Month: February 2012

If You Choose to Invest in a Criminal Enterprise, You are Supposed to Lose Money

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So, the SEC is giving the banksters a free pass when they defraud investors, but the SEC gives them a pass. Why? To protect the investors.

You know, for most people, letting the banksters steal with impunity is not protecting investor:

Even as the Securities and Exchange Commission has stepped up its investigations of Wall Street in the last decade, the agency has repeatedly allowed the biggest firms to avoid punishments specifically meant to apply to fraud cases.
By granting exemptions to laws and regulations that act as a deterrent to securities fraud, the S.E.C. has let financial giants like JPMorganChase, Goldman Sachs and Bank of America continue to have advantages reserved for the most dependable companies, making it easier for them to raise money from investors, for example, and to avoid liability from lawsuits if their financial forecasts turn out to be wrong.
An analysis by The New York Times of S.E.C. investigations over the last decade found nearly 350 instances where the agency has given big Wall Street institutions and other financial companies a pass on those or other sanctions. Those instances also include waivers permitting firms to underwrite certain stock and bond sales and manage mutual fund portfolios.
JPMorganChase, for example, has settled six fraud cases in the last 13 years, including one with a $228 million settlement last summer, but it has obtained at least 22 waivers, in part by arguing that it has “a strong record of compliance with securities laws.” Bank of America and Merrill Lynch, which merged in 2009, have settled 15 fraud cases and received at least 39 waivers.
Only about a dozen companies — Dell, General Electric and United Rentals among them — have felt the full force of the law after issuing misleading information about their businesses. Citigroup was the only major Wall Street bank among them. In 11 years, it settled six fraud cases and received 25 waivers before it lost most of its privileges in 2010.

By granting those waivers, the S.E.C. allowed Wall Street firms to have powerful advantages, securities experts and former regulators say. The institutions remained protected under the Private Securities Litigation Reform Act of 1995, which makes it easier to avoid class-action shareholder lawsuits.

And why are they doing this?

“The ramifications of losing those exemptions are enormous to these firms,” David S. Ruder, a former S.E.C. chairman, said in an interview. Without the waivers, agreeing to settle charges of securities fraud “might have vast repercussions affecting the ability of a firm to continue to stay in business,” he said.

S.E.C. officials say that they grant the waivers to keep stock and bond markets open to companies with legitimate capital-raising needs. Ensuring such access is as important to its mission as protecting investors, regulators said.

…………

Thomas Lee Hazen, a securities law professor at the University of North Carolina at Chapel Hill, said that it is understandable that the S.E.C. might relax some potential sanctions on Wall Street firms — where it appears that lessons have been learned, or when a fine is thought to be sufficient punishment.

“The ripple effect of having a sanction that could shut them down or could seriously impede a company’s operations would seriously affect a lot of innocent customers,” he said. “It’s a very fine balance. That’s not to say that the S.E.C. is striking the balance properly. That is in the eye of the beholder.”

Let’s be clear here. The SEC is using regulatory forbearance to subsidize fraud.

If people stopped investing in firms that committed fraud, the firms would be less inclined to defraud investors.

It’s Official, We Have a 2nd Tech Bubble in 15 Years

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How do I know this? I know this because Paul R. La Monica says that we are not in one.

When he says, “If you want to declare that tech stocks are once again a bubble … you’d be dead wrong,” any sane person would start shorting tech.

This is a guy who called short sales the next bubble, and used a song about masturbation to suggest that it was time to reenter the market. (My posts about him can be found at this link.)

In the world of investing advice, it’s hard to find someone who gets it right even half the time, but there lots of people, like Paul, who can be counted on to function reliably as a reverse barometer.

I’m just sayin’.

Appeals Court Rules that Prop 8 Is Unconstitutional

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It was a 2-1 decision, and the opinion is a pretty strong:

“Although the Constitution permits communities to enact most laws they believe to be desirable, it requires that there be at least a legitimate reason for the passage of a law that treats different classes of people differently,” Judge Stephen R. Reinhardt wrote in the decision. “There was no such reason that Proposition 8 could have been enacted.”

“All that Proposition 8 accomplished was to take away from same-sex couples the right to be granted marriage licenses and thus legally to use the designation ‘marriage,’ ” the judge wrote, adding, “Proposition 8 serves no purpose, and has no effect, other than to lessen the status and human dignity of gay men and lesbians in California.”

BTW, all three judges agreed that the defendants request that the judge Vaughn Walker recuse himself was pretty much a crock of sh%$.

The precedent on this case is fairly straightforward, the Supreme Court ruling on Colorado’s Amendment 2 about 15 years ago, where they said that voters can’t strip rights from a group just because they make them feel squicky, the so-called “rational basis” test.

The question now is whether or not this case goes to the full appeals court (en banc), or to the Supreme Court.

And while we are on recusals.  Seeing as how Scalia has publicly, and repeatedly, made comments explicitly stating that he has pre-judged the matter, how about he recuse his flabby ass from the case?

If SCOTUS takes it, it will be closer though, as O’Connor has been replaced by Alito, who is an almost certain vote against gay civil rights.

And While We Are Talking About White House Spelunking…

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It looks like the White House is preparing to cave to the Conference of Catholic Bishops on reproductive rights:

A top adviser to President Barack Obama’s re-election campaign suggested on Tuesday that the administration was open to working with Catholic hospitals and universities over their objections to providing birth control services to women.

“I’m less concerned about the messaging of this than to find a resolution that makes sense,” David Axelrod said on MSNBC.

“I heard earlier Joe [Scarborough] say, ‘Well, there may be compromises that can be reached.’ We have great respect for the work that these religious institutions do. … We certainly don’t want to abridge anyone’s religious freedoms, so we’re going to look for a way to move forward that both provides women with the preventative care that they need and respects the prerogatives of religious institutions,” he explained.

Jeebus.

It’s like capitulation is so firmly engrained in their DNA that they can’t stand their ground even when it is to their advantage to do so.

These days, the Catholic Bishops is as likely to support Democrats as the Chamber of Commerce, so all you are doing is pissing off your base.

Am I the Only One to Call False Flag?

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Symantec with an assist from the FBI, is now alleging that a group of hackers stole the source code for pcAnywhere and attempted to shake them down for $50,000.

OK, I get that. But what I doubt is the claim, coming from either the software firm, or the boyz in the Hoover building, that the miscreants are, “group of hackers associated with Anonymous and AntiSec.”*

As MP at the Stellar Parthenon BBS observes, “Anyone claiming to be raising funds in any way on behalf of Anonymous is about as kosher as bacon-wrapped shrimp.”

I have no doubt that Symantec got hacked. I’ve suffered with their software at a number of work places, but my sense is that any mention Anonymous is something that the FBI spent a lot of time manufacturing.

After all, it looks much better in a personnel file at annual review time.

*Tin foil hat. When I originally read the first article, there were constant mentions to anonymous, and now they are all gone.

I Guess She Could Not Handel the Pressure

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Yes, the right wing hack hired by Komen as their VP for public policy, Karen Handel, has>called it quits, or as Erin Gloria Ryan so clearly states, Noted Liar Karen Handel Defensively Resigns From Komen, with a self-indulgent letter of resignation where she denies it being about politics.

I’d say, “Cry me a river,” but the letter was more like “Water Music”.*

The thing is, the folks at Komen knew that she was a right wing political hack.  Not only had she campaigned for governor on defunding Planned Parenthood before Komen hired her, but she also has a long history of voter suppression and civil rights violations so bad that the Bush Justice Department called her out.

She was clearly a right wing political hack, and Komen chose to let Ari Fleischer pimp her for a cushy office job, and they knew what she was.

There are lots of better breast cancer charities out there.

Even ignoring politics, the corporate pink-washing Komen does for companies probably contribute to higher cancer rates (KFC? Seriously?) should look elsewhere.

When you add in their politics, any woman who gives them money is like a chicken donating to Colonel Sanders, because they are a a petri dish for right wing zealots who think that the problem with the world is that, “women [are] not being properly punished for having unapproved sex.”

*OK, that’s it for the Handel puns.

And While We are Talking Bankster Corruption

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The Missouri AG has filed criminal indictments for felony forgery over “robo-signing”.

This is a remarkable development, because while what on pretty clearly was forgery, but I never expected someone to actually prefer criminal charges:

“Linda Greene” has become a household word to those on the foreclosure fraud beat. And it turns out, for once, that the work of diligent investigators such as the foreclosure attorneys around Max Gardner, and investigators like Lynn Szymoniak and Lisa Epstein led to press coverage which in turn spurred prosecutors to act.

What is striking about the indictment by a Missouri grand jury is that the Missouri AG Chris Koster has decided to challenge the banks’ party line that robosigning and related abuses were mere “paperwork problems.” He’s called robosiging what it is: forgery. The 136 count indictment is for forgeries and false declarations, and the targets are LPS subsidiary and its founder and past president, Lorraine Brown.

About f%$#ing time.

Foreclosure Sellout Settlement Update

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Well, over 40 states have signed onto the deal, but the biggies, New York, California, Nevada (highest foreclosure rate in the nation), and Delaware (all the banks are covered by Delaware law, and Beau Biden is Joe’s kid), are not (yet) a part of this deal, so the “deadline” has been pushed back two weeks.

We know the deal is bad.

We know that it’s a sellout because:

That being said, the fact that this deal is pitting one part of Wall Street against the other, with, asset management group of SIFMA frantically lobbying negotiators for a better deal,  is a welcome development.

We also have the fact that the deal  favors 2nd mortgages, generally held by the banks, would be favored over 1st mortgages, which the judge who has to approve the deal might see as an illegal taking.

FWIW, if any of the biggies move, it will be California first, because (when current Governor Jerry Brown when he was AG, thanks Governor Moonbeam) they already cut a deal with Bank of America/Countrywide, the largest mortgage lender in the state, which eliminated most pre-2008 liability, so they have the least to gain from holding out.

What a Surprise

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The USAF is determined to avoid having a meaningful close support capability. Case in point, they are cutting 5 to 10 A-10 squadrons:

The A-10 Thunderbolt II provides the type of close-air support that ground-pounders love and the Taliban dread. Although the A-10s are workhorses in the war on terrorism, the Air Force in its new budget request is planning to get rid of five squadrons.

As part of the Defense Department’s efforts to trim close to $500 billion in spending over the next decade, defense officials said Friday that the service intends to cut five A-10 tactical squadrons and two other squadrons as well.

The Thunderbolt squadrons to be stood down encompass one active-duty, one Reserve and three National Guard units. The remaining two squadrons disappearing are a Guard F-16 tactical unit and an F-15 training squadron.

Let’s be clear about this: The F-35 and the F-22 cannot take over this role effectively.

The A-10 can deploy and loiter over the battlefield for hours below 15,000 feet, while the two supersonic stealth jets can loiter for something like 15 minutes before calling bingo fuel.

Well, This Has Me Confused

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New York Attorney General Eric Schneiderman has filed suit against the big banks for fraudulent use of the MERS electronic title registry.

He is claim fraud, deception, and illegal evasion of recording fees (to the tune of more than $2 billion on just the fees).

This is interesting. It appears that the settlement, for which Schneiderman is the most prominent hold out would not shut down any suits already filed.

To my mind, this is likely a bad thing, because it implies that Schneiderman is getting his ducks in a row in preparation for signing onto the sellout settlement with the banks.

I just hope that I am wrong about that last bit.

Full release from the AG after the break:

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings  

Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

 

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.
The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.
“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.
MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.
MERS’ conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.
The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:
  • MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
  • MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
  • MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
  • MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
  • The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.
The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices. 
The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

This is an Epic Prank

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Righteous!

Something to add my rules to live by: Don’t use prison labor to do graphic design for law enforcement:

How did an image of a pig — the infamous ’60s-era epithet by protesters for police officers — wind up on a decal used on as many as 30 Vermont State Police cruisers?

State officials Thursday pointed to the failure of the quality assurance office within the Vermont Correctional Industries Print Shop in St. Albans to detect a prisoner-artist’s addition made four years ago to the traditional state police logo. A spot on the shoulder of the cow in the state emblem was modified into a pig.

An investigation has begun into how the computer program was improperly modified to insert the image, Vermont Corrections Commissioner Andy Pallito said.

I really hope that whoever did this does not get caught.

Seriously, Susan G. Komen is Looking Worse and Worse

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It looks like their latest gaffe, in which they defunded Planned Parenthood, was masterminded by Ari Fleischer:

Ari Fleischer, former press secretary for George W. Bush and prominent right-wing pundit, was secretly involved in the Komen Foundation’s strategy regarding Planned Parenthood. Fleischer personally interviewed candidates for the position of “Senior Vice President for Communications and External Relations” at Komen last December. According to a source with first-hand knowledge, Fleischer drilled prospective candidates during their interviews on how they would handle the controversy about Komen’s relationship with Planned Parenthood.

Fleischer’s relationship with Komen and the Planned Parenthood controversy was previously undisclosed. He confirmed to ThinkProgress his recent role in filling a key communication position at Komen. Fleischer stressed, however, another communications firm (Ogilvy PR) was retained by Komen to deal with crisis communications over the last few days and he has not been involved.

Seriously, this just get better and better.

Komen for the Cure isn’t a charity, it’s yet another Republican full employment program masquerading as a charity.

I’m Expecting an Alien Tort Claim Act Against Apple

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William Black makes the convincing case that the widespread abuse of contractors’ employees in the manufacture of Apple products is the product of deliberate management decisions:

Apple has released a report on working conditions in its suppliers’ factories. It highlights a form of control fraud that criminology has identified but rarely discussed. I write overwhelmingly about accounting control fraud because it drives our recurrent, intensifying financial crises. The primary intended victims of accounting control frauds are the shareholders and the creditors. Other private sector control frauds target customers (e.g., George Akerlof’s 1970 article on “lemons”), and the public (e.g., the unlawful disposal of toxic waste, illegal logging, and tax fraud).

Anti-employee control frauds most commonly fall in four broad, but not mutually exclusive, categories – illegal work conditions due to violation of safety rules, violation of child labor laws, failure to pay employees’ wages and benefits, and frauds based on goods and loans provided by the employer to the employee that lock the employee into quasi-slavery. Apple has just released a report on its suppliers that shows that anti-employee control fraud is the norm. Remember, fraud is hidden and is often not discovered and Apple did not have an incentive to make an exhaustive investigation. Apple calls its inquiries “audits” and it is apparent that most of its information comes from reviewing written and electronic records at its suppliers. That is exceptionally revealing. The suppliers know that they can defraud their employees with such impunity that they don’t even bother to get rid of records that prove their frauds. Apple has resisted making public its suppliers and the report refused to identify which suppliers committed which violations – often for years despite repeated, false promises to end their anti-employee control frauds. Two other facts are evident (but not reported). First, Apple rarely terminates suppliers for defrauding their employees – even when the frauds endanger the lives and health of the workers and the community – and even where Apple knows that the supplier repeatedly lies to Apple about these fraudulent and lethal practices. Second, it appears unlikely in the extreme that Apple makes criminal referrals on its suppliers even when they commit anti-employee control frauds as a routine practice, even when the frauds endanger the worker’s and the public’s health, and even when the supplier repeatedly lies to Apple about the frauds. Apple’s report, therefore, understates substantially the actual incidence of fraud by the 156 suppliers (accounting for 97% of its payments to suppliers).

The ATCA has been used in cases like this, and what is clearly a policy of deliberate blindness to these abuse by Apple, seems to me to bean opening for a very well deserved lawsuit.

You Have Got To Be Kidding

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Guess what, the heavy duty Randroids out there are now going after their enemy du jour, George Bailey, president of the Bailey building and loan:

It’s been a standing joke for ages to claim that some free-market Randroid was so clueless that he or she would watch “It’s A Wonderful Life” and cheer for Mr. Potter while hissing at George Bailey. It would be the equivalent, say, of someone hoping that Scrooge would tell the Ghosts of Christmas Past, Present and Future to sod off or that Spielberg would leave E.T. to die alone in a ditch in Southern California or that Dorothy would be stranded in Oz for the rest of her life as the Wizard’s concubine.

But, of course, this, or so everyone thought, was all just cute and snarky hyperbole. No one, not even the High Priestess Ayn Rand herself, could possibly actually watch “It’s A Wonderful Life” and come away not sobbing like a child but instead thinking that George Bailey was a social parasite spouting vile commie propaganda against the heroic Mr. Potter, the job creator who knew what was really best for the people of Bedford Falls.

Yes, they are demonizing the hero, played by honest to God war hero Jimmy Stewart, of Frank Capra’s treacly bit of cinema, It’s a Wonderful Life, which is considered by many (not me) to be an American cinematic icon.*

Seriously, what the f%$# are wrong with these folks?

I’m beginning to understand what led Ayn Rand to have a doting crush on one William Edward Hickman, a monster who kidnapped and dismembered a twelve year old girl, it’s because Randian libertarianism is not so much a philosophy as it is a beard to conceal from the rest of the world that they are sociopaths.

*Personally, I’m not a big fan of the movie, and it was viewed as a resounding failure when released.  My interest was in the fact that it became popular when it passed out of copyright, and TV stations showed it repeatedly in the holiday season, creating a classic.  My interest is how a series of court rulings allowed it to be snatched out of the public domain.