08/22/2012 archive

One of the latest MSM fixations has been an incident that occurred last year during a Republican junket to Israel. A nighttime swim in the Sea of Galilee by some members of the delegations turned embarrassing when the FBI found the Rep. Kevin Yoder (R-Kan.) took his dip in the sea sans his suit. Oh my! A coed swim with one naked man is now national news. But the question by the press should have been, why was the FBI investigating this trip. Surely, they weren’t interested in who was taking off their clothed and skinny dipping. It turns out that the FBI was only interested in one member of that group and the investigation had nothing to do with that representative’s participation in that incident, clothed or otherwise.

The focus of the FBI is Staten Island’s freshman Tea Party backed House Representative Michael Grimm. The 42 year old former FBI agent who bears a striking resemblance to Rep. Paul Ryan and the other Tea Party clones has been under investigation by the FBI and a federal grand jury investigation into his 2010 campaign finances. The FBI was looking into Mr. Grimm’s side trip to Cyprus that was sponsored by the Cyprus Federation of America.

But FBI agents were actually interested in Grimm’s failure to file paperwork related to his trip to Cyprus following his Israeli junket, which had been paid for by the Cyprus Federation of America. The president of that company was arrested on federal corruption charges in June. Grimm had reported the Israel trip in his initial filing in May but did not list the trip to Cyprus until he amended it in June, one day after Cyprus Federation of America’s president was arrested.

FBI agents may have asked questions about “who went into the water that night, and whether there was any impropriety,” as Politico reported, but sources indicated the dip in the water certainly wasn’t the FBI’s central focus. [.]

Grimm, a former FBI agent, has been the subject of plenty of attention from federal authorities over the past year. On Friday, one of Grimm’s top fundraisers was arrested for allegedly lying about the source of a loan on immigration documents. That man, an Israeli named Ofer Biton, traveled around the New York area with Grimm in 2010 to raise money for his congressional campaign. At least four of Grimm’s 2010 campaign workers have been questioned by the FBI. Federal prosecutors have also interviewed several donors, according to the New York Times.

But heck, what’s more interesting, an skinny dipping congressman or an investigation into possible corruption by a congressman? I think we all know the answer to that.

“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

Katrina vanden Heuvel: Our Shrinking Democracy

Last week, Judge Robert Simpson of the Commonwealth Court of Pennsylvania refused to halt a discriminatory new state law requiring voters to show photo identification.

It was the judicial equivalent of giving democracy the bird.

Since you’re significantly more likely to be struck by lightning than encounter an actual case of voter fraud, the law is really just a solution in search of a problem. Or, rather, a political party in search of a vote to suppress.  

The ruling was rendered only more offensive by its flippant dismissal of the burden that obtaining a photo ID places on people who are young, poor, minority, elderly or some combination of these (read: Democrats). According to Simpson, requiring ID isn’t an unreasonable burden “when viewed in the broader context of the widespread use of photo ID in daily life.” Because, after all, doesn’t everybody get carded at the bar?

Juliet Lapidos; Surveillance, Civil Liberties and Inefficiency

After the Associated Press disclosed the N.Y.P.D.’s Muslim surveillance program, the Times board editorialized against it from a civil liberties perspective. It seemed the police were spying on Muslims-sending plainclothes officers to monitor Muslims at mosques, on college campuses, taking photographs of Muslim-owned businesses, listening to conversations-with no “reason to think anything wrong was going on.” The board acknowledged that “under a federal court decree, it is permissible to collect information from public sources” but argued that “going to public places apparently selected on the basis of religion” was “another matter.”

Now it turns out the spying program is not only constitutionally suspect, but also ineffective. The A.P. reported today that in more than six years of spying on Muslims the police department’s so-called Demographics Unit “never generated a lead or triggered a terrorism investigation.”

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.

August 22 is the 234th day of the year (235th in leap years) in the Gregorian calendar. There are 131 days remaining until the end of the year.

On this day in 1950, Althea Gibson became the first African American on the US Tennis Tour.

On this day in 1950, officials of the United States Lawn Tennis Association (USLTA) accept Althea Gibson into their annual championship at Forest Hills, New York, making her the first African-American player to compete in a U.S. national tennis competition.

Growing up in Harlem, the young Gibson was a natural athlete. She started playing tennis at the age of 14 and the very next year won her first tournament, the New York State girls’ championship, sponsored by the American Tennis Association (ATA), which was organized in 1916 by black players as an alternative to the exclusively white USLTA. After prominent doctors and tennis enthusiasts Hubert Eaton and R. Walter Johnson took Gibson under their wing, she won her first of what would be 10 straight ATA championships in 1947.

In 1949, Gibson attempted to gain entry into the USLTA’s National Grass Court Championships at Forest Hills, the precursor of the U.S. Open. When the USLTA failed to invite her to any qualifying tournaments, Alice Marble–a four-time winner at Forest Hills–wrote a letter on Gibson’s behalf to the editor of American Lawn Tennis magazine. Marble criticized the “bigotry” of her fellow USLTA members, suggesting that if Gibson posed a challenge to current tour players, “it’s only fair that they meet this challenge on the courts.” Gibson was subsequently invited to participate in a New Jersey qualifying event, where she earned a berth at Forest Hills.

snip

Though she once brushed off comparisons to Jackie Robinson, the trailblazing black baseball player, Gibson has been credited with paving the way for African-American tennis champions such as Arthur Ashe and, more recently, Venus and Serena Williams. After a long illness, she died in 2003 at the age of 76.

Ms. Gibson became the first African American woman to join the Ladies Professional Golf Association  tour, in 1963, retiring in 1978.

Career Risk Panic: Only 11% Of Hedge Funds Are Outperforming The S&P In 2012

Tyler Durden, Zero Hedge

08/20/2012 19:10

The S&P500 may be soaring to new 2012 highs, and has its all time highs within short squeeze distance, yet paradoxically this is arguably the worst possible news to the cadre of US hedge fund managers used to beating the market year after year, thus justifying their (increasingly more unsustainable) 2 and 20 fees. The reason: according to just a released report quantifying hedge fund performance so far in 2012, with an average return of 4.6% as of August 3 compared to a 12% return for the S&P, a pathetic 11% of all hedge funds are beating S&P year to date. This is the worst yearly aggregate S&P 500 underperformance by the hedge fund industry in history, and also explains why the smooth sailing in the S&P500 belies the fact that nearly every single hedge fund manager (and at least 89% of all) is currently panicking like never before knowing very well there are only 4 more months left to beat the S&P or face terminal redemption requests. And with $1.2 trillion in gross equity positions, the day of redemption reckoning at the end of the year (and just after September 30 for that matter as well) could be the most painful yet.

More Evidence Wall Street is Overpaid

Matt Taibbi, Rolling Stone

August 21, 9:11 AM ET

(O)ne of the most frequently-overlooked problems of the financialization age is that a lot of our brilliant financial engineers are actually pretty damned average, when it comes to playing the market.

There’s a great little piece at Zero Hedge about how hedge funds are having a terrible year (for the second straight year), with only 11% of all funds outperforming the Standard and Poor’s 500, the basic stock index.

…

Translating that into English, all those super-rich people who turned to hedge funds with their millions in the hopes that bunches of Whiz-Kids from Wharton and Harvard and Yale would find unseen and wildly creative investment ideas to fatten their fortunes — all those rich clients are actually finding out now that those same Whiz Kids are buying Apple just like the rest of us. Hey, it has to be a good stock, right? Everyone has an iPhone now.

…

As is apparently also the case with Mitt Romney’s PE business, which analysts have found often don’t do much better than average if at all, the data shows more and more that we’d all be better off, and there’d be a lot less mischief, if the world’s biggest and more powerful investment specialists just dumped money into humdrum baskets of stocks instead of racking their enormous brains to come up with exotic new trades.

Someday we’ll get back to the time when the really smart guys from the best schools went to work for companies that built actual products, engineered more efficient cars, cured diseases, etc. Because it seems like our best minds kind of suck at investing.

Uncle Sam Needs YOU for a Bailout: 6 Reasons Another Big Banking Crisis Is Coming Our Way

By Alexander Arapoglou and Jerri-Lynn Scofield, Alternet

August 17, 2012

(R)egulators decided that sophisticated investors, including the wealthy, pension funds and charities, had enough financial savvy to be allowed to invest in shadow banks that were either lightly regulated, or not at all. Such alternative investment vehicles, including hedge funds and private equity funds, were exempt from investment restrictions.

In the last two decades, there’s been an explosive growth in shadow banks. The size of this unregulated system has increased fivefold and today is larger than the regulated financial system.

The rationale? Sophisticated investors, it’s claimed, can look after themselves, and therefore the largely unregulated funds that cater to them don’t pose any risks to the rest of us. But that’s not proven to be the case.

…

(A) decade before this bailout, U.S. financial regulators were involved in a rescue of a shadow bank, which helped set the stage for TARP.  In 1998, the Long-Term Capital Management (LTCM) hedge fund got into trouble by placing heavily-leveraged derivatives bets during the Asian financial crisis. Hedge funds are allowed to operate with scant regulatory supervision on the rationale that they cater only to sophisticated investors who could bear the risk.

The Federal Reserve changed its mind when it realized that LTCM’s failure was a threat to the global economy. So the Fed corralled major banks in a room, and told them to fix the problem. They dismembered LTCM and took its underperforming assets onto their books.

The Fed’s role in this rescue sent the wrong message: that the government would be there to fix problems, and that banks and shadow banks alike didn’t have to work too hard to manage risk and to protect themselves from contagion.

…

Banks need to be seized, or at minimum assessed by a neutral observer, and their balance sheets cleaned up. Investors, too, must pay a price for making foolish investment choices. Typically, existing shareholders are wiped out, while bondholders see their promises of guaranteed debt payments converted to more speculative shares of stock.

…

(T)he lack of a streamlined regulatory system means banks play regulatory arbitrage. Recently we saw this dynamic unfold-unsuccessfully in this case- as Standard Chartered Bank used its press cronies to pressure Benjamin Lawsky, New York’s Superintendent of Financial Services, to go easy on the bank for laundering money for Iranian clients and cooperate with other regulators – the Fed, Justice and Treasury- that favored a softer stance. Lawsky threatened to cancel the bank’s license to operate in New York-a death sentence for any international bank. When he didn’t back down, the bank agreed to a $340 million settlement. Lawsky’s firm stance improves the prospects for the pending federal probes.

…

And so we come back to where we started-the decision not to go after Goldman Sachs. Normally, the Justice Department doesn’t  comment on its pending investigations. But for Goldman, the rules are different. Justice issued an unusual statement saying the firm wouldn’t be criminally charged, as prosecutors didn’t believe they could meet the burden of proof necessary to win a trial. Earlier last week, Goldman disclosed that the SEC wouldn’t be pursuing criminal charges against the firm, despite having issued Goldman a “Wells notice” of its investigation. Dropping an investigation after issuing such a notice is not altogether unprecedented– but is also rare.

…

The current failure to prosecute means that banks will continue to pursue risky policies. Bankers continue to get paid based on results, and there’s so much to gain from a successful risky bet, and so little to lose from a bet gone bad, particularly if the taxpayer is there to pick up the tab.

In America, if you misuse food stamps, and you get caught, there’s a good chance you’ll lose your benefits, and you might even go to jail.  If you rip off the Medicare system, commit tax fraud or perpetrate identity theft, federal prosecutors will throw the book at you. But if you’re part of a multi-billion dollar enterprise that misleads investors and lies to Congress, you’re like the trophy fish that’s caught and released.  You’re off the hook.

(h/t Naked Capitalism)

I see in fight club the strongest and smartest men who’ve ever lived. I see all this potential, and I see squandering. God damn it, an entire generation pumping gas, waiting tables; slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War’s a spiritual war… our Great Depression is our lives. We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off.

Pitch a No Hitter and what do you get for your trouble?  Petaluma who thrashed you much more soundly than the 6 – 4 score would indicate.

So tonight is the likely swan song for Fairfield, Connecticut in its Cinderella losers bracket run.  The game will start at 8 pm on ESPN2 or could be streamed here.