What sort of country are we becoming?

Stephen Walt has a very good answer to that question:

Finally, the next president needs to do some hard thinking about the kind of country the United States is becoming. The United States has fought four wars since 1990, and is currently conducting drone strikes and special operations in a half a dozen countries. We are deeply worried about cyber-war and cyber-security, but we are also using these weapons for offensive purposes in ways that we would regard as wholly illegitimate if someone did it to us.

In the same way, American experts now discuss "preventive war" in remarkably casual terms, as if it were just one of many strategic options. They seem to forget that by definition, preventive war means attacking countries that have not attacked us and are not about to do so. "Preventive war" was what Japan did to us at Pearl Harbor, and ambitious young policy wonks now prescribe it without much self-reflection and seemingly unaware that real human lives are at stake.

Instead of the citizen army that we relied upon in World War I, World War II, and Korea, we now have a professional military that receives enormous deference from politicians, pundits, academics, and the public. U.S. politicians rarely have military experience -- Clinton, Bush 43, Obama, and Romney never served, and neither have any of their children -- and this fact inevitably affects their relations with the military establishment. Neither Obama nor Romney said a critical word about the military during any of their debates, even though the quality of military leadership and advice in both Iraq and Afghanistan has been deficient. U.S. politicians rarely talk about peace anymore; instead, they try to sound tough-minded and ever-willing to use force.

Since 9/11, we have created a vast array of intelligence and counter-terrorist organizations whose activities are largely hidden from the citizens who are paying for them and who will bear the consequences if their actions are misguided. Both common sense and much history teaches us that lack of transparency and accountability usually breeds bad behavior, and we may one day be shocked when we find out what's been done in our country's name over the past decade.

Who will play watchdog? Not most academics, who are too busy with ivory-tower exercises and for the most part discomfited by national security issues. Not the mainstream media, which depends on cozy relations with those in power. Not the DC think tanks funded by the defense industry and employing would-be or former officials eager to preserve their career options (and consulting businesses).

So, in addition to all those other challenges, I hope the next president will start unwinding some of the practices we adopted in the aftermath of 9/11, and move us back to being a country that is slower to anger, more interested in diplomacy, and not quite as trigger happy. But I wouldn't bet on it, because he'll be too busy dealing with the rest of his agenda, plus the inevitable surprises that will rise up to bite him.

What's good for the goose

We've had no problem with the elections of foreign countries being monitored for irregularities.  In fact, we have done some of this monitoring.  Some monitoring of  elections in the U.S. and other countries has been done by the Organization for Security and Cooperation in Europe (OSCE), of which we are a member.  Now Iowa and Texas have threatened to arrest any OSCE observers.  Each day brings another proof that the number of strange people living here is growing by leaps and bounds.

Something's not right in Basra and Fallujah

The number of birth defects and early deaths of children is astronomical, according to a University of Michigan study.

From October 1994 to October 1995, there were 1.37 birth defects at Al Basrah Maternity Hospital per 1,000 live births. By 2003, at the beginning of the war, the number of birth defects skyrocketed to 23 per 1,000 live births -- a 17-fold increase. Then the number of birth defects doubled again: By 2009, the maternity hospital witnessed a staggering 48 birth defects per 1,000 live births. In 2011, the last year for which data is available, there were 37 birth defects per 1,000 live births.

Infants under 1 year old were dying at the rate of 80 per 1,000 births; in Egypt that number is 19.8.

The study does not reach a definitive conclusion other than the likely possibility of metal contamination, probably from bullets and armaments.  How will this situation be recorded in the almanac of war costs? 

The first of many?

UBS, which has had a terrible past five years, is getting out of many of its investment banking businesses, particularly trading.  The bank plans to get out of perhaps as many as fifteen lines of business.  This would likely result in about 10,000 people losing their jobs. "It represents a recognition that the firm can no longer try to be all things to all people, one of the people said."

Who will be the next one to smarten up?

How much money do I have?

That's a basic question in one's personal life and in business.  Apparently, MF Global could not answer that question.  They couldn't answer the question when they went bust, they couldn't answer it for most of the time they existed.  Yet Corzine signed the Sarbanes-Oxley requirement that internal controls were in place. 

The company's internal controls were so bad that midlevel employees had wide leeway when handling requests from elsewhere in the company to move hundreds of millions of dollars at a time.  Apparently, there was no "dollar threshold" on how much employees could move from accounts used to invest the firm's own money and certain customer funds. In contrast, only two employees were allowed to move more than $500,000 at a time out of an account used to pay commissions owed.

Is it a function of the volunteer Army?

Okay, the 21st century world is different from that of the 20th century.  I can think of Patton slapping the soldier and MacArthur opposing Truman, but I can't think of a general acting as a total ass, which seems to be occurring with greater frequency in the modern age.

Tis true that McChrystal did make the news because of non-military matters.  But the current negative press about three of our generals goes to a more basic level than McChrystal's comments about Barack and company.  In August we learned about General Ward's spendthrift ways.   Today we learn about two other generals - 

• Brig. Gen. Jeffrey A. Sinclair, who was removed from his job as the deputy commander of the 82nd Airborne Division, is accused of  forcible sodomy, wrongful sexual conduct, engaging in inappropriate relationships, misusing a government charge card and possessing alcohol and pornography while deployed.  
• Lt. Gen. Patrick J O’Reilly created a toxic atmosphere at the Missile Defense Agency (MDA) by berating staff members. Quoting a witness, the inspector general’s report described his style as “management by blowtorch and pliers.”

The Defense Department’s inspector general reviewed 38 cases of alleged wrongdoing by senior officials in 2011, and substantiated the accusations in nearly 40 percent of the them, up from 21 percent in 2007. The total caseload this year is on track to exceed last year’s.

Is Imran Khan a terrorist?

Mr. Khan is a prominent politician and celebrity in Pakistan.  Last month he led a march against the drone attacks we have been waging in Pakistan.  Thousands of Pakistanis supported him.  As far as I know, there have never been charges made against him for any nefarious deeds, political or otherwise.  He is an elected member of his country's parliament.  

Why our immigration authorities took him off a plane in which he was traveling from Toronto to New York last week and interrogated him is unknown beyond a bromide statement issued by Immigration, "Our dual mission is to facilitate travel in the United States while we secure our borders, our people, and our visitors from those that would do us harm like terrorists and terrorist weapons, criminals, and contraband."

Is being against drones now a terrorist activity?

Fukushima is still with us

An oceanographer from the Woods Hole Oceanographic Institution thinks that fish living near the bottom of the ocean involved in the Fukushima tsunami are still ingesting levels of radioactivity that are dangerous.  Thus, his conclusion that radiation from the plant is still being released into the ocean, more than 18 months after the tsunami.  However, the closer to the surface the fish are, the lower is the amount of radiation being ingested.  Furthermore, when fish leave the area, they also lose their radioactivity.

Read more here: http://www.mcclatchydc.com/2012/10/25/172641/radiation-still-leaking-into-nearby.html#storylink=cp

Read more here: http://www.mcclatchydc.com/2012/10/25/172641/radiation-still-leaking-into-nearby.html#storylink=cpy

Making Headlines

In these days when the world seems to be falling apart, how can so much attention be paid to rape and abortion, especially when so many of those who seem to focus their lives on these subjects are - shall we say - rather odd creatures?  I guess that's because they want to be leaders of this nation and think their strange ideas are worth voters' admiration.

But, when you think of this campaign season, you realize that very few of the campaigners want us to know what they really hope to accomplish if elected.  By and large, it's platitude after platitude.  Meanwhile, we sink, people are hurting needlessly, our infrastructure withers, some are hoping we enter our third war of the 21st century, nothing has been done to prevent another financial crisis, our president kills innocent people in foreign lands - and the litany goes on and on.  We have lost the ability to elect real leaders.  We no longer believe that we are all in this together.

My nephew films sharks

Tiburon Blanco II (White Shark) Isla of Guadalupe from Edward DeVito on Vimeo.

Clips from Winged Migration

What were you doing at age 7?

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Another week, Another downer for BofA

Today the newspapers are reporting that we are suing Bank of America for $1 billion, the charge being that BofA defrauded Fannie Mae and Freddie Mac.  It's another problem stemming from the acquisition of Countrywide Mortgage.  This one concerns Countrywide's processing of loans.  The prosecutor alleges, "Countrywide and Bank of America systematically removed every check in favor of its own balance – they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects.  These toxic products were then sold to the government sponsored enterprises as good loans....Countrywide eliminated every significant checkpoint on loan quality and compensated its employees solely based on the volume of loans originated, leading to rampant instances of fraud.”

Up to forty percent of the resulting loans in some months turned out to have material defects, which the lawsuit says was 10 times the industry rate. Countrywide went so far as to offer employees a bonus for rebutting the company’s own quality control department’s findings of defective loans, the lawsuit alleges.

Read more here: http://www.mcclatchydc.com/2012/10/24/172471/us-sues-bofa-for-1-billion-for.html#storylink=cpy

Read more here: http://www.mcclatchydc.com/2012/10/24/172471/us-sues-bofa-for-1-billion-for.html#storylink=cpy

Read more here: http://www.mcclatchydc.com/2012/10/24/172471/us-sues-bofa-for-1-billion-for.html#storylink=cpy

Didn't they sound very similar?

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Something Good

The building above does not look like much, but it can be salvation for those who have difficulty getting clean water.  This building houses a Slingshot water purification system which can turn just about any form of water - river water, ocean water and even raw sewage - into clean drinking water.  The system was created almost ten years ago by Dean Kamen, the inventor of the Segway.  It looks as though it will soon become widely used because Coca-Cola has taken on the distribution and logistics functions for Kamen's invention.  The pilot projects implemented so far seem very promising. 

Don't Worry, Be Happy

 Why don't those aspiring to lead us really discuss our problems and how they intend to resolve them?  While we were a great nation years ago, it was many years ago.  Here are some statistics from an article by Scott Shane:

• of the 35 most economically advanced countries, the United States ranks 34th as regards child poverty, edging out only Romania. 
• this country comes in only 28th in the percentage of 4-year-olds enrolled in preschool, and at the other end of the scale, 14th in the percentage of 25-to-34-year-olds with a higher education. 
• on infant mortality, where the United States ranks worse than 48 other countries and territories
• contrary to fervent popular belief, the United States trails most of Europe, Australia and Canada in social mobility.

Here's a recent photo of our leading presidential candidates.

More from Shane: America is indeed No. 1, — in locking its citizens up, with an incarceration rate far higher than that of the likes of Russia, Cuba, Iran or China; in obesity, easily outweighing second-place Mexico and with nearly 10 times the rate of Japan; in energy use per person, with double the consumption of prosperous Germany.

BofA is not alone

Last week I wrote about Bank of America and how it is subverting the Independent Foreclosure Review, which was a program to evaluate millions of foreclosure cases and compensate homeowners who fell victim to the banks' flawed or illegal practices by suggesting to supposedly independent reviewers whether or not a particular homeowner was not harmed by the bank's foreclosure process and, if he was, the amount of the damage.  These actions certainly reduced the independence of the reviewers.

Now, we find out that the other mega-banks - Wells Fargo, Citibank, JPMorgan Chase - are doing the same thing as BofA: screwing homeowners and us. These financial giants are to review about three-fourths of those eligible for the program.

It's Sickening

The more you learn about the economics of college football, the more you want to puke.  Because of the sport's popularity among the college football powers, the "schools" are able to get a very high price for tickets.  But "tickets" is getting a new meaning in college football.  It's very difficult to get a ticket without making a donation.  And we're not talking a small donation.  The University of Florida requires a minimum donation of $1,800 to be allowed to buy a ticket; a $14,500 donation is required to buy a ticket for a seat in a prized section of its stadium. Overall, the football powers bring in $500,000,000 a year from donations and tickets from loyal fans.  To make matters worse, a fan gets an income tax deduction of 80% of his donation.  You can thank Congress for that, as the IRS has tried to overturn the deductability of these "donations".

Another indication of the corruption that football has brought to some colleges is demonstrated at the University of Oregon.  Top-ranked students in its Honors College receive scholarships “of about $3,000. But a full scholarship for a football player including tuition, room and board, books, food, and all of the rest, is probably worth $40,000 or $50,000."

Do you think something's wrong here?  I wonder how much Romans had to pay for the gladiatorial contests.

Read more here: http://www.mcclatchydc.com/2012/10/18/171894/college-football-gets-tax-breaks.html#storylink=cpy

Read more here: http://www.mcclatchydc.com/2012/10/18/171894/college-football-gets-tax-breaks.html#storylink=cpy

Read more here: http://www.mcclatchydc.com/2012/10/18/171894/college-football-gets-tax-breaks.html#storylink=cp

Read more here: http://www.mcclatchydc.com/2012/10/18/171894/college-football-gets-tax-breaks.html#storylink=cpy

 

Read more here: http://www.mcclatchydc.com/2012/10/18/171894/college-football-gets-tax-breaks.html#storylink=cpy

Read more here: http://www.mcclatchydc.com/2012/10/18/171894/college-football-gets-tax-breaks.html#storylink=cpy

A Fusion Center in Action

A couple of weeks ago I wrote about the fusion centers established by the Department of Homeland Security.  The centers seem to be a cesspool of waste. In Boston, the center is also a surveillance center, except that it surveys citizens who have activist views, particularly as regards peace and anti-war activities.  Today, the Boston Globe reports on some of this activity by the center, which happens to be known as the Boston Regional Intelligence Center although it is housed in the Boston Police Department.

The police spied on such organizations as the Stop the Wars Coalition, United for Justice with Peace, and Greater Boston Code Pink.  It is unlawful to do so unless criminal activity is suspected.  I find it hard to believe that these anti-war activists would have a smidgen of interest in criminal activities.  But the Police Department has a different view, "The BRIC does not maintain continued surveillance or documentation on peace protest groups. Boston residents should confidently participate in any lawful, peaceful protest or demonstration knowing the Boston Police Department is not monitoring the events without specific information on suspected criminal activity.”

I feel so much safer

The police arrested two very dangerous people yesterday at the scene of the presidential debate. Those arrested were Jill Stein and Cheri Honkala, the Green Party candidates for president and vice president. They were ostensibly arrested for disrupting traffic; the reality was that they felt that they should have been included in the presidential debate.

Far and near

The BBC reports two astronomical findings today,  one is a planet with four suns and 5,000 light-years away, the other a planet only four light years away.

The far planet was discovered by volunteers from the Planethunters.org, which in less than two years has garnered more than 170,000 members.  The organization aims to harness human pattern recognition to identify transits in publicly available data gathered by Nasa's Kepler Space Telescope.  The planet is more than six times the radius of the Earth.

The near planet was discovered by the European Southern Observatory's La Silla facility in Chile.  This planet is not in our solar system.  It has has at minimum the same mass as Earth, but circles its star far closer than Mercury orbits our Sun.

Helping the Homeless?

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What will Commissioner Kelly and Mayor Bloomberg Say About This?

The NYC police received a phone call that a potentially homeless man was sleeping in a synagogue. Two officers investigated. No one knows what was said, but the video below shows what the cops did to the guy, who, by the way, had permission to sleep there. 

Here's what the Rabbi had to say, “This person had permission to be there. Regardless, the behavior of the police department — of two individuals — is beyond comprehension. A very sad moment for me personally. I’m a great supporter of the New York City Police Department, and I continue to be a great supporter, but this behavior is unconscionable, and if not for the video camera to record what happened, we might actually believe that Ehud attacked the police officers, and he never did. He’s charged with felonies, he’s charged with all kinds of crimes, and now I wonder how many other times New Yorkers are charged with serious crimes and there’s no video camera to tell the story.”


What is going on with the NYPD? There are more and more stories about violations of people's rights and police brutality.

Symptoms of our decline?

Okay, I'm not an animal lover so I'm probably blowing this out of proportion.  "This" being services to combat obesity in dogs.  There are now treadmills, pedometers and group fitness classes for dogs.  Tufts even has opened an obesity clinic for dogs.  Some dogs now attend yoga and Pilates classes.

I wonder how Rome treated its dogs.
 

Repenting his youthful actions

Paul Gionfriddo was a 25-year-old legislator when the movement to close mental hospitals was in full swing.  Since his primary committee was Health, he played a fairly large role in Connecticut's closings.  He worked hard and was able to get money for community mental health and substance abuse treatment programs for adults.  He helped close special school districts and move these students to schools in their home towns.  He also got money for care coordinators to help manage the transition of people back into the community. Now, in the 21st century he realizes that he did not get enough money, the schools and other public services were not prepared to handle the mentally disabled.

His realization came about because his son is schizophrenic and the system has not been able to really help him, so that now, after stints in jails and hospitals and rehab centers, he is homeless in San Francisco.  Gionfriddo wants us to realize that mental illness can be as devastating as cancer; it can cost as much to treat and studies have shown it can reduce life expectancy by 25 years.

Here is what he thinks should be done:

If I were a legislator today, I’d mandate — and provide funding to ensure — that every teacher receive training in recognizing symptoms of mental illnesses. I’d see that pediatricians are trained to make screening for mental health concerns a regular part of well-child exams. I’d require school administrators to incorporate recommendations from pediatricians and mental health professionals into students’ IEPs.
I’d put much more money into community mental health services. I’d integrate how services are delivered by funding collaborative community mental health programs and have them run by mental health professionals. I’d include services for chronically homeless people under this collaborative umbrella.
At the same time, to clear our county jails of people with mental illnesses, I’d get rid of laws targeting homeless people, such as those against loitering or sitting on a sidewalk. And I’d make sure that there was supportive short-term and long-term community housing and treatment for everyone needing them. Both were promised almost 50 years ago in the federal Community Mental Health Centers Act of 1964 — promises that were broken when it was repealed in 1981and replaced by a block grant to states.

It's a very sad story.

Tax rates of top payers

Smart use of our money?

Nicholas Kristoff tells a sad story about a former classmate of his.  When the friend quit his job, he did not keep his health insurance as he thought the cost of an individual policy was too high, although he had voluntarily switched from full time to part-time employment.  After eight years of no health insurance, he developed what were later determined to be signs of prostate cancer.  Because he had no insurance, he did not see anybody about these symptoms nor worse symptoms that occurred later on.  

It was only when he had reached the quite serious stage that he went to the emergency room, where he was diagnosed with the cancer. He has been in and out of the hospital ever since.  Of course, the bills have piled up; thus far his treatment has cost over $550,000.  Because he has run out of money, the hospital considers him a charity case.  Ergo, you and I are paying the bill for him.

How much less would we have to pay if Obamacare was in effect?  It's likely he would have seen the doctor earlier, would have been in less dire medical straits and the costs would be far less than $550,000 and growing.  How many people are there who are in the same boat as Christoff's friend?

Nuts as Leaders

There are a lot more in addition to those profiled here. 

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More questioning of BofA

Bank of America (BofA) can't seem to stay out of the news.  ProPublica has raised questions as to the independence of BofA's consultants with regard to the Independent Foreclosure Review, which was a program to evaluate millions of foreclosure cases and compensate homeowners who fell victim to the banks' flawed or illegal practices. 

The program was designed to have independent consultants, who would be approved by the feds, analyze the foreclosure records of the banks and determine whether a homeowner should be compensated because the bank screwed up or worse; if the bank was at fault, the consultant would determine how much the bank should pay to the homeowner.

Well, it looks as though the bank did the analysis of its records and, after reviewing the analysis, the consultant determined how much, if anything, should be paid.  If BofA disagreed with the consultant's decision, it had the right to appeal it.  The homeowner had no such rights.

Need I say that BofA disputes ProPublica's contentions?

Raise taxes. Stop the wars. Recovery

The Center on Budget and Policy Priorities (CBPP) has produced the following chart based on CBO and other data.

The chart shows that the deficit is a function of the wars, the Bush tax cuts, TARP and other attempts to bring the economy back and the Great Recession itself.  The CBPP is a liberally oriented think tank, but I think it's unlikely that the period 2009 - 2011 has been distorted.  The tax cuts have had the biggest impact on the deficit after the Great Recession.  Why we thought we could fight two wars and lower revenue simultaneously is the question.  I'm starting to believe that my idea of a growing willingness on our part to believe that we are impervious to life's realities is intruding in more and more areas.  Lake Woebegone is becoming our home.

Not a 21st Century Politician

You can actually understand what she is advocating.  Her platform uses basic - not marketing - English.  And you don't get inundated with pleas for money.

One More Deployment

It looks as though we now have troops in Jordan.  There are 150 deployed at the present time, primarily involved with logistics.  But there have been border clashes between Syrian and Jordanian troops.  These clashes have not reached the level of the Syria-Turkey battles.  But who knows what will happen.  I guess that's the reason why we're there.  What the average Jordanian thinks of this is not known.  

Syria seems to be the most problematic of the Arab Spring uprisings.  It remains to be seen whether the governments resulting from the uprisings across the Middle East will be better for the people in the long run.  I would imagine one response to my speculation is, "It can't be worse".

Anything to get into Harvard

A Chinese couple, Gerald and Lily Chow, apparently thought that nirvana was their sons being admitted to Harvard.  They were willing to hire a consultant, Mark Zimny, to make that happen.  They paid him $2,200,000 to achieve their nirvana. Now, they are suing him for lying, committing fraud, breach of contract, unjust enrichment, and more and would he please return their money.

Dream World #2

More and more people want to believe that we are all born with equal talents and that life will always be wonderful for all of us.  If someone lacks a talent, we think taking a pill will remedy that lack.  

When I went to school, there were students who liked school and those who, for whatever reason, did not function well in school.  Others were good athletes, some of us were not.  Some were good looking, some were not.  Some were leaders, some were followers.  There was a variety of talents among us as schoolchildren.  And there is a variety of talents among us as adults.

In the 20th century attempts were made by teachers, parents and friends to help those kids for whom school was a problem.  Not all of these attempts succeeded, primarily because the raw material was just not there.  The 21st century believes that the raw material exists in everyone; if it doesn't readily display itself, a pill will bring it out.  And pills are being used more and more to improve the school performance of our kids.  They are being prescribed for treatment of A.D.H.D., which, in my opinion, is another indication of the cult of over-diagnosis, as in 2007 almost 10% of kids aged 4 to 17 were diagnosed with ADHD.

The problem with Adderall, Risperdal and the other drugs being used is we don't know what the long term effects of extended use will be.  We do know that they are particularly addictive.  One doctor's thoughts, “These children are still in the developmental phase, and we still don’t know how these drugs biologically affect the developing brain.  There’s an obligation for parents, doctors and teachers to respect the authenticity issue, and I’m not sure that’s always happening.” 

Living in a dream world

That's where a lot of us think we should be living - a dream world.  Life should always be kind to us.  All of our illnesses should be brief and without pain.  How else to explain the fantastic rise in the use of painkillers?   In the few years of this century the number of prescriptions for painkillers has quadrupled.  Vicodin and related generics are the most prescribed drugs in the country.  

There is a cost beyond dollars for the almost epidemic use of painkillers.  More than 15,000 Americans now die annually after overdosing on prescription painkillers called opioids, according to the Centers for Disease Control and Prevention — more than from heroin, cocaine and all other illegal drugs combined. Today, drug overdoses are now the single largest cause of accidental death in America.

Certainly unscrupulous doctors have always existed; some doctors' offices are simply distribution centers for painkillers.  But it is also the case that many doctors now subscribe to the belief that we should be able to live lives free of pain and suffering.  Conditions that were once considered a normal part of living are now treated as illnesses, often based on very little evidence.

Bear likes Sockeye Salmon

From the New York Times

Maybe I'll regret this in the morning

I surprised myself in that I am still awake even though the 'debate' is over and I watched the whole thing.  I'm not sure whether it is our country or these candidates, but I found very little of substance in either candidate or, for that matter, in Jim Lehrer, the moderator.

I was most struck by two of Romney's assertions:  he's against the concept of "Too Big To Fail" banks and his belief that businesses would increase hiring if their taxes were the same, provided the rates were lower but the deductions were fewer.  In that case, the taxes would be the same since he said that the tax revenues to the fed would not decrease.  So, if taxes were the main driver of a business, why would it shift into a hiring mode because taxes have not changed?

I also thought Obama's wishing his wife "Happy Anniversary" was pretty lame.

Overall, Mitt did better than Barack.

Keep it simple

I think that's Thomas Hoenig's mantra.  Hoenig, former head of the KC Fed and now a director of FDIC, thinks we should apply it when trying to set capital standards for banks.  Yes, an international consortium of bankers and others have promulgated another version (Basel III) of a global regulatory standard on bank capital adequacy,stress testing and market liquidity.   

The problem is that, while Basel III tries to improve over Basel II (which was in effect when the Great Recession began), it "does so using highly complex modeling tools that rely on a set of subjective, simplifying assumptions to align a firm’s capital and risk profiles. This promises precision far beyond what can be achieved for a system as complex and varied as that of U.S. banking. It relies on central planners’ determination of risks, which creates its own adverse incentives for banks making asset choices."  The rules are dependent on formulas which few can decipher.

Simple rules will make things more understandable and, hence, enforceable.  Hoenig is advocating that we use the ratio of tangible equity to tangible assets ratio, emphasizing "tangible" (i.e., drop such items as good will, minority interests, deferred taxes, etc.).

Before the world began using sophisticated banking rules, banks relied on the market to establish equity ratios.  In those simpler days, the ratio was in the range of 13 - 16%.  Basel III accepts a ratio of 3.25%, which is much too low in the real world. 

Hoenig has two more suggestions: rely on periodic examinations more than stress tests for the largest banks, restore Glass-Steagall.

Playing in different fields

The compensation of most CEOs of Fortune 500 companies is based on that of a peer group, other CEOs who, in theory anyway, manage similar companies.  Many observers do not think this is a good idea and tends to artificially inflate the CEO's compensation.  A study by two professors from the University of Delaware, Charles Elson and Graig Ferrere, agrees.

They argue that the idea of the peer group assumes that a CEO's skills are readily transferable to another company.  They cite a number of studies which do not support the idea of CEO transferability; they think a company will be better off by hiring from within.

They contend that successful CEOs are often successful because of the people around them, and to the extent that their individual contributions matter, they are often specific to their companies.

We Must Be Protected

Our leaders believe that the real danger we face is terrorism.  Who knows how much we have spent on fighting terrorism since 9/11?  How many of us have had their freedoms violated in the name of this protection?  Has this crusade been a good investment?  About 3,000 of our fellow citizens have been killed by terrorists since 2001.

We'd be much, much better off had we spent a very small portion of the terrorist-protection money on gun control.  In one year we kill ten times as many people by guns as were killed by terrorists in eleven years.

DHS Needs a Little Help

A Senate Subcommittee has just published one of the most scathing reports I have seen.  The report by the Senate Homeland Security and Governmental Affairs permanent subcommittee on investigations looked at the Department of Homeland Security (DHS) so-called fusion centers, which are scattered across the country with the goal of coordinating intelligence between the feds, the states and local governments.  To say that these centers have been mismanaged is an understatement.  The mismanagement of the centers is of such a degree that you have to question the executive management of DHS. 

• For example, DHS' estimate of the federal money spent on the centers between 2003 and 2011 was between $289 million to $1.4 billion.  Just a very slight difference. Right?  
• As to the intelligence reports, they were "of uneven quality – oftentimes shoddy, rarely timely, sometimes endangering citizens’ civil liberties and Privacy Act protections, occasionally taken from already-published public sources, and more often than not unrelated to terrorism."  High quality output!
• DHS either lied or is really out to lunch as they "asserted that some fusion centers existed when they did not."  
• They bragged that the centers were “one of the centerpieces of our counterterrorism strategy,”and “a major force multiplier in the counterterrorism enterprise.”
• They initially refused to give the Senate copies of the centers' internal reports.
  "Despite reviewing 13 months’ worth of reporting originating from fusion centers from April 1, 2009 to April 30, 2010, the Subcommittee investigation could identify no reporting which uncovered a terrorist threat, nor could it identify a contribution such fusion center reporting made to disrupt an active terrorist plot. Instead, the investigation found: The Subcommittee investigation found that the fusion centers often produced irrelevant, useless or inappropriate intelligence reporting to DHS, and many produced no intelligence reporting whatsoever."

How can Napolitano hold her head up?

Turning the tide

An Oregon farmer's body was eaten by pigs.  He never came back from feeding the pigs.  The cause of death is unknown, but there was not much left of him other than his dentures and some pieces of his body.  There are currently two theories: he had a heart attack, the pigs knocked him down and then devoured him.

Answering Romney

In response to Romney's claims that 47% of us have grown dependent on government aid, James Surowiecki lists industries helped by the federal government.  This includes industries such as oil, telecom, mining, farmers, sugar, banking, ethanol.  Surowiecki concludes with the following:

Romney may say that he wants small government, but what he’s pushing for is a government that’s small when it comes to helping people and big when it comes to helping business.

At least a suit was filed

Back in April I said that the Residential Mortgage-Backed Securities Working Group created back in January was a sham.  Perhaps, I'll be proved wrong as the first case on this matter has been filed by the Working Group.   The Group has charged JP Morgan with regard to activities by Bear Stearns, which JP bought in the depths of the crisis.

Basically, the Group says that Bear Stearns lied when it sold mortgage securities.  They knew many of the mortgages were bad but said nothing to the purchasers.  Then, when Bear Stearns went back to the originator of the mortgages, they took the originator's money and did not give it to the buyers as the law says.

I'm still skeptical as to how far this suit will be pursued.  After all, there is an election in a little over a month and being seen as the protector of the little guy can't hurt Obama.

Our leaders

How could Michelle Bachmann have served in our Congress for more than one term?  How stupid are the voters in Minnesota's Sixth District?  Her latest comment - "We must ban falafel and other jihadi foods in schools before its too late." - is absolutely idiotic.  This is based on the following 'logic': "It starts with falafel, then the kids move on to shawarma. After a while they say 'hey this tastes good, I wonder what else comes from Arabia?  Before you know it our children are listening to Muslim music, reading the Koran, and plotting attacks against the homeland.  We need to stop these terror cakes now, before they infiltrate any further."

Where do people like her come from?

Is America in decline?

Steven Walt says "no" but he is looking at the U.S. in the world, not as a nation that has lost its 'mojo', a nation that is rapidly becoming dysfunctional, a nation led by people who care only about winning elections rather than being good governors of the nation.  It is true, as he says, that we still have a lot of attributes to make other nations envious, but we, the citizens, have seen what we once were and that change in perception is really why so many of us feel that America is in decline.  

Look at our standing relative to other countries when it comes to education.  Where has our manufacturing base gone?  How many people have lost their homes?  When was it that banks became more important than people?  Why does a CEO of  a major company make so much more than the average worker?  Where has the middle class gone?  Why have we become so intolerant?  One could go on and on.  I'm lucky; I won't be here to see the final act.