09/16/2011 archive

Evening Edition is an Open Thread

1 Libya fighters surge into two Kadhafi bastions

By Dominique Soguel, AFP

6 hrs ago

Paul Krugman: Free To Die

Back in 1980, just as America was making its political turn to the right, Milton Friedman lent his voice to the change with the famous TV series “Free to Choose.” In episode after episode, the genial economist identified laissez-faire economics with personal choice and empowerment, an upbeat vision that would be echoed and amplified by Ronald Reagan.

But that was then. Today, “free to choose” has become “free to die.”

I’m referring, as you might guess, to what happened during Monday’s G.O.P. presidential debate. CNN’s Wolf Blitzer asked Representative Ron Paul what we should do if a 30-year-old man who chose not to purchase health insurance suddenly found himself in need of six months of intensive care. Mr. Paul replied, “That’s what freedom is all about – taking your own risks.” Mr. Blitzer pressed him again, asking whether “society should just let him die.”

And the crowd erupted with cheers and shouts of “Yeah!

Susan Grigsby’s brother Steve died a painful death fighting for care as an uninsured American. Susan watched, horrified, as the GOP Presidential Candidates on CNN’s Tea Party Debate stood silent when the the audience cheered for the idea that we as a society should just let an uninsured man die. Now Susan wants an answer from each and every GOP candidate.

Yikes! ISS crew endures comms blackout during re-entry

By: William Harwood, CNET

September 16, 2011 6:33 AM PDT

A Russian Soyuz capsule carrying three of the International Space Station’s six crew members suffered an unexpected communications blackout just before plunging back into Earth’s atmosphere, completing a nail-biting descent in radio silence with repeated calls from flight controllers near Moscow going unanswered.

Finally, recovery crews spotted the Soyuz TMA-21’s braking parachute, communications with ground crews were established and the spacecraft touched down in Kazakhstan at 9:59 a.m. local time Friday (8:59 p.m. PT Thursday), tipping over on its side as it closed out an expedition lasting 164 days since launch April 4 from the Baikonur Cosmodrome.

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There was no immediate explanation for the communications dropout. The repeated, unanswered calls from mission control near Moscow were eerily reminiscent of the fruitless calls to the shuttle Columbia during the orbiter’s ill-fated descent to Earth in 2003.

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Engineers have traced the Soyuz-U engine failure to a kerosene fuel line blockage that disrupted the operation of a turbopump used to feed propellants to the main combustion chamber. A Russian commission investigating the failure reportedly has raised questions about quality control. But it’s not yet clear how that issue will be resolved.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Paul Krugman: A Constant Flow of Bad News for Europe and the US

In the United States, we have zero job growth, with unemployment still at nosebleed levels, according to a recent government report. Meanwhile, the interest rate on 10-year bonds is down to 2.04 percent, and it’s negative on inflation-protected securities.

Aren’t you glad we pivoted from jobs to deficits a year and a half ago?

Meanwhile, on the other side of the pond, “Is Austerity Killing Europe’s Recovery?” asks The Washington Post.

Howard Schneider, a staff writer who covers international economics, wrote on Sept. 1: “After more than a year of aggressive budget cutting by European governments, an economic slowdown on the continent is confronting policymakers from Madrid to Frankfurt with an uncomfortable question: Have they been addressing the wrong problem?”

Yah think?

Robert Resich: The Republican Weapon of Mass Cynicism

According to the latest ABC New/Washington Post poll, 77 percent of Americans say they “feel things have gotten pretty seriously off on the wrong track” in this country. That’s the highest percentage since January, 2009.

No surprise. The economy is almost as rotten now as it was two years ago. And, yes, this poses a huge risk to President Obama’s reelection, as it does to congressional Democrats.

But the truly remarkable thing is how little faith Americans have in government to set things right. This cynicism poses an even bigger challenge to Obama and the Democrats – and perhaps to all of us.

Lots of people think, as I did until recently, that ETFs are relatively low risk, low cost investments that track well understood and popular market indexes like the S&P 500 without forcing individual investors to actually assemble a portfolio of the underlying assets.

Not so much.

Terry Smith has put together a list of 4 problems with ETFs as they are traded today of which I think #3 is the biggest-

Because you can exchange trade these funds, they are used by hedge funds and banks to take positions and they can short them. Because they can apparently rely upon creating the units to deliver on their short, there are examples of short interest in ETFs being up to 1000% short i.e. some market participant(s) are short 10 times the amount of the ETF. If the ETF is in an illiquid sector, can you really rely upon creating the units as you may not be able to buy (or sell) the underlying assets in a sector with limited liquidity? The danger of allowing short sales which are a multiple of the value of a fund in an area where it may not be possible to close the trades by buying back the stocks are clear, but amazingly, during the debate in which I have been engaged by various cheer leaders for ETFs, they have claimed that there is no such risk in shorting ETFs. They clearly do not understand the product they are peddling, and if they can’t what chance has the retail investor got?

In other words leverage is creating notional supply in excess of the actual supply of an asset which leads to illiquidity when the demand exceeds it.

I’m sorry, you can’t buy anymore X at any price.

Now economists would argue that there is always a price at which a supply of X is available and on certain theoretical levels they are correct, but there is a practical level at which the price becomes too expensive and someone, somewhere is either deprived of the item they had a contract to purchase OR is forced to spend lots of money making good those promises.

This is apparently what happened at UBS.

The $2 Billion UBS Incident: ‘Rogue Trader’ My Ass

Matt Taibbi, Roling Stone

POSTED: September 15, 8:39 AM ET

Investment bankers do not see it as their jobs to tend to the dreary business of making sure Ma and Pa Main Street get their $8.03 in savings account interest every month. Nothing about traditional commercial banking – historically, the dullest of businesses, taking customer deposits and making conservative investments with them in search of a percentage point of profit here and there – turns them on.

In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you’re not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up, then you won’t make it on today’s Wall Street.

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In the financial press you’re called a “rogue trader” if you’re some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you’re a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.

In other words, “rogue traders” are treated like bad accidents and condemned everywhere from the front pages to Ewan McGregor films. But rogue companies are protected at every level of the regulatory structure and continually empowered by dergulatory legislation giving them access to our bank accounts.

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Sooner or later, this is going to blow up in our faces, and it won’t be one lower-level guy with a $2 billion loss we’ll be swallowing. It’ll be the CEO of another rogue firm like Lehman Brothers, and it’ll cost us trillions, not billions.

‘Rogue trader’? That’s the same as ‘rogue reporter’

The ‘rogues’ are those who get caught while people presiding over systems that go wrong say: ‘How deplorable’

Michael White, The Guardian

Friday 16 September 2011 06.40 EDT

A “rogue trader” in a City of London bank is really like a “rogue reporter” on the News of the World. He’s the one who gets caught and sent to jail when the people who presided over the system that allowed him to lose $2bn – or, in Clive Goodman’s case, to hack some royal phones – say “how deplorable” before business as usual is restored.

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Have we learned nothing? Apparently not. Adoboli is 31, with less visible expertise and experience than his evident ambition to make money. Who left him in charge of the tea money? Yet he was able to lose $2bn in a corner of the investment market known as exchange traded funds (ETFs), which even the FT is having a struggle explaining to its more ignorant readers (bank chairmen, people like that) in today’s edition.

Apparently, they’re the hottest thing since the collateralised debt products that blew up Lehman and others in 2008. The FT columnist Gillian Tett says she wrote a column in May warning that ETFs were heading for a scandal, but not quite this soon.

A rogue trader at UBS or a rogue bank?

by John Gapper, Financial Times

September 15, 2011 3:45 pm

Given the recent history of UBS, it is fair to ask if Kweku Adoboli is a rogue trader or his employer is a rogue bank.

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(T)he bank’s entire senior layer of management was forced out following its involvement in the 1998 collapse of Long-Term Capital Management, the US arbitrage hedge fund run by John Meriwether. UBS had pressed to be closely associated with an operation it regarded as smartly and safely run.

There are similarities between the products relating to the LTCM case and the trading desk on which Mr Adoboli worked. As Izabella Kaminska of FT Alphaville points out, banks’ Delta 1 desks traded and hedged exchange-traded derivatives in  ways that involve complex – and difficult to monitor – risk-taking. Mr Kerviel worked on SocGen’s Delta 1 desk.

On September 21, 2011, the State of Georgia plans to kill Troy Davis by lethal injection.  If it happens, this execution will not be an unusual event.  In Texas this year there have already been ten executions. In the United States this year there have been thirty-three executions.   In fact, there have been some days in 2011 when there were two executions.  But in general most, if not all of these killings have gone unnoticed.  It’s as if someone had pressed the mute button, so we could not hear the anguish or see the tears, so we could not see what was being done in our names.  

There were two executions planned in Texas this week. On September 13, 2011, Texas killed Steven Woods for 2001 a double murder.   And on September 15, 2011, it took the US Supreme Court’s last minute stay to stop the planned killing of Duane Buck.  Buck got some deserved attention because his death sentence included egregious “expert” testimony that Black people are more dangerous than whites.  But in general, state killing goes on largely unnoticed.  And without noticeable scrutiny.  Or opposition.

Troy Davis is an exception to the silence and what appears to be acquiescence to state killing.  Thank goodness.  And that may be because Troy Davis is likely innocent.  The case against him has  disintegrated since his trial.  It has fallen apart as witnesses recanted their testimony and explained the police coercion in interrogations that made them perjured themselves at his trial.  Troy Davis appears to be innocent, a circumstances that Justice Scalia has opined in this very case is of no constitutional significance.  Despite all of this Georgia relentlessly pursues killing him.  So Troy Davis has managed to attract attention, which he completely deserves, and has elicited remarkable and justified eloquence in his defense.  I wish others who have faced execution had received similar support, but I can understand completely why they have not.  And I am pleased that the execution of Troy Davis has evoked such strong opposition.

I have twice before written about Georgia’s desire to kill Troy Davis, on July 7, 2006 and onAugust 9, 2009, and here I am again more than five years later saying the same thing, trying to ask you to ask the State of Georgia to spare the same man, Troy Davis. I won’t repeat all the reasons.  

Troy Davis should be spared.

Alll I can do now is urge you, dear reader, to join the 663,000 people who have already signed a petition to go to spare Troy Davis by signing the NAACP petition and by taking the additional recommended steps to spare Troy Davis.

And also, please, whatever may happen to Troy Davis, please recognize that there are going to be more Troy Davises, recognized or not, as long as the United States has the death penalty.  The only way to prevent that is abolition of state killing.  Let’s spare Troy Davis.  And let’s also stop state killing.

This Week In The Dream Antilles is usually a weekly digest. Sometimes, like now, it is preemptede and is not actually a digest of essays posted in the past week at The Dream Antilles. For that you have to visit The Dream Antilles. Please leave a comment or click the “encouragement jar” so that your Bloguero will know that you stopped by. Your Bloguero likes to know you’ve visited.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

September 16 is the 259th day of the year (260th in leap years) in the Gregorian calendar. There are 106 days remaining until the end of the year.

On this day in 1932, in his cell at Yerovda Jail near Bombay, Mohandas Karamchand Gandhi begins a hunger strike in protest of the British government’s decision to separate India’s electoral system by caste.A leader in the Indian campaign for home rule, Gandhi worked all his life to spread his own brand of passive resistance across India and the world. By 1920, his concept of Satyagraha (or “insistence upon truth”) had made Gandhi an enormously influential figure for millions of followers. Jailed by the British government from 1922-24, he withdrew from political action for a time during the 1920s but in 1930 returned with a new civil disobedience campaign. This landed Gandhi in prison again, but only briefly, as the British made concessions to his demands and invited him to represent the Indian National Congress Party at a round-table conference in London.

In 1932, through the campaigning of the Dalit leader B. R. Ambedkar, the government granted untouchables separate electorates under the new constitution. In protest, Gandhi embarked on a six-day fast in September 1932. The resulting public outcry successfully forced the government to adopt a more equitable arrangement via negotiations mediated by the Dalit cricketer turned political leader Palwankar Baloo. This was the start of a new campaign by Gandhi to improve the lives of the untouchables, whom he named Harijans, the children of God.

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• On this Day in History September 15 by: TheMomCat
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Evening Edition is an Open Thread

1 Major central banks to provide dollars to banks: ECB

By Simon Morgan, AFP

3 hrs ago