The Reasoned Review

Just another WordPress.com weblog

Archive for April 2010

SEC Ignored Fraud, Watched Porn

leave a comment »

I know I’m somewhat late to the party on this one, but I wanted to point out to anyone who wasn’t aware that senior members of the Securities and Exchange Commission, our main regulatory body, watched hours of pornography per day, while on the job. This peak porn usage occurred during 2007-2008, at the height of our banks’ financial fraud.

From ComputerWorld, of all places:

Seventeen investigations involved senior SEC staffers earning between $100,000 and $222,000 annually. In many cases, the Kotz’s office obtained on-the-record admissions from the employees involved, though the report does not say how, or even whether, the employees were disciplined.

Kotz’s report lists several instances where SEC employees spent several hours daily on porn. One such case involved a senior attorney at the SEC’s Washington headquarters who sometimes spent eight hours a day surfing pornographic sites and downloading explicit images. The attorney apparently downloaded so much porn that he filled up all the available space on his government-issued computer. He then downloaded more images onto personal CDs and DVDs, which he stored in boxes in his office.

Enjoy the rest of your day.

Written by pavanvan

April 30, 2010 at 6:19 pm

Posted in Economy

Tagged with , ,

Exxon-Valdez Spill “Pales in Comparison” to Current Louisiana Spill

leave a comment »

It’s true. From the BBC:

Five times as much oil as previously thought could be leaking from the well beneath where a rig exploded and sank last week, US officials said earlier.

The slick is 45 miles (72km) by 105 miles (169km) – almost the size of Jamaica – and heading for the US coast.

A third leak has been discovered, and a fire-fighting expert said the disaster may become the biggest oil spill ever.

“Probably the only thing comparable to this is the Kuwait fires [following the Gulf War in 1991],” Mike Miller, head of Canadian oil well fire-fighting company Safety Boss, told the BBC World Service.

“The Exxon Valdez [tanker disaster off Alaska in 1989] is going to pale [into insignificance] in comparison to this as it goes on.”

Scientists say only a quarter of local marine wildlife survived the Exxon Valdez disaster.

Written by pavanvan

April 29, 2010 at 3:29 pm

Mendacious Commercials Against Financial Regulation

leave a comment »

Annie Lowrey over at The Washington Independent has a nice post deconstructing  the latest series of advertisments attacking the financial regulation bill now being debated in the Senate.

I admit I hadn’t seen this lovely bit of propaganda until she drew my attention to it, and it’s interesting to examine the claims it makes. The first rule of propaganda is to attribute to your enemy your own actions and intentions. Thus, the commercial rather cleverly accuses the Senate of setting up an apparatus for “unlimited bailout authority”, and, astoundingly, claims that “Goldman Sachs is in favor of the bill”.

Neither of these statements is true, of course, but the implications go deeper than that. As TPM revealed earlier this week, the sponsors of the ad, a front-organization calling themselves “Stop Too Big to Fail”, are funded entirely by corporate dollars, including, yes, Goldman Sachs. This attempt to dust up public anger against the financial reform bill indicates Wall Street’s fear of it, and their willingness to tell any lie in order to see that the reform bill doesn’t pass.

Not that they really have that much to worry about. As George Washington remarks, the reform bill currently being debated is “All Holes and No Cheese“, noting that:

Dodd’s bill:

What it will do, however, is set up new protections for consumers, specifically to protect them from predatory lending practices, overdraft fees, byzantine contracts that require a Ph.D to understand, etc. The bill will also (hopefully) enact some barriers to the trade of over-the-counter (unregulated) derivatives, those delightful instruments that got us into this crisis.

As with the health care bill, I feel really ambivalent about this.

On one hand, the Dodd bill does almost nothing to prevent too-big-to-fail, it proposes some watered-down reform on derivatives trading, it doesn’t reduce the size or power of our mega-conglomerate banks, it doesn’t reinstate Glass-Stegall, and it does nothing to rein in the frankly absurd amounts of cash the bank executives make, whether or not they happen to crash the economy

On the other hand, this bill does provide some new consumer protection services, it bans proprietary trading (whatever that is), and it does create a new regulatory body whose specific charge is to watch over our mega-banks (as opposed to the SEC, which has a universal mandate).

Is this good enough? Can we do better? With the flood of Wall Street money flowing into campaign coffers, and with the November election only 6 months away, I’m inclined to say no. Maybe we should take what we can get. And keeping in mind that, unlike the health-care bill which had full industry support, the Dodd bill is being opposed by nearly every major bank, maybe it isn’t so bad after all. If the banks are against it, there must be something good inside this bill.

Update: Also see Nomi Prins’ article in Alternet entitled “Ten Ways The Dodd Bill is Failing on Financial Reform“:

It won’t constrain the Fed’s future bailout operations. It appears to limit the Fed’s ability to lend money freely to firms in trouble by “allowing” its system-wide support only for healthy institutions or systemically important market utilities. But what’s to stop the Fed from designating any company a “systemically important market utility”? That was basically the rationale behind the AIG bailout.

Update II: It’s also important to keep in mind that Chris Dodd, the bill’s sponsor, is heavily funded by some of the most odious Wall Street titans, including Citigroup (who gave him $110,000 this cycle), AIG ($87,000), Merrill Lynch ($61,650), Morgan Stanley ($44,000), and JP Morgan ($37,000). Hooray for transparency!

Written by pavanvan

April 29, 2010 at 1:00 pm

A New Non-Profit News Venture – Without Millionaire Benefactors!

leave a comment »

Alan Mutter over at Newsosaur gives us a great profile of a new non-profit news startup in Minneapolis called MinnPost that seems to be as good a hope as any to revive our failing news economy:

MinnPost, a scrappy news start-up in Minnesota, is beginning to show how to run a sustainable non-profit venture without depending on major philanthropic support.

And it is doing so in two ways: First, by keeping costs low. Second, by raising money almost continuously through such diversified initiatives as advertising, NPR-style user contributions and even an annual gala featuring organic-vodka martinis.

In other words, the highly regarded Minnesota news site is the antithesis of such large-scale journalism projects as Pro Publica, Texas Tribune and Bay Citizen, which at this writing all rely on multimillion-dollar endowments from wealthy individuals and institutions.

MinnPost not only started life without a multimillion-dollar nest egg but also is committed to fully supporting its ongoing operations without major philanthropic donations by 2012, says Joel Kramer, a former editor of the Minneapolis Star Tribune who launched the site in 2007.

Back when Propublica emerged we heard a lot of talk about how its model of non-profit news gathering was a harbinger for the future of news. And while they have given us a series of fantastic investigations, capped most recently by their explosive profile of corrupt hedge fund Magnetar, the uncomfortable fact remained: their business model depended on multi-million dollar grants from wealthy philanthropists. They were, by definition, not a sustainable project.

MinnPost, on the other hand, appears to be the first non-profit whose stated goal is to provide quality journalism free of massive philanthropic donations. They do so by a mixture of low overheads, low operating costs, and good old fashioned reader donations. One of my major criticisms of ProPublica, fantastic though they are, is the obscene six-figure salaries their reporters and editors make. MinnPost does away with these, but (and this should come as a surprise to the Wall Street banks who contend that multi-million dollar bonuses are the only way to secure “talent) the quality of their reporting does not appear to have suffered.

We’re all holding our breath to see what’s going to come of the bloodbath our legacy news media are swimming in (They lost 27% circulation in the past five years), but startups like MinnPost are a genuine ray of hope.

Written by pavanvan

April 29, 2010 at 12:04 pm

This Week in Good Ideas

leave a comment »

Finally harnessing offshore wind power:

The Cape Wind project, the nation’s first offshore wind farm, is go for launch. After nine years of controversy and heated negotiations, U.S. Interior Secretary Ken Salazar announced today that Nantucket Sound, about five miles off the coast of Massachusetts’s Cape Cod, will host a 130-turbine wind farm covering 24 square miles that will begin generating electricity as early as 2012. Salazar made the announcement from the Massachusetts Statehouse in Boston and was joined by Massachusetts Governor Deval Patrick, a big supporter of the project.

Salazar included a few modifications to help protect the historical, cultural, and environmental assets of Nantucket Sound. The farm was originally intended to include 170 turbines, but he dropped the number to 130 to help reduce visual impact. He also stipulated that developers need to take additional marine archaeological surveys and other “commonsense measures” to “minimize and mitigate” potential adverse effects of the project.

Written by pavanvan

April 28, 2010 at 4:44 pm

Goldman Slimeball Hearing

leave a comment »

Well, the big Goldman Sachs hearing just wrapped up 10 hours of grueling testimony, and I’m still reeling from the stupendous prevarications their executives offered. The financial bloggers were out in full form today with some great live-blogs here, here and here. I’m sure I’ll have more to say about this as the hearings progress, and I’d love to see how Goldman will justify its fraudulent deals with AIG once the Senate gets around to asking about them; but until then, a couple comments:

1) I really have to hand it to Sen. Carl Levin for his rigorous and adversarial line of questioning. Watching him tear these executives apart for knowingly engaging in outright fraud is gratifying, though of course some jail time for these executives would be even more so. Watch this video for the money shot (as it were).

2) I was really astounded by the total lack of contrition these executives showed. They defrauded investors to the tune of $500 million (at least) by selling them bonds which they knew were worthless and then betting against those bonds. The basic refrain from all these executives, particularly Mr. Sparks, was that “these bonds were traded on the open market and at market values” – but of course that’s an entirely spurious argument because Goldman was withholding valuable information from their clients (that the bonds were worthless). Amazingly, the Goldman executives don’t seem to think they were doing anything wrong! Fraud is totally acceptable in their world, just so long as it makes them money. Just don’t buy a used car from them – they’d probably sell you a death-trap and then take out car insurance and life insurance on you.

Before I get too gushy on Senator Levin, I should hasten to remind my readers that he voted for the Financial Services Modernization Act back in 1999 – the same act that allowed Goldman Sachs to trade unregulated (“over-the-counter”) derivatives. Without the FSMA, the sort of fraud Goldman engaged in would have been impossible, and any attempt to prevent this sort of behavior in the future is meaningless without repealing the FSMA. Needless to say such a repeal is not even being discussed.

Watching the hearings today gave me a strange, other-worldly feeling. Some of the same senators who took major campaign donations from Goldman Sachs were sitting there and grilling these executives.  A cynical observer might have gotten the impression that this was all a bit of political theater designed to soothe the public’s anger, which by all accounts is badly in need of catharsis. Certainly when one remembers that the very behavior for which Goldman is now being indicted was standard practice for nearly all of the major banks, it seems strange that the Senate should decide to focus all of its ire on Goldman. But then again, they are, after all, the most visible symbol of Wall Street insanity.

Written by pavanvan

April 27, 2010 at 11:21 pm

Posted in Economy

Tagged with , , , ,

“Warrior Transition”

leave a comment »

The Times is out today with an excellent article on the military’s so-called “Warrior Transition Units”, wherein our traumatized soldiers who return from Iraq and Afghanistan can “unwind” in warehouses across the country. They’re given free drugs and told not to think about things so much. There are, of course, too many ex-soldiers who have been permanently scarred by the things they saw on duty to adequately counsel all of them, but the military makes up for it in painkillers, anti-depressants, and sleeping pills.

The article has some pretty juicy examples:

He was prescribed a laundry list of medications for anxiety, nightmares, depression and headaches that made him feel listless and disoriented. His once-a-week session with a nurse case manager seemed grossly inadequate to him. And noncommissioned officers — soldiers supervising the unit — harangued or disciplined him when he arrived late to formation or violated rules.

Oh, and:

Sgt. John Conant, a 15-year veteran of the Army, returned from his second tour of Iraq in 2007 a changed man, according to his wife, Delphina. Angry and sullen, he reported to the transition unit at Fort Carson, where he was prescribed at least six medications a day for sleeping disorders, pain and anxiety, keeping a detailed checklist in his pocket to remind him of his dosages.

“They didn’t want to do anything but give him medication,” she said.

Also:

“These kids change their medication like they change their underwear,” said a psychotherapist who works with Fort Carson soldiers and asked that his name not be used because he was not authorized to speak publicly about the transition unit. “They can’t even remember which pills they’re taking.”

Two points emerge which The Times clearly hints at, but doesn’t come out and say:

1) These cases are bound to happen when you force 18-year-old kids fresh out of high school to travel to a godforsaken desert they know nothing about, kill people for basically no reason, watch their best friends die, and come home to a country that barely even knows they’re at war.

2) There has to be some kind of agreement with the pharmaceutical industry at work here to defraud taxpayers. We’re prescribing these kids pills like they’re candy, and there’s hardly any evidence as to these drugs’ efficacy. How much is the pharmaceutical industry making off of these prescription-happy doctors and the taxpayers who are footing the bill?

Those two points aside, a really excellent effort out of The New York Times.

Written by pavanvan

April 26, 2010 at 7:23 pm

Posted in War

Kyrgyzstan Clients and the Afghan War

leave a comment »

Aram Roston is out with another fantastic investigation in this week’s The Nation about how no-bid contracts and an obedient client-dictator in Kyrgyzstan has allowed one company to control virtually all the oil that enters into Afghanistan:

This is the story of two interlinked and secretive offshore companies run by a former Army intelligence officer. The firms run a specialized monopoly of massive proportions. Their niche: supplying aviation fuel for US military operations in Afghanistan–enough to fill two Olympic-size swimming pools each and every day of the year.

The companies’ names are Red Star Enterprises and Mina Corp. In Afghanistan, Red Star Enterprises has a sole source contract worth more than $1 billion, won without competition, to deliver fuel to Bagram Air Base, that central hub of the war effort.The Nation has obtained an unusual “memorandum of agreement” between Red Star and the US military authorities, giving the firm exclusive ownership of a fuel pipeline that feeds directly into the base.

Written by pavanvan

April 23, 2010 at 11:10 pm

Posted in War

Tagged with , ,

Fraud Didn’t End With Goldman Sachs

leave a comment »

Hats off to ProPublica for their phenomenal follow-ups to the SEC case against Goldman Sachs, and for revealing that what might have been a genuine move against corruption now merely seems like a politically motivated slap on the wrist, a show-trial, essentially, where big bad Goldman Sachs gets forced to pay a pittance of a fine and the rest of their compatriots who indulged in the exact same practices go off scot-free. Let’s not forget that they paid only 1% of their 2009 profits in taxes, so whatever restitution the SEC squeezes out of them won’t begin to cover their debt to the US Government.

For those of you who haven’t been following the byzantine hearings regarding the Goldman case, with their alphabet soup of acronyms and stern avocations from our media that these are “complex financial instruments” we’re dealing with – well, who can blame you? But the gist of the case is relatively easy to follow, and while Goldman may have been a particularly egregious offender, almost every investment bank bigger than a mom-and-pop outfit traded in Collateralized Debt Obligations (CDOs), the “complex instruments” that lie at the center of this case. Earlier this month ProPublica ran an extensive look at Magnetar, a hedge fund that traded exclusively in CDOs, and just a few days ago it revealed that Merril Lynch engaged in identical practices to the ones that got Goldman Sachs sued by the Securities and Exchange Commission.

CDOs are basically a bet that a given asset will perform well or perform poorly. In the Goldman Sachs case, Goldman put together securities (assets) that it knew would fail (the SEC hopes to show that a Goldman trader specifically picked the components of the securities for their especial toxicity), sold those securities to gullible investors, then secretly took out a collateralized debt obligation against that same security, betting, in essence, that its value would go to zero, which of course they knew would happen because they picked it specifically to do so. When, sure enough, the security did become worthless, Goldman hit paydirt.

This is called fraud, and it’s a pretty grievous sin in the world of finance (at least it was, once upon a time). So on one hand, it’s absolutely just for Goldman Sachs to come under the SEC’s gun, get its reputation tarnished a bit, and, with luck, get a few of its executives fired, where they can live the rest of their days in their Park Avenue penthouses, counting their ill-gotten gains. But on the other hand, what is the use of this symbolic prosecution if it doesn’t engender a shift in practices from the financial community?

The case of John Paulson and Goldman Sachs identified in the SEC indictment was neither the biggest nor the most blatant case of securities fraud during the run-up to the crisis. For the SEC to suddenly regain its regulatory muscle, and for them to focus on this one case to the exclusion of all else stinks of politics. President Obama’s approval ratings are dropping fast, and prior to this there had been no prosecutions of financial fraud at all. I could easily see President Obama instructing the SEC to move forward on the Goldman case so he could have something to show by November, especially since Goldman is the most visible and most reviled of all the Wall Street slimeball firms.

Finally, this case brings to light just how important the financial reform being discussed in the Senate is to prevent future such fraud. Currently most of the discussion seems to center around the politically popular “consumer protection”, but while overdraft fees and adjustable rate mortgages were pernicious side effects of the crisis, the real engine behind the financial meltdown was the widespread sale of over-the-counter (unregulated) derivatives like the CDOs mentioned in this case.

“Financial Reform” means nothing if not the outright ban of derivatives trading – or failing that, the erection of a structured derivatives exchange where fraudulent trades like the Goldman Sachs deal would be visible to the public and to investors. Without that, we’re literally back where we started.

Written by pavanvan

April 23, 2010 at 2:54 pm

Senate Climate “Compromise”

leave a comment »

I guess I have to support pretty much anything we can get on the climate change front, and I admit this bill looks pretty good, despite Reuters’ obvious attempts to slander it. The gasoline tax is bound to cause inflation and more Tea Party unrest, but any climate legislation is to some extent inflationary, and I don’t think there’s very much that wouldn’t spark more Tea Party unrest at this point.

But I wanted to point out the one aspect of the bill Reuters mentioned that I think is a major mistake:

On Wednesday, a Senate source told Reuters the legislation would prohibit the Environmental Protection Agency from regulating carbon dioxide emissions. It would also end state and regional carbon-trading programs, such as the one several Northeastern states participate in, to be replaced by a national carbon reduction policy.

One of the big benefits of the EPA is that it’s an Executive department, and thus its dictates don’t have to go through Congresses’ butchery to become implemented. As Christopher Parenti explains in exhaustive detail, the EPA already has the power to singlehandedly dictate carbon emissions via the Clean Air Act. Whatever this bill recommends will no doubt be much lighter on the pollution industry than whatever the EPA could have come up with.

In fact, given that the EPA had recently signaled it was going to move on climate change with or without Congress’ approval, the timing of this Bill, and its clauses that strip the EPA of most of its power, are suspect. That the current bill enormously benefits industry interests is undeniable.

Written by pavanvan

April 18, 2010 at 11:30 pm

Posted in environment

Tagged with ,

Blowback

leave a comment »

Some unintended consequences in the “War on Drugs”: murderous gangs who lay waste to whole towns.

On the other side, a brutal war between drug gangs has forced dozens of fearful families from the Mexican town of El Porvenir to come to the border seeking political asylum, and scores of other Mexicans have used special visas known as border-crossing cards to flee into the United States. They say drug gangs have laid waste to their town, burning down houses and killing people in the street.

Americans are taking in their Mexican relatives, and the local schools have swelled with traumatized children, many of whom have witnessed gangland violence, school officials say.

“It’s very hard over there,” said Vicente Burciaga, 23, who fled El Porvenir a month ago with his wife, Mayra, and their infant son after gang members burned down five homes in their neighborhood and killed a neighbor. “They are killing people over there who have nothing to do with drug trafficking,” he said. “They kill you just for having seen what they are doing.”

Now, it occurs to me that if you decriminalize “drugs”, the people who trade in them can take advantage of a modern judiciary to settle their disputes instead of simply killing each other.

Written by pavanvan

April 18, 2010 at 11:07 pm

Prime Minister Ayad Allawi

leave a comment »

I mentioned previously that the Iraq election was a sham not because it was rigged (though it certainly was) but because the Iraqis had to choose between two pro-occupation candidates, Al-Maliki and Allawi.

The vote was inconclusive, but those two candidates were widely trumpeted as the “frontrunners”, and many of our newspapers expressed the US government’s opinion on the matter by claiming Allawi won. But few have very much to say about him, now that the initial excitement is over. To fill the silence, I wanted to point out a curious fact about him that Ron Suskind revealed in his latest book, The Way of the World.

Apparently Allawi was involved in the manufacture of false evidence connecting Saddam to 9/11. He was at the CIA headquarters immediately before President Bush gave the order to the CIA to “manufacture evidence” that Al-Qaeda had training camps in Iraq. I cannot dismiss the coincidence of a major Iraqi politician meeting with the CIA immediately before they set to work manufacturing evidence. On some level at least, Allawi was a collaborator.

And he still is.

Written by pavanvan

April 18, 2010 at 10:46 pm

Posted in War

Tagged with , , ,

How The US Funds the Taliban

leave a comment »

I want to draw attention to this article by legendary investigative journalist Aram Roston in last November’s The Nation, which gives some pretty compelling evidence that the US plans Afghanistan to be an endless war. The US taxpayer is apparently the Taliban’s single biggest donor.

Now, many would argue that we’re merely ending the war through monetary means, but you have to really think about what this implies. The Taliban may decide not to shoot at us for the time being, but this money being  given to them now can be used against us at any future date. The Taliban are evidently a cheap organization to run, and with millions of US dollars they can continue resisting forever.

This is simply not rational behavior for a country who’s avowed goal is to “defeat the Taliban”. It is rational for a country who wishes always to have a “Taliban” around to fight.

As one of the truck drivers on the route we pay the Taliban not to fire upon says:

Hanna explained that the prices charged are different, depending on the route: “We’re basically being extorted. Where you don’t pay, you’re going to get attacked. We just have our field guys go down there, and they pay off who they need to.” Sometimes, he says, the extortion fee is high, and sometimes it is low. “Moving ten trucks, it is probably $800 per truck to move through an area. It’s based on the number of trucks and what you’re carrying. If you have fuel trucks, they are going to charge you more. If you have dry trucks, they’re not going to charge you as much. If you are carrying MRAPs or Humvees, they are going to charge you more.”

We have been pursuing the same strategy as part of our “Surge” in Iraq with the so-called “Sunni Awakening”, and while every pundit to the right of an anarchist crows that “The Surge Worked”, we have not seen any political reconciliation there, no disarmament, and no end to suicide attacks (an average of 1.5 of which occurred every week in 2009).

I have no doubt that the “Afghan Surge” or whatever it is they’re calling it nowadays will be trumpeted from every news outlet within six months as the greatest victory since Julius Caesar. But, as in Iraq, I think we will find a full withdrawal to be still in the infinite future.

Written by pavanvan

April 18, 2010 at 9:07 pm

India’s Sexual Revolution

with 2 comments

Tehelka has an outstanding piece in this week’s issue about the hyper-sexualization of Indian culture which you should definitely read. In a land where only one generation ago arranged marriages were the norm and pre-marital abstinence a steel command, India’s youth have undergone a startling shift in accepted mores.

At this moment thousands of Indian parents are uneasily wondering whether they really want to know what is going on. Mini’s parents still don’t know how to deal with what they found out. Mini is a dainty, extremely pretty 14-year-old. When she was 12, her first boyfriend and she were both eager to claim BTDT (Been There, Done That) about oral sex. One evening at home alone, they tried it out, anticipating a definite move up the social ladder. Sure enough, the next day at school her friends congratulated her even while making faces at the slight grossness in ‘going down’ on a boy.

_____________________

Dr Prakash Kothari, founder of the World Association For Sexual Health, a man familiar to India through his ubiquitous sex columns, says that one reason children are sexually active earlier is because better nutrition leads to earlier puberty. He says of his new, young clients: “Thirty years ago, only married couples came in looking for advice on safe sex and contraceptives. Today, young girls and boys walk in and ask about sex toys and tonics. Some even ask us if being high on LSD andcharas will enhance their sexual experience.”

Tehelka gets major points for noting the influence of American television:

Alisha describes the extent of OC role-play in her circle: Alisha’s slender best friend was considered to be like rail-thin Marissa from the show. Alisha, who used to be plump until recently, was automatically typecast as Marissa’s best friend Summer since the girls considered Summer chubby. (Look up Rachel Bilson, the waifish actress who plays Summer, and decide for yourself whether our kids are gripped with hatred for their bodies.) The identification with these shows is so close that Alisha’s best friend decided to “do it” with her boyfriend after OC’s lead couple, Ryan and Marissa, did it for the first time. The pressure then began for Alisha (aka best friend Summer) to also ‘pop the cherry’. All this is recounted without any sense of its bizarreness.

But fails to take into account what I believe to be a major factor in this trend: the ever-rising age of marriage. 50 years ago this kind of blatant promiscuity may have been uncommon, but teenage sex was practiced and widespread. Except the teenagers tended to be married. I have no statistics on hand, but my grandmother, to take the most parochial example, was married and had her first child by age 16. Mahatma Gandhi, in fact, was married as an infant and first discovered sex at age 13. No one thought very much of it at the time.

Today, among the upper classes, women and men are generally expected to marry in their mid-to-late twenties, respectively. But they are also expected to keep to the same traditions as their parents’ generation, including arranged marriages and strict abstinence. A child that reaches sexual maturity at age 14-16 but is expected to wait a full decade before “popping the cherry” (as the vulgar expression goes), will almost inevitably engage in promiscuity at some point.

The average age of marriage has gone up across the socioeconomic spectrum, but nowhere has the trend been as acute as among the upper-classes. I think it is telling that they are who comprise most of the anecdotes for the Tehelka piece. Among the middle and lower classes (where the average age dips down to the early 20s to late teens),  I should imagine one would find this sort of thing quite a bit less.

I don’t want to make too much of this point, because I think the rise of American television in India is the real culprit, as Tehelka mentions. But I want to also point out the conspiracy of silence that still surrounds sexual matters in Indian culture. Most Indian children would be horrified to discuss these issues with their parents, and their parents no less so. It’s the ultimate taboo. In my own experience, my parents didn’t speak a word of it to me – they left that for the school.

But sex education is almost nonexistent in India, and many states have actually banned teaching sex education in schools. The Internet is a dirty place, as you know, and the television shows these children watch (Tehelka mentions The OC and Gossip Girl) contain scenes that would be impossible for a child to understand. With all adults refusing to speak of it, it is natural they should get a warped perception.

However despite all these rationalizations, this is a very disturbing trend in Indian society, and though Tehelka must have sensationalized it a bit, I think it is a valuable lesson in how children, in an absence of understanding adults, will interpret their new cultural surroundings.

Written by pavanvan

April 18, 2010 at 8:44 pm

Posted in culture

Tagged with , , , , ,

Note to Tea Partiers

leave a comment »

Former Rep. Dick Armey, the President of Fredomworks (who funds most of your rallies), is now a lobbyist for the financial sector.

That is all.

Written by pavanvan

April 18, 2010 at 5:09 pm

Posted in Politics

SEC sues Goldman

leave a comment »

Written by pavanvan

April 17, 2010 at 1:11 am

Posted in Economy

Tagged with , , ,

Tax Day!

leave a comment »

I know I’m a day late for tax day, but I wanted to re-post the War Resisters League’s pie-chart on where these tax dollars are being spent. You can download a detailed PDF here.

I hope everyone had a happy filing.

Written by pavanvan

April 16, 2010 at 11:36 pm

Blanche Lincoln Stands Up Against OTC Derivatives

leave a comment »

(Via Felix Salmon)

I’ve written negatively about Senator Blanche Lincoln in the past for her vote in favor of the Iraq War, her frightening views on indefinite detention and torture, her support of warrentless surveillance, and a host of other sins, but I think she deserves major credit for introducing a bill earlier this week that would ban over the counter derivatives:

“Speculators will not be exempted and all trades will be reported to regulators and the public,” Mrs. Lincoln wrote. In addition, any agency that is used for the trading of swaps contracts, including those dealing with energy commodities, will be required to register with the C.F.T.C.

This is exactly the kind of transparency and oversight that could have prevented the crisis, or at least made it softer. I want to stress that the layers upon layers of new regulation that Timothy Geithner intends to add (and which I discussed in the post immediately before this one), will not do anything for public transparency.

Blanche, you’ve voted for some pretty bad things in the past, but this is a bill I can get behind.

Written by pavanvan

April 16, 2010 at 8:50 pm

Geithner Turns Halfway Around on Derivatives Regulation

leave a comment »

Via Bloomberg, it looks like the Treasury Secretary has backed off on his previous stance that the derivatives market (which got us into this mess) does not need to be regulated. Today he says:

Geithner said the over-the-counter derivatives market should be subject to “substantial supervision and regulation,” while omitting support for the provision that would force banks like JPMorgan Chase & Co. and Bank of America Corp. to wall off trading operations from their commercial banks.

The Obama administration requires that all over-the- counter derivatives dealers and “major market participants” be subject to “conservative capital requirements, conservative margin requirements and strong business conduct standards,” Geithner said.

There is some very tricky parsing of words here that will probably escape most peoples’ attention.

One of the major factors in the credit freeze of 2008 was the widespread proliferation of so-called “over-the-counter” derivatives, which are debt obligations that were traded secretly between banks. Unlike the mortgage industry or the credit card industry, derivatives were largely unregulated and are not traded on an exchange. Thus, banks can package and sell derivatives to one another “over the counter” – that is, without any public record of the transaction having taken place. This became a serious concern in 2008 when Lehman Bros. failed; because the derivatives market was undisclosed, no bank knew how many assets the other banks had, or if the assets they did have were worthless. As such, lending between banks froze overnight – no one knew who was solvent and who was underwater.

Many have taken this as evidence that OTC derivatives are inherently dangerous and should be banned. This could be done by outlawing all asset-backed derivatives (like the mortgage securities that got us into this mess to begin with), or by simply mandating that derivatives be traded on an open, transparent exchange. Thus, they would cease to be “over the counter”. Geithner’s recent comments, while they sound impressive, make a derivatives exchange highly unlikely, and actually point to an extension of the policies that caused the 2008 crisis.

“Substantial supervision and regulation” can fail. While the OTC derivatives had been the subject of a massive push for deregulation, the problem was that even if there were regulators to look at the books, the instruments had become too complex for them to decipher. Simply adding another layer of regulation won’t change the underlying problem, which is that these instruments are basically impervious to regulation unless traded on a transparent exchange, something Mr. Geithner apparently does not support.

Similarly, the “provision that would force banks to wall off trading operations from their commercial banks” refers to the infamous Glass-Stegall Act of 1934, the repeal of which in 1999  Nobel Laureate Joseph Stiglitz gives an “especial role” in causing the 2008 crisis. I’ve written on Glass-Stegall in the past, and I don’t wish to repeat myself, but I should stress that so long as Lawrence Summers, the architect of the bill that repealed Glass-Stegall (and thus, a major architect of the crisis) stays in place, there is little hope of reducing the size of our Too-Big-To-Fails. Needless to say, Mr. Geithner is not even considering reinstating Glass-Stegall.

So basically, Timothy Geithner’s big plan to rein-in derivatives trading gives only a minor face-lift to the status quo. He’ll slap on a few regulatory outfits and say he’s done the job. Meanwhile, our Too-Big-To-Fail banks are getting even bigger, over-the-counter derivatives are still legal, and there won’t be any meaningful punitive action towards the banks that caused this crisis. The severe risks to the system remain.

Written by pavanvan

April 16, 2010 at 8:03 pm

Cognitive Overload on the Internet

leave a comment »

The Columbia Journalism Review has a good article this week dissecting a book that looks at the crisis in journalism from a cognitive standpoint. The book’s thesis, something which many have come to notice, is that the explosion of information made possible by the internet has presented a radically new challenge to our cognitive evolution, one that has deep implications regarding attention, memory, and reading habits.

At today’s rate, the Internet doubles every four years, and with it the sum total of information available at one’s fingertips. There are billions, perhaps trillions of articles to read on a wide variety of subjects, and naturally only a limited amount of time with which to read them all. This is not, strictly speaking, a new problem, and indeed it has been looming ever since the invention of the printing press. A literary critic (whose name escapes me) remarked 50 years ago: “I read books for a living. Every week, I read maybe five or six books. At this rate, with a long and full career, I can look back at the end of my life and say I read maybe 10,000 books. That’s as many that come out every month.”

Back then, you needed industry backing and real know-how in order to publish even a rotten book. Nowadays, anyone with an internet connection can run a blog, post comments on websites, and publish their own “journalism” at the click of a button. With so many voices all clamoring for attention at once, the brain finds itself overwhelmed and tends to withdraw.

This trend has enormous implications, both from a journalism-industry standpoint and from a cognitive psychology standpoint. Todd Glitin only dissects the business implications in Columbia Journalism Review, and for a wider perspective, I recommend this 3 Quarks Daily article from last month. The author comments on a variety of responses given to The Edge when it asked, “How has the Internet changed the way you think?” Some of the responses are short and illuminating:

“It is our misfortune to live through the largest increase in expressive capability in the history of the human race,” [Clay Shirky] writes, half-ironically, “a misfortune because surplus always breaks more things than scarcity. Scarcity means valuable things become more valuable, a conceptually easy change to integrate. Surplus, on the other hand, means previously valuable things stop being valuable, which freaks people out.”

In his response, German intellectual Frank Schirrmacher compares the Internet to a “Darwinian struggle of ideas”, where a surplus of information ensures only the “fittest” ideas propagate:

As we know, information is fed by attention, so we have not enough attention, not enough food for all this information. And, as we know — this is the old Darwinian thought, the moment when Darwin started reading Malthus — when you have a conflict between a population explosion and not enough food, then Darwinian selection starts. And Darwinian systems start to change situations. And so what interests me is that we are, because we have the Internet, now entering a phase where Darwinian structures, where Darwinian dynamics, Darwinian selection, apparently attacks ideas themselves: what to remember, what not to remember, which idea is stronger, which idea is weaker.

And this idea, too, throws significant doubt on what we consider “true”. Consider the response of Kevin Kelly, the former executive editor of Wired:

For every accepted piece of knowledge I find, there is within easy reach someone who challenges the fact. Every fact has its anti-fact…I am less interested in Truth, with a capital T, and more interested in truths, plural. I feel the subjective has an important role in assembling the objective from many data points.

Which is an optimistic approach. But isn’t the opposite more likely true – that with all these voices clamoring for attention, the one that ends up capturing the greatest “mind-share” ends up passing into the realm of “truth”? This need not be the most factual interpretation, or even the most detailed – it only needs to be the most popular. People tend to value the truth, or at least a reasonable approximation of it, but recent experience would suggest they sometimes value other things more, like emotional connection, validation of previous beliefs, or sheer distraction. One cannot view the massive audiences of Rush Limbaugh, Glenn Beck, or the Fox News outfit without considering this conclusion.

If I were to hazard a prediction, I would say that the sum result of these trends will be the Internet allowing for everyone to have their own reality. With traditional linkages to “the outside world” (i.e. books, newspapers, and standardized narratives on what happened) being ruthlessly severed, people will soon be able to believe whatever they want, sealed in their own Internet cocoon, getting almost all their information from the same four or five sites. There are many Internet users for whom Facebook and Google are “the Internet”. Likewise with the “conservative” blogosphere, the “liberal” blogosphere, and so forth.

The end result, then, is a reductive capacity for the Internet – its impact so far has not been to spread information (though it has done that), but to reduce consensus. And with the cacophony of disparate voices, all shouting their particular “truth”, I fear we will quickly end up with no concept of truth at all.

Update: See also this CJR article on the same trend.

Written by pavanvan

April 16, 2010 at 7:38 pm

Why Ben Metcalf Pays His Taxes

leave a comment »

Harper’s has just made for free an outstanding essay by their literary editor, Ben Metcalf, entitled “Why I Pay My Taxes“. It was first published in April, 2008, and should be required reading for everyone on tax day.

Excerpts:

Who has nottoppled republics and tyrannies alike so that a corporation he took no personal interest in might enhance by meaningless increment an already criminal profit? Who has notwatched on his television set as a bomb or a tank he helped personally to pay for made a charred and limbless stump out of what previously was an innocent (if un-American) child? I might also ask, if only out of curiosity: just how many of these children needed to be chopped up and burnt before at last my fellow citizens thought to stop payment on the meat grinder and the furnace? One hundred? One thousand? Ten thousand? More?

Does not a single such death constitute a villainy no latter-day tax protest could hope to overcome? Was even that one small tragedy not predicted by our military accountants well in advance of any physical war, to be folded neatly into their projections of “collateral damage”? And have we not all of us long understood this phrase to be but a transparent attempt to log beforehand a formal regret over the slaughter to come while implying also that said slaughter will be accidental and therefore, magically, unforeseen?

_____

In 2007, to take but my most recent foray, I paid something on the order of $20,000 into the federal pail. Of this sum, I can be assured that 31 percent, or $6,200, was put toward current military expenses (which would strike me as almost miserly if it did not far surpass what I have given at any one time to any other cause). Of this $6,200, I know that roughly 23 percent, or $1,400 (also more than I have given at any one time to any other cause), went immediately to the wars in Iraq and Afghanistan, both of which our current administration, the second Bush, claims already to have won.

_____

Surely, though, I can say with some certainty that the $1,400 I sent last year to the wars abroad scored at least on occasion. That unassuming sum, after all, would have paid for 5,000 M16 machine-gun bullets at 28 cents per. Five thousand bullets! Is notone of these now lodged in a foreign corpse on my tab and my behalf? True, the price has gone up since then (by a whopping 2 cents), but that still promises a good 4,666-bullet year, and with luck I might get a cost-of-living raise to make up the difference.

The whole thing is grimly hilarious, and well worth reading.

Written by pavanvan

April 16, 2010 at 10:09 am

The Senate Finance Committee’s Revolving Door

leave a comment »

The New York Times has an excellent article on former finance legislators now lobbying their old congressional buddies to make favorable legislation for the financial sector, a practice known affectionately as the “revolving door”. They cite enough examples to show that this sort of thing is a pretty widespread, and they focus on the particularly egregious case of an aide to Rep. Bernie Sanders who drafted financial legislation last summer and is now lobbying for a major bank.

I highly recommend this article

Written by pavanvan

April 15, 2010 at 10:05 pm

Fraud and Washington Mutual

leave a comment »

The recent WaMU collapse hearings have brought out some juicy revelations, all of which detail practices widespread among all mortgage lenders. I highly recommend Zach Carter’s Huffington Post piece for its explanatory power:

There are two types of financial outrages: acts that are outrageously illegal, and acts that are, outrageously, legal. Yesterday’s Senate hearing on the rise and fall of Washington Mutual was a rare examination of the former outrage, documenting the pervasive practice of fraud at every level of the now-defunct bank’s business.

All of Washington Mutual’s sketchy practices can be traced back to rampant fraud in its mortgage lending offices. The company repeatedly performed internal audits of its lending practices, and discovered multiple times that enormous proportions of the loans it was issuing were based on fraudulent documents. At some offices, the fraud rate was on new mortgages over 70%, and at yesterday’s hearing, the company’s former Chief Risk Officer James Vanasek described its mortgage fraud as “systemic.”

When most people think of mortgage fraud, they think of a clever borrower conning an unwitting banker into extending him a loan he cannot afford. But this isn’t really how fraud usually works in the mortgage business. According to the FBI, 80% of mortgage fraud is committed by the lender, so it shouldn’t be surprising that WaMu’s internal audits concluded that its widespread fraud was being “willfully” perpetrated by its own employees. The company also engaged in textbook predatory lending across all of its mortgage lending activities–issuing loans based on the value of the property, while ignoring the borrower’s ability to repay the loan.

These findings alone are pretty bad stuff in the world of white-collar crime. For several years, WaMu was engaged in fraudulent lending, WaMu managers knew it was engaged in fraudulent lending, and didn’t stop it. The company was setting up thousands, if not millions of borrowers for foreclosure, while booking illusory short-term profits and paying out giant bonuses for its employees and executives. During the housing boom, WaMu Chairman and CEO Kerry Killinger took home between $11 million and $20 million every single year, much of it “earned” on outright fraud.

Written by pavanvan

April 15, 2010 at 8:58 pm

The Tea Party Poll and Its Implications

leave a comment »

CBS and The New York Times recently collaboarated in a massive poll of Tea Party members, and have recently released their results.

We all knew for sometime that the Tea Party brought together a wide and disparate group of ideologies, from pro-business tycoons, Ron Paul libertarians, national security fanatics, and plain old racists. What we didn’t know was that the Tea Party has as little in common, ideologically, as the public at large:

Their responses are like the general public’s in many ways. Most describe the amount they paid in taxes this year as “fair.” Most send their children to public schools. A plurality do not think Sarah Palin is qualified to be president, and, despite their push for smaller government, they think that Social Security and Medicare are worth the cost to taxpayers. They actually are just as likely as Americans as a whole to have returned their census forms, though some conservative leaders have urged a boycott.

In fact, the only thing they seem to have in common is an intense distaste for Barack Obama The Person (as opposed to The Politician): They feel he doesn’t share their “values”, that he “disproportionately favors the poor over the rich and middle class” (something which his economic policies have definitely not reflected) and their chief concerns are, in order: The health care bill, “government spending”, and the impression that their feelings aren’t heard in an elite-run Washington.

One remarkable trend is the reaction toward his “socialism”, as they understand it. Fully 92% believe he is a “socialist”, or taking the country “in that direction”. The Times thinks that the theme of Christianity, and a perceived departure from “Christian morals” pervades throughout, as exemplified in this quote:

“I just feel he’s getting away from what America is,” said Kathy Mayhugh, 67, a retired medical transcriber in Jacksonville. “He’s a socialist. And to tell you the truth, I think he’s a Muslim and trying to head us in that direction, I don’t care what he says. He’s been in office over a year and can’t find a church to go to. That doesn’t say much for him.”

Ouch.

The overwhelming likelihood of a Tea Partier to vote Republican should be of especial interest to the GOP – 90% will vote for a Republican in 2010. Contrary to theirname  image, most of the Tea Party does not desire to become a Third Party, nor can it hope to supplant the ruling two (one).

More than three-quarters of them want “smaller government” – again, as they understand it –  but curiously, many had no idea of what that implied. A significant paradox in the Tea Party is its reliance on welfare programs (particularly Medicare), while at the same time venomous dictates on the “size of government”.The article ends with one of the funniest quotes I’ve seen in a serious news piece for some time:

“That’s a conundrum, isn’t it?” asked Jodine White, 62, of Rocklin, Calif. “I don’t know what to say. Maybe I don’t want smaller government. I guess I want smaller government and my Social Security.” She added, “I didn’t look at it from the perspective of losing things I need. I think I’ve changed my mind.”

A few conclusions follow:

  1. Even though the poll did not ask about the Wars on Terror (a startling omission), a plurality or even a majority of Tea Party members likely support overseas imperialism.
  2. The movement is totally confused as to the definition of “small government”, almost to the point of it being a meaningless propaganda phrase.
  3. The criticisms of President Obama are not compelling, and likely betray a deeper prejudice. His perceived faults are largely fictitious (“socialism”), whereas his true crimes (Wall St. – centered economic policy, aggressive war policy, dismal view of constitutional civil rights, etc.) go unmentioned.
  4. The Tea Party’s members believe in their party’s propaganda only to an extent, but most are willing to ignore their doubts for the sake of unity.
  5. They are, on average, far less radical than their worst elements, but are still motivated largely by anger.
  6. They are a major asset to the Republican Party.

Written by pavanvan

April 15, 2010 at 2:21 pm

Posted in culture

Tagged with ,

‘Penny Pinching’ in Afghanistan

leave a comment »

The Times has a blatantly pro-war screed masquerading as unbiased news today, as they attempt to bully Britain into providing more money for Afghanistan. Just look at this lede:

Has a “penny pinching” approach to defense spending by Prime Minister Gordon Brown kept British troops in Afghanistan disastrously short of the helicopters and other equipment their commanders have long demanded, causing unnecessarily heavy combat losses to the Taliban’s most devastating weapon, roadside bombs?

“Disastrously short of helicopters”, “commanders have long demanded”, “unnecessarily heavy combat losses”, “most devastating weapon” – Gee, I wonder if the author thinks Britain ought to invest more money in this black hole of a war! (the answer is yes.)

Then it gets even worse. The author, John F. Burns, decides his best source for this matter is a retired British general – one who was Britain’s top military officer back in 2001:

Gen. Charles Guthrie, Britain’s top military officer until 2001, has spoken bitterly of Mr. Brown’s paring of budgets for helicopters and other defense priorities. “Gordon never cared” about defense, he said in an interview last summer with the Times of London. “It’s no good the prime minister one moment saying success is all important, and then for the sake of a few extra helicopters and 2,000 men allowing the mission in Afghanistan to fail.

You can’t go to war in a penny-pinching way,” he said.

What exactly is the “mission” I hear everyone talking about? What does “success” even mean in this context? And isn’t ‘penny-pinching’ a rational policy if your country is totally broke? I know we live in a culture that worships success, but this is going a little too far.

I guess the point of the article is that Conservative leader David Cameron is using this “issue” to score some quick points against Labour in the upcoming election. Mr. Burns writes:

Mr. Cameron quoted a former British paratroop commander in Afghanistan as saying that “repeated demands for more helicopters fell on deaf ears” with the Brown government, and that troops ended up “driving into combat when they should have been flying.

Why don’t they just leave? They would neither have to drive nor fly into combat in that case. The BBC and several other opinion polls all show the war to be deeply unpopular with the British public. But since all of America’s so-called ‘allies’ are shying away from this insane and endless conflict, we have to rely once again on our ‘oldest ally’ to fill the gap – and that often means having to bully them a bit on the front page of our leading newspaper.

Written by pavanvan

April 15, 2010 at 11:23 am