Tag: TMC Politics

Cross posted from The Stars Hollow Gazette

The current policy of austerity that is being forced on the European Union by Germany and England has been called “financially futile, economically erroneous, politically puzzling and socially irresponsible” by economists and monetary experts. Author and derivatives expert, Satyajit Das, writes in the first part of his series on “The Road to Nowhere, Part 1 – Fiscal Bondage” at naked capitalism that the December 2011 European summit to resolve the euro crisis was a failure:

The proposed plan is fundamentally flawed. It made no attempt to tackle the real issues – the level of debt, how to reduce it, how to meet funding requirements or how to restore growth. Most importantly there were no new funds committed to the exercise.[..]

The plan may result in a further slowdown in growth in Europe, worsening public finances and increasing pressure on credit ratings. This is precisely the experience of Greece, Ireland, Portugal and Britain as they have tried to reduce budget deficits through austerity programs. This would make the existing debt burden even harder to sustain. The rigidity of the rules also limits government policy flexibility, risking making economic downturns worse.[..]

The fiscal compact did not countenance any writedowns in existing debt. It also did not commit any new funding to support the beleaguered European periphery. Germany specifically ruled out the prospect of jointly and severally guaranteed Euro-Zone bonds. Instead, there were vague platitudes about working towards further fiscal integration.[..]

Instead of dealing with the financial problems of the central bailout mechanism (the EFSF – European Financial Stability Fund), European leaders chose the re-branding option.

Actions, or rather inactions, have consequences.

As I predicted in a message to Credit Writedowns Pro subscribers on Monday, statistics have shown that the German economy has finally succumbed to the deflationary economic policy of the euro zone.

   Germany showed first signs of feeling the pain from the euro zone’s debt crisis as the economy shrank in the last three month of 2011, despite outperforming its peers for main part of the year thanks to strong domestic demand and exports.

   Gross domestic product (GDP) grew 3.0 percent in 2011, preliminary Federal Statistics Office data showed on Wednesday, below the previous year’s growth rate of 3.7 percent – the fastest since reunification – and in line with a Reuters poll estimate.

   But GDP contracted by around 0.25 percent in the fourth quarter of 2011, an official from the Statistics Office added.

   “Germany cannot isolate itself so easily from tensions within the euro zone. In addition the export sector is facing a difficult period given the fall in global demand,” said Joerg Zeuner, chief economist at VP Bank.

Harrison wrote in November in the New York Times

that Europe is already in a double-dip recession. Already two months ago, the Markit Eurozone Manufacturing Purchasing Managers Index, which measures activity across Europe in services and manufacturing, had fallen to 50.4, the lowest since September 2009. The divider between expansion and contraction is 50, so Europe was still expanding. But last Wednesday, Markit data indicated that the situation has since deteriorated; the latest data showed a drop in private sector activity in the euro zone for the first time since July 2009. Moreover, the data are poor in the core of the euro zone as well as in the periphery, with Germany and France’s economies stalling as well. The sovereign debt crisis and the fiscal consolidation implemented to deal with it have taken their toll.[..]

Until the banks take substantially more credit write-downs and recapitalize, this crisis will continue and get worse.

The downward spiral is evident throughout Europe with even the strong German economy feeling the effects of erroneous policies

The German economy expanded faster than any other Group of 7 nation last year, official data showed Wednesday, but the stress of the euro crisis and a slowing global economy appear to be already weighing on output.

Germany expanded by 3 percent last year from 2010, the Federal Statistical Office said in Wiesbaden. It noted, however, that the growth came mostly in the first half of 2011, and estimated that the economy actually contracted by about 0.25 percent in the fourth quarter from the prior three months.

Some economists now predict another contraction for Germany in the first three months of 2012, which would meet the usual definition of a recession as two consecutive quarterly declines in output.

And austerity measures in Greece are making their budget deficits even worse:

Greece’s budget deficit widened last year as an austerity-fuelled recession cancelled out much of the extra revenues the government was hoping to raise through emergency taxes, data showed on Thursday. The central government budget gap widened 0.8 percent year-on-year to 21.64 billion euros ($27.45 billion) last year, according to figures from the finance ministry.

David Dayen at FDL News Desk thinks it is probably worse since “the EU uses a different measure to assess the Greek budget.”  He points out that even with increased taxes, the fall in tax compliance from an already lax system has reduced income. It all looks good on paper but that’s not the reality of what is actually in the treasury.

There is some hope that Europe’s leader are waking up to reality that there needs to be a growth strategy, although it may not be enough, or soon enough, to reverse the spiral.

It is a crisis in the € zone. The divergent trends in the € zone are too large. It is not an “optimum currency area”

It’s not just government, to “sovereign debt” but also excesses in the financial sector, real estate etc.

We must do everything to avoid recession. … We need a fiscal strategy that is “growth friendly”

Fiscal consolidation will not tell us to say “no” to all or which is cut everywhere. We must “prioritize”

We ask each member state to establish a “job plan”, we make commitments we can evaluate

The next meeting of the Eurozone member is the end of this month where a tax on financial transactions will be considered and, hopefully, they will discuss job creation and debt reduction.

Cross posted from The Stars Hollow Gazette

President Obama’s recent exercise of his constitutional authority to make recess appointments to the new Consumer Financial Protection Bureau and filling vacancies the National Labor Relations Board has created some dilemmas for himself and congressional Republicans. Republicans, of course, will continue to block confirmation of any Presidential appointee but are split as to how to address President Obama’s dismissal of the sham “pro forma” sessions and his four recess appointments.

With the appointment of Jack Lew as Chief of Staff, there is now a vacancy to head the Office of Budget and Management but the bigger issue may be the vacancy for a new director to the Federal Housing Finance Administration. That institution has been without a confirmed director for over two years, since David Lockhart left. The president is being pressured by the House Congressional Delegation from California to replace the Republican acting director of the FHFA, Ed DeMarco, who they say has been obstructing efforts to stem the housing market collapse and help keep owners in their homes. David Dayen at FDL News Desk reports that he is of two minds on DeMarco:

(DeMarco) has interpreted his mandate very narrowly. It’s a bad thing when he refuses to engage in principal reductions for troubled borrowers, even though that would make more money for Fannie and Freddie in the long run, because he doesn’t want to take the short-term financing hit. But it’s a good thing when he sues 17 banks over misrepresentations of the mortgages in the securities they sold to Fannie and Freddie, with the hope of forcing repurchases of those mortgage pools.

There have been signs that DeMarco is warming to a more activist stance. He agreed to the changes to HARP, which is more of a stimulus program than a program that will save homes, but which will allow expanded refinancing come March of this year on GSE-owned properties. Freddie Mac just initiated a program for a 12-month forbearance (where the borrower can skip payments) for unemployed borrowers, although Democrats maintain that not everyone eligible will receive that forbearance.

Most promisingly, DeMarco is considering a principal pay-down program put forward by a California Democrat, Zoe Lofgren, that would allow underwater homeowners with GSE loans to have their mortgage payments go entirely to equity for five years, waiving the interest payments. DeMarco said he would look into the idea back in October, and there have been leaks since then suggesting that principal pay-down would happen. However, there has been no final word, and officially FHFA “continues to evaluate” the Lofgren proposal, even though in a meeting with House Dems they promised an assessment within two weeks.

Meanwhile those poor Republican obstructionists have a headache, as Brian Buetler at TPMDC reports:

Scores of House Republicans have signed on to a non-binding resolution disapproving of Obama’s four winter recess appointments – Cordray, and three members of the National Labor Relations Board – all fodder for conservatives, who are furious about the existence of these agencies, let alone the recess appointments themselves.

“It’s astounding to me that the president is claiming these are recess appointments and within his authority, when Congress was not in fact in recess,” said Rep. Diane Black (R-TN) who authored the resolution. “These appointments are an affront to the Constitution. No matter how you look at this, it doesn’t pass the smell test. I hope the House considers my resolution as soon as we return to Washington so we can send a message to President Obama.”

This creates an election-year dilemma for GOP leaders who may not want to make a big show of their opposition to the one person in Washington tasked with protecting consumers from predatory financial actors.

But with so many key vacancies, President Obama has his own dilemma headache, not just to make more recess appointments but how to do it:

[T]he breaks between the last week in January and the first week in August will be very brief ones. Which means that if Obama declines to use his recess appointment power in the next several days, he’ll have three options, none ideal: He can fight it out with Congress and push for regular confirmations; he can wait until August, when Congress goes home for over a month; or he can broaden the parameters of his own precedent, and use the recess appointment during brief one-week vacations between now and then.

Republicans will likely keep holding pro forma sessions during those breaks, challenging Obama to take things further than he already has. [..]

As far as the Constitution and the Senate rules are concerned, there wouldn’t be much difference between a recess appointment in, say, April, and the recess appointments he announced last week. But their public rationale for the January appointments wouldn’t really stand in April. And after attacking President Obama’s supposed power grab, Republicans would slip the precedent in their back pocket, to be deployed when they control the White House.

We shall see if the president has finally abandoned all hope of getting any bipartisan cooperation from the Republicans.

Cross posted from The Stars Hollow Gazette

The Florida Inspector General, Jeff Atwater issued a statement (pdf) deciding not to investigate the forced resignation of two lawyers who led a crackdown on foreclosure fraud. The report concluded that no one in the office of Florida Attorney General Pam Bondi broke any laws or rules.

naked capitalism‘s Yves Smith explains the “hatchet job” that this report reveals:

Now narrowly, there may indeed be nothing to investigate relative to their firing, in that workers in the US have pretty close to zero rights and a boss can indeed fire someone simply for not sharing his sense of priories. But there is a more general question of public interest as to whether a firing in a public office was indeed politically motivated, particularly if the investigators were ruffling the feathers of parties that the AG did not want to annoy (and as the brief one page conclusion notes, Florida does have statutes against “misuse of a public position” but query how that is interpreted in practice).

Effectively, this “review” is an effort at reputation/character assassination via the release of pretty much only one side of a “he said, she said” (Clarkson and Edwards were given a brief phone interview which was limited to two conversations Lawson had with them about their performance; they were given no opportunity to contest the allegations made in the subsequent interviews, which were not just with Lawson, Conners, and Muniz, but also five other members of the AG’s office).[..]

To put it mildly, if you read the 85 page document and didn’t know the context (the extensive, widespread evidence of bad conduct and strained pleadings by the foreclosure mills and LPS, and the prior tip top reviews received by Clarkson and Edwards), you’d think they were fuckups of the first order and were lucky to have jobs. This is heresay presented as unvarished truth, and the unsupported (and as we will discuss later, often obviously untrue or at best misleading) charges extend to two Florida foreclosure fraud investigators, Lisa Epstein and Lynn Szymoniak. [..]

For clarity and overview of just how the Florida Attorney General’s office has become so corrupt, David Dayen at FDL explains how the departure of the an old school Republican as AG and, at the same time, the resignation of economic crimes division led to the whitewash of the firings:

(Bill) McCollum left the AGs office in January, replaced by a different Republican, Pam Bondi. At the same time, the longtime director of the economic crimes division left, and Richard Lawson, a former defense attorney for white collar criminals – mainly bank officials – came in. As Lawson acknowledges in his statement to the IG report (more on that in a minute), he received complaints from the lawyers of several of the defendants in Clarkson and Edwards’ cases, in particular Lender Processing Services (LPS), which was part of a multistate investigation at the time.

Lawson immediately went to work criticizing Clarkson and Edwards’ conduct, disputing their claims, savaging the work of their office, and micromanaging their investigations (but only the foreclosure fraud investigations, not their other work). By May they were out, fired by Lawson and Bondi. They were given 90 minutes to pack up their things and leave the office, and lost access to all their files and emails. [..]

The most potentially damning part of the IG report concerns a draft subpoena that was part of a multistate investigation against LPS. Lawson claims that Clarkson leaked the subpoena to Epstein, which Epstein contends was part of a public records request. Those can be done verbally in the state of Florida, but Lawson claims that there’s no record of it. Epstein added that she has received receipt of previous public records requests from the AGs office. In the case of the LPS subpoena, Lawson contends that it would not fall under a public records request. But Epstein says she never published a draft LPS subpoena, or circulate it to the media, and so it’s impossible for other state AGs to complain that “the subpoena came up on the blog.” Because Clarkson and Edwards have no access to their emails anymore, “it’s difficult to respond to the report.” Days after the alleged leak of the subpoena, Clarkson and Edwards were fired.

And the deeper that you look into the IG’s report the worse it gets. More from Yves:

Abigail Field’s post on how the Florida attorney general’s office befriends foreclosure fraudsters is an important, if nausea-inducing read. One of the striking sections that makes the extent of the corruption clear is a snippet toward the end. It show how the AG’s office acted to help Lender Processing Services do damage control, when it had LPS under investigation for foreclosure frauds.

Field points out that the investigation of LPS was launched under the previous AG, Bill McCollum, and is supposedly still active. [..]

Field goes through the current AG Pam Bondi’s fraudster-favoring conduct, which is less surprising than it ought to be, since the AG’s Economic Crimes Division has a proud history of being more in bed with probable criminals than against them. Here Field relies on the report of a former seven year staffer in the AG’s office, attorney Andrew Spark, who wrote after Bondi took office about the long standing considerable obstacles to serving the public interest, such as the all too predictable revolving door (with former employees going to foreclosure mills). While Spark made it clear that he was not a supporter of the aggressive Clarkson/Edwards position (these were the two employees we wrote about yesterday who were fired under suspicious circumstances), he nevertheless presents damning evidence in the section of his letter titled “Powerful interests have influence.”

The message, as Yves states, is very clear, doing your job efficiently in Florida will get you fired and your reputation destroyed because it’s more important to protect the banks than the homeowners they defrauded.

Cross posted from The Stars Hollow Gazette

In 2006, the public policy research organization, The Cato Institute, invited some leading liberal Democratic columnists and bloggers to discuss the question if Libertarians should vote Democratic:

In over a half-decade of Republican political dominance, Americans have witnessed a huge expansion in the scope and cost of government, a questionably just and so-far unsuccessful war in Iraq, serious erosions of civil liberty, and a troubling tendency toward an imperial executive. Is it time for the traditional alliance between libertarians and conservatives to finally end? If Republicans in power have failed so utterly to promote libertarian ideals, would libertarians better advance their cause by supporting Democrats at the polls? Of course, the fact that libertarians have been so badly abused by conservatives doesn’t necessarily imply they will find a more welcoming home among liberals. Is the Democratic tent big enough to include small-government free marketeers. Perhaps libertarians have something to gain by supporting to Democrats, but does the Democratic party have anything to gain by courting libertarians?

Markos “Kos” Moulitsas, proprietor of DailyKos, opened the discussion with the lead article, The Case for the Libertarian Democrat:

It was my fealty to the notion of personal liberty that made me a Republican when I came of age in the 1980s. It is my continued fealty to personal liberty that makes me a Democrat today.

The case against the libertarian Republican is so easy to make that I almost feel compelled to stipulate it and move on. It is the case for the libertarian Democrat that has created much discussion and not a small amount of controversy when I first introduced the notion in what was, in reality, a throwaway blog post on Daily Kos on a slow news day in early June 2006.

Moulitsas went on to describe how the article was attacked by Libertarians unwilling to recognize they were losing their “grasp of libertarian principles” but at the same time were “unwilling to cede any ground to a liberal“. The real surprise came from the general reaction:

[O]f Americans who are uncomfortable with Republican/conservative efforts to erode our civil liberties while intruding into our bedrooms and churches; they don’t like unaccountable corporations invading their privacy, holding undue control over their economic fortunes, and despoiling our natural surroundings; yet they also don’t appreciate the nanny state, the over-regulation of small businesses, the knee-jerk distrust of the free market, or the meddlesome intrusions into mundane personal matters.

The discussion in that introduction continues with Moulitsas explaining why he is, in essence, a Libertarian Democrat, how liberal Democrats relate to Libertarians, the Conservatives’ “war on freedom” and why he believed that there was a rise of Libertarian Democrats. He went on to write three more article for that series:

They are well worth reading and book marking.

Since then, Mr. Moulitsas has become a prominent voice for the left and has used the Internet to bring liberal/progressive policies into political mainstream and to the attention of what he calls the “traditional” media.  

Cross posted from The Stars Hollow Gazette

Recently Federal District Court Judge Jed Rackoff rejected the $285 million settlement that Citibank had negotiated with the SEC over $1 billion in mortgage securities fraud that would also have exonerated the bank of guilt. The SEC acceptance of “neither admit nor deny” language that has been considered “boilerplate” in these settlements has now been, not only rejected by the courts, but dropped by the SEC in securities fraud cases:

The Securities and Exchange Commission, in a fundamental policy shift, said Friday that it would no longer allow defendants to say they neither admit nor deny civil fraud or insider trading charges when, at the same time, they admit to or have been convicted of criminal violations.

The change is the first time that the S.E.C. has stepped back from its longstanding practice of allowing companies to settle fraud charges by paying a fine without admitting wrongdoing. The new policy will also apply to cases where a company or an individual enters an agreement with criminal authorities to defer prosecution or to not be prosecuted as part of a settlement.

Robert Khuzami, the director of enforcement at the S.E.C., said the agency would continue to use the “neither admit nor deny” settlement process when the agency alone reached a deal with a company in a case of civil securities law violations. Those types of cases make up a large majority of S.E.C. settlements.

As David Dayen at FDL so rightly notes, “This is a first step to stopping this travesty of allowing companies to get off the hook and pay their way out of fraud violations without even admitting they did anything wrong. And this never happens without the work of Jed Rakoff.”

Cross posted from The Stars Hollow Gazette

Greg Sargent at the Washington Post reports:

Obama is set to appoint Sharon Block, Terence Flynn, and Richard Grifin to the board – something unions have made a big priority for them in the new year. Senate Republicans have opposed the recess appointments to the NLRB on constitutional grounds, but unions charge that Republicans are only interested in rendering the agency inoperative.

Obama’s move, which will help energize unions in advance of the 2012 election, is yet another sign that he is determined to circumvent GOP opposition and make government functional again by any means necessary. It’s another sign that the White House and Dems have abanoned the illusion that anything can be done to secure bipartisan compromise with Republicans on the major items on Obama’s agenda.

From Think Progress:

All 47 Senate Republicans have warned Obama of a “constitutional conflict” should he choose to use his recess appointment powers – authority he is well within his right to use, as ThinkProgress’ Ian Millhiser noted yesterday – but it was Chief Justice John Roberts, a noted conservative, who said the president should make recess appointments to keep the NLRB functioning, as ThinkProgress reported in 2010.

Obama’s appointment of Block, Flynn, and Griffin is important, too, because it boosts the board’s membership to five, protecting its quorum even if member Brian Hayes follows through on his threats to quit. Preserving its right to quorum ensures that its rulings will not be thrown out on legal challenges, as more than 600 cases were by the Roberts Court in 2010.

Cross posted from The Stars Hollow Gazette

It was announced by the White House that President Barack Obama will make a recess appointment of former Attorney General of Ohio, Richard Cordray to head the newly created Consumer Financial Protection Bureau (CFPB):

President Barack Obama installed Richard Cordray as head of the Consumer Financial Protection Bureau with a recess appointment today, testing the limits of his executive authority to fill the post without Senate approval.

Obama nominated Cordray to be the bureau’s first director in July, almost one year after enactment of the Dodd-Frank financial regulatory law creating the agency. Republicans blocked Cordray’s confirmation by the Senate last month. Putting him in the job today may set up an election-year court fight between the White House and Congress.

Even thought the Senate has been under Democratic control since 2006 when the tactic of pro forma session was first employed to keep President George W. Bush from making recess appointments to the bench, there have been questions by legal scholars about the constitutionality about their use. It has since been used to placate the Republicans in hopes of winning their cooperation, obviously to no avail.

Senate Majority Leader Mitch McConnell (R-KY) called President Obama move “arrogant”, saying that “Breaking from this precedent lands this appointee in uncertain legal territory, threatens the confirmation process and fundamentally endangers the Congress’s role in providing a check on the excesses of the executive branch.”

House Speaker John Boehner had a similar reaction calling the appointment an “extraordinary and entirely unprecedented power grab” by the president.

The legal precedent for these sessions is on very shaky ground. In a 1993 court case involving the Postal Service Board of Governors, Justice Department lawyers argued in court papers that presidents can make recess appointments when the Senate is out of session for more than three days.

The brief suggested that a president might lack that authority during shorter breaks. Pointing to the constitutional requirement that the Senate and House get one another’s consent before adjourning for more than three days, the Justice Department said the constitutional framers might not have considered shorter recesses to be significant.

“If the recess here were of three days or less, a closer question would be presented,” the Justice Department argued.

However, lawyers who advised President George W. Bush on recess appointments wrote that the Senate “cannot use sham ‘pro forma’ sessions to prevent the president from exercising a constitutional power.”

David Dayen at FDL points out the Constitutional argument that there is no time requirement in the Constitution for Congress to be in recess before the president can make recess appointments:

As for the judicial question on whether pro forma sessions count as keeping Congress in session, the 11th Circuit Court of Appeals ruled back in 2007 that “The Constitution, on its face, does not establish a minimum time that an authorized break in the Senate must last to give legal force to the President’s appointment power under the Recess Appointments Clause.” On the other side of this, Solicitor General Neal Katyal, in a 2010 case, argued that the Administration recognized that a 3-day recess was “too small,” in their understanding, to make appointments.

While the Republicans will very likely mount a court challenge, claiming past precedent, it may well fail since the president has the power to make recess appointments under Article II, Section 2 of the Constitution which states, “the President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” It can be argued that Congress is in recess when they gavel out at the end of each day or whenever there is no quorum, which goes to the constitutional argument about pro forma sessions.

The other issue is why didn’t he appoint Elizabeth Warren who is eminently more qualified than Cordray to head the CFPB? It is most likely because of objections from Treasury Secretary Timothy Geithner’s objections and her memo to the the state attorney general’s who are negotiating a settlement with the big banks over mortgage fraud.

Make no mistake, Obama is doing this now for purely political motivations. It emphases Republican obstructionism and as a ploy to win back the disenfranchised left wing of the Democratic Party, as well as, the Independent voters who believed in all his “hopey, changey” campaign rhetoric.

Cross posted fromThe Stars Hollow Gazette

Cenk talks with “Rolling Stone” contributing editor Matt Taibbi about his new piece on the Obama administration’s lack of prosecutions for white collar crime. “If they pushed all these prosecutions, investors worldwide would see how epidemic corruption is on Wall Street,” Taibbi says. “They’re afraid of what the international reaction would be.” Cenk says while he doesn’t think President Obama is personally corrupt, “It’s the system that corrupts all these politicians.”

Strongly recommend this piece at the Huffington Post by Jeff Connaughton, a former aide to Senator Ted Kaufman. Jeff is one of the smartest guys on the Hill and is particularly strong on issues surrounding Wall Street and the regulatory system. In this piece, he takes apart the oft-stated mantra that what Wall Street firms did during and after the crisis was maybe unethical, but not illegal.

He takes particular aim at Barack Obama, who recently tossed that line out on 60 Minutes in what I thought was one of the real low moments of his presidency. Here’s Jeff’s take:

   Speaking in Kansas on December 6, (Obama) said, “Too often, we’ve seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there’s no price for being a repeat offender.” Just five days later on 60 Minutes, he said, “Some of the least ethical behavior on Wall Street wasn’t illegal.” Which is it? Have there been no prosecutions because Wall Street acted legally (albeit unethically)? Or did Wall Street repeatedly violate major anti-fraud laws (and should thus find itself in the dock)?

   The President is confusing “legal” with “difficult to prosecute successfully.”

The notion that what Wall Street firms did was merely unethical and not illegal is not just mistaken but preposterous: most everyone who works in the financial services industry understands that fraud right now is not just pervasive but epidemic, with many of the biggest banks committing entire departments to the routine commission of fraud and perjury – every single one of the major banks, for instance, devotes significant manpower to robosigning affidavits for foreclosures and credit card judgments, acts which are openly and inarguably criminal.

A good friend of mine sent me a link to a small story last week, something that deserves a little attention, post-factum.

The Bloomberg piece is about J.P. Morgan Chase winning a bid to be the lead underwriter on a $400 million bond issue by the state of Massachusetts. Chase was up against Merrill for the bid and won the race with an offer of a 2.57% interest rate, beating Merrill’s bid of 2.79. The difference in the bid saved the state of Massachusetts $880,000. [..]

Except in four out of five cases, it still doesn’t happen that way. From the same piece [emphasis mine]:

   Nationwide, about 20 percent of debt issued by states and local governments is sold through competitive bids. Issuers post public notices asking banks to make proposals and award the debt to the bidder offering the lowest interest cost. The other 80 percent are done through negotiated underwriting, where municipalities select a bank to price and sell the bonds.

By “negotiated underwriting,” what Bloomberg means is, “local governments just hand the bid over to the bank that tosses enough combined hard and soft money at the right politicians.” [..]

There is absolutely no good reason why all debt issues are not put up to competitive bids. [..]

[T]his is a bond issue, not rocket science. In most cases, all the top investment banks will offer virtually the same service, with only the price varying. Towns and cities and states lose billions of dollars every year allowing financial services companies to overcharge them for underwriting.

Cross posted from The Stars Hollow Gazette

Since taking office in 2009, President Obama has waged an increasing clandestine war using unmanned drones controlled by civilians members of the CIA. In a recent article Washington Post‘s Greg Miller exposes some troubling aspects of the program which has little oversight or control:

In the space of three years, the administration has built an extensive apparatus for using drones to carry out targeted killings of suspected terrorists and stealth surveillance of other adversaries. The apparatus involves dozens of secret facilities, including two operational hubs on the East Coast, virtual Air Force­ ­cockpits in the Southwest and clandestine bases in at least six countries on two continents. [..]

The rapid expansion of the drone program has blurred long-standing boundaries between the CIA and the military. Lethal operations are increasingly assembled a la carte, piecing together personnel and equipment in ways that allow the White House to toggle between separate legal authorities that govern the use of lethal force.

In Yemen, for instance, the CIA and the military’s Joint Special Operations Command pursue the same adversary with nearly identical aircraft. But they alternate taking the lead on strikes to exploit their separate authorities, and they maintain separate kill lists that overlap but don’t match. CIA and military strikes this fall killed three U.S. citizens, two of whom were suspected al-Qaeda operatives. [..]

Obama himself was “oddly passive in this world,” the former official said, tending to defer on drone policy to senior aides whose instincts often dovetailed with the institutional agendas of the CIA and JSOC.

Joshua Foust in The Atlantic observes that there are consequences for the successes claimed by the Obama Administration:

In the countries where the drone system is most active — Pakistan and Yemen — relations with local governments and communities are awful, and perceptions of the United States could barely be any worse. There is agreement seemingly only on the need for long distance killing, and even then — especially in Pakistan — there is a great deal of contention.

In fact, one could argue that the severe degradation of relations with Pakistan, which are driven to a large degree by popular anger over drone strikes (as well as a parallel perception among some Pakistani elites that the U.S. disregards Pakistani sovereignty at will), is driving the current U.S. push to ship supplies and, eventually, the withdrawal from Afghanistan, through Uzbekistan.

Besides the political consequences, Foust notes the reorientation of the intelligence community to this killing program may hinder its ability of collecting and analyzing the data needed and a heavy reliance on information from sketchy local partners that can, and has, resulted in unnecessary fatalities. His opinion of Obama’s expansion of the drone war is scathing:

This sloppiness with life and death decisions is a substantial moral failing, and should be a huge scandal for President Obama. But, he has decided to both distance himself from it while also taking credit for its successes, even as it focuses on ever less important and marginal figures within the terrorist milieu. [..]

It is an absolute scandal. We owe ourselves better questions and more accountability of the drones we use to wantonly kill people around the planet.

Senior reporter for Wired.com’s Danger Room, Spencer Ackerman, discussed the sharp increase in drone attacks to do the military’s job since Obama took office.

Cross posted from The Stars Hollow Gazette

The New York City Occupiers took back Zucchotti Park a couple of hours before midnight on New Year’s Eve despite the presence of NYPD and private security:

About 100 people arrived at the park at about 7 p.m., according to witnesses, and someone put up what was described as a small multicolored tent, about two feet tall, made for a child. Two young girls, who were at the park with their mother, began playing inside.

Though the New York City Police Department had officers fanned out throughout the city for the holiday, there were police officers lined up across the street from Zuccotti Park, at the ready alongside private security guards. They stepped in.

Police officers and security guards, who stood at the ready across the street, told protesters to remove the tent, saying it violated rules issued by the park’s owner, Brookfield Properties. Meanwhile, an officer and a guard blocked other protesters, and at least one reporter, from entering the park. Some people disregarded their instructions and squeezed through the spaces between metal barricades along other parts of the perimeter.

That number swelled to over 500 by 10:30 as text messages and signal went out across the city. They draped the piled barricades with Christmas lights and the lighted Christmas tree was wrapped with the Occupy Wall Street banner as the OWS “bat signal” was projected on the side of a building. As the protesters were chased from the park, they took to the nearby streets, drumming and chanting as they marched. Most of the arrests were of demonstrators who were obeying police directions or walking peacefully on the side walk. Many of the protesters and others not involved in the demonstration were “kettled” into groups then arrested for obstructing pedestrian traffic or for moving as directed by the officers. Even legal observers and the press were again arrested and threatened by the NYPD. The observer from the National Lawyers Guild was later released.

Welcome to the United Police State of America where you can be “legally” detained indefinitely on the president’s word.

Cross posted from The Stars Hollow Gazette

Montana residents William Crain, an artist and Stewart Rhodes, an attorney, have launched a petition to recall the state’s congressional delegation, Sen. Max Baucus (D), Sen. Jonathan Tester (D) and Rep. Denny Reberg (R) over their vote for the National Defense Authorization Act that explicitly authorized the indefinite detention of terrorism suspects, including American citizens. Montana is one of nine states that has provisions to recall its elected federal officials. Under the Montana Recall Act all state officials in Montana are subject to recall for physical or mental lack of fitness, incompetence, violation of the oath of office, official misconduct, or conviction of a felony offense. The Montana petitions (there is one for each of the three), states the following “reason for recall”:

   1. “The Sixth Amendment of the U.S. Constitution guarantees all U.S citizens: “a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed…”

   2.  The National Defense Authorization Act of 2011 (NDAA 2011) permanently abolishes the Sixth Amendment right to a jury trial, “for the duration of hostilities” in the War on Terror, which was defined by President George W. Bush as “task which does not end” to a joint session of Congress on September 20, 2001.

   3.  Those who voted Aye on December 15th, 2011, Bill of Rights Day, for NDAA 2011 have attempted to grant powers which cannot be granted, which violate both the spirit and the letter of the Constitution and the Declaration of Independence.

   4.  The Montana Recall Act stipulates that officials including US senators can only be recalled for physical or mental lack of fitness, incompetence, violation of the oath of office, official misconduct, or conviction of a felony offense.

   5. Section 1021 of the National Defense Authorization Act reads in substance: “Congress affirms that the authority of the President to detain …A person who was a part of or substantially supported al-Qaeda…or associated forces…including any person who has…directly supported such hostilities in aid of such enemy forces…The disposition of a person…may include…Detention…without trial until the end of the hostilities…”

   6. “Substantial support” of an “associated force” may imply citizens engaged in innocuous, First Amendment activities.  Direct support of such hostilities in aid of enemy forces may be construed as free speech opposition to U.S. government policies, aid to civilians, or acts of civil disobedience.

   7. Section 1021 reads: “Nothing in this section shall be construed to affect existing law.”  But “existing law” may be construed to refer to Padilla v. Rumsfeld in the Fourth Circuit Court of Appeals, which upheld the government’s claim of authority to hold Americans arrested on American soil indefinitely.

   8. Thus Senators Bacus, Tester, and Congressman Rehberg who voted Aye on December 15th, 2011, Bill of Rights Day, for NDAA 2011 have violated his Oath of Office to protect and defend the U.S. Constitution which guarantees all citizens the right to a jury trial “In all criminal prosecutions.”

According to the press release, Mr. Rhodes stated:

These politicians from both parties betrayed our trust, and violated the oath they took to defend the Constitution. It’s not about the left or right, it’s about our Bill of Rights. Without the Bill of Rights, there is no America. It is the Crown Jewel of our Constitution, and the high-water mark of Western Civilization. [..]

Two time Medal of Honor winner Marine General Smedley Butler once said “There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights.” Time to fight.

It’s not clear if the courts will allow states to recall their federal politicians. It hasn’t gotten very far in the past. In 1967, a recall campaign was waged against Sen Frank Church by Ron Rankin, a Republican county commissioner in Kootenai County in northern Idaho. The U.S. District Court for Idaho ruled that the state’s recall laws did not apply to U.S. senators and that such a recall would violate the U.S. Constitution. Since Idaho’s State Attorney General Alan Shephard decided to accept the court’s ruling, writing that “It must be pointed out that a United States senator is not a state officer but a federal officer whose position is created by Article I, Section I of the United States Constitution. There seems to be no provision for canvassing the votes of a recall election of a United States senator.”

However, it can be argued that since there is no provision provided in the Constitution to recall members of congress, that right is preserved for the states under the 10th Amendment which states:  

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Leaving Mr. Rhodes’ affiliation with The Oath Keepers, a group that has been criticized in the past for adopting extremist views and language, and for their supposed ties to white supremacist and militia groups, the petition drive does have some merits. If successful, it could lead to other states passing laws to provide for the recall of elected federal officers who think that the Constitution is quaint. Good luck to them and perhaps good riddance to Baucus, Tester and Reberg.

Cross posted from The Stars Hollow Gazette

While he is on vacation in Hawaii, President Barack Obama will ask Congress to raise the debt ceiling for the third and last time under the agreement that was negotiated last August. The increase, which is expected to be made by December 30, can only be stopped by passage of a “resolution of disapproval” which the President can veto. That isn’t likely since the last resolution was blocked by the Democrats in the Senate and since Congress in recess until the end of January, well past the 15 days Congress has to vote in the resolution of disapproval.

Pres. Obama is expected to ask for authority to increase the borrowing limit by $1.2 trillion which is within $100 billion of the current cap of $15.194 trillion. The motivation to request this raise now is mostly political and tied to the election next November, as noted by David Dayen at FDL:

In numbers that came out earlier this month, the deficit under current law for Fiscal Year 2012, ending September 30, is set to be right around $1 trillion. That doesn’t leave a lot of wiggle room for the White House to get to the next election without having to deal with the debt limit again, especially if new measures like the payroll tax go unfunded. [..]

That seems to be the motivating factor here. The White House simply does not want to go through another bruising debt limit fight again before the election. That places a limit on borrowing in the next fiscal year. It explains why the “fight” over the American Jobs Act wasn’t that major a fight, because passing all of the measures without paying for them immediately would require raising the debt limit again. And paying for them immediately would make the stimulative effect irrelevant. A couple of the measures, like the payroll tax and unemployment benefits, could conceivably pass while allowing the Treasury to squeeze past the elections under the debt limit. But the numbers are pretty close.

David Weigel at Slate points out, with some amusement, another reason to make the request now:

Both parties like to vote against debt limit hikes, when they can — makes for good TV ads. The problem this time is that they may never get a chance. The Washington Post‘s sharp congressional reporter Felicia Sonmez points out that Congress is actually out of town until January 17. [..]

Congress is still playing the unconstitutional game of pro forma sessions to prevent the president form making recess appointments. Technically, the resolution could be passed but it would have to be by unanimous consent and that is just not going to happen. So as Weigel notes unless some renegade congress critter demands a vote, even Congress keep from getting near the “burning wreckage” of this fight.