Month: November 2008

More Corruption in the Siegelman Case

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Now it appears that the US Attorney for the district, who was married to a Republican operative, and allegedly recused herself….Well, not so much:

It was those connections that led Ms. Canary, under pressure, to publicly withdraw from the Siegelman case in May 2002 — she “completely recused herself,” said the acting United States attorney, Louis Franklin — as proof that the prosecution of Mr. Siegelman would be free of partisan bias.

Yet in her complaint, the Justice Department employee, Tamarah T. Grimes, cited several instances suggesting Ms. Canary maintained a close watch on the case. Ms. Grimes said a legal aide in the office reported on Mr. Siegelman’s trial to Ms. Canary or her top deputy “every day, sometimes several times per day by telephone.” Once, she observed Ms. Canary “frantically pacing in the executive suite” after a courtroom blowup, “pleading with someone” to get on the phone to “tell Louis he has to control his temper.”

Ms. Grimes also disclosed an e-mail message written by Ms. Canary commenting on legal strategy in the case and suggesting to aides that Mr. Siegelman not be allowed to “comment on court activities in the media.” Ms. Grimes, who is also in a dispute with the department related to her accusations that the Siegelman prosecution team had harassed her, cited the affidavit of a former legal aide in the Montgomery office, Elizabeth Jane Crooks, who wrote that “the morning that the trial started, the U.S. attorney herself carried food and beverage over to the courthouse to support the ‘Trial Team.’ ”

Some more people who need to go to jail to show what’s wrong.

To quote Pat Boone, they “should be displayed publicly and have all of his fingers and toes broken, and then publicly executed so they who think [that] those like the
imprisoned Manson and Sirhan are glamorous — will think differently.”

Though to be fair to Mr. Boone, he was talking about a neo-Nazi murderer who went after children in a day care center, but the offense against society here is at least as corrosive.

The Sad Tail of Citi

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So the US government is putting in $20 billion for non-voting preferred stock and guaranteeing over $300 billion in securities.

They are getting only 8% on this, and remember that Citi’s market cap was $22 billion. That $20B should have given the Feds 90% control of the company.

They should have taken it over, and fired (no golden parachute) upper management…Particularly Robert Rubin.

Instead, it’s a suspension of dividends, and some cosmetic restrictions in executive pay.

Paul Krugman nails it:

Mark Thoma has the rundown of informed reactions. A bailout was necessary — but this bailout is an outrage: a lousy deal for the taxpayers, no accountability for management, and just to make things perfect, quite possibly inadequate, so that Citi will be back for more.

Amazing how much damage the lame ducks can do in the time remaining

Paul Kedrosky goes into a bit more detail in Good Bank, Bad Bank, and F$#ked Bank ($# mine):

Here is the gist:

  • Citi will carve out $300-billion in troubled assets, which will remain on its balance sheet
    • The first $37-$40-billion in losses on those assets will go to Citi
    • The next $5-billion in losses will hit Treasury
    • The next $10-billion in losses will go to the FDIC
    • Any more losses will go to the Fed
  • There will be no management changes at Citi, because, you know, they are all fine and upstanding people who have done nothing wrong
  • There will be some compensation limitations, but those have not yet been made clear

To be clear, this is not a “bad bank” model. Assets are not, apparently, being taken off the Citi balance sheet and put into another entity walled off from the Citi biological host. Instead, they are being left on the Citi balance sheet, but tagged and bagged for eventual disposal via taxpayers. In other words, we are, given the size and nature of the maneuver, creating a new variant on the good/bad bank model that I hereby christen “f$#ked” bank. You do that, of course, when removing all the toxic assets from a “good” bank’s balance sheet would leave no bank behind at all.

(emphasis mine)

You know, I was wrong when I said that Robert Rubin should be fired. He should be pursued by criminal authorities with the same Javertian intensity that that corrupt prosecutor did in the Julie Amero case (previous post).

Robert Rubin needs to go to jail for a very long time.

Julie Amero, Innocent, But Prosecutors Still Extort a Guilty Plea

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You may remember the story.

She was substitute teaching, and because the sysop at her school turned off the spyware protections, her computer was innundated with sexually oriented popups.

They charged her with providing pornography to minors, and she faced up to 40 years in jail.

She lost a baby, and after a judge threw out the conviction:

In June of 2007, Judge Hillary B. Strackbein tossed out Amero’s conviction on charges that she intentionally caused a stream of “pop-up” pornography on the computer in her classroom and allowed students to view it. Confronted with evidence compiled by forensic computer experts, Strackbein ordered a new trial, saying the conviction was based on “erroneous” and “false information.”

The “false information” was the prosecution presenting a detective with a few hours of computer training as a forensic expert.

But the prosecutors have continued to pursue her, and finally, they managed to Well, coerce a guilty plea for disturbing the peace, and force her to give up her teaching license.

I’m not sure as to whether this is just hubris, or fear of a lawsuit, but it should be against the law….In fact, it may be, depending on how you read the law.

They took her baby, her career, and her health, she has been in and out of hospital since this all started, and they kept going after her, because they were unwilling to do the right thing.

If only she played Lacrosse, perhaps the DA’s license to practice law would be pulled.

Reinventing Government Initiative is Inherently Corrupt

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The WaPo has a story about how Countrywide Mortgage went regulator shopping to find a more compliant agency, they ended up going with the Office of Thrift Supervision, who wooed the now disgraced mortgage lender. Why?

Winning Countrywide was important for OTS, which is funded by assessments on the roughly 750 banks it regulates, with the largest firms paying much of the freight. Washington Mutual paid 13 percent of the agency’s budget in the fiscal year ended Sept. 30, according to OTS figures. Countrywide provided 5 percent. Individual firms tend to make a larger difference to OTS finances than other bank regulators because the agency oversees fewer companies with fewer assets.

Yes, let’s make sure that regulators are paid by the industries that they regulate.

Let’s make sure that regulators are forced to compete for who they regulate.

That way, they won’t regulate at all.

Economics Update

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I think that we have to start with the fact that U.S. Treasury Credit Default Swaps risk premiums just hit record levels.

If that sounds arcane and obscure, that’s because it is, because the brokers like it that way, but here is a slightly clearer statement, returns on insurance against a defaults on US Treasuries hit a new high….Meaning that investors are pricing in the possibility of a US government default.

This means that a Lot of people are betting that the full faith and credit of the United States of America means nothing.

The US defaulting is the Stay-Puft Marshmallow man moment of US society, and an increasingly large segment of the investing world is betting on it.

At its core, the problem is that this bubble is something that people cannot walk away from, housing and shelter, and the realtor-pimps are now saying that existing home sales are softening, though the staid New York Times is saying that home prices are plunging.

Existing home sales down over 3.1%, and prices down 11.3% year over year.

In the mean time, the Citi bailout is pushing on both currency and energy, with
the dollar falling, because people realize that the printing presses are running non-stop.

That being said, the falling dollar is not helping the ruble, where the Russian central bank has reduced support for the currency for the 2nd time in as many weeks.

It also drove oil up about a fin spot, though retail gasoline prices fell for 68th straight day.

It’s not going to get better any time soon, because MasterCard is reporting falling retail sales.

Meanwhile, Calculated Risk’s Credit Crisis Indicators are slightly worse today.

Zimbabwe Update

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Well, Annan and Carter are calling for the SADC to get off their tuchases and do something, which is unlikely to happen, since they’ve already tried to fob off a phony deal on the MDC.

Thabo Mbeki and most of the leadership of the Southern African Development Community do not want just resolution, because it’s a gun pointed to most of their heads, since much of their opposition comes from the trade union movement too, so a victory will embolden them, which is why they suggested a fictitious “joint ministry” for interior, which is one the primary tools used by Mugabe to maintain control through harassment, violence, and intimidation.

In the meantime, the MDC says that any deal it signs must involve real and profound power, which is not surprising.

ZANU-PF is so blatantly corrupt that they changed an agreed upon document out before signing. (link)

They also note that the illegal detention of MDC activists by agents of the ZANU-PF do not give them cause to believe that talks would be worthwhile.

On the brighter side, if there can be said to be a brighter side in Zimbabwe, it appears taht the general populace has gotten so desperate that they are fighting back against Zimbabwean troops:

Hundreds of angry Zimbabweans attacked soldiers carrying out a crackdown on illegal foreign currency trading in the capital Harare on Monday in a further sign of the country’s collapse.

The crowd hurled stones at the troops and chanted “beat the soldiers,” accusing them of hitting and robbing people during the currency operation.

On the darker side, there has been an outbreak of cholera, killing at least 500, and the response of Mugabe and his associates has been to shut down the municipal water supply, which is more like trying to put a fire out with gasoline than anything I could possibly imagine.

Seriously, while Gordon Brown is calling Iceland a terrorist state, the ZANU-PF government of Zimbabwe is a terrorist government, and a declaration by the US and UK, with the associated freezing of assets held by high level government officials might do something.

These folks are engaging in a terror campaign to maintain power.

Election Updates

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Well, Franken is still down, but Nate Silver of fivethirtyeight.com says that his math has Franken to winning the recount by 27 votes.

He notes that his number have error bars much larger than 27 votes though, but Nate did call a Begich win the day after the election.

That being said, he is also not considering either the thousands of challenged ballots or rejected absentee votes, and those numbers dwarf his error bar too.

Meanwhile, in the Georgia Senate runoff, the ‘Phants fracked up big time. They sent out a mailing to Republithug voters to get thm to vote by absentee ballots, and neglected to mention that they should sign the applications:

Many of the unsigned requests came in the form of cards printed by the Republican National Committee and mailed to voters. Republican U.S. Sen. Saxby Chambliss is in a tight battle to retain his seat by beating Democratic challenger Jim Martin.

The signature line on the RNC cards is easy to miss since it appears after an entry asking voters to enter an address different from their permanent one. Georgia doesn’t require voters to give a reason for voting by absentee ballot.

OOPS.

We also have Tom Perriello certified as defeating racist scumbag Rep. Virgil H. Goode by 745 votes. Goode is likely to ask for a recount, but the margin is actually large enough that it’s unlikely to matter.

One interesting thing about all this is that because the certification was so late, Perriello couldn’t take part in the office lottery for freshmen.

Not to worry though, he gets what’s left and that’s Virgil Goode’s office, which, because Goode was a 6 term incumbent, is a very nice office. Heh.

Finally, though not technically an election, but Biden aide Ted Kaufman has been selected to replace the him when he becomes Vice-President.

The Citi Bailout

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No details, but considering that it’s George W. Bush and Hank Paulson and Their Evil Minions™, mu guess is that it:

  • Will be a givaway.
  • Won’t address the underlying problem (fire Bob Rubin).
  • Won’t be adequate under even those terms.

As details come in, and as I read stuff from people who actually have a clue about this crap, I’ll update.

MN Election Update

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There are indications that the Coleman Campaign is being aggressive with challenges, probably to attempt to ensure that they go into the canvassing board with a lead, because they do not like the trend.

In any case, the Colman campaign is now eschewing its earlier statements about not talking the canvassing board’s decision to court.

So Coleman is definitely nervous….I would note that the swings are much smaller than in Florida, indicating a better balloting process.

Gail Collins is on some Very Strong Meds

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gail Collins is suggesting that George W. Bush resign for the good of the country so that Barack Obama can start implementing his policies.

Ignoring the precedent, which is very bad, that it would set regarding presidents and serving out their their terms, the idea that Bush would resign, when he is already burrowing political appointees into the civil service and creating regulations in order to knee cap him is delusional.

George W. Bush is all about George W. Bush, and he believes that he is on a mission from God (which will hopefully take him to The Hague at some time), and the rejection of ego inherent in such an action, because it is an acknowledgment of his failure on a spectacularly grand scale.

It won’t happen.

Russian Sub Update

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There are 3 items, and I don’t believe the first 2:

The Russian Navy is due to receive Severodvinsk 2010. Yeah right…..Considering the delays and cost overruns in their shipyards, the Indian carrier comes to mind, this is not going to happen on schedule.

They are also claiming that they will scrap all decommissioned nuclear submarines by 2012. See above.

The one that I do believe is reports that the Russians Russia will not lease the Akula II class nuke boat, Nerpa India.

Idon’t think that the recent fatal accident has anything to do with this. I think that this was always a ruse by the shipyard to get funding to finish the boat, with the goal of delivering it to the Russian navy.

IDF Shocked by JSF Price Spike

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Well, the numbers that the Israelis are seeing :

“Defense News” reports that Ministry of Defense and Israel Air Force officials are “stunned by projected program costs for their Israel-unique version of the F-35” Joint Strike Fighter (JSF), manufactured by Lockheed Martin Corporation (NYSE: LMT). IAF and Ministry of Defense officials are struggling to pare a hefty list of customized subsystems and add-ons that threaten to ground the aircraft as unaffordable.

“Defense News” states that, in September, US F-35 program officials gave rough price and availability data to their Israeli counterparts, who reacted with sticker shock to the price tag of $200 million per plane. Since then, both sides have been seeking a new configuration that can meet IAF performance and budget requirements. The IDF had expected to pay about $2 billion – $80 million per plane – for the first 25 aircraft.

My money is on the Israeli numbers being closer to the truth than the Norwegian ones.

Doubtless, there costs with integrating Israeli systems into the airframe, but it’s increasingly clear that the high end estimates for cost are accurate, and largely unaffordable.

George W. Bush Broke Our Army

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That’s, or at the least the conclusion that the US Army is broken, is the conclusion of well respected army analyst Andrew Krepinevich in a Center for Strategic and Budgetary Assessments report.

His basic points:

  • The quality of enlisted men and officers is decreasing despite significant pay hikes.
  • Physical, educational, and “moral” (i.e. criminal conviction) standards have been lowered for recruits.
  • NCO quality is suffering, because enlisted men ill suited to leadership are being promoted to NCO status.
  • Falling reenlistment numbers.
  • Increased use of stop loss to maintain staffing levels.
  • The Army is attempting to create units that are simultaneously configured for both conventional and counterinsurgency warfare, and thus under performing at both.

He does not explicitly finger Bush, but Iraq is clearly mentioned as a part of the problem.

His recommendations:

  • Make 15 Army BCTs dediucated to counter-insurgency/peacekeeping.
  • Delay expanding the army until personnel quality issues are resolved.
  • Cancel the FCS, which has dubious utility in a counter-insurgency scenario, and is sucking up too much budget.

It is likely that the ill effects of Iraq will weigh on the army for more than a decade.

Interesting Regulatory Take on Open Rotor Engines

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Are they unducted fans, are they high tech propellers, or are they, as one wag put it, a bunch of bananas whirling around.

I don’t know, and it appears that regulatory authorities are in a similar conundrum.

The regulations if they are classed as turbofan blades are stricter, and thus the would add more weight, and the regulations if they were classed as a propeller.

It’s a non-trivial issue that needs to be resolved.