Year: 2013

Big Brother in Oakland, California

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Following protests at the Port of Oakland, the Port set up a surveillance network on their facilities, law enforcement proceeded to expand the network to cover most of the city:

With this city repeatedly roiled by civil protests and the public’s attention sharply focused on government surveillance, local officials are pushing forward with a federally funded project to link surveillance cameras, license-plate readers, gunshot detectors, Twitter feeds, alarm notifications and other data into a unified “situational awareness” tool for law enforcement.

The Domain Awareness Center, a joint project between the Port of Oakland and city, started as a nationwide initiative to secure ports by networking sensors and cameras in and around the facilities. The busy port is one of seven U.S. maritime facilities that the Department of Homeland Security considers at highest risk of a terrorist attack.

Since its inception in 2009, the project has ballooned into a surveillance program for the entire city. Some officials already have proposed linking the center to a regional Department of Homeland Security intelligence-gathering operation or adding feeds from surveillance cameras around the Oakland stadium and arena complex.

As Digby pithily observes, “We just can’t have enough surveillance centers what with all the protests … er terrorists.”

If you build it, law enforcement will use in ways that it was not originally intended for.

This May be the Best Take on Too Big to Fail Ever

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Mark Roe at Harvard has concluded that in addition to everything else, to big to fail (2B2F) is a petri dish for incompetent insulated management:

Corporate governance incentives at too-big-to-fail financial firms deserve systematic examination. For industrial conglomerates that have grown too large, internal and external corporate structural pressures push to re-size the firm. External activists press it to restructure to raise its stock market value. Inside the firm, boards and managers see that the too-big firm can be more efficient and more profitable if restructured via spin-offs and sales. But for large, too-big-to-fail financial firms (1) if the value captured by being too-big-to-fail lowers the firms’ financing costs enough and (2) if a resized firm or the spun-off entities would lose that funding benefit, then a major constraint on industrial firm over-expansion breaks down for too-big-to-fail finance.

His insight is two fold.

First is the point made by plenty of economists that 2B2F institutions are able to borrow money at lower rates, because, notwithstanding the law, if they implode, their creditors expect to be the beneficiary of a government bailout, because the consequences of not doing so are perceived to be catastrophic.

The second point is far more interesting, and original. He believes that one of the constraints on executive behavior is the potential takeover by any of the many vultures out there (Icahn, Pickens, etc.), and that they are too big to be taking:

These lower financing costs from the too-big-to-fail subsidy are a shadow poison pill — the corporate governance defense that managers and boards have used to ward of unwanted takeovers in the industrial sector. Worse, the shadow financial pill impedes restructurings more strongly than a conventional poison pill. It impedes not just outsiders, as does the conventional pill, but insiders as well — a controlling shareholder where there is one, the board of directors and the CEO where there is no controlling shareholder — even if restructuring the firm would be operationally wise.

James Kwak further expands on this by noting that a corporate takeover is effectively impossible at this scale:

Not so with too-big-to-fail banks. For one thing, TBTF banks are impossible to acquire in one piece: no other bank could absorb JPMorgan, even if there weren’t the rule against a banking conglomerate having more than 10 percent of all U.S. deposits. The other option is to engineer a breakup, which is what all manner of shareholder advocates have been arguing for. But, Roe argues, if being too big to fail is your competitive advantage, that would kill the golden goose. Therefore, the market for control doesn’t work properly, and these behemoths continue bumbling along their way—not just threatening the financial, but doing a lousy job at their job of providing credit to the economy.

So, even if you believe that basic market forces serve to regulate corporate governance, (I don’t) the market breaks down at this scale, and government intervention is essential.

Abenomics is Working

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If you believe, as I do, that much of the cause of the lost decade(s) in Japan is deflation/disinflation, then the news of consumer prices rising in Japan is an unalloyed good:

Consumer prices in Japan rose at the fastest pace in five years in October, suggesting policymakers’ attempts to end years of deflation are working.

Consumer prices, excluding food, rose 0.9% from a year earlier. Prices have now risen for five months in a row.

Japan has been battling deflation, or falling prices, for best part of the past 20 years.

It is seen as a major drag on its economy and policymakers have unveiled a series of measures to end the cycle.

While falling prices may sound good to those experiencing inflation, they hold back economic growth as consumers and businesses tend to put off purchases in the hope of getting a cheaper deal later on, which hurts domestic demand.

………

Japan’s central bank has set a target of achieving an inflation rate of 2%.

I think that the central bank is being too timid. I think that their target, at least over the next 2-5 years, should be more, somewhere between 4% and 6%, but the admittedly anemic 0.9% rate is better that what has been the trend for a very long time.

Linkage

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China’s Second Aircraft Carrier under construction  (China Defense Blog) Domestically manufactured, and it might have a catapult.
India Hits ‘Milestone’ with Launch of Own Aircraft Carrier (Defense News) 
J-2X Hot-Fire-Tests First Additive-Manufactured Part (Aviation Week) 3-D printing of high temperature, high strength components.  This is a big deal.
Caseless and case telescoped ammunition as a part of the Lightweight Small Arms Technologies (LSAT)

LSAT supporting materials:

You can see the 26 page PowerPoint for the program here, and a 2 page brochure here.

The Libertarian Paradise in Just One Story

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A couple in Utah was billed $3500.00 for a negative review of a vendor who never shipped what they ordered:

A Utah couple is facing an uphill legal battle after being slapped with a $3,500 fine by an online retailer for posting a negative review of the company years after it failed to ship the products they ordered.

 CNN reported on Friday that John and Jen Palmer’s problems with Klear Gear began in 2008, when John canceled a purchase he made through the company after it failed to deliver his order within 30 days. The Palmers then panned the company in a review on the consumer-complaint site Ripoff Review, saying, in part, that it was impossible to reach someone at Klear Gear by phone.

 But earlier this year, Klear Gear contacted the Palmers in writing, saying they violated the company’s “non-disparagement clause” and threatening them with the fine if they did not remove the negative review.

 “This is fraud,” Jen Palmer told KUTV-TV. “They’re blackmailing us for telling the truth.”

 KUTV also reported that the company’s terms of service stated, “To prevent the publishing of libelous content in any form, your acceptance of this sales contract prohibits you from taking any action that negatively impacts Kleargear.com, its reputation, products, services, management or employees.”

 However, Yahoo News reported that the clause seemingly only went into effect this year, only for the language to be removed from the website.

 When Ripoff Report refused to remove the review, Klear Gear contacted major credit agencies and listed the $3,500 fine as a “failure to pay,” hampering the couples’ credit rating. The company told KUTV via email that its request that the Palmers erase their negative comment was “a diligent effort to help them avoid the fine.”

So, first, the provision of the contract is illegal, second, it wasn’t in force at the time that they made an order, and all the private entities involved, Klear Gear, Ripoff Report (which demanded a large payment to pull the post), and the credit rating agencies (’nuff said), have decided to f%$# the customer.

This is what happens when the contracts achieve primacy over basic human rights.

My only suggestion to the Palmers would be four letters, RICO, but I am an engineer, not a lawyer, dammit!*

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

Austerity for Greeks, Welfare for the Germans

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Following elections, because Angela Merkel’s traditional partner, the FDP was shut out of the Bundestag, she had to form a coalition government with her traditional opposition, the SDP.

As a part of the coalition agreement she has agreed to create a minimum wage of €8.50 and a partial lowering of the retiring age to 63:

It was a “Six-Eye Negotiation” – in German, an “Unter Sechs Augen Gespraech”. Three leaders, and so three pairs of eyes, sat down together in the small hours in a private room and haggled amongst themselves, eyeball to eyeball.

 In the 185-page agreement which resulted, the Social Democrats (SPD) came away with a minimum wage of 8.50 euros (£7.10) an hour, uniformly applied across the country. The counter-argument had been that insisting on the minimum wage in the old East Germany would dent the region’s ability to attract work.

 The SPD’s chief negotiator Sigmar Gabriel also got a lowering of the retirement age and some extra public spending. That may be welcomed by those outside Germany, who have argued that the country is “beggaring its neighbours” by not increasing German spending to match the country’s amazing excess of exports over imports.

 The SPD also secured the introduction of a minimum percentage of women on German company boards.

 For her part, Chancellor Merkel got an acceptance from the SPD that its election demand of higher taxes on the rich would not happen. She also emphasised that the new government would continue to balance its budgets – there will be no move away from the belief that spending is tied to revenue.

I think that there is a fair amount consequences, some intended, and some not, to this.

First, a minimum wage of €8.50 will raise the wages of 17% of the workforce, with much of the effect in the service industry.

When one considers the impact on wages of people whose wages are just above the new minimum wage (probably about €10.00) it means that something like ¼ of the workforce will see a raise from this, which, in the long run may have negative political consequences for Merkel’s CDU.

On the other side of the political consequences, the SDP’s capitulation on higher taxes of the wealthy may play to the advantage of the left wing Die Linke, which is really the standard bearer of the democratic Socialism now eschewed by the “3rd Way” movement of the SDP in recent years.

One of the artifacts of German taxation is that it is fairly regressive, and wages of the bottom 90% have decreased in recent years:

According to a DIW study published last year, wages fell in real terms for all but the top 10 percent of earners in Germany between 2005 and 2010. This had a particularly acute effect on those earning the least. “As a rule, the lowest earners spend the highest portion of their income,” study co-author Karl Brenke explains.

Low-wage workers also end up spending a much higher proportion of their income on mandatory health insurance, as any income above €46,000 in annual salary is not subject to premium payments. Thus, while a senior engineer earning €150,000 a year is only required to pay 6.6 percent of his total income in social security contributions, a laborer who makes only a tenth as much ends up paying 20.7 percent.Low-wage workers also end up spending a much higher proportion of their income on mandatory health insurance, as any income above €46,000 in annual salary is not subject to premium payments. Thus, while a senior engineer earning €150,000 a year is only required to pay 6.6 percent of his total income in social security contributions, a laborer who makes only a tenth as much ends up paying 20.7 percent.

The collapse of the FDP was in part a reaction to this reality, as it is the most Thatcherite of the major parties.

Note also that this coalition agreement is exactly the opposite of the normal prescription to debt crises in the Euro zone: reductions in spending, increases in retirement age, and reductions in the minimum wage.

The next country to receive a demand of austerity from IMF and the Euro zone troika will likely highlight the inherent hypocrisy of such a demand.

Making Latkes for Thanksgivukah

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Latkes from scratch at my mother-in-law’s.  (THANK GOD FOR FOOD PROCESSORS)

Unfortunately, because this is a collaborative cooking experience, there is a shortage of pans, so I am relegated to a tiny pan which can only handle 3 latkes at a time.

Chanukah in Thanksgiving, gotta love it.

No specific recipe for the latkes, just potatoes, onions, eggs, matzoh meal, salt, and pepper in proportions dictated by my gut.

My only specific advice is to grate the onions first, because the onions have a chemical that prevents the grated potatoes from changing color in the air.

Posted via mobile.

Linkage, Thanksgivukah Edition

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Have some exquisite music.

The camera work is a bit busy though.

Bye Bye Silvio

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Berlusconi has been expelled from the Italian parliament following his conviction for tax fraud:

The Italian Senate has voted to expel ex-Prime Minister Silvio Berlusconi from parliament with immediate effect over his conviction for tax fraud.

Berlusconi, who has dominated politics for 20 years, could now face arrest over other criminal cases as he has lost his immunity from prosecution.

He told supporters in Rome it was a “day of mourning” for democracy.

Ahead of the vote, he vowed to remain in politics to lead his Forza Italia in a “fight for the good of Italy”.

A defiant Berlusconi told supporters gathered outside his Rome residence that “no political leader has suffered a persecution such as I have lived through”.

He said: “It is a bitter day, a day of mourning.”

Central to Berlusconi’s success has always been his near monopoly on commercial TV in Italy, particularly when juxtaposed with his control of the state TV networks after he was first elected.

What the need to do now is to pass regulations preventing this ghastly intersection of monopoly media ownership and electoral politics from recurring.

Any Guess as to Which SEC Senior Official is About to Jump to the Private Sector

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Because the Securities and Exchange Commission has delayed a revolving door regulation:

Months ago, bowing to concern about regulators who leave government and then work their former colleagues on behalf of industry, the Securities and Exchange Commission (SEC) announced that it was tightening restrictions on the revolving door.

Specifically, the SEC decided to close a loophole in the ethics rules that allowed some “senior” SEC personnel to lobby the agency immediately after leaving instead of staying on the sidelines for a year or more, as employees at other federal agencies must do. The change in the rules—revoking a longstanding exemption for some SEC officials—appeared to be a rare stand against the revolving door at an agency that has long blurred the lines between the regulators and the regulated.

But not so fast.

A notice published in Monday’s edition of the Federal Register said that the Office of Government Ethics (OGE) was withdrawing the new rule at “the request of the SEC” so that the agency could have more time to “effectively educate affected employees before the exemption revocation takes effect.”

The rule, which was published as “final” on October 3, had been scheduled to take effect on January 2.

The ethics office said it expects to republish the rule in January 2014, but it then would take another 90 days for the rule to go into effect, according to Monday’s announcement. As a result, SEC employees who would be affected by the rule change—including supervisory accountants, attorneys, economists, analysts, and administrative specialists—will have even more time to take advantage of the loophole. As long as they leave before the rule change takes effect, they’ll still be able to lobby the agency during their first year out.

For the ethics office to withdraw a rule after it had been adopted but before it could take effect appeared to be an unusual event. POGO searched the Federal Register going back to 1994 (the earliest year available in the Government Printing Office’s online archives) and found no other OGE notice containing the phrase “Withdrawal of Final Rule.” We asked an OGE spokesman how frequently this has happened, but he declined to comment.

Not feeling hope and change here.

Somewhere in Hell, J. Edgar Hoover is Laughing

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Because Glenn Greenwald’s latest scoop is that the NSA has been running the equivalent of Hoover’s COINTELPRO program of spying and blackmail:

The National Security Agency has been gathering records of online sexual activity and evidence of visits to pornographic websites as part of a proposed plan to harm the reputations of those whom the agency believes are radicalizing others through incendiary speeches, according to a top-secret NSA document. The document, provided by NSA whistleblower Edward Snowden, identifies six targets, all Muslims, as “exemplars” of how “personal vulnerabilities” can be learned through electronic surveillance, and then exploited to undermine a target’s credibility, reputation and authority.

 The NSA document, dated Oct. 3, 2012, repeatedly refers to the power of charges of hypocrisy to undermine such a messenger. “A previous SIGINT” — or signals intelligence, the interception of communications — “assessment report on radicalization indicated that radicalizers appear to be particularly vulnerable in the area of authority when their private and public behaviors are not consistent,” the document argues.

 Among the vulnerabilities listed by the NSA that can be effectively exploited are “viewing sexually explicit material online” and “using sexually explicit persuasive language when communicating with inexperienced young girls.”

Note that notwithstanding the claims from an NSA spokes bot that, “Without discussing specific individuals, it should not be surprising that the US Government uses all of the lawful tools at our disposal to impede the efforts of valid terrorist targets who seek to harm the nation and radicalize others to violence,” these people are not accused of being terrorists, planning terrorism, or offering material support of terrorism.

They are simply called, “Radicalizers,” people who say things that they don’t like. People who hold up a mirror to the actions of the United States, and show that we as a society do not comport to our stated ordeals.

In other words, people like Martin Luther King, who was a major target of COINTELPRO.

They went through his sex life, and, after he was awarded the Nobel Peace Prize, attempted to convince him to commit suicide.

Note also, that at least one of the targets was a, “US Person”.

So, we are now targeting citizens or legal residents for blackmail from the state security apparatus with No Finding of Wrongdoing or Support for Terrorism.

Our state security apparatus is completely out of control.

Toronto Has Officially Jumped the Shark

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You know that it’s true, because Florida, home of the hanging chad and governor Batboy, is now looking down on Canada’s largest city:

A north Florida sheriff has filed drug charges against a local mayor, saying Bradford County “isn’t Toronto.”

Hampton Mayor Barry Layne Moore was arrested Monday afternoon in Polk County on a Bradford County warrant.

Bradford County Sheriff Gordon Smith appeared to draw a comparison between Moore and Toronto Mayor Rob Ford, who has admitted to smoking crack cocaine while he was in a drunken stupor.

Authorities say Moore faces charges of possessing and selling Oxycodone.

Congratulations Toronto, you are now the butt of jokes from Floridians.

Your fall is complete.

Today’s Must Read

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It’s, “Here’s why Wall Street has a hard time being ethical,” in the Guardian, and here is the money quote:

That’s the paradox at the core of the settlements we’re seeing: where is the real responsibility? Others were doing it, yes. Banks should be fined, yes. But somebody should be charged. Yet the people who really should be held accountable have not. They are the bosses, the managers and CEOs of the businesses. They set the standard, they shaped the culture. The Chuck Princes, Dick Fulds, and Fred Goodwins of the world. They happily shepherded and profited from a Wall Street that spun out of control.

A precedent needs to be set, to slow down Wall Street’s wild behavior. A reminder that rules are there to be followed, not exploited. The managers knew what was going on. Ask anyone who works at a bank and they will tell you that.

The excuse we have long accepted is ignorance: that these leaders couldn’t have known what was happening. That doesn’t suffice. If they didn’t know, it’s an even larger sin.

Go read the rest.

F%$# Him. Walk Away, and He Will Be Hanging from a Lamp Post in 9 Months

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It looks like Hamid Karzai is issuing new demands for a status of forces agreement:

Efforts by the United States and Afghanistan to finalize a long-term security arrangement appeared on the brink of collapse Monday as Afghan President Hamid Karzai made a new set of demands, and the Obama administration said it would be forced to begin planning for a complete withdrawal of U.S. forces at the end of 2014.

In a two-hour meeting here, Susan E. Rice, President Obama’s top national security adviser, told Karzai that if he failed to sign the bilateral security agreement by the end of this year, the United States would have “no choice” but to prepare for withdrawal, according to a statement by the National Security Council in Washington.

Karzai told Rice that he would sign only after the United States helps his government begin peace talks with the Taliban and agrees to release all 17 Afghan citizens being held in the Guantanamo Bay detention center in Cuba, according to Afghan and U.S. officials.

In addition to those new demands, the Afghan leader reiterated that he will not sign if “another [U.S.] soldier steps foot into an Afghan home,” Karzai spokesman Aimal Faizi said. The United States has already promised to show “restraint” in “home entries” by U.S. troops and to carry them out only in conjunction with Afghan troops, but the tactic remains a part of U.S. operations against some insurgents here.

If I were a cynical son of a bitch, I would be thinking that he is deliberately trying to encourage the Taliban to mount attacks to against the Afghan Presidential Elections in the Spring, so that he can hang onto power.

Wait ……… I AM a cynical son of a bitch.

Seriously. Just call his damn bluff, and either he capitulates, or the Taliban plays piñata with his mutilated corpse.

Either way, it is a win for the United States, and for the Afghan people.

Sounds Good, but I do not Expect Anything Meaningful to Come of This

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We’ve seen this before.

The White House puts out a potentially significant rule, or rule change, and the right wing noise machine cranks up, and they back off.

This is why I’m dubious that their place greater restrictions on tax-exempt political groups will amount to much:

The Obama administration proposed new rules on Tuesday to rein in tax-exempt groups that have transformed the U.S. political landscape in recent years by harnessing hundreds of millions of dollars in anonymous donations to influence elections.

The proposal would alter definitions in the tax code that allow limited campaign and fundraising activities by the tax-exempt groups, some of which have been at the center of allegations that the Internal Revenue Service targeted conservative Tea Party groups for extra scrutiny.

These tax-exempt “social welfare” groups, organized under section 501(c)(4) of the tax code, mushroomed after a 2010 U.S. Supreme Court ruling that relaxed campaign finance rules. Part of their appeal is that the groups do not have to disclose the identities of their donors as long as they spend less than half their time and money on political activities.

Critics say the relaxed rules have opened the door to the abuse of campaign finance rules meant to curb the influence of wealthy donors in U.S. politics.

………

U.S. government officials have struggled for years to determine what qualifies as political activity. The proposed rules would more clearly define “candidate-related political activity” and also ask for public comment about how much political spending these groups should be allowed to do. The proposed rules introduce several bright-line tests that would determine when a 501(c)(4) is doing too much campaign activity and is violating its tax-exempt status.

Among these new definitions, advertising that names a candidate 60 days before a general election would count as political activity. Certain contributions that can now be made anonymously by these groups may need to be reported. Any “voter guides” that refer to a candidate would be considered political activity.

Also, any event within 60 days of a general election at which a candidate appears as part of the program would be a political event.

“This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by social welfare organizations,” Mark Mazur, Treasury assistant secretary for tax policy, said in a statement.

If they implement this, it would be good first step, but I expect it to be watered down beyond recognition.

I Guess that You Get il Papa Buono About Once Every 50 Years

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Pope Francis just went rhetorically postal on Anglo-Saxon hyper capitalism:

Pope Francis on Tuesday sharply criticized growing economic inequality and unfettered markets in a wide-ranging and decidedly populist teaching that revealed how he plans to reshape the Catholic Church.

In his most authoritative writings as pontiff, Francis decried an “idolatry of money” in secular culture and warned that it would lead to “a new tyranny.” But he reserved a large part of his critique for what he sees as an excessively top-down Catholic Church hierarchy, calling for more local governance and greater inclusiveness — including “broader opportunities for a more incisive female presence in the Church.”

………

On Tuesday, he showed a willingness to use tough language in attacking what he views as the excesses of capitalism. Using a phrase with special resonance in the United States, he strongly criticized an economic theory — often affiliated with conservatives — that discourages taxation and regulation.

“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Francis wrote in the papal statement. “This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.”

“Meanwhile,” he added, “the excluded are still waiting.”

Although Francis has previously raised concerns about the growing gap between the wealthy and the poor, the direct reference to “trickle-down” economics in the English translation of his statement is striking.

The phrase has often been used derisively to describe a popular version of conservative economic philosophy that argues that allowing the wealthy to run their businesses unencumbered by regulation or taxation bears economic benefits that lead to more jobs and income for the rest of society. Liberals and Democratic officials have rejected the theory, saying it is contradicted by economic evidence.

………

Francis’s language on the economy has been far more accessible than that of Benedict, a theologian who wrote primarily in thick books hard to untangle for the regular lay­person. And Pope John Paul II’s warnings on economic inequality were swallowed at times by his war on Communism, a far more dangerous problem in the church’s eyes because of its anti-religious bent.

John Paul II’s “war on Communism” was a reactionary war against the idea that the church was to be a countervailing force against the excesses of capitalism.

It’s nice to see that some of the less antediluvian members of the Catholic clergy managed to avoid JP II’s purges.