Tim Geithner has been named a distinguished fellow at the Council on Foreign Relations. The chair of the Council is one Robert Rubin, who has been a mentor to Mr. Geithner, as well as a former Treasury Secretary at the time of the repeal of Glass-Steagall and a former muck-a-muck at Citigroup where he pulled down a fairly decent dollar. But Rubin is not the only financier involved with the Council. Morris Greenberg of AIG fame is an honorary vice chair.
Do you suppose that the recent bailouts to Citi and AIG had any bearing on the Council's hiring of Mr. Geithner?
Incidentally, I gleaned some of this information from Wall Street on Parade, which seems to take shall we say a different view of Wall Street.
Monday, February 11, 2013
Sunday, February 10, 2013
America in the 21st century
Two quotes from a former Guantanamo prosecutor, Col. Morris Davis:
“We
used to be the land of the free and the home of the brave. Since 9/11, we’ve
been the constrained and the cowardly.”
“If
you went to the airport 15 years ago and somebody felt you up, it was
called a sexual assault, not pre-boarding. From that, to
the ‘kill list,’ to indefinite detention, liberty’s kind of gone by the
wayside. Ben Franklin said, ‘Anyone who would trade their liberty for
security deserves neither,’ and here we are now.”
Changing energy prices in Australia
Australia instituted a carbon tax last year. Lo and behold, wind power is now cheaper than coal from new plants and natural gas. Electricity can be supplied from a new wind farm in
Australia at a cost of A$80 ($84) per megawatt hour, compared
with A$143 a megawatt hour from a new coal-fired power plant or
A$116 from a new station powered by natural gas when the cost of
carbon emissions is included, according to a Bloomberg New
Energy Finance report. Older coal-fired power stations built in the
1970s and 1980s are still cheaper than wind-powered plants can still produce power at a lower cost than
that of wind, the research shows. This change in relative costs is very significant because Australia has some of the world’s best fossil fuel resources.
Checking the skies
While asteroids, comets, meteors and other objects in space have been around forever as far as we know, it is only relatively recently (basically the start of the 21st century) that we have begun to discover just how many objects there are out there. Scientists estimate that we have discovered less than 10% of all the near-Earth objects. And, we've focused more money and attention on the Northern Hemisphere. So, the estimates may be way off. Of the objects discovered it is estimated that more than two dozen asteroids have a chance of being the black swan relative to objects from space crashing into earth. The last one that did so was in 1908 when it leveled all the trees in 825 square miles in Russia. It is also thought that the dinosaurs vanished because of a collision with an object from space.
Saturday, February 09, 2013
Friday, February 08, 2013
Next week's disaster story
This week we in the Northeast are being deluged by 'news' about a blizzard. If the forecasts are correct, it will be a very bad storm. But we've had very bad storms - a lot of them - before. We survived without going into panic mode. I know it's no longer the 20th century and things are so much more critical and important today than they ever used to be. But give me a break. Stop the hyperbole. Get real.
Next week the story will be 2012 DA14. This is the asteroid that will pass by us next Friday. Unlike the blizzard hysteria, the pitch here is that everything will be okay as it will not get closer to us than 17,000 miles. However, compared to the blizzard this is a 'black swan' event in that we have had very few asteroids crash into the earth. So, maybe we should worry or believe that the scientists are right. Take your pick.
Next week the story will be 2012 DA14. This is the asteroid that will pass by us next Friday. Unlike the blizzard hysteria, the pitch here is that everything will be okay as it will not get closer to us than 17,000 miles. However, compared to the blizzard this is a 'black swan' event in that we have had very few asteroids crash into the earth. So, maybe we should worry or believe that the scientists are right. Take your pick.
Thursday, February 07, 2013
Gilding the lily
U.S. News has gained a lot of credibility and prestige by publishing its annual college rankings. I'm sure it has helped their revenues. Some have questioned the accuracy of the data. In many cases where the 'public' votes for the 'best of', many organizations work hard to make sure they are among the 'best'; however, the work is not done in the field in which they are being rated, it's done by getting out the vote. Well, it looks like something similar happens with the U.S. News rankings. Just recently five universities - Bucknell, George Washington, Tulane, Emory, Claremont McKenna - have admitted that they submitted incorrect test scores or overstated the high school rankings of their incoming freshmen.
Some of the universities assert that there was a flaw in their data collection system; others admit someone cheated. Gallup conducted a survey of 576 college admissions officers last year. 91% of those surveyed think other colleges had falsely reported standardized test scores and other admissions data.
Some of the universities assert that there was a flaw in their data collection system; others admit someone cheated. Gallup conducted a survey of 576 college admissions officers last year. 91% of those surveyed think other colleges had falsely reported standardized test scores and other admissions data.
A criminal charge
DOJ was able to get the Japanese unit of the Royal Bank of Scotland to plead guilty to
criminal wrongdoing for its role in the LIBOR scheme. Okay, the company was hit with the charge. No people were. But, it is a step up the ladder of providing enough incentive to dissuade people from violating the law. RBS also had to pay a fairly large fine, $612,000,000.
Wednesday, February 06, 2013
We don't need no stinking badges
A recent white paper by DOJ provides the legal basis for our drone attacks.
We are the United States of America and have the right to kill anyone anywhere if they are leaders of al-Qaeda or its allies, pose an "imminent threat" and their capture is not feasible. We are always right, so we do not have to produce evidence that a specific attack is being planned if the target is generally engaged in plotting against the US.
It concludes that such killings do not violate the US Constitution as long as:
This is the country we have become.
We are the United States of America and have the right to kill anyone anywhere if they are leaders of al-Qaeda or its allies, pose an "imminent threat" and their capture is not feasible. We are always right, so we do not have to produce evidence that a specific attack is being planned if the target is generally engaged in plotting against the US.
It concludes that such killings do not violate the US Constitution as long as:
- An informed, high-level official of the US government has determined that the targeted individual poses an imminent threat of violent attack against the US
- Capture is infeasible and the US continues to monitor whether capture becomes feasible
- The operation would be conducted in a manner consistent with applicable law of war principles
This is the country we have become.
A very old bird
Tuesday, February 05, 2013
Finally, the ratings agencies may have a problem
Surprise, surprise! DOJ actually filed charges against a credit-rating agency, S&P. True, it's only for civil, not criminal, fraud, but it may be a start. And it is expected that some states will be joining the suit. S&P is also being investigated by the SEC.
Interestingly, the government is pressing the firm to plead guilty to at least one count of fraud. This is very different from the government's willingness to allow fraudsters to neither admit nor deny guilt. Who knows maybe they'll even try to put someone in jail?
Interestingly, the government is pressing the firm to plead guilty to at least one count of fraud. This is very different from the government's willingness to allow fraudsters to neither admit nor deny guilt. Who knows maybe they'll even try to put someone in jail?
Nobody is perfect
In the 20th century I finished just about every book I started, even if it was a bad book. In this century I guess I'm more particular or finally realize that my days are numbered because I don't finish every book I start. I've finished less than half of the books in my current book club because they are just not very good.
I have read a few by Elmore Leonard and they have all been good. But he's written close to 50 and he is human so he's entitled to mess up once in a while. His latest, "Raylan", is an example of a screw up. If it wasn't a Leonard book, I would have stopped at around page 50. It is really three long short stories (or novellas) in one book. There is not the suspense one expects in his books. Most of the characters are uninteresting. In short, I did not like it. But, I guess because he was the author, I felt duty-bound to finish it. My first mistake in 2013!
I have read a few by Elmore Leonard and they have all been good. But he's written close to 50 and he is human so he's entitled to mess up once in a while. His latest, "Raylan", is an example of a screw up. If it wasn't a Leonard book, I would have stopped at around page 50. It is really three long short stories (or novellas) in one book. There is not the suspense one expects in his books. Most of the characters are uninteresting. In short, I did not like it. But, I guess because he was the author, I felt duty-bound to finish it. My first mistake in 2013!
Monday, February 04, 2013
Does the Super Bowl Blackout Tell Us Anything?
More BofA
Three of the Federal Home Loan Banks are suing Bank of America alleging that the $8.5 billion settlement is too low. Most of the allegations against BofA have stemmed from actions by Countrywide prior to being acquired. This new suit says that nothing much changed because of the acquisition. BofA violated its agreements with investors who bought the securities that held the
mortgages by failing to buy back troubled mortgages in full once it had
lowered the payments and principal on the loans. While loan modifications resulted in big losses for the investors, BofA did not reduce the principal on second mortgages
it owned on the same properties.
Sunday, February 03, 2013
Maintain or Expand
My limited experience serving on town government committees demonstrated to me that governments are more likely to build a new project rather than spend the money necessary to maintain their existing projects. This tendency seems to hold when it comes to our highways. Federal government analysts, taxpayer advocates and transportation experts have warned for at least a decade that many states were spending too much on building highways and too little on fixing them, and that their maintenance costs would skyrocket if they didn’t change course. For example, in 2004 Pennsylvania was spending about as much of its federal funding on expansion as
it was on maintenance. By 2011, the state was spending about four times as much on
repairs, and it was still struggling to keep up. Our highway system has reached the end of the line in the eyes of many. We've seen bridges collapse, highways constantly being repaired.
The federal gas tax has not been increased in twenty years. The 18.4 cents tax has lost a third of its purchasing power. And still we do nothing but borrow $50 billion every year from the Treasury rather than the Highway Trust Fund.
Maintenance is a good investment. According to the National Center for Pavement Preservation, a research lab for road-building materials at the Michigan State University engineering school, every dollar spent to maintain a road in the first 15 years of its life saves $6 to $14 in maintenance costs after 20 years.
The federal gas tax has not been increased in twenty years. The 18.4 cents tax has lost a third of its purchasing power. And still we do nothing but borrow $50 billion every year from the Treasury rather than the Highway Trust Fund.
Maintenance is a good investment. According to the National Center for Pavement Preservation, a research lab for road-building materials at the Michigan State University engineering school, every dollar spent to maintain a road in the first 15 years of its life saves $6 to $14 in maintenance costs after 20 years.
Saturday, February 02, 2013
GW vs. Barack
Bill Moyers has an interesting chart comparing Bush and Obama on wartime civil liberties. Here's a summary:
- Retained: Patriot Act, Wire taps and data collection, Guantanamo, Military commissions
- Stopped: CIA black sites, Enhanced interrogation
- Expanded: Targeted killing, drone strikes
All drug trials yield great results
The pharmaceutical industry would like you to believe that. However, like most of man's endeavors, creating new drugs that are effective is not a simple task and does not always work. Yet, we seldom learn about drug failures. Sure, the medical journals are filled with supposedly perfect trials but studies have shown that half of all the clinical trials ever conducted and completed on the treatments in use today have never been published in academic journals.Why do you suppose that is the case? Trials that show that a particular drug has failed just don't get written up.
In 2007 the FDA passed a law which required that new clinical trials conducted in the United States post summaries of their results at within a year of completion at a government web site, or be fined $10,000 a day. Five years later, the British Medical Journal found that four out of five trials covered by the legislation had ignored the reporting requirements and no one was fined for violating the law.
And then there's the International Committee of Medical Journal Editors. It directed that its members never again publish any clinical trial unless its existence had been declared on a publicly accessible registry before the trial began. The result from a subsequent study: the editors had broken their promise: more than half of all trials published in leading journals still weren’t properly registered, and a quarter weren’t registered at all.
In 2007 the FDA passed a law which required that new clinical trials conducted in the United States post summaries of their results at within a year of completion at a government web site, or be fined $10,000 a day. Five years later, the British Medical Journal found that four out of five trials covered by the legislation had ignored the reporting requirements and no one was fined for violating the law.
And then there's the International Committee of Medical Journal Editors. It directed that its members never again publish any clinical trial unless its existence had been declared on a publicly accessible registry before the trial began. The result from a subsequent study: the editors had broken their promise: more than half of all trials published in leading journals still weren’t properly registered, and a quarter weren’t registered at all.
Thursday, January 31, 2013
Complying with the law
ProPublica lists some of the obligations Congress has imposed on the rest of us but not on itself. Some examples where it's "do as I say, not as I do".
- Whistleblower Protections
- Subpoenas for Health and Safety Probes
- Keeping Workplace Records
- Prosecution for Retaliating Against Employees
- Posting Notices of Workers’ Rights
- Anti-Discrimination and Anti-Retaliation Training
- The Freedom of Information Act
Wednesday, January 30, 2013
Organizing for Action
That's the name of Mr. Obama's 501(c)(4) Super PAC. This was his campaign organization but now it will be used to promote his second-term agenda. Wasn't it just a couple of months ago he was inveighing against the "dark money" flowing from this type of organization? But flip-flopping on money in politics is not new for Barack.
In 2008 he first vowed to use only public money for his campaign. Then, he decided not to accept public money and proceeded to raise $745,000,000 from non-public sources.
In 2010 he said relative to the Citizens United decision, “I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities.” At the start of 2012 he founded Priorities USA Action, a super Pac providing "dark money".
In 2008 he took no corporate money for the inauguration and limited the amount that cold be contributed. This year he reversed himself and took as much money as corporations were willing to donate.
In 2008 he first vowed to use only public money for his campaign. Then, he decided not to accept public money and proceeded to raise $745,000,000 from non-public sources.
In 2010 he said relative to the Citizens United decision, “I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities.” At the start of 2012 he founded Priorities USA Action, a super Pac providing "dark money".
In 2008 he took no corporate money for the inauguration and limited the amount that cold be contributed. This year he reversed himself and took as much money as corporations were willing to donate.
Tuesday, January 29, 2013
A very bizarre trial
The Russian judicial system is strange. Take, for example, the case related to a hedge fund, Hermitage Capital. One defendant, Sergei Magnitsky is dead and has been dead for 3 years. Another defendant, William F. Browder, has been barred from entering Russia since
2005, so he cannot appear in court. The trial has been postponed.
True or False?
Stephen Walt hypothesizes what our leaders might say about our foreign policy if they were given a truth serum:
#1: "We're never gonna get rid of our nuclear weapons."
#2: "We don't actually care that much about human rights."
#3: "There's not going to be a two-state solution."
#4: "We like being #1, and we're going to stay there just as long as we can."
#5: "We do a lot of stupid things in foreign policy. Get used to it."
Do you think he has a point?
#1: "We're never gonna get rid of our nuclear weapons."
#2: "We don't actually care that much about human rights."
#3: "There's not going to be a two-state solution."
#4: "We like being #1, and we're going to stay there just as long as we can."
#5: "We do a lot of stupid things in foreign policy. Get used to it."
Do you think he has a point?
Who do you believe?
I seem to be asking that question more and more. My latest instance concerns an article by Luigi Zingales. He reports on a paper by three economists which seems to show that mortgage fraud was endemic to the financial industry.
The paper compares the characteristics of securitized mortgages as they were disclosed to investors at the time of sale with these loans’ characteristics as they were recorded in the banks’ proprietary databases. Zingales writes (my emphases):
The paper compares the characteristics of securitized mortgages as they were disclosed to investors at the time of sale with these loans’ characteristics as they were recorded in the banks’ proprietary databases. Zingales writes (my emphases):
If the massive wave of defaults on securitized mortgages was purely the result of bad luck, we would expect that the characteristics reported to investors would not differ from those recorded in the banks’ databases. This is especially true of characteristics that are relevant to default risk, such as whether the borrower was an owner or an investor, or whether there was a second lien on the property. In fact, the authors find that more than 6% of mortgage loans misreport the borrower’s occupancy status, while 7% do not disclose second liens. Of course, any database contains errors. Are these errors large enough to be worrisome? And how can we be sure that the banks knowingly misrepresented this information, rather than that they merely were sloppy in reporting it? The authors provide some interesting evidence in this context. They show, for example, that the misrepresentation is correlated with higher defaults down the line: delinquent payments on misreported loans are more than 60% higher than on loans that are otherwise similar. Thus, the errors do not seem to be random, but purposeful. What the authors do not find is also interesting. The degree of misrepresentation seems to be unrelated to the incentives provided to the top management and to the quality of risk-management practices inside these firms. In fact, all reputable intermediaries in their sample exhibit a significant degree of misrepresentation. Thus, the problem does not seem to be limited to a few bad apples, but is pervasive. This makes a solution more difficult to achieve. After all, if the financial industry’s leaders are misleading investors, it is the culture of the entire industry that needs to be changed.The above raises all sorts of questions as to the accuracy of the analysis. But, based on many similar tales, I'm inclined to think it's credible.
Bye bye, Arab Spring in Egypt?
A state of emergency in Port Said. The head of the army warns of the "collapse of the state (which) threatens the future of the
coming generations". Protesters in Port Said declare their city's independence. Protesters killed daily. Violence escalating daily.
Morsi seems to be losing control even with all his efforts to stop the protesters. Can Army control be far off?
Monday, January 28, 2013
Guantanamo Forever
Remember all that talk four years ago about closing Guantanamo? Of course, nothing was ever done about it. And now probably the final nail was banged into that coffin today when it was announced that the office of the special envoy for closing the prison at Guantanamo will be closed. Interestingly, an administration spokesman said, “We remain committed to closing Guantánamo, and doing so in a responsible fashion.”
The title says it all
The title of the latest report from the Special Inspector General for the TARP is "Treasury Continues Approving Excessive Pay for Top Executives at Bailed-Out Companies". We bailed out AIG, GM and Ally Financial. However, the Treasury feels that the executives of these firms must be compensated as though nothing happened - the executives were doing a great job when these firms collapsed and continued to do so through 2012.
That's what it would seem as Treasury approved pay packages of $3 million or more for 54% of the 69 Top 25 employees at AIG, GM and Ally Financial Inc. (formerly General Motors Acceptance Corporation, Inc.) – 23% of these top executives (16 of 69) received Treasury-approved pay packages of $5 million or more, and 30% (21 of 69) received pay ranging from $3 million to $4.9 million. Treasury seemingly set a floor, awarding 2012 total pay of at least $1 million for all but one person.
That's what it would seem as Treasury approved pay packages of $3 million or more for 54% of the 69 Top 25 employees at AIG, GM and Ally Financial Inc. (formerly General Motors Acceptance Corporation, Inc.) – 23% of these top executives (16 of 69) received Treasury-approved pay packages of $5 million or more, and 30% (21 of 69) received pay ranging from $3 million to $4.9 million. Treasury seemingly set a floor, awarding 2012 total pay of at least $1 million for all but one person.
Finding the true story
I think that it is getting harder to know what is true or false. The latest news about a massive explosion last Monday at one of Iran's top secret nuclear facilities is a case in point. This was first reported on Friday by what has been called a right-wing Israeli news site, WND.com. Iran denied it, but has not elaborated at all. Israel is as quiet.
While there has been little mention in our press, the English media has raised questions as to the veracity of the original report. The Telegraph has some speculations:
While there has been little mention in our press, the English media has raised questions as to the veracity of the original report. The Telegraph has some speculations:
It could be that the Iranians have deliberately leaked news of the explosion to prevent officials from the International Atomic Energy Agency from making one of their routine inspections. On the other hand the Israelis, who have never officially admitted responsibility for assassinating a number of Iranian nuclear scientists, may think it prudent to keep quiet about any involvement they might have had in the explosion for fear of provoking retaliation from Tehran.Then, we have the story of Iran sending a monkey into space. The view of some in the West:
Western countries are concerned the long-range ballistic technology used to propel Iranian satellites into orbit could be used to launch atomic warheads. Tehran denies such suggestions and says its nuclear work is purely peaceful.On the other hand, Israel thinks this is just a PR ploy. What is the truth?
Sunday, January 27, 2013
More negative news for Barclays
The Daily Mail has an extensive article about Barclays Wealth, a division of Barclays Bank. This particular problem was triggered by the SEC's concerns about Barclays Wealth back in 2011. An outside firm was hired to investigate. Their report found the management of Barclays Wealth:
What will come of all this is unknown.
- Pursued a ‘revenue at all costs’ strategy.
- Fostered a culture of fear and intimidation.
- Were ‘actively hostile’ to the idea of compliance with banking rules.
- Presided over a ‘broken culture’ where problems were ignored or buried.
- Allowed the business to spin ‘out of control’.
What will come of all this is unknown.
Cycles
Our NYC correspondent suggested this song. It's not one of Frank's hits that I know of. But it's a great performance and the lyrics make sense.
Resource Utilization
Sometimes it's hard for others - as well as ourselves - to realize the resources and talents we have. This is particularly the case if we are handicapped in some way. The difficulty in spotting talents in the handicapped is less if the disability is physical; it's much greater when the disability is mental or emotional. But it is not impossible. We learned that Thorkil Sonne was able to see how his son's autism could be a valuable resource in the business world. Today's example can be found in the NY Times.
Elyn R. Saks is schizophrenic but also a chaired professor at the University of Southern California Gould School of Law, holds an adjunct appointment in the department of psychiatry at the medical school of the University of California, San Diego, is on the faculty of the New Center for Psychoanalysis and has been awarded a MacArthur Foundation genius grant.
Saks has been able to accomplish all this, first of all, because she refused to listen to those who advised her to accept the limitations of her condition and spend her life as a handicapped person. Then, she has received excellent psychoanalytic treatment and medication, has developed coping strategies and knows that she will always be schizophrenic.
She acknowledges that not all mentally ill people have the resources to fully break out, "But the seeds of creative thinking may sometimes be found in mental illness, and people underestimate the power of the human brain to adapt and to create".
A very powerful and moving article.
Elyn R. Saks is schizophrenic but also a chaired professor at the University of Southern California Gould School of Law, holds an adjunct appointment in the department of psychiatry at the medical school of the University of California, San Diego, is on the faculty of the New Center for Psychoanalysis and has been awarded a MacArthur Foundation genius grant.
Saks has been able to accomplish all this, first of all, because she refused to listen to those who advised her to accept the limitations of her condition and spend her life as a handicapped person. Then, she has received excellent psychoanalytic treatment and medication, has developed coping strategies and knows that she will always be schizophrenic.
She acknowledges that not all mentally ill people have the resources to fully break out, "But the seeds of creative thinking may sometimes be found in mental illness, and people underestimate the power of the human brain to adapt and to create".
A very powerful and moving article.
Saturday, January 26, 2013
Amgen jumps over the fiscal cliff
In late December Amgen was found to have illegally marketed one of its drugs for uses not approved by the FDA. Amgen will have to pay $762,000,000 in criminal and civil penalties.
But that was December. In January the Senate gave Amgen about $500,000,000 of our money by allowing it to sell another of its drugs for another two years without conforming to Medicare price restraints. (Note that the company had already been granted a two year delay previously.) This permission was given as part of the fiscal cliff bill. The primary movers behind this permission were Senators McConnell, Hatch and Baucus. Is it coincidence that the former chiefs of staff for both McConnell and Baucus are now lobbyists for Amgen?
But that was December. In January the Senate gave Amgen about $500,000,000 of our money by allowing it to sell another of its drugs for another two years without conforming to Medicare price restraints. (Note that the company had already been granted a two year delay previously.) This permission was given as part of the fiscal cliff bill. The primary movers behind this permission were Senators McConnell, Hatch and Baucus. Is it coincidence that the former chiefs of staff for both McConnell and Baucus are now lobbyists for Amgen?
""I am quite concerned about our failure rate."
That's what a doctor told DePuy Orthopaedics in June of 2005 about a hip replacement device the company had begun marketing. The device shed large amounts of metallic debris after implantation. But it wasn't until November of 2008 that the company decided to cancel any attempts to rectify the problems. During that time they kept selling the device. It was implanted on more than 93,000 patients. A company analysis made in 2011 concluded that the device would fail in five years in more than 40% of the patients. There are now more than 10,000 lawsuits filed against the company.
I find it hard to believe that Johnson & Johnson owns DePuy.
I find it hard to believe that Johnson & Johnson owns DePuy.
Friday, January 25, 2013
Cats or Birds?
Gareth Moore, a New Zealand environmental activist, has generated a fair amount of concern on the web with his plea that people sterilize all cats and vow never to get another cat because cats are killing native bird species. Apparently, Mr. Moore believes birds are more important than cats. If the world followed his advice, cats would eventually disappear.
Wednesday, January 23, 2013
Bibi has a problem
Netanyahu did not do as well as expected in yesterday's elections in Israel. It looks as though each bloc had 60 of
parliament's 120 seats.His conservative alliance lost 11 seats in Parliament, going from 42 to 31.
The big winner is the party known as There is a Future. It campaigned on major economic changes, an end to the granting of draft exemptions to ultra-Orthodox Jewish men and the pursuit of peace with the Palestinians. The party is only a year old and has changed the political structure in Israel. Let's hope this augurs for a more realistic, less militaristic Israel.
The big winner is the party known as There is a Future. It campaigned on major economic changes, an end to the granting of draft exemptions to ultra-Orthodox Jewish men and the pursuit of peace with the Palestinians. The party is only a year old and has changed the political structure in Israel. Let's hope this augurs for a more realistic, less militaristic Israel.
Python Challenge 2013
Burmese pythons have become such a challenge in Florida that the state's Fish and Wildlife Conservation
Commission has organized a hunting tournament. It will pay $1,000 to the hunter who catches the
longest python and $1,500 to the one who catches the most pythons.
About 1,300 people have signed up for the month-long tournament.
Why not punish the big guys as well?
The SEC has barred Egan-Jones Ratings Co. from issuing ratings on certain bonds. Egan-Jones is a very small firm in the ratings business; it has five credit analysts and supervisors, while S&P has 1,416 and Moody's has 1,252. Clearly, the major agencies bear much, much more of the blame for the Great Recession than Egan-Jones. But, as of now, only Egan-Jones is being punished.
Monday, January 21, 2013
A brief history lesson
Peter Andreas recounts some of our early history in his new book, "Smuggler Nation". Smuggling played an important part in that history.
Take, for example, the War of Independence. Colonial merchants were leading players in the Atlantic smuggling economy — most notably the smuggling of West Indies molasses to New England distilleries — and conflicts over smuggling and customs enforcement played a critical role in the tensions leading up to the outbreak of war. Pivotal incidents and protests, such as the Boston Tea Party, were closely connected to smuggling interests and the backlash against the Crown’s militarized crackdowns. The first signer of the Declaration of Independence was one of Boston’s best-known merchant-smugglers, John Hancock.
Smugglers put their transportation methods, skills, and networks to profitable use by covertly supplying George Washington’s troops with arms and gunpowder. Motivated as much by profit as by patriotism, they also were recruited by Washington for his makeshift naval force. This was just one of a number of major American military conflicts, from trading with the enemy in the War of 1812 to blockade running during the American Civil War, in which success on the battlefield was tied to entrepreneurial success in the underworld of smuggling.
Early U.S. leaders such as Alexander Hamilton enthusiastically encouraged intellectual piracy and technology smuggling during the country’s initial industrialization process, especially in the textile industry.
The first signer of the Declaration of Independence was one of Boston’s best-known merchant-smugglers, John Hancock.
The West was won not only through military conquest but also through illicit commerce. Many nineteenth-century Americans understood Manifest Destiny to include a divine right to smuggle. Smuggling of all sorts was at the forefront of the young nation’s aggressive territorial expansion, including large-scale smuggling of alcohol into Indian country (illegally traded for much-coveted furs) and illicit slave trafficking for the rapidly expanding cotton plantations of the Deep South.
Sunday, January 20, 2013
Playbook for murder
How to conduct a proper drone strike is part of a new counterterrorism manual (aka the playbook) that will be issued soon by our leaders in the White House. I doubt we will be told much about it since it deals with such subjects as the process for adding
names to kill lists, the legal principles that govern when U.S. citizens
can be targeted overseas and the sequence of approvals required when
the CIA or U.S. military conducts drone strikes outside war zones. And because Pakistan is such a nasty place attacks on it will not be subject to the rules of the playbook for at least another year.
Another element to be proud of.
Another element to be proud of.
One way to deal with TBTF banks
Richard Fisher proposes that the Too-Big-To-Fail banks be broken up. But he goes further than that. He wants to limit FDIC coverage to commercial banking operations only; anything else - securities trading, for example - would not be covered by you and me. His reasoning is also based on the fact that the TBTF banks have been reluctant to lend. Community banks (those with less than $10 billion in assets) hold more than half of the nation's small business loans, yet have less than 20% of our banking assets. Another interesting factoid: Of the 5,600 commercial banks in the U.S., the twelve largest control 69% of the banking assets.
Give Obama a C
That's the grade David Rothkopf would give Obama for his management of the White House over the past four years. And that's grading him on a curve that takes into account how bad GW was. Obama's lack of management skills and his poor negotiating ability may be the result of his never having managed any sort of large, complex organization.
We are a forgetful people
We are still not out of the woods economically (and lots of other way) speaking. Alan Blinder reminds us of that and lays down "10 financial commandments".
1. Remember That People Forget
When the good times roll, investors expect them to roll
indefinitely. When bubbles burst, they are always surprised.
2. Do Not Rely on Self-Regulation
We saw what happened when we tried to live by the idea of a self-correcting market.
3. Honor Thy Shareholders
For too long most boards of directors have been sycophants of the CEO.
4. Elevate Risk Management
If you have people responsible for managing risk, listen to them.
5. Use Less Leverage
Leverage is wonderful up to a point.
6. Keep It Simple, Stupid
How many brokers understood the securities they were selling?
7. Standardize Derivatives and Trade Them on Exchanges
Not all derivatives are bad. Let's trade them openly.
8. Keep Things on the Balance Sheet
Some CEOs forgot about non-balance sheet items.
9. Fix Perverse Compensation
People should pay for their mistakes, especially major mistakes.
10. Watch Out for Consumers
What we learned in the crisis is that failure to protect unsophisticated
consumers from financial predators can undermine the whole economy.
Simple but sensible.
Friday, January 18, 2013
There's something about Italian animals
Earlier this month I reported about a cat that had been visiting his master's tomb. This happened in a small Italian village near Florence. Now, our NYC correspondent tells us of a dog who visits the church at which his master's funeral was held. Again, this takes place in another small Italian village. The dog used to go to Mass every day with his master and is continuing the practice.
Thursday, January 17, 2013
What is his legal argument?
Vicki Divoll, a former general counsel to the Senate Select Committee
on Intelligence and former deputy legal adviser to the C.I.A.’s
Counterterrorism Center, asks for Obama to release the legal basis for his use of drones to kill Americans without a trial. She chides the Senate for not pushing on this, as they did with Mr. Gonzales of the GW administration. She reminds us of 2008 candidate Obama's talk about transparency in government and his release of GW's legal memos, which were found to be faulty. Is Obama worried that his legal basis for murder is also faulty?
Tuesday, January 15, 2013
Monday, January 14, 2013
Geithner's Accomplishments
Ryan Chittum of Columbia Journalism Review doesn't think much of Geithner. Geithner did nothing for the housing decline; HAMP spent only $4 billion of its $50 billion war chest. He thought that deficit reduction and austerity was more important than jobs. He opposed breaking up the too-big-to-fail banks. He was against the Volcker Rule and lobbied against Elizabeth Warren. He fought for allowing the banks to do whatever they felt like doing.
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| Timothy Geithner - Caricature (Photo credit: DonkeyHotey) |
Words, words, words
Which do you believe? Here's a few from Obama's press conference today:
Q: ...I want to come back to the debt ceiling, because in the summer of 2011, you said that you wouldn’t negotiate on the debt ceiling, and you did. Last year you said that you wouldn’t extend any of the Bush tax cuts for the wealthy, and you did. So as you say now that you’re not going to negotiate on the debt ceiling this year, why should House Republicans take that seriously and think that if we get to the one-minute-to-midnight scenario that you’re not going to back down? ...
PRESIDENT OBAMA: No, no, look, what I’ve said is is that I’m happy to have a conversation about deficit reduction.
Q: So you technically are willing to negotiate.
PRESIDENT OBAMA: Nope. ...
A Worthy Successor to Tim
Jack Lew will be our next Treasury Secretary. Should I have said 'our' secretary? It looks as though he is close to a clone of Tim in his links to and support of the Too Big To Fail investment houses that were responsible for the massive deregulation that caused the Great Recession. His background, like Tim's, includes a stint at Citicorp, a follower of Rubin, espousal of austerity.
Will the second term be worse than the first?
Will the second term be worse than the first?
Sunday, January 13, 2013
It's not my money
We know that the charlatans of the latest fiscal crisis don't really mind paying the 'fines' that the feds impose on them for violating our laws. After all, it's the company's money, not theirs. Gretchen Morgenson reminds us that we often wind up 'paying' part of these settlements as the banks can in many cases deduct the settlement payments from their income tax.
Friday, January 11, 2013
Another Indictment of Our Health System
The National Institutes of Health asked the National Research Council
(NRC) and the Institute of Medicine to study health differences among 16 countries (Australia, Japan, Canada and Western Europe) and us. They convened a panel of experts to examine whether the U.S. health disadvantage exists across the life span, consider potential explanations, and assess the larger implications of the findings. The panel published their results in "U.S. Health in International Perspective:Shorter Lives, Poorer Health".
The results are not good. We lead the world in lacking a medical system that produces good results. We have
The results are not good. We lead the world in lacking a medical system that produces good results. We have
- The highest rate of death by violence, by a stunning margin
- The highest rate of death by car accident, also dramatically so
- The highest chance that a child will die before age 5
- The second-highest rate of death by coronary heart disease
- The second-highest rate of death by lung disease
- The highest teen pregnancy rate
- The highest rate of women dying due to complications of pregnancy and childbirth
Thursday, January 10, 2013
Checking Social Security Estimates
There was a disturbing article in Sunday's NY Times. The authors, Gary King and Samir Soneji, believe that the actuaries in the Social Security Administration have underestimated how long we will be living. If the SSA has erred in this estimate, the result will be dire; the fund will run dry two years earlier than the government estimate.
The SSA does not consider the effects on longevity of the decline in smoking in this country. In 1955 the percent of smokers in our population has declined a lot; for example, the percent of 40-year-olds who smoke has gone from 50% to about 10%. Further, we have improved the treatment of cardiovascular diseases quite a bit; deaths of this type for those 65 - 69 have been cut in half, from 300 per 100,000 people in 1980 to 150 today.
In addition, the authors think that the SSA's assumptions as to life expectancy fall short of reality. They group too many causes into a single group, risk factors and demographics are not isolated as much as they should be.
By the authors' calculations the SSA has underestimated the life of women from 8 to 14 months depending on age and that of men from 12 to 19 months.
This is a very serious issue and another reason for a dispassionate task force to review Social Security in depth.
The authors' work can be found here.
The SSA does not consider the effects on longevity of the decline in smoking in this country. In 1955 the percent of smokers in our population has declined a lot; for example, the percent of 40-year-olds who smoke has gone from 50% to about 10%. Further, we have improved the treatment of cardiovascular diseases quite a bit; deaths of this type for those 65 - 69 have been cut in half, from 300 per 100,000 people in 1980 to 150 today.
In addition, the authors think that the SSA's assumptions as to life expectancy fall short of reality. They group too many causes into a single group, risk factors and demographics are not isolated as much as they should be.
By the authors' calculations the SSA has underestimated the life of women from 8 to 14 months depending on age and that of men from 12 to 19 months.
This is a very serious issue and another reason for a dispassionate task force to review Social Security in depth.
The authors' work can be found here.
How can one disagree with Buffett?
Warren Buffett is quoted as saying, "The banks will not get this country in trouble, I guarantee it.” This seems like a real stretch. At the time of the financial crisis Buffett put his money where his mouth is now and bought into Wells Fargo, BofA, Goldman Sachs. If he sold now, he would make a bundle. Would he really put money into them now? I don't see where there is much protection from the banks repeating their practices that got us into trouble, particularly when none of them went to jail for their actions.
Jumping the transplant line
Germany has a major problem with organ transplants. Transplant centers across Germany have been placed under criminal investigation over allegations that they had manipulated donor waiting lists so that certain patients could be moved up the waiting list. So far, 107 cases have come to light.
The waiting lists were manipulated by the doctors submitting false information as to the severity of the illness of certain patients. These centers are not your run-of-the-mill operations; they are university teaching hospitals that are considered among the finest in the country.
Needless to say, the number of organ donations is down considerably.
The waiting lists were manipulated by the doctors submitting false information as to the severity of the illness of certain patients. These centers are not your run-of-the-mill operations; they are university teaching hospitals that are considered among the finest in the country.
Needless to say, the number of organ donations is down considerably.
Wednesday, January 09, 2013
He wasn't so bad
I admit I was not a fan of Richard Nixon when he was a political player. My views have changed, especially when you look at those who succeeded him, especially the last two, George W and Barack.
McClatchy has a retrospective of him on what would have been his hundredth birthday. One of his former aides who now helps curate the Nixon Museum has this summary, "His greatest legacy is that he left the world a safer and more peaceful place, and he appreciated the difference government could make in the lives of average Americans. He knew how to get things done.” Some of the good things he got done include: the opening to China, the SALT treaty, the EPA, expansion of affirmative action.
McClatchy has a retrospective of him on what would have been his hundredth birthday. One of his former aides who now helps curate the Nixon Museum has this summary, "His greatest legacy is that he left the world a safer and more peaceful place, and he appreciated the difference government could make in the lives of average Americans. He knew how to get things done.” Some of the good things he got done include: the opening to China, the SALT treaty, the EPA, expansion of affirmative action.
The government is not a household or a business
Neither a household nor a business can create money. Only the government can. It's hard to understand, but it is true. Comparing your options in tough times with those of the government ignores that reality. Maybe we should look more seriously at the trillion dollar coin idea.
Leave it to the ratings agencies
The Basel Committee on Banking Supervision decided to allow banks to include weaker securities in computing their liquidity coverage ratio, which, as the name implies, is a measure of the riskiness of banks' investments. Of course, the committee did not say "weaker securities", but it is still relying on the supposedly independent ratings agencies to actually provide a realistic rating, just as they did when rating 90% of CDOs as AAA.
Tuesday, January 08, 2013
A weakness in the Volcker rule
The rule places limits on short-term trading, defined as being within 60 days, for the account of the investment bank; there are no limits on longer term trading. That's probably why Lloyd Blankfein of Goldman Sachs could say, “We shut off that activity,” at a meeting of the Economic Club of DC in July. Its Multi-Strategy Investing (MSI) subsidiary does invest a good sum - about $1 billion of Goldman's
own funds on stocks and bonds; the subsidiary has no clients. For some reason, Goldman does not list MSI's name or its results anywhere, although it is very profitable.
Monday, January 07, 2013
The victim is as guilty as her rapists.
That's a quote from a supposed spiritual leader. He was commenting on what has become a 'cause celebre' in India. A young woman was raped on a bus late last year. She died from the injuries.
It is a different world. Isn't it?
It is a different world. Isn't it?
Sunday, January 06, 2013
A Dog and Pony Show?
Was the Independent Foreclosure Review simply for show? It certainly looks that way as the government is about to sign a deal whereby the banks would pay $10 billion in fines. $3.75 billion would go to the homeowners affected. Since there could be as many as 4,000,000 home owners involved, it's not much per homeowner.
The government is settling supposedly because the banks’ mandatory review of loan files was arduous and expensive, and would not yield promised relief to homeowners.
Again, the banks pay money, no one goes to jail.
The government is settling supposedly because the banks’ mandatory review of loan files was arduous and expensive, and would not yield promised relief to homeowners.
Again, the banks pay money, no one goes to jail.
Cats can do anything
Or maybe it's only Brazilian cats who help prisoners. Prison guards caught a cat sneaking into a prison. Taped to its body were a
cellphone, drills, small saws and other contraband taped to its body. The cat was familiar to authorities as prisoners had raised it and relatives would often take it home after a prison visit.
In Italy a cat visits his master's tomb and brings him little presents (little twigs, leaves, toothpicks, plastic cups, etc. ) daily. He has been doing this for the year after his master's death. I guess he found out where the cemetery was when he followed his master's funeral procession last year.
Friday, January 04, 2013
What's in a name?
Some think a lot. Some countries even go so far as to limit the names you can give to your children.
For example, in Iceland you must select from the Personal Names Register or apply to a special committee that has the power to say yea or nay. The names on the register fit Icelandic grammar and pronunciation rules and that officials maintain will protect children from embarrassment. Denmark also has an approved list of names.
Swedish children's names must meet with the approval of the country's tax authorities. German children "must be given names that clearly denote gender and they cannot be given family names as first names" and there are complicated restrictions on combining last names with hyphens. China does not allow names using Arabic numerals, foreign languages and symbols that do not belong to Chinese minority languages,
For example, in Iceland you must select from the Personal Names Register or apply to a special committee that has the power to say yea or nay. The names on the register fit Icelandic grammar and pronunciation rules and that officials maintain will protect children from embarrassment. Denmark also has an approved list of names.
Swedish children's names must meet with the approval of the country's tax authorities. German children "must be given names that clearly denote gender and they cannot be given family names as first names" and there are complicated restrictions on combining last names with hyphens. China does not allow names using Arabic numerals, foreign languages and symbols that do not belong to Chinese minority languages,
Put on weight
That's what Israel wants its models to do. It just passed a law banning unnaturally thin models from the catwalk and restricting ads that are digitally altered to make models look skinnier. The law was triggered by Adi Barkan, a fashion photographer and modelling agent, who had one of his models die from anorexia while he was visiting her in the hospital.
Perhaps the name of your country must begin with "I", as Italy and India have also banned ultrathin models from the catwalk.
Maybe our politicians are not so bad
Take 'bad' in the sense of evil, as ours are truly bad representatives.
In India there appears to be a relatively high number of bad-in-the-sense-of-evil politicians. It is likely that India has many more government representatives as their population is triple ours, but perhaps not. Anyway here are some numbers from a report put together by an NGO. Note that India uses the terms MLA for state-level assemblies and MP for members of parliament.Note also that the report covers the past five years:
In India there appears to be a relatively high number of bad-in-the-sense-of-evil politicians. It is likely that India has many more government representatives as their population is triple ours, but perhaps not. Anyway here are some numbers from a report put together by an NGO. Note that India uses the terms MLA for state-level assemblies and MP for members of parliament.Note also that the report covers the past five years:
- 6 MLAs had charges of rape against them at the time of their election
- 36 MLAs have charges of crimes against women including assault and insulting the modesty of a woman
- 2 MPs have charges against them of using cruelty to outrage a woman's modesty
- 27 candidates for state elections are accused with raping women
- 260 candidates for state elections are accused of crimes against women
Thursday, January 03, 2013
Justified Killings
The ACLU and NY Times have filed Freedom of Information Requests with regard to the administration's policy of killing by drones. In at least three cases the people killed have been American citizens. There was no indictment, no trial. Just death. Here is the core of the decision denying the requests (with my emphases):
This is the country we've become?
However, this Court is constrained by law, and under the law, I can only conclude that the Government has not violated FOIA by refusing to turn over the documents sought in the FOIA requests, and so cannot be compelled by this court of law to explain in detail the reasons why its actions do not violate the Constitution and laws of the United States. The Alice-in-Wonderland nature of this pronouncement is not lost on me; but after careful and extensive consideration, I find myself stuck in a paradoxical situation in which I cannot solve a problem because of contradictory constraints and rules - a veritable Catch-22. I can find no way around the thicket of laws and precedents that effectively allow the Executive Branch of our Government to proclaim as perfectly lawful certain actions that seem on their face incompatible with our Constitution and laws, while keeping the reasons for their conclusion a secret. But under the law as I understand it to have developed, the Government's motion for summary judgment must be granted, and the cross-motions by the ACLU and the Times denied, except in one limited respect. Final rulings on that discrete issue must abide further information from the Government.
This is the country we've become?
Wednesday, January 02, 2013
A Moderate Republican
In December this is how Obama described his policies in an interview on Univision, "The truth of the matter is that my policies are so mainstream that if I
had set the same policies that I had back in the 1980s, I would be
considered a moderate Republican." Bruce Bartlett picked up on that comment to cement his point that the Democrats of the 21st century are quite different, in fact more conservative, than the Democrats of the 20th century. Clinton began the move to the right. The decline of the unions accelerated it.
Bartlett's thesis is a good explanation of why Obama has been such a disappointment to we liberals, who believed Obama's message that he would be an instrument of badly-needed change.
Bartlett's thesis is a good explanation of why Obama has been such a disappointment to we liberals, who believed Obama's message that he would be an instrument of badly-needed change.
Tuesday, January 01, 2013
Trepidations
Mark Thoma has summarized the positions of four economists with regard to the deal Obama has worked out with the Senate. None of the economists thinks we have done the right thing; they all hope that the House votes the deal down.
Brad DeLong thinks that little has been done to avoid the effects of austerity; the necessary fiscal stimulus is just not there. Paul Krugman worries that Obama's negotiations in the current situation do not augur well for the fight coming down the pike:
Brad DeLong thinks that little has been done to avoid the effects of austerity; the necessary fiscal stimulus is just not there. Paul Krugman worries that Obama's negotiations in the current situation do not augur well for the fight coming down the pike:
So why the bad taste in progressives’ mouths? It has less to do with where Obama ended up than with how he got there. He kept drawing lines in the sand, then erasing them and retreating to a new position. And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff bodes very badly for the confrontation looming in a few weeks over the debt ceiling.Jeffrey Sachs echoes Krugman and DeLong:
The White House should have put forward its own tax plan with adequate overall revenues. It could have told Congress to adopt the alternative plan or simply accept the expiration of the Bush tax cuts. That was the time for negotiating leverage. Instead, the White House gave up the revenues permanently and without a fight.Greg Mankiw, the only conservative discussed, is complaining that the deal did not follow the Simpson-Bowles approach and lower social insurance costs.
The deal appears to offer no entitlement reforms, no tax reform, and higher marginal tax rates.The year is not starting out well. Obama has yet to act as those who voted for him want him to act. He has not learned anything in the past four years.
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