut down” by company officials and told to stop doing the report. 

 BofA's answer is that this is all water over the dam; it did not happen on their watch. Hudson does not agree with them.

The Mighty Do Fall

Maybe not all the time but it is true, as the bible says, to everything there is a season. When I was in business, HP was a paragon; it seemed it could do no wrong. In the 21st century, shall we say that it has had its problems. This latest fiasco with Mr. Apothecker seems to indicate that these 21st century problems can be laid at the feet of the board of directors.

Would you believe that most of the directors had not even met him before he was hired; forget about interviewing him. How much are these guys being paid? Talk about dereliction of duty. In Tom Perkins' words, “It has got to be the worst board in the history of business.”

Maybe the music will cheer up the stockholders and employees.

Only 713 to go

The Dow is now at 10,712, having dropped over 400 so far today, after yesterday's couple of hundred. Will it crack 10,000? Certainly, the markets haven't responded to the Fed's latest attempt to pull us out of this 'slough of despond'. We need to bump up demand. Now is not the time to go on an overly emotional cost-cutting streak. Yes, there is waste in government and business; it should be eliminated but there are deeper problems, the worst financial problems that I've ever seen - and I've been around since WWII. 

The basic problem is a lack of leadership, an other-worldly focus on being in power rather than on what our leaders' task is.  These people have no concern about you or me. They should be replaced en masse.

Certainly a different view of the world

I don't think that you can really call Somalia a country. It's been in shambles for 20 years and it's unlikely that I will ever see a functioning government there. However, despite knowing of these problems, I was amazed to learn that some in Somalia, the Shabab, think it perfectly fine to award prizes of automatic rifles and live hand grenades to kids ranging in age from 10 to 17. The prizes were awarded to kids who did well in a quiz on Islam. The Shabab apparently believe “Children should use one hand for education and the other for a gun to defend Islam.” 

The Dark Ages are returning.

Land of the Free, Home of the Brave

I'm not a fan of Michael Moore but he does have a point that the media seems to be ignoring protests by liberals. He mentions the Tar Sands protests of last week and the Wall Street protests of this week where, he says, a thousand people were protesting at each site.

I searched for Wall Street sit-in and Wall Street protest and found very few major media players in the first couple of pages of results. Interestingly, one of the citations claimed that Yahoo is stopping mail on the subject.

Here's a video from the scene.

Mexican Justice

We are all well aware of the violent world of the drug cartels in Mexico. But it looks like this violence is spreading within Mexico. Dr. George W. Grayson has published a monograph on the growing violence among those not affiliated with the cartel. Much of the violence, which Grayson refers to as vigilantism, has been spontaneous; it starts when someone notices a suspicious person(s) in the neighborhood and wants to make sure that the suspect does no harm here. Soon, church bells toll, a mob gathers and the violence begins. Some of these acts: "Mobs have torched presumed pedophiles; average citizens have beaten suspected home invaders; and passengers on buses have hit, kicked, and tortured men who have tried to rob them." Often, the police ignore the situation.

Grayson does not think that this violence has been caused by the drug cartel violence. He sees it more as the result of a failing police and justice system.

You wonder where the increasingly vocally provocative statements by some of our leaders and want-to-be leaders will take us. Moderation, compromise, toleration, respect - they are all becoming just words.

Is Science on Trial?

Italy has begun the trial of the scientists who failed to predict the earthquake at L'Aquila in 2009. They are accused of manslaughter of the 309 people who died in the earthquake. The trial is both criminal and civil with potential penalties of 15 years in jail and about $70,000,000. The basic charge is "negligence and imprudence... of having provided an approximate, generic and ineffective assessment of seismic activity risks as well as incomplete, imprecise and contradictory information".

The scientists were members of a panel charged with assessing the risks after months of low-level seismic activity. They concluded that it was unlikely that the risks were great, however they also said that one could not predict a major earthquake. Furthermore, they advised that improvements be made in building construction. The court claims that those who listened to the panel studied indoors, those who didn't stayed outside. Just about all of the deaths were of people who stayed inside.

Should the scientists be convicted, what will be the effect on Science in Italy?

Why not a Palestinian state?

Gideon Levy has a hard time understanding why the leaders of Israel do not want a Palestinian state. 

Some of his observations:

Four prime ministers, Benjamin Netanyahu among them, have said that they're in favor, that it must be accomplished through negotiations, so why haven't we done it yet? Is our argument that we object to it's being a unilateral measure? What's more unilateral than the settlements that we insist on continuing to build?

Thirty-two years ago, Israel signed a peace agreement with Egypt in which it undertook "to recognize the legitimate rights of the Palestinian people" and to establish an autonomous authority in the West Bank and Gaza Strip within five years. Nothing happened.

Eighteen years ago the prime minister of Israel signed the Oslo Accords, in which Israel undertook to conduct talks in order to achieve a final-status agreement with the Palestinians, including the core issues, within five years. That, too, did not occur.

For years, Israel claimed that Yasser Arafat was the sole obstacle to peace with the Palestinians. Arafat died - and once again nothing happened. Israel claimed that if only the terror were to stop, a solution would appear. The terror stopped - and nothing.

Can you answer the question? If the number of Arab voters in the U.S. exceeded that of Jewish voters, what do you think the answer of our leaders would be?

A Big Week for Astronomers

The Wall Street Journal has an excellent article on the discovery of a number of  'exoplanets'; these are planets orbiting other stars. Scientists announced  the recent discovery of 73 exoplanets. One, dubbed Kepler-16b, orbits around two separate stars. It is unique, but, surprisingly, a planet of this type was featured in "Star Wars" movies.

Kepler-16b is about as big as Saturn and completes its orbit around the two stars in 229 days. It is 200 light-years from us and its very cold (-150 Fahrenheit). Because of the way it orbits its stars, no two sunrises or sunsets are the same.

Some other interesting facts from WSJ:

Among the other unearthly wonders discovered in recent months are an exoplanet blacker than coal and a world stripped to a diamond-like core. A third newly found exoplanet is blasted by its parent star with X-ray bursts so fierce that the radiation is eroding the planet's surface at a rate of five million tons a second.
Stranger still, a star survey of the Milky Way by astronomers in Japan and New Zealand earlier this year discovered a new class of Jupiter-size planets that float free of any star at all, swimming about on their own in the dark. They estimated that there may be twice as many of these orphan planets as stars.

Smog in Wyoming? Wyoming?

It's been reported that on some days the ozone level in Wyoming exceeds that of LA. The level has reached as high as 124 parts per billion; the EPA limit is 75 and LA has hit 114. The culprit is thought to be the production of natural gas, our old friend fracking.

My Administration is committed to creating an unprecedented level of openness in Government.

You'll find that statement on the White House site. But, as we are seeing more and more, words mean less and less in this administration. Take, for example, the rules being formulated for ObamaCare. The rules to access Medicare billing records, which are being created by the Centers for Medicare & Medicaid Services (CMS), will ensure that this data is released only to "qualified entities". I can understand that. However, CMS would have to approve how the qualified entity will use the data. More egregiously, CMS would provide the data to doctors and hospitals before releasing it. And, of course, there will be a small charge - $200,000.

Who's the Boss?

We're seeing more and more that Obama is not a leader and it is beginning to look like he has also not been a boss from the earliest days of his administration. Ron Suskind's newest book, "Confidence Men", asserts that our friend, Tim Geithner, ignored Obama's directive to consider that, maybe, Citibank was not too big to fail and should be dissolved. Note the word 'consider'. Timmy did not waste his time on such a directive. We've seen the mess that Tim has caused with his loyalty to the world of finance. And Mr. Obama was stupid enough to beg him to stay on as Treasury Secretary when Tim was contemplating leaving this summer.

Suskind is not a nutter. He has written a number of sound books about our world and has won the Pulitzer. I think we have to take his assertions as truth. Clearly, Obama has done nothing for us to question the assertions.

It's less and less likely that Obama will be living in the White House come January 20, 2013.

Truly Amazing

Thanks to a Duncaster correspondent.

College Athletics As It Should Be

Chances are that you have not heard of Wheelock College. It's a small school in the Boston area that has been turning out solid graduates since 1888. In the world of college athletics it is a Division III team. It is by no means an athletic powerhouse and has no intention of becoming one. Here's the athletic philosophy articulated by the AD, Diana Cutaia, “So it wasn’t that winning was foreign to me. It was that over time I saw how destructive it was to the players to hear how important winning a game was. It’s not new for coaches to tell their players that the most important thing is that they build character and learn to grow up. But that always comes with a wink and a nod that sends a message that winning is still important. It is a distraction, if you think about the fact that the vast majority of college athletes - 99 percent - will never play professionally or be paid to play.’’ And, very surprisingly in the 21st century, it looks as though the college actually abides by this philosophy. It's a feel-good story. Read it.

Outsourcing Is Not Always Cheaper

The Project on Government Oversight (POGO) has released a fascinating report comparing federal compensation to contracted services. In the period 2000 to 2011 outsourcing has gone from $200 to $5000 billion. Since we seem to be on a course to outsource more and more governmental activities, it makes sense to do something the government has not done - compare the costs of keeping the work in-house versus outsourcing it. It is amazing that the government has not done and does not do cost comparisons.

The conclusion of the report (emphasis added):

POGO’s study shows that the federal government approves service contract billing rates—deemed fair and reasonable—that pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the total compensation paid in the private sector for comparable services.

Of course, the study did not look at all government outsourcing. It looked at 35 job classifications, covering 550 service classifications. "In 33 of the 35 job classifications POGO looked at, the average contractor billing rate was significantly steeper than the average compensation for federal employees." In some cases the cost of outsourcing was five times that of in-house labor.

There are some limitations to the study largely due to the unavailability of some government data.  These limitations are spelled out in the report and really do not negate the basic conclusion - our money is being wasted.

Real People?

These are models appearing at New York's Fashion Week.

They're only numbers

From the NY Times:

• 46.2 million people now live in poverty in the United States.
• Median household incomes adjusted for inflation declined by 2.3 percent in 2010 from the previous year to $49,400.  
• The group of 25-to-34-year-olds experienced a 25 percent rise in living at home in the period between 2007, when the recession began, and 2011. Of that group, nearly half were living below the poverty line, when their parents’ incomes were excluded. 
• Poverty also swallowed more children, with about 22 percent of all children living below the poverty line, up from 20.7 percent in 2009.  

Are you one of those numbers?

Solyndra Part 2

The Solyndra bankruptcy is starting to take on some disturbing aspects.  Federal investigators have removed records from company headquarters and visited the homes of three executives. There are concerns that the company misled the government about its financial health in securing its half billion dollar reward, and in landing a favorable loan refinancing earlier this year.

The $535,000,000 was essentially approved before full due diligence was completed. In March 2010 the company's auditors said, “The Company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern.” Now, I can understand why an investor would stay with a company whose viability was questioned by its auditors, especially if sophisticated investors had put over $1 billion into the company. I can't understand why full due diligence was not practiced. Nor can I understand why the CEO would give an overly optimistic presentation (revenues are skyrocketing, orders are setting records, we're hiring, etc.) to a House Subcommittee in July when the company had to go belly up six weeks later.

Something doesn't smell right here.

From Congressional Staffer to Lobbyist

I suppose it is to be expected that many who work for a Congressman or Senator will eventually leave the job and go to work for a lobbying firm. However, I was surprised at the number who have done so in the past ten years. Legistorm reports that 5,400 congressional staffers have moved to a lobbying firm. That's almost 2 every 3 days, including weekends. In that same period 400 ex-Congressmen and Senators have become lobbyists; that's one every ten days. Again that seems a lot.

There is also traffic the other way as 605 lobbyists have joined our legislators.

The Vatican Is To Blame

That's the argument made in a filing with the International Criminal Court (ICC) relative to priests' abuse of their parishioners. The 'case' was filed by two American groups active in that particular arena. The groups want the ICC to prosecute Pope Benedict XVI and three top Vatican officials for crimes against humanity for what they described as abetting and covering up the rape and sexual assault of children by priests. 

Experts feel that it is unlikely that the ICC will prosecute the case. But it is probably true that the petitioners do not expect prosecution. This is part of the PR war that is endemic to most battles today.

It Will Happen Again

'It' is the BP oil spill of April 2010. If the conditions described in this post-mortem by Peter Maas are still the way oil companies operate, then a repeat is a certainty. And there are few signs that the BP spill has changed the way these companies and their overseers operate. Yes, the Minerals Management Service has a new name, but has it really become an agency responsible to us or to the oil companies? Have the oil companies become more sensitive to the environment, or are they still focusing solely on profits? How often will OSHA inspect the safety conditions prevalent in oil companies?

Remember the conclusion of the president's commission that studied the disaster: "The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again. Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur."

Keeping Us Safe

The Department of Homeland Security (DHS) does not seem to be among the most efficient of our federal bureaucracies, at least according to Gilbert Sanchez who is one of the people guarding our border at Port Angeles, Washington. Mr. Sanchez is so excised at what he believes is a boondoggle that he testified before a congressional panel, "When I arrived at my station, there was rarely any casework to be done, if at all, so I just roved ... wasting gasoline. Today this has not changed and there still is rarely any casework to do, if any, and we agents are bored." Yet, DHS is increasing the staff from 40 and 50 and spending $5,700,000 to house them in a new building which is a 21st century building complete with fitness center and dog kennel. Another comment from Mr. Sanchez, "The worst fraud on taxpayers is that we are getting paid overtime not to work."

This northern section of our border has seen less than 2% of the Border Patrol's 'apprehensions' since 2001. Nonetheless, the staff has gone from 340 to 2,263.  And, of course, the budget for the Border Patrol has gone from $1.6 billion in 2000 to $3.6 billion last year.

Republican Candidates for President

I've been fairly silent on this issue. Partly because it's still too early to know who will oppose Obama and partly because the current candidates seem like very strange people indeed. I can't believe that next summer we will see the current crop of candidates still around. Their statements make one question whether they live in any sort of a real world. Read this article by Steven Pearlstein for corroboration.

9/11 Words

The following was an introduction I gave to an informal remembrance service here at Duncaster.

Good afternoon. Thanks for coming.

It’s really been a beautiful day today, much like the Sept. 11 of 2001. It’s a fine late summer, early fall day. A normal Sunday here at Duncaster. It is unlikely that we’ll remember much about today 10 years from now because it is such a normal day. But we do remember the September 11 of 10 years ago. That day was not a normal Tuesday, although the weather was beautiful. We know where we were that day, what we did, what we saw on the television, who we called, what we felt.

Yes, it was a day of death and destruction. But it was more than that. It was a day we can look back at with pride, as well as sorrow. It was a day when many people became heroes by helping their fellow man. And it did not matter if they were young or old, man or woman, rich or poor, CEO or secretary, stranger or friend. It made no difference. People were in trouble and needed help and many Americans stepped up to the plate to provide that help.

It was a day that changed the lives of many. It certainly changed our country. It was an important day.

Like Pearl Harbor, this day that will live in infamy, but it was also a day when this country’s honor showed through. It is a day that must be remembered. Let’s begin remembering by singing a song we’ve known all of our lives – America the Beautiful.

A pretty good definition

The following is courtesy of our Bloomfield correspondent.

The English language has some wonderfully anthropomorphic collective nouns for the various groups of animals. We are all familiar with a Herd of cows, a Flock of chickens, a School of fish and a Gaggle of geese.

However, less widely known is a Pride of lions, a Murder of crows (as well as their cousins the rooks and ravens), an Exaltation of doves and, presumably because they look so wise, a Parliament of owls.

Now consider a group of Baboons. They are the loudest, most dangerous, most obnoxious, most viciously aggressive and least intelligent of all primates. And what is the proper collective noun for a group of baboons? Believe it or not ... a Congress! I guess that pretty much explains the things that come out of Washington.

People are as much people as corporations are people.

I'm starting to like the Federal Housing Finance Agency (FHFA). Last Friday the agency sued the big banks for fraud vis-a-vis the mortgage world of the early 21st century. Now we learn that the agency also accused real living, breathing human beings of fraud as well. Isn't that surprising? A federal agency thinks that perhaps people (131 of them in this matter) may have actually helped corporations violate our laws. This thinking probably stems from the fact that the FHFA is not part of the executive branch, where the idea of suing people is frowned on if there is a possibility that the people can help finance Obama's campaign.

It's true that none of the people are household names, but they did hold quite powerful and influential positions. A sidebar: two of the people charged are the ones who headed the mortgage operations at Goldman and Bear Stearns. They now both work for Goldman. What's that old saying about birds of a feather?

The Occupying Army

Obama has said that all troops will be removed from Iraq by 1/1/2012. It looks like the Administration is waffling on this point, as Panetta is talking about leaving 3-4,000 troops there. The military wants 3-4 times as many. Perhaps, Obama is looking at having some troops there as a sop to the military, but a senior military man had this to say about the number of troops to be left in Iraq, “I think we’re doing this backwards. We should be talking about what missions we want to do, and then decide how many troops we’ll need.”

Irrespective of the number of troops, you have to realize that we now are living in the world of the professional army. Soldiers no longer do all the work of fighting our wars. The CIA has its hand in all over the world. And we still have our battalions of private security companies.

I doubt that we will close our embassy in Iraq. It is our largest in the world and will house not only diplomats but more security contractors. The embassy will also house an Office of Security Cooperation that, like similar ones in countries like Egypt, would be staffed by civilians and military personnel overseeing the training and equipping of Iraq’s security forces.

Sixty-six years later we still have troops in Germany and Japan. It's unlikely that we'll have troops in Iraq anywhere near that long, as our empire will be over long before then.

Chasing a dog can change the world

Matthew Berger, young son of Lee Berger, a paleoanthropologist, fell while chasing his dog in the African grass and found a fossil. It was not just any fossil. It was named Australopithecus sediba and it may change our views of man's ancestors. The article quotes several anthropologists talking about the significance of the find. Some say it is a direct ancestor, others say it's not. They all say it's a major, major find. Here are some photos.

Here's one way to beef up Arizona's budget

Charge prison visitors. If you want to visit a prisoner, you must pay a one-time $25 fee. This fee is labeled a “background check fee". But, occasionally, labels are meaningless. In this case, the money goes into the Building Renewal Fund. The fee was imposed as a way to get some money to fix the prisons. However, since Arizona has 40,000 prisoners, the total collected would amount to $1,000,000, which doesn't sound as though it would go very far to fix buildings.

I wonder if Sheriff Arpaio had any input on this.

Another American Banker Scoop

Has the American Banker always been an investigative publication? They certainly are now and they have the expertise to get into some fairly complex schemes by which the average guy gets screwed by banks. Take, for instance, this article on mortgage insurance. 

Perhaps when you bought your first house you did not have quite enough for the down payment (which in prehistoric times was 20%). No problem. You could buy mortgage insurance, which would protect the bank if you defaulted on the mortgage. True, the bank would recommend an insurer but they did so more to insure themselves should there be a problem down the road. In the boom days of subprime mortgages the banks realized that they could make a buck (maybe even more than a buck) on this insurance so they got in bed with the insurers.

Banks didn't recommend just any insurer; they recommended those with whom they had made a deal. The deal being that the insurer had to buy reinsurance and, by coincidence, the bank had a subsidiary that could provide that reinsurance. Of course, the subsidiary would have to receive a portion of the premium paid by the homeowner. In some cases the subsidiary would be responsible for only 10% of any losses, but would be able to keep 40% of the premium. Not a bad deal!

One problem with the deal was that it was illegal. It violated the Real Estate Settlement Procedures Act, a 1974 law prohibiting abusive home sales practices. Furthermore, some banks made homeowners buy more insurance than they needed.

HUD discovered these deals. In 2009 HUD told the Department of Justice about them and provided reams of evidence. Two plus years later Mr. Holder and company have done nothing about the matter. The Banker article claims that these reinsurance deals were worth about $6 billion. Even a judgment of 1% wold be worth $60,000,000. But the banks are Obama's and Geithner's friends.

What's with American Banker?

I had never read American Banker before a reference to it in the Columbia Journalism Review (CJR). Last week I wrote about Banker's expose of the continuing robo-signing practices by the banks. Today, there are two references to the magazine in CJR.

The first reference raises the question of just how close were the ties between David Stevens, a former FHA commissioner, and the Mortgage Banking Association (MBA), which is 'regulated' by the FHA. Stevens does not dispute that he asked the "MBA for policy memos, was copied on its internal lobbying strategy debates and asked its boss at the time to devise "an excuse" for him to attend one of its conferences". HUD does back Stevens up. However, Stevens left FHA for a new job - with MBA for about 8 times his FHA salary.

The second reference alleges that the banks devised a reinsurance scheme which netted them about $6 billion and the Department of Justice did nothing about it. More on this later.

Rated Higher Than The U.S.

Standard & Poors, the arbiter of what's right and wrong in the financial world, has concluded that more than half of the bonds of Springleaf Mortgage Loan Trust are of higher quality than the bonds of the U.S. of A. Springleaf is offering $497,000,000 of bonds, 59% of which are rated AAA and represent mortgages to homeowners with virtually no equity in their homes and below-average credit scores. 

Would you define these loans as subprimes? Aren't subprimes one of the major things that got us into this mess? But, hey, S&P knows what's best and I have faith in their judgment. After all, they have admitted they screwed up big time just a few years ago when they gave AAA ratings to almost every security they rated.

Drunk as a moose

That is the drunken moose. He got stuck in the tree after eating fermented apples. After being freed from the tree, the moose slept it off and went about his business in Sweden the next day.

Federal Housing Finance Agency Files Suits Against Big Banks

Well, it finally happened. A federal agency seems to have some guts. The Federal Housing Finance Agency (FHFA), the keeper of Fannie Mae and Freddie Mac, has accused 17 banks of fraud and of lying to the feds and investors about the crap they were securitizing. FHFA is looking for almost $200 billion for just the crap that was sold to Fannie and Freddie.

BofA looks like it will get hit pretty hard as Merrill and Countrywide are separately named in the suit. A fourth of the mortgages in this suit originate with BofA.

“We’ve gone from Brigadoon to Lord of the Flies,”

That's one quote from Jim Cooper, a Democratic Congressman from Tennessee. Cooper blames Gingrich for starting the excessive partisanship that now defines our Congress. Here are some more quotes from this article by Joe Nocera in the NY Times. 

"Tip saw his role as speaker of the whole House, not just the Democrats.”

“We no longer search for the best ideas or the best policies. There was only one health care bill offered. One Dodd-Frank. Now you are either an ally or a traitor.”  

“This is not a collegial body anymore. It is more like gang behavior. Members walk into the chamber full of hatred. They believe the worst lies about the other side. Two senators stopped by my office just a few hours ago. Why? They had a plot to nail somebody on the other side. That’s what Congress has come to.”

“Money changes hands here way too much. Members buy their way onto committees. When I first came to Congress, the party was supposed to help you. Now, when a new member is sworn in, he or she is told what their dues are — how much they are expected to raise for the party for the next election. It’s worse in the Senate. It turns the whole place into a money machine.” 

“We survived McCarthy. We’ll survive this.”

“I don’t feel as safe as I did five years ago.’’

That's a quote from an air traffic controller talking about flying today. Serious errors reported by controllers in the period 2007 - 2010 increased by 81%. The FAA says we need not worry, as the reporting system has changed in such a way that more errors will be reported. Plus, the current three years have been the safest ever. Howsomever, others disagree.

The number of errors is up 81% while air traffic is down 10%. Some of the problem is due to the number of controllers who have retired over the past few years; about 25% of the controllers are trainees. Some may be due to a change in the firm doing the training; Raytheon replaced the firm that had been doing the training for 20+ years. The IG wrote a scathing report on the quality of Raytheon's efforts.

Is this all an internal squabble where the controllers feel they are understaffed and management is under budgeting pressures?

A few moved up, Many moved down

You really should look at these graphs that accompanied an article by Robert Reich in yesterday's NY Times. Reich argues that a major part of our financial problems is due to the decline of the middle class and the rise of the ultra-wealthy. I couldn't figure out how to copy the graphs so that they would be readable. Let me summarize them. Reich divides the years since WWII into two time periods: the Great Prosperity (1947-1979) and the Great Regression (1980-now). 

• In the Great Prosperity average pay for production and non-supervisory workers doubled and productivity increased by 119%. In the Great Recession pay has increased by 8% and productivity by 80%.
• In the Great Prosperity the gain in income for those at the top was less on a percentage basis than those beneath the. In the Great Recession that was reversed, the top people had a much larger income gain than all beneath them.
• The percent of debt to household income went from 26% in 1947 to 120% today.

The charts are based on government data.

She went down fighting

Yvonne, the cow that has become another celebrity animal in Germany, has been captured - but only after a pitched battle.

It took two tranquilizer shots and a lot of physical labor to get the job done. And the fellow who turned her in has received his $14,500 reward.

A Different Way

What state does not have a jobs problem? North Dakota. Its unemployment rate in July was 3.3%, a rate this country hasn't seen in the 21st century yet. It has had the lowest rate in the country every month for the past three years. Last year it had the greatest increase in payroll (5.2%) in the country.

What state is in very good financial shape? North Dakota. It has had a budget surplus since 2008. It has been able to reduce "individual income taxes and property taxes by a combined $400 million, and is debating further cuts. It also has the lowest foreclosure rate and lowest credit card default rate in the country, and it has had NO bank failures in at least the last decade."

Some people think that oil is the reason why North Dakota has done so well. Ellen Brown thinks it's because the state has a state-owned bank. Brown cites several oil states where the unemployment rate is in the 7%+ range.

The Bank of North Dakota is something like a mini-Federal-Reserve. It partners with banks in the state with loans and guarantees. It offers towns a loan program which enables towns to help residents borrow for such key items as jobs retention, technology creation, retail, small business, and essential community services. 

The bank makes money; last year it earned 19% on equity. Basically how it makes money and is able to support other banks in the state is due to the fact that the state deposits its tax revenues in the bank. It does not place the funds with private banks that may be located all over the country. So, North Dakota money stays in North Dakota and benefits the residents. Sounds like a pretty good idea to me.

Another Weird Act

David Elmer Senk of Sacramento was hungry so he took a couple of bites out of his neighbor's pet python. Or, maybe he was mad at the neighbors. One doesn't know, as Mr. Senk is in jail.  The python must have been quite small as Mr. Senk was able to remove two of its ribs.

Mr. Senk is not the only strange person in this matter. Why the neighbors would have a python as a pet boggles my mind. Look at the size of this baby. How big will it be as an adult and how dangerous?

DHS: An Asset or a LIability?

Truthout will be posting several articles about the Department of Homeland Security in September. The articles will not be in praise of DHS. While I'm sure most of the articles will be about screw-ups or over-zealousness by DHS, the fundamental issue remains one of risk. As the first article states, you're more likely to be murdered than be killed in a terrorist attack. Between 1980 and 2005, terrorists killed 3,178 people in this country; the Oklahoma City and WTC events accounted for 3,130 of these. Compare these numbers to the 500,000 that were murdered in the U.S. in the same 25 years.

The article will be diminished if you read the comments. There are truly some strange people out there.

It's part of the reelection campaign

But the idea that you may be able to push an issue through the government is not a bad idea. Of course,  it's pie in the sky but on WhiteHouse.gov/WeThePeople (how's that for a patriotic name?) you'll find this:

Throughout our history Americans have used petitions to unite around issues they care about. We the People provides you with a new way to petition the federal government to take action on a range of issues. And if your petition attracts enough support, White House staff will review it, ensure it is sent to the appropriate policy experts, and issue an official response.

You need only 5,000 signatures to get a White House review. Not a bad gimmick.