Tag: ek Politics

Notional Value

Crossposted from The Stars Hollow Gazette

Recently some people of my acquaintance have had traffic accidents that damaged their cars (fortunately there were no injuries).

They had insurance which, over the lifetime of the vehicle, amounted to much more than its replacement cost.  So an adjuster came out and examined the damage, determined whether or not repair exceeded replacement cost and issued a check for the lower of the two values.

In the mean time the insurance company had the use of the payment money which they invested and collected the profits of that investment.

At least that’s the way insurance is supposed to work.

Accountancy is boring.  I want to be a Lion Tamer!

What If Lehman Happened Today?

By Michael Hirsh and Stacy Kaper, National Journal

Updated: December 1, 2011 5:19 p.m.

And now Gensler-a former Goldman Sachs executive whose stand against his erstwhile Wall Street comrades has won praise from progressives-is facing down the biggest Goliath of all. Europe’s raging financial crisis may not leave Gensler the time he needs to get a handle on the vast global market in derivatives, the arcane instruments used to bet on everything from interest rates to currencies to credit default swaps on the Continent. At $708 trillion (yes, trillion), the derivatives trade is already much larger than it was during the 2008 crisis. Just as last time, this opaque market may hold the key to whether the evolving eurozone disaster causes another market meltdown worldwide. With a staff of only 712 (roughly unchanged from the 1990s, when financial products where much less complex), the CFTC must regulate markets seven times the size of the futures market it used to oversee. Mostly, it supervises America’s $300 trillion portion of the global derivatives trade. “Until we complete this task, the American people remain at risk,” Gensler warned in an interview with National Journal at his office in downtown Washington. “We are midstream” in rule-writing and in requiring firms to report their trading positions, he admits. “The only thing that we would have right now is the data that banks and others are voluntarily reporting.” Even after the rules are written, Gensler says, “we won’t necessarily have the cops on the beat to oversee the market.”



The most frightening (but still very plausible) scenario is that some of the CDS dealers won’t have capital to pay off the swaps as they are “triggered” by the plummeting value of European bonds. That shortfall could lead to defaults on trillions of dollars in other types of derivatives. Something similar occurred when Lehman Brothers collapsed in September 2008; it failed to make good on nearly 10,000 contracts for swaps and derivatives. Lehman was severely over-leveraged, relied too heavily on short-term funding, and ultimately succumbed to a liquidity run. “That’s exactly what’s going to bring the system down,” says Michael Greenberger, a derivatives expert at the University of Maryland who once served as a senior CFTC official. “Here you’ve got people holding on to potentially valueless government debt.”



A panic may be just around the corner. The International Swaps and Derivatives Association appears to be trying to tighten its standards for paying out credit default swaps on euro debt, making it more difficult to collect on them, the Financial Times reported this week. That decision has angered the firms holding the CDS insurance. The situation also has similarities to 2008 and the failure of American International Group, the world’s biggest dealer of credit default swaps, which required a $150 billion bailout by the U.S. government. AIG imploded because it couldn’t keep up with the triggers that required it to post more collateral. “The real problem is that CDS moves the financial consequences of a default much further up the line,” says Dennis Kelleher, the head of Better Markets, a D.C.-based activist group. “So, long before someone defaults, be it an institution or a country, anyone who has written insurance-ie, credit default swaps-has to start posting massive amounts of collateral.”



“We still don’t have transparency in the swaps market,” Gensler says. “There is $20 of swaps for every dollar in our economy.”

Or so it would have been, if certain modern theories about the shape of the world had not proved to be disastrously wrong.

A House of Cards Behind a Jet Engine

Crossposted from The Stars Hollow Gazette

Germany’s Hidden Risk

By Peter Coy, BusinessWeek

December 14, 2011, 11:00 PM EST

Germany’s Bundesbank-BuBa for short-has quietly, automatically lent €495 billion to the European Central Bank via Target2. That lending has balanced correspondingly huge borrowings from Target2 by the central banks of weaker nations including Greece, Ireland, and Portugal-and lately Spain, Italy, and even France. They are technically “claims,” not loans. To find them you have to root around in the footnotes of the reports of the 17 national central banks of the euro zone.

If the euro zone breaks into sorry little pieces, Germany could possibly lose its entire €495 billion claim. That’s more than $650 billion. It is 60 percent bigger than Germany’s annual federal budget-and larger than the lending under the European Financial Stability Facility and other aid programs that have received more scrutiny.



Germany’s Bundesbank-BuBa for short-has quietly, automatically lent €495 billion to the European Central Bank via Target2. That lending has balanced correspondingly huge borrowings from Target2 by the central banks of weaker nations including Greece, Ireland, and Portugal-and lately Spain, Italy, and even France. They are technically “claims,” not loans. To find them you have to root around in the footnotes of the reports of the 17 national central banks of the euro zone.

If the euro zone breaks into sorry little pieces, Germany could possibly lose its entire €495 billion claim. That’s more than $650 billion. It is 60 percent bigger than Germany’s annual federal budget-and larger than the lending under the European Financial Stability Facility and other aid programs that have received more scrutiny.



Here’s how it happened. When a Greek businessperson buys a truck from Germany with money from a checking account, the transaction is carried out between the two nations’ central banks via Target2. The truck seller isn’t interested in financing the purchase-it wants euros now. So the Bundesbank has to come up with money in order to deposit it in the seller’s checking account. In accounting terms, the Bundesbank acquires a liability (what it owes to the truck seller’s checking account) and an asset (a claim on the ECB).

The transformation of the Bundesbank’s balance sheet through this slow-but-steady process has been stunning-and to hard-money Germans, sickening. At the end of 2006, Target claims represented just 7 percent of the Bundesbank’s assets. By this October they represented 64 percent, according to data compiled by economists Aaron Tornell of the University of California-Los Angeles and Frank Westermann of Germany’s University of Osnabrück. The collateral the ECB holds to back those loans is primarily the sovereign debt of the euro zone’s weakest nations. It’s a far cry from the gold that’s the Bundesbank’s second-biggest asset (17 percent).



As Europe’s financial crisis has worsened, the ECB has benevolently turned a blind eye to the poor quality of collateral posted by the Bank of Greece and others. But a reckoning is due. In an interview with Bloomberg News on Dec. 13, Bundesbank President Jens Weidmann expressed more concern about the collateral than the volume of ECB balances. “In a situation like the current one, where we are providing solvent banks with liquidity,” he said, “for me the size of the Target2 balances is less important than the risks we are taking on. It is my concern that we limit these risks as much as possible.”



Germany faces a dilemma familiar to anyone who has ever made a bad loan-whether to keep throwing good money after bad to keep the debtor afloat or pull the plug and suffer the consequences. The half-trillion-euro claim the Bundesbank has on the ECB is an important but poorly understood factor in the decisions over the future of the euro.

European Banks Get ‘False Deleveraging’ in Seller-Financed Deals

By Anne-Sylvaine Chassany, Simon Packard and Neil Callanan, Bloomberg News

Nov 22, 2011 7:01 PM ET

Because most buyers of distressed assets fund purchases with debt, which has become increasingly expensive and difficult to obtain, banks are financing transactions themselves, even if it means retaining loans on their balance sheets. That will slow deleveraging and make more asset sales necessary, analysts say.

“A lot of those asset sales might be dependent on the banks themselves, the sellers, providing financing to the buyers,” Raoul Leonard, a London-based RBS analyst covering southern European banks, said on a conference call with clients Oct. 20, without referring to any specific deal. “It’ll be almost false deleveraging going on, but it’s off your book and you can argue that the risk-weighting changes.”



European banks will dispose of less than 100 billion euros of the more than 500 billion euros of distressed loans and other impaired assets because they can’t afford to take losses on the sales, Huw van Steenis, a Morgan Stanley analyst in London, wrote in a Nov. 13 note. Banks may have to unload some of their good assets to U.S. or Asian competitors, he said. Van Steenis estimated banks in Europe may shrink assets by between 1.5 trillion euros and 2.5 trillion euros in two years.

The IMF-ECB ‘Plan’ – Fig-Leaf Upon Fig-Leaf

Authors: Warren Mosler & Philip Pilkington, EconoMonitor

November 29th, 2011

The latest Euro fashion is for the IMF to fund distressed sovereigns while being, in turn, funded by the ECB – while all this includes the fashiony gimmick that the IMF guarantees the loans.

The end result, of course, is that the ECB writes the check – which is precisely what it takes to make any of these schemes work. In fact, whenever you hear of any of these wacky evasions… er… sensible proposals, you can be safe in the knowledge that it will always work as long as it is the ECB writing the check. But we digress; and so here is how this latest one scheme will function.

When the ECB buys European national government bonds it credits member bank accounts on the ECB’s spreadsheet. Those accounts count as ‘money’ while the bonds did not count as ‘money’ and so, this action is said to be ‘printing money’ – and printing money is bad for some reason or other according to our German friends… and so the ECB undertakes a further step: sterilisation.

The ECB offers different euro accounts – which are also just numbers on an ECB spreadsheet – with relatively short maturities that pay interest. This is called ‘sterilisation’ because these deposits don’t technically count as money. Cool, huh?



When the ECB buys Special Drawing Rights from the IMF it credits an IMF account with the required euros. This does not count as ‘printing money’. And when the IMF loans those funds on to Italy or whoever, it does not count as ‘printing money’ either even though, when all is said and done, the same euros sit in the same ECB accounts and they effectively come from the same place. How clever.

ECB puts emergency plans in place as German banks feel the heat

Heather Stewart, Jill Treanor and Patrick Collinson, The Guardian

Thursday 8 December 2011 15.33 EST

Following European-wide “stress tests”, Germany’s banks were found to need more than double the amount of capital anticipated, with the focus immediately turning on Commerzbank, in which the German state already owns a 25% stake, and amid speculation the government may need to step in with a fresh capital injection.



When the initial results of stress tests intended to protect banks against the eurozone crisis were announced in October the European Banking Authority announced that €106bn (£90bn) of extra capital would be needed to shore up banks against the eurozone crisis and restore confidence in the battered sector. But that shortfall was revised up to €115bn and the gap for Germany’s banks raised to €13.1bn from €5.2bn. Commerzbank alone needs €5.3bn of the total for Germany, up from €3bn, Deutsche Bank needs €3.2bn, while the amounts needed by Spanish banks remain unchanged at €26.2bn – with Santander needing to find €15bn of the total. Commerzbank is confident it can find the extra capital by its own means.



Those banks with shortfalls have been given until 20 January to present their proposals to their regulators and must find ways to fill gaps without leading to a “reduced flow of lending to the EU’s real economy”. The EBA reiterated that they should reduce bonuses and retain their profits to bolster their capital before attempting assets sales. Efforts already announced by French banks reduced their shortfall by €1.5bn to €7.3bn.

Europe Still Heading For Collapse

Author: Tim Duy, EconoMonitor

December 15th, 2011

The half-life of the effectiveness of European summits is growing increasingly shorter.  While I have been a long-term Europessimist, market participants are more willing to trade on whatever appears to be positive news, thus markets jump whenever it appears the Europeans are taking action.  But eventually the game will wear thin as market participants increasingly realize European “solutions” are never more than half-measures intended to kick the can down the road another few months.

And the last summit was no exception.  The reality is quickly sinking in that, relative to the dimensions of the challenge, very little was really accomplished two weeks ago.  And very little will be accomplished until European leaders come to the realization that they continue to treat the symptoms of the disease, not the cause of the disease.  They need to find a mechanism to address Europe’s internal imbalances that does not rely exclusively on deflation as a cure.



Arguably, European policymakers might see the fundamental problem, but also recognize a real solution in years away.



Europe doesn’t have years.  The vice of austerity packages will eventually crush to hard, and the cost of staying within the Euro will exceed the costs of exit.

Meanwhile, the ECB is at best having mixed results.  On one hand, recent actions appear to have stabilized government debt markets in Spain, Belgium, and France.  On the other, Italian yields have retraced much of their collapse.  Probably more importantly, however, stabilization of the banking crisis remains elusive.



Germany needs to issue a massive amount of debt to support demand in Europe, even at the cost of higher relative inflation.  And, better yet, to support debt writedowns in the periphery.  The response from Germany:  Nein.

Bottom Line:  I still don’t see where this ends well.  Play the news cycle if you are so inclined, but keep one eye on the key issue.  Is Europe working to resolve their fundamental internal imbalances with anything other than deflation?  As long as the answer continues to be “no,” be afraid.  Be very afraid.

A Glass Half Full

Crossposted from The Stars Hollow Gazette

Sigh.  I’m reluctant to jump on the bandwagon but there is a section of the Left/Democrat blogosphere that agrees with dday in his assessment that the inclusion of a Keystone XL deadline in the 2 month Social Security Tax Holiday extension (bad for reasons not relevant here) contrary to conventional Washington “Wisdom” actually effectively kills the project.

Republicans Demand to Kill the Keystone XL Pipeline

By: David Dayen, Firedog Lake

Friday December 16, 2011 10:54 am

The provision would force the Administration to decide on a permit for the pipeline within 60 days, and that the permit would automatically be granted otherwise. The President could decide that the pipeline production “would not serve the national interest,” and deny the permit. Politico goes on to claim that this decision would be “fraught with political risks in the thick of an election year.”

No it wouldn’t. The State Department has already come out and said that they would not have enough time within 60 days to assess the environmental risks from the pipeline project. So they would have to deny the permit if forced into a 60-day decision-making process. And that serves as the excuse. It becomes a political discussion, like any other, and calling it a “risk” is really overblown.

Senate Passes Two-Month Extension for Payroll Tax Cut, Unemployment Benefits, Doc Fix

By: David Dayen, Firedog Lake

Saturday December 17, 2011 8:41 am

The second measure concerns the Keystone XL pipeline. There’s been a ton of misinformation around this part. I know some people have termed this a GOP victory but I don’t see why. Even the venerable 350.org rushed out a call to action last night saying that Obama caved on the pipeline and that everyone must call to get him to veto the bill. They are either playing along or don’t understand that this provision will ensure a denial of the permit in rapid fashion.

The bill stipulates that the Administration must make an up-or-down decision on the permit for the pipeline within two months of the signing of this act. The State Department has already said that doesn’t leave them enough time to explore the re-routing both they and the state of Nebraska and pipeline owner TransCanada have said they want to consider, to avoid the Ogalalla Sand Hills region, and particularly the aquifer that supplies water to the area. So if faced with a 60-day timeline, the State Department said, they would have to deny the permit. Earlier in the week the White House agreed with them, saying that The House bill simply shortens the review process in a way that virtually guarantees that the pipeline will NOT be approved. So adding this provision kills the pipeline in the short term.

And Republicans, by the way, KNOW this. They want the President to deny the permit. The tell is that Newt Gingrich spoke up about the pipeline in the debate on Thursday night. Republicans want to position Obama as someone destroying US jobs to satisfy environmentalists. They also would like to say that he is stopping the supply of domestic energy production. None of this is true with regards to Keystone XL. The pipeline won’t create jobs, all the energy production in this case comes from Canada, and the President actually has presided over a boom in domestic energy production, although that hasn’t led to a drop in oil prices because we simply don’t have that much oil domestically.

But the likely outcome on Keystone XL fits a narrative for the GOP. So they want to see the President cancel the pipeline to make it a campaign issue. The counter-argument for the Democrats is that the demand by House Republicans to give an answer within 60 days on a pipeline whose route remained in flux killed the permit. So this becomes your run-of-the-mill he-said/she-said, and the pipeline doesn’t get built. My understanding is that it would not impact the possibility of the pipeline being approved after the elections, when more time is given to the environmental impact. So that’s a fight environmentalists will still have to wage. In the short term, within 60 days they will have a President reject the pipeline, and then they can go to their lists and tell everyone how their pressure got it done. But they’ll have to extend a note of gratitude to Republicans, who made it all possible.

If those are not adequately sourced enough for you there is also The Hill

Democrats: Concession to GOP on Keystone will force Obama to kill pipeline

By Alexander Bolton, The Hill

12/16/11 09:08 PM ET

Republicans hailed inclusion of the pipeline provision as a victory, but Democrats said the practical effect of the language would be to kill the project.

“They’ve just killed the Keystone pipeline. They killed it because they forced the president to make a decision before he can make it so he’s not going to move forward with it,” said Sen. Barbara Boxer (D-Calif.), chairwoman of the Senate Environment and Public Works Committee and an ally of environmental groups.



A senior Obama administration official noted that the president said he would not accept an attempt by Congress to mandate construction before adequate review of health and safety regulations.

Regardless of the current decision there’s no reason at all the next Administration couldn’t revisit the proposed project provided it’s still economically viable, but that seems less and less likely with every delay.  Pushing the deadline to 2013 is a good thing, but not a stake in the heart.

I’m an optimist.

Not that it does any good.

Sanity Clause

Crossposted from The Stars Hollow Gazette

You can’t a fool a me.  There ain’t no Sanity Clause.

Barry Ritholtz made a not so bold prediction at the beginning of December that I highlighted on the 5th (Pepper Spray Saves Santa).  Even way back in the dim dark mists of History that those born yesterday don’t remember and I was working retail shipping and receiving we knew holiday sales reports were thin tissues of lies put together by buyers to save their asses from the piles of remainders we’d get stuck inventorying in February after marking it down to nothing.

Rithholtz followed up with this-

Retail Sales Disappoint on False Black Friday Reports

Author: Barry Ritholtz, EconoMonitor

December 13th, 2011

Today, we learn that many breathless forecasts from NRF to ShopperTrak were so much hot air and empty hype: Sales were flat to up only modestly. Total U.S. retail sales in November gained only 0.2%, following a 0.6% October. Even that month was revised downwards.

Retailers themselves may pay the price for their massive discounting: Not only might their quarterly earnings be affected by the margin pressure, but they continually train investors shoppers to hunt for discounts. Retail therapy and sport shopping are being replaced by extreme couponing and sites like Living Social and Groupon.

We are left to ponder what those folks who were lining up late at night at Wal-Mart and Best Buy for bargains were doing. No, it was not a sign of “shopping enthusiasm,” it was a sign of extreme economic distress. No one who can afford otherwise goes out Thanksgiving night to stand in the cold with a crowd, to fight the stampeding, pepper-spraying mob for a discounted X Box.

Here is your simple formula:

Thanksgiving Thursday night shopping + record food stamps = Bad Economy

I almost pointed that out because I’m greedy for any affirmation of sanity, but today, like a Red Nosed Rudolph, we have The New York Times reporting-

As Sales Lag, Stores Shuffle the Calendar

By STEPHANIE CLIFFORD, The New York Times

Published: December 15, 2011

A sharp drop in shopping since Thanksgiving weekend has prompted worried retailers to slash prices, extend specials, stay open later – and rewrite the calendar.

Usually one of the most heavily discounted shopping days of the year, the Saturday before Christmas – it falls on Dec. 24 this year – is too crucial to retailers’ holiday sales to be left in the hands of procrastinating Christmas Eve shoppers. Instead, many of the promotions pegged to “Super Saturday,” as the day is known in the retail industry, are now scheduled for this Saturday – a full eight days before Christmas.



The dueling Saturdays might seem like a lot of consternation about nothing to consumers weary of faux shopping events: Black Friday, Sofa Sunday, Cyber Monday, Red Tuesday, Mobile Sunday, Green Monday and Free Shipping Day (Friday this year, for those keeping track).

But the worries are real for retailers who are seeing the season slip away from them, and the potential effects on the economy are considerable.

After a Thanksgiving weekend that set records in terms of sales, in-store shopping has dropped significantly in the two weeks that followed. The cumulative drop from Thanksgiving-week sales in those weeks, of 2.4 percent, was the biggest since 2000, according to the International Council of Shopping Centers. The Commerce Department said this week that retail sales in November, including online sales, came in lower than analysts had expected, rising just 0.2 percent to $399.3 billion, the smallest increase in five months.

“That suggests we may not get quite as much momentum in the holiday-sales season as people were expecting,” said Peter Buchanan, an economist at CIBC World Markets. Given that consumer spending makes up the majority of the gross domestic product, he said, “the chances of having a really decent recovery are rather limited if consumers continue to hold back.”Almost 40 percent of Americans said they were done with their holiday shopping as of last week, according to a survey from America’s Research Group and UBS, suggesting there may not be too much spending left to do.

Merry eksmas suckers.

He may look like an idiot and talk like an idiot, but don’t let that fool you. He really is an idiot.

What real justice looks like.

Crossposted from The Stars Hollow Gazette

I don’t know if you woke up as horribly depressed today as I did, but I spent a long time looking for a single nugget of good news; that someone, somewhere still believed in Justice and The Rule of Law.

JP Morgan Hit by Ripple Effects of Rakoff Decisions Nixing SEC No Admission Settlements

Yves Smith, Naked Capitalism

Wednesday, December 14, 2011

Alison Frankel at Reuters highlights a new New York appellate court decision where JP Morgan is being hoist on the Rakoff petard. Bear Stearns, which is now owned by JP Morgan, entered into a $250 million settlement in 2006 over allegations that it cheated customers by engaging in impermissible market timing. The agreement contained standard SEC “without admitting wrongdoing or denying” language. The payment broke down into $160 million of disgorgement and $90 million of penalties.

What may surprise many readers is that the $160 million disgorgment was covered by insurance, or at least JP Morgan thought it was.



The insurers said no dice, and JP Morgan took them to court to try to force them to pay. The lower court decided in favor of JP Morgan, but the appeals court reversed.



Putting on a public policy, rather than a legal hat, insurance that has the effect of letting companies and boards buy their way out of the economic consequences of bad conduct is a terrible idea. Even though it is widely accepted that no one would become a director of a public company ex directors and officers insurance, the consequences are detrimental. Why should, for instance, the directors of Lehman not be sued into penury? If we didn’t have D&O insurance, companies would have to pay directors a prince’s ransom to do the job, and a director would have to work really really hard at oversight. That would mean he could probably only sit on one board (ending the board as high level social club phenomenon, another plus) and would do a vastly better job. You’d also see an end to directors who serve as mere decoration (nice enough people, say college presidents or heads of heavyweight not for profits) but add bupkis in terms of monitoring management.

Now I’ll admit we have not seen all the implications of the Rakoff decision, but this first one seems entirely salutary. I suspect on balance, the effect will be to give companies fewer “get out of jail free” cards, which is something that everyone but the SEC and public company executive should welcome.

The Dictatorship of the “Democratic” Party

Crossposted from The Stars Hollow Gazette

Immigration Officials Picking Up US Citizens for Deportation

By: David Dayen, Firedog Lake

Wednesday December 14, 2011 7:00 am

The Obama Administration swears that their deportation program has only captured criminals and sent them back to their home countries. Recently acquired data shows that to be false. Now we’re learning that not only non-criminals have been caught up in the immigration net. So have American citizens.



There are few hard statistics on the number of American citizens held for deportation, but obviously when you get more aggressive about deporting people – as the Obama Administration has, with a record 1.1 million deportations during his tenure – you’re going to get a higher number of incidents like this. And these are wrongful arrests, illegal actions being taken by immigration authorities. It’s far more than just the cost of doing business.

The cases profiled here involved individuals charged on misdemeanors. But we know that represents a minority of those deported. So the likelihood is high that there have been cases of American citizens not convicted of a crime somehow falling into the immigration net and getting scheduled for deportation. In fact, a few of them probably were deported, though ICE claims that they cancel any deportation orders if the individual claims citizenship.

And this, from an ACLU lawyer, is correct: “It’s sort of like the canary in the mine. If those who have the full due process rights of U.S. citizens are being detained, it tells us a lot about potentially unlawful people who do not have those protections.” Exactly.

Florida’s Politicians (But Not Its Residents) Love Private Prisons

By: WhyIHateCCA, Firedog Lake

Wednesday December 14, 2011 10:45 am

Congresswoman Debbie Wasserman-Schultz represents Southwest Ranches, Florida, which has been at the epicenter of a debate over a proposed immigration detention facility. Residents of the town have consistently demonstrated their opposition to the facility, which they feel was designed and planned without much public knowledge of the proceedings.

Basically, they think they have been fleeced by CCA, who hopes to build the facility on land it already owns, into having a detention center that they fear will lower property values and present a risk to public safety.

Unfortunately, they’ve got a pretty poor representative in Ms. Wasserman, who’s basically taking a “lesser of available evils” approach. She initially called a town hall meeting to allow residents to voice their opposition and learn more about the project. After more than 250 people showed up to let CCA and the town council know they didn’t want a private prison, Wasserman, who had called the meeting, decided she would support the project. She now thinks it’s a good idea and that the town should move forward, saying she thinks “it is going to be far better to have that ICE detention center there than to have any other facility that would have a much more negative impact on residents there.” Other than a lead paint producing puppy mill, I can’t really imagine what would be worse for a community than a privately operated, for-profit human rights violations incubator. But there’s no chance she could have been partially swayed by the nearly $20 million CCA has spent lobbying the federal government over the past decade. Right?

Unfortunately for the residents of Southwest Ranches, Wasserman isn’t alone in ignoring her constituents interests and supporting a company with a long track record of failing to live up to its contracts. The mayor of Southwest Ranches just basically told his constituents to pound sand, because the deal is done. CCA owns the land, and has for a decade, so he says there’s really nothing residents can do to stop the construction at this point.

After FBI Director Testimony, Veto of Defense Authorization Bill Appears Likely

By: David Dayen, Firedog Lake

Wednesday December 14, 2011 11:32 am

Mueller made the comments despite changes to the bill that attempted to give the Administration several loopholes to bypass indefinite military detention on a case-by-case basis. So coming after the conference committee report, it looks like the White House counter-terrorism advisers will recommend a veto. It’s highly unlikely to believe that Mueller was freelancing here.

As we’ve discussed, this does not reflect a White House uncomfortable with statutory indefinite military detention. The Administration opposes the bill because it would put too MANY constraints on their counter-terrorism activities. They would prefer to exist in a legal gray area, without binding rules on indefinite detention. In this case, Mueller appears upset that the military would get first crack at these terrorist suspects rather than the FBI. So there is no nobility here. But the result could be the one civil liberties defenders advocate: a veto of the NDAA.

Let’s just review where we’re at, then. The government could shut down on Friday. The parties are far apart on a bill to avoid the expiration of a payroll tax reduction and extended unemployment benefits, both of which would create a fiscal drag of up to 1% of GDP. Doctors will see a 27% cut in their reimbursement rate for Medicare on January 1 if nothing is done. And the one area where the parties agree, this defense authorization bill, is likely to draw a Presidential veto.

It’s such a wonder why Americans hold no faith in their government.

Record High Anti-Incumbent Sentiment Toward Congress

by Frank Newport, Gallup

December 9, 2011

PRINCETON, NJ — About three-quarters of registered voters (76%) say most members of Congress do not deserve re-election, the highest such percentage Gallup has measured in its 19-year history of asking this question. The 20% who say most members deserve to be re-elected is also a record low, by one percentage point.



A substantial majority of Republican (75%), independent (82%), and Democratic (68%) voters agree that most members of Congress do not deserve re-election — a sign of rare consensus about the legislative body in which both parties currently hold a leadership stake.



How this antipathy toward Congress plays out in next year’s congressional elections remains to be seen. Americans were not as negative last October, before the 2010 midterm elections, yet voters flipped 63 seats from Democratic to Republican control and gave the House to the GOP in the process. This was the largest seat gain by any party since 1948.

More evidence that "independents" don’t "swing"

thereisnospoon, Hullabaloo

Monday, December 12, 2011

“(I)ndependent” voters don’t shift party allegiance from election to election, so much as stay home out of apathy and to punish their preferred party for not doing its job.



Pollsters looking to see how to “win back” so-called “independent” voters will often do focus groups with people who crossed party lines from one election to another–say, those who voted for Barack Obama in 2008 but then voted for Republicans in 2010. They then analyze the data they get from those people to tell Dem politicians like President Obama what they must do to “win back” those independents.

But this is the wrong way of going about it. Sure, those “switcher” voters are out there. But they’re dwarfed in number by the people who hold an allegiance to the Democratic Party and progressive principles in general, and may have voted in the big presidential election of 2008, but failed to turn out to vote in 2010. That’s a much bigger cohort–and not only is it bigger in size, it’s more winnable and courting it doesn’t create resentment and anger within the Party base.



Smart Democratic consultants would do well to do focus groups with Dem voters from 2008 who stayed home in the midterms, and aren’t sure whether they’re likely to come out in 2012. See what is driving their anger and apathy, and what they want in terms of policy and message. And then insofar as decisions are made based on focus groups and polls, tailor the message to those people. My suspicion? You’ll find a lot of those very sorts of people at Occupy protests around the country.

Update:

President Will Not Veto Defense Authorization Bill, Despite Detention Provisions

By: David Dayen, Firedog Lake

Wednesday December 14, 2011 1:32 pm

After its FBI Director told Congress that the revisions to the defense authorization bill did not satisfy his concerns with the bill, the White House issued a statement of Administration policy saying that they would not veto the bill, despite an earlier threat.



(T)he changes do offer a variety of possible loopholes for the executive branch to carry out counter-terrorism policy as they see fit. Military custody is no longer “required” in the bill, and FBI policies are nominally preserved, though in a strange way that would seem to be impossible to implement. The President has a few extra pieces of discretion to take terrorist suspects out of military custody and into an interrogation process outside military purview. In addition, federal courts could still be used for terrorism cases.

Remember that the White House has little problem with indefinite military detention. They just want to be able to dictate when it gets used and on whom. So they obviously see enough flexibility here to carry out unconstrained intelligence gathering and detention policies.

Naked Euro

Crossposted from The Stars Hollow Gazette

I wonder how many ‘the Emperor has no clothes’ moments we’re going to have to go through before Mr. Market finally realizes he’s nude?  The big news about the Euro is that nothing has changed at all, except to get worse.

What the pieces I’ve selected make clear is that governments in the Euro Zone can’t afford to pay off the banksters crap assets at anything near their notional balance sheet value.  The European Central Bank (ECB) is the only one who can print Euros and impose investor haircuts through asset inflation and they can’t lend directly to governments, only to banks.  Any country that follows the Irish example of paying off their vampire bank failures is committing economic suicide.

What they don’t highlight, but which is none the less true, is that the ECB balance sheet is running out of room without a looser monetary policy (i.e. ‘printing’) AND that the assets it’s accepting as collateral are, even under the relaxed standards, made acceptable only through Credit Default Swap ‘Insurance’ issued by the self same banks that don’t have the reserves to cover their primary obligations.

Like AIG these ‘counter parties’ have absolutely no intention of paying off and no ability to do so even if they did.

‘House of Cards’ hardly begins to describe the tissue thin fictional fig leaf these insolvent banksters are trying to hide their behinds behind.

Bubble Wrap

Eurocrats

Reality TV

Frack You Very Much!

Crossposted from The Stars Hollow Gazette

middle_finger_flameA Profile in Fracking: How One Tiny Hamlet Could Be Devastated by Gas

By Molly Oswaks, The Atlantic

Dec 7 2011, 10:02 AM ET

Hancock is home to four bait-and-tackle shops, three beauty salons, six churches, ever more vacant and dilapidated-looking homes, one video rental thrift store hyphenate, and one funeral parlor. The stateliest establishment in this otherwise decidedly unstately community is the Hancock House Hotel; here you will find Honest Eddie’s Tap Room, a dimly lighted wood-paneled bar named for the major league baseball player John Edward “Honest Eddie” Murphy, who was born in Hancock in 1891. The food menu at Honest Eddie’s includes items like “They’re Smothered!” (thick-cut fries blanketed in a melty cheese sauce) and “The Deep-fried Pickle” (which is exactly what it sounds like). There is also an off-menu rice pudding, which they serve in a tall bevelled glass sundae cup and garnish with a dollop of whipped cream. The pudding has no spice.



Here, some 9,000 feet below traversable ground, lies a particularly profitable piece of the Marcellus Shale, a 400-million year old formation of marine sedimentary rock rich with reserves of untapped natural gas. Shale gas reserves are extracted by means of a multi-step process called hydraulic fracturing, or fracking. Chemical fracking fluid is pumped into a targeted borehole drilled deep into the ground; sand is then introduced into the fluid to maintain the integrity of the fracture. The pressure and depth at which this is executed produces a subterranean climate porous and permeable enough for shale gas to be recovered profitably: this is a “frack job.”

For a cash-strapped community like Hancock, fracking would seem a high-yield stimulus plan millennia in the making: there is, of course, the economic appeal of home-sourced natural gas, but there are also land royalties to be reaped by residents and money to be made from all the supplies and sandwiches sold in town to the fracking crew itself. Not to mention jobs.



It’s difficult to predict whether Hancock’s soil and water will, in fact, be poisoned once the drilling begins. Various assessments of the environmental impact of fracking have been conducted, at both state and national levels. The second-hand damage is much easier to forecast.

The roads and highways that run through town will experience a significant surge in traffic, with large trucks and heavy machinery traveling to and from the drill sites, and all the accompanying noise pollution. The bucolic natural landscape, which has long drawn lucrative hunting and camping tourism at peak season, will be cut up and and cordoned off for pipes and drills and gas collection.

It’s a paradox: The town needs money to survive, but the money being offered comes at the expense of the town itself. It would seem, then, however ironic, that capitalism is killing the company town.

Actually, it’s not at all difficult to predict that “Hancock’s soil and water will, in fact, be poisoned once the drilling begins.”

Your Obama Justice Department At Work

Crossposted from The Stars Hollow Gazette

Breaking News: Feds Falsely Censor Popular Blog For Over A Year, Deny All Due Process, Hide All Details…

by Mike Masnick, Tech Dirt

Thu, Dec 8th 2011 8:29am

Imagine if the US government, with no notice or warning, raided a small but popular magazine’s offices over a Thanksgiving weekend, seized the company’s printing presses, and told the world that the magazine was a criminal enterprise with a giant banner on their building. Then imagine that it never arrested anyone, never let a trial happen, and filed everything about the case under seal, not even letting the magazine’s lawyers talk to the judge presiding over the case. And it continued to deny any due process at all for over a year, before finally just handing everything back to the magazine and pretending nothing happened. I expect most people would be outraged. I expect that nearly all of you would say that’s a classic case of prior restraint, a massive First Amendment violation, and exactly the kind of thing that does not, or should not, happen in the United States.



The Dajaz1 case became particularly interesting to us, after we saw evidence showing that the songs that ICE used in its affidavit as “evidence” of criminal copyright infringement were songs sent by representatives of the copyright holder with the request that the site publicize the works — in one case, even coming from a VP at a major music label. Even worse, about the only evidence that ICE had that these songs were infringing was the word of the “VP of Anti-Piracy Legal Affairs for the RIAA,” Carlos Linares, who was simply not in a position to know if the songs were infringing or authorized. In fact, one of the songs involved an artist not even represented by an RIAA label, and Linares clearly had absolutely no right to speak on behalf of that artist.

Despite all of this, the government simply seized the domain, put up a big scary warning graphic on the site, suggesting its operators were criminals, and then refused to comment at all about the case. Defenders of the seizures insisted that this was all perfectly legal and nothing to be worried about. They promised us that the government had every right to do this and plenty of additional evidence to back up its claims. They promised us that the government would allow for plenty of due process within a reasonable amount of time. They also insisted that, after hearing nothing happening in the case for many months, it meant that no attempt to object to the seizure had occurred. Turns out… none of that was true.



Under the seizure laws, the government has 60 days from seizure to “notify” those whose property it seized (imagine having the government swoop in and take away your property, and not even being told why for two whole months). Once notified, the property owner has 35 days to file a claim to request the return of the property. If that doesn’t happen, the government can effectively just keep the property, so it tends to rely on intimidation and threats towards anyone who indicates plans to ask for their property back (usually in the form of threatening to file charges). However, if such a claim is filed, the government then has 90 days to start the full “forfeiture” process, which would allow the government to keep the seized property and never have to give it back. If the claim to return the property is filed and the government does not file for forfeiture, it is required to return the property. Thus seizures are supposedly used as a temporary part of the investigation, to stop criminal activity or to prevent the destruction of evidence. However, that’s not how things always play out in real life.

As we’d heard with a number of domain names that had been seized, the government began stalling like mad when contacted by representatives for domain holders seeking to get their domains back. ICE even flat out lied to the public, stating that no one was challenging the seizures, when it knew full well that some sites were, in fact, challenging. Out of that came the Rojadirecta case, but what of Dajaz1?

After continuing to stall and refusing to respond to Dajaz1’s filing requesting the domain be returned, the government told Dajaz1’s lawyer, Andrew P. Bridges, that it would begin forfeiture procedures (as required by law if it wanted to keep the domain). Bridges made clear that Dajaz1 would challenge the forfeiture procedure and seek to get the domain name back at that time. Then, the deadline for the government to file for forfeiture came and went and nothing apparently happened. Absolutely nothing. Bridges contacted the government to ask what was going on, and was told that the government had received an extension from the court. Bridges, quite reasonably, asked how that was possible without him, as counsel for the site, being informed of it or given a chance to make the case for why such an extension was improper.

He also asked for a copy of the the court’s order allowing the extension. The government told him no and that the extension was filed under seal and could not be released, even in redacted form.

He asked for the motion papers asking for the extension. The government told him no and that the papers were filed under seal and could not be released, even in redacted form.

He again asked whether he would be notified about further filings for extensions. The government told him no.

He then asked the US attorney to inform the court that, if the government made another request for an extension, the domain owner opposed the extension and would like the opportunity to be heard. The government would not agree.

And file further extensions the government did. Repeatedly. Or, at least that’s what Bridges was told. He sent someone to investigate the docket at the court, but the docket itself was secret, meaning there was no record of any of this available.

The government was required to file for forfeiture by May. The initial (supposed) secret extension was until July. Then it got another one that went until September. And then another one until November… or so the government said. When Bridges asked the government for some proof that it had actually obtained the extensions in question, the government attorney told Bridges that he would just have “trust” him.

Finally, the government decided that it would not file a forfeiture complaint — because there was no probable cause — and it let the last (supposed) extension expire. Only after Bridges asked again for the status of the domain did the government indicate that it would return the domain to its owner — something that finally happened today. Dajaz1.com is finally back in the hands of its rightful owner. This is really quite incredible, considering the “rush” with which it seized these domain names, claiming the urgency in stopping a crime in progress. But, of course, after realizing that it had no evidence to suggest a crime was ever in progress – there was absolutely no urgency to correct the error.

The level of secrecy in this case makes it sound like a terrorist investigation, not the censorship of a popular music blog. Normally, when there’s a lawsuit, the docket is available on PACER. Even in cases where things are filed under seal or everything is redacted, there’s at least a placeholder for them in PACER. This case does not exist anywhere that anyone can find. The docket was apparently kept hidden in a judge’s office in Los Angeles the whole time. No one knew this was going on, other than the US Attorney and the representatives of Dajaz1 (who still never saw the docket or the extension orders).

Let’s just take stock here for a second. We have the government clearly censoring free speech in the form of a blog that discussed the music world and was widely recognized for its influence in promoting new acts. The government seized the blog with no adversarial hearing and no initial due process. Then, rather than actually provide some sort of belated due process in the form of an adversarial hearing, it continued to deny any and all due process by secretly (even to Dajaz1’s own lawyer) extending the seizure without any way to challenge those extensions. All in all, the government completely censored a popular web site for over a year, when it had no real evidence for probable cause of infringement, as it had falsely claimed in the original rubber stamped affidavit.

(h/t DCblogger @ Corrente)

C’thulhu fhtagn

Crossposted from The Stars Hollow Gazette

Then mankind would have become as the Great Old Ones; free and wild and beyond good and evil, with laws and morals thrown aside and all men shouting and killing and revelling in joy. Then the liberated Old Ones would teach them new ways to shout and kill and revel and enjoy themselves, and all the earth would flame with a holocaust of ecstasy and freedom.

I’ve been following what purports to be a conversation with a libertarian over at Naked Capitalism and I hardly know how to characterize it except as pathological.  It’s faith based and factually wrong in addition to being illegal, immoral, and selfish.

I’m not making the claim that it accurately represents libertarian doctrine or practice, or even the viewpoint of a real human being and not a fictional straw man construct.

Frankly I don’t know what to think.  I was appalled and horrified reading it and draw your attention because of those qualities.

By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.

Simulposted at The Distributist Review

(h/t Think Progress)

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