U.S. Welcomes African Union's Call to Action on Mauritania. By Gordon Duguid, Acting Deputy Department Spokesman, Office of the Spokesman
US State Dept, Bureau of Public AffairsWashington, DC, March 26, 2009
The United States welcomes and supports the March 24 African Union Peace and Security Council’s reaffirmation of its decision to impose targeted sanctions on civilian and military individuals that maintain the unconstitutional status quo in Mauritania. The coup d'etat in Mauritania has proven to be a dangerous and destabilizing precedent for the continent and we join the African Union in its rejection of unconstitutional changes in government.
PRN: 263
Thursday, March 26, 2009
Federal President's "government first" attitude puts food safety at risk
Food Fight, by Jim Prevor
Obama's 'government first' attitude puts food safety at risk.
The Weekly Standard, Mar 20, 2009 12:00:00 AM
While nominating Dr. Margaret Hamburg as head of the FDA and appointing Joshua Sharfstein as her deputy, President Obama showed a laudable passion as he addressed the nation regarding food safety. Unfortunately, his understanding of the situation is incorrect and his professed goal is counterproductive.
President Obama showed he is blinded by the liberal conceit that the government is the most important factor in food safety: "There are certain things only a government can do. And one of those things is ensuring that the foods we eat are safe and don't cause us harm."
This is nonsense. The government does not farm or process anything, it does not distribute, market or cook, and it cannot possibly monitor the hundreds of millions of people in over 100 countries and every state, from field to fork, that have a role in food safety.
Food in the United States is generally safe for four reasons: First, because there are moral precepts that make the vast majority of producers intent on doing no harm to their customers. Second, because the value of a brand and a company dissipate rapidly if they sicken or kill their customers. Third, because those who prepare meals at home mostly love those they cook for and so try to serve wholesome foods. Fourth, because the United States is an affluent, western society with advanced technologies and procedures for making foods safe and we are both willing and able to spend money to have safer food.
Of course, government is important. It sets up the legal and economic ground rules within which we operate. But its specific effect on food safety is dramatically overstated by those, like the president, who seem able to identify virtue only in public employees.
What else could the president mean when he says, "The men and women who inspect our foods it is because of the work they do each and every day that the United States is one of the safest places in the world to buy groceries"? It seems the president has this notion that the entire private sector for food production and distribution is filled with bad actors being held back by an army of federal inspectors.
The president says this but in the same address he contradicts himself by pointing out that "the FDA has been underfunded and understaffed in recent years, leaving the agency with the resources to inspect just 7,000 of our 150,000 food processing plants and warehouses each year. That means roughly 95% of them go uninspected." Obviously it is impossible to both hold that we barely inspect anything and yet it is these inspections that are responsible for the overwhelmingly safe food we have in America.
The president either misunderstands or misrepresents the problem. He explains that "in recent years, we've seen a number of problems with the food making its way to our kitchen tables. In 2006, it was contaminated spinach. In 2008, it was salmonella in peppers and possibly tomatoes. And just this year, bad peanut products led to hundreds of illnesses and cost nine people their lives these incidents reflect a troubling trend that's seen the average number of outbreaks from contaminated produce and other foods grow to nearly 350 a year--up from 100 a year in the early 1990s."
The choice of the early 1990s as the baseline is telling. For it was only in 1993, during the horrible Jack-in-the-Box food safety outbreak in which four children died, that staff from the Centers for Disease Control and Prevention used a technique of DNA fingerprinting known as pulsed-field gel electrophoresis (PFGE) to establish that the sick people all had the same strain and that the strain matched the strain of E. Coli found in the hamburger patties.
Up to that point, food safety outbreaks were typically identified in the context of a local event such as a banquet, where many people may have gotten sick from eating the same contaminated food. Before we used PFGE, there was simply no way to tie together illnesses in different cities and states by people who had eaten many different things at many different times.
Even after PFGE was known to work, there was no easy way to share that data. After the Jack-in-the-Box outbreak, the CDC established standardized PFGE techniques and began development of PulseNet, a computer bulletin board at CDC headquarters in Atlanta where state labs could share and compare their PFGE findings. Officially opened in 1996, the system hobbled on for many years--the states didn't collect the proper data; and few scientists at the state laboratories had the expertise or experience to use PFGE and PulseNet properly.
It was really only after the terrorist attacks of 9/11 when, due to concern about food security not food safety, we saw enhanced funding for PulseNet and the state laboratories. This resulted in a quantum leap in our ability to identify outbreaks. But better identification is not the same as the "troubling trend" the President spoke of. In all likelihood, our increased sophistication, such as the use of Hazard Analysis Critical Control Point (HACCP) plans in food processing, the development of Good Agricultural Practices (GAP) and Commodity Specific Guidelines for specific produce items and a myriad of food safety steps taken to protect beef, means we have less foodborne illness than ever. Our better detection techniques distort the numbers.
The president touchingly invoked his daughter Sasha's love of peanut butter sandwiches to define his food safety bottom line: "No parent should have to worry that their child is going to get sick from their lunch." Tugging at heartstrings probably wins points on the national polls but it would have been more helpful if the president explained the real situation to the people of America.
The truth is that our food supply is enormously safe. Known pathogens account for about 1,800 deaths per year from foodborne illness. If we include unknown pathogens, an estimated total of about 5,000 Americans die each year of foodborne illness -- mostly those with weakened immune systems such as the very old, very young or those with AIDS or undergoing cancer treatment. Although we can and should reduce this number, it needs to be kept in perspective. For example, over 40,000 people, including 6,000 teenagers, die each year in motor vehicle accidents. Yet the president hasn't announced that no parent should have to worry because their child steps in a car.
Food is not made safer for the same reason cars are not made safer. We have the technology to make autos safer, but we recognize that there are trade-offs. Safer vehicles may be more expensive, use more fuel, emit more carbon, etc. Equally, food safety is not a free good. A farm can be contaminated by soil, wind, water, animals or people. We can add buffer zones, put in more pest traps, fence the farm, train employees better and test the water more frequently. Each notch up may make things marginally safer but it also increases the cost. The logic leads to growing each bell pepper in a semiconductor type "clean room" and selling the pepper for $30 each. Does anyone really want that?
The biggest obstacle to enhancing food safety has been that the FDA has been unwilling to accept anything other than a zero tolerance of pathogens. To this day, despite entreaties from industry, FDA will not define what specific food safety measures it wants a produce farmer, for example, to adopt. This is because any specific measure will still leave the occasional outbreak as a possibility, and FDA is petrified of accepting responsibility for this, even if food safety improves overall.
The most important step is for FDA to move away from its zero tolerance attitude and adopt a continuous improvement model as we have in both aviation and autos with great success. Farmers and the food industry are fully prepared to do this. If we focus on doing better we can reduce foodborne illness and save lives. Unfortunately, the president's contempt for the private sector and absolutist attitude toward Sasha's lunch moves us further from this easily obtainable goal.
Jim Prevor is the founder and editor-in-chief of Phoenix Media Network, Inc., a business-to-business media company specializing in the food industry. He writes frequently on food safety and other topics at PerishablePundit.com.
Obama's 'government first' attitude puts food safety at risk.
The Weekly Standard, Mar 20, 2009 12:00:00 AM
While nominating Dr. Margaret Hamburg as head of the FDA and appointing Joshua Sharfstein as her deputy, President Obama showed a laudable passion as he addressed the nation regarding food safety. Unfortunately, his understanding of the situation is incorrect and his professed goal is counterproductive.
President Obama showed he is blinded by the liberal conceit that the government is the most important factor in food safety: "There are certain things only a government can do. And one of those things is ensuring that the foods we eat are safe and don't cause us harm."
This is nonsense. The government does not farm or process anything, it does not distribute, market or cook, and it cannot possibly monitor the hundreds of millions of people in over 100 countries and every state, from field to fork, that have a role in food safety.
Food in the United States is generally safe for four reasons: First, because there are moral precepts that make the vast majority of producers intent on doing no harm to their customers. Second, because the value of a brand and a company dissipate rapidly if they sicken or kill their customers. Third, because those who prepare meals at home mostly love those they cook for and so try to serve wholesome foods. Fourth, because the United States is an affluent, western society with advanced technologies and procedures for making foods safe and we are both willing and able to spend money to have safer food.
Of course, government is important. It sets up the legal and economic ground rules within which we operate. But its specific effect on food safety is dramatically overstated by those, like the president, who seem able to identify virtue only in public employees.
What else could the president mean when he says, "The men and women who inspect our foods it is because of the work they do each and every day that the United States is one of the safest places in the world to buy groceries"? It seems the president has this notion that the entire private sector for food production and distribution is filled with bad actors being held back by an army of federal inspectors.
The president says this but in the same address he contradicts himself by pointing out that "the FDA has been underfunded and understaffed in recent years, leaving the agency with the resources to inspect just 7,000 of our 150,000 food processing plants and warehouses each year. That means roughly 95% of them go uninspected." Obviously it is impossible to both hold that we barely inspect anything and yet it is these inspections that are responsible for the overwhelmingly safe food we have in America.
The president either misunderstands or misrepresents the problem. He explains that "in recent years, we've seen a number of problems with the food making its way to our kitchen tables. In 2006, it was contaminated spinach. In 2008, it was salmonella in peppers and possibly tomatoes. And just this year, bad peanut products led to hundreds of illnesses and cost nine people their lives these incidents reflect a troubling trend that's seen the average number of outbreaks from contaminated produce and other foods grow to nearly 350 a year--up from 100 a year in the early 1990s."
The choice of the early 1990s as the baseline is telling. For it was only in 1993, during the horrible Jack-in-the-Box food safety outbreak in which four children died, that staff from the Centers for Disease Control and Prevention used a technique of DNA fingerprinting known as pulsed-field gel electrophoresis (PFGE) to establish that the sick people all had the same strain and that the strain matched the strain of E. Coli found in the hamburger patties.
Up to that point, food safety outbreaks were typically identified in the context of a local event such as a banquet, where many people may have gotten sick from eating the same contaminated food. Before we used PFGE, there was simply no way to tie together illnesses in different cities and states by people who had eaten many different things at many different times.
Even after PFGE was known to work, there was no easy way to share that data. After the Jack-in-the-Box outbreak, the CDC established standardized PFGE techniques and began development of PulseNet, a computer bulletin board at CDC headquarters in Atlanta where state labs could share and compare their PFGE findings. Officially opened in 1996, the system hobbled on for many years--the states didn't collect the proper data; and few scientists at the state laboratories had the expertise or experience to use PFGE and PulseNet properly.
It was really only after the terrorist attacks of 9/11 when, due to concern about food security not food safety, we saw enhanced funding for PulseNet and the state laboratories. This resulted in a quantum leap in our ability to identify outbreaks. But better identification is not the same as the "troubling trend" the President spoke of. In all likelihood, our increased sophistication, such as the use of Hazard Analysis Critical Control Point (HACCP) plans in food processing, the development of Good Agricultural Practices (GAP) and Commodity Specific Guidelines for specific produce items and a myriad of food safety steps taken to protect beef, means we have less foodborne illness than ever. Our better detection techniques distort the numbers.
The president touchingly invoked his daughter Sasha's love of peanut butter sandwiches to define his food safety bottom line: "No parent should have to worry that their child is going to get sick from their lunch." Tugging at heartstrings probably wins points on the national polls but it would have been more helpful if the president explained the real situation to the people of America.
The truth is that our food supply is enormously safe. Known pathogens account for about 1,800 deaths per year from foodborne illness. If we include unknown pathogens, an estimated total of about 5,000 Americans die each year of foodborne illness -- mostly those with weakened immune systems such as the very old, very young or those with AIDS or undergoing cancer treatment. Although we can and should reduce this number, it needs to be kept in perspective. For example, over 40,000 people, including 6,000 teenagers, die each year in motor vehicle accidents. Yet the president hasn't announced that no parent should have to worry because their child steps in a car.
Food is not made safer for the same reason cars are not made safer. We have the technology to make autos safer, but we recognize that there are trade-offs. Safer vehicles may be more expensive, use more fuel, emit more carbon, etc. Equally, food safety is not a free good. A farm can be contaminated by soil, wind, water, animals or people. We can add buffer zones, put in more pest traps, fence the farm, train employees better and test the water more frequently. Each notch up may make things marginally safer but it also increases the cost. The logic leads to growing each bell pepper in a semiconductor type "clean room" and selling the pepper for $30 each. Does anyone really want that?
The biggest obstacle to enhancing food safety has been that the FDA has been unwilling to accept anything other than a zero tolerance of pathogens. To this day, despite entreaties from industry, FDA will not define what specific food safety measures it wants a produce farmer, for example, to adopt. This is because any specific measure will still leave the occasional outbreak as a possibility, and FDA is petrified of accepting responsibility for this, even if food safety improves overall.
The most important step is for FDA to move away from its zero tolerance attitude and adopt a continuous improvement model as we have in both aviation and autos with great success. Farmers and the food industry are fully prepared to do this. If we focus on doing better we can reduce foodborne illness and save lives. Unfortunately, the president's contempt for the private sector and absolutist attitude toward Sasha's lunch moves us further from this easily obtainable goal.
Jim Prevor is the founder and editor-in-chief of Phoenix Media Network, Inc., a business-to-business media company specializing in the food industry. He writes frequently on food safety and other topics at PerishablePundit.com.
For a diplomat, Christopher Hill has ticked off an awful lot of people.
The Insubordinate Ambassador, by Stephen F. Hayes
For a diplomat, Christopher Hill has ticked off an awful lot of people.
The Weekly Standard, Mar 30, 2009, Volume 014, Issue 27
On October 11, 2006, three days after North Korea detonated a crude nuclear device, George W. Bush held a press conference. He recommitted the United States to a diplomatic course on North Korea, but ruled out a bilateral meeting with representatives from the rogue regime:
In order to solve this diplomatically, the United States and our partners must have a strong diplomatic hand, and you have a better diplomatic hand with others sending the message than you do when you're alone. And so, obviously, I made the decision that the bilateral negotiations wouldn't work, and the reason I made that decision is because they didn't.
Three weeks later, Christopher Hill, a veteran of the Foreign Service, overruled the president. Then the government's chief negotiator on North Korea's nuclear program, now Barack Obama's nominee to serve as U.S. ambassador to Iraq, Hill didn't much care what the president wanted. Secretary of State Condoleezza Rice had given Hill permission to meet face-to-face with the North Koreans but only on the condition that diplomats from China were also in the room. Although the Chinese participated in the early moments of the discussions, they soon left. Hill did not leave with them.
North Korea had long sought to deal with the United States bilaterally, more for the legitimacy such direct dealings would confer on the thuggish regime in Pyongyang than because they were interested in serious negotiations. Hill granted their wish. According to former CNN reporter Mike Chinoy, in his book Meltdown: The Inside Story of the North Korean Nuclear Crisis, Hill had "in effect, accepted terms the North Koreans had been putting forward for most of the previous twelve months"--despite the fact that they were "overtures the Bush administration rejected."
Rice was angry. Chinoy writes: "Although Rice remained supportive of reviving the diplomatic process, . . . Hill had held the bilateral [discussion with North Korean negotiator Kim Gye Gwan] in defiance of her instructions."
Think about that. The secretary of state expressly forbade Hill from participating in bilateral talks. The president of the United States was on record opposing bilateral negotiations. Hill thought he knew better.
Meanwhile, North Korea was on the State Department's list of state sponsors of terror, they had just weeks earlier tested a nuclear device, and we now know, at the very time Hill was conducting his rogue diplomacy, North Korea was supplying nuclear technology to Syria--another nation on the State Department's list of terror sponsors.
Hill had done this before. On July 9, 2005, Rice had given approval for a trilateral meeting with the Chinese and the North Koreans in an effort to get the North Koreans to return to the six-party talks on their nuclear program. North Korea had been boycotting the talks in part because Rice had referred to the North as an "outpost of tyranny" in her confirmation hearings. Curiously, the Chinese didn't show up, as they had promised. Hill nonetheless met alone with the North Koreans and gave them an important propaganda victory. According to the official North Korean news agency: "The U.S. side at the contact made between the heads of both delegations in Beijing clarified that it would recognize the DPRK [North Korea] as a sovereign state, not to invade it and hold bilateral talks within the framework of the six-party talks, and the DPRK side interpreted it as a retraction of its remark designating the former as an 'outpost of tyranny' and decided to return to the six-party talks."
Leaving aside questions of Hill's effectiveness--"We clearly have not achieved our objective with North Korea," Vice President Dick Cheney told me just before leaving office--his rank insubordination and cavalier disregard for presidential prerogatives were surely grounds for dismissal. Instead, Bush kept him in place, and now Barack Obama is rewarding him with what is arguably the most sensitive and important U.S. ambassadorship.
That appointment has stirred some opposition among Republicans. Two weeks ago, John McCain and Lindsay Graham sent Obama a letter pointing out Hill's "controversial" diplomacy on North Korea and his lack of experience in the Middle East. The two senators urged Obama to "reconsider this nomination."
Early last week, five additional Republicans--Jon Kyl, Christopher Bond, Sam Brownback, Jim Inhofe, and John Ensign--signaled their opposition to Hill. In a separate letter to Obama they cited Hill's "unprofessional activities" which include cutting out key State Department officials from policy discussions on North Korea and "breaking commitments made for the record before congressional committees."
It is that last point that could make things difficult for Hill in confirmation hearings scheduled for next week. Brownback believes Hill repeatedly misled him--in public testimony--regarding Hill's willingness to make North Korea's human rights record a component of the six-party talks. In 2008 Brownback placed a hold on the nomination of Hill's deputy Kathy Stevens to be ambassador to South Korea. Brownback said he would lift that hold if Hill would promise to include Jay Lefkowitz, the special envoy for Human Rights in North Korea, in all further discussions with the North Koreans. Hill made the promise and Brownback lifted his hold on Stevens.
On October 2, 2008, Lefkowitz met with President Bush and several NSC staffers to discuss the possibility of making one last push on human rights in North Korea. Bush was enthusiastic. Hill, despite his pledge to Brownback and despite the president's enthusiasm, never invited Lefkowitz to join the talks.
When Hill made the rounds on Capitol Hill last Tuesday, he told Brownback that the White House, and specifically National Security Adviser Steve Hadley, blocked him from bringing Lefkowitz to the negotiations with North Korea. Several officials with knowledge of those discussions disputed Hill's story and said, in fact, that NSC and Hadley pushed to include human rights.
Brownback, for one, isn't buying. Although Hill has the support of several important backers--former ambassador Ryan Crocker, Republican senator Richard Lugar, and Generals David Petraeus and Ray Odierno--Brownback may still place a hold on his nomination.
"He didn't follow the law," Brownback told me, referring to the North Korean Human Rights Act. "He misled me completely. He was very difficult to deal with. And the six-party talks failed."
Brownback is undeterred by arguments that there is an urgency to fill the post in Baghdad. "People wanted someone at Treasury quickly and looked past [Timothy] Geithner's problems--tax evasion and his time at the New York Fed. We need to take the time to get the right person in the job. I appreciate what Petraeus and Odierno are saying. But we need someone who will follow the law and the direction of the president."
Stephen F. Hayes is a senior writer at The Weekly Standard.
For a diplomat, Christopher Hill has ticked off an awful lot of people.
The Weekly Standard, Mar 30, 2009, Volume 014, Issue 27
On October 11, 2006, three days after North Korea detonated a crude nuclear device, George W. Bush held a press conference. He recommitted the United States to a diplomatic course on North Korea, but ruled out a bilateral meeting with representatives from the rogue regime:
In order to solve this diplomatically, the United States and our partners must have a strong diplomatic hand, and you have a better diplomatic hand with others sending the message than you do when you're alone. And so, obviously, I made the decision that the bilateral negotiations wouldn't work, and the reason I made that decision is because they didn't.
Three weeks later, Christopher Hill, a veteran of the Foreign Service, overruled the president. Then the government's chief negotiator on North Korea's nuclear program, now Barack Obama's nominee to serve as U.S. ambassador to Iraq, Hill didn't much care what the president wanted. Secretary of State Condoleezza Rice had given Hill permission to meet face-to-face with the North Koreans but only on the condition that diplomats from China were also in the room. Although the Chinese participated in the early moments of the discussions, they soon left. Hill did not leave with them.
North Korea had long sought to deal with the United States bilaterally, more for the legitimacy such direct dealings would confer on the thuggish regime in Pyongyang than because they were interested in serious negotiations. Hill granted their wish. According to former CNN reporter Mike Chinoy, in his book Meltdown: The Inside Story of the North Korean Nuclear Crisis, Hill had "in effect, accepted terms the North Koreans had been putting forward for most of the previous twelve months"--despite the fact that they were "overtures the Bush administration rejected."
Rice was angry. Chinoy writes: "Although Rice remained supportive of reviving the diplomatic process, . . . Hill had held the bilateral [discussion with North Korean negotiator Kim Gye Gwan] in defiance of her instructions."
Think about that. The secretary of state expressly forbade Hill from participating in bilateral talks. The president of the United States was on record opposing bilateral negotiations. Hill thought he knew better.
Meanwhile, North Korea was on the State Department's list of state sponsors of terror, they had just weeks earlier tested a nuclear device, and we now know, at the very time Hill was conducting his rogue diplomacy, North Korea was supplying nuclear technology to Syria--another nation on the State Department's list of terror sponsors.
Hill had done this before. On July 9, 2005, Rice had given approval for a trilateral meeting with the Chinese and the North Koreans in an effort to get the North Koreans to return to the six-party talks on their nuclear program. North Korea had been boycotting the talks in part because Rice had referred to the North as an "outpost of tyranny" in her confirmation hearings. Curiously, the Chinese didn't show up, as they had promised. Hill nonetheless met alone with the North Koreans and gave them an important propaganda victory. According to the official North Korean news agency: "The U.S. side at the contact made between the heads of both delegations in Beijing clarified that it would recognize the DPRK [North Korea] as a sovereign state, not to invade it and hold bilateral talks within the framework of the six-party talks, and the DPRK side interpreted it as a retraction of its remark designating the former as an 'outpost of tyranny' and decided to return to the six-party talks."
Leaving aside questions of Hill's effectiveness--"We clearly have not achieved our objective with North Korea," Vice President Dick Cheney told me just before leaving office--his rank insubordination and cavalier disregard for presidential prerogatives were surely grounds for dismissal. Instead, Bush kept him in place, and now Barack Obama is rewarding him with what is arguably the most sensitive and important U.S. ambassadorship.
That appointment has stirred some opposition among Republicans. Two weeks ago, John McCain and Lindsay Graham sent Obama a letter pointing out Hill's "controversial" diplomacy on North Korea and his lack of experience in the Middle East. The two senators urged Obama to "reconsider this nomination."
Early last week, five additional Republicans--Jon Kyl, Christopher Bond, Sam Brownback, Jim Inhofe, and John Ensign--signaled their opposition to Hill. In a separate letter to Obama they cited Hill's "unprofessional activities" which include cutting out key State Department officials from policy discussions on North Korea and "breaking commitments made for the record before congressional committees."
It is that last point that could make things difficult for Hill in confirmation hearings scheduled for next week. Brownback believes Hill repeatedly misled him--in public testimony--regarding Hill's willingness to make North Korea's human rights record a component of the six-party talks. In 2008 Brownback placed a hold on the nomination of Hill's deputy Kathy Stevens to be ambassador to South Korea. Brownback said he would lift that hold if Hill would promise to include Jay Lefkowitz, the special envoy for Human Rights in North Korea, in all further discussions with the North Koreans. Hill made the promise and Brownback lifted his hold on Stevens.
On October 2, 2008, Lefkowitz met with President Bush and several NSC staffers to discuss the possibility of making one last push on human rights in North Korea. Bush was enthusiastic. Hill, despite his pledge to Brownback and despite the president's enthusiasm, never invited Lefkowitz to join the talks.
When Hill made the rounds on Capitol Hill last Tuesday, he told Brownback that the White House, and specifically National Security Adviser Steve Hadley, blocked him from bringing Lefkowitz to the negotiations with North Korea. Several officials with knowledge of those discussions disputed Hill's story and said, in fact, that NSC and Hadley pushed to include human rights.
Brownback, for one, isn't buying. Although Hill has the support of several important backers--former ambassador Ryan Crocker, Republican senator Richard Lugar, and Generals David Petraeus and Ray Odierno--Brownback may still place a hold on his nomination.
"He didn't follow the law," Brownback told me, referring to the North Korean Human Rights Act. "He misled me completely. He was very difficult to deal with. And the six-party talks failed."
Brownback is undeterred by arguments that there is an urgency to fill the post in Baghdad. "People wanted someone at Treasury quickly and looked past [Timothy] Geithner's problems--tax evasion and his time at the New York Fed. We need to take the time to get the right person in the job. I appreciate what Petraeus and Odierno are saying. But we need someone who will follow the law and the direction of the president."
Stephen F. Hayes is a senior writer at The Weekly Standard.
Britain Fights Home-Grown Islamists - The Labour government unveils a new antiterror strategy
Britain Fights Home-Grown Islamists. WSJ Editorial
The Labour government unveils a new antiterror strategy.
WSJ, Mar 26, 2009
The only good news from a British security report published this week -- that al Qaeda is "likely to fragment" -- comes with a scary caveat: Islamist splinter groups will continue Osama bin Laden's work and could prove just as dangerous, if not more so.
The possibility of a WMD attack against Britain has never been as grave as it is today, the government report warned: "Changing technology and the theft and smuggling of chemical, biological, radiological, nuclear and explosive materials make this aspiration more realistic than it may have been in the recent past."
This dire outlook may have triggered the long overdue policy change in London's antiterrorism strategy, announced Tuesday by Home Secretary Jacqui Smith. The new objective is to address the real root cause of Islamist terrorism -- its ideology. Ms. Smith promised that the government would "challenge" Muslims in Britain who may not support violence but who reject "our shared values" -- such as democracy and the rule of law -- and promote hatred toward women, homosexuals and other religions and ethnicities. While not criminalizing such ideology, Ms. Smith said, "we should all stand up for our shared values and not concede the floor to those who dismiss them."
This may sound like common sense, but it's actually a dramatic change from past British policy. Until now, the Labour government has "engaged" nonviolent extremists, believing they could help in the fight against violent extremists. To justify this approach, the government dumbed down the definition of "moderate" Muslim to include those who claim to reject terrorism but still support a global caliphate, oppose democracy and justify suicide bombings outside Britain as "resistance." The assumption was that only "moderates" who hold such radical views possess the credibility to dissuade young Muslims from the path of jihad.
The consequences of this policy have been predictably devastating. "The effect has been to empower reactionaries within Muslim communities and to marginalize genuine moderates," according to a study published this month by the think tank Policy Exchange. "The link between non-violent and violent extremism is habitually underplayed." Policy Exchange also found that the government spent almost £90 million over the past three years on nonviolent radical Islamic groups, "underwriting the very Islamist ideology which spawns an illiberal, intolerant and anti-Western world view."
Hazel Blears, secretary of state for communities and local government, has long pushed for changing this approach and seems to have made a start. This week she suspended ties with the Muslim Council of Britain -- once the Labour government's favorite Muslim organization -- because its deputy secretary general, Daud Abdullah, signed a declaration in Istanbul last month that calls for jihad against Israel and any country supporting it, which could include Britain.
The Labour government shares much of the blame for making radical Muslim views respectable in the eyes of British Muslims who may have otherwise shunned them. In the process, it has endangered Britain's national security and that of its allies. Most of Britain's 2,000 terror suspects are home-grown and U.S. officials have warned that British Islamists entering the U.S. under the visa-waiver program pose a severe threat to homeland security.
The threat of a terror attack against Britain, including during next week's G-20 financial summit in London, is "severe," Home Secretary Smith said this week -- meaning "it's highly likely" and "could happen without warning."
The break from the policy of courting radical Muslims is long overdue. Britain, and its allies, will be safer for it.
The Labour government unveils a new antiterror strategy.
WSJ, Mar 26, 2009
The only good news from a British security report published this week -- that al Qaeda is "likely to fragment" -- comes with a scary caveat: Islamist splinter groups will continue Osama bin Laden's work and could prove just as dangerous, if not more so.
The possibility of a WMD attack against Britain has never been as grave as it is today, the government report warned: "Changing technology and the theft and smuggling of chemical, biological, radiological, nuclear and explosive materials make this aspiration more realistic than it may have been in the recent past."
This dire outlook may have triggered the long overdue policy change in London's antiterrorism strategy, announced Tuesday by Home Secretary Jacqui Smith. The new objective is to address the real root cause of Islamist terrorism -- its ideology. Ms. Smith promised that the government would "challenge" Muslims in Britain who may not support violence but who reject "our shared values" -- such as democracy and the rule of law -- and promote hatred toward women, homosexuals and other religions and ethnicities. While not criminalizing such ideology, Ms. Smith said, "we should all stand up for our shared values and not concede the floor to those who dismiss them."
This may sound like common sense, but it's actually a dramatic change from past British policy. Until now, the Labour government has "engaged" nonviolent extremists, believing they could help in the fight against violent extremists. To justify this approach, the government dumbed down the definition of "moderate" Muslim to include those who claim to reject terrorism but still support a global caliphate, oppose democracy and justify suicide bombings outside Britain as "resistance." The assumption was that only "moderates" who hold such radical views possess the credibility to dissuade young Muslims from the path of jihad.
The consequences of this policy have been predictably devastating. "The effect has been to empower reactionaries within Muslim communities and to marginalize genuine moderates," according to a study published this month by the think tank Policy Exchange. "The link between non-violent and violent extremism is habitually underplayed." Policy Exchange also found that the government spent almost £90 million over the past three years on nonviolent radical Islamic groups, "underwriting the very Islamist ideology which spawns an illiberal, intolerant and anti-Western world view."
Hazel Blears, secretary of state for communities and local government, has long pushed for changing this approach and seems to have made a start. This week she suspended ties with the Muslim Council of Britain -- once the Labour government's favorite Muslim organization -- because its deputy secretary general, Daud Abdullah, signed a declaration in Istanbul last month that calls for jihad against Israel and any country supporting it, which could include Britain.
The Labour government shares much of the blame for making radical Muslim views respectable in the eyes of British Muslims who may have otherwise shunned them. In the process, it has endangered Britain's national security and that of its allies. Most of Britain's 2,000 terror suspects are home-grown and U.S. officials have warned that British Islamists entering the U.S. under the visa-waiver program pose a severe threat to homeland security.
The threat of a terror attack against Britain, including during next week's G-20 financial summit in London, is "severe," Home Secretary Smith said this week -- meaning "it's highly likely" and "could happen without warning."
The break from the policy of courting radical Muslims is long overdue. Britain, and its allies, will be safer for it.
WaPo's Jay Mathews now calls for the end of the DC Opportunity Scholarship program
Women’s Suffrage Abandoned. “Too Unpopular,” says Anthony. By Andrew J. Coulson
Cato at Liberty, Mar 25, 2009
Reversing his earlier support for private school choice in the District of Columbia, Washington Post columnist Jay Mathews now calls for the end of the DC Opportunity Scholarship program. Why? “Vouchers help [low income] kids, but not enough of them. The vouchers are too at odds with the general public view of education. They don’t have much of a future.”
So private school choice programs work, but because they are not growing quite fast enough for Mr. Mathews’ taste we should abandon the entire enterprise? Why keep striving for total victory when can seize defeat today!
The thing is, major social changes are usually, what’s the word… oh yes: hard. Susan B. Anthony co-founded the National Women’s Suffrage Association in 1869. She died in 1906 – 14 years, 5 months and five days before passage of the 19th Amendment. If a social reform is right and just, it will inspire reformers who will fight for it every bit as long as it takes.
And even those who decide what social reforms to support based on their popularity should take note that school choice programs are proliferating all over the country. And newer tax credit programs, such as Florida’s, Pennsylvania’s, and Arizona’s, are all growing at a faster rate than older voucher programs like the one in Milwaukee. More than that, the politics of school choice have already begun to change at the state level. While Democrats in Congress had no qualms slipping a shiv into the futures of 1,700 poor kids, more and more of their fellow party members at the state level are deciding to back educational freedom.
Cato at Liberty, Mar 25, 2009
Reversing his earlier support for private school choice in the District of Columbia, Washington Post columnist Jay Mathews now calls for the end of the DC Opportunity Scholarship program. Why? “Vouchers help [low income] kids, but not enough of them. The vouchers are too at odds with the general public view of education. They don’t have much of a future.”
So private school choice programs work, but because they are not growing quite fast enough for Mr. Mathews’ taste we should abandon the entire enterprise? Why keep striving for total victory when can seize defeat today!
The thing is, major social changes are usually, what’s the word… oh yes: hard. Susan B. Anthony co-founded the National Women’s Suffrage Association in 1869. She died in 1906 – 14 years, 5 months and five days before passage of the 19th Amendment. If a social reform is right and just, it will inspire reformers who will fight for it every bit as long as it takes.
And even those who decide what social reforms to support based on their popularity should take note that school choice programs are proliferating all over the country. And newer tax credit programs, such as Florida’s, Pennsylvania’s, and Arizona’s, are all growing at a faster rate than older voucher programs like the one in Milwaukee. More than that, the politics of school choice have already begun to change at the state level. While Democrats in Congress had no qualms slipping a shiv into the futures of 1,700 poor kids, more and more of their fellow party members at the state level are deciding to back educational freedom.
A Maker of History: John Hope Franklin, 1915-2009
A Maker of History. WaPo Editorial
John Hope Franklin, 1915-2009
WaPo, Thursday, March 26, 2009; 20
Among scholars of the American past, John Hope Franklin, who died Wednesday at 94, was a rarity: He not only studied history; he made it. This should not have been necessary. But the culture into which Mr. Franklin was born in 1915 was distorted by racial discrimination. As a young African American pursuing a Harvard doctorate in history, he had to overcome not only the normal rigors of academia, but also racial insults -- the most stinging of which might have been the fact that American history, as it had been written until then, basically omitted people of color. And so, at a time when it took courage for him to visit certain libraries, Mr. Franklin set out to correct the record. "My challenge," Mr. Franklin once said, "was to weave into the fabric of American history enough of the presence of blacks so that the story of the United States could be told adequately and fairly."
His magisterial study of the American black experience, "From Slavery to Freedom: A History of African Americans," was a revelation when it appeared in 1947 -- to be followed by books and articles on Reconstruction, the martial culture of the antebellum South, runaway slaves and many other subjects. Each one is a model of graceful prose, meticulously documented and free of bias or cant. The quality of Mr. Franklin's writings made him the first black chairman of a history department at a predominantly white institution, Brooklyn College, in 1956. Later came appointments at the University of Chicago and Duke, and teaching assignments at Howard and Cambridge universities and elsewhere. Along the way he assisted Thurgood Marshall's legal team in Brown v. Board of Education, served in government and accumulated more academic honors than we have space to mention. In 1995, President Bill Clinton awarded him the Presidential Medal of Freedom.
Ever the mild-mannered academic, Mr. Franklin tended orchids at his Durham, N.C., home. But he never lost his outrage at the injustice he and other blacks had experienced. Toward the end of his life, he spoke of the need for the United States to apologize for the historical wrongs of slavery and segregation and compensate the victims. "I don't see any reason why I should get over that kind of exploitation," he told an interviewer. Yet he also called on young African Americans to make the most of their opportunities, notwithstanding residual racism. Last year, as then-candidate Barack Obama neared the presidency, Mr. Franklin found himself swept up in the excitement of a campaign that brought together whites and blacks "like this is a natural thing," as he put it in an interview with The Post. In his long and extraordinarily productive life, Mr. Franklin himself did much to bring about new attitudes and new possibilities. By changing his country's perception of itself, Mr. Franklin changed his country.
John Hope Franklin, 1915-2009
WaPo, Thursday, March 26, 2009; 20
Among scholars of the American past, John Hope Franklin, who died Wednesday at 94, was a rarity: He not only studied history; he made it. This should not have been necessary. But the culture into which Mr. Franklin was born in 1915 was distorted by racial discrimination. As a young African American pursuing a Harvard doctorate in history, he had to overcome not only the normal rigors of academia, but also racial insults -- the most stinging of which might have been the fact that American history, as it had been written until then, basically omitted people of color. And so, at a time when it took courage for him to visit certain libraries, Mr. Franklin set out to correct the record. "My challenge," Mr. Franklin once said, "was to weave into the fabric of American history enough of the presence of blacks so that the story of the United States could be told adequately and fairly."
His magisterial study of the American black experience, "From Slavery to Freedom: A History of African Americans," was a revelation when it appeared in 1947 -- to be followed by books and articles on Reconstruction, the martial culture of the antebellum South, runaway slaves and many other subjects. Each one is a model of graceful prose, meticulously documented and free of bias or cant. The quality of Mr. Franklin's writings made him the first black chairman of a history department at a predominantly white institution, Brooklyn College, in 1956. Later came appointments at the University of Chicago and Duke, and teaching assignments at Howard and Cambridge universities and elsewhere. Along the way he assisted Thurgood Marshall's legal team in Brown v. Board of Education, served in government and accumulated more academic honors than we have space to mention. In 1995, President Bill Clinton awarded him the Presidential Medal of Freedom.
Ever the mild-mannered academic, Mr. Franklin tended orchids at his Durham, N.C., home. But he never lost his outrage at the injustice he and other blacks had experienced. Toward the end of his life, he spoke of the need for the United States to apologize for the historical wrongs of slavery and segregation and compensate the victims. "I don't see any reason why I should get over that kind of exploitation," he told an interviewer. Yet he also called on young African Americans to make the most of their opportunities, notwithstanding residual racism. Last year, as then-candidate Barack Obama neared the presidency, Mr. Franklin found himself swept up in the excitement of a campaign that brought together whites and blacks "like this is a natural thing," as he put it in an interview with The Post. In his long and extraordinarily productive life, Mr. Franklin himself did much to bring about new attitudes and new possibilities. By changing his country's perception of itself, Mr. Franklin changed his country.
Libertarian: Don't Provoke a Cap-and-Trade War
Don't Provoke a Cap-and-Trade War. By Will Wilkinson
Marketplace, March 25, 2009.
Last week, Energy Secretary Steven Chu said the U.S. should be open to slapping tariffs on imports from countries that fail to implement their own carbon reduction policies. Meanwhile, China has threatened trade war if faced with carbon duties, which it says are illegal under World Trade Organization agreements.
Trade restrictions tend to leave all involved poor, making trade war a frightening prospect during an already immiserating recession. So how did we come to have the Energy Secretary provoking threats of mutually destructive trade sanctions?
Here's how. Either all the big, carbon-intensive economies reduce their emissions, or there's little chance of reducing warming. If the climate modelers are right, we'll all be better off if everyone pitches in. But each has an incentive to hold out, since countries that don't pitch in will enjoy lower energy costs and a competitive advantage in international markets.
Chu rightly points out that Obama's proposed cap and-trade scheme will put American manufacturers at a relative disadvantage. So how do we avoid this, and make sure countries like China don't get a leg up?
In short, we can't. There is no mechanism, no global government, to compel compliance. And it is dangerously naive to think that China, who is the world's largest owner of dollar-denominated assets, is in a weaker bargaining position than the U.S. We poke the dragon at our peril.
Cap-and-trade is sure to raise costs for struggling American consumers. But it won't much reduce warming unless countries like China and India fall in line. Yet neither the U.S. nor Europe can just force this to happen. If we try by imposing carbon duties, we'll hurt consumers even more by raising the cost of imports, and possibly start a trade war no one will win.
Chu's remarks highlight the fact that cap-and-trade is a costly, risky gambit. But now's not the time. Suffering workers and consumers can't afford to lose again.
Marketplace, March 25, 2009.
Last week, Energy Secretary Steven Chu said the U.S. should be open to slapping tariffs on imports from countries that fail to implement their own carbon reduction policies. Meanwhile, China has threatened trade war if faced with carbon duties, which it says are illegal under World Trade Organization agreements.
Trade restrictions tend to leave all involved poor, making trade war a frightening prospect during an already immiserating recession. So how did we come to have the Energy Secretary provoking threats of mutually destructive trade sanctions?
Here's how. Either all the big, carbon-intensive economies reduce their emissions, or there's little chance of reducing warming. If the climate modelers are right, we'll all be better off if everyone pitches in. But each has an incentive to hold out, since countries that don't pitch in will enjoy lower energy costs and a competitive advantage in international markets.
Chu rightly points out that Obama's proposed cap and-trade scheme will put American manufacturers at a relative disadvantage. So how do we avoid this, and make sure countries like China don't get a leg up?
In short, we can't. There is no mechanism, no global government, to compel compliance. And it is dangerously naive to think that China, who is the world's largest owner of dollar-denominated assets, is in a weaker bargaining position than the U.S. We poke the dragon at our peril.
Cap-and-trade is sure to raise costs for struggling American consumers. But it won't much reduce warming unless countries like China and India fall in line. Yet neither the U.S. nor Europe can just force this to happen. If we try by imposing carbon duties, we'll hurt consumers even more by raising the cost of imports, and possibly start a trade war no one will win.
Chu's remarks highlight the fact that cap-and-trade is a costly, risky gambit. But now's not the time. Suffering workers and consumers can't afford to lose again.
US Provides $3.7 million to Assist Senegal with Food Security
USAID Provides $3.7 million to Assist with Global Food Security in Senegal
US State Dept, March 25, 2009
DAKAR, SENEGAL - The U.S. Agency for International Development's (USAID) Office of U.S. Foreign Disaster Assistance (OFDA) is providing more than $3.7 million in assistance to lower rates of malnutrition and increase food security of families in Senegal.
Of this $3.7 million, USAID is providing $2.7 million to improve community-based nutrition efforts and agriculture production in the regions of Ziguinchor, Sedhiou and Kolda in Senegal. The program, implemented by USAID partners Catholic Relief Services and Christian Children's Fund, will provide community-based nutrition programs for malnourished children; build community awareness for the importance of good nutrition and how to prevent malnutrition; educate farmers on the benefits of improved seed varieties; organize seed fairs that will make improved seed varieties available; and provide microloans to community-based groups.
USAID is also providing $1.05 million to the United Nations Food & Agricultural Organization (FAO) to provide regional coordination of food security and agriculture efforts. With this funding, FAO will strengthen livelihoods and improve the nutritional status of the most vulnerable households affected by rising food prices.
"USAID's assistance will help thousands of families struggling to cope with the immediate impacts of the global food and financial crisis on their households," said Regina Davis, Principal Regional Advisor of USAID/OFDA's Regional Office for West and North Africa. "These projects will provide viable alternatives to increase self-sufficiency and lower overall malnutrition rates in vulnerable households."
US State Dept, March 25, 2009
DAKAR, SENEGAL - The U.S. Agency for International Development's (USAID) Office of U.S. Foreign Disaster Assistance (OFDA) is providing more than $3.7 million in assistance to lower rates of malnutrition and increase food security of families in Senegal.
Of this $3.7 million, USAID is providing $2.7 million to improve community-based nutrition efforts and agriculture production in the regions of Ziguinchor, Sedhiou and Kolda in Senegal. The program, implemented by USAID partners Catholic Relief Services and Christian Children's Fund, will provide community-based nutrition programs for malnourished children; build community awareness for the importance of good nutrition and how to prevent malnutrition; educate farmers on the benefits of improved seed varieties; organize seed fairs that will make improved seed varieties available; and provide microloans to community-based groups.
USAID is also providing $1.05 million to the United Nations Food & Agricultural Organization (FAO) to provide regional coordination of food security and agriculture efforts. With this funding, FAO will strengthen livelihoods and improve the nutritional status of the most vulnerable households affected by rising food prices.
"USAID's assistance will help thousands of families struggling to cope with the immediate impacts of the global food and financial crisis on their households," said Regina Davis, Principal Regional Advisor of USAID/OFDA's Regional Office for West and North Africa. "These projects will provide viable alternatives to increase self-sufficiency and lower overall malnutrition rates in vulnerable households."
Federal President Mobilizes EPA Troops for War on Coal
Obama Mobilizes EPA Troops for War on Coal
Agency to Kill Jobs, Prevent Access to America’s Cheapest, Most Abundant Energy Resource
IER, March 25, 2009
WASHINGTON, D.C. – Institute for Energy Research President (IER) Thomas J. Pyle issued the following statement today in response to the Environmental Protection Agency’s (EPA) decision to place a strict and indefinite moratorium on new mountaintop mining projects—a decision about which Democratic Gov. Joe Manchin (W.Va.) and others in the Appalachian region are “very concerned.”
“President Obama has made his intentions to bankrupt the coal industry clear. EPA’s actions this week demonstrate that he will wage a war against the energy source that generates half of America’s electricity and is our nation’s most abundant, reliable, and affordable energy resource.
“Even more dismal are estimates that show how this action will affect the 65,000 members of the Appalachian workforce who stand to lose some of the best, highest-paying jobs available in the region. That’s not to mention the $12 billion in lost economic development that an area already wrestling with our current economic downturn will have to reconcile.
“Evidently and regrettably, the president’s plan to redistribute the country’s wealth won’t make anyone any richer; instead it’ll eliminate jobs and increase energy costs until all Americans face equally devastating economic struggles.”
NOTE: The average American miner earns $66,000 each year – nearly 60 percent more than the average wage for industrial jobs. It is unclear whether miners are eager to trade the high-paying jobs they have now, for low-paying, government-sponsored “green jobs” that may or may not exist in the future.
More from IER on domestic energy policy:
IER Analyses: Coal Overview and Coal Facts Sheet
Press Release: Interior Decision Locks Away American Energy Resource Larger than Middle East Reserves
Blog Posting: Obama’s Budget Includes Biggest Tax Increase in U.S. History
Agency to Kill Jobs, Prevent Access to America’s Cheapest, Most Abundant Energy Resource
IER, March 25, 2009
WASHINGTON, D.C. – Institute for Energy Research President (IER) Thomas J. Pyle issued the following statement today in response to the Environmental Protection Agency’s (EPA) decision to place a strict and indefinite moratorium on new mountaintop mining projects—a decision about which Democratic Gov. Joe Manchin (W.Va.) and others in the Appalachian region are “very concerned.”
“President Obama has made his intentions to bankrupt the coal industry clear. EPA’s actions this week demonstrate that he will wage a war against the energy source that generates half of America’s electricity and is our nation’s most abundant, reliable, and affordable energy resource.
“Even more dismal are estimates that show how this action will affect the 65,000 members of the Appalachian workforce who stand to lose some of the best, highest-paying jobs available in the region. That’s not to mention the $12 billion in lost economic development that an area already wrestling with our current economic downturn will have to reconcile.
“Evidently and regrettably, the president’s plan to redistribute the country’s wealth won’t make anyone any richer; instead it’ll eliminate jobs and increase energy costs until all Americans face equally devastating economic struggles.”
NOTE: The average American miner earns $66,000 each year – nearly 60 percent more than the average wage for industrial jobs. It is unclear whether miners are eager to trade the high-paying jobs they have now, for low-paying, government-sponsored “green jobs” that may or may not exist in the future.
More from IER on domestic energy policy:
IER Analyses: Coal Overview and Coal Facts Sheet
Press Release: Interior Decision Locks Away American Energy Resource Larger than Middle East Reserves
Blog Posting: Obama’s Budget Includes Biggest Tax Increase in U.S. History
North Korea places Taepodong-2 missile on launch pad
North Korea places Taepodong-2 missile on launch pad
Japan Today, Thursday 26th March, 03:22 AM JST
TOKYO —
North Korea has positioned what is believed to be a Taepodong-2 long-range ballistic missile on the launch pad at a facility in Musudanri, sources close to Japan-U.S. relations said Wednesday night. North Korea has said it plans to send a satellite into orbit from the facility between April 4 and 8. But Japan, the United States and South Korea suspect the planned launch may actually be a test-firing of a ballistic missile.
NBC television, quoting U.S. officials, said in its online edition Wednesday that while two stages of the missile can be seen on the launch pad, the top is covered with a shroud supported by a crane. But now that the missile is on the pad, the launch itself could come within a matter of days, NBC said.
North Korea has informed the International Maritime Organization of the plan and warned that the first stage of the rocket will fall into the Sea of Japan while the second stage will fall into the northern Pacific Ocean. The Japanese government also received the information from Pyongyang.
Japan is expected to issue an order for the destruction of debris from the missile in case its planned launch fails.
North Korea launched a Taepodong-1 missile in August 1998, part of which flew over Japan and into the Pacific Ocean.
A Taepodong-2 missile is believed to have a range of more than 6,000 kilometers. Its test launch in July 2006 apparently ended in failure.
Japan Today, Thursday 26th March, 03:22 AM JST
TOKYO —
North Korea has positioned what is believed to be a Taepodong-2 long-range ballistic missile on the launch pad at a facility in Musudanri, sources close to Japan-U.S. relations said Wednesday night. North Korea has said it plans to send a satellite into orbit from the facility between April 4 and 8. But Japan, the United States and South Korea suspect the planned launch may actually be a test-firing of a ballistic missile.
NBC television, quoting U.S. officials, said in its online edition Wednesday that while two stages of the missile can be seen on the launch pad, the top is covered with a shroud supported by a crane. But now that the missile is on the pad, the launch itself could come within a matter of days, NBC said.
North Korea has informed the International Maritime Organization of the plan and warned that the first stage of the rocket will fall into the Sea of Japan while the second stage will fall into the northern Pacific Ocean. The Japanese government also received the information from Pyongyang.
Japan is expected to issue an order for the destruction of debris from the missile in case its planned launch fails.
North Korea launched a Taepodong-1 missile in August 1998, part of which flew over Japan and into the Pacific Ocean.
A Taepodong-2 missile is believed to have a range of more than 6,000 kilometers. Its test launch in July 2006 apparently ended in failure.
Wednesday, March 25, 2009
Forensic scientists who testify for criminal defendants are under fire. They ought to be praised
In Criminal Cases, Should Science Only Serve the State? By Radley Balko
Forensic scientists who testify for criminal defendants are under fire. They ought to be praised.
Reasons, March 25, 2009
Last month, the National Academy of Sciences (NAS) released a wide-ranging report expressing alarm at the way forensic science is used in the courtroom. Among the many problems the report addressed was the tendency of many states to see state-employed forensic experts not as independent scientists, but as part of the prosecution's "team."
The problem with that sort of arrangement is obvious: It introduces pressure—subtle or overt—on scientists to produce results that please police and prosecutors. The NAS report recommends that state-employed forensic experts be neutral. Today, far too many crime labs and medical examiners report to the attorney general of their states. Others report directly to the prosecutors in their jurisdictions. Ideally, government medical examiners would not only be independent of the state's law enforcement agencies, they would be free to testify against any state claims unsupported by scientific evidence.But that isn't the case in most of the country. In fact, it's almost universally accepted—among both prosecutors and medical examiners—that a government medical examiner should never testify against the district attorney who serves in the same jurisdiction, even if the medical examiner strongly disagrees with the prosecutor's conclusions. Lately, that already dubious notion seems to be expanding. Many law enforcement officials believe that government forensic experts should be barred from testifying for the defense in any case, even in other jurisdictions.
Earlier this month, the Minneapolis Star-Tribune reported that Minnesota District Attorney James Backstrom rebuked his county's medical examiner, Dr. Lindsey Thomas, because members of her staff had testified for defense attorneys in other counties, calling into question the conclusions of those counties' medical examiners. In one email to Thomas (you can read all of the emails here), Backstrom called the practice "a conflict of interest," and complained that the "added credibility attached to someone who is currently a coroner/medical examiner in another community who testifies as a defense expert makes any prosecution more difficult." In Backstrom's view, the actions of Thomas' staff were no different than if he were to testify that he disagreed with another prosecutor's strategy or conclusions. Backstrom ended one email by threatening to block Thomas's reappointment as the county's medical examiner if the practice continued.
Backstrom not only exhibited a fundamental ignorance of the purpose of forensic science in the courtroom, he also tellingly revealed a striking philosophical difference between the fields of science and law enforcement. Law enforcement officers—be they police officers or prosecutors—assume a sort of fraternity that precludes them from criticizing one another. Cops almost never testify against other cops—even when a fellow officer has broken the law—and prosecutors rarely criticize other prosecutors. Scientists, on the other hand, are not only willing to criticizing other scientists, but the process of peer review—a fundamental component of the scientific method—actually depends on such criticism. Backstrom's efforts to undermine peer review are alarming, particularly given that his efforts are aimed at the courtroom, where so much is frequently at stake.
Sadly, Backstrom's view is all too common. Last week, the local Fox affiliate in Atlanta ran two investigative pieces critical of Georgia's chief state medical examiner, Dr. Kris Sperry. The station's big scoop was that Sperry—who has an impeccable reputation among his peers—was regularly testifying for criminal defendants in other jurisdictions. The report quoted a sheriff and former county coroner in Harrison County, Mississippi, both still angry at Sperry for contradicting the state medical examiner's testimony in a murder case. The piece included quotes from both Mississippi officials stating that a medical examiner who gets a government paycheck should never contradict another government medical examiner in court. One Tennessee official said the practice was akin to a police officer testifying against another police officer.
Again, this is nonsense. We need more doctors willing to hold their rogue colleagues accountable, not less. For the last three years, I've been reporting on the severe inadequacies of Mississippi's criminal autopsy system. In particular, I've reported on Dr. Steven Hayne, who over the last 20 years has done 80 to 90 percent of the state's autopsies, carrying an impossible workload of some 1,500 to 1,800 autopsies per year (by his own account), despite the fact that he isn't board-certified in forensic pathology. Hayne's colleagues have known for years that he's little more than a rubber stamp for prosecutors. He has inflicted incalculable damage on the state's criminal justice system.
Kris Sperry, along with several current and former state medical examiners in Alabama, is one of the few doctors who has been trying to hold Hayne accountable. Over the years, Sperry has written letters to professional organizations asking for Hayne to be investigated. Yes, he has also testified against Hayne and other disreputable Mississippi medical examiners in court. He ought to be lauded for that, not condemned.
The other problem here, as the NAS study points out, is that there is currently a critical shortage of board-certified medical examiners. If every forensic pathologist with a government job or contract were barred from ever testifying for criminal defendants, there wouldn't be many doctors left to testify. The few who were left couldn't possibly testify in every case where they're needed—and in those cases they do take, they could easily be impeached by prosecutors as guns-for-hire.
But then, maybe that's the point.
You'd think that a forensic expert who tells the jury that he testifies for both defense attorneys and prosecutors would carry more weight on those occasions when he testifies for the state. That would show a doctor who testimony follows the science. But for prosecutors like Backstrom, the primary concern is not embarrassing his fellow district attorneys, and ensuring that credible doctors with state credentials don't screw up another prosecutor's case—even if that case is based on faulty science.
It takes an odd definition of justice to believe that state-paid scientists should only use their expertise to help win prosecutions. Unfortunately, that view seems to be the prevailing one.
Radley Balko is a senior editor at Reason magazine.
Forensic scientists who testify for criminal defendants are under fire. They ought to be praised.
Reasons, March 25, 2009
Last month, the National Academy of Sciences (NAS) released a wide-ranging report expressing alarm at the way forensic science is used in the courtroom. Among the many problems the report addressed was the tendency of many states to see state-employed forensic experts not as independent scientists, but as part of the prosecution's "team."
The problem with that sort of arrangement is obvious: It introduces pressure—subtle or overt—on scientists to produce results that please police and prosecutors. The NAS report recommends that state-employed forensic experts be neutral. Today, far too many crime labs and medical examiners report to the attorney general of their states. Others report directly to the prosecutors in their jurisdictions. Ideally, government medical examiners would not only be independent of the state's law enforcement agencies, they would be free to testify against any state claims unsupported by scientific evidence.But that isn't the case in most of the country. In fact, it's almost universally accepted—among both prosecutors and medical examiners—that a government medical examiner should never testify against the district attorney who serves in the same jurisdiction, even if the medical examiner strongly disagrees with the prosecutor's conclusions. Lately, that already dubious notion seems to be expanding. Many law enforcement officials believe that government forensic experts should be barred from testifying for the defense in any case, even in other jurisdictions.
Earlier this month, the Minneapolis Star-Tribune reported that Minnesota District Attorney James Backstrom rebuked his county's medical examiner, Dr. Lindsey Thomas, because members of her staff had testified for defense attorneys in other counties, calling into question the conclusions of those counties' medical examiners. In one email to Thomas (you can read all of the emails here), Backstrom called the practice "a conflict of interest," and complained that the "added credibility attached to someone who is currently a coroner/medical examiner in another community who testifies as a defense expert makes any prosecution more difficult." In Backstrom's view, the actions of Thomas' staff were no different than if he were to testify that he disagreed with another prosecutor's strategy or conclusions. Backstrom ended one email by threatening to block Thomas's reappointment as the county's medical examiner if the practice continued.
Backstrom not only exhibited a fundamental ignorance of the purpose of forensic science in the courtroom, he also tellingly revealed a striking philosophical difference between the fields of science and law enforcement. Law enforcement officers—be they police officers or prosecutors—assume a sort of fraternity that precludes them from criticizing one another. Cops almost never testify against other cops—even when a fellow officer has broken the law—and prosecutors rarely criticize other prosecutors. Scientists, on the other hand, are not only willing to criticizing other scientists, but the process of peer review—a fundamental component of the scientific method—actually depends on such criticism. Backstrom's efforts to undermine peer review are alarming, particularly given that his efforts are aimed at the courtroom, where so much is frequently at stake.
Sadly, Backstrom's view is all too common. Last week, the local Fox affiliate in Atlanta ran two investigative pieces critical of Georgia's chief state medical examiner, Dr. Kris Sperry. The station's big scoop was that Sperry—who has an impeccable reputation among his peers—was regularly testifying for criminal defendants in other jurisdictions. The report quoted a sheriff and former county coroner in Harrison County, Mississippi, both still angry at Sperry for contradicting the state medical examiner's testimony in a murder case. The piece included quotes from both Mississippi officials stating that a medical examiner who gets a government paycheck should never contradict another government medical examiner in court. One Tennessee official said the practice was akin to a police officer testifying against another police officer.
Again, this is nonsense. We need more doctors willing to hold their rogue colleagues accountable, not less. For the last three years, I've been reporting on the severe inadequacies of Mississippi's criminal autopsy system. In particular, I've reported on Dr. Steven Hayne, who over the last 20 years has done 80 to 90 percent of the state's autopsies, carrying an impossible workload of some 1,500 to 1,800 autopsies per year (by his own account), despite the fact that he isn't board-certified in forensic pathology. Hayne's colleagues have known for years that he's little more than a rubber stamp for prosecutors. He has inflicted incalculable damage on the state's criminal justice system.
Kris Sperry, along with several current and former state medical examiners in Alabama, is one of the few doctors who has been trying to hold Hayne accountable. Over the years, Sperry has written letters to professional organizations asking for Hayne to be investigated. Yes, he has also testified against Hayne and other disreputable Mississippi medical examiners in court. He ought to be lauded for that, not condemned.
The other problem here, as the NAS study points out, is that there is currently a critical shortage of board-certified medical examiners. If every forensic pathologist with a government job or contract were barred from ever testifying for criminal defendants, there wouldn't be many doctors left to testify. The few who were left couldn't possibly testify in every case where they're needed—and in those cases they do take, they could easily be impeached by prosecutors as guns-for-hire.
But then, maybe that's the point.
You'd think that a forensic expert who tells the jury that he testifies for both defense attorneys and prosecutors would carry more weight on those occasions when he testifies for the state. That would show a doctor who testimony follows the science. But for prosecutors like Backstrom, the primary concern is not embarrassing his fellow district attorneys, and ensuring that credible doctors with state credentials don't screw up another prosecutor's case—even if that case is based on faulty science.
It takes an odd definition of justice to believe that state-paid scientists should only use their expertise to help win prosecutions. Unfortunately, that view seems to be the prevailing one.
Radley Balko is a senior editor at Reason magazine.
The 70s: Bad Music, Bad Hair and Bad Energy Policy (what Obama can learn from Carter)
The 70s: Bad Music, Bad Hair and Bad Energy Policy (what Obama can learn from Carter). By Donald Hertzmark
Master Resource, March 25, 2009
Many in the energy business, whether or not they support President Obama’s positions on energy and the environment, are likely to think, “Look, the US is a big ship. It cannot be turned around in a couple of years, and even if they tried, you can right the course at the ballot box.”
Actually, you can’t. The United States is still a nation of laws, and without strong political support, the acts of one administration cannot be easily reversed or undone by the next.
But there is more to the story than simple inertia and political head-counts. Each new administration enters with an agenda of positive goals. Spending time and political capital on your predecessor’s agenda can often find its way to the bottom of the to-do list. Moreover, a new president has only a limited circle of advisers. They cannot know everything about what the last guys did (Hayek’s revenge).
So it is that we find ourselves saddled with a whole series of outmoded, inappropriate, and just plain counterproductive energy laws and regulations. What is astonishing is the longevity of policies that prevent the United States from developing and implementing a constructive approach to energy, an approach that could use the totality of our resources to fashion a constructive, efficient and clean energy system.
The Bad Past
The U.S. political class in the 1970s was not one to let a good crisis go to waste. Indeed, this is what was done in the 1970s:
First, Nixon and Ford set the stage with price controls and product allocation rules, including:
Nuclear Non-Proliferation Act (1978) – under that benign banner lurked a prohibition on reprocessing the spent fuel from civilian nuclear power reactors (the other 95% of the energy in the fuel rods), leading to the waste storage “problem” that inhibits development of nuclear power to this day;
Natural Gas Policy Act (1978) – established 8 different pricing tiers for gas and set them on a path to converge with oil by the mid-1980s, preventing the emergence of a natural gas market until the 1990s; prohibited the use of natural gas for new electric power plants (except for cogeneration);
Solar Tax Credits (1979) – encouraged significant spending on immature and inefficient solar technologies;
Windfall Profits Tax (1980) – Intended to raise more than $100 billion by taxing the “excess” profits of oil producers in the United States, raised only $40 billion before it was repealed in the late 1980s, but reduced domestic oil and gas production by 6-10 percent over that period;
Energy Security Act (1980) – established the Synthetic Fuels Corporation, a public-private partnership intended to improve the technology of coal and shale liquefaction/extraction and eventual commercialization. This act was repealed in 1986, after spending just $1.2 billion on 3 projects. In one of the supreme ironies of the entire 1970s energy policy frenzy, this $1.2 billion was perhaps the most cost-effective technology funding by the U.S. Government in that period. Though it was not used to produce shale oil or coal-based liquids, the technology to convert heavy, dirty feedstocks to light refined products was used by U.S. refiners to produce a slate of valuable light products from less expensive, heavy crudes, saving U.S. consumers many billions of dollars in crude acquisition costs over the years.
With the coming of the Reagan Administration in 1981 some of these measures were swept away, including price controls, entitlements, and some provisions of the Natural Gas Policy Act. For others, including the Synfuels Corporation, Solar Tax Credits, and Windfall Profits Taxes, legislative relief was required, which did not come until late in President Reagan’s second term.
For the domestic oil and gas industry the Malthusian gloom of the Carter years inhibited interest in readily available oil and gas reserves, hiding behind a belief that oil and gas were doomed to run out soon in any event. Jimmy Carter was a fan of Peak Oil Theory before the current decade’s bandwagon was ever conceived.
In the end, the energy policies of that past 30 years that had significant positive effects were mostly of the “first do no harm” variety. Most of those policies were enacted during the 1980s, so as to undo some of the most egregious acts of the 1970s. With the exception of the spectacular unintended consequences of the (relative) pittance in Synfuels Corporation funding, all of the careful mandatory allocations, use restrictions, production restrictions, punitive taxes, price controls and technology development showed either negative impacts on the supply of energy or no discernable effects on energy supply and use.
A number of the Carter era policies have remained part of the US Government’s official approach to energy: restrictions on offshore oil and gas production, “catch-22” type regulation of spent nuclear fuel, reliance on overall manufacturer fuel economy standards rather than prices to encourage conservation of gasoline, and last, but not least, the ethanol tax credit.
The price that we have paid for these interventions – less domestic energy production, more price volatility, aging network infrastructure – far exceeds any of the supposed benefits of such policies. Now we have a new president who wishes to make his name by even more massive intervention in energy markets – since it worked so well the last time. We face grandiose plans that start from the assumption that markets do not work and private firms cannot be trusted to make the “right” types of investments, when, in fact, most of our “remnant” problems result from ignoring rather than following market pricnciples. If the 1970s are any guide we will live with the consequences of our follies for many years.
It is much better to choose wisely than quickly.
Master Resource, March 25, 2009
Many in the energy business, whether or not they support President Obama’s positions on energy and the environment, are likely to think, “Look, the US is a big ship. It cannot be turned around in a couple of years, and even if they tried, you can right the course at the ballot box.”
Actually, you can’t. The United States is still a nation of laws, and without strong political support, the acts of one administration cannot be easily reversed or undone by the next.
But there is more to the story than simple inertia and political head-counts. Each new administration enters with an agenda of positive goals. Spending time and political capital on your predecessor’s agenda can often find its way to the bottom of the to-do list. Moreover, a new president has only a limited circle of advisers. They cannot know everything about what the last guys did (Hayek’s revenge).
So it is that we find ourselves saddled with a whole series of outmoded, inappropriate, and just plain counterproductive energy laws and regulations. What is astonishing is the longevity of policies that prevent the United States from developing and implementing a constructive approach to energy, an approach that could use the totality of our resources to fashion a constructive, efficient and clean energy system.
The Bad Past
The U.S. political class in the 1970s was not one to let a good crisis go to waste. Indeed, this is what was done in the 1970s:
First, Nixon and Ford set the stage with price controls and product allocation rules, including:
- Price controls on oil and gas at the wellhead and at the consumer level
- Encouragement to build small, inefficient oil refineries (the Entitlements Program)
Nuclear Non-Proliferation Act (1978) – under that benign banner lurked a prohibition on reprocessing the spent fuel from civilian nuclear power reactors (the other 95% of the energy in the fuel rods), leading to the waste storage “problem” that inhibits development of nuclear power to this day;
Natural Gas Policy Act (1978) – established 8 different pricing tiers for gas and set them on a path to converge with oil by the mid-1980s, preventing the emergence of a natural gas market until the 1990s; prohibited the use of natural gas for new electric power plants (except for cogeneration);
Solar Tax Credits (1979) – encouraged significant spending on immature and inefficient solar technologies;
Windfall Profits Tax (1980) – Intended to raise more than $100 billion by taxing the “excess” profits of oil producers in the United States, raised only $40 billion before it was repealed in the late 1980s, but reduced domestic oil and gas production by 6-10 percent over that period;
Energy Security Act (1980) – established the Synthetic Fuels Corporation, a public-private partnership intended to improve the technology of coal and shale liquefaction/extraction and eventual commercialization. This act was repealed in 1986, after spending just $1.2 billion on 3 projects. In one of the supreme ironies of the entire 1970s energy policy frenzy, this $1.2 billion was perhaps the most cost-effective technology funding by the U.S. Government in that period. Though it was not used to produce shale oil or coal-based liquids, the technology to convert heavy, dirty feedstocks to light refined products was used by U.S. refiners to produce a slate of valuable light products from less expensive, heavy crudes, saving U.S. consumers many billions of dollars in crude acquisition costs over the years.
With the coming of the Reagan Administration in 1981 some of these measures were swept away, including price controls, entitlements, and some provisions of the Natural Gas Policy Act. For others, including the Synfuels Corporation, Solar Tax Credits, and Windfall Profits Taxes, legislative relief was required, which did not come until late in President Reagan’s second term.
For the domestic oil and gas industry the Malthusian gloom of the Carter years inhibited interest in readily available oil and gas reserves, hiding behind a belief that oil and gas were doomed to run out soon in any event. Jimmy Carter was a fan of Peak Oil Theory before the current decade’s bandwagon was ever conceived.
In the end, the energy policies of that past 30 years that had significant positive effects were mostly of the “first do no harm” variety. Most of those policies were enacted during the 1980s, so as to undo some of the most egregious acts of the 1970s. With the exception of the spectacular unintended consequences of the (relative) pittance in Synfuels Corporation funding, all of the careful mandatory allocations, use restrictions, production restrictions, punitive taxes, price controls and technology development showed either negative impacts on the supply of energy or no discernable effects on energy supply and use.
A number of the Carter era policies have remained part of the US Government’s official approach to energy: restrictions on offshore oil and gas production, “catch-22” type regulation of spent nuclear fuel, reliance on overall manufacturer fuel economy standards rather than prices to encourage conservation of gasoline, and last, but not least, the ethanol tax credit.
The price that we have paid for these interventions – less domestic energy production, more price volatility, aging network infrastructure – far exceeds any of the supposed benefits of such policies. Now we have a new president who wishes to make his name by even more massive intervention in energy markets – since it worked so well the last time. We face grandiose plans that start from the assumption that markets do not work and private firms cannot be trusted to make the “right” types of investments, when, in fact, most of our “remnant” problems result from ignoring rather than following market pricnciples. If the 1970s are any guide we will live with the consequences of our follies for many years.
It is much better to choose wisely than quickly.
PPIFs: Gaming the federal government
Open Letter To The FDIC Ombudsman. By Karl Denninger
The Market Ticker, Monday, March 23, 2009
Now that the Treasury Plan to "cleanse" the market of "toxic assets" has been put forward, I have noted that The FDIC is the entity that will both guarantee the debt issued and vet the bidder list.
I also note the following quote from The FDIC:
The FDIC will provide oversight for the formation, funding, and operation of new public-private investment funds (“PPIFs”) that will purchase loans and other assets from depository institutions. The Legacy Loans Program will attract private capital through an FDIC debt guarantee and Treasury equity co-investment. Private market equity investors (“Private Investors’) are expected to include but are not limited to financial institutions, individuals, insurance companies, mutual funds, publicly managed investment funds, pension funds, foreign investors with a headquarters in the United States, private equity funds, and hedge funds. The participation of mutual funds, pension plans, insurance companies, and other long term investors is particularly encouraged.
There is a potential problem here.
Let's say that I am a bank ("financial institution") with $100 billion in "toxic assets". I have them on my balance sheet at 80 cents on the dollar. The market has them marked at 30 cents. We do not know what the held-to-maturity performance will be, since that requires knowing the future, although for the moment let's assume that they are cash-flowing at the present time.
What I (the bank) do know, however, is that if I sell them at 30 cents I take a monstrous loss - perhaps enough to force me under Tier Capital limits and thus render me subject to an FDIC enforcement action. I therefore will not sell for 30 cents so long as I have any belief whatsoever that the cash flow - or any government subsidy - will exceed that value.
If I, as a "financial institution" can participate as a bidder in these auctions I can foist off my loss onto the taxpayer. Here is how I can rig the game so as to avoid an otherwise-inevitable loss:
The taxpayer gets hosed for the remaining $71.25 billion dollars.
This can and will be done if the "sellers" of these assets are allowed to bid either directly or indirectly as it provides a means for banks to intentionally dump bad assets at a certain loss that is much smaller than their expected realized loss over time, shifting the rest of the loss to the taxpayer.
This program has the potential to shift literally $500 billion or more in losses onto the taxpayer, not through the operation of "bad luck" but rather through what amounts to a bid rigging operation.
Be aware that I, along with many others, have figured this out. Also be aware that as taxpayers and your ultimate boss, we do not intend to sit still and allow the public treasury to be looted in such a fashion.
The FDIC's job is to prevent that sort of looting operation by prohibiting the sellers of these assets from having any financial interest in the bidding side of the equation, directly or indirectly, and I along with many others intend to hold you to that obligation.
I like the outline of this program if and only if it cannot be gamed in this or similar fashion. Provided that does not occur, this program has the potential to provide great benefit to both the banking system and our economy.
If, however, the financial institutions that created this mess in the first place are allowed by the FDIC and Treasury to use it as a looting operation to intentionally shift their bad assets onto the Taxpayer you can expect that we the people will hold our government to account.
The Market Ticker, Monday, March 23, 2009
Now that the Treasury Plan to "cleanse" the market of "toxic assets" has been put forward, I have noted that The FDIC is the entity that will both guarantee the debt issued and vet the bidder list.
I also note the following quote from The FDIC:
The FDIC will provide oversight for the formation, funding, and operation of new public-private investment funds (“PPIFs”) that will purchase loans and other assets from depository institutions. The Legacy Loans Program will attract private capital through an FDIC debt guarantee and Treasury equity co-investment. Private market equity investors (“Private Investors’) are expected to include but are not limited to financial institutions, individuals, insurance companies, mutual funds, publicly managed investment funds, pension funds, foreign investors with a headquarters in the United States, private equity funds, and hedge funds. The participation of mutual funds, pension plans, insurance companies, and other long term investors is particularly encouraged.
There is a potential problem here.
Let's say that I am a bank ("financial institution") with $100 billion in "toxic assets". I have them on my balance sheet at 80 cents on the dollar. The market has them marked at 30 cents. We do not know what the held-to-maturity performance will be, since that requires knowing the future, although for the moment let's assume that they are cash-flowing at the present time.
What I (the bank) do know, however, is that if I sell them at 30 cents I take a monstrous loss - perhaps enough to force me under Tier Capital limits and thus render me subject to an FDIC enforcement action. I therefore will not sell for 30 cents so long as I have any belief whatsoever that the cash flow - or any government subsidy - will exceed that value.
If I, as a "financial institution" can participate as a bidder in these auctions I can foist off my loss onto the taxpayer. Here is how I can rig the game so as to avoid an otherwise-inevitable loss:
- I become a "bidder" and "bid" on my own assets at 75 cents.
- I am providing 5 or 10% of the money. The rest is covered by Treasury, The Fed and the FDIC via guaranteed bond issuance.
- The loan, ex my contribution, is non-recourse. That is, I can lose 5 or 10% of the total portfolio purchased, but nothing more.
The taxpayer gets hosed for the remaining $71.25 billion dollars.
This can and will be done if the "sellers" of these assets are allowed to bid either directly or indirectly as it provides a means for banks to intentionally dump bad assets at a certain loss that is much smaller than their expected realized loss over time, shifting the rest of the loss to the taxpayer.
This program has the potential to shift literally $500 billion or more in losses onto the taxpayer, not through the operation of "bad luck" but rather through what amounts to a bid rigging operation.
Be aware that I, along with many others, have figured this out. Also be aware that as taxpayers and your ultimate boss, we do not intend to sit still and allow the public treasury to be looted in such a fashion.
The FDIC's job is to prevent that sort of looting operation by prohibiting the sellers of these assets from having any financial interest in the bidding side of the equation, directly or indirectly, and I along with many others intend to hold you to that obligation.
I like the outline of this program if and only if it cannot be gamed in this or similar fashion. Provided that does not occur, this program has the potential to provide great benefit to both the banking system and our economy.
If, however, the financial institutions that created this mess in the first place are allowed by the FDIC and Treasury to use it as a looting operation to intentionally shift their bad assets onto the Taxpayer you can expect that we the people will hold our government to account.
The Guardian goes to Pallywood
The Guardian goes to Pallywood, by Melanie Phillips
The Spectator, Tuesday, March 24, 2009
Not to be outdone by the Ha’aretz blood libel, the Guardian today devotes a front page splash, two inside pages, three separate videos, a commentary by Seumas Milne and an editorial to what it claims is evidence from a special investigation by Clancy Chassay that Israel committed 'war crimes’ in Gaza in Operation Cast Lead by deliberately targeting civilians, using young boys as human shields and deliberately targeting ambulances and medical personnel and hospitals.
It presents these allegations as facts. It does so even though they are only allegations, unsupported by any evidence whatever. It does so even though the allegations are made by people with a proven track record of systematic lying to journalists and fabrication of stories and images. It does so even though such people either support Hamas or are controlled and schooled by Hamas to tell lies under pain of torture or death.
It does so without providing any verifiable information – full names, dates, specifics. It does so without making any mention of the extraordinary lengths to which the Israel Defence Force went in trying to avoid civilian casualties, by leafleting targeted houses to warn the inhabitants to get out and even calling them on their mobile phones to urge them to do so. It does so without acknowledging the fact that it was Hamas which used Gazan civilians as human shields – indeed, it dismisses this in a sentence by stating that Amnesty and Human Rights Watch found ‘no evidence’ that it had done so.
Hardly surprising since Amnesty and Human Rights Watch have repeatedly shown themselves to be wholly partisan in the Palestinian cause and viscerally prejudiced against Israel. But aren’t Guardian reporters supposed to be journalists rather than passive conduits of NGO propaganda? In his ‘month-long investigation’, didn’t investigative reporter Clancy Chassay himself come across any of the copious evidence that Hamas used Gazan civilians as human shields – indeed, effectively used the whole civilian population as either a collective hostage or missile fodder? Did special investigative reporter Chassay manage somehow not to see this, or this, or this, or this, or this evidence that Hamas was guilty prima facie of the war crime of repeatedly using civilians as a weapon of war?
Looking at this Hamas propaganda sicked up by the Guardian (and in a pale imitation, the similarly implausible tale in today’s Independent) it is blindingly obvious that, as so often before, Hamas has chosen to deflect attention from its own war crimes – the deliberate targeting of Israeli civilians and the use of Palestinian civilians as hostages, human shields and missile fodder – by claiming that it is instead Israel that is guilty of that very behaviour. And the evidence that the Guardian has presented as fact to support this claim turns out to be at best paper-thin and at worst demonstrably ridiculous.
Take the first video, featuring the family of six who we are told were killed by an Israeli drone – whose pinpoint accuracy must have meant, says Chassay, that Israel deliberately targeted civilians in that house. But the evidence presented shows nothing of the kind. We are left with absolutely no idea why this house was targeted – whether it was actually a terrorist stronghold, whether terrorists were firing nearby, whether it was erroneous intelligence or even whether a drone was indeed responsible. There whole thing is only allegations. In addition Carl at Israelmatzav adds this intriguing observation:
By the way, the part of the video where the two girls were allegedly killed looked very familiar to me. To me, it looks remarkably like the neighborhood in which the Hilles clan lived. There are some shots of that neighborhood in the video here. Were the people in this video Fatah supporters who were set up to be killed by Hamas?
Now take the second video, in which we are told as a fact that three young brothers were used by the IDF as human shields. Again, all we have to go on is the brothers’ allegations. We see them posing self-consciously in positions replicating how the Israeli army had reportedly used them, including supposedly kneeling in front of Israeli tank positions to deter Hamas from firing.
But a moment’s thought suggests this is hardly plausible. The whole point of human shields is that they are a deterrent against attack because the other side will not want to kill civilians being used in such a way. That is undoubtedly true of the Israelis: there have been countless examples of their aborting attacks because Palestinian children were seen or suspected to be present.
But that’s the point: children and other civilians are present because Hamas use them as human shields. We know from Palestinians’ own testimony and other evidence (see above) that they deliberately kept families in houses which the IDF warned would be targeted – even putting them on the rooftops – in order that they should be killed as martyrs to the cause of destroying Israel. And as we know, they also turn their own children into human bombs for the same reason. So is it really likely that the Israelis would assume that if they used Palestinian children as human shields, Hamas would not fire at them?
Most ludicrously of all, the video shows what it solemnly states is an Israeli army magazine found in one of the destroyed houses showing a picture of one of the brothers bound and blindfolded before he said he was stripped to his underpants and used as a human shield.
Rub your eyes. Operation Cast Lead lasted from December 27 to January 18. Are we supposed to believe that the Israelis managed to publish during that time a magazine with a picture of a boy they had captured during that same operation? And then left it lying around in the rubble– miraculously without so much as a tear in its pages -- for him conveniently to find it?
The boys shown are healthy, well fed and bright-eyed. Their mother is consumed by grief as she describes what happened to them... hang on, let’s read that one again. Her children are healthy, well fed and bright-eyed. So why is she weeping as if they have all been killed? Looks suspiciously like another Hamas ‘Pallywood’ production to me.
Now let’s look at the third video which claims Israel targeted ambulances, hospitals and medical personnel. No mention that Hamas regularly hijacks ambulances, as reported here; nor that they and their NGO mouthpieces claimed medics were killed when they were in fact terrorists, as reported here:
Last week, the International Solidarity Movement, a pro-Palestinian NGO, quoted statistics obtained by the Palestinian Health Ministry according to which 15 Palestinian medics were killed during the three-week operation. But, said the CLA, some of those reportedly killed were not medics, while in other cases the reports of deaths turned out to be false. One of the ‘medics’ reported dead was Anas Naim, the nephew of Hamas Health Minister Bassem Naim, who was killed during clashes with the IDF on January 4 in the Ash Sheikh Ajlin neighborhood of Gaza City.
Following the clashes, the Palestinian press reported that Naim was killed and that he was a medic with the Palestinian Red Crescent. However, an investigation by the Gaza CLA discovered numerous pictures of Naim posing holding a RPG launcher and a Kalashnikov assault rifle posted on a Hamas website. Two days earlier, on January 2, a Hamas website reported that Israel had shelled the Dabash family home in the Sheikh Radwan neighborhood of Gaza City and that a medic, named Id Ramzan, was killed. But in a report posted on the same website several hours later, Ramzan, who was described as a member of Hamas's Civil Defense Unit, was reported to be alive and to have just conducted a live interview with Al-Aksa Television.
No mention of any of this. Instead the video presents as fact a claim by a man wearing an ambulance vest that his ambulance was struck by an Israeli tank shell containing 8000 ‘flechettes’, or small winged darts. He describes how his colleague was hit by hundreds of these flechettes -- whereupon he sank to his knees, raised his hands in the air and prayed. But my understanding is that flechette shells rip to pieces anyone they hit. So how could a man hit by a shell containing 8000 flechettes have been able to raise his hands and start praying?
What’s striking about these videos is how scrappy these claims are. So much so, in fact, that the second one seeks to shore up its case by footage from 2007, claiming to show the IDF using Palestinians as human shields on two previous occasions. But once again, these brief clips show no such thing. We see IDF soldiers going up a staircase into a building preceded by a Palestinian youth – we have no idea why, or what role the youth is playing. And we see a child sitting on the bonnet of an IDF jeep with his hand chained to the windshield – which is most likely to have been done to stop him from running away rather than using him as a human shield.
To pad out these preposterous and absurd claims, the Guardian cites the now infamous Ha’aretz allegations – which it manages to distort even further, saying that these included the admission by an Israeli soldier that an Israeli sniper had shot dead a Palestinian mother and her two children without saying a) that even Ha’aretz had said this was an accident and b) that the soldier subsequently admitted he hadn’t even been there and was merely recycling rumour and hearsay.
In his commentary, the Muslim Brotherhood/Hamas mouthpiece Seumas Milne misrepresents the Ha’aretz travesty yet further still by stating:
Last week, the Israeli newspaper Ha’aretz reported that a group of Israelis soldiers had admitted intentionally shooting dead an unarmed Palestinian mother and her two children, as well as an elderly Palestinian woman, in Gaza in January.
But the group of soldiers had ‘admitted’ doing no such thing. They had not ‘admitted’ doing anything themselves at all – merely reported what they had heard others say. Milne also sought to prop up the ‘human shield’ claims by dragging in other events:
Or take the case of Majdi Abed Rabbo – a Palestinian linked to Fatah and no friend of Hamas – who described to the Independent how he was repeatedly used as a human shield by Israeli soldiers confronting armed Hamas fighters in a burned-out building in Jabalya in the Gaza strip. The fact of Israeli forces’ use of human shields is hard to gainsay, not least since there are unambiguous photographs of several cases from the West Bank in 2007, as shown in Chassay’s film.
The ‘unambiguous photographs’ are of course, as discussed above, anything but unambiguous. And as far as Majdi Abed Rabbo is concerned, once again a moment’s thought suggest this is most implausible. Since Hamas has been killing large numbers of Fatah operatives who it considers to be its deadly enemies, is it really likely that ‘a Palestinian linked to Fatah and no friend of Hamas’ would be used by the Israelis as a human shield against Hamas?
Lazy, malicious use of partisan, uncorroborated, thin, ambiguous and on occasion demonstrably absurd allegations, with the purpose and effect of demonising and delegitimising the Israeli victims of terrorism by painting them as the terrorists and their Palestinian attackers as their victims.
In similar vein, no mention at all in the Guardian of the enormous bomb planted in a shopping mall in Haifa last Saturday evening – 100 kg of explosives packed with ball bearings -- which, had it not been defused, would most likely have killed hundreds of people.
Truly, the Guardian is an evil newspaper.
The Spectator, Tuesday, March 24, 2009
Not to be outdone by the Ha’aretz blood libel, the Guardian today devotes a front page splash, two inside pages, three separate videos, a commentary by Seumas Milne and an editorial to what it claims is evidence from a special investigation by Clancy Chassay that Israel committed 'war crimes’ in Gaza in Operation Cast Lead by deliberately targeting civilians, using young boys as human shields and deliberately targeting ambulances and medical personnel and hospitals.
It presents these allegations as facts. It does so even though they are only allegations, unsupported by any evidence whatever. It does so even though the allegations are made by people with a proven track record of systematic lying to journalists and fabrication of stories and images. It does so even though such people either support Hamas or are controlled and schooled by Hamas to tell lies under pain of torture or death.
It does so without providing any verifiable information – full names, dates, specifics. It does so without making any mention of the extraordinary lengths to which the Israel Defence Force went in trying to avoid civilian casualties, by leafleting targeted houses to warn the inhabitants to get out and even calling them on their mobile phones to urge them to do so. It does so without acknowledging the fact that it was Hamas which used Gazan civilians as human shields – indeed, it dismisses this in a sentence by stating that Amnesty and Human Rights Watch found ‘no evidence’ that it had done so.
Hardly surprising since Amnesty and Human Rights Watch have repeatedly shown themselves to be wholly partisan in the Palestinian cause and viscerally prejudiced against Israel. But aren’t Guardian reporters supposed to be journalists rather than passive conduits of NGO propaganda? In his ‘month-long investigation’, didn’t investigative reporter Clancy Chassay himself come across any of the copious evidence that Hamas used Gazan civilians as human shields – indeed, effectively used the whole civilian population as either a collective hostage or missile fodder? Did special investigative reporter Chassay manage somehow not to see this, or this, or this, or this, or this evidence that Hamas was guilty prima facie of the war crime of repeatedly using civilians as a weapon of war?
Looking at this Hamas propaganda sicked up by the Guardian (and in a pale imitation, the similarly implausible tale in today’s Independent) it is blindingly obvious that, as so often before, Hamas has chosen to deflect attention from its own war crimes – the deliberate targeting of Israeli civilians and the use of Palestinian civilians as hostages, human shields and missile fodder – by claiming that it is instead Israel that is guilty of that very behaviour. And the evidence that the Guardian has presented as fact to support this claim turns out to be at best paper-thin and at worst demonstrably ridiculous.
Take the first video, featuring the family of six who we are told were killed by an Israeli drone – whose pinpoint accuracy must have meant, says Chassay, that Israel deliberately targeted civilians in that house. But the evidence presented shows nothing of the kind. We are left with absolutely no idea why this house was targeted – whether it was actually a terrorist stronghold, whether terrorists were firing nearby, whether it was erroneous intelligence or even whether a drone was indeed responsible. There whole thing is only allegations. In addition Carl at Israelmatzav adds this intriguing observation:
By the way, the part of the video where the two girls were allegedly killed looked very familiar to me. To me, it looks remarkably like the neighborhood in which the Hilles clan lived. There are some shots of that neighborhood in the video here. Were the people in this video Fatah supporters who were set up to be killed by Hamas?
Now take the second video, in which we are told as a fact that three young brothers were used by the IDF as human shields. Again, all we have to go on is the brothers’ allegations. We see them posing self-consciously in positions replicating how the Israeli army had reportedly used them, including supposedly kneeling in front of Israeli tank positions to deter Hamas from firing.
But a moment’s thought suggests this is hardly plausible. The whole point of human shields is that they are a deterrent against attack because the other side will not want to kill civilians being used in such a way. That is undoubtedly true of the Israelis: there have been countless examples of their aborting attacks because Palestinian children were seen or suspected to be present.
But that’s the point: children and other civilians are present because Hamas use them as human shields. We know from Palestinians’ own testimony and other evidence (see above) that they deliberately kept families in houses which the IDF warned would be targeted – even putting them on the rooftops – in order that they should be killed as martyrs to the cause of destroying Israel. And as we know, they also turn their own children into human bombs for the same reason. So is it really likely that the Israelis would assume that if they used Palestinian children as human shields, Hamas would not fire at them?
Most ludicrously of all, the video shows what it solemnly states is an Israeli army magazine found in one of the destroyed houses showing a picture of one of the brothers bound and blindfolded before he said he was stripped to his underpants and used as a human shield.
Rub your eyes. Operation Cast Lead lasted from December 27 to January 18. Are we supposed to believe that the Israelis managed to publish during that time a magazine with a picture of a boy they had captured during that same operation? And then left it lying around in the rubble– miraculously without so much as a tear in its pages -- for him conveniently to find it?
The boys shown are healthy, well fed and bright-eyed. Their mother is consumed by grief as she describes what happened to them... hang on, let’s read that one again. Her children are healthy, well fed and bright-eyed. So why is she weeping as if they have all been killed? Looks suspiciously like another Hamas ‘Pallywood’ production to me.
Now let’s look at the third video which claims Israel targeted ambulances, hospitals and medical personnel. No mention that Hamas regularly hijacks ambulances, as reported here; nor that they and their NGO mouthpieces claimed medics were killed when they were in fact terrorists, as reported here:
Last week, the International Solidarity Movement, a pro-Palestinian NGO, quoted statistics obtained by the Palestinian Health Ministry according to which 15 Palestinian medics were killed during the three-week operation. But, said the CLA, some of those reportedly killed were not medics, while in other cases the reports of deaths turned out to be false. One of the ‘medics’ reported dead was Anas Naim, the nephew of Hamas Health Minister Bassem Naim, who was killed during clashes with the IDF on January 4 in the Ash Sheikh Ajlin neighborhood of Gaza City.
Following the clashes, the Palestinian press reported that Naim was killed and that he was a medic with the Palestinian Red Crescent. However, an investigation by the Gaza CLA discovered numerous pictures of Naim posing holding a RPG launcher and a Kalashnikov assault rifle posted on a Hamas website. Two days earlier, on January 2, a Hamas website reported that Israel had shelled the Dabash family home in the Sheikh Radwan neighborhood of Gaza City and that a medic, named Id Ramzan, was killed. But in a report posted on the same website several hours later, Ramzan, who was described as a member of Hamas's Civil Defense Unit, was reported to be alive and to have just conducted a live interview with Al-Aksa Television.
No mention of any of this. Instead the video presents as fact a claim by a man wearing an ambulance vest that his ambulance was struck by an Israeli tank shell containing 8000 ‘flechettes’, or small winged darts. He describes how his colleague was hit by hundreds of these flechettes -- whereupon he sank to his knees, raised his hands in the air and prayed. But my understanding is that flechette shells rip to pieces anyone they hit. So how could a man hit by a shell containing 8000 flechettes have been able to raise his hands and start praying?
What’s striking about these videos is how scrappy these claims are. So much so, in fact, that the second one seeks to shore up its case by footage from 2007, claiming to show the IDF using Palestinians as human shields on two previous occasions. But once again, these brief clips show no such thing. We see IDF soldiers going up a staircase into a building preceded by a Palestinian youth – we have no idea why, or what role the youth is playing. And we see a child sitting on the bonnet of an IDF jeep with his hand chained to the windshield – which is most likely to have been done to stop him from running away rather than using him as a human shield.
To pad out these preposterous and absurd claims, the Guardian cites the now infamous Ha’aretz allegations – which it manages to distort even further, saying that these included the admission by an Israeli soldier that an Israeli sniper had shot dead a Palestinian mother and her two children without saying a) that even Ha’aretz had said this was an accident and b) that the soldier subsequently admitted he hadn’t even been there and was merely recycling rumour and hearsay.
In his commentary, the Muslim Brotherhood/Hamas mouthpiece Seumas Milne misrepresents the Ha’aretz travesty yet further still by stating:
Last week, the Israeli newspaper Ha’aretz reported that a group of Israelis soldiers had admitted intentionally shooting dead an unarmed Palestinian mother and her two children, as well as an elderly Palestinian woman, in Gaza in January.
But the group of soldiers had ‘admitted’ doing no such thing. They had not ‘admitted’ doing anything themselves at all – merely reported what they had heard others say. Milne also sought to prop up the ‘human shield’ claims by dragging in other events:
Or take the case of Majdi Abed Rabbo – a Palestinian linked to Fatah and no friend of Hamas – who described to the Independent how he was repeatedly used as a human shield by Israeli soldiers confronting armed Hamas fighters in a burned-out building in Jabalya in the Gaza strip. The fact of Israeli forces’ use of human shields is hard to gainsay, not least since there are unambiguous photographs of several cases from the West Bank in 2007, as shown in Chassay’s film.
The ‘unambiguous photographs’ are of course, as discussed above, anything but unambiguous. And as far as Majdi Abed Rabbo is concerned, once again a moment’s thought suggest this is most implausible. Since Hamas has been killing large numbers of Fatah operatives who it considers to be its deadly enemies, is it really likely that ‘a Palestinian linked to Fatah and no friend of Hamas’ would be used by the Israelis as a human shield against Hamas?
Lazy, malicious use of partisan, uncorroborated, thin, ambiguous and on occasion demonstrably absurd allegations, with the purpose and effect of demonising and delegitimising the Israeli victims of terrorism by painting them as the terrorists and their Palestinian attackers as their victims.
In similar vein, no mention at all in the Guardian of the enormous bomb planted in a shopping mall in Haifa last Saturday evening – 100 kg of explosives packed with ball bearings -- which, had it not been defused, would most likely have killed hundreds of people.
Truly, the Guardian is an evil newspaper.
Jake DeSantis, American International Group, letter to Edward M. Liddy
Dear A.I.G., I Quit! By Jake DeSantis
TNYT, March 25, 2009
The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.
Dear Mr. Liddy,
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.
I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.
But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.
My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.
That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”
That may also be why you authorized the balance of the payments on March 13.
At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.
I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.
You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.
The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.
So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.
That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.
This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.
Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”
Sincerely,
Jake DeSantis
TNYT, March 25, 2009
The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.
Dear Mr. Liddy,
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.
I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.
But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.
My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.
That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”
That may also be why you authorized the balance of the payments on March 13.
At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.
I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.
You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.
The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.
So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.
That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.
This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.
Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”
Sincerely,
Jake DeSantis
Toameh: The Pro-Palestinians' Real Agenda
The Pro-Palestinians' Real Agenda, by Khaled Abu Toameh
Hudson New York/Hudson Institute, March 24, 2009 6:45 AM
During a recent visit to several university campuses in the U.S., I discovered that there is more sympathy for Hamas there than there is in Ramallah.
Listening to some students and professors on these campuses, for a moment I thought I was sitting opposite a Hamas spokesman or a would-be-suicide bomber.
I was told, for instance, that Israel has no right to exist, that Israel’s “apartheid system” is worse than the one that existed in South Africa and that Operation Cast Lead was launched only because Hamas was beginning to show signs that it was interested in making peace and not because of the rockets that the Islamic movement was launching at Israeli communities.
I was also told that top Fatah operative Marwan Barghouti, who is serving five life terms in prison for masterminding terror attacks against Israeli civilians, was thrown behind bars simply because he was trying to promote peace between Israelis and Palestinians.
Furthermore, I was told that all the talk about financial corruption in the Palestinian Authority was “Zionist propaganda” and that Yasser Arafat had done wonderful things for his people, including the establishment of schools, hospitals and universities.
The good news is that these remarks were made only by a minority of people on the campuses who describe themselves as “pro-Palestinian,” although the overwhelming majority of them are not Palestinians or even Arabs or Muslims.
The bad news is that these groups of hard-line activists/thugs are trying to intimidate anyone who dares to say something that they don’t like to hear.
When the self-designated “pro-Palestinian” lobbyists are unable to challenge the facts presented by a speaker, they resort to verbal abuse.
On one campus, for example, I was condemned as an “idiot” because I said that a majority of Palestinians voted for Hamas in the January 2006 election because they were fed up with financial corruption in the Palestinian Authority.
On another campus, I was dubbed as a “mouthpiece for the Zionists” because I said that Israel has a free media. There was another campus where someone told me that I was a ‘liar” because I said that Barghouti was sentenced to five life terms because of his role in terrorism.
And then there was the campus (in Chicago) where I was “greeted” with swastikas that were painted over posters promoting my talk. The perpetrators, of course, never showed up at my event because they would not be able to challenge someone who has been working in the field for nearly 30 years.
What struck me more than anything else was the fact that many of the people I met on the campuses supported Hamas and believed that it had the right to “resist the occupation” even if that meant blowing up children and women on a bus in downtown Jerusalem.
I never imagined that I would need police protection while speaking at a university in the U.S. I have been on many Palestinian campuses in the West Bank and Gaza Strip and I cannot recall one case where I felt intimidated or where someone shouted abuse at me.
Ironically, many of the Arabs and Muslims I met on the campuses were much more understanding and even welcomed my “even-handed analysis” of the Israeli-Arab conflict. After all, the views I voiced were not much different than those made by the leaderships both in Israel and the Palestinian Authority. These views include support for the two-state solution and the idea of coexistence between Jews and Arabs in this part of the world.
The so-called pro-Palestinian “junta” on the campuses has nothing to offer other than hatred and de-legitimization of Israel. If these folks really cared about the Palestinians, they would be campaigning for good government and for the promotion of values of democracy and freedom in the West Bank and Gaza Strip.
Their hatred for Israel and what it stands for has blinded them to a point where they no longer care about the real interests of the Palestinians, namely the need to end the anarchy and lawlessness, and to dismantle all the armed gangs that are responsible for the death of hundreds of innocent Palestinians over the past few years.
The majority of these activists openly admit that they have never visited Israel or the Palestinian territories. They don’t know -and don’t want to know - that Jews and Arabs here are still doing business together and studying together and meeting with each other on a daily basis because they are destined to live together in this part of the world. They don’t want to hear that despite all the problems life continues and that ordinary Arab and Jewish parents who wake up in the morning just want to send their children to school and go to work before returning home safely and happily.
What is happening on the U.S. campuses is not about supporting the Palestinians as much as it is about promoting hatred for the Jewish state. It is not really about ending the “occupation” as much as it is about ending the existence of Israel.
Many of the Palestinian Authority and Hamas officials I talk to in the context of my work as a journalist sound much more pragmatic than most of the anti-Israel, “pro-Palestinian” folks on the campuses.
Over the past 15 years, much has been written and said about the fact that Palestinian school textbooks don’t promote peace and coexistence and that the Palestinian media often publishes anti-Israel material.
While this may be true, there is no ignoring the fact that the anti-Israel campaign on U.S. campuses is not less dangerous. What is happening on these campuses is not in the frame of freedom of speech. Instead, it is the freedom to disseminate hatred and violence. As such, we should not be surprised if the next generation of jihadists comes not from the Gaza Strip or the mountains and mosques of Pakistan and Afghanistan, but from university campuses across the U.S.
Hudson New York/Hudson Institute, March 24, 2009 6:45 AM
During a recent visit to several university campuses in the U.S., I discovered that there is more sympathy for Hamas there than there is in Ramallah.
Listening to some students and professors on these campuses, for a moment I thought I was sitting opposite a Hamas spokesman or a would-be-suicide bomber.
I was told, for instance, that Israel has no right to exist, that Israel’s “apartheid system” is worse than the one that existed in South Africa and that Operation Cast Lead was launched only because Hamas was beginning to show signs that it was interested in making peace and not because of the rockets that the Islamic movement was launching at Israeli communities.
I was also told that top Fatah operative Marwan Barghouti, who is serving five life terms in prison for masterminding terror attacks against Israeli civilians, was thrown behind bars simply because he was trying to promote peace between Israelis and Palestinians.
Furthermore, I was told that all the talk about financial corruption in the Palestinian Authority was “Zionist propaganda” and that Yasser Arafat had done wonderful things for his people, including the establishment of schools, hospitals and universities.
The good news is that these remarks were made only by a minority of people on the campuses who describe themselves as “pro-Palestinian,” although the overwhelming majority of them are not Palestinians or even Arabs or Muslims.
The bad news is that these groups of hard-line activists/thugs are trying to intimidate anyone who dares to say something that they don’t like to hear.
When the self-designated “pro-Palestinian” lobbyists are unable to challenge the facts presented by a speaker, they resort to verbal abuse.
On one campus, for example, I was condemned as an “idiot” because I said that a majority of Palestinians voted for Hamas in the January 2006 election because they were fed up with financial corruption in the Palestinian Authority.
On another campus, I was dubbed as a “mouthpiece for the Zionists” because I said that Israel has a free media. There was another campus where someone told me that I was a ‘liar” because I said that Barghouti was sentenced to five life terms because of his role in terrorism.
And then there was the campus (in Chicago) where I was “greeted” with swastikas that were painted over posters promoting my talk. The perpetrators, of course, never showed up at my event because they would not be able to challenge someone who has been working in the field for nearly 30 years.
What struck me more than anything else was the fact that many of the people I met on the campuses supported Hamas and believed that it had the right to “resist the occupation” even if that meant blowing up children and women on a bus in downtown Jerusalem.
I never imagined that I would need police protection while speaking at a university in the U.S. I have been on many Palestinian campuses in the West Bank and Gaza Strip and I cannot recall one case where I felt intimidated or where someone shouted abuse at me.
Ironically, many of the Arabs and Muslims I met on the campuses were much more understanding and even welcomed my “even-handed analysis” of the Israeli-Arab conflict. After all, the views I voiced were not much different than those made by the leaderships both in Israel and the Palestinian Authority. These views include support for the two-state solution and the idea of coexistence between Jews and Arabs in this part of the world.
The so-called pro-Palestinian “junta” on the campuses has nothing to offer other than hatred and de-legitimization of Israel. If these folks really cared about the Palestinians, they would be campaigning for good government and for the promotion of values of democracy and freedom in the West Bank and Gaza Strip.
Their hatred for Israel and what it stands for has blinded them to a point where they no longer care about the real interests of the Palestinians, namely the need to end the anarchy and lawlessness, and to dismantle all the armed gangs that are responsible for the death of hundreds of innocent Palestinians over the past few years.
The majority of these activists openly admit that they have never visited Israel or the Palestinian territories. They don’t know -and don’t want to know - that Jews and Arabs here are still doing business together and studying together and meeting with each other on a daily basis because they are destined to live together in this part of the world. They don’t want to hear that despite all the problems life continues and that ordinary Arab and Jewish parents who wake up in the morning just want to send their children to school and go to work before returning home safely and happily.
What is happening on the U.S. campuses is not about supporting the Palestinians as much as it is about promoting hatred for the Jewish state. It is not really about ending the “occupation” as much as it is about ending the existence of Israel.
Many of the Palestinian Authority and Hamas officials I talk to in the context of my work as a journalist sound much more pragmatic than most of the anti-Israel, “pro-Palestinian” folks on the campuses.
Over the past 15 years, much has been written and said about the fact that Palestinian school textbooks don’t promote peace and coexistence and that the Palestinian media often publishes anti-Israel material.
While this may be true, there is no ignoring the fact that the anti-Israel campaign on U.S. campuses is not less dangerous. What is happening on these campuses is not in the frame of freedom of speech. Instead, it is the freedom to disseminate hatred and violence. As such, we should not be surprised if the next generation of jihadists comes not from the Gaza Strip or the mountains and mosques of Pakistan and Afghanistan, but from university campuses across the U.S.
Why Congress Will Kill the Bank Rescue
Why Congress Will Kill the Bank Rescue. By Vincent Reinhart
What happens when the hedge funds make profits?
WSJ, Mar 25, 2009
Americans can be forgiven for experiencing a sense of deja vu as they digest the details of Treasury Secretary Timothy Geithner's Public-Private Investment Program (PPIP) for troubled bank assets. What was rolled out on the pages of newspapers this week read like press releases on the various plans over the past year from Mr. Geithner's predecessor, Hank Paulson.
The two Treasury secretaries share a touching faith in public-private cooperation to lift the value of troubled assets. This assumes, of course, that those assets are troubled because their true values are obscured by irrational self-doubt and market illiquidity, and not by fundamental problems in the prospects of repayment. It also assumes that the solution to problems created by excessive leverage is for government to encourage more leverage.
Notably absent in the Geithner plan is any progress on the barrier at which Mr. Paulson stumbled last year: What are the right prices for troubled assets? To believe that the solution lies in harnessing the public and private sectors in tandem shows a misunderstanding of these sectors' incentives.
Public officials want this problem to go away without being stuck with the smoldering wreckage of large and complicated financial institutions. That requires buying assets quickly from problematic firms at the highest prices possible.
Private investors want to make a profit. That can best be achieved by delaying purchases, thereby lowering prices and sticking the government with as much of the loss as possible.
The possibility of outsized profit, made possible by government guarantees and matching capital contributions, is the carrot government can offer to those with private capital willing to commit to the enterprise. The problem is that Congress has been demonizing the financial sector and considering ex post expropriation of bonuses.
For the PPIP to work, the government will have to use the expertise of much-vilified financial professionals, create massive expected profit opportunities to entice capital, and tap places where there are deep pools of money -- including sovereign wealth funds. If the PPIP is successful, is there any chance that Congress would not be holding hearings complaining about the massive rewards to those who took on the risk? Unless members of Congress cool the heat of their rhetoric, the potential profits Mr. Geithner is putting on the table will simply be left there.
When the government's carrot does not work, next will come the stick. Remember, 19 of the largest financial firms have been asked to submit to stress tests detailing the adequacy of their capital.
Talk about irony. Financial markets are in disarray today because leading firms chose to bury complicated instruments in their books. The results were opaque balance sheets that hid the considerable use of leverage, and proved misleading both to investors and examiners. These same firms are now being required by regulators to use these misshapen accounts to make far-ahead predictions.
But the objective of the stress test is not to get useful forecasts. Rather, it will provide the excuse for regulators, outside the usual process of examination and resolution, to open a discussion with major firms about the adequacy of their capital.
A dialogue, once started, can then proceed to capital infusions, forced mergers and other forms of balance-sheet relief. This will all be with an eye to creating strong incentives for bank managers to attract private capital. If necessary, the stress tests can be used to force fire sales that will attract private capital through the PPIP.
So the government, once again, has opted for a circuitous route to the goal of sorting out financial firms. This will take longer than necessary and sacrifice clarity. But obfuscation was probably a design principle. As yet, the American public does not appear ready to admit that its government will have to absorb large losses to restart financial markets. Until that day comes, government action will continue to be indirect and probably insufficient.
This circuitous route can work, provided that the branches of the government pull in the same direction. Politicians are going to have to understand that the longer-term good of the nation involves cooperating with, not castigating, financial professionals. And the Obama administration will have to understand that its approval rating is to be used to convince the public of hard choices.
Mr. Reinhart is a resident scholar at the American Enterprise Institute and former director of the division of monetary affairs at the Federal Reserve.
What happens when the hedge funds make profits?
WSJ, Mar 25, 2009
Americans can be forgiven for experiencing a sense of deja vu as they digest the details of Treasury Secretary Timothy Geithner's Public-Private Investment Program (PPIP) for troubled bank assets. What was rolled out on the pages of newspapers this week read like press releases on the various plans over the past year from Mr. Geithner's predecessor, Hank Paulson.
The two Treasury secretaries share a touching faith in public-private cooperation to lift the value of troubled assets. This assumes, of course, that those assets are troubled because their true values are obscured by irrational self-doubt and market illiquidity, and not by fundamental problems in the prospects of repayment. It also assumes that the solution to problems created by excessive leverage is for government to encourage more leverage.
Notably absent in the Geithner plan is any progress on the barrier at which Mr. Paulson stumbled last year: What are the right prices for troubled assets? To believe that the solution lies in harnessing the public and private sectors in tandem shows a misunderstanding of these sectors' incentives.
Public officials want this problem to go away without being stuck with the smoldering wreckage of large and complicated financial institutions. That requires buying assets quickly from problematic firms at the highest prices possible.
Private investors want to make a profit. That can best be achieved by delaying purchases, thereby lowering prices and sticking the government with as much of the loss as possible.
The possibility of outsized profit, made possible by government guarantees and matching capital contributions, is the carrot government can offer to those with private capital willing to commit to the enterprise. The problem is that Congress has been demonizing the financial sector and considering ex post expropriation of bonuses.
For the PPIP to work, the government will have to use the expertise of much-vilified financial professionals, create massive expected profit opportunities to entice capital, and tap places where there are deep pools of money -- including sovereign wealth funds. If the PPIP is successful, is there any chance that Congress would not be holding hearings complaining about the massive rewards to those who took on the risk? Unless members of Congress cool the heat of their rhetoric, the potential profits Mr. Geithner is putting on the table will simply be left there.
When the government's carrot does not work, next will come the stick. Remember, 19 of the largest financial firms have been asked to submit to stress tests detailing the adequacy of their capital.
Talk about irony. Financial markets are in disarray today because leading firms chose to bury complicated instruments in their books. The results were opaque balance sheets that hid the considerable use of leverage, and proved misleading both to investors and examiners. These same firms are now being required by regulators to use these misshapen accounts to make far-ahead predictions.
But the objective of the stress test is not to get useful forecasts. Rather, it will provide the excuse for regulators, outside the usual process of examination and resolution, to open a discussion with major firms about the adequacy of their capital.
A dialogue, once started, can then proceed to capital infusions, forced mergers and other forms of balance-sheet relief. This will all be with an eye to creating strong incentives for bank managers to attract private capital. If necessary, the stress tests can be used to force fire sales that will attract private capital through the PPIP.
So the government, once again, has opted for a circuitous route to the goal of sorting out financial firms. This will take longer than necessary and sacrifice clarity. But obfuscation was probably a design principle. As yet, the American public does not appear ready to admit that its government will have to absorb large losses to restart financial markets. Until that day comes, government action will continue to be indirect and probably insufficient.
This circuitous route can work, provided that the branches of the government pull in the same direction. Politicians are going to have to understand that the longer-term good of the nation involves cooperating with, not castigating, financial professionals. And the Obama administration will have to understand that its approval rating is to be used to convince the public of hard choices.
Mr. Reinhart is a resident scholar at the American Enterprise Institute and former director of the division of monetary affairs at the Federal Reserve.
WSJ Editorial Page: Diplomacy with Iran has no chance without tougher energy sanctions
Pain Iran Can Believe In. WSJ Editorial
Diplomacy has no chance without tougher energy sanctions.
WSJ, Mar 25, 2009
As a general rule, economic sanctions are a poor foreign policy instrument: hard to enforce (think Burma), prone to corruption (think Oil for Food), rarely effective (think Cuba). But in the case of Iran, let's make an exception.
We say this after five years of futile diplomatic efforts -- spearheaded by the Europeans and backed by the Bush Administration -- to persuade Iran to abandon its nuclear programs and comply with binding U.N. Security Council resolutions. Now the only thing standing between the mullahs and a bomb is either punitive sanctions or a military strike, probably Israeli, which could engulf the Middle East in a regional war. Which option do you prefer?
So here's a fact: Despite being a leading oil exporter, Iran imports roughly 40% of its gasoline because it lacks adequate domestic refining capacity. Any cut-off in supply would do immediate damage to the fragile Iranian economy and could bring about social unrest, as happened in 2007 after the regime imposed gasoline rations. Here's another fact: Iran is supplied with gasoline by a mere handful of foreign companies, all of which do substantial business in the United States.
Final fact: There is a growing bipartisan consensus in favor of gasoline sanctions. As candidate Barack Obama put it in the second Presidential debate last October, "If we can prevent [Iran] from importing the gasoline they need and the refined petroleum products, that starts changing their cost-benefit analysis [about the advantages of a nuclear arsenal], that starts putting the squeeze on them."
Well, amen to that. So it's too bad that as President, Mr. Obama is now putting tougher sanctions off indefinitely in favor of pushing the rock of diplomacy up the mountain once again. He's likely to be strung along like George W. Bush and the Europeans were, allowing the mullahs to get closer to a bomb. Diplomacy will have no chance without the threat of sticks, so Congress could help by passing two significant pieces of legislation affecting Iran's energy supply.
One of them, an amendment to the Senate omnibus appropriations bill from Arizona Republican Jon Kyl, would forbid federal funds from going to companies involved in Iran's energy industry. On the House side, Republican Mark Kirk and Democrat Rob Andrews sponsored complementary legislation in 2007 that would have expanded the Iran Sanctions Act to companies selling refined petroleum to Iran. The value of this latter legislation is partly symbolic, since no company has ever actually been sanctioned under the Iran Sanctions Act. But symbolism can also have its practical uses: The mere existence of the act has helped persuade a number of energy multinationals, such as France's Total, to stop investing in Iran.
As for the Kyl Amendment, it takes aim at companies like the Swiss-Dutch oil trading firm Vitol, currently Iran's largest supplier, which has a contract with the U.S. Department of Energy to help fill the Strategic Petroleum Reserve. Vitol, which in 2007 pleaded guilty to grand larceny charges in New York state court for its role in Oil for Food, is also building a $100 million fuel-storage facility in Florida. Just by the way.
The good news is that Iran's suppliers are starting to get the message. Until recently, Indian giant Reliance Industries provided Iran with as much as 25% of its gasoline imports, even as it was building a giant refinery in India with over $500 million in loan guarantees from the U.S. Export-Import Bank. In December the guarantees came to the attention of Mr. Kirk and Democrats Howard Berman and Brad Sherman, who wrote a letter of protest to Ex-Im Bank President James Lambright. The letter later leaked to the Indian press, and, last month, Reliance did not supply Iran, according to the International Oil Daily.
Reliance's departure will likely not affect Iran's gasoline imports, since other suppliers can pick up the slack. But the number of firms willing to incur legal or reputational risks to supply Iran is limited, especially given the relatively small size of its domestic market. Would-be suppliers could also work through proxies, but again this raises costs and risks both for them and Iran, where the economy is already under severe strain from the collapse of oil prices and Mahmoud Ahmadinejad's inflationary economic policies.
Critics of gasoline sanctions argue that they amount to a game of whack-a-mole, and to some extent that's true. But the goal of the sanctions isn't to create an airtight regime so much as to sharply raise the costs to Iran for pursuing its nuclear programs. "This is no silver bullet but it may be silver shrapnel," says Mark Dubowitz of the Foundation for Defense of Democracies, a Washington, D.C.-based think tank that has brought the idea of gasoline sanctions to political attention.
With Iran now fast approaching the nuclear threshold, an Administration that doesn't want bullets to fly needs more than diplomacy. The only way Iran's regime is going to stop its nuclear program is if it feels some pain it can believe in.
Diplomacy has no chance without tougher energy sanctions.
WSJ, Mar 25, 2009
As a general rule, economic sanctions are a poor foreign policy instrument: hard to enforce (think Burma), prone to corruption (think Oil for Food), rarely effective (think Cuba). But in the case of Iran, let's make an exception.
We say this after five years of futile diplomatic efforts -- spearheaded by the Europeans and backed by the Bush Administration -- to persuade Iran to abandon its nuclear programs and comply with binding U.N. Security Council resolutions. Now the only thing standing between the mullahs and a bomb is either punitive sanctions or a military strike, probably Israeli, which could engulf the Middle East in a regional war. Which option do you prefer?
So here's a fact: Despite being a leading oil exporter, Iran imports roughly 40% of its gasoline because it lacks adequate domestic refining capacity. Any cut-off in supply would do immediate damage to the fragile Iranian economy and could bring about social unrest, as happened in 2007 after the regime imposed gasoline rations. Here's another fact: Iran is supplied with gasoline by a mere handful of foreign companies, all of which do substantial business in the United States.
Final fact: There is a growing bipartisan consensus in favor of gasoline sanctions. As candidate Barack Obama put it in the second Presidential debate last October, "If we can prevent [Iran] from importing the gasoline they need and the refined petroleum products, that starts changing their cost-benefit analysis [about the advantages of a nuclear arsenal], that starts putting the squeeze on them."
Well, amen to that. So it's too bad that as President, Mr. Obama is now putting tougher sanctions off indefinitely in favor of pushing the rock of diplomacy up the mountain once again. He's likely to be strung along like George W. Bush and the Europeans were, allowing the mullahs to get closer to a bomb. Diplomacy will have no chance without the threat of sticks, so Congress could help by passing two significant pieces of legislation affecting Iran's energy supply.
One of them, an amendment to the Senate omnibus appropriations bill from Arizona Republican Jon Kyl, would forbid federal funds from going to companies involved in Iran's energy industry. On the House side, Republican Mark Kirk and Democrat Rob Andrews sponsored complementary legislation in 2007 that would have expanded the Iran Sanctions Act to companies selling refined petroleum to Iran. The value of this latter legislation is partly symbolic, since no company has ever actually been sanctioned under the Iran Sanctions Act. But symbolism can also have its practical uses: The mere existence of the act has helped persuade a number of energy multinationals, such as France's Total, to stop investing in Iran.
As for the Kyl Amendment, it takes aim at companies like the Swiss-Dutch oil trading firm Vitol, currently Iran's largest supplier, which has a contract with the U.S. Department of Energy to help fill the Strategic Petroleum Reserve. Vitol, which in 2007 pleaded guilty to grand larceny charges in New York state court for its role in Oil for Food, is also building a $100 million fuel-storage facility in Florida. Just by the way.
The good news is that Iran's suppliers are starting to get the message. Until recently, Indian giant Reliance Industries provided Iran with as much as 25% of its gasoline imports, even as it was building a giant refinery in India with over $500 million in loan guarantees from the U.S. Export-Import Bank. In December the guarantees came to the attention of Mr. Kirk and Democrats Howard Berman and Brad Sherman, who wrote a letter of protest to Ex-Im Bank President James Lambright. The letter later leaked to the Indian press, and, last month, Reliance did not supply Iran, according to the International Oil Daily.
Reliance's departure will likely not affect Iran's gasoline imports, since other suppliers can pick up the slack. But the number of firms willing to incur legal or reputational risks to supply Iran is limited, especially given the relatively small size of its domestic market. Would-be suppliers could also work through proxies, but again this raises costs and risks both for them and Iran, where the economy is already under severe strain from the collapse of oil prices and Mahmoud Ahmadinejad's inflationary economic policies.
Critics of gasoline sanctions argue that they amount to a game of whack-a-mole, and to some extent that's true. But the goal of the sanctions isn't to create an airtight regime so much as to sharply raise the costs to Iran for pursuing its nuclear programs. "This is no silver bullet but it may be silver shrapnel," says Mark Dubowitz of the Foundation for Defense of Democracies, a Washington, D.C.-based think tank that has brought the idea of gasoline sanctions to political attention.
With Iran now fast approaching the nuclear threshold, an Administration that doesn't want bullets to fly needs more than diplomacy. The only way Iran's regime is going to stop its nuclear program is if it feels some pain it can believe in.
The 'Populists' Are Right About Wall Street. What's wrong with well-directed anger?
The 'Populists' Are Right About Wall Street. By Thomas Frank
What's wrong with well-directed anger?
WSJ, Mar 25, 2009
How has a popular Democratic president with a convincing electoral mandate failed to translate the opportunities of recent events into the "change" for which voters clamored? What kind of miscalculation allowed his administration to stir up such a wave of populist fury in such a short time?
The short answer, of course, is AIG. Why did the Treasury Department allow the payout of many millions in bonuses to executives of the unit that sank the company? Every answer the president's brain trust offered made them look more feckless, at the very moment they were rolling out a bank plan designed to spare stakeholders of our troubled financial institutions the haircut they so richly deserve.
This lapse of common sense arises from a deeper problem: the reflexive contempt for populism that is felt by the dominant faction of the Democratic Party -- the faction that regards itself as the responsible guardian of financial civilization, and that thinks of populism as crackpot economics and senseless proletarian rage.
I was reminded of the party's long-simmering debate over populism a little while ago when I read an essay by Al From, the founder of the centrist Democratic Leadership Council (DLC), announcing his retirement as that group's "CEO" and recounting his many successes over the years in building a "political brand." A short while later I read in Roll Call an account of Mr. From's career as "one of the 20th century's most successful political entrepreneurs," a man whose adventures in shifting the Democratic Party to the right formed a neat analogy to Mr. From's father's accomplishments in the suburban garage-building biz.
In Washington, where the need to treat government like a business is a no-brainer, thinking about politics in this way -- as though it were a matter of branding, entrepreneurship and CEOs -- is thought to be highly advanced stuff.
But I don't agree. Surely we have learned the hazards of turning business models loose on the state, after all our experiences with the "MBA president" and his "market-based" government, all the "K Street Projects" and "superlobbyists" of the last 20 years, all the regulatory agencies that understood the regulated as their "customers," all the bailouts engineered by friends of the bailed-out, all the faith placed in "voluntary compliance" on the grounds that business would naturally self-regulate.
Still, none can doubt the DLC's success at pushing "third way" humbug in elite Democratic circles. Many of the rhetorical gestures we associate with centrism -- for example, the habit of dismissing liberal policies as "industrial age" relics -- got their start in Mr. From's shop.
The theme that matters most these days, though, is the DLC's war with populism, a term that is supposed to summarize everything that is wrong with class-based discontent. Not only is populism mulishly wrong-headed, according to the DLC, but it is a sure-fire electoral loser -- a whiff of populism, the group once concluded, is what cost Al Gore the 2000 election.
The group's attacks on populism resonate in D.C., I suspect, because the commentariat has always thought "populism" to be faintly ridiculous, a thing of mobs and pitchforks and windbag leaders more demagogue than CEO. (For an illustration of what I mean, look at the cover of the latest issue of Newsweek.)
This way of thinking has not served the Obama administration well in recent weeks. Think of Larry Summers repeating, on program after program, his outrage with the AIG bonuses, but then immediately moving, as you would with a naughty child, into a discussion of the rule of law -- which I guess is what you call the years of de facto de-supervision that allowed this disaster.
One of these days it may dawn on our leaders that the public, in this case, is right; that this time the mountebanks and charlatans are not the populists but the responsible-looking CEOs who ran the country's financial institutions into the ground -- and who the administration apparently wants to leave in charge of many of those institutions. The public outrage about performance bonuses isn't just mindless resentment; it is directed at exactly the instruments that steered the economy into the ditch and the executives who built the system -- and who will demand to do business the old way as long as they have breath to bellow.
What's more, it is only thanks to populist members of Congress that we know our bailout of AIG sluiced billions to foreign banks, and it's only thanks to public outrage that the administration feels any pressure at all to exert a firmer hand on the institutions it has rescued from bankruptcy.
There are many, I am sure, who wish that this whole bailout business could be settled as an affair between political entrepreneurs and the interests that fund them, as in days of yore. But I hope President Obama has a better strategy than that planned for the time when his Treasury Department has to ask Congress for another helping of TARP.
What's wrong with well-directed anger?
WSJ, Mar 25, 2009
How has a popular Democratic president with a convincing electoral mandate failed to translate the opportunities of recent events into the "change" for which voters clamored? What kind of miscalculation allowed his administration to stir up such a wave of populist fury in such a short time?
The short answer, of course, is AIG. Why did the Treasury Department allow the payout of many millions in bonuses to executives of the unit that sank the company? Every answer the president's brain trust offered made them look more feckless, at the very moment they were rolling out a bank plan designed to spare stakeholders of our troubled financial institutions the haircut they so richly deserve.
This lapse of common sense arises from a deeper problem: the reflexive contempt for populism that is felt by the dominant faction of the Democratic Party -- the faction that regards itself as the responsible guardian of financial civilization, and that thinks of populism as crackpot economics and senseless proletarian rage.
I was reminded of the party's long-simmering debate over populism a little while ago when I read an essay by Al From, the founder of the centrist Democratic Leadership Council (DLC), announcing his retirement as that group's "CEO" and recounting his many successes over the years in building a "political brand." A short while later I read in Roll Call an account of Mr. From's career as "one of the 20th century's most successful political entrepreneurs," a man whose adventures in shifting the Democratic Party to the right formed a neat analogy to Mr. From's father's accomplishments in the suburban garage-building biz.
In Washington, where the need to treat government like a business is a no-brainer, thinking about politics in this way -- as though it were a matter of branding, entrepreneurship and CEOs -- is thought to be highly advanced stuff.
But I don't agree. Surely we have learned the hazards of turning business models loose on the state, after all our experiences with the "MBA president" and his "market-based" government, all the "K Street Projects" and "superlobbyists" of the last 20 years, all the regulatory agencies that understood the regulated as their "customers," all the bailouts engineered by friends of the bailed-out, all the faith placed in "voluntary compliance" on the grounds that business would naturally self-regulate.
Still, none can doubt the DLC's success at pushing "third way" humbug in elite Democratic circles. Many of the rhetorical gestures we associate with centrism -- for example, the habit of dismissing liberal policies as "industrial age" relics -- got their start in Mr. From's shop.
The theme that matters most these days, though, is the DLC's war with populism, a term that is supposed to summarize everything that is wrong with class-based discontent. Not only is populism mulishly wrong-headed, according to the DLC, but it is a sure-fire electoral loser -- a whiff of populism, the group once concluded, is what cost Al Gore the 2000 election.
The group's attacks on populism resonate in D.C., I suspect, because the commentariat has always thought "populism" to be faintly ridiculous, a thing of mobs and pitchforks and windbag leaders more demagogue than CEO. (For an illustration of what I mean, look at the cover of the latest issue of Newsweek.)
This way of thinking has not served the Obama administration well in recent weeks. Think of Larry Summers repeating, on program after program, his outrage with the AIG bonuses, but then immediately moving, as you would with a naughty child, into a discussion of the rule of law -- which I guess is what you call the years of de facto de-supervision that allowed this disaster.
One of these days it may dawn on our leaders that the public, in this case, is right; that this time the mountebanks and charlatans are not the populists but the responsible-looking CEOs who ran the country's financial institutions into the ground -- and who the administration apparently wants to leave in charge of many of those institutions. The public outrage about performance bonuses isn't just mindless resentment; it is directed at exactly the instruments that steered the economy into the ditch and the executives who built the system -- and who will demand to do business the old way as long as they have breath to bellow.
What's more, it is only thanks to populist members of Congress that we know our bailout of AIG sluiced billions to foreign banks, and it's only thanks to public outrage that the administration feels any pressure at all to exert a firmer hand on the institutions it has rescued from bankruptcy.
There are many, I am sure, who wish that this whole bailout business could be settled as an affair between political entrepreneurs and the interests that fund them, as in days of yore. But I hope President Obama has a better strategy than that planned for the time when his Treasury Department has to ask Congress for another helping of TARP.
Hernando de Soto on toxic assets: We can't afford to allow shadow economies to grow this big
Toxic Assets Were Hidden Assets. By Hernando de Soto
We can't afford to allow shadow economies to grow this big.
WSJ, Mar 25, 2009
The Obama administration has finally come up with a plan to deal with the real cause of the credit crunch: the infamous "toxic assets" on bank balance sheets that have scared off investors and borrowers, clogging credit markets around the world. But if Treasury Secretary Timothy Geithner hopes to prevent a repeat of this global economic crisis, his rescue plan must recognize that the real problem is not the bad loans, but the debasement of the paper they are printed on.
Today's global crisis -- a loss on paper of more than $50 trillion in stocks, real estate, commodities and operational earnings within 15 months -- cannot be explained only by the default on a meager 7% of subprime mortgages (worth probably no more than $1 trillion) that triggered it. The real villain is the lack of trust in the paper on which they -- and all other assets -- are printed. If we don't restore trust in paper, the next default -- on credit cards or student loans -- will trigger another collapse in paper and bring the world economy to its knees.
If you think about it, everything of value we own travels on property paper. At the beginning of the decade there was about $100 trillion worth of property paper representing tangible goods such as land, buildings, and patents world-wide, and some $170 trillion representing ownership over such semiliquid assets as mortgages, stocks and bonds. Since then, however, aggressive financiers have manufactured what the Bank for International Settlements estimates to be $1 quadrillion worth of new derivatives (mortgage-backed securities, collateralized debt obligations, and credit default swaps) that have flooded the market.
These derivatives are the root of the credit crunch. Why? Unlike all other property paper, derivatives are not required by law to be recorded, continually tracked and tied to the assets they represent. Nobody knows precisely how many there are, where they are, and who is finally accountable for them. Thus, there is widespread fear that potential borrowers and recipients of capital with too many nonperforming derivatives will be unable to repay their loans. As trust in property paper breaks down it sets off a chain reaction, paralyzing credit and investment, which shrinks transactions and leads to a catastrophic drop in employment and in the value of everyone's property.
Ever since humans started trading, lending and investing beyond the confines of the family and the tribe, we have depended on legally authenticated written statements to get the facts about things of value. Over the past 200 years, that legal authority has matured into a global consensus on the procedures, standards and principles required to document facts in a way that everyone can easily understand and trust.
The result is a formidable property system with rules and recording mechanisms that fix on paper the facts that allow us to hold, transfer, transform and use everything we own, from stocks to screenplays. The only paper representing an asset that is not centrally recorded, standardized and easily tracked are derivatives.
Property is much more than a body of norms. It is also a huge information system that processes raw data until it is transformed into facts that can be tested for truth, and thereby destroys the main catalysts of recessions and panics -- ambiguity and opacity. To bring derivatives under the rule of law, governments should ensure that they conform to six longstanding procedures that guarantee the value and legitimacy of any kind of paper purporting to represent an asset:
- All documents and the assets and transactions they represent or are derived from must be recorded in publicly accessible registries. It is only by recording and continually updating such factual knowledge that we can detect the kind of overly creative financial and contractual instruments that plunged us into this recession.
- The law has to take into account the "externalities" or side effects of all financial transactions according to the legal principle of erga omnes ("toward all"), which was originally developed to protect third parties from the negative consequences of secret deals carried out by aristocracies accountable to no one but themselves.
- Every financial deal must be firmly tethered to the real performance of the asset from which it originated. By aligning debts to assets, we can create simple and understandable benchmarks for quickly detecting whether a financial transaction has been created to help production or to bet on the performance of distant "underlying assets."
- Governments should never forget that production always takes priority over finance. As Adam Smith and Karl Marx both recognized, finance supports wealth creation, but in itself creates no value.
- Governments can encourage assets to be leveraged, transformed, combined, recombined and repackaged into any number of tranches, provided the process intends to improve the value of the original asset. This has been the rule for awarding property since the beginning of time.
- Governments can no longer tolerate the use of opaque and confusing language in drafting financial instruments. Clarity and precision are indispensable for the creation of credit and capital through paper. Western politicians must not forget what their greatest thinkers have been saying for centuries: All obligations and commitments that stick are derived from words recorded on paper with great precision.
Above all, governments should stop clinging to the hope that the existing market will eventually sort things out. "Let the market do its work" has come to mean, "let the shadow economy do its work." But modern markets only work if the paper is reliable.
Government's main duty now is to bring the whole toxic environment under the rule of law where it will be subject to enforcement. No economic activity based on the public trust should be allowed to operate outside the general principles of property law.
Financial institutions will have to serve society and fully report what they own and what they owe -- just like the rest of us -- so that we get the facts necessary to find our way out of the current maze. They must begin learning to put on paper statements about facts, instead of statements about statements.
Mr. de Soto, the author of "The Mystery of Capital" (Basic Books, 2000) and "The Other Path" (Harper and Row, 1989), co-chairs the Commission on Legal Empowerment of the Poor.
We can't afford to allow shadow economies to grow this big.
WSJ, Mar 25, 2009
The Obama administration has finally come up with a plan to deal with the real cause of the credit crunch: the infamous "toxic assets" on bank balance sheets that have scared off investors and borrowers, clogging credit markets around the world. But if Treasury Secretary Timothy Geithner hopes to prevent a repeat of this global economic crisis, his rescue plan must recognize that the real problem is not the bad loans, but the debasement of the paper they are printed on.
Today's global crisis -- a loss on paper of more than $50 trillion in stocks, real estate, commodities and operational earnings within 15 months -- cannot be explained only by the default on a meager 7% of subprime mortgages (worth probably no more than $1 trillion) that triggered it. The real villain is the lack of trust in the paper on which they -- and all other assets -- are printed. If we don't restore trust in paper, the next default -- on credit cards or student loans -- will trigger another collapse in paper and bring the world economy to its knees.
If you think about it, everything of value we own travels on property paper. At the beginning of the decade there was about $100 trillion worth of property paper representing tangible goods such as land, buildings, and patents world-wide, and some $170 trillion representing ownership over such semiliquid assets as mortgages, stocks and bonds. Since then, however, aggressive financiers have manufactured what the Bank for International Settlements estimates to be $1 quadrillion worth of new derivatives (mortgage-backed securities, collateralized debt obligations, and credit default swaps) that have flooded the market.
These derivatives are the root of the credit crunch. Why? Unlike all other property paper, derivatives are not required by law to be recorded, continually tracked and tied to the assets they represent. Nobody knows precisely how many there are, where they are, and who is finally accountable for them. Thus, there is widespread fear that potential borrowers and recipients of capital with too many nonperforming derivatives will be unable to repay their loans. As trust in property paper breaks down it sets off a chain reaction, paralyzing credit and investment, which shrinks transactions and leads to a catastrophic drop in employment and in the value of everyone's property.
Ever since humans started trading, lending and investing beyond the confines of the family and the tribe, we have depended on legally authenticated written statements to get the facts about things of value. Over the past 200 years, that legal authority has matured into a global consensus on the procedures, standards and principles required to document facts in a way that everyone can easily understand and trust.
The result is a formidable property system with rules and recording mechanisms that fix on paper the facts that allow us to hold, transfer, transform and use everything we own, from stocks to screenplays. The only paper representing an asset that is not centrally recorded, standardized and easily tracked are derivatives.
Property is much more than a body of norms. It is also a huge information system that processes raw data until it is transformed into facts that can be tested for truth, and thereby destroys the main catalysts of recessions and panics -- ambiguity and opacity. To bring derivatives under the rule of law, governments should ensure that they conform to six longstanding procedures that guarantee the value and legitimacy of any kind of paper purporting to represent an asset:
- All documents and the assets and transactions they represent or are derived from must be recorded in publicly accessible registries. It is only by recording and continually updating such factual knowledge that we can detect the kind of overly creative financial and contractual instruments that plunged us into this recession.
- The law has to take into account the "externalities" or side effects of all financial transactions according to the legal principle of erga omnes ("toward all"), which was originally developed to protect third parties from the negative consequences of secret deals carried out by aristocracies accountable to no one but themselves.
- Every financial deal must be firmly tethered to the real performance of the asset from which it originated. By aligning debts to assets, we can create simple and understandable benchmarks for quickly detecting whether a financial transaction has been created to help production or to bet on the performance of distant "underlying assets."
- Governments should never forget that production always takes priority over finance. As Adam Smith and Karl Marx both recognized, finance supports wealth creation, but in itself creates no value.
- Governments can encourage assets to be leveraged, transformed, combined, recombined and repackaged into any number of tranches, provided the process intends to improve the value of the original asset. This has been the rule for awarding property since the beginning of time.
- Governments can no longer tolerate the use of opaque and confusing language in drafting financial instruments. Clarity and precision are indispensable for the creation of credit and capital through paper. Western politicians must not forget what their greatest thinkers have been saying for centuries: All obligations and commitments that stick are derived from words recorded on paper with great precision.
Above all, governments should stop clinging to the hope that the existing market will eventually sort things out. "Let the market do its work" has come to mean, "let the shadow economy do its work." But modern markets only work if the paper is reliable.
Government's main duty now is to bring the whole toxic environment under the rule of law where it will be subject to enforcement. No economic activity based on the public trust should be allowed to operate outside the general principles of property law.
Financial institutions will have to serve society and fully report what they own and what they owe -- just like the rest of us -- so that we get the facts necessary to find our way out of the current maze. They must begin learning to put on paper statements about facts, instead of statements about statements.
Mr. de Soto, the author of "The Mystery of Capital" (Basic Books, 2000) and "The Other Path" (Harper and Row, 1989), co-chairs the Commission on Legal Empowerment of the Poor.
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