More Self-Serving AICPA Claptrap

I got an e-mail from the AICPA's "Center for Audit Quality" on 16 June 2010, saying it opposes a permanent exemption for companies with market capitalizations under $75 million from compliance with SOX section 404. The Center opposes this to protect investors. Would an AICPA organ favor creating make-work projects for CPAs? No. The Center is the old AICPA SEC Practice Section in new garb. Consider how much the AICPA has improved audit quality since 1976. Not much. Here's a link to the letter sent Congress:

http://www.thecaq.org/publicpolicy/pdfs/CAQCIICFAInstitutelettertoConfereesRESOX404b61510.pdf. Don't laugh too hard in reading this.

Henny Youngman, Central Banker

"The principle of central-bank independence, a mainstay of economic orthodoxy for two decades, has taken a battering over the past week. Investors should be on their guard. ... Allowing central banks freedom to set interest rates without political interference is the best way to anchor inflation expectations, reducing borrowing costs and deliver faster growth. ... But independence also allows central banks huge power with limited accountabilty. ... The ECB's decision to start buying goverment debt is even more troubling. it says it is responding to dysfunctional' bond markets. How does it know high goverment borrowing costs reflect liquidity problems rather than legitimate solvency fears that will expose the central bank to losses? ... Might its decision to buy bonds increase moral hazard, removing the incentive for governments to tackle their deficits?," my emphasis, Simon Nixon at the WSJ, 14 May 2010, link:

http://online.wsj.com/article/SB10001424052748704635204575242400983963766.html.

Of course that's the intent: to enable deficit spending! What principle? Independent of who? I have another way to "anchor inflation expectations": gold. My more basic question: "high borrowing costs", as Henny Youngman would ask, "compared to who"?

Left and Right vs. The Center

"Sen. Bernie Sanders can seem like a character from another era with his rumpled suits and oratory about economic justice. But his anger at bankers and Wall Street runs high, Congress's only self-declared socialist is moving to center stage. ... Mr. Sander's amendment, which is likely to be voted on within days, is worrying White House officials, who say it would violate the central bank's independence and cripple its ability to protect the economy. ... The amendment has drawn an unusally broad alliance of backers. Mr. Sanders's 19 co-sponsors include such liberals as Sen. Patrick Leahy (D., Vt.) and conservatives like Sen. Jim DeMint (R., SC). The measure is supported with equal fervor by the AFL-CIO labor union and the conservative lobby group Americans for Tax Reform. ... 'Nobody in America, or very few people, think that makes any sense at all,' he said. 'Putting trillions of dollars at risk, and you don't know who got it, who made the decisions, the possible conflicts of interests, what they did with it?' ... Critics say the auditors would be able to interview Fed policy makers and staffers and monetary-policy decisions, a scenario they say would weaken investors' confidence that decisions are free from politicial influence. ... 'One of the great strengths of our financial structure is that we keep monetary policy separate from the political winds of the day,' Sen. Judd Gregg (R., NH) said in an interview. 'That was the whole idea in setting up the Fed'," my emphasis, Naftali Bendavid at the WSJ, 5 May 2010, link: http://online.wsj.com/article/SB10001424052748704866204575224591171078912.html.

Amazing. I agree with Sanders. Kill this monster. Is Gregg crazy? I now have 2012's winning ticket: Putin-Sanders!

EU in Wonderland

"The bailout package for eurozone governments facing debt troubles has created another urgent challenge for European policy makers: how to keep free spending governments in line. ... Because there was no currency risk, banks, insurance companies and pension funds in every euro-zone economy became the biggest investors in the bonds issued by governments of other countries using the euro. .... Although the budget policies of euro-zone members were tied together in this way, without people really noticing, there were no mechanisms to prevent governments from overspending. ... But, in practice, the pact had no bite. ... These packages circumvented rules that many had assumed prohibited bailouts within the euro zone. They also weakened market incentives for governments to get their houses in order. ... 'Profligate countries now can count on the ECB to alleviate market pressure that could provide the only disciplining device before a crisis situation is reached,' Mr. [Marco] Annuziata says. ... As a step toward improving it, Olli Rehn, the EU economic commissioner, is set Wednesday to propose rules, with clear enforcement mechanisms, both to prevent excessive government debts and deficits, and to act more decisively in a debt crisis", my emphasis, Stephen Fidler at the WSJ, 11 May 2010, link: http://online.wsj.com/article/SB10001424052748704879704575236572824559304.html.

This is laughable. There no "rules" for governments, unless you have your own army to enforce them. Unless the EU has its own army and will use it to "enslave" millions of Greeks, Greece's debt will be repudiated. One way or another. What part of this don't you understand? Sovereign debts are usually repudiated. Openly. Or by inflation. Government bonds are a sell. Treasuries, Bunds, Gilts, etc. They all stink. You want to restrain government spending? Have your government go back to the gold standard. "[T]here were no mechanisms to prevent governments from overspending". Of course. As Yves Smith asks, "feature or bug"? What "circumvented rules"? What "clear enforcement mechanisms" short of an army? Will the EU hire the Crips or Bloods to collect from Greece? For a small "emolument", they could likely be enticed into collecting. How small? Say 10% of whatever they collect. Hell, for 10% of say $150 billion, you might be able to get the Zetas to collect for you.

SEC, Investors Friend, Fiend?-4

"The [SEC] joined 12 Wall Street firms in seeking to scrap a key portion of a landmark 2003 deal that put strict curbs on stock analysts, a move that could heighten the ongoing debate about a broad overhaul of the financial-regulatory system. ... The proposal would have allowed employees in investment-banking and research departments at Wall Street firms to 'communicate with each other ... "outside the presence" of lawyers or compliance-department officials resposible for policing employee conduct--an activity strictly prohibited by the settlement'. ... After the bust, it was revealed that many of those analysts were touting stocks at the behest of their firms' investment-banking operations, which were profiting from initial public offerings. One solution to the conflict of interest was separating the analysts from the investment-banking operations. ... SEC spokesman John Nester said the agency believes there are other restrictions in place, such as keeping bankers physically separate and prohibiting bankers from influencing analyst coverage decisions. In a letter requesting the change, the SEC and the banks had stated 'it is appropriate to eliminate' certain provisions because the conduct is now covered by new rules and regulations. Securities firms covered by the settlement, including Goldman Sachs Group Inc., Morgan Stanley and the Merrill Lynch unit of Bank of America Corp., declined to comment. ... The SEC is at the heart of the battle because of its mistakes during the crisis. ... Also yesterday, the head of enforcement at the Financial Industry Regulatory Authority, Wall Street's self-regulatory boy, resigned. Like the SEC, Finra has been criticized for failing to detect abuses that led to the crisis and didn't uncover the Ponzi scheme run by Bernard Madoff. ... The settlement allows the firms and the SEC to seek a judge's approval to change the agreement under certain circumstances. ... In a letter to the judge, Lewis J. Liman, a lawyer representing the securities firms, said the Chinese wall is no longer needed because of securities regulations enforced by Finra. The securities firms and SEC 'believe that these rules adequately address the concern intended to be addressed' in the original settlement, Mr. Liman wrote", my emphasis, Susanne Craig & Kara Scannell at the WSJ, 18 March 2010, link:

http://online.wsj.com/article/SB10001424052748704743404575128122174622274.html.

Did the SEC join the 12 firms, or did it take orders? Investment-banking and retail brokerage should be severed. The settlement did not do that, so had no effect in my opinion. Enforced by Finra? Hahahahaha would the Mogambo Guru say. Physically separate? Did Nester ever hear of a telephone? Or the internet? You who take the SEC's case against Vampire Squid seriously, please read this.

Blackwater's Black Hats?

"So much of federal prosecutions depend on the Court being able to rely on the credibility of federal prosecutors. There's no reason for courts to do that any longer and we all will suffer because of the unethical behavior of a series of [DOJ] lawyers who simply refuse to follow their professional responsibility", Clarice Feldman at American Thinker, 1 January 2010, link:

http://comments.americanthinker.com/read/1/508687.html.

"The sudden blow to the case against the former Blackwater security guards over a shooting that killed 17 Iraqis and wounded at least 20 may have come as a surprise to the public in Iraq and the [US], but the legal problem that the judge cited Thursday when he threw out the indictments was obvious to American government lawyers within days of the shooting. The issue was that the guards, as government contractors, were obligated to give an immediate report of what they had done, but the Constitution prevents the government from requiring a defendant to testify against himself, so those statements could not be used in a prosecution. ... The prosecutors were also concerned, even when using qwhat they called a 'taint team' to try to prevent information in the guards' compulsory statements from influencing the investigation, according to the 90-page ruling by Judge Ricardo M. Urbina of the Federal District Court in Washington. The judge said the prosecutors had failed to take 'coomon sense precautions' to avoid the problem. The ruling led to disappointment in the [US] as in Iraq. ... Judge Urbina's decision would make it difficult for prosecutors to reinstate the original charges. Information that the guards were required to give immediately after the shootings was deeply woven into the governments effort to secure the indictments, he wrote. ... Investigators did not find physical evidence of an attack by Iraqis, the judge's decision said. ... But in their presentations to the second grand jury, the prosecutors also edited out evidence that suggested that the guards were firing in self-defense, the judge said, and those omissions were improper", my emphasis, Matthew Wald at the NYT, 2 January 2010: http://www.nytimes.com/2010/01/02/us/02legal.html.

"Iraqis seeking justice for 17 people shot dead at a Baghdad intersection responded with bitterness and outrage Friday at a US judge's decision to throw out a case against a Blackwater security team accused in the killings. The Iraqi government vowed to pursue the case, which became a source of contention between the US and the Iraqi government", my emphasis, Rebecca Santana at the Houston Chronicle, 2 January 2010.

"The dismissal of charges against five Blackwater Worldwide security guards accused by the [DOJ] of recklessly shooting in a Baghdad traffic circle in 2007 potentially strains US-Iraqi relations at a critical moment and raises new questions for the Obama administration about effective legal ovesight of battlefield contractors. ... 'Investigations conducted by specialized Iraqi authorities confirmed unequivocally that the Blackwater guards committed the crime of murder and broke the rules by using arms without the existence of any threat obliging them to use force, Iraqi government spokesman Ali al-Dabbagh said in a statement, the AP reported", my emphasis, August Cole at the WSJ, 2 January 2010, link: http://online.wsj.com/article/SB126229226969112429.html.

The DOJ's Blackwater Five (BF) case stank from the start. It had problems with: evidence, chain of custody, crime scene control and witness statements. Lastly, any statement by a Moslem with respect to non-Moslem matters must be viewed through the lens of takiwa and Sharia's blood money concept. My conclusion: the DOJ brought this case for political purposes to ingratiate the Bush administration with Iraq. What would the DOJ have done if the case was tried and the BF were acquitted? Call the jurors stupid?

Did the DOJ immediately dispatch CSI NY's incorruptible Gary Sinese to Iraq to "control the crime scene" and collect evidence? There was no "physical evidence of an attack by Iraqis". So? The Iraqi investigators destroyed it. In my opinion. A decent defense attorney would have made mincemeat of the DOJ's case if it went to trial. This was a political prosecution. That's my bottom line. The State Department saw the BF as "expendibles". My surprise was that Urbina had the cojones to throw the indictment out. I wouldn't have, but forced the case to trial and ruled against the DOJ on evidence issue after evidence issue. Then empanel the jury and let the DOJ's case collapse. In public. Urbina did the DOJ a favor by dismissing the indictment. It kept the DOJ's dirty laundry from the public. In some schools of Islamic jurisprudence a kaffir may not even testify against a Moslem! Why should we credit anything an Iraqi says? "This declaration defines human rights according to Islamic law, which prohibits critcism of Islam. Indeed, Iraq's US-enabled 2004 constitution enshrines Islamic law above all. Little wonder Iraq consistently votes at the United Nations with the OIS and against the [US] on this key ideological divide between Islam and the West, most recently in November. ... Guess we're supposed to look the other way. But that's like applauding the Status of Force Agreement (SOFA) between the [US] and Iraq without noticing that the agreement prohibits the [US from attacking Iran (or any other country) from Iraq", Diana West at Townhall, 29 December 2009, link:

http://townhall.com/columnists/DianaWest/2009/12/29/the_surge_and_success,_part_ii. Until you understand Sharia, you can't understand what really happened here. Iran won our war with Iraq. Brilliant.

Big deal. Outrage. What is outrageous is that this case was ever brought.

Who were these "specialized" authorities? Iraq's answer to Saudi Arabia's mutwain, operating under Sharia's rules of evidence? Our Iraq "excursion" has been a total failure. That we would concern ourselves with relations with Iraq shows we wasted $700 billion and 5,000 lives. It is inconceivable to Iraqis that dhimmi could ever be justified to shoot Moslems. Get over it.

Assignats for America!

"Corporations raise money by issuing both debt and equity, the latter giving investors an implicit share in future profits. Governments should do something like this, too, and not just rely on debt. Borrowing a concept from corporate finance, governments could sell a new type of security that commits them to paying shares in national 'profit,' as measured by gross domestic product. ... Although GDP numbers still aren't perfect--they are subject to periodic revisions, for example--the basic problem has been largely solved. So why not issue shares in GDP now? Such securities might help assuage doubts that governments can sustain the deficit spending required to keep sagging economics stimulated and protected from the threat of a truly serious recession. In a recent pair of papers, my Canadian colleague Mark Kamstra at York University and I have proposed a solution. We'd like our countries to issue securities we call 'trills,' short for trillionths. ... Each would pay in perpetuity, and in domestic currency, a quarterly dividend equal to a trillionth of the nation's quarterly nominal GDP. ... Trills would be issued with the full faith and credit of the respective governments. ... There are indications that officials in China are starting to worry about threats to their huge investment n [US] debt from a possible outbreak of high inflation. The trills, tied to nominal GDP, would protect them. Right now, TIPS, ... are offering disappointingly low yields, which may have to be raised to attract more investment. ... The [US] government is highly unlikely to default on its debt, but even this remote possibility would be virtually eliminated by trills, becasue the government's dividend burden would automatically decline in tough times, when GDP declined. ... These imbalances--exempliifed by the massive Chinese holdings of [US] government debt--might not be so worrisome if the investments were financed better. ... Proposals for securities like trills have been aired many times over the years", my emphasis, Robert Schiller (RS) at the NYT, 27 December 2009, link:

http://www.nytimes.com/2009/12/27/business/economy/27view.html.

RS is a Yale economics professor. I would normally say "big deal" to a proposal like this. A New York City CPA buddy of mine, suggested these type of securities 30 years ago! Trills appear to pay "interest", but pay nothing. As long as Uncle Sam (US) will not run a budget surplus, trills can't be "paid" in real terms. Anyone buying trills should remember, "interest is what the government promises to pay you to steal your principal". Trills look like an ideal security for Teresa Ghillarducci to stuff in people's IRAs without their consent. For their own good of course. I'm sure Argentina's Madame Kirchner will consider issuing trills. RS forgets "Miller-Modigliani" finance, i.e., investment and financing decisions are separable. No matter how US finances his debt, absent budget surpluses, it can't be paid. Will a trills owner get multiple votes? One vote per million trills? Will trill-owning foreigners vote? Will Saudi Arabia control our Congress more obviously than today? Trills facilitate deficit spending! RS said it! RS does not suggest US reduce spending. He is now another "house economist". Well RS, make it official and move to Princeton! "Full faith and credit"? Hahahahahaha. If TIPS yields are too low, tell Zimbabwe Ben (ZB). ZB could increase interest rates. Disagreeing RS, US will default on his debt. Explicitly, or through higher inflation. "Financed better"? Let's call Vampire Squid to sell trills and Moody's to rate them AAAA, quadruple A! Professor Fama, we need you. Try to kill trills. Trills remind me of France's assignats and mandats issued in the 1790s. They became worthless. Here's a link to an article about French inflation: http://www.usagold.com/gildedopinion/assignats.html.

Experts, Bah Humbug

Monty Pelerin blasts experts at American Thinker, 25 November 2009. Laugh. Here's a link: http://www.americanthinker.com/blog/2009/11/experts_then_and_now_always_ge.html.

Who Cares Vampire Squid?

"Goldman Sachs Group Inc. Chairman and Chief Executive Lloyd Blankfein, defending the investment bank from public criticism over pay and profitability, said most of the bank's risk has been taken at clients' request to facilitate their activities. ... 'We are not lounging around in our sunglasses, basking in our certain future, he said. 'We stay very close to our clients.' ... Mr. Blankfein was in the public eye over the weekend when the Times of London quoted him as saying he was just a banker 'doing God's work'," my emphasis, Jessica Papini at the WSJ, 11 November 2009, link: http://online.wsj.com/article/SB10001424052748703808904574529273639590590.html.

I'm sure Lloyd Antoinette Blankfein (LAB) does "God's work". Mammon's. LAB, I have no problem with Vampire Squid (VS) taking risk at its clients' behest. The problem is: VS pawns off the risk on Joe Schmoe. What can't you with two Harvard degrees understand?

Oxford in Boulder

"But this Halloween, one of its wackiest traditions is under siege: the Naked Pumpkin Run [NPR]. ... For nearly a decade, naked pumpkin runners did their thing unmolested, stampeding through the frigid dark past crowds of admirers who hooted, hollered and tossed cady. ... All [police] have orders to arrest gourd-topper streakers as sex offenders. ... The American Civil Liberties Union has fired off a letter accusing the police of violating citizens' consitutional rights to express whatever it is they're expressing when they slip hollowed-out pumpkins over their heads and race buck naked down the Pearl Street pedestrian mall. ... Oleg Abramov, a 31-year-old planetary scientist, says it's an excruciating choice. He loves the run; he calls it a 'liberating and somewhat surreal community arts project.' But being labeled a sex offender could ruin his career. ... More recently, Boulder has played host to an annual Naked Bike Ride to protest dependence on fossil fuels. And the Boulder Daily Camera, the local newspaper, serves up a steady diet of stories about clothes-free joggers and nudist gardners. ... Given that the [NPR] starts at 11 p.m., long after young trick-or-treaters have retired, and given that the route is packed with fans who come out specifically to see the event, runners argue that it's absurd to think that their prank is causing either affront or alarm. ... Police acknowledge that they have not been flooded with pumpkin-run-related complaints, but say that's beside the point. A throng of naked people with jack-o-lanterns on their heads is by definition, an alarming sight, Chief [Mark] Beckner says. Therefore, it's illegal. Those convicted of indecent exposure rarely get jail time, but they must register as sex offenders, just as rapists do. Which seems a bit excessive to Boulder County [DA] Stan Garnett", my emphasis, Stephanie Simon at the WSJ, 31 October 2009, link: http://online.wsj.com/article/SB125693458626119361.html.

In 1968 or 1969 I attended a lecture by Commander Whitehead of Schweppes Tonic Water fame. He spoke of two Owford dons who swam naked in a lake. A few co-eds went by. One wrapped his "privates" in a towel. The other wrapped his head in a towel. The first said to the second, "That's extraordinary". The second replied, "Not at all. On this campus I am generally recognized by my face". So it is in Boulder. Laugh! A law which does not distinguish streakers from rapists should be repealed. Boulder has too many cops. It should fire some. Starting with Beckner.

Vampire Squid Values

"Sure, firm trumpet their values and missions. Goldman Sachs has 14 business principles, many of which could apply to a preschool. ('We stress creativity and imagination.')", Daniel Gross at Newsweek, 2 November 2009, link: http://www.newsweek.com/id/219334

I mentioned the Vampire Squid's (VS) values on 24 October 2008: http://skepticaltexascpa.blogspot.com/2008/10/cold-war-ii.html. Hahahahahahaha the Mogambo Guru would say. Here's principle 1, "Our clients' interests come first. Our experience shows that if we serve our clients well, our own business success will follow". Ya gotta hand it to Lloyd Antoinette Blankfein. He lacks the decency to remove VS's principles from its website. Here's a link, don't laugh too hard: http://www2.goldmansachs.com/our-firm/about-us/business-principles.html.

Goldman Sachs, KGB?

"Hoping to defuse a politically combustible situation, Goldman officials have been mounting a soft-sell campaign that pushes the usually reticent company into the spotlight. For months, the New York firm has been working to dispel what it sees as misperceptions about itself to make its profit and bonuses go down easier, from a lobbying push in Washington to media interviews in which Goldman Chief Executive Lloyd Blankfein reminisces about his humble roots. ... Company executives also have discussed charitable contributions by the firm or by encouraging empoyees, according to the people familar with the situation. Such a move could help Goldman repel any public backlash it suffers are a result of this year's bonuses, whioch will be decided near the end of the fourth quarter and paid out in January. ... Goldman spokesman Lucas van Praag said the charm offensive is a necessary response to supercharged rhetoric and exaggerations that have swirled around the 140-year-old company since the financial crisis erupted. In June, a Rolling Stone magazine article--which was passed up and down Wall Street--called Goldman a 'great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.' ... 'In a world that seems to have turned upside down, where virtues are viewed as vices,' said Mr. van Praag, 'it is important we explain our business model to a wider audience, why what we do matters and why and how we pay our people.' ... Luigi Zingales, a finance professor at the University of Chicago Booth School of Business, said trying to explain to the public billions in bonuses barely a year after Goldman got a $10 billion capital infusion from the government and bolstered its liquidity by converting to a bank holding company is to many Americans the equivalent of 'putting lipstick on a pig.' ... Goldman's share price is up more than threefold since it bottomed out in January, including Wednesday's jump of $5.05, or 2.7%, to $192.28 in 4 pm [NYSE] composite trading. ... Blankfein also has been spending more time meeting lawmakers in Washington, lobbying for more effective systematic regulation", my emphasis, Susanne Craig at the WSJ, 15 October 2009, link: http://online.wsj.com/article/SB125556536458586219.html.

"Roughly a year after accepting unprecedented financial aid to shore up its operations, Wall Street firm Goldman Sachs Group Inc. [GSG] posted yet another impressive quarter that further distances itself from its rivals, many of which are still struggling to overcome the credit crisis. ... 'We are very aware of what is going on in the world, but we have to trade that off with being fair to our people who, we believe, have performed admirably throughout the crisis,' said [GSG's] chief financial officer, David Viniar. ... [GSG] also has benefitted from the [FDIC's] debt-guarantee program, which means it and other banks can borrow money at cheaper rates than before. ... The firm has tried to soften the blow of its decision to set aside huge pools of money for compensation; Thursday it made a $200 million charitable contribution to the [GSG] Foundation, which has an existing $283 million in it. Still, that did little to deflect attention from the $16.71 billion in has earmarked for bonuses, which will be paid out early in 2010", my emphasis, Susanne Craig at the WSJ, 16 October 2009, link: http://online.wsj.com/article/SB125560247815487177.html.

A "charm offensive" should be easy for GSG. GSG likely employs dozens of graduates of the KGB "charm school" in Nelson DeMille's The Charm School, 1988. This is a job, not for Superman, but Michael Moore (MM). MM, please make a movie of politicians meeting GSG apparachiks then slinking away with newspapers covering their faces. GSG now sprouts the prosperity gospel of say Ken Hagin, or the now-deceased Reverend Ike. "Sow a seed" of say $10 million into Washington and have it return to GSG 100 fold! The Rolling Stone article insulted GSG. GSG would not stick its blood funnel into a money pile of less than $1 billion. Does GSG really want the American public to understand its "business model"? Go Zingales! Why need Blankfein, who makes about $60 million a year, have his actions regulated by $150,000 a year civil servants? Who is he kidding? WC Varones recently added GSG's "logo" to his blog. Take a look. I have an idea for GSG, it can add the vampire squid to its stationery and people's business cards.

Is GSG's charitable contribution admissible "res gestae" on the issue of "consciouness of guilt"? Didn't Bernie Madoff donate millions to charity? Millions of other people's money. Yes Viniar, Henry Paulson performed "admirably" for his "former" firm. $16.71 billion divided by $200 million = 83.5, you're in the "prosperity gospel" ballpark!

Stanley's Army-2

"The US justification for the waging of war is because 9/11 was planned there. It is a fallacy. The next attack on America can be planned anywhere. Al Qaeda does not need Afghanistan to do that. ... All during the long years of the war in Vietnam, Americans were told that another increase of troops would turn the tide, but we now know what the White House knew then; there was no indigenous enthusiasm for the South Vietnamese generals and even less for the Americans. ... It doesn't matter who's elected because the business of Afghanistan is opium. ... Our military exists to kill people and smash things. Nation building is not one of its skill sets, nor should it be. ... When it becomes too lethal to join al Qaeda, its members will go back to herding goats", my emphasis, Alan Caruba, 8 September 2009, link: http://www.intellectualconservative.com/2009/09/08/the-afghanistan-quagmire/.

"A US-German rift over a deadly airstrike in Afghanistan on Friday escalated, as US commanders accused the German military of undermining guidelines that seek to avoid civilian causalties. ... Afghan and Western officials have said betweeen 70 and 130 people died, including many civilians. ... Civilian deaths are undermining Western efforts to marshal Afghans' support for the fight against the Taliban and further threatening support for President Hamid Karzai. ... Public disquiet is growing in Germany about the country's role in Afghanistan, only three weeks before Germany's national elections. ... Public pressure is rising for the German government to clarify the purpose and duration of its Afghanistan mission. ... According to a written report by Germany's defense minstry to German lawmakers, Taliban militants hijacked the two fuel trucks and killed one of the drivers, before the trucks got stuck on a sandbank in the Kunduz River about four miles from a base housing German military and civil-reconstruction personnel. ... A senior US defense official said investigators are trying to determine whether Germany's stringent battlefield restrictions, known as caveats, contributed to the bloody airstrike by limiting German forces' scope for actions on the ground", my emphasis, Marcus Walker, Matthew Rosenberg and Yochi Dreazen at the WSJ, 8 September 2009, link: http://online.wsj.com/article/SB125229769546989199.html.

George Patton couldn't have said it better, my 9 August 2008 post: http://skepticaltexascpa.blogspot.com/2008/08/what-should-general-do-2.html. Stanley, please read this. Learn your trade.

Do you remember the Jenin massacre, which wasn't? As the Prophet (PBUH) said, "Deception is the essence of warfare". Did the Taliban put "civilians" in harm's way to create an incident? Will this "incident" ground allied aircraft in Afghanistan? US commanders worry less about their "allies" than "enemy" civilians. Amazing. Germany should tell Stanley "take your guidelines and shove 'em. We will set our own rules of engagement. Don't like it? We'll leave". If the WSJ is right about civilian deaths, I suspect the Taliban acts to increase them. Wanna bet? Imagine if during WWII, Hitler killed German civilians to get the US end the war. This is laughable. Unintended consequences? Hmm.

Which Mob?

"Everybody is looking for stimulus money. ... The mob is eager too. Federal and state investigators who track organized crime believe that some members have geared up to take advantage of the swift and enormous cash influx--if they have not already--looking, as the old Sicilian expression goes, to wet their beaks. Nimble, innovative and with a seemingly boundless appetite for the taxpayer's dollar, the mob's more sophisticated cadre has plundered municipal, state and federal coffers for generations. So the FBI office in New York has conducted an extensive analysis of the money flowing into the area to create a blueprint of its vulnerabilites, a process, an official said, that is being continually updated. ... 'Because there is so much money involved, criminals will look to exploit the system,' said Guy Petrillo, chief of the criminal division in the [US] attorney's office in Manhattan, referring to the New York area's five Mafia families", my emphasis, William Rashbaum (WR), at the NYT, 31 August 2009, link: http://www.nytimes.com/2009/08/31/nyregion/31mob.html.

Which five families? Goldman, Morgan Stanley, Citigroup, AIG and JPMorgan? Or was Petrillo thinking of other "families"? What could say, the Genoveses come up with to top the $13 billion Goldman got from AIG? In broad daylight! "Seemingly boundless appetite for the taxpayer's dollar". WR, do you mean Freddie and Fannie? Or Citigroup? "Plundered ... for generations"? Petrillo, did Goldman call you complaining it did not want the Genoveses, Gambinos, et. al. "muscling on its racket"? Do you mean the way the Fed plunders Joe Schmoe's savings to support the banks? From 1913 to 2009 is 96 years, or four generations. Enough. Kill the Fed. I think the "Five families" would each give up its questionable ways to become Goldman. Read my 21 December 2007 post citing Ben Stein's 1990 NYT article: http://skepticaltexascpa.blogspot.com/2007/12/mortgage-fraud-whose.html.

The Sarcastic "Economist"

"As the financial crisis gathered force in August 2007, Jim Cramer, a hyperbolic market commentator on cable television, hurled the worst epithet he could muster at the chairman of the [Fed]: 'Bernanke is being an academic. It is no time to be an academic!' ... It is too soon to declare that the threat of depression has passed, but not to conclude that Mr Bernanke's academic background, which seemed a liability at the start of his tenure, has proved his greatest asset. ... The recovery now under way will be feeble: deflation will remain a bigger threat than inflation for at least a year. ... He will also have to create a new monetary regime to replace the single-minded focus on low inflation, says David Blanchflower, who recently quit the Bank of England's monetary policy committee. ... But Mr Bernanke not only acted more quickly and forcefully, he faced unique constraints. ... But America's economy is now dominated by a shadow banking system of investment banks, financial firms and investment funds. Mr Bernanke's staff devoted much of their creativity to overcoming the legal and technical barriers of the Fed's 20th-century charter and, when they hit the limit, convincing Congress and the administration to pick up the baton. ... Professional economists have applauded Mr Bernanke's action, but the public has not", my emphasis, Economist, 27 August 2009, link: http://www.economist.com/businessfinance/PrinterFriendly.cfm?story_id=14327657.

Where to begin with this? "Begin at the beginning", said the King in Alice. The story is titled, "The very model of a modern central banker". This tells us what the Economist really thinks of Zimbabwe Ben (ZB), not much. How do we know? The Economist likens him to Gilbert & Sullivan's "modern major general", my 25 August 2008 post: http://skepticaltexascpa.blogspot.com/2008/08/new-army-career-path.html. Laugh. "Deflation will remain a bigger theat than inflation"? We are on the other side of the looking glass. "Single minded focus on low inflation", huh? Are all central bankers Mad Hatters? "Devoted much of their creativity to overcoming the legal and technical barriers", ah, ZB runs the Enron of central banks. Now POTUS Obama can pardon Andrew Fastow (AF) and put him on the Fed at the next opening. Alternatively, AF would make a fine replacement for Timmy Boy. Who could object to AF at Treasury? I can't. He never worked a day in his life for Goldman Sachs!

The SEC as Passover's Fourth Son

"The [SEC] has 'historically been slow to act' in regulating the nation's credit rating agencies, the agency's inspector general said in a report released Friday that called for a broad range of improvements in oversight. ... The audit report found that the commission delayed adopting rules on the rating agencies and sometimes failed to follow the rules that existed. ... The report recommended that the SEC impose further restrictions on the consulting and advisory services that rating agencies provide to issuers of rated debt, to avoid conflicts of interest. It advised a rotation requirement for credit ratings analysts to 'reduce the risk of undue pressure' on analysts to sign off on questionable products to maintain relationships with issuers. It also called for a review of the effect of what is called a revolving door syndrome, in which analysts leave to work for an issuer whose debt they were rating", my emphasis, Cyrus Santi at the NYT, 29 August 2009, link: http://www.nytimes.com/2009/08/29/business/29rating.html.

"The [SEC's] internal watchdog criticized the SEC's handling of credit-rating firms, saying some won federal approval despite slipshod applications and, in one case, suspicious financial data. ... In a report released Friday, the SEC's inspector general, David Kotz, cited serious concerns about one firm, including 'suspicions regarding the accuracy of the financial information provided in its application and concerns about the authenticity of a number of certifications.' ... The big three credit-ratings firms have been blamed by some critics for exacerbating the financial crisis after giving overly positive ratings to certain kinds of debt, including some backed by subprime mortgages. However, the problems identified in Mr. Kotz's report appear to involve primarily smaller firms", Sarah Lynch at the WSJ, 29 August 2009, link: http://online.wsj.com/article/SB125147990818867325.html.

"When everyone else is blaming you for creating the credit crisis, it helps to have a friend at the [SEC]. Especially when the SEC has the power to prevent new competitors from entering your market. ... Yet David Kotz, the SEC's inspector general, has apparently concluded that the real problem is not this government-anointed oligopoly, but the upstarts that have lately been approved to compete with them. ... Kotz has also issued recommendations certain to make competing with the Big Three more difficult, time-consuming and expensive. ... Of course, the greatest reform of all would be to get the government out of the business of approving credit raters. The SEC should enact its 2008 proposal to remove all references to NRSROs from the agency's rules and let markets decide how to judge default risk. ... Among the most costly of Mr. Kotz's ill-advised recommendations is the suggestion that all rating agencies should be audited by a firm regulated by the [PCAOB], the bureaucratic monster created by Sarbanes-Oxley", Editorial at the WSJ, 1 September 2009, link: http://online.wsj.com/article/SB10001424052970204731804574384983262268864.html.

This is worthless. Kotz advocates the same "solutions" that did not improve Big 87654 audits for 33 years. He must be "Passover's fourth son", the one who cannot ask a question. Why is Kotz worried about the rating agencies "revolving door syndrome"? Kotz, first look at the SEC and DOJ. Did not the Master say, "Why do you look at the speck of sawdust in your brother's eye and pay not attention to the plank in your own eye? How can you say to your brother, 'Let me take the speck out of your eye,' when all the time there is a plank in your own eye? You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother's eye", Matthew 7:3-5 (NIV).

Kotz's report could have been written by the PCAOB. It's worthless. The problems appear to be clerical.

I knew Kotz would use his report to further a PCAOB power grab. Aren't the Big Three already audited by large CPA firms?

I anticipated Kotz's PCAOB idea, but meant it sarcastically. Kotz took me seriously. See my 27 September 2007 and 28 April 2008 posts: http://skepticaltexascpa.blogspot.com/2007/09/let-market-work.html http://skepticaltexascpa.blogspot.com/2008/04/sec-investors-friend-fiend-2.html.

Added links 7:40 PM:

http://retheauditors.com/2008/02/21/the-big-4-and-the-ratings-agencies-a-self-fulfilling-prophecy/

http://retheauditors.com/2008/03/06/auditor-musical-chairs-at-moodys/

Timmy Boy, Comedian

"Treasury Secretary Timothy Geithner said Friday that government officials acted appropriately in their dealings with Goldman Sachs Group Inc. during the heat of the financial crisis last year", Deborah Solomon at the WSJ, 22 August 2009, link: http://online.wsj.com/article/SB125088307063549883.html.

Hahahahaha. Junior at Junior Deputy Accountant said on 21 August 2009, "Oh please, cue the chocolate syrup and porno tracks, Timmy, these guys are skeezy pigs who pimped American taxpayers off to their homies to make sure everyone had their bets covered", link: http://www.jrdeputyaccountant.com/2009/08/tim-geithner-on-honorable-men-bailouts.html. Is that all Junior?

The online WSJ has this statement not in my paper copy, "'These are deeply honorable men, great public statesmen willing to come serve their country in very challenging times and they did exceptionally good things for the country,' Mr. Geithner said". Get out that violin. Henry Paulson for the medal of honor! Brutus was also an "honorable man", Julius Caesar, 3:2:9-11.

The "Economist" On Afghanistan

"Eight years after the Taliban were blasted from power by American jets, and despite the splashing of $32 billion of foreign aid on Afghanistan, there are many reasons for Afghan anger. A failure to provide the security they crave--despite the deployment of over 100,000 ISAF and American troops, more than 120 of whom have been killed in the past six weeks--is the most obvious. ... Afghans, who welcomed this Kafir intervention in 2001 with outstretched arms, tell stories of American and British soldiers barging into cloistered Pushtun women's quarters, at night, with unclean dogs. ... An American-funded effort to plough up opium poppies, the main cash crop in much of the Pushtun south, has been wasteful and self-defeating. ... In Afghanistan Mr. Obama's arrival has brought a flurry of strategy reviews and a ruthless change of command, to usher in General McChrystal--whose own review will be unveiled later this month. It will re-emphasise that the main goal of the ISAF and American troops is to protect Afghans, not kill the Taliban among them. Orders to this effect have already gone out. Air power is to be used only when there is no significant risk of civilian deaths. ... Wherever he is, Mullah Omar must be smiling", my emphasis, Economist, 20 August 2009, link: http://www.economist.com/printedition/PrinterFriendly.cfm?story_id=14265001.

"The war is going badly. ... In Britain, a sceptical public wonders what its soldiers are dying for. ... The generals need more troops both to regain territory from the Taliban and to fight the war in a way that does not breed hostility to the West", my emphasis, Economist, 20 August 2009, link: http://www.economist.com/printedition/PrinterFriendly.cfm?story_id=14258750.

"The orator-in-chief has not lost his touch. Addressing a crowd of military veterans on August 17th, Barack Obama thanked them for their service and vowed to give their successors in uniform everything they might need, while also cutting waste from the military budget. ... The main purpose of his speech, however, was to drum up support for the war in Afghanistan. ... 'If left unchecked, the Taliban insurgency will mean an even larger safe haven from which al-Queda would plot to kill more Americans. So this is not only a war worth fighting. This is fundamental to the defence of our people'," Economist, 20 August 2009, link: http://www.economist.com/printedition/PrinterFriendly.cfm?story_id=14259062.

I'm sure Mullah Omar is smiling. By carefully placing his people he can ground the whole US Air Force. Anyone reporting to Stanley has my sympathies. Why do we care what the Afghans think? The Prophet (PBUH) didn't like dogs, so we should not have them? "Ruthless change of command"? Is Stanley today's Patton or Blackjack Pershing? In 1945 "there were many reasons for [German] anger". So?

Fight a war and "not breed hostility". Amazing. Poor limeys.

Let's give Mr. "my grandfather liberated Auschwitz" the benefit of the doubt. "His" knowledge of geography is so poor, "He" does not realize Afghanistan is landlocked. "He" thinks the Taliban has "force projection capabilities" from its five carrier battlegroups and hundreds of naval aircraft. "Everything"? How about artillery and air support, now!

The SDNY's Continuing Revolving Door

"In his new post, Mr. [Preet] Bharara will oversee more than 200 lawyers who handle some of the country's most prominent cases, like the prosecution of Bernard L. Madoff for this multibillion-dollar Ponzi scheme. As a naturalized American citizen from India, Mr. Bharara also brings a diversity of background to the post. And while most recent [US] attorneys in Manhattan have come directly from prosecutors' jobs, Mr. Bharara's background on Capitol Hill will serve him well, said Daniel C. Richman, a law professor at Columbia and a former [SDNY] prosecutor. ... He grew up in Monmouth County, NJ, and graduated from Harvard in 1990 and Columbia Law School in 1993. ... In 2000, after about six years in private practice, Mr. Bharara became a [SDNY] prosecutor, first under Mary Jo White [MJW], and later under James B. Comey. For five years, he prosecuted organized crime, narcotics, and securities fraud, among other crimes. ... 'He does have an incredible manner and ability to work with others,' said the New Jersey attorney general, Anne Milgram, who in 2005 serves as counsel to Jon S. Corzine, then a [US] senator, and got to know Mr. Bharara through their work on judiciary issues", my emphasis, Benjamin Weiser at the NYT, 10 August 2009, link: http://www.nytimes.com/2009/08/10/nyregion/10bharara.html.

Wonderful. All the "boys" are here. We get a double Ivy Leaguer with Moslems, Sikhs, Hindus and Jews in his family. Mr. Diversity. We also get a MJW School alumnus. Bharara must know whose Capitol Hill calls to take. The SDNY seems to work like the KGB, it puts "agents" in place, potentially decades before "activating" them. What did Bharara fail to prosecute? Bharara gives us an "Andropov Moment". Does he drink Scotch too? Bharara "works well with others". Is this Bharara's kindergarten report card? Counsel to Corzine? Did Goldman Sachs, them again, have Milgram "vet" Bharara? This selection is so rich. Bharara even got his ticket punched at Gibson, Dunn & Crutcher, 1993-96. Laugh. Yes you. See my 31 January and 3 August 2009 posts: http://skepticaltexascpa.blogspot.com/2009/01/sdnys-lazarus.html http://skepticaltexascpa.blogspot.com/2009/08/but-andropov-drinks-scotch.html.

New Improved SEC

"The [SEC] will give its attorneys more authority to speed up investigations and new tools aimed at winning the cooperation of Wall Street insiders, as part of a broader effort to overhaul an agency widely blamed for lax enforcement. ... The changes have drawn resistance from some attorneys in the agency, and will likely garner criticism from the business community, which has complained of an overly aggressive enforcement program. The SEC has opened 10% more investigations, granted 118% more formal orders, filed 146% more temporary restraining orders and filed nearly 30% more cases", my emphasis, Kara Scannell at the WSJ, 6 August 2009, link: http://online.wsj.com/article/SB124951229299109209.html.

The SEC enforcement shell game continues. The SEC greenlighted its enforcement staff to open more insignificant cases most of which it will close with the subject neither admitting nor denying the accusations. What a joke. "Overly aggressive enforcement program", hahahahha, the Mogambo Guru would say. Aimed at who? Even Forbes "gets it", my 9 December 2008 post: http://skepticaltexascpa.blogspot.com/2008/12/linda-thomsen-please-go-home.html.