Sunday, August 31, 2008
Saturday, August 30, 2008
"In the dozen or so years until 2007, it had become as close to a global economic orthodoxy in economic policy making as we ever see: Central banks should target a low and stable rate of inflation. This replaced earlier orthodoxies--such as that central banks should maintain a fixed exchange rate with an ounce of gold. ... The U.S. [Fed], the Eurpoean Central Bank, the Bank of England and other rich-country central banks have generally made 2% inflation, give or take a smidge, the touchstone of good performance. Fed officials have for 20 years paid public obeisance to the statutory 'dual mandate,' to maximize employment as well as stabilize prices. ... Yet one of the great attractions of inflation targeting was that it only appeared to constrain central bankers discretion. ... The irony of the collapse of inflation targeting's intellectual edifice is that it has long been championed by Fed Chairman Ben Bernanke. ... A sudden 'exogenous shock' cuts demand to 98 widgets. But the central bank can then print money to induce consumers to buy up the two excess widgets, thereby stopping the factory from cutting production capacity and causing a 'recession.' It claws back the excess money when 'equilibrium' is restored. But what if this analogy is deeply flawed? What if the economy is much more like two factories than one? One factory produces say, real-estate widgets, and the other produces everything else. If consumers decide they want fewer real-estate widgets and more of some other widgets, it will take time and resources for capacity to shift from the first factory to the second. 'GDP' growth will decline during that time. ... By printing more money, the central bank only makes it longer and more painful, not least by producing significant and prolonged inflation", my emphasis, Ben Steil, (BS) at the WSJ, 18 August 2008.
I agree with HS's diagnosis and have said the same thing myself, I disagree with his perscription. The Fed ain't ready for reform. It can only be killed. Who decides when we have a "crisis"? Why should banks get special Fed treatment? Why can't Joe Blow borrow from the Fed?
"Meanwhile U.S. Secretary of State Condoleeza Rice will attend an emergency session of [NATO] in Brussels on Tuesday to fashion a more detailed response to Russia's actions in Georgia and the disputed territories of South Ossetia and Abkhazia. 'The damage done to Russia's reputation and the damage to people's views of Russia's suitability for some of these institutions, that damage can't be undone,' Ms. Rice said Sunday on CBS television's 'Face the Nation'," WSJ, 18 August 2008.
"Five months ago, President Mikheil Saakashvili of Georgia, long a darling of this city's diplomatic dinner party circuit, came to town to push for America to muscle his tiny country of 4 million into NATO. ... At the White House, President Bush promised him to push hard for Georgia's acceptance into NATO. ... The Russian president warned that the push to offer Ukraine and Georgia membership in NATO was crossing Russia's 'red lines,' according to an adminstration official close to the talks. ... The story of how a 16-year, low-grade conflict over who should rule two small mountain regions in the Caucasus erupted into the most serious post-Cold War showdown between the [US] and Russia is one of miscalculation, missed signals and overreaching, according to interviews with diplomats and senior officials in the [US], the European Union, Russia and Georgia. In many cases, the officials would speak only on condition of anonymity", Houston Chronicle, 18 August 2008.
"[US] Secretary of State Condoleeza Rice is supposedly a specialist on Russia, yet one would not know that by looking at her triumphal statement that ... (NATO) will defeat Russian aims in Georgia. ... NATO is 'considering seriously the implications of Russia's actions for the NATO-Russia relationship', said a statement of the 26-member alliance. ... Short of destabilizing Europe, there is practically nothing the US can do about [Georgia], except fire more verbal volleys, as Rice has been doing relentlessly since the outbreak of Russia-Georgia hostilities on August 7-8. ... There are four interrelated causes of the present crisis: irredentism in Georgia, NATO's expansion, the US's plan to station an anti-missile system in Eastern Europe, considered a first-strike capability by Moscow, and the geo-economics of energy security. ... On the US's part, instead of applying the arithmetic of political realism and coming to terms with the sources of Russian anger, that is, at NATO's unwelcome, intrusive and threatening expansion near Russian territory, the US is now seeking to augment Russia's insecurity by pushing more aggressively for NATO's role and influence in the region and beyond. ... Such bellicose US reactions are neither fully in sync with Europe's needs and interests, nor that of the US's own interest--such as engaging Russia in the NATO-Russia Council. Whereas Moscow's legitimate national security worries have been completely side-stepped and ignored in Washington (and to a lesser extent in London), other Western leaders, such as those in Paris and Berlin, have been more cautious and one may even say considerate of the Russian point of view. ... It is simply not wise to corner the Russian bear and provoke it into aggression by taking blatant initiatives that threaten Russian national-security interests", Kavej Afrasiabi at http://www.atimes.com/, 20 August 2008.
"WAR doesn't change anything! How many times have we heard the claim from self-righteous leftists protected by their betters? ... Condoleeza Rice flew to Brussels to huff and puff, but NATO isn't about to blow Putin's house down. We'll get an earnest statement of concern, the cancellation of military exercises with the Russians and an easy-to-retract suggestion that, just maybe (if the astrologers approve unanimously), there might be a place in the Atlantic alliance for Georgia and the Ukraine in the distant future. In an act of breathtaking daring, NATO ministers even put down their teacups and agreed to term the Russian invasion 'disproportionate.' Boy, Putin's scared now. ... War doesn't change anything? Wish it were true--but war has been humankind's preferred means of effecting change. ... We're all--right and left--getting an in-your-face lesson about how the world really works. Passive resistance only has a chance when your opponent believes in the rule of law and respect for human rights. Gandhi was effective against law-abiding Britain, but he would've frozen to death in the Soviet gulag--if he'd lived long enough to reach the camps. ... But war does work. ... Berkeley radicals don't take midnight strolls through the toughest streets in Oakland. They know that some human beings are innately violent--but admitting it would be unbearable. ... The bitter truth is, none of us can move Russia. ... Putin believes in force. ... Imagine a President Barack Obama pitted against Putin--the left's new messiah would be gobbled up in one bite", Ralph Peters (RP) at http://www.nypost.com/, 20 August 2008.
"The international community has not done enough to push back. ... The fact is, Putin and his associates in the Kremlin don't accept the post-Soviet realities. ... But the West, and particularly the U.S., should continue to mobilize the international community to condemn Russia's behavior. ... But Russia must be made to understand that it is in danger of becoming ostracized internationally. ... If the issue of Georgia's territorial integrity is not adequately reasolved ... the U.S. should contemplate withdrawing from the 2o14 Winter Games, to be held in the Russian city of Sochi", Zbignew Brezinski (ZB) at Time, 25 August 2008.
"As Israel was provoked in 1967, so, too, was Russia provoked. ... If we proceed on a course of isolating Russia from the West, keeping her out of the [WTO], throwing her out of the G-8 and ending cooperation with NATO, where do we think Russia will go? Where did Il Duce go, when he was excommunicated from the West? ... Does the Stanford provost have any idea where the end of this road lies, upon which she and Bush have started the [US]? ... If the [US] intends to bring Georgia and Ukraine into NATO and arm them to fight Russia, why should Russia not dissolve the Treaty on Conventional Forces in Europe and move her tank armies into Belarus and up to the borders of Estonia, Latvia and Lithuania? ... In March 1939, Britain pledged to declare war and fight Germany to the death to guarantee the sovereignty and territorial integrity of Poland, How did that one turn out for Britain and Poland? Before we start down the road of isolating and encircling Russia with weak NATO allies, let us think through Gen. Petreus' question in 2003 about Iraq. 'Tell me, how does this thing end?' But, then, these folks never seem to think anything through", Pat Buchanan (PB) at vdare.com, 25 August 2008. The link: http://vdare.com/buchanan/080825_russia.htm.
Richardson is as knowledgable about the UN as Obama is about Nuremberg, or Auschwitz. Russia should shock the elites of the world. It should support Richardson's UN resolution, let him draft it and introduce it into the Security Council. Then do what it pleases. Long live the Czar!
Friday, August 29, 2008
"Hold on to your hats. Common sense and constitutionalism have prevailed in the California judiciary. Last week, the Second District Court of Appeal in Los Angeles declared that parents who homeschool don't need teaching credentials in order to educate their own children. Amazingly, the three judges were overturning their own February decision. ... What prompted this fit of judicial restraint? In a case the provoked outrage across the country, lawyers for the Los Angeles Department of Children and Family Services earlier this year invoked the state's truancy laws to place two homeschooled children into public schools after reports of abuse by their father. ... The families of the 166,000 children who are homeschooled in California, as well as Governor Arnold Schwarznegger, registered their protests. And thanks, at least in part to public pressure, the court agreed to rehear the case", my emphasis, Editorial at the WSJ, 18 August 2008.
I have long been an Andrew Jackson (AJ) fan, see my 24 December 2007 post. SF, welcome aboard.
Not all all, WSJ. Constitutionalism had nothing to do with it. We had a "Patrick Buchanan-Andrew Jackson moment". The Los Angeles court realized: California has a $17 billion 2008 budget deficit, 172,000 prisoners, prisons at 159% of capacity and if California's localities tried to enforce this ruling, there would be a "waiting list for jail". Getting into Harvard would be easier than a California prison. Further, Schwarznegger's opposition made the ruling unenforceable. Schwarznegger took a page from AJ's book, see my 26 January 2008 post. To avoid public ridicule and having its order ignored, the court retreated in the face of Pat Buchanan's advancing "peasants with pitchforks". Even the teacher's union couldn't save this ruling for its members. Legal "reasoning", whatever that is, had nothing to do with it.
Thursday, August 28, 2008
Another SEC enforcement division triumph.
Wednesday, August 27, 2008
I agree with SH. I am still amazed USD interest rates are as low as they are.
Tuesday, August 26, 2008
Monday, August 25, 2008
Sunday, August 24, 2008
Saturday, August 23, 2008
Friday, August 22, 2008
The FASB is gutless. The supposed changes are unnecessary. The problem is: failure to properly apply the existing rules and the PCAOB's unwillingness to discipline the Big 87654 firms which audit big banks. The existing rules are fine. See my 15 December 2007 and 6 February 2008 posts.
Thursday, August 21, 2008
I agree with Morris. Connie Yu, are you listening yet?
"Russia's only worry is the United States, which currently has a lame-duck president with low approval ratings, and is exhausted after Afghanistan and Iraq. But more importantly, America's attention is preoccupied with a presidential race, in which 'world citizen' Barack Obama has mesmerized Europe as the presumptive new president and soon-to-be disciple of European soft power. ... Most importantly, Putin and Medvedev have called the West's bluff. ... Together with the dismal NATO performance in Afghanistan, the Georgian incursion reveals the weakness of the Atlantic Alliance. The tragic irony is unmistakable. NATO was given a gift in not having made Georgia a member, since otherwise an empty ritual of evoking Article V's promise of mutual assistance in time of war would have effectively destroyed the Potemkin Alliance. ... Indeed, tired of European lectures, the Russians are now telling the world that soft power is, well soft. Moscow doesn't give a damn about the United Nations, the European Union, the World Court at the Hague, or any finger-pointing moralist from Geneva or London. Did anyone in Paris miss any sleep over the rubble of Grozny? ... Russia does not need a global force-projection capacity; it has sufficient power to muscle its neighbors and thereby humiliate not merely its enemies, but their entire moral pretensions as well. The Russians have sized up the moral bankruptcy of the Western Left. They know that half-a-million Europeans would turn out to damn their patron the United States for removing a dictator and fostering democracy, but not more than a half-dozen would do the same to criticize their long-time enemy from bombing a constitutional state. ... We talk endlessesly about 'soft' and 'hard' power as if humanitarian jawboning, energized by economic incentives or sanctions, is the antithesis to mindlesss miliary power. In truth, there is soft power, hard power and power-power--the latter being the enormous advantages held by energy rich, oil-exporting states", my emphasis, Victor Davis Hanson at http://www.nationalreview.com/, 12 August 2008.
"The Russian are alcohol-sodden barbarians, but now and then they vomit up a genius. Prime Minister--and now generalissimo--Vladimir Putin is Mother Russia's latest world-class wonder. Let's be honest: Putin's the most effective leader in the world today. ... Not a single free-world leader currently in office can measure up to Czar Vladimir the Great. ... Putin not only knew what he was doing--he knew exactly what others would do. ... Strategy and conflict hinge on character. Pution's character is ugly, but he's certainly got one: On the world stage, he comes across as a man among munchkins. ... The empire of the czars hasn't produced such a frightening genius since Stalin", my emphasis, Raph Peters (RP) at the NY Post, 14 August 2008.
"Russia won. Diplomacy failed. No state or alliance will reverse the decision. When President Bush spoke out strongly on Friday, Moscow ignored him: Words mean nothing to Prime Minister Putin, a man who regards all compromise as weakness. ... Georgia will never be whole again. ... Knocked off balance politically, American leftists rushed to blame both America and democratic Georgia. Their hypocrisy rivals Putin's. ... Putin is sending an unmistakable message to all other independent states that once belonged to Moscow's empire: Russia will not tolerate true democracies or Western orientations on its 'eternal property'. ... Apart from some tactical slovenliness on the part of the military, things have gone perfectly for him. His strategic acumen, audacity and ruthlessness easily make him 2008's 'Man of the Year'. ... Putin's a Russian nationalist. He would have been as at home in the age of Peter the Great as in our time", RP at the NY Post, 16 August 2008.
I agree in part with JRN. JRN writes of "the past nine years". We began bombing Serbia in March 1999, nine years ago. Is that a coincidence? Washington doesn't want a break with Moscow? Huh? What did FDR do to bring us to war with Japan? See Mauritz Hallgren's The Tragic Fallacy, 1937. The next to the last chapter is titled, "Japan the Chosen Foe" and describes FDR's provocations of Japan which exploded across the headlines on 7 December 1941. I disagree with JRN, that the Russians are "assuring the Iranians of Moscow's readiness to confront the U.S.". I think Russia is inviting us to attack Iran! In effect saying: "see what we did in Chechnya. See what we are doing in Georgia. Get off the stick and do likewise in Iran. We border Iran, will join the party and split the proceeds". The Russians are not provoking anything so much as reacting to our provocations. A legal case illustrates. "The fourth assignment was to the following language: 'How can you find a deliberate intent to kill? Do you have to see whether or not the man had that intent or not in his mind a year or month or day or hour? Not at all, for in this day of improved weapons, when a man can discharge a gun in the twinkling of an eye, if you see a man draw one of these weapons, and fire it, and the man toward whom he presents it falls dead, you have a deliberate intent to kill, as manifested by the way he did that act',", Allen v US, 164 US 492, 495 (1896). "The sixth assignment is to the following language: 'The law says we have no power to ascertain the conditions of a man's mind. The best we can do is to infer it more or less satisfactorily from his acts. A person is presumed to intend what he does. A man who performs an act which it is known will produce a particular result is, from our common experience presumed to have anticipated that result, and to have intended it'. ... This is nothing more than a statement of the familiar proposition that every man is presumed to intend the natural and probable consequences of his own act", 496. We: attack Serbia, criticize Russia for charging the Ukraine market prices for natural gas, bring countries bordering Russia into NATO, yet expect Russia not to react adversely? I agree with Michael Savage, radio talk show host on this. We apparently learned nothing from Britain and France's 1939 guarantee of Polish borders, which in part led to World War II, see my 24 February 2008 post.
Wednesday, August 20, 2008
"The [FBI] says the evidence, including hundreds of pages of unsealed documents, proves that Dr. Ivins was the sole person responsible for the 2001 anthrax mailings. ... He committed suicide on July 29 after federal prosecutors informed him they intended to charge him in the attacks that killed five people and injured 17. ... U.S. Attorney Jeffrey Taylor [JT] ... said there was no physical evidence that tied the researcher to the mailbox in Princeton. where the letters were mailed, but said authorities reached a 'reasonable conclusion' that it was possible he had done so, based on his past actions. ... Paul Kemp, Dr. Ivin's attorney, accused federal prosecutors of conducting 'an orchestrated dance of carefully worded statements, heaps of innuendo and a staggering lack of real evidence.' ... The FBI now faces a major challenge: making its version of events stick over the many competing narratives that have arisen in the intervening years, and over its own prior mistakes. ... 'We believe we could have proven Dr. Ivin's guilt beyond a reasonable doubt,' said Mr. Taylor the U.S. Attorney", my emphasis, Evan Perez, Siobhan Gorman, Gary Fields and Elizabeth Williamson at the WSJ, 7 August 2008.
"It sounds like a very bad made-for-televison move: a mad scientist--a violent sociopath, a 'nerd with a dark side,' who had already tried to kill several people, is obsessed with pornography, and is fixated on a particular college sorority--unleashes a strain of anthrax through the U.S. mail, killing five, infecting 17 others, and terrorizing the country. His motive, aside from sheer antisocial vindictiveness: he holds the patent for an anthrax vaccine, and he also wants to direct the nation's attention to the supposedly overlooked and underfunded problem of bio-terrorism, That'll teach 'em! It sounds like some pretty execrable fiction, yet the FBI is peddling this farrago of shopworn cliches as the facts surrounding the alleged guilt of Bruce E. Ivins, whose suicide the other day ostensibly closes the 7-year-old anthrax terrorism case that has baffled investigators and shown a cruel light on the Bureau's methods and standards of conduct. ... The real topper has got to be the 'sorority obsession'. ... This passes muster in Hollywood, of course, since it embodies all the social prejudices so beloved by that temple of cultural corruption, yet in the real world one looks at it askance and wonders: are these guys kidding? ... Clearly, the whole purpose of bringing this sorority angle up is to smear a dead man as a pervert and cast him in the sinister light suitable for the villian in this crude media narrative. ... For all the 'genome tracing' and scientific detective work conducted by the FBI over a period of years, the reality is that they can trace the anthrax to a particular lab--but not, as several experts have pointed out, to a particular person. That would require real detective work of the gumshoe variety, as opposed to farming it out to scientists, many of whom are (or were) on the FBI's suspect list. (Ivins himself was recruited to this task.) Yet the FBI is not that concerned with the facts: what they're after is a good story, one that the media--and therefore, they think the public--will swallow without thinking about it too much. ... They aren't trying to convince a jury; after all, the guy is dead. ... Well, they didn't arrest him because there wasn't enough evidence. So they drove him to suicide, as the only alternative to confessing to a crime he didn't commit. ... Did they drive Ivins to suicide because he knew too much? ... Surely a lone nut could not have carried out this technically difficult and logistically complicted scheme", Justin Raimondo (JR) at antiwar.com, 6 August 2008.
"The anthrax murder case has become an epic embarassment for the [FBI], and the suicide of Ivins on July 29 forced the government to go public with its case against him before it was ready", my emphasis, Amada Ripley/Frederick at Time, 18 August 2008.
"Paul Kemp, Ivin's lawyer, said some of what's presented in the unsealed affidavits are 'speculative; theories that would never be admissible in court ... What's more, Kemp said, the FBI omitted evidence that might have been exculpatory, including that Ivins kept his security clearance after passing a polygraph in which he was questioned about the anthrax investigation", Michael Isikoff at Newsweek, 18 August 2008.
More sloppy WSJ reporting. How does the WSJ know what the DOJ's "caution" stems from? The most the WSJ could say is the DOJ "stated" where its caution stems from.
Who conducted this investigation? The FBI or Russia's FSB? "Skeptical reception"? You bet. I'm here. The "FBI would turn off the security cameras". How nice. Criminal lawyers should see a problem here. Many police agencies film arrests when possible. Why? To avoid lawsuits. Why did the FBI turn off those cameras? Will it say to look for things in the lab and not "compromise" its investigation, or to plant things in the lab? Even so, it could have kept the cameras on, given the films immediately to say a Texas Ranger or Michigan State Policeman, part of the "team", stationed at the lab, for safekeeping. Why do I suggest those agencies? They're not federal and still have good reputations. I see the FBI's turning off the cameras as "res gestae", i.e., "things done". Res gestae are admittable in criminal cases to show: motive, plan, intent, absence of mistake, etc. West's criminal law keys 351 and 364-370 include concealment as res gestae! I assume JT knows this. Yet he permitted it. Hmmm. As Justice Louis Brandeis once wrote, "sunlight is often the best disinfectant". The DOJ and FBI need lots of sunlight here.
Tuesday, August 19, 2008
Monday, August 18, 2008
Sunday, August 17, 2008
Saturday, August 16, 2008
Friday, August 15, 2008
"Massachusetts regulators accused Merrill Lynch & Co. of co-opting 'supposedly independent' research anaylsts to help them dump collapsing auction-rate securities on unsuspecting customers. ... 'We've seen a corruption of research', says Massachusetts Secretary of the Commonwealth William Galvin, who oversees the state securities division. 'This is an issue that many of us on the enforcement side have seen years ago, and it's the same pattern.' ... In August 2007, Martin Mauro, a fixed-income research analyst, issued a report noting some of the less-than flattering features of auction rate securities. That alarmed Francis Constable, a managing director in charge of Merrill's auction-rate securities desk. Ms. Constable demanded that Merrill retract the report. ... Constable ... sent the following message: ' Shut this guy down'," John Hechinger at the WSJ, 1 August 2008.
"New York state's attorney general, Andrew Cuomo, threatened Friday to sue Citigroup Inc. for alleged fraud in the marketing and sales of auction-rate securities and for destroying evidence after being subpoenaed by his office. ... Citigroup said it is cooperating with Mr. Cuomo's investigation and 'acted in good faith and in the best interests of our clients both before and since auctions began to fail, and there is simply no basis for claims to the contrary.' ... The firm also disclosed Friday in a regulatory filing that it has received subpoenas or requests for information for the [SEC], among others, in connection with its handling of auction-rate securities. ... The letter, written by David Markowitz, the head of the investor-protection bureau in Mr. Cuomo's office, accused the bank of wrongly telling customers the securities were safe, liquid and cash-equivalent. It added that the bank failed to tell investors that, from last August until earlier this year, the market was kept afloat only because the bank placed bids in auctions for the securities", Amir Efrati at the WSJ, 2 August, 2008.
"Pushing to put one of the biggest debacles on the credit crisis behind them, Citigroup Inc. and Merrill Lynch & Co, agreed to buy back $17 billion in auction-rate securities", WSJ, 8 August 2008.
"A once obscure corner of the bond market is triggering one of the messiest Wall Street scandals in years--and potentially the largest mass bailout of American individual investors ever. On Friday, facing allegations of wrongdoing over its sales of so-called auction-rate securities, UBS AG agreed to buy back nearly $19 billion of the investments as part of a settlement with federal and a group of state regulators. ... Regulators from several states have also shown up on Wachovia's Corp.'s doorstep demanding documents; the bank says it's cooperating. A New York state official has accused Citigroup of destroying documents, a charge Citi has denied. Federal prosecutors are preparing to file criminal charges against two former Credit Suisse Group brokers who allegedly lied to investors about auction-rate securities. ... UBS said it didn't intentionally hide the risks of auction-rate securities, and sold them 'appropriately' to individuals for 20 years. ... Merrill categorized auction-rate securities as 'other cash' on its brokerage statements. ... Also, regulators say brokers were paid unusually rich commission to sell the securities. ... UBS said that, after its own internal probe, it 'found cases of poor judgment' but not illegality by certain individuals, and is 'evaluating appropriate disciplinary measures", Liz Rappaport and Ann Randall Smith (R&S) at the WSJ, 9 August 2008.
"Securities regulators are widening the list of Wall Street firms that are being told to fix the auction-rate securities mess. ... State regulators have subpoenaed roughly 30 financial institutions about their involvement in the auction-rate securities market. ... In an SEC filing, [Wachovia] said its individual retail-brokerage clients held $8.7 billion of auction-rate securities as of Aug. 1. That doesn't count other clients, such as corprate clients and charities", Liz Rappaport at the WSJ, 12 August 2008.
Doesn't DA's participation in a "Corporate Fraud Task Force" (CFTF) make you feel nice and warm inside? Was the CFTF's job to facilitate corporate fraud by getting corporations prosecutorial immunity? Why did UBS hire DA? Did DA do anything at Treasury that served USB's interests? It's Alice in Wonderland at Treasury. I await Chris Cox's SEC joining in Cuomo's case. That'll be a long wait.
I wonder how Citigroup will account for the buy back.