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Sunday, August 19, 2007

I Did It All Myself

The September 2007 issue of The Atlantic has two stories that further cement what will surely become the over-arching diagnosis of the psychosis of the Bush Administration and the problems and divisions they created for the country. Reading the stories doesn't produce any sense of surprise, just a disturbing sense of familiarity with both the arrogance and ignorance of key members of the Administration and with the long term damage produced as a result.

The cover story on Karl Rove, The Rove Presidency by Joshua Green, garnered most of the attention, partly because it hit the newsstands the day Rove announced his decision to leave the Administration but also for its synopsis of the complete 180 degree reversal in the legend of Karl Rove in a mere eighteen months. Days after the 2004 elections, a parade of political watchers were virtually proclaiming the beginning of a "pax Republicana", a period of Republican invincibility in government that would yield all of the things Republicans have been promising from government since the Nixon era, despite controlling the White House for twenty four of thirty six years from 1968 and controlling the House and Senate since 1994.

Leading the post-2004 election parade, of course was Karl Rove himself, patting himself on the back for his ingenious approach to elections and government, an approach one could term the 50.0000000001 percent solution. In Rove's warped view of the world, as long as policies and positions could be forged (both in the created or fabricated sense) that could secure 50.0000000001 percent of the vote, any citizens in the other 49.9999999999 percent were immaterial. We won, we're in control, SCREW YOU.

The article describes meetings and public appearances with reporters after the 2004 elections in which Rove not only touted the brilliance of this approach, but also used the election victory as a reminder to political friends and foes alike that the strategy would continue and even friends better play the Rove way or else. It then goes on to describe how Rove focused the political agenda of the entire Administration on policies believed to be crucial to the Republican fanatical faithful but of yawning interest to an electorate increasingly puzzled and annoyed over an Administration making zero progress on terrorism or even delivering water to hurricane ravaged Louisiana and Mississippi.

In a nutshell, the 50.0000000001 percent solution summarizes exactly what is wrong with the Rove strategy for winning friends and influencing people. It involves neither winning friends or influencing people. It amounts to political exclusion of your enemies and political terrorism of your "friends" to keep them in line with the party line dictated by a very isolated and dogmatic few. In essence, the story of Rove is the story of how the Republican Party became a hostage of a single political strategy and a single political mind who thought he could win elections by himself without alternative strategic input and thought he could subsequently fashion policy in the same vacuum chamber of thought.

The second story, Present at the Creation by Matthew Scully, was perhaps even more interesting, in the psychological train wreck sense. Scully was one of three principle speechwriters for Bush and "served" from April 1999 during the early days of the campaign through August 2004. His story reads like a psychotic, delusional version of Forrest Gump, with fellow Bush speechwriter Michael Gerson in the starring role. If you Google "speechwriter Gerson", you come across dozens of stories written in the past seven years which recount the tale of a strong Christian faith and unparalleled command of language and metaphor combining to allow our hero, Michael Gerson, to craft the development of nearly every notable turn of phrase uttered by Bush in his Administration.

Singlehandedly.

There's only one small problem with the stories.

They're not true. Not remotely true.

In a polite tone but in withering detail, Scully describes a variety of famous Bush appearances and speeches, describes the glowing accolades showered upon Gerson by the press, describes how Gerson himself fed the sound bytes to the reporters writing the bon mots, then describes what ACTAULLY happened within the team of Matthew Scully, John McConnell and Michael Gerson to craft those speeches. The essence of Scully's piece boils down to the following paragraph from the story:

Without fear of contradiction -- because it's all in the presidential records -- I can report here that Michael Gerson never wrote a single speech by himself for President Bush. From beginning to end, every notable speech, and a huge proportion of the rest, was written by a team of speechwriters, working in the same office and on the same computer. Few lines of note were written by Mike, and none at all that come to mind from the post-9/11 addresses -- not even "axis of evil."

After reading Scully's piece, one comes to at least one inescapable conclusion --- Michael Gerson has some serious psychological issues. He is not only a compulsive liar but possibly a megalomaniac suffering from delusions of his own genius. One also gets the impression his supposed Christian faith has done little to temper these behaviors, even when they directly or indirectly take credit from those he worked with every day. A real team player. So much for the "shalt not bear false witness" clause of the Ten Commandments.

If this were just one story about one actor in an otherwise average American Administration producing the average set of mistakes and problems, the Scully piece would just be an interesting political read with shades of schadenfreude. In the Administration of George W. Bush, the Gerson fabrications are just one chapter in an entire book where the exact same combination of ignorance, arrogance and religious self-righteousness combined to produce long-lasting damage to the country.

One gets the feeling when all of the major players of the Bush Administration reach the end of their road, they'll all request the same epitaph on their tombstone:

I DID IT ALL MYSELF

The only problem is they did it to us.

Friday, August 17, 2007

The Fed's Psychological Move

After attempting to prop up the US markets on August 9 and 10 of 2007 with an unprecedented $62 billion dollar injection and watching the markets slide for another week, the Fed called another surprise audible at the line of scrimmage on August 17.

Last week, it agreed to materially lower its quality threshold for collateral used to secure overnight borrowing for cash while initiating an unprecedented injection of funds on those looser terms. The move was prompted by major banks all reaching the same conclusion at the same time -- customer demand for cash outstripped their willingness to trust mortgage backed securities as collateral for loans among themselves. In essence, they all simultaneously realized they were holding the same empty bag -- or at least a bag filled with question marks.

Despite the $62 billion dollars injected August 9 and 10, banks and investors gained little confidence and stocks declined for four straight days despite additional injections from the Fed. On August 17, the Fed intervened again by lowering the rate it charges for "discount window" loans AND extending terms from overnight to thirty days. Manipulation of the discount rate is nothing new. Converting discount window terms from overnight to thirty days is another matter entirely. The extension of terms for discount window borrowing in the current climate is the financial equivalent of sending a teenager cross-country in a Camaro with a case of beer and a cell phone after they already crashed the family sedan pulling out of the driveway. The financial markets have already demonstrated

1) they cannot be trusted to enforce adequate credit standards at the retail level
2) they cannot be trusted to properly evaluate the risks of securities sold to one another
3) they cannot be trusted to cut their losses early instead of doubling down in search of a greater fool

With these facts already in evidence, the Fed's move reinvented fundamental mechanics of its "lender of last resort" function by creating MORE of the arbitrage opportunities that have already destabilized the entire banking system.

The only FOR argument for the Fed's action is that extending the terms gives the market additional time to reach some conclusions about the true value of the bundles of mortgage backed securities and let those adjustments trickle through the system in an orderly frenzy rather than an outright panic. The arguments AGAINST this move have already been itemized above. Banks have already demonstrated they cannot properly judge the risks associated with complex bundles of loan securities of unknown, mysterious provenance. Banks have already lost tens of billions of dollars attempting to operate hedge funds specializing in these high-risk segments of the market.

The players are all the same. The incentives are all the same. The stakes are getting bigger. The Fed continues to instill false confidence in a financial safety net big enough to catch every bank falling off the high wire at the same time. Are we really expecting a better result this time?

Virtually all of the talking head market watchers asked to comment on the August 17 intervention described it as a "mostly psychological" move by the Fed. For once, they're right. This is absolute INSANITY.

Saturday, August 11, 2007

Financial Markets Running On Empty

Glen Hubbard, former Chair of the Council of Economic Advisors, and Laurence Meyer, former Federal Reserve Bank Governor and current principal of noted economic consulting firm Macroeconomic Advisors, both appeared on a segment of The NewsHour on PBS on August 10, 2007. They addressed questions about the past two weeks of wildly fluctuation stock prices and the financial linkages between the hedge fund world, the sub-prime lending sector, the general banking industry and the overall economy.

Hubbard and Meyer are two of the highest profile "professional" experts on the economy and the financial sector. So how did the "pros" do at explaining the crunch? Not well. Their explanations both framed the wild fluctuations as a perfectly logical result from a sudden shift in the "risk spread" between the cost of "safe" money versus the cost of achieving higher returns as markets realized the risks taken to earn those higher returns were in fact much larger than previously understood.

Oh. Of course! Makes perfect sense. A little temporary confusion over the amount of risk I took on getting that 7% return instead of the safer 5% return. The Fed steps in, puts a little cash into the pockets of the big banks to calm the fears of the little guys driving the banks' temporary need for additional cash and presto! Everything will be smoothed out in a few days. Nothing to see here, move along…

Both Hubbard and Meyer indirectly commented on the staggering $38 billion dollars injected by the Fed during the August 10 trading day to calm the market but glossed over details about the very short term benefit of the intervention, the sheer size of the intervention and the quality of the assets swapped to free up the cash. For that, the mechanisms have to be looked at from other angles.


An Amateur Explains Borrowing from the Federal Reserve

How does the Fed actually "inject" the cash? Member banks needing extra cash to meet reserve rules or pay out cash for withdrawals can borrow money from the Fed at the Federal Funds rate, currently targeted at about 5.25%. Borrowing banks typically provide collateral for these loans in the form of Treasury Bills, which don't eat into the borrowing bank's cash reserve but are almost as "liquid" as cash in terms of their safety. These loans are typically termed repurchase or "repo" loans and typically have very short terms -- usually two weeks.

If the Fed decides the market for this money only requires X billion to be made available, that's all they loan out. If member banks become more nervous about cash needs and want to borrow more, they can borrow from each other or any other source but, like any other market, if demand exceeds supply, the price (the interest rate) goes up. The Fed "injects" additional cash by deciding to loan out more of its cash. As the supply gets closer to demand, the "price" of the money falls, reducing the interest rate.

If the Fed wants to reduce cash on hand in member banks to shrink the money supply, it can reverse the direction of a "repo" and act as the net borrower of the cash rather than the source. This bids up the interest rate but attracts cash in from member banks, thus reducing the money supply. Since the market for these short term funds varies daily and terms usually extend 14 days, at any given time, the Fed's books will show outstanding "repos" and "reverse repos".

In a balanced market where the Fed and all of its member banks agree upon the degree of risk in the world and their short term needs for cash, the rate on inter-bank loans matches the rate target publicly advertised by the Fed. Before the opening of trading on August 10, the rate on inter-bank loans between member banks had reached 6.0% in contrast to the 5.25% target rate of the Fed. In short, the member banks had become extremely nervous about demands for cash and the price of borrowing to get that cash was spiking up.


Do You Smell Smoke?

If the Fed loans money every day to member banks, what's the big deal about the $38 billion lent on August 10? The best way to answer that question is to pose another one: Did August 10, 2007 feel like September 11, 2001?

The first bit of perspective comes from examining normal values of outstanding repo and reverse repo agreements on the Fed's books. Each Thursday, the Fed publishes a summary reflecting the averages of that week's daily figures:

Report Date    Repos    Reverse Repos
August 9 $18.6B $31.6B
August 2 $25.8B $33.3B
July 26 $18.9B $31.5B
July 19 $22.5B $31.6B


http://www.federalreserve.gov/releases/h41/20070809/
http://www.federalreserve.gov/releases/h41/20070802/
http://www.federalreserve.gov/releases/h41/20070726/
http://www.federalreserve.gov/releases/h41/20070719/

As an example for clarity, the $18.6 billion shown for the report issued August 9 means that over the seven day period from August 3 to August 9, the value of outstanding repurchase agreements averaged $18.6 billion each day.

The $38 billion dollars of repo agreements issued August 10 represented a huge spike in "smoothing" from the norm. The $38 billion total is certainly an attention getter but were the events of August 10 nearly equal to the threats to market stability after September 11? Keep reading…

In the week after September 11, 2001, the markets faced all of the following unprecedented risks:

* stale, uncertain pricing for stocks and bonds from days of halted trading
* major social and political uncertainty after a critical financial and military attack
* major damage to the physical and electronic trading engines used in the markets
* billions in risk from uncertain claim amounts on major insurance carriers

To address the post September 11 crisis, the Federal Reserve used the repo mechanism to inject huge amounts of cash, including one infusion totaling $50.4 billion on September 19, the third trading day after markets re-opened. (#3) By September 20, total outstanding repos were valued at $75.3 billion. (#4)

The sequence and timing of the injections on August 10 are noteworthy as well. One day prior, the Fed injected $24 billion dollars yet the market plunged 387 points. (#5) Prior to the markets opening on August 10, an additional $19 billion was injected, yet the Dow dropped another 93 points immediately after opening. The Fed then had to publicly state to the market it would intervene throughout the day as necessary and, sure enough, it felt the need. The Dow dropped a net of 212 points before recovering to close only 31 points down.

A second key concern about the market picture is that central bank intervention was not limited to the United States. The European Central Bank announced its own weekend injection plan to the tune of $83.6 billion (US) beginning August 10 following a $130.6 injection completed on August 9. (#6) The Bank of Japan performed an equivalent operation worth approximately $8.4 billion (US) as its stock market plunged on fears over US mortgage problems. (#7). The need for simultaneous emergency interventions across multiple continents means the theories underlying a huge variety of derivative investments used to hedge against currency fluctuations and regional economic problems may all be at risk. Leveraged bets on those derivative instruments has wound up coupling the performance of investments thought to be independent or inversely correlated with one another, completely defeating the purpose of many of these investments.

Perhaps most disconcerting about the one-day $38 billion dollar injection is a change in practice announced by the Fed with the intervention. Each weekly report on the Fed's positions includes a footnote to the repurchase figures which states (emphasis added)

4 Cash value of agreements, which are collateralized by U.S. Treasury and federal agency securities.


In English, this means the Fed provides these repurchase arrangements and frees up cash for use by borrowing banks in exchange for very low-risk, "near-cash" securities. As very short term instruments, this improves liquidity throughout the system by narrowing the risk spread between the two classes of assets being swapped (cash to the banks, near-cash securities to the Fed) as much as possible.

In announcing its operations on August 10, the Fed actually stated it would accept mortgage backed securities (MBSs) as collateral. Of course, mortgage backed securities are the very instruments which have changed hands from sub-prime retail lenders to MBS intermediaries and now to top-line banks who have been purchasing the higher interest debt hoping to collect interest payments to help them pay higher competitive rates to their own retail money market customers.

Just stop and think about that for a moment. Some of the most risky debt floating around the financial industry that is CAUSING the financial instability is now being accepted by the Federal Reserve central bank as collateral for daily "liquidity lending" at the core of our banking system. This makes about as much sense as regular banks lending additional cash to pay-day loan stores experiencing a spike in demand for emergency cash and accepting held pay stubs from their end customers as collateral even though half of the pay stubs are from companies already on the brink of bankruptcy. The need by member banks to offer mortgage backed securities as some of their collateral on daily inter-bank borrowing means even top-line banks have virtually NOTHING left in the tank as a cushion to protect them from any surprises in their loan portfolios or the investments they've made trying to collect higher returns to turn around and offer higher returns to compete in a bubble financial climate.

Were the financial risks averted on August 10 nearly as dangerous as those in the days after September 11, 2001? The Fed certainly seemed to think so. In the absence of any other social, political or military input to cause a panic, the Fed's decision to intervene on a scale not seen since that obviously crucial period should make every American ponder how our economy is being operated and for whom. None of us have seen this exact movie before. It's still being filmed on the lot. However, I'm guessing the screenplay doesn't end with the words "soft landing."

===================

#1) http://www.ft.com/cms/s/0b908a2a-4767-11dc-9096-0000779fd2ac.html

#2) http://findarticles.com/p/articles/mi_qa3678/is_200201/ai_n9039172

#3) http://www.cnbc.com/id/20211772

#4) http://www.federalreserve.gov/releases/h41/20010920/

#5) http://www.bloomberg.com/apps/news?pid=20601103&sid=aKF5hoe_fU2Y&refer=news

#6) http://money.cnn.com/2007/08/10/news/international/bc.centralbanks.reut/

#7) http://www.komotv.com/news/business/9086551.html

Sunday, August 05, 2007

Operation Squirm

After watching the American public sit in stunned or ignorant silence through a six year assault on American's worldwide reputation, our budget and our Constitution, it is frightfully apparent we cannot tolerate another major election driven by the traditional political parties and media outlets. The Legislative branch is abandoning its obligation to oversee the Executive branch's enforcement of the law in exchange for not being subjected to proper law enforcement of its own activities. The Executive branch has repeatedly provided false information about proposed legislation involving issues ranging from half-trillion dollar ten-year prescription drug coverage plans to domestic spying programs which violated existing laws. The Judicial branch has contributed to an undermining of basic property rights with rulings on eminent domain abuses aiding big business at the expense of individual Americans.

Americans have been notoriously short sighted for decades when faced with issues involving complicated multi-year tax or spending plans or issues combining domestic policy and international politics. The behavior of the major media outlets on both broadcast and cable TV all but disqualifies them from being trusted to educate the American public about the choices we face or to ask the right questions on our behalf of our elected officials and follow up on their answers.

It is up to We The People to use the tools at our disposal to reorient the political process to suit our purposes.

Maybe one way of doing that is to collectively assemble a list of questions sharpened to a razor's edge that accurately, concisely and inescapably frame the failure of our leaders to do the right thing and serve their own interests rather than those of We the People. Armed with that list of questions, every voter of every affiliation needs to hammer candidates mercilessly at every baby-kissing shopping mall appearance, Rotary Club meeting, Chamber of Commerce convention and every national or local debate with these questions.

The goal is to frame these questions to be so "non-partisan" and so well-crafted so that A) the American public can instantly "get it" and understand the absurdity of the situation our government has created on the issue and B) the politician answering the question has no where to hide when a simple, coherent answer cannot be provided.

Think of it as "Operation Squirm".

The real goal is to metaphorically blow the blow-dried, talking points tested candidates off the national stage and identify the REAL candidates of either party that have a grasp of basic finance and basic government and can articulate a coherent plan for the country that has more than one degree of synergy with other polices.

I'll toss out some questions to get the process started.

====================

WHO IS OUR ENEMY? -- Can you explain why the American government:

1) spent $400 billion on the war in Iraq to topple a dictator dependent on a Sunni minority?
2) provided billions to a new interim government led by Shia Muslims allied with our enemy Iran?
3) is now soliciting help from Iraqi Sunnis who have supported our enemy Al Qaeda while we aided Shia groups?
4) is now selling $20 billion of weapons to Saudi Arabia, which provides 55 percent of the foreign fighters in Iraq shooting at our troops?

Shia and Sunni sects haven't "changed sides" in roughly 1400 years. Why are we formulating policies based upon them switching sides every year?

====================

TAX OR BORROW? --- Explain to the American public your criteria for deciding between current taxes and borrowing to pay for a program. Do you roll your monthly electric bill into your home's 30 year mortgage? (Then why would you saddle a taxpayer who hasn't been born yet with the cost of a program providing short term benefits to a current citizen by borrowing money to pay for it?) Do you solicit your neighbors to pay part of your mortgage even through you're the only one living in your house? (Then why are federal dollars being used for local-interest projects such as tractor museums, etc.?)

====================

CORPORATE VERSUS INDIVIDUAL BANKRUPTCY -- If you believe the changes to personal bankruptcy laws enacted in October 2005 were too onerous in some areas, describe how you would alter those rules without allowing out-of-control credit card users to saddle other Americans with their bad debt. If you believe the changes were appropriate, explain why a clampdown on personal bankruptcy is justified while laws governing corporate bankruptcy encourage a similar cavalier approach to pension obligations and union contracts that stick American taxpayers with the costs of underfunded pension plans via the PBGC while executives of those firms receive outsized pay for helping stick those costs to taxpayers.

====================

Any other suggestions?

The August 5 Republican Debate

Republican Presidential candidates met on the campus of Drake University on August 5, 2007 for a debate televised on ABC's This Week. Given the hour allotted and the number of candidates, the format didn't allow for terribly detailed discussion. However, two key items of interest to all voters emerged from the discussion.


Huckabee Gets It (sort of), Brownback Doesn't

During the August 5 debate for Republican candidates in Iowa, a question was asked about the current state of the war in Iraq and its future. Texas Congressman Ron Paul answered by stating America needs to withdraw given the complete absence of any political compromise to better unify the Iraqi people and government. Surprisingly, his comments drew significant applause, along with the only boos of the debate. California Congressman Duncan Hunter stated a position on the other extreme, calling for continued support of the current strategy with little change.

George Stephanopolis then summarized those states as the poles of the issue and asked if there was any middle position. Arkansas Governor Mike Huckabee almost got it right. His reply stated that every time we Americans fill our tank, our money is making the Saudi royal family a little bit more wealthy. At the same time, "money" (generic money) is going to fundamentalist groups who are causing the problems we are fighting. Huckabee called for a serious effort by America to stop the loop that transforms our petro dollars into bombs and bullets aimed at our soldiers and interests by materially reducing our dependence on foreign energy. Oohhh, so close!

Whether out of politeness or not quite grasping the whole picture, Huckabee failed to outline the DIRECT connection between our gas tanks, Saudi revenue, and funding of terrorists. The link between Saudi Arabia and the terrorism we are fighting should not be a secret to Americans and should not be unmentionable in any public debate of our future strategy. Fifteen of the nineteen hijackers on September 11 came from Saudi Arabia. Between 45 and 55 percent of the foreign fighters in Iraq attacking our soldiers are from Saudi Arabia. (#1) Saudi oil revenue has produced consecutive generations of young fundamentalist malcontents whose family wealth affords them the luxury of playing "global jihadist", making trouble across the mideast.

In contrast to Huckabee's overall appropriate policy summary, Kansas Senator Sam Brownback earned a BZZZZZZZZT. His analysis calls for the Iraqi political solution to revert to a three-state solution mirroring the political boundaries that existed in the region prior to World War I. Brownback was clearly trying to win the support of those who view our failure as being caused by an attempt to "impose" a country and a government on factions that never did and never will naturally get along. It barely makes sense if you only look at the land and people within present day Iraq. It makes no sense when you look at the larger neighborhood.

The Kurdish region has oil reserves that can support a Kurdish state but a standalone Kurdish state is viewed as a threat to neighboring Turkey. The Shi'ite dominated area of Iraq also has oil reserves that could help sustain a "Shia" state but such a state would quickly fall into the political orbit of Iran, which the Saudis would immediately view as a threat, leading them to broaden support for Iraqi Sunnis and unravel any chance of reducing sectarian violence in the region. The Southern Sunni portion of Iraq has relatively little oil wealth and would have trouble financially surviving alone. A three-state solution would also isolate the Kurdish and Shia regions from the engineering and operational talents held primarily by the Sunnis who held most of the government and infrastructure positions in the Baath'ist regime.

While America cannot impose sense and geopolitical wisdom on the Iraqis, we shouldn't be actively encouraging a strategy that would clearly harm the interests of the Iraqis themselves and neighbors in the region in both the short term and long term. Given the animosities between its neighbors in Iran, Turkey, Pakistan and Saudi Arabia, one would hope it will become increasingly clear to the Iraqi people that their best strategy for survival in the short term and long term peace is remaining as a unified, moderate country that is viewed by its neighbors as sufficiently benign and not requiring more meddling.


Giuliani on Taxes

The I-35W bridge collapse in Minneapolis prompted a question on taxes that produced a talking point response from former New York Mayor Rudy Guiliani. The question was simple -- do the problems with our infrastructure as illustrated by the collapse of a bridge warrant additional gas taxes to help fix those problems? Guiliani responded by citing a liberal bias in the question that assumed you have to raise taxes to raise revenues. He basically claimed that tax revenues in New York City actually rose during his tenure because he lowered taxes instead of raising them. These two events certainly occurred at the same time in the 90s. However, Guliani is confusing correlation with causation. I suspect the vast majority of the increase in tax revenue enjoyed by New York City was due to bloated Wall Street incomes during the Internet bubble which itself was fueled in part by Alan Greenspan over-stoking the economy leading up to 2000 in anticipation of a Y2K economic hiccup that never materialized.

Giuliani's take on tax strategy needs to be carefully reviewed by all voters of all affiliations. America has added $3.2 TRILLION dollars to the national debt during the current Administration. (#2) Yearly interest payments on that debt are roughly $465 billion --- that's an Iraq war EVERY YEAR. Politicians who claim we can tax-cut our way out of these massive structural deficits while enacting even MORE unfunded entitlement programs are the SINGLE BIGGEST THREAT to American's long term survival.


Overall

Whether you agree or disagree with their particular policies, only Ron Paul, Mike Huckabee and Rudy Guiliani seemed to articulate a consistent thread of philosophy and strategy across all the questions raised in the debate with Romney coming in a close fourth. The rest, either by their demeanor or answers to their questions, basically came across as irrelevant. As someone vehemently opposed to the current non-policy in Iraq, all but Ron Paul seemed too tied to the "speak no evil of a fellow Republican" philosophy when it came to both Iraq policy and the role of a Vice President and the role of Dick Cheney in particular. As someone who doesn't want any of these candidates to win, it is still important that the Republicans have serious, meaningful debates that get through all of the foreign and domestic issues facing the country and get Americans thinking about ALL of the possibilities. I think the August 5 debate indicates the Republicans can do that. For that, they get kudos.

===================

#1) http://www.latimes.com/news/nationworld/world/la-fg-saudi15jul15,0,3132262.story

#2) http://www.treasurydirect.gov/NP/NPGateway

Friday, August 03, 2007

A Claim of Legislative Privilege?

http://news.yahoo.com/s/ap/20070803/ap_on_go_ot/raid_on_congress

WASHINGTON - The FBI violated the Constitution when agents raided U.S. Rep. William Jefferson's office last year and viewed legislative documents, a federal appeals court ruled Friday.

The court ordered the Justice Department to return any privileged documents it seized from the Louisiana Democrat's office on Capitol Hill. The court did not order the return of all the documents seized in the raid.

Jefferson argued that the raid trampled on congressional independence. The Justice Department said that declaring the search unconstitutional would essentially prohibit the FBI from ever looking at a lawmaker's documents.


=======================

American government and corruption continues to be more bizarre than any fiction writer could imagine.

We have a Republican President repeatedly citing "executive privilege" on issues ranging from leaks of information about CIA agents, hearings about whether the Attorney General lied to Congress while defending possibly inappropriate firings of US Attorneys and even Army investigations into the friendly fire killing of a war hero.

At the same time, the FBI is pursuing criminal prosecution of a Democratic Congressman caught with $90,000 in cash in his freezer at his home that was part of $100,000 paid to him in bribes by a telecommunications firm as part of a larger $500,000 in bribes he is alleged to have collected from multiple parties.

Taking a cue apparently from the Bush White House, the Congressman's defense team argued that an FBI seizure of documents inside his Capital Hill office violated terms of the "Speech and Debate clause" of the Constitution and that the material must be returned and cannot be used in the prosecution.

The US Court of Appeals in DC now rules in favor of Jefferson, despite the fact that the speech and debate clause was intended to prevent the Executive Branch from arresting, detaining, or otherwise preventing a member of Congress from physically voting on a specific legislative matter in opposition to the President's preferred outcome. It was not intended to provide each member of Congress a 20 foot by 20 foot bubble of immunity inside their office to be used to store incriminating evidence about their conduct that could never be compromised by a law enforcement search.

So is this where the country is at? Where the Executive and Legislative branches are claiming the right to be immune from incriminating evidence being gathered about their conduct that directly affects public policy while millions of individual Americans are subjected to warrantless wiretapping? Where the courts uphold those fictitious claims by inventing constitutional protections where none were intended or warranted? Where every branch of government is so bent on protecting its own dubious legal and ethical powers of fiat that it is not willing to block meritless claims of protection and power of the other branches that are causing repeated, serious harm to the country?


WTH

Wednesday, August 01, 2007

The Four Horsemen of an Apocalypse in Democracy

There's a pretty famous literary tradition of bad omens coming in fours. The great American experiment in democracy had four omens of its own in the past week.


Tobacco Regulation -- The United States Congress proposed new laws providing more authority to the FDA over the manufacture of cigarettes, a product consumed by about 48 million Americans (#1) and a product that consumes about 400,000 Americans yearly (#2). The insanity of tighter "reglation" over the manufacture of a product that kills people boggles the mind. In a country that worries about flecks of lead-based paint affecting the health of children, the idea of "regulating" a product that contains 43 known carcinogens and is used ROUTINELY around children who have no choice about its use in their presence is pure hypocrisy. If America really wants to solve the tobacco problem, here's a simple three point solution:

1) Protect non-smokers from subsidizing medical care for smokers by permitting insurance companies to deny medical coverage for any lung related disease if the patient cannot produce an x-ray showing pink lungs.

2) Keep tobacco lawsuits from wasting the time of our courts and prevent trial lawyers from making money over the uncertainty over tobacco liability by explicitly eliminating all liability for damages caused by smoking. If you, rugged individualistic American stud, want to smoke, knock yourself out. If you willingly consume a product with a label that says THIS WILL KILL YOU, guess what? YOU ARE LIABLE. And dead. Us non-smokers are tired of hearing about the whole issue.

3) Make smokers fund their own highly predictable medical expenses with their own addiction. Use current statistics to determine average lifetime health costs per smoker and the average number of packs smoked per smoker over that period, divide the costs by the number of packs and impose a fixed "Black Lung Tax" on every pack sold. Put the tax proceeds in a "trust fund" invested in 30-year Treasuries.

The fact that the American government cannot properly address such an obvious problem with a $92 billion dollar yearly impact is a horrible indictment of our process for setting public policy.


Political Games Over Iraq -- Iraq has moved closer to a political collapse that many within the country have been expecting for months. As expected, the Iraqi Parliament adjourned for the month of August with absolutely no proposals for unifying policies or signs of deals in the works that can take the country off a high boil. Shortly after adjourning, Sunni factions in the Parliament announced their withdrawal from Parliament, putting pressure on Iraq's Prime Minister and further heightening sectarian tensions in the country.

While this was happening, Republicans and the White House were feverishly working to simultaneously lower expectations, greasing the skids for deferring the September do-or-die date to November, while also declaring success in areas where surge troops are deployed, ingoring results in other areas we've de-emphasized. While American deaths dropped in July, Iraqi civilian deaths in July 2007 increased 33 percent, to 1652, exceeding the level experienced at the beginning of the so-called surge. It was a good story for the two days it lasted.

The Democrats in Congress are doing absolutely no better. Not to be out-done by the "Do Nothing" Iraqi Parliament, members of the Democratic leadership have decided to prevent any Republicans from introducing any Iraq related proposals until September -- the political tactic essentially being "block our votes, we'll block yours." Of course, this is a mindblowingly effective strategy.

On a playground.

Filled with seven year olds.

Besides ignoring the lesson that should have been apparent from the November 2006 election that voters are tired of games, the Democrats are completely clueless about the practical value of having remaining supporters of the current strategy get up in public and attempt to explain their support. First, all you have to do is let them talk -- they'll un-sell the strategy themselves. Second, until Congress can find enough people with a brain and a conscience to force a change in strategy, letting them talk about Iraq prevents Congress from moving forward on other moronic proposals. Like, say, regulating the manufacture of cigarettes.


More Fuel to the Fire --- At a time when American forces experience deaths and life-shattering injuries nearly every day in Iraq, reports from a variety of sources estimate the percentage of foreign fighters in Iraq to be between 45 and 55 percent from Saudi Arabia. (#3) (#4). Saudi Arabia, the same country that furnished 15 of the 19 hijackers on September 11, 2001. The same country that has implemented no meaningful crackdown on fundraising providing support for Sunni jihadist organizations within or outside the country.

At a time when America is trying to prevent a fragile coalition government in Iraq with Shi'ite leadership from completely collapsing, the White House brain trust has decided now would be a good time to try curry favor with the Saudis by selling them $20 billion worth of fighter planes. What exactly does Saudi Arabia need more fighters for? If Saudi oil is at risk, does anyone seriously believe the Saudis will be fighting for themselves?

This deal, like every other Saudi arms deal, is more like a bizarre lend-lease program with two twists. American consumers fill their tanks and hand their dollars to Saudis who hand some of those dollars to American defense contractors who make planes the Saudis pretend to own while American ships its own planes, carriers and troops into the region any time Saudi Arabia is really threatened. The twist is amidst the dollar transfers, defense contractors get a chance to corrupt our political process and the Saudis get a chance to skim off some money to fund the very terrorist organizations we are supposedly fighting.


Presidential Debates as "Project Green Light" for Slackers -- In an misguided attempt to up the "hip" factor of Presidential debates, Democratic candidates recently participated in a debate "forum" in which questions of an informed, sophisticated voting public were submitted as personal videos on YouTube. Recognizing the potential for publicity, TV deals, and God knows what else if a quirky video happened to be selected, two teenagers or early 20-somethings still living at home with their parents (Wayne and Garth?) concocted a video depicting a snowman asking a question about global warming. Recognizing the potential for at least an easy three minutes of publicity for future debates, YouTube and CNN actually selected the video for use in the "debate." That wasn't even the worst question selected for the program.

Republican candidates immediately expressed concern about similar stunts occurring with a similar debate to be held in September and several announced their withdrawal from that forum. Democrats jumped on this reluctance as a sign of Republican unwillingness to engage with the American people. In an environment where Democrats refuse to answer questions posed in a FOX televised debate or Republicans refuse to answer questions posed in a stunt video submitted by slackers hoping for a sitcom deal, I'll side with the Republicans.

We're fighting two wars, we're $8.9 trillion in debt, our economy will collapse overnight if our supply of $78 / barrel oil is cut off, and we are funding BOTH SIDES who are sitting on top of that $78 / barrel oil, and this is the best we can do?

The leading horse is white...

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#1) http://www.americanheart.org/presenter.jhtml?identifier=4559

#2) http://www.cdc.gov/tobacco/data_statistics/Factsheets/cig_smoking_mort.htm

#3) http://www.latimes.com/news/nationworld/world/la-fg-saudi15jul15,0,3132262.story

#4) http://www.msnbc.msn.com/id/8293410/