Daily Archive: 06/13/2012

Jun 13 2012

JP Morgan’s CEO And The Grand Lie

“We are not in the hedge fund business.”

Jamie Dimon, CEO JP Morgan Chase

JP Morgan Chase CEO Jamie Dimon testified today before the Senate Banking Committee about the $2 billion plus loss from it’s “London Whale” gambling with depositor and tax payer money. He was hardly contrite. Not only did Dimon whine about the complexity of the federal regulatory system but he lied, blatantly, this from Yves Smith at naked capitalism:

In Senate testimony, Dimon revealed his idea of “portfolio hedging” to be even more egregious than the harshest critics thought. Dimon presented the job of the CIO to be to make modest amounts of money in good times and to make a lot of money when there’s a crisis. (That does not appear to be narrowly true, since in the last couple of years, during which there was no crisis, the CIO’s staff were among the best paid in the bank and produced significant profits for the bank. That is a bald faced admission that the CIO’s mandate had nothing to do with hedging. A hedge is a position taken to mitigate losses on an underlying exposure should they occur. Instead, Dimon has admitted that the mission of the CIO is to place bets on tail risks that are unrelated to JP Morgan’s exposures. A massive, systemically destructive strategy like the Magnetar trade would fit perfectly within the CIO’s mandate.

Needless to say, this definition is an inversion of not just what the Volcker rule was meant to stand for (limiting financial firm gambles with taxpayer money), it’s NewSpeak, or in this case, DimonSpeak: “a hedge is whatever I say it is, no more and no less.” Another bit of DimonSpeak was his specious response when he was arguing against the Volcker rule. The JP Morgan chief asserted that a customer loan could be construed to be a prop trade. Um, no, Volcker applies to trading books. The fact that he’d run a line like that shows how little he thinks of the intelligence of the Senate Banking Committee and the public generally. [..]

It was instructive to see how effective confident misrepresentation can be. Most of the Republican senators fawned over Dimon after the ritual scolding at the top of the hearings, and I suspect most of the media will simply replay his lines uncritically. There were a few that will work against him, like his reluctant admission that the Volcker rule might have prevented the failed London trade. But in general, reducing complex situations to soundbites allows for obfuscation and misdirection, which is exactly what Dimon and his ilk are keen to have happen.

During the testimony, Dimon admitted to responsibility for the failed trade that could possibly lead to criminal charges for violation of Sarbanese-Oxley, but even under this Democratic administration, no one believes that, certainly not Yves or David Dayen at FDL:

Dimon also deflected blame for the losses. David Dayen recounts the conference call that took place during the hearing with economists Rob Johnson and Bill Black:

Dimon tried to blame the losses on a lot of factors, and in such a way that doesn’t trip up his priorities later. As economist Rob Johnson mentioned in a conference call, Dimon has been lobbying vociferously against things like the Volcker rule. So he doesn’t want this Fail Whale mix-up to lead to a stronger regulatory environment. He tried to explain the trades as a hedge (never saying that they were one, but that he “believed” they were one, to keep him out of trouble), that would make small amounts of money in good times and more money when things went bad. They were also specifically tied to business in Europe. Bill Black, who was also on the call, targeted this as a non sequitur. “He said that senior management ordered the CIO to get out of the risk out of this underlying supposed hedge,” Black said. “But a hedge is supposed to be reducing risk, and it was protecting you from Europe going bad, when Europe is going bad. So it should have been making more money at this time.”

Black continued. “Instead of reducing the risk, the CIO went into a vastly more complex series of derivatives and went far larger, and they hid the losses. I mean, my God. They violated direct orders, lose a ton of money and lie about it. Dimon described a massive insurrection by the CIO.”

Most of the senators soft peddled their questions and Sen. Jim DeMint (R-SC) actually asked Dimon for advice about banking regulations and Sen. Richard Shelby (R-AL) doesn’t believe in second guessing the banksters. The closest any of the questioners came to holding Dimon accountable for the losses was Sen Jeff Merkley (D-OR). It was during that exchange that Dimon admitted he was responsible for the losses.

All in all another farce by our politicians who are owned by the man before them.

Jun 13 2012

Cartoon Land

What does it say about a president’s policies when he uses a cartoon character, rather than a real person, to justify his record?

Jun 13 2012

Not Hypocrisy

And don’t you dare ever say so!

Warrantless spying fight

Obama officials demand full, reform-free renewal of the once-controversial power to eavesdrop without warrants

By Glenn Greenwald, Salon

Thursday, May 24, 2012 09:37 AM EDT

In 2006, The New York Times’ James Risen and Eric Lichtblau won the Pulitzer Prize for their December, 2005 article revealing that the Bush administration was eavesdropping on the electronic communications of Americans without the warrants required by the FISA law (headline: “Officials Say U.S. Wiretaps Exceeded Law”). Even though multiple federal judges eventually ruled the program illegal, that scandal generated no accountability of any kind for two reasons:

(1) federal courts ultimately accepted the arguments of the Bush and Obama DOJs that the legality of Bush’s domestic spying program should not be judicially reviewed; and

(2) the Democratic-led Congress, in 2008, enacted the Bush-designed FISA Amendments Act, which not only retroactively immunized the nation’s telecom giants for their illegal participation in that spying program and thus terminated pending lawsuits, but worse, also legalized the vast bulk of the Bush spying program by vesting vast new powers in the U.S. Government to eavesdrop without warrants (in his memoir, President Bush gleefully recounted that the 2008 eavesdropping bill supported by the Democrats gave him more than he ever expected).

It was then-Sen. Obama’s vote in favor of the FISA Amendments Act that caused the first serious Election Year rift between him and his own supporters. Obama’s vote in favor of the bill was so controversial for two independent reasons:

(1) when he was seeking the Democratic nomination only a few months earlier and needed the support of the progressive base, Obama unequivocally vowed to filibuster “any bill that includes retroactive immunity for telecommunications companies,” only to turn around once he had secured the nomination and not only vote against a filibuster of that bill but then vote in favor of the bill itself; and

(2) the bill itself legalized vast new powers of warrantless eavesdropping: powers which the Democratic Party (and Obama) had spent years denouncing (as Yale Law Professor Jack Balkin put it at the time: “Through the FISA Amendments Act of 2008, Congress has legitimated many of the same things people are now complaining about”).

When Obama announced his reversal, his defenders insisted he was only doing it so that he could win the election and then use his power as President to stop warrantless eavesdropping abuses, while Obama himself claimed he voted for the FISA bill “with the firm intention – once I’m sworn in as President – to have my Attorney General conduct a comprehensive review of all our surveillance programs, and to make further recommendations on any steps needed to preserve civil liberties and to prevent executive branch abuse in the future.”

The only positive aspect of the FISA Amendments Act of 2008 was that Congress imposed a four-year sunset provision on the new warrantless eavesdropping powers it authorized. That sunset provision is set to expire and – surprise, surprise – the Obama administration, just like it did for the Patriot Act, is demanding its full-scale renewal without a single change or reform.

Of course he’ll be better and more courageous and “progressive” when he never has to face voters again.

Jun 13 2012

Punting the Pundits

“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”.

Wednesday is Ladies’ Day

Follow us on Twitter @StarsHollowGzt

Elinor Ostrom: Green from the Grassroots

((Note: Elinor Ostrom, the first and only woman to receive the Nobel Prize in Economics, died today (6/12) at the age of 78. In her final syndicated column, she champions those local communities that have not waited for global agreements or policies from above, but have taken it upon themselves to create ‘organic’ policies to manage shared resources and adapt to current global challenges and the ones ahead.))

Much is riding on the United Nations Rio+20 summit. Many are billing it as Plan A for Planet Earth and want leaders bound to a single international agreement to protect our life-support system and prevent a global humanitarian crisis.

Inaction in Rio would be disastrous, but a single international agreement would be a grave mistake. We cannot rely on singular global policies to solve the problem of managing our common resources: the oceans, atmosphere, forests, waterways, and rich diversity of life that combine to create the right conditions for life, including seven billion humans, to thrive.

We have never had to deal with problems of the scale facing today’s globally interconnected society. No one knows for sure what will work, so it is important to build a system that can evolve and adapt rapidly.

Katrina vanden Heuvel: Obama’s ‘Kill List’ Is Unchecked Presidential Power

A stunning report in the New York Times depicted President Obama poring over the equivalent of terrorist baseball cards, deciding who on a “kill list” would be targeted for elimination by drone attack. The revelations – as well as those in Daniel Klaidman’s recent book – sparked public outrage and calls for congressional inquiry.

Yet bizarrely, the fury is targeted at the messengers, not the message. Sen. John McCain (R-Ariz.) expressed dismay that presidential aides were leaking national security information to bolster the president’s foreign policy credentials. (Shocking? Think gambling, Casablanca). Republican and Democratic senators joined in condemning the leaks. Attorney General Eric H. Holder Jr. – AWOL in the prosecution of rampant bank fraud – roused himself to name two prosecutors to track down the leakers.

Please. Al-Qaeda knows that U.S. drones are hunting them. The Pakistanis, Yemenis, Somalis, Afghanis and others know the U.S. is behind the drones that strike suddenly from above. The only people aided by these revelations are the American people who have an overriding right and need to know.

Margaret Kimberly: Freedom Rider: The Obama Thrill is Gone

Few predict that Barack Obama will generate the Black turnout that propelled him to victory in 2008. “A small but growing number” of Black former Obama enthusiasts “have grown weary of the charade and know they have been played for fools.” Race pride motivated them the first time around, but that is harder to muster for “a man who never saw them as anything more than saps who would vote for him no matter what he said or did.”

Black Americans’ devotion to Barack Obama during his 2008 run for the presidency was unparalleled in American political history. From the moment he won the Iowa caucus and proved that white people would vote for him, any and all questions or concerns raised about Obama were promptly forgotten. The opportunity to see a black president created a level of enthusiasm previously unseen, and unfortunately a blind devotion too. A group of reliably progressive people changed their political religion and coalesced nearly unanimously around the only kind of person the system will allow to compete, a corporatist and imperialist with no inclination to put black people anywhere on the agenda of the day.

Diane Ravitch: Mitt Romney’s Blueprint for Privatizing American Education

On 23 May, the Romney campaign released its education policy white paper titled A Chance for Every Child: Mitt Romney‘s Plan for Restoring the Promise of American Education. If you liked the George W Bush administration’s education reforms, you will love the Romney plan. If you think that turning the schools over to the private sector will solve their problems, then his plan will thrill you.

The central themes of the Romney plan are a rehash of Republican education ideas from the past 30 years, namely, subsidizing parents who want to send their child to a private or religious school, encouraging the private sector to operate schools, putting commercial banks in charge of the federal student loan program, holding teachers and schools accountable for students’ test scores, and lowering entrance requirements for new teachers. These policies reflect the experience of his advisers, who include half a dozen senior officials from the Bush administration and several prominent conservative academics – among them, former Secretary of Education Rod Paige and former Deputy Secretary of Education Bill Hansen, and school choice advocates John Chubb and Paul Peterson.

Unlike George W Bush, who had to negotiate with a Democratic Congress to pass No Child Left Behind, Romney feels no need to compromise on anything. He needs to prove to the Republican party’s base – especially evangelicals – that he really is conservative. And this plan is “mission accomplished”.

Michelle Chen: Working Women’s Bodies Besieged by Environmental Injustice

From birth control pills to equal pay, women are a favorite target in the country’s most heated political wars. But a much quieter struggle is being waged over women’s bodies in their neighborhoods and workplaces, where a minefield of pollutants threaten working mothers and their children.

According to new research from the the National Birth Defects Prevention Study, working pregnant women who are exposed on the job to toxins known as polycyclic aromatic hydrocarbons (PAHs) are more likely to have children with gastroschisis, a rare birth defect in which the intestines stick out from the baby’s body, generally requiring surgical repair.

The study, summarized by Environmental Health News, reveals a distinct link between women’s occupational exposure and the prevalence of the defect: “mothers who were exposed to PAHs had 1.5 times the risk of having a baby with gastroschisis compared to women who were not exposed to PAHs at work.”

Sarah Laskow: Waffling on Climate Change? Consult Friends, Not Science

Ever since climate scientist James Hansen first testified before Congress about global warming in 1988, the scientists, advocates, academics and former vice-presidents who work to stop climate change have presumed that the science matters. Hansen began his testimony by telling the assembled senators (pdf): “The earth is warmer in 1988 than at any time in the history of instrumental measurements,” in full confidence that instrumental measurements would matter more than the weather outside the politicians’ front doors. Like Al Gore in An Inconvenient Truth, Hansen depended on graphs (he called them “viewgraphs”) and numbers to help make his case. Almost two decades later, when Gore first raised the alarm about climate change with his documentary, his strategy rested on that same science: I dare you to look at this PowerPoint and tell me climate change isn’t a problem! It is an expectedly rational assumption to make, that a rational science like science should be a trump card. Inconveniently, it’s not true.

A study published last week in Nature Climate Change, a leading, meticulously vetted journal of climate research, showed that the more scientifically literate people are, the less worried they are about climate change. “As respondents’ science-literacy scores increased, concern with climate change decreased,” wrote the study’s authors, a group that includes researchers from Ohio State, George Washington University and Yale University.

Jun 13 2012

On This Day In History June 13

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.

June 13 is the 164th day of the year (165th in leap years) in the Gregorian calendar. There are 201 days remaining until the end of the year.

On this day in 1966, The Miranda rights are established.

The Supreme Court hands down its decision in Miranda v. Arizona, establishing the principle that all criminal suspects must be advised of their rights before interrogation. Now considered standard police procedure, “You have the right to remain silent. Anything you say can, and will, be used against you in court of law. You have the right to an attorney. If you cannot afford one, one will be appointed to you,” has been heard so many times in television and film dramas that it has become almost cliche.

Miranda v. Arizona 384 U.S. 436 (1966), was a landmark 5-4 decision of the United States Supreme Court. The Court held that both inculpatory and exculpatory statements made in response to interrogation by a defendant in police custody will be admissible at trial only if the prosecution can show that the defendant was informed of the right to consult with an attorney before and during questioning and of the right against self-incrimination prior to questioning by police, and that the defendant not only understood these rights, but voluntarily waived them. This had a significant impact on law enforcement in the United States, by making what became known as the Miranda rights part of routine police procedure to ensure that suspects were informed of their rights. The Supreme Court decided Miranda with three other consolidated cases: Westover v. United States, Vignera v. New York, and California v. Stewart.

The Miranda warning (often abbreviated to “Miranda”) is the name of the formal warning that is required to be given by police in the United States to criminal suspects in police custody (or in a custodial situation) before they are interrogated, in accordance with the Miranda ruling. Its purpose is to ensure the accused is aware of, and reminded of, these rights under the U.S. Constitution, and that they know they can invoke them at any time during the interview.

As of the U.S. Supreme Court decision Berghuis v. Thompkins(June 1, 2010), criminal suspects who are aware of their right to silence and to an attorney, but choose not to “unambiguously” invoke them, may find any subsequent voluntary statements treated as an implied waiver of their rights, and which may be used in evidence.

Jun 13 2012

You’re Fabulous

It’s all about you.

It’s all about me.