Month: April 2009

Uruguay Round Agreements Act Held Unconstitutional

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The case is Golan v. Holder (originally filed when Gonzalez was Attorney General), and challenged the provision of the URAA that restored copyright to out of copyright works, and rendered derivative works that had been made when there was no copyright illegal, and now a Federal District Court has ruled it an unconstitutional violation of the first amendment, after a remand from the appeals court (PDF of opinion at link).

This is the first time ever that, “a court has held any part of the Copyright Act violates the First Amendment and the first time any court has placed specific constitutional limits on the government’s ability to erode the public domain,” so it is very significant.

This differs from Eldred, in which the Supreme Court allowed copyright extension, in that the speech of the plaintiffs was already legally created, and so the change was an infringement on their legally created speech (derivative works of then public domain items).

It is my understanding, that this applies only to legally created derivative works, and one would assume, newly created derivatives of those derivatives, but not new derivatives of these works, but I’m an engineer, not a lawyer, dammit!*

In either case, this is a recognition that IP law is a restriction of the rights of the rest of society, and as such there needs to be a showing a serious state interest in order to override that, and this is IMHO, a major step forward.

*I LOVE IT when I get to go all Doctor McCoy!!!

Where Real America Is

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We have a CBS News Poll, and unlike the pundits, the American public gets it:

  • Higher taxes on the rich: Support 74% Oppose 23%
  • Obama’s Budget priorities: Support: 56% Oppose 32%
  • Auto industry bailout: Support 47% Oppose 38%
  • Banking industry bailout: Support 33% Oppose 58%
  • Increase financial regulation: Support 71% Oppose 23%

So, they don’t blame the unions for the Auto industry, despite the constant drum beat that this is the problem, they want to soak the rich, they support Obama, and they do blame the bank executives.

Senate Judiciary Committee Approves Patent Update

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It looks to me like the Patent Reform Act of 2009, is an improvement, the patent troll crowd are generally negative on it, and Senator Feingold’s statement in opposition suggests that it weakens patents too much, which is a good thing.

The real question is what happens in conference.

In my dream scenario, the patenting of software algorithms, tax deductions, business plans, genes, and species would be invalidated, and a litigant could file a suit against a patent as a plaintiff without having to infringe, as is done with civil rights suits.

Why the US Mobile Phone Industry is a Horrible Model for the Internet

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The advocacy group Free Press has filed a complaint with the FCC over Apple and AT&T’s ban on the use of Skype on their network.

The money quote on this is from a typically clueless AT&T spokesman, “Customers are free to download and use the apps they want, but we have no obligation—nor should we have—to facilitate or subsidize our competitors’ businesses.”

It sounds reasonable, but what is really going on here is that AT&T is using monopoly power, it is the exclusive licensee for the iPhone in the US, and it’s customers incur hefty roaming charges on other networks, in order to lock a potential competitor out on a service that their customers have paid for.

This is why network neutrality is necessary, and it is yet another example as to how the US privatized largely unregulated telco markets do not serve the consumer: it creates businesses whose model is largely predicated on creating, and maintaining, a monopoly.

A Little Gem in the FDIC Job Postings

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Peterr at Firedoglake was looking at job postings on the FDIC website, and saw something that was probably not intended for the general public, specifically some job postings by the FDIC that may indicate that there will be some very big fish on a path to be caught in the FDIC’s net.

First, there is a posting for a Deputy Chief Accountant (announcement number 2009-EM-0096) who is responsible for, “identifying emerging accounting, auditing, and taxation issues, particularly those raising systemic concerns, for which the timely development of policy guidance for FDIC -supervised and -insured institutions and the Division’s examination staff is critical” (emphasis mine).

“Raising systemic concerns?” Sound like anyone we know? As Peterr notes, it looks like part of their duties will be teasing out responsibilities amongst other financial regulators, which may involve putting a finger in the eye of Timothy “Too Big to Allow to Fail” Geithner’s Treasury Department.

Additionally, there are two openings for two Senior Large Financial Institution Specialist (announcement number 2009-HQD-B1089) located in New York, NY and Charlotte, NC, which are where the HQ’s of Citi and BoA are located, though obviously there are many financial institutions with headquarters in the New York City area, as well as a Chief, Examination Support and Risk Analysis Section (announcement number 2009-HQDEU-1113), who seems to be in charge of “Formulates, refines, and updates supervisory expectations relative to Basel II implementation efforts,” which means risk evaluation of banks.

Additionally, we have Treasury announcing a delay in the reporting the results of the stress tests, “until after the first-quarter earnings season.”

People do not delay good news.

I wouldn’t expect anything this Friday on one of the big 20 financial institutions, but it could get interesting in a few weeks.

Wanker of the Day: Henry Porter

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Mr. Porter is complaining about Google and Youtube, because in negotiating with Performing Rights Society, the UK music licensing organization, Google, “took down the videos of the artists concerned,” when the PRS demanded £0.22, about $0.40, for each video watched.

I would be surprised if Google grosses $0.04 per video watched on Youtube, and they are demanding nearly half a dollar, so Google tells you to pound sand, and it appears that he’s also angry because Google “only” takes down infringing material promptly when notified, when required by law, as opposed to…well, it’s not clear, but he thinks it’s bad.

Tough.

This is where the idea of IP as “property” as opposed to “temporary exclusive license” gets us, and it does not encourage the useful sciences and arts, which is what it’s there for, at least in the USA.

TARP Overseer Calls for Bank Execs to Be Fired

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Elizabeth Warren, the head of the TARP oversight commission is calling for executives at TARP recipients to be fired, and their shareholders to be whiped out, saying, “It is crucial for these things to happen. Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade.”

It appears that her report will specifically mention Citi and AIG.

Your mouth to God’s ear, Dr. Warren.

Election Updates

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They have finished counting the 300 some odd absentee ballots in Minnesota, and Franken picked up 90 votes, which puts him ahead even if the throw out the lost ballots counted on election night, or any other scenario, except for Bush v. Gore judicial nullification, so it looks like the fat lady has sung.

In the NY-20 special election Murphy is setting up a legal fund for the clearly telegraphed legal challenges from Tedisco, hoping to get ahead of delaying tactics of the Norm Coleman variety.

Economics Update

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Scary Picture of the Day, Industrial Production, Courtesy of Naked Capitalism

The big news is that there are rumors of GM preparing for bankruptcy, and mark my words, if they do go into bankruptcy, it will be because of the bond holders, not the union, and I do not see it working as a prepackaged filing, so we would see massive disruptions amongst all the auto plants of all brands in the US.

Were it not for the GM rumors, the lede would be the continued implosion of consumer credit, with grim February reports showing that U.S. consumer credit falling by $7.48 billion, an annual rate of 3.5%, and homeowner mortgage default rates have increased to 7%, up more than 50% from a year ago.

That being said, it’s not just consumers and homeowners in trouble, as the default rate of “speculative-grade corporate borrowers” hit the highest rate since the depression in March.

Meanwhile in a harbinger of things to come in commercial real estate, New York City office rents fell 6% in the Q1 of 2009, and the vacancy rate is at 9.6%, up from 6.1% a year ago.

It is therefore unsurprising that the Business Roundtable’s survey of CEOs is showing falling confidence.

In the meantime, uncertainty, particularly the GM rumors have driven both the Yen and the US Dollar up, and has driven oil down.

The Phrase is “Good Germans”

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The term which should be applied to doctors and other medical personnel who aided in torture at Guantanamo and the CIA gulag system.

Note that while the Red Cross did say that medical assistance rendered in furtherance of torturer was unethical even if it was the preserve the life or health of the subject, that the activities of medical personnel did not even fall under this limited scope, but rather that they were, “medical professionals’ role was primarily to support the interrogators, not to protect the prisoners, and that the professionals had ‘condoned and participated in ill treatment.'”

This is wrong, and the people involved should never be allowed to participate in patient care ever again.

When Immigration Policy and Stimulus Intersect

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Matthew Yglesias has a post up on the stimulative effects to the economy of legalizing various activities. Item 7 is “Liberalized immigration”.

Undoubtedly, this will grow the GDP. That is not the question. The question is whether it will grow the per capita GDP, which is how the overall benefit to society should be defined.

As I noted before, the post Black Death prosperity in Europe was almost certainly at a lower aggregate GDP than before the plague, but because population fell faster than GDP, wages, and standard of living, went up.

Wall Street Self Dealing Again

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Zero Hedge is reporting that there are strong indications that Wall Street firms are going back to their Dotbomb era practice of swapping favorable ratings for analysts in exchange for business underwriting their IPOs:

1) First Merrill Lynch/BofA gets clients to subscribe to a massively diluting equity offering (105 million new shares out of 271 million pre-offering shares, or 39% dilution). The offering prices at $7.10/share, a 6% discount to the previous day closing price of $7.49. In the process Merrill pockets an underwriting fee likely equal to 3% of the offering or around $20 million.

2) Minutes after the offering Merrill REIT analyst Schmidt comes out with a report, changing the recommendation on the stock from a Sell to a Buy, thereby getting the vanilla money which makes critical fiduciary decisions merely based on what some sell-side analyst will recommend. As a result Kimco stock rises throughout the day and closes at $9.40, a 25% premium to the closing price, and a 30% premium to offering price of $7.10, which closed that very same day.

…

Go read the rest. It’s pretty damning, and yet another indication that at least 1 in 10 of the brokers, executives, and analysts on Wall Street should be under criminal investigation.

Is Dick Cheney Working the Phones to Blackmail Obama?

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That’s my guess as to why Senate Republicans are threatening the nominationsof Dawn Johnsen as head of the Office of Legal Counsel in the Department of Justice and Harold Koh as the State Department legal counsel if more torture memos are released.

It has been reported that they have told the administration that they will filibuster/place a hold on the nominations unless Obama covers up the torture memos

The people directly involved in this, and hence the ones most likely to face legal or disciplinary action, Alberto “Abu” Gonzalez, John Yoo, David Addington, etc., have no reputation or political pull to get the ‘Phant Senators to do this.

So, it has to be someone who:

  • Is implicated in the memos.
  • Has political pull with the base.
  • Has some sort of rapport with Republican members of the Senate, possibly from their days in Congress.

Sounds like Cheney, and as his latest appearances on the Sunday gas bag circuit, it is clear that he is worried that one of his stalwart supporters of torture will roll on him if they are facing real jeopardy.

Auto Industry Update

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Once again, it looks like the management at Ford did everything right to face this crisis, and they have executed debt for equity swaps and haircuts to bondholders that has lowered their outstanding debt by $9.9 billion, and lowered their interest payments by about $550 million a year.

On the other side of doing the right thing, we have GM, who says that they
expect to sell their SAAB automobile division by the end of June, as there are 3-5 serious bidders.

I never understood this merger in the first place, SAAB auto was too small for GM, and unlike Ford’s purchase of Jaguar, where Ford’s quality was marked superior, and was applied to the British sports care maker, GM didn’t have anything of value to send to SAAB.

Meanwhile, I get to say a sentence that I rarely get to say, that “The New Republic gets it,”on the auto bailout.

The problem is not the unions. It’s the bondholders and banks who are unwilling to deal.

Obama’s Bank Plan Worse Than Thought

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Jeffrey Sachs has looked at the plan, and his assessment is that it is far worse than previously believed, noting that, “Insiders can easily game the system created by Geithner and Summers to cost up to a trillion dollars or more to the taxpayers.”

Basically, it means that the banks can set up off the balance sheet subsidiaries to over pay for the assets, and when they go bankrupt, the federal government is left holding the bag:

Citibank thereby receives $1 million for the worthless asset, while the CPPIF ends up with an utterly worthless asset against $850K in debt to the FDIC. The CPPIF therefore quietly declares bankruptcy, while Citibank walks away with a cool $1 million. Citibank’s net profit on the transaction is $925K (remember that the bank invested $75K in the CPPIF) and the taxpayers lose $925K. Since the total of toxic assets in the banking system exceeds $1 trillion, and perhaps reaches $2-3 trillion, the amount of potential rip-off in the Geithner-Summers plan is unconscionably large.

This is so stupid and corrupt that Larry Summers has to be the guy who came up with this.

A Democrat You Should Not Make Donations To

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Senator Blanche Lincoln (R-AR), who has come out against the Employee Free Choice Act (Card Check).

Not only that, she is clearly signaling that she will support a filibuster.

Not only is this bad policy, it’s also bad politics, since union members vote Democratic, but being from Arkansas, Wal-Mart owns her.

Put your money elsewhere, and give to individual candidates, not the DSCC, which will doubtlessly funnel money to her race in 2010.