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24651  Politics, Religion, Science, Culture and Humanities / Politics & Religion / WSJ: Tea Party challenger wins to face Reid on: June 09, 2010, 08:04:40 AM
Conservative outsider and tea-party pick Sharron Angle handily defeated more established rivals to win the Republican nomination for U.S. Senate in Nevada—which would give incumbent Democratic Sen. Harry Reid the opponent he had hoped to face.

With nearly all precincts reporting, Ms. Angle, a former state assemblywoman, was ahead of former casino executive Sue Lowden by 40% to 26.%. Ms. Lowden had emerged as the early leader in the race and was embraced by the Republican establishment, which saw her as the party's best chance for knocking out Mr. Reid.

Ms. Angle's primary victory sets up what is likely to be one of the bitterest Senate races in the country. Although Ms. Angle began the race as an outsider candidate with a three-person campaign staff—her most recent Federal Election Commission filing said she had just $138,609 on hand—she is expected to receive a flood of Republican money now that she is taking on Mr. Reid, the Senate Majority Leader.

Already, the members of the conservative Club for Growth, which endorsed her last month, have contributed $153,000 to her campaign. The group has spent another $475,000 in an independent expenditure to back her with television ads.

Mr. Reid, who has held office since 1987, is facing a tide of unpopularity in his home state, which has been hard-hit by the foreclosure crisis. Republicans have been strategizing for months about the best way to unseat the powerful Democrat.

On Monday, Mr. Reid's camp said it was preparing for an "aggressive campaign" against any Republican challenger. He commands a war chest of $9.1 million, a large sum for a state with only 2.6 million residents. And he is expected to be able to raise more easily.

A campaign spokesman said Mr. Reid planned to spend the rest of the week in Washington working on a jobs bill.

Nevada will be one of the most important testing grounds for the tea party. The state has long favored limited government but voted for Barack Obama in 2008. And it is small enough for a grass-roots movement like the tea party to have decisive impact. However, the state also has a strong union base, centered mostly around the Las Vegas hotel and casino industry.

The Reid camp maintains that Ms. Angle holds many views that lie outside the mainstream. For example, she supports a phased-in privatization of Medicare and Social Security. While serving in the Nevada state legislature, she made numerous enemies among fellow Republicans, because she was often unwilling to toe the party line. In a recent radio interview she called Felipe Calderon, the Mexican president who has generally friendly relations with the United States, a "despot" and a "tyrant."

But in a year when many voters are outraged by the weak economy and the health-care overhaul, Ms. Angle could be a wild card. Larry Hart, a consultant to the Angle campaign, said Ms. Angle would appeal to a wide array of voters at home. "She'll build a broad coalition of support. I know that's not the conventional wisdom, but she'll do that, and she'll start doing it tonight," Mr. Hart said.

The political equation in Nevada will be complicated by the fact that Mr. Reid's son, Rory, easily won the Democratic nomination for governor, meaning that both Reids will figure prominently on the November ballot.

The younger Mr. Reid will face off against former U.S. District Court Judge Brian Sandoval, who defeated embattled incumbent Gov. Jim Gibbons.
24652  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Washington 1795 on: June 09, 2010, 07:40:44 AM
"[W]e ought to deprecate the hazard attending ardent and susceptible minds, from being too strongly, and too early prepossessed in favor of other political systems, before they are capable of appreciating their own." --George Washington, letter to the Commissioners of the District of Columbia, 1795
24653  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Russia-Turkey and on: June 09, 2010, 12:47:55 AM
Next Steps for Ankara and Moscow
WORLD LEADERS FROM ACROSS EURASIA and the Middle East will be gathering in Istanbul Tuesday for a Conference on Interaction and Confidence Building Measures in Asia (CICA) summit hosted by the Turkish leadership. Some of the high-profile attendees include Russian Prime Minister Vladimir Putin, Azerbaijani President Ilham Aliyev, Iranian President Mahmoud Ahmadinejad, Syrian President Bashar al Assad, Ukrainian President Victor Yanukovich and Kazakh President Nursultan Nazarbayev.

With Turkish-Israeli relations in serious jeopardy in the wake of the flotilla crisis, the war in Afghanistan in flux, Moscow contemplating a shift in foreign policy with the West and the United States trying to juggle all of the above, the geopolitical intensity surrounding the summit is all too apparent.

The headlining issue of the conference will of course be the Turkish-Israeli flotilla crisis. Not surprisingly, Israel decided to send a lower level diplomat from its consulate in Turkey rather than having a senior official come under fire by the Turkish hosts. Turkey will use the CICA platform — as well as a summit beginning Wednesday in Istanbul with Arab foreign ministers as part of the Turkish-Arab Cooperation Forum — to highlight what Turkey sees as the gross illegality of Israel’s actions that resulted in the death of eight Turkish citizens in international waters off the Gaza coast. Turkey does not intend to let this issue rest. The issue is not even really about Gaza, anymore. On the contrary, Turkey views its current crisis with Israel as an opportunity to accelerate its regional rise to fame.

For this plan to work, Turkey needs to go beyond the public censures and pressure Israel into making a very public concession to Ankara. The problem for Turkey is that there is no Arab consensus to build on in forging this campaign against Israel. The Arab states are happy to engage in the rhetoric alongside Turkey, but when it comes to taking action against Israel, the impetus falls flat. Though Turkey will attempt to galvanize the Arabs at the Wednesday summit, it is not clear to STRATFOR that Ankara will be able to overcome the challenge of Arab fractiousness and weakness in formulating its response to Israel.

“Turkey is not the only one with its hands full at this summit.”
Turkey will also be spending some quality time during the CICA summit with the Iranian president. Iran is happy to see the flotilla crisis deflect attention away from its own nuclear controversy with the West, but it’s also not enthused about Turkey soaking up the spotlight and hijacking Iran’s role in defending the Palestinians. Wanting their piece of the action, the Iranians have announced that they will send their own aid ships to the Gaza coast, while privately hinting that they will try to score a moral victory in attempting to recreate the Mavi Marmara incident by provoking Israeli forces into an attack. An Iranian-provoked confrontation with Israel in the Mediterranean is precisely what the Turks cannot afford. Such a move would draw the United States to Israel’s side and undercut Turkish momentum in a snap. The Turks will use the summit as an opportunity to share some of the spotlight with Ahmadinejad and thus try to keep Tehran from scuttling its own agenda, but Iranian tenacity on this issue may also be hard to beat.

Turkey is not the only one with its hands full at this summit. Putin has a slew of private meetings lined up with the leaders of Turkey, Azerbaijan, Ukraine and Kazakhstan. His sideline meetings in Istanbul come after Russia held a week of meetings in Germany and the Baltic states and ahead of a visit to France. Rather than an attempt to rack up frequent flyer miles, the prime minister’s busy agenda stems from a major shift Russia is seriously contemplating making in its foreign policy toward the West.

The strategic thrust behind the shift is a Russian desire to obtain Western technology to modernize the Russian economy in everything from energy to space to telecommunications. Russia has internally acknowledged that for it to get its hands on this technology –- and ensure Russia’s competitiveness as a global power in the years to come –- it needs to appear more pragmatic to the West in making its foreign policy moves. This doesn’t mean Russia is ready to be any less nationalistic, just a little more willing to strike deals to get what it wants. The only reason Russia can even think about making such a dramatic shift is because it has spent the past several years carefully laying the groundwork in the former Soviet Union states in preparation for this very moment.

Russia wants to make sure that before it follows through with this plan, it gets some assurances from Europe and the United States that they will reward Russian cooperation with the technological cooperation Moscow is seeking and respect the sphere of influence Russia has recreated. At the same time, Putin -– acting as the enforcer on this issue -– is talking to the former Soviet states to make sure they understand that any Russian opening to the West is not a signal of Russia relenting in its former Soviet space, but a sign of Moscow dealing with the West on its own terms and in the time of its choosing. In other words, Putin wants to make sure Ukraine, Georgia, the Central Asians and the Baltic states don’t get any ideas about trying to flirt with the West the second they see Moscow shift.

While Putin delivers this stern reminder to Ukraine and the Central Asians, he will also be meeting separately with Turkish Prime Minister Recep Tayyip Erdogan. The Russians are wary of Turkey’s regional resurgence and want to ensure that the two don’t bump heads in pursuing their respective agendas. But the Russians have a plan for this, too. By regularly waving deals on energy and peace agreements in the Caucasus, Russia is keeping its relationship with Turkey on an even keel. Putin is not (yet), however, scheduled to meet with the Iranian president, something that will not go unnoticed in Tehran. The Iranians, picking up on the leaks of a coming Russian foreign policy shift, have already spent the past weeks publicizing their ire against Moscow and warning the Russians against turning on them for a grand bargain with the United States. The Russians are not at the point of throwing Iran under the bus (Iran is still a very useful lever for them in dealing with Washington), but it doesn’t hurt Moscow to keep the Iranians on edge as Russia feels out the West and contemplates a major foreign policy shift that may be on the horizon.
24654  Politics, Religion, Science, Culture and Humanities / Politics & Religion / A great Prager rant on: June 09, 2010, 12:39:11 AM
24655  DBMA Martial Arts Forum / Martial Arts Topics / Re: Daily Expression of Gratitude on: June 08, 2010, 06:09:01 PM
Grateful for my friends.
24656  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Photonic Teleportation on: June 08, 2010, 12:37:55 PM
24657  DBMA Martial Arts Forum / Martial Arts Topics / Re: DBMA Knife and Anti Knife on: June 08, 2010, 08:10:47 AM
Those are good posts James.  Any comments any one?
24658  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Taibbi: Wall Street's War-2 on: June 08, 2010, 07:26:35 AM
At the moment, though, Brown has a more pressing problem. He and Kaufman are both making themselves conspicuous in the Senate chamber, and the reason why is illustrative of the looniness of Senate procedure. Unlike in the House, where a rules committee decides in advance which amendments will be brought to a vote, senators have no orderly, dependable way of knowing if or when their proposals will get voted on. Instead, they're at the mercy of a strange and nebulous process that requires them to badger the leadership, who have the sole discretion of deciding which amendments go to a vote. So Brown is reduced to hanging around the Senate floor and trying to get a committee chair like Chris Dodd to put Too Big to Fail to a vote before other amendments use up all the time allotted for debate. It's not unlike fighting a crowd of pissed-off airport passengers for a single seat on an overbooked flight – you're completely at the mercy of the snippy airline rep behind the desk.

Near the end of the day, to Brown's surprise, Dodd actually allows his amendment to go to a vote. In the end, however, the proposal to break up the nation's riskiest banks gets walloped 61-33, with an astonishing 27 Democrats – including key banking committee heavyweights like Dodd and Chuck Schumer of New York – joining forces to defeat it. After the debate, Kaufman, a gregarious and aggressive advocate of finance reform, seems oddly unfazed that his fellow Democrats blew the best chance in a generation to corral the great banking monsters of Wall Street. "For some of them, it was just a bridge too far," he says. "There's an old saying: Never invest in anything you don't understand." Given the bizarre standards of the Senate bureaucracy, Kaufman considers it a victory just to have gotten his amendment into the woodshed for an ass-whipping.

I encounter that same "just glad to be here" vibe from Sen. Jeff Merkley, a Democrat from Oregon who co-authored one of the handful of genuinely balls-out reforms in the entire bill. The Merkley-Levin amendment couldn't have been more important; it called for restoring part of the Glass-Steagall Act, the Depression-era law that prevented commercial banks, investment houses and insurance companies from merging. The repeal of Glass-Steagall in 1999 paved the way for the creation of the Too-Big-to-Fail monsters like Citigroup, who drove the global economy into a ditch over the past 10 years.

Merkley-Levin was the Senate version of the "Volcker Rule," a proposal put forward by former Fed chief and Obama adviser Paul Volcker, that would prevent commercial banks from engaging in the kind of speculative, proprietary trading that helped trigger the financial crisis. When I meet with Merkley, he is in the same position as Brown and Kaufman, waiting anxiously for a chance to get his amendment voted on, with no idea of when or if that might happen. A vote – even if it means defeat – is all he's hoping for. When I ask if he's excited about the prospect of restoring a historic piece of legislation like Glass-Steagall, he smiles faintly. "I'm not saying I'm real optimistic," he says.

In the end, Merkley is forced to resort to the senatorial equivalent of gate-crashing: He attaches his amendment to the sordid proposal to exempt auto dealers from the CFPB, which has already been approved for a vote. That Merkley has to invoke an arcane procedural stunt just to get such a vital reform a vote is a testament to how convoluted American democracy looks by the time it reaches the Senate floor.

As with the whittled-down victories over the Fed audit and the Consumer Finance Protection Bureau – and the brutal defeat of Too Big to Fail – the stalling over the Volcker Rule underscores the basic dynamic of the Senate. With deals cut via backroom consensus, and leaders like Reid and Dodd tightly controlling which amendments go to a vote, the system allows a few powerful members whose doors are permanently open to lobbyists to pilot the entire process from beginning to end. One Democratic aide grumbles to me that he had no access to the negotiations for months, while a Wall Street lobbyist he knows could arrange an audience with the leadership. The whole show is carefully orchestrated from start to finish; no genuinely tough amendment with a shot at being approved receives an honest up-or-down vote. "It's all kind of a fake debate," the aide says.


When all the backroom obfuscation doesn't work, of course, there is always one last route in Congress to killing reform: the fine print. And never has an amendment been fine-printed to death as skillfully as the proposal to reform derivatives.

Imagine a world where there's no New York Stock Exchange, no NASDAQ or Nikkei: no open exchanges at all, and all stocks traded in the dark. Nobody has a clue how much a share of IBM costs or how many of them are being traded. In that world, the giant broker-dealer who trades thousands of IBM shares a day, and who knows which of its big clients are selling what and when, will have a hell of a lot more information than the day-trader schmuck sitting at home in his underwear, guessing at the prices of stocks via the Internet.

That world exists. It's called the over-the-counter derivatives market. Five of the country's biggest banks, the Goldmans and JP Morgans and Morgan Stanleys, account for more than 90 percent of the market, where swaps of all shapes and sizes are traded more or less completely in the dark. If you want to know how Greece finds itself bankrupted by swaps, or some town in Alabama overpaid by $93 million for deals to fund a sewer system, this is the explanation: Nobody outside a handful of big swap dealers really has a clue about how much any of this shit costs, which means they can rip off their customers at will.

This insane outgrowth of jungle capitalism has spun completely out of control since 2000, when Congress deregulated the derivatives market. That market is now roughly 100 times bigger than the federal budget and 20 times larger than both the stock market and the GDP. Unregulated derivative deals sank AIG, Lehman Brothers and Greece, and helped blow up the global economy in 2008. Reining in derivatives is the key battle in the War for Finance Reform. Without regulation of this critical market, Wall Street could explode another mushroom cloud of nuclear leverage and risk over the planet at any time.

The basic pillar of derivatives reform is simple: From now on, instead of trading in the dark, most derivatives would have to be traded on open exchanges and "cleared" through a third party. Last fall, Wall Street lobbyists succeeded at watering down the clearing requirement by pushing through a series of exemptions for "end-users" – that is, anyone who uses derivatives to hedge a legitimate business risk, like an airline buying swaps as a hedge against fluctuations in jet-fuel prices. But the House then took it even further, expanding the exemption to include anyone who wants to hedge against balance-sheet risk. Since every company has a balance sheet, including giant insurers like AIG and hedge funds that gamble in derivatives, the giant loophole now covered pretty much everyone except a few megabanks. This was regulation with a finger crossed behind its back.

When it came time for the Senate to do its version, however, the lobbyists were in for a surprise. Sen. Blanche Lincoln of Arkansas – best known as one of the few Democrats to vote for Bush's tax cuts – suddenly got religion and closed the loophole. Facing a tough primary battle against an opponent who was vowing to crack down on Wall Street, Lincoln tweaked the language so derivatives reform would apply to any greedy financial company that makes billions trading risky swaps in the dark.

Republicans went apeshit, pulling the same tactics they tried to gut the Consumer Finance Protection Bureau. Sen. Enzi, back at the lectern after his failed attempt to claim that the CFPB was a government plot to control the orthodontics industry, barked to the Senate gallery that Lincoln's proposal would harm not millionaire swap dealers at JP Morgan and Goldman Sachs, but "a wheat-grower in Wyoming." Unmoved by such goofy rhetoric, the Senate shot down an asinine Republican amendment that would have overturned Lincoln's reform by a vote of 59-39.

Then reform advocates started reading the fine print of the Lincoln deal, and realized that all those Wall Street lobbyists had really been earning their money.

That same day the GOP amendment failed, the derivatives expert Adam White was at his home in Georgia, poring over a "redline" version of the Lincoln amendment, in which changes to the bill are tracked in bold. When he came to a key passage on page 570, he saw that it had a single line through it, meaning it had been removed. The line read, "Except as provided in paragraph (3), it shall be unlawful to enter into a swap that is required to be cleared unless such swap shall be submitted for clearing."

Translation: It was no longer illegal to trade many uncleared swaps. Wall Street would be free to go on trading these monstrosities by the gazillions, largely in the dark. "Regulators can't say any longer if you don't clear it, it's illegal," says White.

Once he noticed that giant loophole, White went back and found a host of other curlicues in the text that collectively cut the balls out of the Lincoln amendment. On page 574, a new section was added denying the Commodity Futures Trading Commission the power to force clearinghouses to accept swaps for clearing. On page 706, two lines were added making it impossible for buyers who get sold an uncleared swap to void the deal. Taken altogether, the changes amount to what White describes as a "Trojan Horse" amendment: hundreds of pages of rigid rules about clearing swaps, with a few cleverly concealed clauses that make blowing off those rules no big deal. Michael Greenberger, a former official with the Commodity Futures Trading Commission who has been fighting for derivatives reform, describes the textual trickery as a "circle of doom. Despite the pages and pages of regulations, violating them is risk-free."

On May 18th, as the clock ran out on the deadline to file amendments, reform-minded Democrats staged a concerted push to close the loopholes. But when Sen. Maria Cantwell of Washington offered a proposal to eliminate the "Trojan Horse" sham, Reid tried to slam the door on her and everyone else working to strengthen reform. The majority leader called for a vote to end debate – a move that would squelch any remaining amendments. This extraordinary decision to cut off discussion of our one, best shot at revamping the rules of modern American finance was made, at least in part, to enable senators to get home for Memorial Day weekend.

But then something truly unexpected took place. Cantwell revolted, joined by Sen. Russ Feingold of Wisconsin. That left Reid in the perverse position of having to convince three Republicans to come over to his side to silence a member of his own party. On May 20th, Reid got the votes he needed to kill the debate. A few hours later, the Senate passed the bill, loopholes and all, by a vote of 59-39.

In a heartwarming demonstration of the Senate's truly bipartisan support for Wall Street, Sen. Sam Brownback – a Republican from Kansas – stepped in to help Democrats kill one of the bill's most vital reforms. At the last minute, Brownback mysteriously withdrew his amendment to exempt auto dealers from regulation by the CFPB – a maneuver that prevented the Merkley-Levin ban on speculative trading, which was attached to Brownback's amendment, from even being voted on. That was good news for car buyers, but bad news for the global economy. Senators may enjoy scolding Goldman Sachs in public hearings, but when it comes time to vote, they'll pick Wall Street over Detroit every time.

The rushed vote also meant that the Democratic leadership wasn't able to gut 716, the amazingly aggressive section of Lincoln's amendment that would cut off taxpayer money to big banks that gamble on risky derivatives. Not that they didn't try. With just three minutes to go before the deadline, Dodd had filed a hilarious amendment that would have delayed the ban on derivatives for two years – and empowered a new nine-member panel to unilaterally kill it. Sitting on the panel would be Bernanke, Treasury Secretary Tim Geithner and FDIC chief Sheila Bair, all of whom violently opposed 716.

Dodd was forced to withdraw his amendment after Wall Street complained that even this stall-and-kill tactic would create too much "uncertainty" in the market. That left 716 still alive for the moment – but even its staunchest supporters expected the leadership to find some way to gut it in conference, especially since President Obama personally opposes the measure. "Treasury and the White House are in full-court mode, assuring everybody that this will be fixed," says Greenberger. "And when they say fixed, that means killed."

Whatever the final outcome, the War for Finance Reform serves as a sweeping demonstration of how power in the Senate can be easily concentrated in the hands of just a few people. Senators in the majority party – Brown, Kaufman, Merkley, even a committee chairman like Lincoln – took a back seat to Reid and Dodd, who tinkered with amendments on all four fronts of the war just enough to keep many of them from having real teeth. "They're working to come up with a bill that Wall Street can live with, which by definition makes it a bad bill," one Democratic aide explained in the final, frantic days of negotiation.

On the plus side, the bill will rein in some forms of predatory lending, and contains a historic decision to audit the Fed. But the larger, more important stuff – breaking up banks that grow Too Big to Fail, requiring financial giants to pay upfront for their own bailouts, forcing the derivatives market into the light of day – probably won't happen in any meaningful way. The Senate is designed to function as a kind of ongoing negotiation between public sentiment and large financial interests, an endless tug of war in which senators maneuver to strike a delicate mathematical balance between votes and access to campaign cash. The problem is that sometimes, when things get really broken, the very concept of a middle ground between real people and corrupt special interests becomes a grotesque fallacy. In times like this, we need our politicians not to bridge a gap but to choose sides and fight. In this historic battle over finance reform, when we had a once-in-a-generation chance to halt the worst abuses on Wall Street, many senators made the right choice. In the end, however, the ones who mattered most picked wrong – and a war that once looked winnable will continue to drag on for years, creating more havoc and destroying more lives before it is over.
24659  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Taibbi: Wall Street's War-1 on: June 08, 2010, 07:25:43 AM
Wall Street's War
Congress looked serious about finance reform – until America's biggest banks unleashed an army of 2,000 paid lobbyists
Matt Taibbi

It's early May in Washington, and something very weird is in the air. As Chris Dodd, Harry Reid and the rest of the compulsive dealmakers in the Senate barrel toward the finish line of the Restoring American Financial Stability Act – the massive, year-in-the-making effort to clean up the Wall Street crime swamp – word starts to spread on Capitol Hill that somebody forgot to kill the important reforms in the bill. As of the first week in May, the legislation still contains aggressive measures that could cost once-indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has escaped the usual Senate-whorehouse orgy of mutual back-scratching, fine-print compromises and freeway-wide loopholes that screw any chance of meaningful change.

The real shocker is a thing known among Senate insiders as "716." This section of an amendment would force America's banking giants to either forgo their access to the public teat they receive through the Federal Reserve's discount window, or give up the insanely risky, casino-style bets they've been making on derivatives. That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shit into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crappy mortgages in phony insurance. In short, 716 would take a chain saw to one of Wall Street's most lucrative profit centers: Five of America's biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan's trading revenue between 2006 and 2008 came from such derivatives. If 716 goes through, it would be a veritable Hiroshima to the era of greed.

"When I first heard about 716, I thought, 'This is never gonna fly,'" says Adam White, a derivatives expert who has been among the most vocal advocates for reform. When I speak to him early in May, he sounds slightly befuddled, like he can't believe his good fortune. "It's funny," he says. "We keep waiting for the watering-down to take place – but we keep getting to the next hurdle, and it's still staying strong."

In the weeks leading up to the vote on the reform bill, I hear one variation or another on this same theme from Senate insiders: that the usual process of chipping away at key legislation is not taking place with its customary dispatch, despite a full-court press by Wall Street. The financial-services industry has reportedly flooded the Capitol with more than 2,000 paid lobbyists; even veteran members are stunned by the intensity of the blitz. "They're trying everything," says Sen. Sherrod Brown, a Democrat from Ohio. Wall Street's army is especially imposing given that the main (really, the only) progressive coalition working the other side of the aisle, Americans for Financial Reform, has been in existence less than a year – and has just 60 unpaid "volunteer" lobbyists working the Senate halls.

The companies with the most at stake are particularly well-connected. The lobbying campaign for Goldman Sachs, for instance, is being headed up by a former top staffer for Rep. Barney Frank, Michael Paese, who is coordinating some 14 different lobbying firms to fight on Goldman's behalf. The bank is also represented by Capitol Hill heavyweights like former House majority leader Dick Gephardt and former Reagan chief of staff Ken Duberstein. All told, there are at least 40 ex-staffers of the Senate Banking Committee – and even one former senator, Trent Lott – lobbying on behalf of Wall Street. Until the final weeks of the reform debate, however, it seemed that all these insiders were facing the prospect of a rare defeat – and they weren't pleased. One lobbyist even complained to The Washington Post that the bill was being debated out in the open, on the Senate floor, instead of in a smoky backroom. "They've got to get this thing off the floor and into a reasonable, behind-the-scenes" discussion, he groused. "Let's have a few wise fathers sit around the table in some quiet room" to work it out.

As it neared the finish line, the Restoring American Financial Stability Act was almost unprecedentedly broad in scope, in some ways surpassing even the health care bill in size and societal impact. It would rein in $600 trillion in derivatives, create a giant new federal agency to protect financial consumers, open up the books of the Federal Reserve for the first time in history and perhaps even break up the so-called "Too Big to Fail" giants on Wall Street. The recent history of the U.S. Congress suggests that it was almost a given that they would fuck up this one real shot at slaying the dragon of corruption that has been slowly devouring not just our economy but our whole way of life over the past 20 years. Yet with just weeks left in the nearly year-long process at hammering out this huge new law, the bad guys were still on the run. Even the senators themselves seemed surprised at what assholes they weren't being. This new baby of theirs, finance reform, was going to be that one rare kid who made it out of the filth and the crime of the hood for everybody to be proud of.

Then reality set in.

Picture the Restoring American Financial Stability Act as a vast conflict being fought on multiple fronts, with the tiny but enormously influential Wall Street lobby on one side and pretty much everyone else on the planet on the other. To be precise, think World War II – with some battles won by long marches and brutal campaigns of attrition, others by blitzkrieg attacks, still more decided by espionage and clandestine movements. Time after time, at the last moment, the Wall Street axis has turned seemingly lost positions into surprise victories or, at worst, bitterly fought stalemates. The only way to accurately convey the scale of Wall Street's ingenious comeback is to sketch out all the crazy, last-minute shifts on each of the war's four major fronts.

Front #1

The most successful of the reform gambits was probably the audit-the-Fed movement led by Sen. Bernie Sanders, the independent from Vermont. For nearly a century, the Federal Reserve has been, within our borders, a nation unto itself – with vast powers to shape the economy and no real limits to its authority beyond the president's ability to appoint its chairman. In the bubble era it has been transformed into a kind of automatic bailout mechanism, helping Wall Street drink itself sober by flooding big banks with cheap money after the collapse of each speculative boom. But suddenly, with both the Huffington Post crowd and the Tea Party raising their pitchforks in outrage, Sanders managed to pass – by a vote of 96-0 – an amendment to force the Fed to open its books to congressional scrutiny.

If Alan Greenspan and Ben Bernanke don't take that 96-0 vote as a kick-to-the-groin testament to the staggering unpopularity of the Fed, they should. When 96 senators agree on something, they're usually affirming their devotion to the flag or commemorating the death of Mother Teresa. But as it turns out, the more than $2 trillion in loans that the Fed handed out in secret after the 2008 meltdown is something that both the left and the right have no problem banding together to piss on. One of the most bizarre alliances of the bailout era took place when Sanders, a democratic socialist, and Sen. Jim DeMint, a hardcore conservative from South Carolina, went on the CNBC show hosted by crazy supply-sider Larry Kudlow – and all three found themselves in complete agreement on the need to force Fed loans into the open. "People who come from very different places agree that it ought not to be done in secret, that the Fed isn't Skull and Bones," says Michael Briggs, an aide to Sanders.

The Sanders amendment, if it survives in conference, will lead to some delicious disclosures. Almost exactly a year ago, Sanders questioned Bernanke at a Senate-budget hearing, asking him to name the banks that had been bailed out by the Fed. "Will you tell the American people to whom you lent 2.2 trillion of their dollars?" Sanders demanded.

After a little hemming and hawing, a bored-looking Bernanke – Time magazine's 2009 Person of the Year, by the way – bluntly said, "No." It would be "counterproductive," he explained, if clients and investors learned that these poor banks were broke enough to need a public handout.

Bernanke's performance that day so rankled Sanders that he wrote up his amendment specifically to bring the Fed's goblin-in-chief to heel. The new law will force Bernanke to post the identity of loan recipients on the Fed's website for all to see. It also mandates that the Government Accountability Office investigate potential conflicts of interest that took place during the bailout, such as the presence of Goldman CEO Lloyd Blankfein in the room during the negotiations of the AIG bailout, which led to Goldman's receiving $13 billion of public money via the rescue.

The Sanders amendment was perhaps the headline victory to date in the ongoing War for Finance Reform, but even this battle entailed some heavy casualties. Sanders had originally filed an amendment that was much closer to a House version pressed by libertarian hero Ron Paul, one that would have permanently opened the Fed's books to Congress. But as the Senate crawled closer to a vote, the Sanders camp began to hear that the Obama administration opposed the bill, fearing it would give Congress too much day-to-day involvement in Fed policy. "The White House was saying how wonderful transparency is, but they still had 'concerns,' "Briggs says. "Within a couple hours, those concerns were being worked out."

The end result was a deal that restricted the audit to a one-time shot: Congress could only examine Fed loans made after December 2007. Once the audit was complete, the Fed's books would once again be sealed forever from public scrutiny. Sen. David Vitter, a Democrat from Louisiana, countered with an amendment to permanently open up the Fed's books, but it was shot down by a vote of 62-37. In one of the most absurd and indefensible retreats of the war, a decisive majority of senators voted to deny themselves the power to audit the Federal Reserve on behalf of the American people. When it comes to protecting the world's wealthiest banks from public scrutiny, it turns out, Democrats and Republicans have no trouble achieving bipartisanship.


The biggest no-brainer of finance reform was supposed to be the Consumer Financial Protection Bureau. The idea was simple: create a federal agency whose sole mission would be to make sure that financial lenders don't rape their customers with defective products, unjust fees and other fine-print nightmares familiar to any American with a credit card. In theory, the CFPB would rein in predatory lending by barring lenders from making loans they know that borrowers won't be able to pay back, either because of hidden fees or ballooning payments.

Wall Street knew it would be impossible to lobby Congress on this issue by taking the angle of "We're a rapacious megabank that would like to keep skull-fucking to death our customers using incomprehensible and predatory loans." So it came up with another strategy – one that deployed some of the most inspired nonsense ever seen on the Hill. The all-powerful lobbying arm of the U.S. Chamber of Commerce, which has been fierce in its representation of Wall Street's interests throughout the War for Finance Reform, cued up a $3 million ad campaign implying that the CFPB, instead of targeting asshole bankers in flashy suits and hair gel, would – and this isn't a joke – target your local butcher, making it hard for him to lend you the money to buy meat. That's right: The ads featured shots of a squat butcher with his arms folded, standing in front of a big pile of meat. "The economy has made it tough on this local butcher's customers," the ad reads. "So he lets some of them run a tab and pay the bill over time to make ends meet. But now Washington wants to make it tougher on everyone." After insisting – falsely – that this kindly butcher would be subject to the new consumer protection bureau, the ad warns that the CFPB "would also have the ability to collect information about his customers' financial accounts and take away many of their financial choices."

Sitting in the Senate chamber one afternoon not long before the vote, I even heard Sen. Mike Enzi, an impressively shameless Republican from Wyoming, insist that the CFPB would mean that "anyone who has ever paid for dental care in installments could be facing the prospect of paying for dental care upfront." Other anti-reform ads claimed that everyone from cabinetmakers to electricians would be hounded by the new agency – even though the CFPB's mandate explicitly excludes merchants who are "not engaged significantly in offering or providing consumer financial products or services."

The CFPB was always a pretty good bet to pass in some form. Just as pushing through anything that could plausibly be called "health care reform" was a political priority for the Obama administration, creating a new agency with the words "consumer protection" in the title was destined from the start to be the signature effort of the finance bill, which is otherwise mostly a mishmash of highly technical new regulations. But that didn't stop leading Democrats from doing what they could to chisel away at the thing. Throughout the process, Chris Dodd, the influential chairman of the Senate Banking Committee, has set new standards for reptilian disingenuousness – playing the role of stern banker-buster while taking millions in Wall Street contributions. Dodd worked overtime trying to craft a "bipartisan" bill with the Republican minority – in particular with Sen. Richard Shelby, the ranking Republican on the committee. With his dyed hair, porcine trunk and fleshy, powdery-white face, Shelby recalls an elderly sumo wrestler in drag. I happened to be in the Senate on the day that Shelby proposed a substitute amendment that would have stuffed the CFPB into the FDIC, effectively scaling back its power and independence. Throughout the debate, I was struck by the way that Dodd and his huge black caterpillar eyebrows kept crossing the aisle to whisper in Shelby's ear. During these huddles, Dodd would gently pat Shelby's back or hold his arm; it was like watching a love scene in a Japanese monster movie.

Shelby's amendment was ultimately defeated by a vote of 61-37 – but he and Dodd still reached a number of important compromises that significantly watered down the CFPB. The idea was to rack up as many exemptions as possible for favored industries, all of which had contributed generously to their favorite senators. By mid-May, Republicans and Democrats had quietly agreed to full or partial "carve-outs" for banks with less than $10 billion in deposits, as well as for check-cashers and other sleazy payday lenders. As the bill headed toward a vote, there was also a furious fight to exempt auto dealers from anti-predatory regulations – a loophole already approved by the House – even though car loans are the second-largest source of borrowing for Americans, after home mortgages. The purview of the CFPB, in essence, was being limited to megabanks and mortgage lenders. That's a major victory in the war against Wall Street, but it will be hard to be too impressed if Congress can't even find a way to vote for consumer protection against used-car salesmen.


Perhaps the fiercest fight of all over finance reform involved a part of the bill called "resolution authority" – also known as, "The next time an AIG or a Lehman Brothers goes belly up, do we bail the fuckers out? And if so, with whose money?" In its original form, the bill answered these crucial questions by requiring that banks contribute to a $50 billion fund that could be used to aid failing financial institutions. The fund was hardly a cure-all – $50 billion "wouldn't even be enough to bail out Citigroup's prop-trading desk," as one industry analyst observed – but it at least established a precedent that banks should pay for their own bailouts, instead of simply snatching money from taxpayers.

The fund had been established after a fierce battle last fall, when Democrats in the House beat back a seemingly insane proposal backed by the Obama administration that would have paid for bailouts by borrowing from taxpayers and recouping the money from Wall Street later on, by means of a mysterious, convoluted process. That heroic stand in the House, which was marked by long nights of ferocious negotiations, was wiped out in one fell swoop on May 5th, after Dodd and Shelby huddled up in another of their monster-love sessions and hammered out a deal to strip the bailout fund from the bill. The surprise rollback was introduced by the Senate leadership late on a Wednesday and voted on three hours later. Just like that, taxpayers were back to fronting the nation's biggest banks the money when they find themselves in financial trouble.

One day after the Shelby-Dodd wipeout, another key reform got massacred. This was the "Too Big to Fail" amendment put forward by two reform-minded freshmen, Sens. Ted Kaufman of Delaware and Sherrod Brown of Ohio. The measure would have mandated the automatic breakup of any bank that held more than 10 percent of all insured deposits, or had at risk more than two percent of America's GDP. The amendment was just the kind of common-sense, loophole-proof, no-bullshit legislation that, sadly, almost never passes in the modern Senate.

Brown is an interesting character. Whenever I talk to him, I often forget he's a U.S. senator; he feels more like a dude you met on an Amtrak train and struck up a conversation with. He remains the only member of Congress I've ever met who took off his shoes and socks in the middle of an interview. But when I catch up with him in an anteroom outside the Senate chamber on the day his and Kaufman's amendment ends up being voted on, he seems harried and tense, like a man waiting for bad news in a hospital lobby. In recent weeks, he confides, he has found himself facing both barrels of the banking lobby.

"There are 1,500 bank lobbyists in this town, and they're coming by all the time," he says. "And it's not just the lobbyists. When the bank lobbyist from Columbus comes by, he brings 28 bankers with him."
24660  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Gobar Gas on: June 08, 2010, 07:20:52 AM
24661  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Gobar Gas on: June 08, 2010, 07:19:01 AM

Michael Yon on Gobar Gas
24662  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Israel, and its neighbors on: June 08, 2010, 06:26:31 AM
The Limits of Public Opinion: Arabs, Israelis and the Strategic Balance
June 8, 2010
By George Friedman

Last week’s events off the coast of Israel continue to resonate. Turkish-Israeli relations have not quite collapsed since then but are at their lowest level since Israel’s founding. U.S.-Israeli tensions have emerged, and European hostility toward Israel continues to intensify. The question has now become whether substantial consequences will follow from the incident. Put differently, the question is whether and how it will be exploited beyond the arena of public opinion.

The most significant threat to Israel would, of course, be military. International criticism is not without significance, but nations do not change direction absent direct threats to their interests. But powers outside the region are unlikely to exert military power against Israel, and even significant economic or political sanctions are unlikely to happen. Apart from the desire of outside powers to limit their involvement, this is rooted in the fact that significant actions are unlikely from inside the region either.

The first generations of Israelis lived under the threat of conventional military defeat by neighboring countries. More recent generations still faced threats, but not this one. Israel is operating in an advantageous strategic context save for the arena of public opinion and diplomatic relations and the question of Iranian nuclear weapons. All of these issues are significant, but none is as immediate a threat as the specter of a defeat in conventional warfare had been. Israel’s regional enemies are so profoundly divided among themselves and have such divergent relations with Israel that an effective coalition against Israel does not exist — and is unlikely to arise in the near future.

Given this, the probability of an effective, as opposed to rhetorical, shift in the behavior of powers outside the region is unlikely. At every level, Israel’s Arab neighbors are incapable of forming even a partial coalition against Israel. Israel is not forced to calibrate its actions with an eye toward regional consequences, explaining Israel’s willingness to accept broad international condemnation.

Palestinian Divisions
To begin to understand how deeply the Arabs are split, simply consider the split among the Palestinians themselves. They are currently divided between two very different and hostile factions. On one side is Fatah, which dominates the West Bank. On the other side is Hamas, which dominates the Gaza Strip. Aside from the geographic division of the Palestinian territories — which causes the Palestinians to behave almost as if they comprised two separate and hostile countries — the two groups have profoundly different ideologies.

Fatah arose from the secular, socialist, Arab-nationalist and militarist movement of Egyptian President Gamal Abdul Nasser in the 1950s. Created in the 1960s, Fatah was closely aligned with the Soviet Union. It was the dominant, though far from the only, faction in the Palestine Liberation Organization (PLO). The PLO was an umbrella group that brought together the highly fragmented elements of the Palestinian movement. Yasser Arafat long dominated Fatah; his death left Fatah without a charismatic leader, but with a strong bureaucracy increasingly devoid of a coherent ideology or strategy.

Hamas arose from the Islamist movement. It was driven by religious motivations quite alien from Fatah and hostile to it. For Hamas, the liberation of Palestine was not simply a nationalist imperative, but also a religious requirement. Hamas was also hostile to what it saw as the financial corruption Arafat brought to the Palestinian movement, as well as to Fatah’s secularism.

Hamas and Fatah are playing a zero-sum game. Given their inability to form a coalition and their mutual desire for the other to fail, a victory for one is a defeat for the other. This means that whatever public statements Fatah makes, the current international focus on Gaza and Hamas weakens Fatah. And this means that at some point, Fatah will try to undermine the political gains the flotilla has offered Hamas.

The Palestinians’ deep geographic, ideological and historical divisions occasionally flare up into violence. Their movement has always been split, its single greatest weakness. Though revolutionary movements frequently are torn by sectarianism, these divisions are so deep that even without Israeli manipulation, the threat the Palestinians pose to the Israelis is diminished. With manipulation, the Israelis can pit Fatah against Hamas.

The Arab States and the Palestinians
The split within the Palestinians is also reflected in divergent opinions among what used to be called the confrontation states surrounding Israel — Egypt, Jordan and Syria.

Egypt, for example, is directly hostile to Hamas, a religious movement amid a sea of essentially secular Arab states. Hamas’ roots are in Egypt’s largest Islamist movement, the Muslim Brotherhood, which the Egyptian state has historically considered its main domestic threat. Egyptian President Hosni Mubarak’s regime has moved aggressively against Egyptian Islamists and sees Hamas’ ideology as a threat, as it could spread back to Egypt. For this and other reasons, Egypt has maintained its own blockade of Gaza. Egypt is much closer to Fatah, whose ideology derives from Egyptian secularism, and for this reason, Hamas deeply distrusts Cairo.

Jordan views Fatah with deep distrust. In 1970, Fatah under Arafat tried to stage a revolution against the Hashemite monarchy in Jordan. The resulting massacres, referred to as Black September, cost about 10,000 Palestinian lives. Fatah has never truly forgiven Jordan for Black September, and the Jordanians have never really trusted Fatah since then. The idea of an independent Palestinian state on the West Bank unsettles the Hashemite regime, as Jordan’s population is mostly Palestinian. Meanwhile, Hamas with its Islamist ideology worries Jordan, which has had its own problems with the Muslim Brotherhood. So rhetoric aside, the Jordanians are uneasy at best with the Palestinians, and despite years of Israeli-Palestinian hostility, Jordan (and Egypt) has a peace treaty with Israel that remains in place.

Syria is far more interested in Lebanon than it is in the Palestinians. Its co-sponsorship (along with Iran) of Hezbollah has more to do with Syria’s desire to dominate Lebanon than it does with Hezbollah as an anti-Israeli force. Indeed, whenever fighting breaks out between Hezbollah and Israel, the Syrians get nervous and their tensions with Iran increase. And of course, while Hezbollah is anti-Israeli, it is not a Palestinian movement. It is a Lebanese Shiite movement. Most Palestinians are Sunni, and while they share a common goal — the destruction of Israel — it is not clear that Hezbollah would want the same kind of regime in Palestine that either Hamas or Fatah would want. So Syria is playing a side game with an anti-Israeli movement that isn’t Palestinian, while also maintaining relations with both factions of the Palestinian movement.

Outside the confrontation states, the Saudis and other Arabian Peninsula regimes remember the threat that Nasser and the PLO posed to their regimes. They do not easily forgive, and their support for Fatah comes in full awareness of the potential destabilizing influence of the Palestinians. And while the Iranians would love to have influence over the Palestinians, Tehran is more than 1,000 miles away. Sometimes Iranian arms get through to the Palestinians. But Fatah doesn’t trust the Iranians, and Hamas, though a religious movement, is Sunni while Iran is Shiite. Hamas and the Iranians may cooperate on some tactical issues, but they do not share the same vision.

Israel’s Short-term Free Hand and Long-term Challenge
Given this environment, it is extremely difficult to translate hostility to Israeli policies in Europe and other areas into meaningful levers against Israel. Under these circumstances, the Israelis see the consequences of actions that excite hostility toward Israel from the Arabs and the rest of the world as less dangerous than losing control of Gaza. The more independent Gaza becomes, the greater the threat it poses to Israel. The suppression of Gaza is much safer and is something Fatah ultimately supports, Egypt participates in, Jordan is relieved by and Syria is ultimately indifferent to.

Nations base their actions on risks and rewards. The configuration of the Palestinians and Arabs rewards Israeli assertiveness and provides few rewards for caution. The Israelis do not see global hostility toward Israel translating into a meaningful threat because the Arab reality cancels it out. Therefore, relieving pressure on Hamas makes no sense to the Israelis. Doing so would be as likely to alienate Fatah and Egypt as it would to satisfy the Swedes, for example. As Israel has less interest in the Swedes than in Egypt and Fatah, it proceeds as it has.

A single point sums up the story of Israel and the Gaza blockade-runners: Not one Egyptian aircraft threatened the Israeli naval vessels, nor did any Syrian warship approach the intercept point. The Israelis could be certain of complete command of the sea and air without challenge. And this underscores how the Arab countries no longer have a military force that can challenge the Israelis, nor the will nor interest to acquire one. Where Egyptian and Syrian forces posed a profound threat to Israeli forces in 1973, no such threat exists now. Israel has a completely free hand in the region militarily; it does not have to take into account military counteraction. The threat posed by intifada, suicide bombers, rockets from Lebanon and Gaza, and Hezbollah fighters is real, but it does not threaten the survival of Israel the way the threat from Egypt and Syria once did (and the Israelis see actions like the Gaza blockade as actually reducing the threat of intifada, suicide bombers and rockets). Non-state actors simply lack the force needed to reach this threshold. When we search for the reasons behind Israeli actions, it is this singular military fact that explains Israeli decision-making.

And while the break between Turkey and Israel is real, Turkey alone cannot bring significant pressure to bear on Israel beyond the sphere of public opinion and diplomacy because of the profound divisions in the region. Turkey has the option to reduce or end cooperation with Israel, but it does not have potential allies in the Arab world it would need against Israel. Israel therefore feels buffered against the Turkish reaction. Though its relationship with Turkey is significant to Israel, it is clearly not significant enough for Israel to give in on the blockade and accept the risks from Gaza.

At present, Israel takes the same view of the United States. While the United States became essential to Israeli security after 1967, Israel is far less dependent on the United States today. The quantity of aid the United States supplies Israel has shrunk in significance as the Israeli economy has grown. In the long run, a split with the United States would be significant, but interestingly, in the short run, the Israelis would be able to function quite effectively.

Israel does, however, face this strategic problem: In the short run, it has freedom of action, but its actions could change the strategic framework in which it operates over the long run. The most significant threat to Israel is not world opinion; though not trivial, world opinion is not decisive. The threat to Israel is that its actions will generate forces in the Arab world that eventually change the balance of power. The politico-military consequences of public opinion is the key question, and it is in this context that Israel must evaluate its split with Turkey.

The most important change for Israel would not be unity among the Palestinians, but a shift in Egyptian policy back toward the position it held prior to Camp David. Egypt is the center of gravity of the Arab world, the largest country and formerly the driving force behind Arab unity. It was the power Israel feared above all others. But Egypt under Mubarak has shifted its stance versus the Palestinians, and far more important, allowed Egypt’s military capability to atrophy.

Should Mubarak’s successor choose to align with these forces and move to rebuild Egypt’s military capability, however, Israel would face a very different regional equation. A hostile Turkey aligned with Egypt could speed Egyptian military recovery and create a significant threat to Israel. Turkish sponsorship of Syrian military expansion would increase the pressure further. Imagine a world in which the Egyptians, Syrians and Turks formed a coalition that revived the Arab threat to Israel and the United States returned to its position of the 1950s when it did not materially support Israel, and it becomes clear that Turkey’s emerging power combined with a political shift in the Arab world could represent a profound danger to Israel.

Where there is no balance of power, the dominant nation can act freely. The problem with this is that doing so tends to force neighbors to try to create a balance of power. Egypt and Syria were not a negligible threat to Israel in the past. It is in Israel’s interest to keep them passive. The Israelis can’t dismiss the threat that its actions could trigger political processes that cause these countries to revert to prior behavior. They still remember what underestimating Egypt and Syria cost them in 1973. It is remarkable how rapidly military capabilities can revive: Recall that the Egyptian army was shattered in 1967, but by 1973 was able to mount an offensive that frightened Israel quite a bit.

The Israelis have the upper hand in the short term. What they must calculate is whether they will retain the upper hand if they continue on their course. Division in the Arab world, including among the Palestinians, cannot disappear overnight, nor can it quickly generate a strategic military threat. But the current configuration of the Arab world is not fixed. Therefore, defusing the current crisis would seem to be a long-term strategic necessity for Israel.

Israel’s actions have generated shifts in public opinion and diplomacy regionally and globally. The Israelis are calculating that these actions will not generate a long-term shift in the strategic posture of the Arab world. If they are wrong about this, recent actions will have been a significant strategic error. If they are right, then this is simply another passing incident. In the end, the profound divisions in the Arab world both protect Israel and make diplomatic solutions to its challenge almost impossible — you don’t need to fight forces that are so divided, but it is very difficult to negotiate comprehensively with a group that lacks anything approaching a unified voice.

24663  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Small Alabama town defies the Feds on: June 08, 2010, 06:21:46 AM
Looks like the Community Organizer in Chief would do well to take lessons from these folks.

In Alabama, a Home-Grown Bid to Beat Back Oil
Published: June 7, 2010

MAGNOLIA SPRINGS, Ala. — James Hinton looked over a barge jutting into the mouth of a 6,000-acre estuary last weekend and said, “If we can make this work, if the oil don’t get in here, 1,275 miles of bay and river coastline will be protected. I could go to jail for going against unified command. Now, I don’t mind going to jail, I just need to make sure it’s for doing the right thing.”

In a month in which Gulf Coast officials have railed about not being able to protect their shorelines from oil and not getting support from BP or the unified command structure set up to handle the cleanup efforts, Mr. Hinton, a volunteer fire chief in Magnolia Springs, a small town of fewer than 1,000, has emerged as a man with a plan.

“What he’s doing is really admirable,” said Bethany Kraft, executive director of the Alabama Coastal Foundation, a nonprofit environmental group. “He’s taking things into his own hands instead of waiting for other people to do something about it.”

Mr. Hinton went into action the first week of May, calling a town meeting to discuss ideas for protecting Weeks Bay, an estuary off Mobile Bay that supports 19 federally protected species, including bald eagles and wood storks. The residents came up with a solution that is unique on the gulf, said Malissa Valdes, a spokeswoman for the unified command, which approves all responses in federally governed waters.

From the start, the townspeople were unsatisfied with the unified command’s plan for Weeks Bay — a strand of floating surface barriers known as boom stretched across the bay’s mouth. Because of tidal currents, any oil on top of the water could splash over the boom, then into the bay and up the Fish and Magnolia Rivers into nurseries for area wildlife. A plan to string boom across Mobile Bay failed when water shredded the barrier.

Mr. Hinton’s solution was simple: run a wall of barges across the mouth of Weeks Bay to block the current, then run five layers of boom behind it — two to block the oil, and three strands of absorbent boom to soak up any oil that got through the containment layers.

The town bought the boom right away, before an increase in demand nearly quadrupled the price. Money for the project came from the state, which received $25 million from BP for emergency response efforts.

“We’re not biologists or engineers or scientists,” Mr. Hinton said. “We took common sense and what we knew about the water from living here. I’m pretty proud of our little plan.”

Between rain showers on Sunday, two dozen volunteer firefighters and teenage explorers laid out the layers of boom, while a tugboat and a crane moved nine barges into place, anchored by 40-foot spikes, with a closeable 100-foot gap for boats to pass through.

To seal the bay entirely they would need approval from unified command. But they are resolved to close it at the first sight of nearby oil, with or without approval, said Charles S. Houser, the mayor of Magnolia Springs, who earns a monthly salary of $100.

“We’re not going to wait for BP,” Mr. Houser said. “If we saw oil right there we’d close the bay right now. The lesson we learned from Louisiana is to act, not wait. We’ll ask for forgiveness later.”

The biggest challenge, Mr. Hinton said, has been dealing with BP and the unified command bureaucracy. The 36 fire chiefs in Baldwin County here passed a resolution to censure BP for poor communications with fire crews.

Mr. Hinton said that so far no other communities had contacted him about copying his plan. “A fire chief told me, ‘Jamie, you can slow down in your preparations, the federal government is going to take care of it.’ I said, ‘Meaning the way they took care of Katrina, Ivan and the Valdez spill?’ ”

He added: “If you wait on BP, it’ll be like Louisiana. They had a month to protect the marshes. The Bible says the good Lord made the world in seven days. I’m not going to risk what happened in Louisiana happening here.”
24664  Politics, Religion, Science, Culture and Humanities / Politics & Religion / POTH: Medicaid cut places States in budget bind on: June 08, 2010, 06:15:59 AM

Medicaid Cut Places States in Budget Bind
Published: June 7, 2010

Having counted on Washington for money that may not be delivered, at least 30 states will have to close larger-than-anticipated shortfalls in the coming fiscal year unless Congress passes a six-month extension of increased federal spending on Medicaid.

MedicaidGovernors and state lawmakers, already facing some of the toughest budgets since the Great Depression, said the repercussions would extend far beyond health care, forcing them to make deep cuts to education, social services and public safety.

Gov. Edward G. Rendell of Pennsylvania, for instance, penciled $850 million in federal Medicaid assistance into the revenue side of his state’s ledger, reducing its projected shortfall to $1.2 billion. The only way to compensate for the loss, he said in an interview, would be to lay off at least 20,000 government workers, including teachers and police officers, at a time when the state is starting to add jobs.

“It would actually kill everything the stimulus has done,” said Mr. Rendell, a Democrat. “It would be enormously destructive.”

The Medicaid provision, which would extend assistance first granted in last year’s stimulus package, was considered such a sure bet by many governors and legislative leaders that they prematurely included the money in their budgeting. But under pressure from conservative Democrats to rein in deficit spending, House leaders in late May eliminated $24 billion in aid to states from a tax and jobs bill that was approved and forwarded to the Senate.

The Senate plans to take up the measure this week, and the majority leader, Senator Harry Reid of Nevada, favors restoring the money, said his spokesman, Jim Manley. The House speaker, Nancy Pelosi, signaled last week that her chamber was open to reconsidering the appropriation.

But state and Congressional officials said the evolving politics of a midterm election year meant that the federal aid could no longer be taken for granted. And if it does not arrive, it will leave gaping shortages for states that are already slashing services and raising taxes to balance their recession-racked budgets.

According to the National Conference of State Legislatures, states are relying on the money to close more than a fourth of the $89 billion in cumulative budget shortfalls projected for the 2011 fiscal year, which starts on July 1 in 46 states.

In California, Gov. Arnold Schwarzenegger’s proposed budget assumed $1.5 billion in increased federal aid for Medicaid. With his state reeling from $57 billion in cuts over three years and facing a shortfall of $19 billion in 2011, further reductions would be “both cruel and counterproductive,” Mr. Schwarzenegger, a Republican, wrote to members of Congress last week.

In New York, which started its fiscal year on April 1 without a financial plan, Gov. David A. Paterson’s proposed budget included $1.1 billion in unsecured federal financing. Mr. Paterson, who is depending on the money to narrow a $9.2 billion gap, joined Mayor Michael R. Bloomberg of New York City at Gracie Mansion on Thursday to lobby their state’s Congressional delegation.

Governors and state lawmakers were caught largely by surprise by the House’s removal of the appropriation. Over the previous 10 months, the Medicaid money had been included in separate bills passed by each chamber, and President Obama had wrapped the extension into his executive budget proposal.

“There was every reason to think they’d get together,” Mr. Rendell said.

But in recent weeks, Republicans and conservative Democrats began to complain that the proposed spending would add to the deficit because it was not “paid for” with new revenue or other cuts. Their success in reducing the size of the bill reflected a deepening debate in Congress — and on the campaign trail — about the long-term consequences of using deficit spending to fight the recession.

Democratic aides in both the House and the Senate said state officials had not pressed their case forcefully enough.

“We may have fallen asleep at the wheel a little bit because we took it as a certainty for so long,” said Michael Bird, federal affairs counsel for the National Council of State Legislatures.

Republican governors in particular, the aides said, had been reluctant to petition for relief while the party’s leaders in Congress were criticizing Democrats for driving up the national debt.

“Governors need to make it clear that it is vital that their states receive this money, instead of blasting Congress for ‘out-of-control spending,’ ” said a senior Democratic aide in the House, speaking on the condition of anonymity because he was not authorized to talk about the issue publicly.

But the need to balance state and federal interests makes for awkward politics for some governors. Timing has made the conflict more pronounced because state budgets typically do not recover until well after a national recession fades.

“I’m very concerned about the level of federal spending and what it would mean for the long term,” said Gov. Jim Douglas of Vermont, a Republican and chairman of the National Governors Association. “But for the short term, states need this bridge to sustain the safety net of human services programs and education.”

A report issued Thursday by the National Governors Association and the National Association of State Budget Officers projected that state revenues would “remain sluggish” for two more years. State general fund spending declined by nearly $75 billion, or 11 percent, from 2008 to 2010, according to the report. But states, which unlike the federal government must balance their budgets, avoided even harsher cuts because of nearly $135 billion in stimulus grants from Washington.

The aid included $87 billion made available by adjusting how states and the federal government share the growing cost of Medicaid, the health insurance program for the poor and the disabled. The economic downturn is expected to drive up enrollment in the program by 21 percent from 2009 to 2011, according to the report.

Although the federal Medicaid share varies by state, the stimulus act raised it to an average of 66 percent, from 57 percent, according to the Kaiser Family Foundation.

The reimbursement increase was limited to a 27-month period that ends on Dec. 31. Almost as soon as it took effect, governors began fretting about the fiscal precipice they would face when the enhanced payments ended. In February, governors from 42 states and several territories signed a letter to Congressional leaders pleading for a six-month extension.

But with the public alarmed about deficit spending, House leaders found that they could not muster the Democratic votes needed to pass the tax and jobs bill without jettisoning several expensive components.

In a conference call with bloggers last week, Ms. Pelosi, Democrat of California, took note of the changed political climate, calling the package “too large for members to digest.”

“If I had all the votes that I needed in the non-Blue Dog world,” she said, referring to the caucus of conservative Democrats, “I would not have had to make some of the changes I made to get some of the Blue Dog support.”

Many states do not have contingencies for replacing the federal money. Their options will be limited by the severity of the steps they already have taken, and by federal requirements that they maintain eligibility levels for Medicaid.

“We don’t have a specific list of things we would do if we don’t get the money,” said Erik Kriss, a spokesman for Mr. Paterson’s budget office, “but we are looking for the most part at the cut side of the ledger.”
24665  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Franklin, 1749: Education of Youth on: June 08, 2010, 05:56:50 AM
"The good Education of Youth has been esteemed by wise Men in all Ages, as the surest Foundation of the Happiness both of private Families and of Common-wealths. Almost all Governments have therefore made it a principal Object of their Attention, to establish and endow with proper Revenues, such Seminaries of Learning, as might supply the succeeding Age with Men qualified to serve the Publick with Honour to themselves, and to their Country." --Benjamin Franklin, Proposals Relating to the Education of Youth in Pennsylvania, 1749

24666  Politics, Religion, Science, Culture and Humanities / Politics & Religion / The American Nightmare on: June 07, 2010, 08:16:44 PM
24667  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Rants & interesting thought pieces on: June 07, 2010, 08:16:04 PM
These thoughts probably fit better on the Politics thread , , ,
24668  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Laffer: Tax Hikes and 2011 econ collapse on: June 07, 2010, 10:40:49 AM
People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.

It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.

Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.

People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."

Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

 .Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.

But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.

Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.

View Full Image

Associated Press
 .In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.

The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.

Mr. Laffer is the chairman of Laffer Associates and co-author of "Return to Prosperity: How America Can Regain Its Economic Superpower Status" (Threshold, 2010).
24669  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Congress agreeing to EPA taking its legislative power? on: June 07, 2010, 10:07:43 AM
This also could be posted in the Issues in the American Creed -Constitutional Law thead on the SCH forum as a matter of Separation of Powers.
  For Immediate Release: June 7, 2010
Contact: David Almasi at (202) 543-4110 x11 or (703) 568-4727
Judy Kent at (703) 759-7476 or

Senators to Vote on Whether to Cede Congressional Authority to the EPA

Washington, D.C. - Senators will soon consider a resolution to pare back an Environmental Protection Agency plan to regulate greenhouse gases - a plan that would raise energy costs.

On June 10, the U.S. Senate will consider a "resolution of disapproval" regarding a 2009 ruling made by the EPA in late 2009 claiming six greenhouse gases are a threat to public health. This makes these gases -- carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride -- subject to regulation under the Clean Air Act.

"The EPA's endangerment finding endangers our economy and our liberty," said Deneen Borelli, full-time fellow with the Project 21 black leadership network. "The EPA's effort to regulate greenhouse gases will affect virtually every aspect of our economy and our lives. In expert opinion, this will result in higher energy costs and job losses while having -- by their own admission -- virtually no effect on cooling global climate."

Senate Joint Resolution 26, introduced by Senator Lisa Murkowski (R-AK), would use the Congressional Review Act to overturn the administrative ruling. This would allow elected representatives to deliberate and pass their own regulations as Congress sees fit.

"I don't want an unelected bureaucrat imposing rules and regulations on businesses that are essentially a tax on energy and will be passed along to consumers -- many of whom are just getting by as it is," said Tom Borelli, director of the Free Enterprise Project of the National Center for Public Policy Research.

"Opposition to the cap-and-trade bill that was jammed through the House of Representatives is one of the key positions of the tea parties, and this endangerment finding is cap-and-trade by other means," noted Deneen Borelli. "Americans are already skeptical enough of lawmakers these days. Watching them pass up an opportunity to do what they were sent to Washington for will restore no lost faith in the government."

"This resolution is a major indicator of where our republic is headed. Senators will determine if they are going to cede their authority as an elected representative of the people to largely unaccountable bureaucrats," added Tom Borelli. "While the White House is eager for the EPA to seize regulatory authority, rank-and-file Americans such as those found in the tea party movement are troubled and will be watching to see who will be for and who will be against this massive federal power grab."

The National Center for Public Policy Research is a non-profit, free-market think-tank established in 1982 and funded primarily by the gifts of over 100,000 recent individual contributors. Less than one percent of funding is received from corporations.

24670  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: US Foreign Policy on: June 06, 2010, 06:38:14 PM
As Sarkozy asked in a spontaneous moment, “C’est debile?” Oui, oui, monsieur il est debile.

Here’s how things stack up for me at the moment:

Our policy in Afghanistan is utterly incoherent. BO (President Obama) says we are there because it is a vital war of national self-defense. This is why we will leave it up to Karzai and the central government as we begin to leave in a year. The Wackostans will return to their wicked ways in full measure. The ISI will act accordingly. Pakistan’s nuke program, if it has not already slipped its leash, will do so once again. BO has thrown away everything in Iraq. Iran will dominate via the Shias. Turkey, will work with Iran to screw the Kurds. This may be part of why Turkey just assisted and enabled Iran’s fraudulent pretense at meeting objections to its enrichment program. Iran will go nuke. Russia, having given up nothing in return for our pulling the rug from under Poland and the Czechs, will finish re-establishing its dominance over East Europe, and central Asia. Its action in and against Georgia has ensured that no pipelines will be built through Georgia. Thus central Asian gas will not be able to get to Europe outside of Russian control. Central Europe, especially Germany, will increasingly be subject to Russian whims. With Iran going nuke, and BO and the US’s proven track record of being an unreliable umbrella, the Arab mid-east will seek to go nuke as well. Turkey will seek to re-assert its historical regional dominance and influence. The farce it just pulled off at Israel’s expense is the sign that a very large and very important decision has been made. If Israel’s blockade against arms in Gaza is broken, Iran will have Israel surrounded: via Hezbollah, thanks to Israel’s bellicus interruptus of a few years ago, it how has some 50,000 rockets which reach most of Israel. In Gaza it will be able to reach what it cannot from Lebanon. It certainly will be able to reach Israel’s nuke reactor. The US presence in Iraq will soon be meaningless. Israel’s extermination is likely to be attempted. In the meantime, back in the USA the laws of gravity and of supply and demand will assert themselves and our final economic bubble will burst. We will all be Californians. In search of purchasing the Latino vote, BO and Congress will grant amnesty to 10-20 million illegals, plus visas to some 20-50 million more family members. They will vote Democratic, and the Republican Party will become as dead a letter for the entire nation as it already is for New England and the Atlantic States.

Have a nice day.
24671  Politics, Religion, Science, Culture and Humanities / Politics & Religion / June 6, 1944 on: June 06, 2010, 03:14:02 PM
President Reagan gets it right:
24672  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Volcker on: June 06, 2010, 02:09:58 PM
For those of you too young to remember Paul Volcker was appointed Chairman of the Fed in 1978.  It was he that brought the Nixon-Ford-Carter inflation under control (econ growth due to supply side tax rate cuts by Reagan was the other half of the equation).  More recently he was brought on board by the Obama team during the presidential campaign to bolster the impression that Obama was a responsible man.  Once in power, PV has complained that he has felt ignored.  Now that the excrement's approach to the fan is more imminent, BO re-courts PV. 

Here are PV's most recent thoughts:

The New York Review of Books
The Time We Have Is Growing Short
by Paul Volcker
Some five years ago, at a conference of the Stanford Institute for Economic Policy Research, I lamented that “the growing imbalances, disequilibria, risks” were giving rise to “circumstances as dangerous and intractable” as any I could recall—intractable not just because of the combination of complicated issues, but because there seemed to be “so little willingness or capacity to do much about it.”

Part of the story is familiar. In the United States, savings practically disappeared as consumption rose far above past relationships to national production. That consumption was satisfied by rapidly growing imports from China and elsewhere in Asia at remarkably cheap prices, helping to keep inflation well subdued. The resulting seemingly inexorable increase in our current account deficit was easily financed by an equally large flow of short-term funds from abroad at exceptionally low interest rates. In fact, money was so easily available that it supported what became a bubble in housing, with rising home prices reinforcing a sense of prosperity and high consumption.

It was not so much that the imbalances were hidden or unknown. In particular, the Chinese surpluses and American deficits were widely thought to be unsustainable. But for the time being, the world economy was growing strongly. China in particular was mainly interested in developing its industry by encouraging exports, and the United States was not prepared to balance its national budget or to restrain the consumption and housing boom.

At the time, I suggested that the most likely result would not be well- thought-out and complementary policy actions. Rather, sooner or later, the necessary changes would be forced by a financial crisis.

I certainly did not anticipate the nature of the crisis that eventually ensued, its complexity, its force, or its impact right across the industrialized world. Subprime mortgages, credit default swaps, CDOs—squared, tranched, or otherwise—were not part of my world. Nor, I can add, had I ever imagined that the financial markets over those frightening weeks in the fall of 2008 would virtually freeze up. The sense of mutual trust upon which operating financial markets depend was lost.

Now we know that trillions of dollars of official funds came to the rescue of the broken system in the form of loans, capital, and guarantees. Flows of finance have been restored, albeit with large areas of continuing public support. The residential mortgage market in the United States—by far the largest sector of our capital market for the time being—remains almost wholly a ward of the government. Now, another range of uncertainty has arisen. Sovereign credits have come into question, most pointedly in the Eurozone but potentially of concern among some of our own states.

Any thoughts—any longings—that participants in the financial community might have had that conditions were returning to normal (implicitly promising the return of high compensation) should by now be shattered. We are left with some very large questions: questions of understanding what happened, questions of what to do about it, and ultimately, questions of political possibilities. The way those questions are answered will determine whether, in the end, the financial crisis has, in fact, forced the changes in thinking and in policies needed to restore a well-functioning financial system and better-balanced growing economies.

The Stanford Institute prize announcement sets out a simple proposition I suspect we all would support: “Economics is fundamentally about efficiently allocating resources so as to maximize the welfare of individuals.” I think it is fair to say that for some time the dominant approach of economic theorizing, increasingly reflected in public policy, has been that free and open financial markets, supported by advances in electronic technology and by sophisticated financial engineering, would most effectively support both market efficiency and stability. Without heavily intrusive regulation, investable funds would flow to the most profitable and productive uses. The inherent risks of making loans and extending credits would be diffused and reallocated among those best able and willing to bear them.

It is an attractive thesis, attractive not only in concept but for those participating in its seeming ability to generate enormous financial rewards. Our best business schools developed and taught ever more complicated models. A large share of the nation’s best young talent was attracted to finance. However, even when developments seemed most benign, there were warning signs.

Has the contribution of the modern world of finance to economic growth become so critical as to support remuneration to its participants beyond any earlier experience and expectations? Does the past profitability of and the value added by the financial industry really now justify profits amounting to as much as 35 to 40 percent of all profits by all US corporations? Can the truly enormous rise in the use of derivatives, complicated options, and highly structured financial instruments really have made a parallel contribution to economic efficiency? If so, does analysis of economic growth and productivity over the past decade or so indicate visible acceleration of growth or benefits flowing down to the average American worker who even before the crisis had enjoyed no increase in real income?

There was one great growth industry. Private debt relative to GDP nearly tripled in thirty years. Credit default swaps, invented little more than a decade ago, soared at their peak to a $60 trillion market, exceeding by a large multiple the amount of the underlying credits potentially hedged against default. Add to those specifics the opacity that accompanied the enormous complexity of such transactions.

The nature and depth of the financial crisis is forcing us to reconsider some of the basic tenets of financial theory. To my way of thinking, that is both necessary and promising in pointing toward useful reform.

One basic flaw running through much of the recent financial innovation is that thinking embedded in mathematics and physics could be directly adapted to markets. A search for repetitive patterns of behavior and computations of normal distribution curves are a big part of the physical sciences. However, financial markets are not driven by changes in natural forces but by human phenomena, with all their implications for herd behavior, for wide swings in emotion, and for political intervention and uncertainties.

Important questions about the governance of businesses and the relationships between principals and their agents are being reexamined. Most obviously and appropriately, the role of regulation and supervision, their necessity, their methods, and their difficulties are being reconsidered.

Virtually all developed economies have long had official institutions responsible for regulating their banking systems. To a lesser extent, there has been oversight of financial markets and nonbank financial institutions. In the United States, there has been a particularly complicated and intrusive institutional structure. But as a broad generalization, these existing structures, in all their variety, largely failed to prevent cascading financial failures, with severe economic damage.

One response has been a broad international effort to review capital requirements, leverage restraints, and liquidity practices, extending even beyond the traditional area of commercial banking. These are matters that by and large are within the existing competences of national regulatory authorities. Over the past two years, there has been much useful analysis and large areas of conceptual agreement. But even with that concentrated effort, it has been difficult to reach operational consensus.

The fact is that the exercise of effective regulatory and supervisory authority is always difficult on a national level, and those difficulties are multiplied when dozens of countries are involved. There are large political constraints and industry pressure. Consider the ten-year effort by the G10’s Basel Committee on Banking Supervision to coordinate capital requirements—completed just in time to be largely rendered moot by the financial crisis.

To me, the lesson is clear. There are deep-seated structural issues that must be dealt with by legislation. Moreover, there should be common elements among nations hosting significant international financial markets and institutions. As this is written, the US Senate has passed one fairly comprehensive legislative approach. There are some parts of that bill that I would prefer to see changed, redrafted, or eliminated in the negotiations to reconcile it with the House bill during the coming weeks. This is particularly true in clarifying the limits on proprietary activity of commercial banks, including trading in derivatives. However, I do think that taken as a whole the bill does incorporate basic approaches that can and should be part of our international consensus.


The central issue with which we have been grappling is the doctrine of “too big to fail.” Its corollary is so-called moral hazard: the sense that an institution—its creditors, its management, even its stockholders—will be inclined to tolerate highly aggressive risk in the expectation that it will be rescued from possible failure by official financial support.

That is not a new concern. Commercial banks in the ordinary course of their business have deposit insurance and access to Federal Reserve credit in times of stress. In practice, creditors of the largest banking institutions have been protected. The quid pro quo has been extensive regulation to limit risk. The underlying assumption has been, quite correctly in my view, that these banking institutions perform absolutely critical functions in our economy. They manage the payment systems, nationally and internationally. They provide safe and liquid facilities for depositing money. They are an indispensable source of credit to most businesses.

Now, the situation has been changed. A vast “shadow banking system” has emerged alongside, and is importantly dependent upon, traditional commercial banks. Investment banks have become financial trading machines. Hedge and private equity funds are active, operating in large part on borrowed funds. Financial affiliates of some industrial firms have expanded into the capital markets to the extent, in a few cases, that the risks have jeopardized the entire company. Derivatives, including credit default swaps hardly known a decade ago, have become speculative vehicles, exceeding their use as hedging instruments. Fragmented regulation and supervision, if present at all, have been weak.

To a substantial extent, it was those “nonbanks” that were at the epicenter of the crisis. Contrary to well-established central bank practices and with active government support, many of those same institutions received extensive assistance to remain viable.

Dealing with this great extension of moral hazard has become the largest challenge for financial reform. Central to that effort in thinking both in the United States and in Europe has been the creation of a new “resolution authority” that could supersede conventional bankruptcy procedures when the potential failure of a “systemically important” financial institution threatens to undermine the stability of the financial system.

Essentially, an official agency following established procedural safeguards (in theUS presumably the FDIC) could seize control of the failing institution, deal with its immediate obligations to maintain continuity in the market, but then promptly arrange for an orderly liquidation: stockholders and management would be gone, and creditors placed at risk, as in a normal bankruptcy. Ideally the path toward liquidation (including the sale of parts of the company) would be eased by setting out a “living will”—dissolution priorities prepared by large nonbank institutions and reviewed by their supervisors. Put simply, the concept is to prepare for a dignified burial—not intensive care with hopes for recovery.

The largest nonbank institutions would also be subject to supervision with respect to their capital, leverage, and liquidity—matters that, according to the Senate bill, would be overseen by the Federal Reserve. The intent is to permit the nonbanks to compete, to innovate, to actively trade, and to make profits free of highly detailed intrusive regulation. They should also be free to fail.

Put simply, there would continue to be a federal safety net implicitly subsidizing strongly regulated commercial banks, as has been the practice for decades, even for centuries—here and abroad. Other institutions, and their creditors, should not expect official protection. The clear possibility of failure without a “bailout” will be reflected in lower credit ratings, in higher financing costs, and in market-imposed restraints.

The logic of that approach is embedded in the Senate bill. Commercial banking would implicitly be supported in its wide range of relations with businesses and other customers. Proprietary trading, hedge funds, and other potentially profitable but risky activities not related to their essential responsibilities should clearly be prohibited for banks. The essential logic is that the taxpayers need not, and should not, be called upon to support essentially speculative activities within the protected, implicitly subsidized financial sector.

There are other key elements in the Senate bill. Importantly, there is a strong effort to force trading, clearance, and settlement of derivatives into organized exchanges and clearinghouses. New responsibilities for coherent oversight of the entire financial system are set out. Regulatory authorities are clarified. In all these areas, a high degree of international cooperation is necessary. My hope is that the legislative initiative underway will provide a solid foundation for strong American leadership in that effort.

None of these reforms will assure crisis-free financial markets in the years ahead. The point is to keep the inevitable excesses and points of strain manageable, to reduce their scale and frequency, and in the process more effectively contribute to the efficient allocation of our financial resources.

As we well know, the critical policy issues we face go way beyond the technicalities of law and regulation of financial markets. There is growing awareness of historically large and persistent fiscal deficits in a number of well-developed economies. The risks associated with the virtually unprecedented levels of public debts as we emerge from recessions are evident. In California, as in my own state of New York, it’s not a matter of intellectual awareness but of practical confrontation.

If we need any further illustration of the potential threats to our own economy from uncontrolled borrowing, we have only to look to the struggle to maintain the common European currency, to rebalance the European economy, and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshaled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary.

As we look to that European experience, let’s consider our own situation. We are not a small country highly vulnerable to speculative attack. In an uncertain world, our currency and credit are well established. But there are serious questions, most immediately about the sustainability of our commitment to growing entitlement programs. Looking only a little further ahead, there are even larger questions of critical importance for those of less advanced age than I. The need to achieve a consensus for effective action against global warming, for energy independence, and for protecting the environment is not going to go away. Are we really prepared to meet those problems, and the related fiscal implications? If not, today’s concerns may soon become tomorrow’s existential crises.

I referred at the start of these remarks to my sense five years ago of intractable problems, resisting solutions. Little has happened to allay my concerns. But, of course, it is not true that our economic problems are intractable beyond our ability to react, to make the necessary adjustments to more fully realize the enormous potential for improving our well-being. Permit me a note of optimism.

A few days ago, I spent a little time in Ireland. It’s a small country, with few resources and, to put it mildly, a troubled history. In the last twenty years, it took a great leap forward, escaping from its economic lethargy and its internal conflicts. Responding to the potential of free and open markets and the stable European currency, standards of living have bounded higher, close to the general European level. Instead of emigration, there has been an influx of workers from abroad.

But now Ireland has been caught up in its own speculative excesses and financial deficits, culminating in a sharp economic decline. There is a lot of grumbling, about banks in particular. But I came away with another impression. The people I spoke to had an understanding that the boom had gotten out of hand. There seems to me a determination to do something about the situation, reflected not just in the words of the political leaders but in support for action among the public. And there is a sense of what is at stake, that the gains they made in recent years have been placed in jeopardy. The urgent need to get back on a sustainable budgetary and economic track is well understood.

I hope my quick impressions of Irish attitudes and policies will be borne out and that that small country will not be caught up by a European crisis beyond its control. In the United States, we don’t seem to me to share the same sense of urgency. We view ourselves as a huge and relatively self-sufficient country, in control of our own destiny. We have time to sort out our priorities, to decide what to do, and to do it. There are elements of truth in those propositions, but the time we have is growing short.

Restoring our fiscal position, dealing with Social Security and health care obligations in a responsible way, sorting out a reasonable approach toward limiting carbon omissions, and producing domestic energy without unacceptable environmental risks all take time. We’d better get started. That will require a greater sense of common purpose and political consensus than has been evident in Washington or the country at large.
24673  Politics, Religion, Science, Culture and Humanities / Politics & Religion / The Forgotten Rachels on: June 06, 2010, 01:02:27 PM
Oy vey.

All right gentlemen.  You have my permission to have a food fight for a while.  Rather than clutter up this thread with it however, please take it over to the Fire Hydrant thread.  Thank you.

Moving right along:



“My Name is Rachel Corrie,” a new play based on the writings of the young American radical who was accidentally killed during an anti-Israeli demonstration in Gaza in 2003, opened in April 2005 at London’s prestigious Royal Court, a venue named by The New York Times as “the most important theatre in Europe.” In October, it reopened again in near record time, at the same theatre. In November the “Cantata concert for Rachel Corrie” – co-sponsored by the UK government Arts Council – had its world premiere at another London theatre. Lincoln Center in New York has expressed interest to the Royal Court in staging the play, as have dozens of schools and universities. And that the play’s co-director was “Harry Potter” and “Die Hard” star Alan Rickman only served to add a touch of Hollywood glamour to the cult of Rachel Corrie.

But other Rachels have lost their lives as well – Jewish victims of the Intifada. Does anyone remember them? In Britain, where the play is being staged, how many people even know the name of Rachel Thaler, a British citizen who was murdered by a Palestinian suicide bomber in an Israeli shopping mall at the age of 16?

“Not a single British journalist has ever interviewed me or mentioned Rachel’s death,” her mother Ginette Thaler told me three and a half years after her murder. Below, an article of mine published in the weekly British magazine, The Spectator, explores these phenomena and also marks the first time Rachel Thaler’s name has been mentioned in the mainstream British media. Earlier, in April 2005, I wrote another piece on “The Forgotten Rachels” for The Jerusalem Post, to mark the play’s initial staging.

-- Tom Gross



Rachel Levy, 17, blown up
in a Jerusalem grocery store
Rachel Charhi, 36, blown up
while sitting in a café
Rachel Gavish, 50, killed with her
husband and son while at home
Rachel Kol, 53, who worked for
20 years in the neurology lab at
Jerusalem’s Hadassah Hospital,
murdered with her husband in a
drive-by shooting by the Fatah
al-Aqsa Martyrs Brigades, in
July 2005 (in the midst of a
supposed Palestinian truce)
Rachel Ben Abu, 16, killed with
her teenage friends by a suicide
bomber at the Netanya shopping
mall, in July 2005 (in the midst
of a supposed Palestinian truce)
Rachel Shabo, 40, murdered with
her three sons aged 5, 13 and 6,
while sitting at home
By Tom Gross, Oct. 22, 2005

RACHEL Thaler, aged 16, was blown up at a pizzeria in an Israeli shopping mall. She died after an 11-day struggle for life following a suicide bomb attack on a crowd of teenagers on 16 February 2002.

Even though Thaler was a British citizen, born in London, where her grandparents still live, her death has never been mentioned in a British newspaper.

Rachel Corrie, on the other hand, an American radical who died in 2003 while acting as a human shield during an Israeli anti-terror operation in Gaza, has been widely featured in the British press. According to the Guardian website, she has been written about or referred to on 57 separate occasions in the Guardian alone, including three articles the Saturday before last.

The cult of Rachel Corrie doesn’t stop there. Last week the play, My Name is Rachel Corrie, reopened at the larger downstairs auditorium at the Royal Court Theatre (a venue which the New York Times recently described as “the most important theatre in Europe”). It previously played to sold-out audiences at the upstairs theatre when it opened in April. (It is very rare to revive a play so quickly.)

On 1 November the “Cantata concert for Rachel Corrie” – co-sponsored by the Arts Council – has its world premiere at the Hackney Empire.


But Rachel Thaler, unlike Rachel Corrie, was Jewish. And unlike Corrie, Jewish victims of Middle East violence have not become a cause célèbre in Britain. This lack of response is all the more disturbing at a time when an increasing number of British Jews feel that there has been a sharp rise in anti-Semitism.

Thaler is by no means the only Jewish Rachel whose violent death has been entirely ignored by the British media. Other victims of the Intifada include Rachel Levy (aged 17, blown up in a grocery store), Rachel Levi (19, shot while waiting for the bus), Rachel Gavish (killed with her husband, son and father while at home celebrating a Passover meal), Rachel Charhi (blown up while sitting in a Tel Aviv cafe, leaving three young children), Rachel Shabo (murdered with her three sons aged 5, 13 and 16 while at home), Rachel Ben Abu (16, blown up outside the entrance of a Netanya shopping mall) and Rachel Kol, 53, who worked at a Jerusalem hospital and was killed with her husband in a Palestinian terrorist attack in July a few days after the London bombs.

Corrie’s death was undoubtedly tragic but, unlike the death of these other Rachels, it was almost certainly an accident. She was killed when she was hit by an Israeli army bulldozer she was trying to stop from demolishing a structure suspected of concealing tunnels used for smuggling weapons.

Unfortunately for those who have sought to portray Corrie as a peaceful protester, photos of her burning a mock American flag and stirring up crowds in Gaza at a pro-Hamas rally were published by the Associated Press and on Yahoo News on 15 February 2003, a month before she died. (Those photos were not used in the British press.)

While Thaler’s parents, after donating their murdered daughter’s organs for transplant surgery, grieved quietly, Corrie’s parents embarked on a major publicity campaign with strong political overtones. They travelled to Ramallah to accept a plaque from Yasser Arafat on behalf of their daughter. They circulated her emails and diary entries to a world media eager to publicise them. They have written op-ed pieces, including a recent one in the Guardian.


The International Solidarity Movement (ISM), the group with which Corrie was affiliated, is routinely described as a “peace group” in the media. Few make any mention of the ISM’s meeting with the British suicide bombers Omar Khan Sharif and Asif Muhammad Hanif who, a few days later, blew up Mike’s Place, a Tel Aviv pub, killing three and injuring dozens, including British citizens. Or of the ISM’s sheltering in its office of Shadi Sukiya, a leading member of Islamic Jihad. Or of the fact that in its mission statement the ISM said “armed struggle” is a Palestinian “right”.

According to the “media co-ordinator” of the ISM, Flo Rosovski, “‘Israel’ is an illegal entity that should not exist” – which at any rate clarifies the ISM’s idea of peace.

Indeed, partly because of the efforts of Corrie’s fellow activists in the ISM, the Israeli army was unable to stop the flow of weapons through the tunnels near where she was demonstrating. Those weapons were later used to kill Israeli children in the town of Sderot in southern Israel, and elsewhere.

However, in many hundreds of articles on Corrie published in the last two years, most papers have been careful to omit such details. So have actor Alan Rickman and Guardian journalist Katharine Viner, co-creators of My Name is Rachel Corrie, leaving almost all the critics who reviewed the play completely ignorant about the background to the events with which it deals.

So in April, when reviewers first wrote about the play, they tended to take it completely at face value. “Corrie was murdered after joining a non-violent Palestinian resistance organisation,” wrote Emma Gosnell in the Sunday Telegraph. The Evening Standard, for example, described it as a “true-life tragedy” in which Corrie’s “unselfish goodness shines through”.

Rachel Corrie, 23, burning a mock
U.S. flag at a pro-Hamas rally in Gaza
Only one critic (Clive Davis in the Times) saw the play for the propaganda it is. At one point Corrie declares, “The vast majority of Palestinians right now, as far as I can tell, are engaging in Gandhian non-violent resistance.” As Davis notes, “Even the late Yasser Arafat might have blushed at that one.”

But ultimately the play, and many of the articles about Corrie that have appeared, are not really about the young American activist who died in such tragic circumstances. They are about promoting a hate-filled and glaringly one-sided view of Israel.


(Tom Gross is a former Jerusalem correspondent for the Sunday Telegraph.)

24674  Politics, Religion, Science, Culture and Humanities / Politics & Religion / The coming clusterfcuk explained on: June 05, 2010, 09:41:33 AM
24675  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Now here's a lovely development: Price Fixing charges on: June 05, 2010, 08:58:00 AM

Justice Department declares war on doctors
In a landmark Idaho case, the Justice Department forced a group of doctors to accept government price controls.

By S.M. Oliva, Guest blogger / May 31, 2010

As I’ve long suspected, “health care reform” has emboldened the Justice Department to take a more active role in enforcing government price controls against physicians. Today the Antitrust Division, joined by Idaho Attorney General Lawrence Wasden, forced a a group of Boise orthopedists to accept price controls for worker’s compensation and HMO contracts as part of a settlement accusing the doctors of “price fixing”:

According to the complaint, the conspiring orthopedists engaged in two antitrust conspiracies, which took place from 2006 to 2008. In the first conspiracy, through a series of meetings and other communications, the orthopedists agreed not to treat most patients covered by workers’ compensation insurance.

They entered into a group boycott in order to force the Idaho Industrial Commission to increase the rates at which orthopedists were paid for treating injured workers. The Idaho Industrial Commission sets the fee schedule that determines the amount that orthopedists and other healthcare providers usually receive for treating patients covered by workers’ compensation insurance.

The boycott resulted in a shortage of orthopedists willing to treat workers’ compensation patients, causing higher rates for orthopedic services.

In the second conspiracy, all of the defendants, except [one], and other conspiring orthopedists agreed to threaten to terminate their contracts with Blue Cross of Idaho. They jointly threatened to terminate their contracts to force Blue Cross of Idaho to offer better contract terms to orthopedists.
The proposed settlement prevents the Idaho Orthopaedic Society and the named orthopedists from agreeing with their competitors on fees and contract terms.

The settlement also prohibits them from collectively denying medical care to patients, refusing to deal with any payer or threatening to terminate contracts with any payer.

This case is a watershed for two reasons:

First, until now the Federal Trade Commission, not the Justice Department, has taken the lead in prosecuting physicians. Since 2000, the FTC has brought about three dozen cases against physicians (all but one of which settled without any trial). But the FTC only has civil and administrative jurisdiction; the Antitrust Division has civil and criminal jurisdiction. The Sherman Act makes no distinction between civil and criminal “price fixing,” so in a case like this, it’s entirely a matter of prosecutorial discretion whether to charge the doctors with a civil or criminal offense.

Based on the descriptions in the Antitrust Division’s press release, there’s certainly no reason they couldn’t have prosecuted the doctors criminally and insisted upon prison sentences — and there’s little doubt such threats were made or implied to obtain the physicians’ agreement to the proposed “settlement.”

The second reason this is a landmark case is that the Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal “price fixing.”

The FTC has hinted at this when it’s said physicians must accept Medicare-based reimbursement schedules from insurance companies. But the DOJ has gone the final step and said, “Government prices are market prices,” in the form of the Idaho Industrial Commission’s fee schedule.

The IIC administers the state’s worker compensation system and is composed of three commissioners appointed by the governor. This isn’t a quasi-private or semi-private entity. It’s a purely government operation.

What’s more, the Antitrust Division has linked a refusal to accept government price controls with a refusal to accept a “private” insurance company’s contract offer. This leaves little doubt that antitrust regulators consider insurance party contracts the equivalent of government price controls — and physicians and patients have no choice but to accept them.

Despite this, Antitrust Division chief Christine Varney, an Obama political appointee, insists she’s trying to protect “competition”:

The orthopedists who participated in these group boycotts denied medical care to Idaho workers and caused higher prices for orthopedic services.

Today’s action seeks to prevent the recurrence of these illegal acts and protects Idaho consumers by promoting competition in the healthcare industry.”

The Idaho attorney general compounds the lie:

The free marketplace works best when there is fair competition. Anticompetitive activity harms the marketplace, businesses and consumers.

Enforcement of the antitrust laws restores competition to the marketplace to the benefit of businesses and consumers and the marketplace as a whole.

But what “competition” do they refer to? The IIC fee schedule is set by government fiat. There’s no “competition” among orthopedists — or any other physicians for that matter. Everyone gets paid exactly the same “acceptable charges” based on the schedule. Even in the case of the Blue Cross contract, the physicians weren’t “competing” on price; they were simply told to accept the reimbursement levels proposed by the insurer.
And as much as the government would tout the “conspiracy” among physicians, as I said yesterday, we’re basically talking about people having conversations with one another. The truth is the antitrust regulators don’t need much to establish a Sherman Act “conspiracy.” Even if there’s no evidence of direct communication between physicians, if a large number of physicians in a given market individually reject a government price control scheme or insurance company contract, the Antitrust Division can simply “infer” the existence of a conspiracy.

This is another reason why the DOJ’s presence in a physician case is more disturbing than the normal FTC case. The DOJ has a number of “tools” the FTC does not, including the self-granted power to award amnesties from criminal prosecutions to the first “conspirator” to step forward and provide evidence against one’s competitors.

A doctor that feared prosecution could seek amnesty — and provide the Justice Department a blank check to rummage through his files and private communications. And if that doesn’t work, the DOJ can always seek wiretaps of physicians’ phones and computers, a power awarded the DOJ during a 2006 renewal of the PATRIOT Act.

The potential exposure of your physician’s confidential records — including your medical records — is limitless.

And while I usually caution against reading partisan political motives into an antitrust case — and I’d note the Idaho attorney general is a Republican — it’s hard to segregate today’s action from the larger political context of “Obamacare.”

Christine Varney is an Obama political appointee, and if the Idaho case is an indication her Division plans to take a more hands-on approach to dealing with local physician groups, this policy will quickly degenerate into political demagoguery. It’s just too easy to label physicians “price fixers” and scapegoat them for the failure of government planning of the healthcare industry.

UPDATE: The DOJ has released the proposed order and other documents. It’s a naked censorship order that restrains the physicians from

(A) encouraging, facilitating, entering into, participating in, or attempting to engage in any actual or potential agreement or understanding with, between, or among competing physicians about:

any fee, or other payer contract term or condition, with any payer or group of payers, including the acceptability or negotiation of any fee or other payer contract term with any payer or group of payers;

the manner in which the defendant or any competing physician will negotiate with, contract with, or otherwise deal with any payer or group of payers, including participating in or terminating any payer contract; or

any refusal to deal or threatened refusal to deal with any payer;


(B) communicating with any competing physician or facilitating the exchange of information between or among competing physicians about:
the actual or possible view, intention, or position of any defendant or his or her medical practice group, or any competing physician concerning the negotiation or acceptability of any proposed or existing payer contract or contract term, including the negotiating or contracting status of the defendant, his or her medical group, or any competing physician with any payer or group of payers, or

any proposed or existing term of any payer contract that affects:

the amount of fees or payment, however determined, that the defendant, his or her medical practice group, or any competing physician charges, contracts for, or accepts from or considers charging, contracting for, or accepting from any payer or group of payers for providing physician services;

the duration, amendment, or termination of any payer contract; or

the manner of resolving disputes between any parties to any payer contract.

The order also illegally legislates through the courts by requiring the physicians to adhere to the 1996 Department of Justice and Federal Trade Commission Statements of Antitrust Enforcement Policy in Health Care, which is not law but merely the subjective opinions of unelected government antitrust lawyers. The order also requires the physicians to make “all books, ledgers, accounts, records, data, and documents,” available for government inspection at any time in the next ten years.

Since this is an DOJ case, it is subject to final approval by a federal judge in Idaho. There’s a mandatory 60-day public comment period, after which the judge will almost certainly rubber stamp the order as being “in the public interest.” Still, there’s at least an opportunity to express some serious dissent to what’s transpired here.

2ND UPDATE: It turns out the Idaho physicians hired the guy who used to run the Antitrust Division’s litigation department — and developed the government’s anti-physician antitrust rules — to represent them. No wonder they settled without a fight.
24676  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: The United Nations/ US Sovereignty on: June 05, 2010, 08:54:18 AM
Given some of the shared rhetoric from Mexico and Obama-Clinton, and the presence of Harvard prof Harold Koh in Clinton's State Dept, rumors of efforts at an international treaty to end run US sovereignty and Second Amendment rights  were plausible , , , as were suspicions of these rumors being used/fomented for fund raising purposes:
Hillary Clinton And The UN Arms Trade Treaty Rumor
Friday, May 28, 2010

We continue to receive numerous inquiries regarding UN international treaties, and their impact on our Second Amendment rights. The latest rumor making its way around the Internet claims that Secretary of State Hillary Clinton actually signed a UN small arms treaty.

Contrary to this widely circulated e-mail, Hillary Clinton has not signed any small arms treaty. She could not have done so, in fact, because no such treaty has yet been negotiated.

As we noted in an update from last November, the UN Arms Trade Treaty will be drafted between now and 2012, and even if signed, would not take effect in the U.S. until it was ratified by the Senate.

Please rest assured that, as we said in November, NRA will be actively involved in this process and will oppose any treaty that would attempt to impose limits on our Second Amendment rights. In the meantime, we urge gun owners to follow this issue in NRA's magazines and NRA-ILA's Grassroots Alerts. We also urge gun owners not to circulate misinformation on this issue.
24677  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Re: Issues in the American Creed (Constitutional Law and related matters) on: June 05, 2010, 01:14:31 AM

I am delighted to have Big Dog here with us.  Agree or disagree I think we will find him to be a gracious, thoughtful and well-informed member of our conversations.

24678  Politics, Religion, Science, Culture and Humanities / Politics & Religion / STrat: Israel's isolation, Turkey's rise on: June 05, 2010, 01:11:24 AM
Israel's Isolation, Turkey's Rise
UNNAMED SENIOR U.S. OFFICIALS LEAKED to The New York Times Thursday that U.S. President Barack Obama’s administration was considering a policy shift on Israel’s blockade of Gaza. The U.S. officials reportedly described the Israeli blockade of Gaza as “untenable” and the deadly Israeli raid on the Turkish-led aid flotilla as impetus for a new U.S. approach to Gaza.

These hints of a U.S. shift toward Israel and Gaza, while still in the unofficial stage of newspaper leaks, are deeply troubling for the state of Israel. The comments by anonymous U.S. officials come after Turkey’s Prime Minister Recep Tayyip Erdogan said Tuesday, that “Israel stands to lose its closest ally in the Middle East if it does not change its mentality.” Though Turkey is stopping short of threatening a breach in its relations with Israel, it is clearly looking to publicly downgrade the alliance. And though the United States is not about to abandon its Jewish ally, Washington is not about to rush to Israel’s defense in this difficult time, either.

Israel is not a country that can survive in isolation. It is a small country surrounded by hostile states that sits on the edge of the Mediterranean basin, where larger, more distant powers with greater resources will inevitably entangle Israel in pursuit of their own interests. In such a dynamic neighborhood, Israel has to maneuver very carefully in trying to ensure its own security. Israel can do this by making itself attractive enough to the Mediterranean power of the day such that the Mediterranean power sees in its interest to fulfill the role of Israel’s security patron. The second Israel becomes a liability to that patron, however, the country’s vulnerability soars and its survivability comes into question.

“Israel is not a country that can survive in isolation.”
The Soviet Union — eyeing a strategic foothold in the Mediterranean Basin — was a patron to Israel since the state’s inception. Israel, wanting to balance its relationship with the Soviets and unnerved by Soviet sponsorship of the Arabs, then joined forces with France, which was fighting its own bloody war in Algeria and was already in a hostile relationship with the Arabs. French interest in Israel began to wane, however, in 1962 with the end of the Algerian civil war. Paris quickly began to view Israel as a liability to its efforts to maintain influence in the Middle East. By 1967, the United States was prepared to forge an alliance with Israel as a strategic counter to a Soviet push in the eastern Mediterranean. By aligning with both Israel and Turkey during the Cold War, the United States had two strategic pressure points in the Mediterranean basin to counter Soviet footholds in Egypt, Syria and Iraq. Israel and Turkey were natural allies facing common foes, while the United States was the glue that held this alliance structure together.

But times have changed. Turkey is no longer a vulnerable power in need of a bodyguard to fend off the Soviets. Present-day Turkey is rediscovering its Ottoman roots in the Middle East, Caucasus, Europe and Central Asia, and is using its Islamic credentials to spread Turkish influence throughout the Muslim world. A tight alliance with Israel does not fit with this agenda. Turkey derives leverage from having a relationship with both Israel and the Muslim states (and so is unlikely to break ties with Israel), but is also viewing its alliance with Israel as a liability to its expansionist agenda. The United States, while needing to maintain a strategic foothold in the Mediterranean basin, is trying desperately to follow through with a timeline to militarily extricate itself from Iraq and reach some sort of understanding with the Iranians. Turkey, unhindered by the Persian-Arab and Israeli-Arab rivalries, can do things for the United States in this region that Israel simply can’t achieve. In short, Turkey is the more valuable ally to Washington than Israel at this point in time.

With Jordan locked into an alliance, Egypt being more interested in maintaining peace with Israel than making war and Syria too militarily weak to pose a meaningful challenge, Israel is not as dependent on the United States as it used to be. This decline in dependence explains why Israel feels able to push the envelope with the United States when it comes to thorny issues like Iran and settlement construction in East Jerusalem and the West Bank. With Turkey regaining flexibility in the region and Israel not under heavy military pressure, the U.S. adhesive in the Turkish-Israeli relationship is wearing off. Washington no longer has the influence over these two powers it once had.

The United States thus finds itself in the difficult position of having to choose between its two allies in the Middle East. Washington will try a balancing act, but it has no choice but to lean toward the Turks in the wake of the flotilla crisis. A little animosity with Israel might also help the United States gain some credibility in this part of the world. Israel, on the other hand, finds itself backed into a corner. Turkey means it when it says its relationship with Israel will not go back to what it once was. The two countries will likely maintain relations, but Israel will not be able to rely on Turkey as a regional ally. The United States, meanwhile, cannot afford to prioritize Israel’s interests over Turkey’s. In this geopolitical climate, Israel lacks the luxury of options.
24679  DBMA Martial Arts Forum / Martial Arts Topics / Re: 7/31-8/1 Guro Crafty at Range 37 in Fayetteville, NC on: June 04, 2010, 11:01:44 PM
Here is the info and place to register:
24680  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Energy Politics & Science on: June 04, 2010, 10:50:58 PM
Some other spills

This site lists other oil spills and their tonnage from over the years:
24681  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Helen of Troy, whose face launched , , , well, never mind. on: June 04, 2010, 10:13:08 PM
EVer wonder why Israel gets such even handed coverage in the media?
24682  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Re: Issues in the American Creed (Constitutional Law and related matters) on: June 04, 2010, 09:53:03 PM
"The thing that always struck me as odd with Bush v. Gore is that the justices seemed to switch arguments.  The liberals became state rights advocates and the conservatives were concerned about the individual right to vote."

My Constitutional law prof at Columbia was Ruth Bader Gingsberg and I will vouch for this.  I remember disagreeing with her over National League of Cities v. Usery.  Bush v. Gore was the first time in her life she ever gave a rat's tail about States' Rights especially with regard to voting rights!

I followed Bush v. Gore QUITE closely.  I read the statute in question.  I watched the oral arguments in front of the Fl Supreme Court.  I read serious legal analysis.  In my opinion, the greatest lack of intellectual integrity was shown by the FL Supremes and IMO the case was decided correctly on the merits by the US Supremes.
24683  DBMA Martial Arts Forum / Martial Arts Topics / Re: DBMA Knife and Anti Knife on: June 04, 2010, 07:55:21 AM
I'm not quite sure what the last 5 posts have to do with knives, but I suppose we are dogs; and dogs are not the most linear of animals when left to their own devices  cheesy
24684  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Madison, 1822 on: June 04, 2010, 07:50:20 AM
"What spectacle can be more edifying or more seasonable, than that of Liberty and Learning, each leaning on the other for their mutual & surest support?" --James Madison, letter to W.T. Barry, 1822
24685  Politics, Religion, Science, Culture and Humanities / Politics & Religion / IRS on: June 04, 2010, 07:23:24 AM
Will the IRS Oversee Your Health Care?
The Patient Protection and Affordable Care Act, which was signed into law on March 23, 2010, mandates that every American, with few exceptions, have health coverage starting in 2014. Failure to obtain required coverage will result in a penalty. For those whose household income is below set limits, there are federal tax credits to help make coverage affordable.

It is not clear how involved the Internal Revenue Service will be in enforcing the mandate. IRS Commissioner Shulman has indicated that the definition of "adequate health coverage" as required by the new law will be determined by the Department of Health and Human Services (not by the IRS). However, the IRS will create 1099 forms that insurance companies will use to inform the IRS of those with adequate coverage.

If the IRS learns that an individual does not have adequate coverage (presumably because no 1099 was received for that person), a letter will be sent about the penalty. The penalty could be withheld from any tax refunds owed to an individual without adequate health coverage. There are no criminal sanctions for failure to obtain coverage or to pay the penalty for lack of coverage.

The IRS will also do outreach to inform eligible taxpayers about tax credits available to help pay for health coverage.
An MD friend writes:
Good summary, As I understand it, the Insurance Company will send the original to the IRS then the individual receives two copies of the 1099. One goes with your return attached to W-2, the other for your records.
    The reality is, Most people will pay the fine and since there is no preexisting exclusion capability for private, exchange or government insurance, people will buy or apply for the policy when they need their Gall bladder out, their hernia fixed etc then drop it after its preformed and paid for. This is an old trick, currently, women buy a Blue's policy, get pregnant, see an OB-GYN and get accepted as a patient then drop their BCBS policy and pick up Medicaid. The OB is then obligated to deliver the child at a much reduced reimbursement. Even with the new bill, just as today, If the uninsured experiences an emergency it will be the old story--go to the ER get treated and don't pay the bill. For those of us who are MDs they have seen and experienced this many times. 
    Sadly this healthcare bill now allows for a healthy, capable of hard work single fun loving 25 year old male to qualify for Medicaid. The only thing better is that when we legalize "medical marijuana" the tax payer can pay for both the healthcare and the "Medical Marijuana" to keep this 25 yo happy and healthy.
    The fact is most working people may financially be better off to not carry insurance, pay the fine, invest the difference and follow the above. Since HSAs are legislated to disappear why not save the money after tax where the Feds can only tax it instead of confiscate it when they take over the 401-ks, pension plans etc as has been discussed up there.
    Gamming the system is going to become an art form. For the rest of us who follow the law, healthcare will become more expensive.
24686  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Murky in Turkey on: June 03, 2010, 06:57:35 PM
3 June 2010
Claire Berlinski
Murky in Turkey

What we don’t know about the Mavi Marmara incident: just about everything.

I live in Istanbul and for obvious reasons have been receiving e-mails and phone calls in the past few days asking what, exactly, is going on in Turkey. The answer is that I’m not sure. This is the only honest answer any journalist can give, unless she has managed to place a listening device in the meeting rooms of the Turkish Cabinet. It’s not, however, the answer all are giving. The events surrounding the bloodletting on the Mavi Marmara have prompted more media coverage, here and abroad, than any news event I can recently recall. Much of it is speculative and polemical nonsense. Journalists proclaim, over and over, that this has become a media war, which would seem to put them in an impressive position on the front lines, though in fact, should the worst come to pass and result in an outright Turkish-Israeli naval war—not impossible to imagine—journalists will, as usual, make no military decisions and will constitute only a tiny fraction of the dead. The media are certainly playing a role in this conflict, but in the end the power is, as it always has been, with those who control the militaries—and they’re saying little.

Here is what we don’t know. We don’t know why the Turkish government allowed the Mavi Marmara to sail. While it’s clear that some indeterminate proportion of the passengers were Islamist thugs, it’s also clear that many of the passengers were naive civilians. (You cannot argue that a one-year-old child is anything but a naive civilian.) We don’t yet know whether there was an active plot, among the thugs, to provoke this confrontation, or whether they decided to attack the Israeli commandos in an access of spontaneous enthusiasm. If the former, we don’t know whether the AKP government was aware of the organizers’ intentions or whether it never seriously considered the possibility. We can speculate, based on known connections between the İnsan Hak ve Hürriyetleri İnsani Yardım Vakfı, which organized the expedition, and well-known extremist groups, that this was a trap, set deliberately. We can speculate that the Turkish government conceived of the trap or lent it tacit support. But thus far we have no evidence.

Why might the Turkish government have permitted a Turkish boat packed with women, children, stupid people, and Islamic extremists to sail into the world’s most volatile military conflict zone? Why, especially, did they permit this while knowing that the Israeli government had made explicit its intention to stop that boat, by force if necessary? It’s tempting to think that the Turkish government anticipated or desired this outcome, all the more so if one looks at this conflict through a certain prism, to wit: one in which Prime Minister Recep Tayyip Erdoğan is an Islamist nut intent upon establishing Turkish hegemony over the Islamic world by becoming the populist champion of the Palestinians, even at the risk of provoking an all-out regional war. I don’t dismiss that possibility.

But in fact, bad decisions can be made in infinitely many human ways. It’s also possible that Erdoğan sincerely believed that the boats had been properly inspected and were free of any weapons, and therefore no serious conflict could occur. It’s possible that he spoke to the organizers of the flotilla and came away with assurances about their intentions; or that he simply thought the Israelis were bluffing; or that his mind was on other things. The latter species of blunder happens all the time. Clearly, President Obama’s mind was on other things—the oil spewing all over the Gulf of Mexico, namely.

Erdoğan no doubt does have much on his mind these days, with the new leader of the CHP posing the first serious challenge to his party since the AKP took power; with Turkish troops dying at the hands of the PKK and making a mockery of his Kurdish opening; with his trip to South America, punctuated by a now-overshadowed diplomatic crisis of its own. It’s possible that Erdoğan’s intentions in permitting the boat to sail were entirely malicious (or designed to distract the Turkish public from these recent events), but it’s also possible—and never a theory to be discounted—that he and his government were simply fatally oblivious and incompetent. Any journalist who claims to know the answer, without possessing evidence of it, is exaggerating his access and overstating his analytic abilities.

Likewise, we have no idea why the Israelis responded as they did. Little about their response makes much sense on the face of it. It seems clear now that the Israelis should have known that a boat with members of the İHH aboard had the potential to turn into a floating riot. But who made the decision to interdict the boat in that fashion, and why? We don’t know. Did the decision-makers fail to consider the possibility that the passengers would attack the commandos? It seems unlikely, but so many things seem likely only in hindsight. The Israelis, too, might well have been thinking that the boat had been properly inspected, and that there was no serious possibility of violence. Perhaps they received private assurances of this from the Turkish government.

Nor could any member of the media possibly know that the Israelis wanted a violent outcome, whether (as it has variously been hypothesized) to establish Israeli deterrence, to distract the world from Israel’s activities in the Persian Gulf, or to provoke Erdoğan into an overreaction that would at last discredit him in the West. None of the journalists offering speculation about Turkish or Israeli positions claim to have even an anonymous source or a secret document in their possession. Their speculations tend to conform with perfect precision to whatever line about Turkey or Israel they’ve endorsed before.

We also don’t know whether the Israelis received intelligence, real or faulty, about the nature of the goods being shipped on the Mavi Marmara. We don’t know whether they were told—by an honest source who believed it or by a corrupt one trying to make mischief—that the boat was another Karine A. We don’t know what really happened before the violence broke out or why the accounts conflict. It’s possible, of course, that they conflict because one or both sides are wicked propagandists, but eyewitness testimony is notoriously confused in the aftermath of traumatic events. We don’t know why the Israelis stopped the boat in international waters or whether they seriously considered disabling it by other means. We certainly don’t know what the Obama administration is doing about all of this, because it is either doing nothing, or doing something so quietly that it very much appears that way.

This much I do know, firsthand: the event is dominating the Turkish media. It’s on every television and radio station. Much of the media, the Islamist press in particular, is disgusting and utterly irresponsible. The Islamist fringe is running headlines that are not, to say the least, calculated to encourage confidence about Turkey’s future. Yeni Şafak, an Islamist rag favored by the prime minister, described the Israelis as “Hitler’s Children.” An AKP Deputy Chairman, Hüseyin Çelik, has speculated (without evidence) that it is “no coincidence” that in the past week, a PKK attack claimed the lives of seven Turkish soldiers in İskenderun. The more reputable Islamist papers, such asZaman, reported this claim uncritically. Few Turks read English and almost none read Hebrew, so the Turkish public is not exposed to a wide variety of opinion. The Turkish media is not helping matters.

I’ve seen street protests at Taksim, but not elsewhere; the protesters seem to be mainly young men, as to be expected, waving Palestinian flags. Apart from that, the mood is generally calm. People seem more anxious than angry. “We don’t know what’s going on,” said my Muay Thai teacher. “No one knows what’s going on.” Everyone at my gym, which I suppose politically represents a fairly random sample of Istanbul, seemed to agree that they did not want war. Many have voiced to me a suspicion that they are being manipulated.

I have about 500 Turkish Facebook friends, most of whom I’ve never met; we’ve come into contact through our shared interest in causes or hobbies—martial arts, rescuing animals, improving Istanbul’s construction codes. Of these 500, about three have clearly gone mad, posting insane anti-Israel diatribes, full of vulgarities, in capital letters. About 50 have posted something angry about the incident or joined a group devoted to denouncing it. The vast majority have done neither, and some have spoken out strongly against Islamism and anti-Semitism. I’ve spoken to a few people who say they don’t care about the Mavi Marmara. “I didn’t know them, what were they to me?” said one computer programmer. His friend, a chef, agreed: “Why should I care about the Palestinians just because they’re Muslims?” From these comments I can firmly conclude only that Turkey is not monolithic, and that if indeed Erdoğan provoked this crisis deliberately to buttress his popularity, he may well also provoke a backlash if it spins out of his control.

These are modest observations, to be sure, but I’ll conclude with an immodest suggestion: it would be best for this region if journalists contained their observations to what they do, in fact, know. A media war is actually quite different from a real one. Whatever is really happening, however little of it we understand, is obviously minatory and extremely dangerous. The best thing journalists can do under the circumstances is to stop playing with fire unless they have something real to report.

Claire Berlinski is an American journalist who lives in Istanbul. She is the author of  There Is No Alternative: Why Margaret Thatcher Matters.
24687  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Government Programs, spending, budget process on: June 03, 2010, 06:01:56 PM
Friday Feature /The Millionaire Cop Next Door
RICH KARLGAARD, "Digital Rules" (06/01/10): It is said that
government workers now make, on average, 30% more than private sector
workers. Put that fantasy aside. It far underestimates the real figures.
By my calculations, government workers make more than twice as much.
Government workers are America's fastest-growing millionaires.

Doubt it? Then ask yourself: What is the net present value of an $80,000
annual pension payout with additional full health benefits? Working
backward, the total NPV would depend on expected returns of a basket of
safe investments--blue chip stocks, dividends and U.S. Treasury bonds.

Investment pros like my friend Barry Glassman say 4% is a reasonable
return today. That's a pitiful yield, isn't it? It is sure to disappoint
the scores of millions of baby boomers who will soon enter retirement with
nothing more than their desiccated 401(k)s, down 30% on average from 30
months ago, and a bit of Social Security.

Based on this small but unfortunately realistic 4% return, an $80,000
annual pension payout implies a rather large pot of money behind it--$2
million, to be precise.

That's a lot. One might guess that a $2 million stash would be in the 95th
percentile for the 77 million baby boomers who will soon face retirement.

That $2 million also happens to be the implied booty of your average
California policeman who retires at age 55. Typical cities in California
have a police officer's retirement plan that works as follows: 3% at 50.
As the North County Times of Carlsbad, Calif., explains:

"Carlsbad offers its police and firefighters a "3-percent-at-50"
retirement plan, meaning that emergency services workers who retire at age
50 can get 3 percent of their highest salary times the number of years
they have worked for the city.

City officials have said that in Carlsbad, the average firefighter or
police officer typically retires at age 55 and has 28 years of service.
Using the 3 percent salary calculation, that person would receive an
annual city pension of $76,440."

That does not include health benefits, which might push real retirement
compensation close to $100,000 a year.

Who are America's fastest-growing class of millionaires? They are police
officers, firefighters, teachers and federal bureaucrats who, unless
things change drastically, will be paid something near their full salaries
every year--until death--after retiring in their mid-50s. That is
equivalent to a retirement sum worth millions of dollars....

Read On or Post a Comment:
24688  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Tax rate increase on carried interest? on: June 03, 2010, 05:44:36 PM
The Week /Congress's Carried Interest Tax Folly
JOHN RUTLEDGE, The Wall Street Journal (05/22/10): Nero fiddled while Rome
burned, but at least he didn't strike the match. Members of Congress are
doing Nero one better. In the middle of the second global financial crisis
in two years, Congress is preparing to dramatically raise a key tax rate
on long-term investment. This is sure to discourage capital investment,
increase the cost of money to start and grow businesses, and depress
real-estate and stock prices, all at the worst possible time.

Last week, Senate Finance Committee Chairman Max Baucus (D., Mont.) and
House Ways and Means Chairman Sander Levin (D., Mich.) released joint
legislation that would among other measures significantly raise the tax on
"carried interest." Now the tax rate on these long-term capital gains
earned by the general (managing) partners of investment partnerships is
15%. The new law would raise the rate to as high as 38.5% (three-fourths
of the gain would be taxed at ordinary income tax rates and one-fourth at
capital gains rates, both of which will be increasing as well).

Tax rates matter. And what matters about them is what activities get
taxed, not who gets taxed. When you increase the tax rate on an activity,
you get less of it. The only question is how much less of it you will get.

Nero fiddled while Rome burned, but at least he didn't strike the match.
Members of Congress are doing Nero one better. In the middle of the second
global financial crisis in two years, Congress is preparing to
dramatically raise a key tax rate on long-term investment. This is sure to
discourage capital investment, increase the cost of money to start and
grow businesses, and depress real-estate and stock prices, all at the
worst possible time.

Last week, Senate Finance Committee Chairman Max Baucus (D., Mont.) and
House Ways and Means Chairman Sander Levin (D., Mich.) released joint
legislation that would among other measures significantly raise the tax on
"carried interest." Now the tax rate on these long-term capital gains
earned by the general (managing) partners of investment partnerships is
15%. The new law would raise the rate to as high as 38.5% (three-fourths
of the gain would be taxed at ordinary income tax rates and one-fourth at
capital gains rates, both of which will be increasing as well).

Tax rates matter. And what matters about them is what activities get
taxed, not who gets taxed. When you increase the tax rate on an activity,
you get less of it. The only question is how much less of it you will get.

Congress should be asking one question: "Is long-term investment something
we really want less of, especially now?" Unfortunately, in today's
political climate, tax policy discussions focus almost exclusively upon
who, not what, gets taxed. This means singling out specific groups of
people-bankers, Wall Street, "the rich," the owners and executives of
insurance, oil and drug companies-to punish for our economic difficulties.
This may be politically popular but will have bad consequences for the

Carried interest refers to the share of the capital gains (typically 20%)
earned on long-term investments in real estate, venture capital, private
equity and other investments organized as partnerships that is allocated
to the general (managing) partner. Limited partners (i.e., passive
investors) pay this share to align their interests with those of the
general partner and to provide incentives for him to increase capital

Both general partners and limited partners pay taxes based on the
character of the income earned by the partnership: ordinary income rates
on dividends and short-term capital gains, and the long-term capital gains
rate on the long-term capital gains. Some partnerships, such as hedge
funds, earn mostly short-term gains, and pay ordinary income tax rates.
Other partnerships, such as real estate, venture capital and private
equity, make long-term investments. Their profits are mostly made up of
long-term capital gains and are taxed at lower long-term capital gains tax
rates as a way to encourage long-term investment.

The economic impact of the proposed tax rate hike is unequivocally
negative for long-term investment. It will lead to changes in the terms of
investment partnerships that will reduce after-tax returns for all
investors, including the limited partners.

Before partnerships are formed, the fees, carried interest, governance and
other provisions are heavily negotiated. The proposed tax increase reduces
the after-tax value of carried interest compensation. A material change in
the after-tax economics of something as critical as general partner
compensation will result in an entirely different set of terms in which
both general partners and limited partners share the pain.

The resulting drop in after-tax returns for all investors will reduce
capital committed to long-term investments in partnerships of all sorts.
This means less capital formation, less construction activity, less
manufacturing activity for capital goods makers and their suppliers, fewer
start-ups, fewer jobs, lower productivity growth, and lower wages. The
direction of these changes is not in question. The only question is how
much less of these things we are going to get....

Read On or Post a Comment:
24689  DBMA Martial Arts Forum / Martial Arts Topics / Flyer on: June 03, 2010, 11:56:46 AM
24690  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Converting back to dollar on: June 03, 2010, 11:40:57 AM
Iran: Converting Back to the Dollar
June 2, 2010 | 1952 GMT
PRINT Text Resize:   

Iranian Finance Minister Seyed Shamseddin HosseiniThe Central Bank of Iran (CBI) announced a plan to convert 45 billion euros from its foreign exchange reserves into dollars and gold, Iran’s state-owned news channel Press TV reported June 2. Meanwhile, the Iranian daily Jaam-e Jam quoted unnamed sources as saying the new monetary policy would be carried out in three phases — the first of which had already begun.

From 2006 through much of 2009 a declining dollar motivated Tehran’s move toward the euro as its preferred currency for its foreign exchange reserves, a policy that dovetailed nicely with its anti-American foreign policy posture. Iran calculated that the dollar would remain in a state of decline while the United States dealt with the fallout from the financial crisis and global risk appetite returned. Even though they were paying transaction fees for converting dollars into euros, the increasing strength of the euro and the political benefits of reducing dollar-denominated holdings more than outweighed these costs.

(click here to enlarge image)
However, while the euro rose from the “conclusion” of the financial crisis, the unfolding European debt crisis is now pressuring the currency again. As a result, in the last six months the euro has lost about 20 percent of its value relative to the dollar. This is problematic for the Iranians, as they now have significant losses on the euro portion of their foreign exchange reserve holdings — last year Iran had claimed that its reserves amounted to about $100 billion (more than half of which it claimed was in euros), not far from other sources reporting $97 billion.

These losses are particularly painful for Iran, as its economy is already suffering from three decades of U.S.-led international sanctions that have led to the atrophy of its energy sector — Iran’s main revenue source. Further complicating this situation are the probability of additional sanctions, an aggressive Iranian foreign policy agenda, existing divisions within the ruling elite and the threat of domestic social unrest over poor economic conditions.

These circumstances would explain why Iran is deciding to alter its currency policy and revert to a largely dollar-denominated foreign exchange reserve. While such a move is indicative of a widening gap between Iran’s rhetoric and its actual behavior when it comes to doing business, narrowing that gap is a luxury Tehran neither can afford nor is too concerned with, given the pragmatic radicalism of the regime.
24691  Politics, Religion, Science, Culture and Humanities / Politics & Religion / A cynical question on: June 03, 2010, 10:23:02 AM
June 03, 2010
Is there a political reason behind the Obama Administration's foot-dragging on the Gulf Oil Clean-Up?
Bill Weckesser

Is the Obama administrations slowness to deal with the gulf oil disaster simply another example of government bungling or is there more to it?  There appears to be one common thread that connects all of the administration's actions, or inaction, as well as both liberal and conservative criticisms -- namely, the administration's slow response.  But, more pointedly the administration has been foot-dragging clean up efforts.  The Wall Street Journal reports that criticizing the clean-up has become Louisiana Governor Bobby Jindal's daily routine.     
Nearly every day, the Republican policy wonk pulls on his brown cowboy boots and traipses across a newly oiled shore, or takes a boat through fouled waters. Along the way, he often lambastes BP's and the federal government's efforts as "too little, too late" for communities scrambling to protect their fragile wetlands from encroaching crude—comments that have drawn sharp criticism from the White House and some Democratic lawmakers.

Louisiana has jurisdiction over its coastline, but none in the federal waters of the Gulf.

Mr. Jindal accuses the federal government of poorly coordinating cleanup efforts between its agencies and BP, leading to delays in cleaning oiled beaches and marshes, laying protective boom and delivering resources to critical areas.

One can understand the difficulties in plugging a well that's about a mile underwater; it's certainly a daunting task.   But cleaning oil spills is routine work.  There are many methods and there've been lots of suggestions.  Industry expert John Hofmeister argues that supertankers have been successfully used before.  The idea is all over the internet; for instance Esquire has a blog about it

There's a potential solution to the Gulf oil spill that neither BP, nor the federal government, nor anyone — save a couple intuitive engineers — seems willing to try. As The Politics Blog reported on Tuesday in an interview with former Shell Oil president John Hofmeister, the untapped solution involves using empty supertankers to suck the spill off the surface, treat and discharge the contaminated water, and either salvage or destroy the slick.

Hofmeister had been briefed on the strategy by a Houston-based environmental disaster expert named Nick Pozzi, who has used the same solution on several large spills during almost two decades of experience in the Middle East — who says that it could be deployed easily and should be, immediately, to protect the Gulf Coast. That it hasn't even been considered yet is, Pozzi thinks, owing to cost considerations, or because there's no clear chain of authority by which to get valuable ideas in the right hands. But with BP's latest four-pronged plan remaining unproven, and estimates of company liability already reaching the tens of billions of dollars (and counting), supertankers start to look like a bargain.

The real question now is, "Why has the administration blocked clean-up efforts, of all things?  There's no argument that it may take until August for new wells to stem the leak, but why isn't everything possible being done to clean the water and prevent as much oil from coming to shore as possible?  Is it merely government bungling or is there a political agenda at work here?  This is, after all, the administration that vowed to "never waste a good crisis."

Did the administration early on make a conscious effort to stone-wall the clean up efforts in an attempt to use scenes of dirty birds and blobs of oil to sway public opinion in favor of its green, cap-and-trade agenda that's looked all but dead in congress?  Could much of the environmental and economic destruction been averted by an aggressive clean-up and containment effort?  Who in the administration is to blame? And why? 

One can only hope that American's will begin asking these tough questions about what appears to be a willful slowness on behalf of Bama Petroleum to vigorously attack the clean-up and preservation efforts.
24692  Politics, Religion, Science, Culture and Humanities / Politics & Religion / History returns to Europe on: June 03, 2010, 10:15:49 AM
History Returns to Europe

VIENNA -- Walk the beautiful streets in Munich, Strasbourg and Vienna, and you can see why Europeans thought in the last decades that they had reached the end of history. There is not a soldier to be seen. Sidewalk cafes are jammed midweek with two-hour lunch-goers. Fashion, vacations and sex dominate the ads and billboards.

Bikers, electric commuter trains and tiny fuel-efficient cars zoom by in a green contrast to our gas-guzzling Tahoes and Yukons.

So naturally, there is a general sense of satisfied accomplishment among European social democrats. They believe that finally a quiet sameness across their continent has replaced two millennia of constant European warring and revolution. Now, everybody seems to get an apartment, small car, state job, good pension and peace -- and in exchange, all voice comfortable center-left consensus politics.

But beneath the genteel European Union veneer, few remembered that human nature remains constant and gives not even nice Europeans a pass from its harsh laws.

So suddenly the Greek financial meltdown, and the staggering debts that must be repaid, have alternately enraged and terrified northern European creditors. Even the most vocal Europhiles are quietly rethinking the entire premise of a European Union that offers lavish benefits but no sound method of paying for them.

After all, it is one thing to redistribute income by taking from richer Germans and Austrians to give to poorer Germans and Austrians. But it is something else for all Germans and Austrians to extend their socialist charity to siesta-taking Greeks, Italians and Spaniards. For all the lofty rhetoric of the collective European Union, age-old culture, language and nationalism still trump the ideal of continental unity.

But bickering over a trillion dollars in bad southern European debt is not the EU's only problem. Why, for example, do Europe's cradle-to-grave entitlements so often end up encouraging declining populations, atheism and lower worker productivity that is readily apparent to the casual visitor?

Perhaps if everybody ends up about the same, regardless of effort or achievement, then life must be enjoyed mostly in the here and now. Why sacrifice for children, or put something aside for heirs, or worry over a judgment in the afterlife? The more the European Union talks about its global caring, the less likely its own citizens are to have children.

It is also strange that the more Europeans flock to their ancient majestic cathedrals, splendid museums and grandiose villas and castles to satisfy an innate human desire to enjoy artistic, architectural and religious achievement, the more it is likely that they would never again build a now politically incorrect cathedral at Rouen, a Schönbrunn Palace or a castle on the Rhine.

Much is made of European multiculturalism, a willingness to allow Muslims from the Middle East, Pakistan and Turkey to live separate lives without assimilating fully into European society.

But such "tolerance" reflects in part a fear of radical Islam and terrorism. For all the European talk of progressive attitudes about free speech, feminism and gay rights, such principles fade quickly when radical Muslims demand Sharia law, demonize homosexuals or threaten European cartoonists and novelists. It is almost as if the more Europe takes pride in its own multiculturalism, the larger its ethnic ghettoes expand -- and the more its native populations grow bitter against the foreign-born.

Europe is a vocal member of the United Nations and other transnational organizations. But this utopian internationalism depends on the protection guaranteed by the United States and its huge military. Otherwise, there would either be costly European militaries -- or the occasional threat of attack. Europeans forgot that just because they are not looking for war, it doesn't mean that war might not look for them.

In short, as a reaction to the self-destruction of Europe in World War II and the twin monsters of fascism and communism, Europeans thought they could change human nature itself through the creation of an all-caring, all-wise European Union uber-citizen. Instead of dealing with human sins, European wise men of the last half-century would simply declare them passé.

But human-driven history is now roaring back with a fury in Europe -- from Mediterranean insolvency, to the threat of radical Islam, to demographic decline, to new international dangers on the horizon.

Only one question remains: At a time when Europe is discovering that its democratic socialism does not work, why in the world is the United States doing its best to copy it?
24693  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Atlantic article on MY on: June 03, 2010, 08:03:13 AM
second post
24694  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Brennan on: June 03, 2010, 07:38:35 AM
No doubt with this man at DHS, the nation is safe:
24695  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Politics on: June 03, 2010, 07:19:57 AM
I am second to very few in my contempt and low opinion of our current President, but my current impression is that this is on the level of President Clinton's fellonious fellatio with Monica Lewinsky.
24696  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Michael Yon disembedded!!! on: June 03, 2010, 07:17:37 AM
Military Mysteriously Cuts Short Top War Correspondent's Time in Afghanistan
by Chris Carter

The military has cut short a war correspondent's embed, and there may be evidence that the decision may have been part of a smear campaign against the writer.

Michael Yon, a former Green Beret, has been covering Iraq and Afghanistan for six years. He has also covered conflicts in Thailand, the Philippines, and Nepal. Following a string of events covered by Yon that cast a negative light on two top NATO commanders, the military decided to terminate Yon's embed prematurely, citing reasons that didn't add up.

ISAF's reason for disembedding Yon was “embed overcrowding.” Yet in an email to Admiral Gregory J. Smith, an ISAF public affairs officer, Yon wrote, “I rarely see journalists. Those journalists I see have been doing drive-by reporting.”

Yon states that he has forwarded to his attorney “compelling evidence” of a smear campaign perpetrated by members of Gen. McChrystal's staff. He says that the general's staff have released official statements that are “defamatory and libelous.”

“A writer must be able to spot libel just as a soldier must be able to spot IEDs,” writes Yon. “It's part of the job. If you can't spot it, you will get hurt.”

In March, Yon began investigating a possible weapons mishap by Canadian Brig. Gen. Daniel Menard, the top Canadian general in Afghanistan and also Commander of Task Force Kandahar. Reports say that Menard nearly shot Canada's Chief of the Defense Staff, Gen. Walt Natynczyk while preparing to board a helicopter at Kandahar Airfield. According to Yon, Menard didn't acknowledge the incident until ISAF learned that Yon was looking into the matter. Menard was found guilty of negligent discharge and fined $3500 on Tuesday.

Menard has operational control over three battalions of U.S. Army soldiers. And as Yon points out in his website that “while Canada increasingly shies from combat, American units under Canadian command will spill blood under Canadian military leadership that answers to Ottawa.”

The Canadian general's defense counsel stated Menard “accepted full responsibility.” But in a separate incident just days before the shooting, Menard took absolutely no responsibility for a fatal incident on a strategic bridge near Kandahar when a suicide bomber killed a U.S. soldier.

On the morning of March 1, a suicide car bomber attacked a U.S. convoy as they crossed the Tarnak River Bridge leading to Kandahar. The bridge is a chokepoint on a crucial route between Kandahar Airfield and the town of Kandahar, and on out to Helmand Province. The bridge was damaged in the attack, which killed U.S. Army Specialist Ian Gelig, several Afghan civilians, and wounded several other soldiers. Numerous missions were canceled as the river could not be crossed.

The Stryker Brigade that Yon was embedded with was tasked with keeping the roads open. And the British Royal Air Force is responsible for much of the ground around Kandahar Airfield, including the land around the bridge. And the Afghanistan National Police, mentored by U.S. military police were guarding the bridge. However when Yon investigated the matter, he was informed by multiple officers that Menard was ultimately responsible for the bridge at the time of the attack as it belongs to Task Force Kandahar.

“Menard ultimately had responsibility for the bridge,” Yon stated in an interview. When Yon investigated the matter, he was informed by multiple officers that the bridge at the time of the attack belonged to Task Force Kandahar. Menard tried to pin the blame on his supervisor, British Maj. Gen. Nick Carter. Yet during a meeting with ISAF officials, U.S. Army Brig. Gen. Ben Hodges took full responsibility, although Yon did not believe him.

When asked why the U.S. military would possibly cover for Menard, Yon replied, “I think the cover was in the interest of Coalition warfare. An American putting it to a Canadian would have had political ramifications.”

Yon has stood alone in his criticism of Menard and received heavy fire for doing so. He called Menard incompetent and said he needed to be fired. He also stands alone saying the same about McChrystal. Yon recently wrote, “This is clear as day: General Stanley McChrystal will lose this war.”

“The reason stated for my disembed was 'overcrowding.' Clearly this is untrue,” Yon said. “The war is going poorly and it is widely known that I will call the ball where it lands. We are losing the war and it seems likely that McChrystal and staff don't want me in combat reporting their failures.”

So with the upcoming operation in Kandahar – which would be commanded by Menard – it seems entirely possible that ISAF wanted Yon out of the theater. His criticism of not only Menard but of ISAF commander Gen Stanley McChrystal could well be the reason behind the ending of his embed.

While the military may view Yon's dispatches as controversial, the American people deserve the truth. And as Kay Day from the US Report says, “No one reporting on the Global War on Terror has done a more effective or honest job than Michael Yon.”

Past statements by Yon were initially viewed as controversial – such as being the first journalist to say the “Surge” was working, or that Iraq was experiencing a “civil war.” However, these events would soon become conventional wisdom. Could his assessments of Gens. Menard and McChrystal soon become conventional wisdom as well?

Perhaps a comment from a reader at the United States Naval Institute sums it up best:

Frankly, I trust Yon more than I trust McChrystal at this point.

The man who took part in the cover-up of [Army Ranger and former professional football player Pat] Tillman’s death has lost quite a bit of credibility. In fact, McChrystal admitted as much – years later – before the Senate.

Yon, meanwhile, was right about Iraq. He was right about Afghanistan. He was right about Petraeus. He was right about Menard.

And I suspect he’s right about McChrystal.
24697  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stratfor: Israel, Turkey, and the US on: June 03, 2010, 06:48:41 AM
Turkey and Israel Fight for U.S. Support
TUESDAY WAS ALL ABOUT THE INTERNATIONAL FALLOUT from Israel’s move to raid the Turkish-led aid ship trying to circumvent the blockade of the Gaza Strip, which left 9 people dead (mostly Turkish nationals) and scores of others injured. In a speech before Turkey’s parliament, Turkish Prime Minister Recep Tayyip Erdogan warned Israel not to test Turkey’s patience, adding that the state did not want his country as an enemy. Elsewhere, the head of Israeli intelligence said in a briefing to the Knesset Foreign Affairs and Defense Committee that Israel’s strategic worth in the eyes of the United States was increasingly on the decline.

After deciding to forcibly bring an end to the Turkish flotilla saga, Israel finds itself in a major bind. They have much of the international community condemning them for the action, and there are growing calls that Israel end the blockade of the Hamas-ruled Gaza Strip. At the same time, additional flotillas are being organized, which will only exacerbate matters, especially since Israel has said —international condemnation notwithstanding — it will not end the blockade.

“After deciding to forcibly bring an end to the Turkish flotilla saga, Israel finds itself in a major bind.”
From Israel’s point of view, ending the blockade directly undermines the state’s national security. A Gaza with free access to the outside world does not simply mean relatively improved economic conditions for its inhabitants. It also translates into Hamas and its Islamist militant allies gaining a freer hand to try to acquire weapons, which would be used against Israel.

From Turkey’s point of view, it is no longer content being Israel’s only Muslim ally. Indeed, Turkey has moved beyond being a pro-Western state to one on the path of becoming a great independent power. And its path to regional player status involves assuming an aggressive stance toward Israel, which can help it gain the leadership of the Arab Middle East and the wider Islamic world.

Ankara’s encouragement of the flotilla is very much in keeping with this objective. While the Turks have been successful at creating an international uproar against Israel, they have yet to demonstrate that they can force the Israeli hand. Not having a whole lot of options, Turkey is looking to align itself with the United States against Israel — something Washington has hesitated to do thus far.

While the United States will not even consider the Turkish proposition, it is not exactly endorsing Israel’s position. Even so, there is a strong possibility that the United States could prefer Turkey to Israel in the future since it needs Turkey’s help in extricating itself from the complexities of the region. Which brings us back to the warning from Mossad chief Meir Dagan, who said Israel “is gradually turning from an asset to the United States to a burden.” Currently, the United States needs Turkey more than it needs Israel.

While STRATFOR has been pointing out the emerging divergence in U.S. and Israeli interests for quite some time now, this is the first time Israel has acknowledged that its great power patron has a diminishing need for it. Though historically Israel has never faced a challenge from any of its neighboring states, the threat has come from powers outside its immediate region, which is where the great power patron has come in handy. That its traditional ally, the United States, has a need to align with Turkey, a rising regional power and potential adversary to Israel, would explain the statements of the Israeli intelligence chief, which underscore the massive national security debate currently under way in the country.
24698  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: We the Well-armed People on: June 03, 2010, 06:47:49 AM
Good find.
24699  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Let us remember on: June 03, 2010, 06:41:05 AM
24700  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stratfor: Al Shabaab on: June 03, 2010, 06:15:51 AM
By Scott Stewart

On the afternoon of Sunday, May 30, an Aeromexico flight from Paris to Mexico City was forced to land in Montreal after authorities discovered that a man who was on the U.S. no-fly list was aboard. The aircraft was denied permission to enter U.S. airspace, and the aircraft was diverted to Trudeau International Airport in Montreal. The man, a Somali named Abdirahman Ali Gaall, was removed from the plane and arrested by Canadian authorities on an outstanding U.S. warrant. After a search of all the remaining passengers and their baggage, the flight was allowed to continue to its original destination.

Gaall reportedly has U.S. resident-alien status and is apparently married to an American or Canadian woman. Media reports also suggest that he is connected with the Somali jihadist group al Shabaab. Gaall was reportedly deported from Canada to the United States on June 1, and we are unsure of the precise charges brought against him by the U.S. government, but more information should be forthcoming once he has his detention hearing. From the facts at hand, however, it appears likely that he has been charged for his connection with al Shabaab, perhaps with a crime such as material support to a designated terrorist organization.

Last week, the Department of Homeland Security issued a lookout to authorities in Texas, warning that another Somali purportedly linked to al Shabaab was believed to be in Mexico and was allegedly planning to attempt to cross the border into the United States. This lookout appears to be linked to a U.S. indictment in March charging another Somali man with running a large-scale smuggling ring bringing Somalis into the United States through Latin America.

Taken together, these incidents highlight the increased attention the U.S. government has given to al Shabaab and the concern that the Somali militant group could be planning to conduct attacks in the United States. Although many details pertaining to the Gaall case remain unknown at this time, these incidents involving Somalis, Mexico and possible militant connections — and the obvious U.S. concern — provide an opportunity to discuss the dynamics of Somali immigration as it relates to the U.S. border with Mexico, as well as the possibility that al Shabaab has decided to target the United States.

The Somali Diaspora
In any discussion of al Shabaab, it is very important to understand what is happening in Somalia — and more important, what is not happening there. Chaos has long reigned in the African country, chaos that became a full-blown humanitarian crisis in the early 1990s due to civil war. Somalia never fully recovered from that war, and has lacked a coherent government for decades now. While Somalia does have a government in name, known as the Transitional Federal Government (TFG), it controls little apart from a few neighborhoods and outposts in Mogadishu, the capital of Somalia. In this vacuum of authority, warlords and pirates have thrived, along with a variety of militant Islamist groups, such as the jihadist group al Shabaab.

The decades of fighting and strife have also resulted in the displacement of millions of Somalis. Many of these people have moved into camps set up by humanitarian organizations inside the country to help the huge number of internally displaced people, but large numbers of Somalis have also sought refuge in neighboring countries. In fact, the situation in Somalia is so bad that many Somalis have even sought refuge in Yemen, the poorest country in the Arab world. Tens of thousands of Somalis have also been resettled abroad in places like the United States, Canada and Europe.

Unlike an earthquake, tsunami or other natural disaster, the man-made disaster in Somalia has continued for decades. As Somali refugees have been settled in places like the United States, they, like many other immigrants, frequently seek to have their relatives join them. Frequently, they are able to do this through legal means, but quite often, when the wait for legal immigration is deemed too long or an application is denied for some reason — such as the applicant’s having served in a militia — illegal means are sought to bring friends and relatives into the country. This is by no means a pattern exclusive to Somali immigrants; it is also seen by other immigrant groups from Asia, Africa and other parts of the world. For example, Christians from Iraq, Egypt and Sudan are frequently smuggled into the United States through Latin America.

In years past, a significant portion of this illegal traffic passed through Canada, but in the post-9/11 world, Canada has tightened its immigration laws, making it more difficult to use Canada as an entry point into the United States. This has driven even more immigrant traffic to Latin America, which has long been a popular route for immigrants seeking to enter the United States illegally.

Indeed, we have seen an expansion of Somali alien-smuggling rings in Latin America in recent years, and according to documents filed in court, some of these groups have been associated with militant groups in Somalia. In an indictment filed in the U.S. District Court for the Western District of Texas on March 3, 2010, a Somali named Ahmed Muhammed Dhakane was charged with operating a large-scale alien-smuggling ring out of Brazil responsible for smuggling several hundred Somalis and other East Africans into the United States. The indictment alleges that the persons Dhakane’s organization smuggled included several people associated with al-Itihaad al-Islamiya (AIAI), a militant group linked to al Qaeda that was folded into the Supreme Islamic Courts Council (SICC) after the latter group’s formation. After Ethiopian forces invaded Somalia and toppled the SICC in late 2006, many of the more hardcore SICC militants then joined with the SICC youth wing, al Shabaab, to continue their armed struggle. The more nationalist-minded SICC members formed their own militant organization, called Hizbul Islam, which at various times either cooperates or competes with al Shabaab. The U.S. government officially designated AIAI a terrorist group in September 2001. The March indictment also alleged that Dhakane was associated with al-Barakat, a Somalia-based company that is involved in the transfer of money to Somalia. The U.S. government claims that al-Barakat is involved in funding terrorist groups and has designated the company a terrorist entity. Diaspora Somalis transfer a great deal of legitimate money to family members back in Somalia through organizations such as al-Barakat because there is no official banking system in the country, and militant groups like al Shabaab use this flow of money as camouflage for their own financial transactions.

Many other alien smugglers besides Dhakane are involved in moving Somalis through Latin America. Most of these smugglers are motivated by profit, but some like Dhakane who have ties to militant groups might not be opposed to moving people involved with militant groups — especially if they also happen to make more money in the process. Other smugglers might unknowingly move militants. Moreover, a number of front businesses, charities and mosques in the region more closely tied to militant groups of various stripes are used to raise funds, recruit and facilitate the travel of operatives through the region. Some of these entities have very close ties to people and organizations inside the United States, and those ties are often used to facilitate the transfer of funds and the travel of people.

Determining Intentions
Clearly, there are many Somalis traveling into the United States without documentation. According to the U.S. government, some of these Somalis have ties to jihadist groups such as AIAI and al Shabaab, like Dhakane and Gaall, respectively. Given the number of warlords and militias active in Somalia and the endemic lack of employment inside the country, it is not at all uncommon for young men there to seek employment as members of a militia. For many Somalis who are driven by the need merely to survive, ideology is a mere luxury. This means that unlike the hardcore jihadists encountered in Saudi Arabia or even Pakistan, many of the men fighting in the various Somali militias do not necessarily ascribe to a particular ideology other than survival (though there are certainly many highly radicalized individuals, too).

The critical question, then, is one of intent. Are these Somalis with militant ties traveling to the United States in pursuit of a better life (one hardly need be an Islamist bent on attacking the West to want to escape from Somalia), or are they seeking to travel to the United States to carry out terrorist attacks?

The situation becomes even more complex in the case of someone like Gaall, who came to the United States, reportedly married an American woman, received resident-alien status, but then chose to leave the comfort and security of the United States to return to Somalia. Clearly, he was not a true asylum seeker who feared for his life in Somalia, or he would not have returned to the African country. While some people become homesick and return home, or are drawn back to Somalia for some altruistic purpose, such as working with a non-governmental organization to deliver food aid to starving countrymen— or to work with the Somali government or a foreign government with interests in Somalia — some Somalis travel back to support and fight with al Shabaab. Since most of the previously mentioned activities are not illegal in the United States, the criminal charges Gaall faces likely stem from contact with al Shabaab.

Having contact with al Shabaab does not necessarily mean that someone like Gaall would automatically return to the United States intending to conduct attacks there. It is possible that he considered Somalia a legitimate theater for jihad but did not consider civilians in the United States legitimate targets. There is a great deal of disagreement in jihadist circles regarding such issues, as witnessed by the infighting inside al Qaeda in the Islamic Maghreb over target selection. There are also militant groups, like Hamas and Hezbollah, who consider the United States as a place to recruit and raise funds rather than a battlefield for jihad. U.S. authorities certainly would err on the side of caution regarding such people, and would charge them with any applicable criminal charges, such as material support of a terrorist group, rather than run the risk of missing an impending attack.

If it is determined that Gaall intended to conduct an attack inside the United States, the next question becomes whether he sought to conduct an attack of his own volition or was sent by al Shabaab or some other entity.

As we have previously discussed, we consider the current jihadist world to be composed of three different layers. These layers are the core al Qaeda group; the regional al Qaeda franchises (like al Shabaab); and grassroots jihadists — either individuals or small cells — inspired by al Qaeda and the regional franchises but who may have little if any actual connection to them. It will be important to determine what Gaall’s relationship was with al Shabaab.

To this point, the leadership of al Shabaab has shown little interest in conducting attacks outside Somalia. While they have issued threats against Uganda, Burundi, Kenya and Ethiopia (which invaded Somalia and deposed the SICC), al Shabaab has yet to act on these threats (though AIAI did conduct a series of low-level bombing attacks in Ethiopia in 1996 and 1997 and al Shabaab has periodic border skirmishes with the Kenyan military). Somalis have also been involved with the al Qaeda core for many years, and al Shabaab has sworn allegiance to Osama bin Laden — the reason we consider them an al Qaeda regional franchise group.

That said, we have been watching al Shabaab closely this year to see if they follow in the footsteps of al Qaeda in the Arabian Peninsula (AQAP) and become a transnational terrorist group by launching attacks against the West rather than just a group with a national or regional focus. While some al Shabaab members, like American-born Omar Hammami — who sings jihadi rap songs about bringing America to its knees — have threatened the West, it remains unclear whether this is rhetoric or if the group truly intends to attack targets farther afield. So far, we have seen little indication that al Shabaab possesses such intent.

Due to this lack of demonstrated intent, our assessment at the present time is that al Shabaab has not yet made the leap to becoming transnational. That assessment could change in the near future, however, as details from the Gaall case come out during court proceedings — especially if it is shown that al Shabaab sent Gaall to the United States to conduct an attack.

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