March 2013 archive

Sunday is St. Patrick’s Day but Saturday is the big parade in NYC. The tradition on the day is corned beef and cabbage with potatoes, so what to eat on parade day. The easy answer is go traditional with a stew. This beef stew made with Guiness Stout and topped with a Stilton laced pastry crust takes a little work but it is well worth the work.

Ingredients:

   * 7 Tbs. olive oil

   * 1 lb. white button mushrooms, quartered

   * 2 cups frozen pearl onions, thawed

   * Salt and freshly ground pepper, to taste

   * 3 1/2 lb. beef chuck roast, cut into 1-inch cubes

   * 1 cup all-purpose flour

   * 3 garlic cloves, minced

   * 2 Tbs. tomato paste

   * 2 1/2 cups Irish stout

   * 1 cup beef broth

   * 1 lb. carrots, cut into chunks

   * 1 lb. red potatoes, cut into chunks

   * 1 Tbs. finely chopped fresh thyme

   * One 16-inch round Stilton pastry (recipe below)

   * 1 egg, beaten with 1 tsp. water

Directions:

In a 5 1/2-quart Dutch oven over medium-high heat, warm 1 Tbs. of the olive oil. Add the mushrooms, onions, salt and pepper and cook, stirring occasionally, about 12 minutes. Transfer to a bowl.

Season the beef with salt and pepper. Dredge the beef in the flour, shaking off the excess. In the Dutch oven over medium-high heat, warm 2 Tbs. of the olive oil. Add one-third of the beef and brown on all sides, about 7 minutes total. Transfer to a separate bowl. Add 1/2 cup water to the pot, stirring to scrape up the browned bits. Pour the liquid into a separate bowl. Repeat the process 2 more times, using 2 Tbs. oil to brown each batch of beef and deglazing the pot with 1/2 cup water after each batch.

Return the pot to medium-high heat. Add the garlic and tomato paste and cook, stirring constantly, for 30 seconds. Add the beef, stout, broth and reserved liquid, stirring to scrape up the browned bits. Add the mushrooms, onions, carrots, potatoes and thyme and bring to a boil. Reduce the heat to medium-low, cover and simmer, stirring occasionally, until the beef and vegetables are tender, about 3 hours.

Preheat an oven to 400°F.

Stilton Pastry

Ingredients:

   * 2 1/2 cups all-purpose flour

   * 2 tsp. salt

   * 1 Tbs. sugar

   * 16 Tbs. (2 sticks/250g) cold unsalted butter, cut into 1/2-inch pieces

   * 1/3 to 1/2 cup ice water

   * 4 oz. Stilton cheese, crumbled

Directions:

In a food processor, combine the flour, salt and sugar and pulse until blended, about 5 pulses. Add the butter and process until the mixture resembles coarse meal, about 10 pulses. Add 1/3 cup of the ice water and pulse 2 or 3 times. The dough should hold together when squeezed with your fingers but should not be sticky. If it is crumbly, add more water 1 Tbs. at a time, pulsing twice after each addition. Turn the dough out onto a lightly floured work surface and shape into a disk. Wrap with plastic wrap and refrigerate for 1 hour.

Remove the dough from the refrigerator and let stand for 5 minutes. Sprinkle the top of the dough lightly with flour, place on a lightly floured sheet of parchment paper and roll out into a 12-by-16-inch rectangle. Sprinkle the cheese over half of the dough, then fold the other half over the cheese. Roll out the dough into a 16 1/2-inch square. Using a paring knife, trim the dough into a 16-inch round.

Refrigerate the dough until firm, about 10 minutes, then lay the dough on top of the beef and stout pie and bake as directed in that recipe. Makes enough dough for a 16-inch round.

Brush the rim of the pot with water. Lay the pastry round on top, allowing it to droop onto the filling. Trim the dough, leaving a 1-inch overhang, and crimp to seal. Brush the pastry with the egg mixture, then cut 4 slits in the top of the dough. Bake for 30 minutes. Let the potpie rest for 15 minutes before serving. Serves 8 to 10.

Erin Go Bragh!

I’m sure you will be reading and watching with great interest today the testimony of Ina Drew in front of the Senate Subcommittee on Investigations.

(Annoying auto starting video now below the fold- ek)

The Fail Whale trade is a bit complicated in it’s details, but basically JPMorgan Chase was selling insurance against a basket of corporate bonds that made up a fairly regularly (as these things go) traded index (like the Dow, but not the same companies and not common stock) and was supposedly hedging these bets with actual positions in the underlying assets and making money off the spread between the price for the insurance and the cost of the bonds.

Esoteric but perfectly sound and legal (under today’s laws).

The problem was that in order to manipulate the much smaller market for the insurance and increase the spread by simulating demand (sockpuppets), JPMorgan Chase ended up in a position where it was net bearish on the bonds (i.e. betting there would be a default so it could collect the insurance from itself) thereby increasing its need to obtain bonds in the regular market that it did not totally control in order to offset potential losses should the bonds in fact do better than expected and rise in price.

And then the wolves came in.

You can’t throw large chunks of money around a small casino without somebody noticing and a lot of regular players saw the increase in demand for bonds and started buying them up, raising the price even more and making JPMorgan Chase’s insurance nearly worthless.

Now on the money losing end of the trade JPMorgan Chase tried unwinding it, selling their sockpuppet positions in the insurance for pennies on the dollar and liquidating their hedge assets at what they thought was the top of the underlying market.

Only the wolves were there first and valuations dropped like a stone to their normal equilibrium and JPMorgan Chase ended up with an approximately $6.5 BILLION loss.

Yay for our side.  Way to stick it to the man.

But wait, there’s more.

The funds JPMorgan Chase used were taxpayer insured depositor’s accounts, which is illegal.  Manipulating markets using sockpuppets is illegal.

AND to cover up these crimes JPMorgan Chase started issuing fraudulent statements to Government Regulators, which is illegal; AND TO ITS VERY OWN STOCKHOLDERS AND INVESTORS, which is illegal.

And Jamie Dimon knew all about it and lied to Congress, which is illegal.

Will anyone go to jail?  Who’s naive now Kay?

Senate investigation finds JP Morgan hid mistakes as trade losses grew

Heidi Moore, The Guardian

Friday 15 March 2013 04.38 EDT

JP Morgan’s $6.2bn London Whale trading debacle was born out of secretive trades and creative bookkeeping as the bank attempted to limit losses using a practice that one regulator called “make believe voodoo magic”, a Senate investigation has concluded.

The report by the Senate subcommittee on investigations, published on Thursday, detailed a series of failures in which accounts were hidden and trades were valued incorrectly to minimize losses. It also alleged that regulators were kept in the dark, a head trader’s concerns went unheeded and a $51bn trading portfolio ballooned to $157bn in three months.

…

The report also concludes that JP Morgan CEO Jamie Dimon, whose bonus was cut in half to $11.5m last year, knew about the sustained trading losses when he dismissed the incident as a “tempest in a teapot” in April 2012.

…

The investigation paints a picture of a growing debacle that started with the bank’s attempt to reduce the risk of its trades so that it would have a stronger capital cushion and look powerful to regulators. It started with the overconfidence of traders after a lucky bet made about $400m on the bankruptcy of American Airlines. Drew applauded the traders.

They suffered from that overconfidence when they bet incorrectly on the bankruptcy of Eastman Kodak in January 2012. That kicked off nine straight days of trading losses that cost the bank at least around $50 million. One trader in the CIO told the Senate committee that “they were told not to let an Eastman Kodak-type loss happen again.” As the traders scrambled to keep the trades – which were designed to benefit if there was a financial crisis – they found that the improving bond market worked against them. Between January and March 2012, it didn’t have one profitable day in its CIO portfolio, according to the report.

JPMorgan Chase CEO Jamie Dimon is accused of hiding information about big losses

By Danielle Douglas, Washington Post

Mar 15, 2013 12:59 AM EDT

Washington dealt a double blow Thursday to JPMorgan Chase as a Senate report accused its iconic chief executive of hiding information about a massive loss from regulators while the Federal Reserve unexpectedly said it had found a “weakness” in the bank’s capital plans.

The twin announcements, both unveiled in the late afternoon, escalates the problems for JPMorgan, the nation’s largest bank and arguably its most prestigious. Once viewed as the strongest bank to emerge from the 2008 financial crisis, the firm on Thursday watched its weaker rivals, Bank of America and Citigroup, sail through the Fed’s examination.

…

The Senate report is the first to suggest that JPMorgan’s chief executive Jamie Dimon was less than forthright with regulators as he learned of the mounting losses. To date, Dimon has acknowledged that the bank failed to manage its risks, which allowed the bad trades to persist.

The report takes the bank to task for hiding losses for three months last year, overstating the value of its trading positions and ignoring red flags. When regulators grew concerned, JPMorgan withheld information about the nature of the portfolio, Senate investigators say.

JPMorgan Report Piles Pressure on Dimon in Too-Big Debate

By Dawn Kopecki, Clea Benson & Hugh Son, Bloomberg News

Mar 15, 2013 10:05 AM ET

JPMorgan Chase & Co. (JPM)’s efforts to hide trading losses, outlined in a Senate report yesterday, probably will ignite debate over whether the largest U.S. bank is too big to manage and ratchet up pressure on Chief Executive Officer Jamie Dimon to surrender his role as chairman.

Dimon misled investors and dodged regulators as losses escalated on a “monstrous” derivatives bet, according to a 301-page report by the Senate Permanent Subcommittee on Investigations. The bank “mischaracterized high-risk trading as hedging,” and withheld key information from its primary regulator, sometimes at Dimon’s behest, investigators found. Managers manipulated risk models and pressured traders to overvalue their positions in an effort to hide growing losses.

…

The Senate report cited Bloomberg stories published last year disclosing that Dimon, 57, had transformed the CIO in the past five years from a conservative investment operation into a much larger, high-risk trading profit center, and that he exempted the office from rigorous scrutiny.

…

JPMorgan’s credit portfolio more than tripled from a net notional size of $51 billion in late 2011 to $157 billion by the time trading was shut down in late March of last year, the report says. Iksil acquired more than $80 billion, or about 50 percent, of a thinly traded credit index, which made it difficult to find buyers, according to the subcommittee.

…

Iksil’s book breached all five of the CIO’s internal risk measures, and with increasing frequency from January through April, totaling more than 330 violations, the report said. Instead of investigating the cause or reducing its danger, traders, risk managers and executives criticized the metrics as inaccurate and “pushed for model changes that would portray credit derivative trading activities as less risky,” the report said.

On Jan. 30, 2012, the bank began using a new formula for so-called value at risk that cut Iksil’s estimated possible losses by about half. He had breached the limit under the prior model.

“The new VaR model not only ended the SCP’s breach, but also freed the CIO traders to add tens of billions of dollars in new credit derivatives to the SCP which, despite the supposedly lowered risk, led to additional massive losses,” the report said, referring to the synthetic credit portfolio. That model was later scrapped.

…

JPMorgan misled the public by hiding losses, mismarking trades, withholding information from the Office of the Comptroller of the Currency and “lying to investigators by saying that JPMorgan was fully transparent to regulators regarding the mounting losses when it was not,” (Senator John) McCain told reporters at a press briefing.

…

“None of those statements made on April 13 to the public, to investors, to analysts were true,” (Senator Carl) Levin said. “The bank also neglected to disclose on that day that the portfolio had massive positions that were hard to exit, that they were violating in massive numbers key risk limits.”

…

Statements and regulatory filings by the bank “raise questions about the timeliness, completeness and accuracy of information” given to investors, the committee said in a section on securities laws and their requirements about disclosing information. The Securities and Exchange Commission has been conducting its own investigation of the bank’s losses.

The evidence suggests the bank “initially mischaracterized or omitted mention” of the portfolio’s problems partly because it “likely understood the market would move against it if even more of those facts were known,” the report says.

(h/t Susie Madrak @ Crooks & Liars)

Live-Blogging Senate Hearing Tomorrow, When J.P. Morgan Chase Will Be Torn a New One

Matt Taibbi, Rolling Stone

POSTED: March 14, 5:00 PM ET

Why should we care if a private bank, or more to the point a private banker like Chase CEO Jamie Dimon, loses a few billion here and there? What business is it of ours? And why did we have to have congressional hearings about it last year?

…

What the report describes is an epic breakdown in the supervision of so-called “Too Big to Fail” banks.

…

If the information in the report is correct, Chase followed the behavioral model of every corrupt/failing hedge fund this side of Bernie Madoff and Sam Israel, only it did it on a much more enormous scale and did it with federally-insured deposits. The fund used (in part) federally-insured money to create, in essence, a kind of super high-risk hedge fund that gambled on credit derivatives, and just like Sam Israel did with his Bayou fund, when it got in trouble, it resorted to fudging its numbers in order to disguise the fact that it was losing money hand over fist.

Chase for years hid the very existence of this operation from banking regulators and lied about the purpose of the fund (saying it was purely a hedging operation when it stopped being a hedge and instead became a wild directional gamble), and it also changed the way it calculated the fund’s value once it started to lose hundreds of millions of dollars. Even worse, the bank’s own internal auditors signed off on the phoney-baloney accounting of this Synthetic Credit Portfolio (SCP), at one point allowing it to claim $719 million in losses when the real number was closer to $1.2 billion.

How did they do this? In the years leading up to January of 2012, Chase used a standard, plain-vanilla method to price the derivative instruments in its portfolio. The method was known as “mid-market pricing”: if on any given day you had a range of offers for a certain instrument – the “bid-ask” range – “mid-market pricing” just meant splitting the difference and calling the value the numerical middle in that range.

But in the beginning of 2012, Chase started to lose lots of money on the derivatives in its SCP, and just decided to change its valuations, that they weren’t in the business of doing “mids” anymore.

…

If you can fight through the jargon, what this basically means is that Chase decided to go into the fiction business and invent a new way to value its crazy-ass derivative bets, using, among other things, a computerized model the company designed itself called “P&L predict” which subjectively calculated the value of the entire fund toward the end of every business day.

If this all sounds familiar, it’s because it’s the same story we’ve heard over and over again in the financial-scandal era, from Enron to WorldCom to Lehman Brothers – when the going gets tough, and huge companies start to lose money, they change their own accounting methodologies to hide their screw-ups, passing the buck over and over again until the mess explodes into the public’s lap.

“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”.

Follow us on Twitter @StarsHollowGzt

Kristen Breitweiser: Dear Mr Obama: You’re Just Like Dick

Mr. President, what a high bar you have set for yourself in assuring us that you are no Dick Cheney when it comes to drones. [..]

But actually Mr. President, you are probably worse than Dick Cheney.

Because with Cheney, the Democrats screamed and yelled (ok, more like ineffectively grumbled and mumbled) about Cheney’s unconstitutional power grabs. Yes, with Cheney at least there was a modicum of pushback, a scintilla of oversight — even if it was only due to partisan politics.

With you Mr. Obama, indeed, the halls of Congress, the media, and the provocateurs of the prattle-sphere are mostly silent. And that’s what’s so dangerous.

Because who could believe that the first African-American President — a former Con-law professor, no less! — could so thoughtlessly, recklessly throw our Constitution under the bus?

Richard (RJ) Eskow: Seven Million Jobs, Two Budgets – And One Very Strange Tribe

Last night I returned from a nearly month-long trip to Africa. It’s profoundly unsettling to suddenly find oneself immersed in a primitive and superstitious culture – a culture dominated by taboos and rituals, a culture whose primitive beliefs could lead to its downfall, a culture whose members inhabit a flickering and illusory world of light and shadows.

I’m speaking, of course, about my return to the States.

I’d been tracking the budget debate and other events from the other side of the world but, aside from one or two YouTube clips, I hadn’t seen any television for nearly four weeks.  As I caught up on my viewing, it was downright jarring to be confronted by so many people so deeply disconnected from reality.

Transcript

The Drug Scandal That’s Finally Hitting The Big Time

By Charles P. Pierce, Esquire

March 11, 2013 at 1:45PM

(B)ack during the Golden Age Of Bipartisanship, wherein everybody made nicey-nice to each other, and deals were cut that sold out gay people (DOMA), poor people (welfare reform), and all the while the Republicans tried to give the boot to the president with whom they were cutting all the deals, and most of the Democrats, looking to suck up that sweet corporate cash that was sluicing into the party through the DLC floodgates, went along for the ride. (Joe Scarborough, the Machiavelli of the live bait industry, cited this period just the other day as being altogether remarkable. Republicans were working with a president they were trying to impeach! Mirabile dictu!) Now, here’s another masterpiece of bipartisan achievement. (The Supreme Court mucked around with it, too, gutting what remained of the FDA’s power to regulate the compounders in 2001.) They waited until Kessler was gone before passing the bill. In signing the bill, President Bill Clinton attached a presidential signing statement to it that strikes with a cruel irony today.

…

Trust them. They’ve got this.

But the principle obtained – make a deal to make a deal, and the devil take the details. Now, almost 50 people are dead because Everyone Agrees that The Market will always be more efficient at doing things like picking up deadly fungal infections than the dead hand of government regulation will. Some day, we are going to have to count up the cost of The Third Way of the 1990’s, and it is not going to be pretty.

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.

March 15 is the 74th day of the year (75th in leap years) in the Gregorian calendar. There are 291 days remaining until the end of the year.

In the Roman calendar, March 15 was known as the Ides of March.

On this day in 1965, President Lyndon B. Johnson addressed a joint session of Congress to urge the passage of legislation guaranteeing voting rights for all.

Using the phrase “we shall overcome,” borrowed from African-American leaders struggling for equal rights, Johnson declared that “every American citizen must have an equal right to vote.” Johnson reminded the nation that the Fifteenth Amendment, which was passed after the Civil War, gave all citizens the right to vote regardless of race or color. But states had defied the Constitution and erected barriers. Discrimination had taken the form of literacy, knowledge or character tests administered solely to African-Americans to keep them from registering to vote.

“Their cause must be our cause too,” Johnson said. “Because it is not just Negroes, but really it is all of us, who must overcome the crippling legacy of bigotry and injustice. And we shall overcome.”

The speech was delivered eight days after racial violence erupted in Selma, Alabama. Civil rights leader Rev. Martin Luther King and over 500 supporters were attacked while planning a march to Montgomery to register African-Americans to vote. The police violence that erupted resulted in the death of a King supporter, a white Unitarian Minister from Boston named James J. Reeb. Television news coverage of the event galvanized voting rights supporters in Congress.

The Voting Rights Act of 1965 (42 U.S.C. §§ 1973 – 1973aa-6 is a landmark piece of national legislation in the United States that outlawed discriminatory voting practices that had been responsible for the widespread disenfranchisement of African Americans in the U.S.

Echoing the language of the 15th Amendment, the Act prohibits states from imposing any “voting qualification or prerequisite to voting, or standard, practice, or procedure … to deny or abridge the right of any citizen of the United States to vote on account of race or color.” Specifically, Congress intended the Act to outlaw the practice of requiring otherwise qualified voters to pass literacy tests in order to register to vote, a principal means by which Southern states had prevented African-Americans from exercising the franchise The Act was signed into law by President Lyndon B. Johnson, a Democrat, who had earlier signed the landmark Civil Rights Act of 1964 into law.

The Act established extensive federal oversight of elections administration, providing that states with a history of discriminatory voting practices (so-called “covered jurisdictions”) could not implement any change affecting voting without first obtaining the approval of the Department of Justice, a process known as preclearance. These enforcement provisions applied to states and political subdivisions (mostly in the South) that had used a “device” to limit voting and in which less than 50 percent of the population was registered to vote in 1964. The Act has been renewed and amended by Congress four times, the most recent being a 25-year extension signed into law by President George W. Bush in 2006.

The Act is widely considered a landmark in civil-rights legislation, though some of its provisions have sparked political controversy. During the debate over the 2006 extension, some Republican members of Congress objected to renewing the preclearance requirement (the Act’s primary enforcement provision), arguing that it represents an overreach of federal power and places unwarranted bureaucratic demands on Southern states that have long since abandoned the discriminatory practices the Act was meant to eradicate. Conservative legislators also opposed requiring states with large Spanish-speaking populations to provide bilingual ballots. Congress nonetheless voted to extend the Act for twenty-five years with its original enforcement provisions left intact.

π (Pi), how could we live without it. So let’s celebrate π on it’s day 3.14.

As you remember from grammar school math, π is the mathematical constant consisting of the main numbers 3, 1 and 4. According to the Wikipedia of π, “it is the the ratio of a circle’s circumference to its diameter, and is approximately equal to 3.14159.”

It has been represented by the Greek letter “π” since the mid-18th century, though it is also sometimes written as pi. π is an irrational number, which means that it cannot be expressed exactly as a ratio of two integers (such as 22/7 or other fractions that are commonly used to approximate π); consequently, its decimal representation never ends and never settles into a permanent repeating pattern. The digits appear to be randomly distributed, although no proof of this has yet been discovered. π is a transcendental number – a number that is not the root of any nonzero polynomial having rational coefficients. The transcendence of π implies that it is impossible to solve the ancient challenge of squaring the circle with a compass and straight-edge.

OK, enough of that. Let’s get on to the party part

It’s earliest known celebration was in California where in 1988 at the San Francisco Exploratorium physicist Larry Shaw along with the staff and the public marched around one of its circular spaces eating fruit pies. In 2009. The US House of Representatives passed a non-binding resolution declaring 3.14 π (Pi) Day.

Coincidentally, it is also the birthday of theoretical physicist Albert Einstein. So at Princeton University in New Jersey there are numerous celebrations around both events that also include an Albert Einstein look alike contest.

Besides the partying at Princeton, here’s what is going on elsewhere to celebrate this mathematical necessity that drives mathematicians nuts.

In the past, MIT has posted its acceptance letters to high school seniors on Pi Day.

   Attention, Chicago residents: First Slice Pie Café will be giving out free slices of pizza today at 3:14 pm. For readers in the Southeast, pizzas cost $3.14 at Your Pie’s 16 locations across Georgia, Tennessee and Florida.

   The Microsoft store is offering 3.14% off on Dell tablets.

   At Mission High School in California’s Bay Area, students are composing “piems” – poems that have “the same number of letters as the corresponding digit of pi.”

   It’s OK if all of this talk about pi is making you crave pie. Last night, students at Cal Tech hosted a late-night pi-themed pie-eating party. The Pasadena Sun reports: students “dug into 130 pies laid out for them outside student housing. There were 26 each of five different pies. Follow that? So on 3/14 at 1:59 a.m. there were 26 each of five kinds of pie. None is by chance. The first digits of Pi are 3.14159265.”

   After pigging out on pies, you can go on a 3.14 mile bicycle ride in Milwaukee.

   And by the way, if you think all this pie-eating on Pi Day is merely an exercise in bad puns, prepare to have your mind blown.

   In France, British writer Daniel Tammet has kicked off “France’s first Pi Day celebration” at the Palace of Discovery, Paris’s science museum, CNN reports. In 2004, the then-25-year-old recited “22,514 digits of pi from memory” – breaking the European record.

And the founder of π Day, retired physicist Larry Shaw will be at the Exploratorium today leading a “Pi Procession”, in which “Pi partiers will get a yardstick mounted to a pie plate, each with a single digit of pi on it. Then all 500 of them will line up in pi-order” and trot around the “Pi Shrine.”

In 2010’s “Moment of Geek”, Rachel Maddow, host of MSNBC’s “The Rachel Maddow Show,” featured a math student teacher, Teresa Miller, from the University of New Mexico with a hula hoop and a Rubic’s Cube that was quite amazing.

I was never that energetic as a math student. Teresa should be a great math and phys ed teacher.

So, whatever you do today, every time you see a circle or a pie of any kind remember π

“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”.

Follow us on Twitter @StarsHollowGzt

Floyd Abrams and Yochai Benkler: Death to Whistle-Blowers?

LAST month Pfc. Bradley Manning pleaded guilty to several offenses related to leaking hundreds of thousands of documents to WikiLeaks in 2010, a plea that could land him in jail for 20 years. But Private Manning still faces trial on the most serious charges, including the potential capital offense of “aiding the enemy” – though the prosecution is not seeking the death penalty in this case, “only” a life sentence.

If successful, the prosecution will establish a chilling precedent: national security leaks may subject the leakers to a capital prosecution or at least life imprisonment. Anyone who holds freedom of the press dear should shudder at the threat that the prosecution’s theory presents to journalists, their sources and the public that relies on them.

Dean Baker: Does Paul Ryan Want to Change the Relationship Between Americans and Their Government or Give Money to Rich People?

Ezra Klein looked at Paul Ryan’s latest budget and told readers:

“Ryan’s budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan’s real point throughout his career.”

Well, that is one possibility. There is another option: Paul Ryan wants to makes rich people richer. I think the evidence supports the latter view. [..]

Arguably the evidence supports the latter view. Needless to say, even if Ryan’s mission was to redistribute income upward, he would not present his case this way since there are not enough rich people to win elections. A politician seeking to get support for policies that redistribute income upward will get much farther claiming to support a free market and getting government out of the way. If Ryan’s agenda is in fact redistributing income upward the media do him a great favor when they describe it instead as a commitment to free market principles.  

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.

March 14 is the 73rd day of the year (74th in leap years) in the Gregorian calendar. There are 292 days remaining until the end of the year.

On this day in 1885, The Mikado a light opera by W.S. Gilbert and Arthur Sullivan, had its first public performance in London.

The Mikado, or, The Town of Titipu is a comic opera in two acts, with music by Arthur Sullivan and libretto by W. S. Gilbert, their ninth of fourteen operatic collaborations. It opened in London, where it ran at the Savoy Theatre for 672 performances, which was the second longest run for any work of musical theatre and one of the longest runs of any theatre piece up to that time. Before the end of 1885, it was estimated that, in Europe and America, at least 150 companies were producing the opera. The Mikado remains the most frequently performed Savoy Opera, and it is especially popular with amateur and school productions. The work has been translated into numerous languages and is one of the most frequently played musical theatre pieces in history.

Setting the opera in Japan, an exotic locale far away from Britain, allowed Gilbert to satirise British politics and institutions more freely by disguising them as Japanese. Gilbert used foreign or fictional locales in several operas, including The Mikado, Princess Ida, The Gondoliers, Utopia, Limited and The Grand Duke, to soften the impact of his pointed satire of British institutions.

The Mikado is a comedy that deals with themes of death and cruelty. This works only because Gilbert treats these themes as trivial, even lighthearted issues. For instance, in Pish-Tush’s song “Our great Mikado, virtuous man”, he sings: “The youth who winked a roving eye/ Or breathed a non-connubial sigh/ Was thereupon condemned to die / He usually objected.” The term for this rhetorical technique is meiosis, a drastic understatement of the situation. Other examples of this are when self-decapitation is described as “an extremely difficult, not to say dangerous, thing to attempt”, and also as merely “awkward”. When a discussion occurs of Nanki-Poo’s life being “cut short in a month”, the tone remains comic and only mock-melancholy. Burial alive is described as “a stuffy death”. Finally, execution by boiling oil or by melted lead is described by the Mikado as a “humorous but lingering” punishment.

Death is treated as a businesslike event in Gilbert’s Topsy-Turvy world. Pooh-Bah calls Ko-Ko, the Lord High Executioner, an “industrious mechanic”. Ko-Ko also treats his bloody office as a profession, saying, “I can’t consent to embark on a professional operation unless I see my way to a successful result.” Of course, joking about death does not originate with The Mikado. The plot conceit that Nanki-Poo may marry Yum-Yum if he agrees to die at the end of the month was used in A Wife for a Month, a 17th century play by John Fletcher. Ko-Ko’s final speech affirms that death has been, throughout the opera, a fiction, a matter of words that can be dispelled with a phrase or two: being dead and being “as good as dead” are equated. In a review of the original production of The Mikado, after praising the show generally, the critic noted that the show’s humour nevertheless depends on

“unsparing exposure of human weaknesses and follies-things grave and even horrible invested with a ridiculous aspect-all the motives prompting our actions traced back to inexhaustible sources of selfishness and cowardice…. Decapitation, disembowelment, immersion in boiling oil or molten lead are the eventualities upon which (the characters’) attention (and that of the audience) is kept fixed with gruesome persistence…. (Gilbert) has unquestionably succeeded in imbuing society with his own quaint, scornful, inverted philosophy; and has thereby established a solid claim to rank amongst the foremost of those latter-day Englishmen who have exercised a distinct psychical influence upon their contemporaries.”

Here we are again, talking about filibuster reform. Despite the insistence of Majority Leader Harry Reid (D-NV), it ain’t fixed by any stretch of your imagination. It wasn’t Sen. Rand Paul (R-KY) and his 13 hour filibuster of CIA Director John Brennan’s nomination that set this off but the blocking of a qualified appointments by using the same cloture tactic that has been applied to stop nearly everything productive out of the Senate. The Democratic leadership has no one to blame but themselves and now they are scrambling to fix this disaster.

Top Democrats Badly Blew It on the Filibuster

by Earl Ofari Hutchinson, Huffington Post

Supposedly, the saving grace in all this is that in 2014 and beyond, Democrats might lose their majority in the Senate to the GOP and then they’ll need the filibuster as their weapon to hold the GOP in check from riding roughshod over the Obama administration in getting its legislative initiatives through. But this is all guesswork and sophistry in trying to predict the future. The reality is that in the two years that the Democrats hold their Senate majority until January 2015 there will be countless numbers of presidential nominations that need to be approved, and crucial legislation from budget bills to immigration reform proposals that the Obama administration and Democrats will be pushing. And even if the GOP does take majority control of the Senate in January 2015, there’s absolutely no guarantee that it won’t simply rewrite the rules to do what Reid didn’t do, and that’s sharply limit how and when the filibuster can be used. The loser would still be the Democrats, because that’s who the GOP would target. [..]

In the meantime, the filibuster with all of its terrifying potential to delay or style effective legislation and the confirmation of Obama nominees that have been trapped in limbo for months, even years, remains in full play. Here’s a final stat to drive home just how terrifying and damaging it has been. Since 2007, according to the Senate Historical Office, Democrats have had to end Republican filibusters more than 360 times. That is a record. With Obama in the White House for three more years, the GOP, thanks to the failure of top Democrat’s to do something about it, may even break that record.

Senate Dems Weigh Consequences For GOP Filibusters Of Key Nominees

by Brain Beutler, Talking Points Memo

Senate Democratic leaders have engaged in preliminary discussions about how to address Republican procedural obstruction, according to a senior Democratic aide, reflecting an awareness that key administration and judicial vacancies might never be filled, and that a watered-down rules reform deal the parties struck early this Congress has failed. [..]

The source said conversations are still too preliminary for Democrats to lay out publicly potential avenues of recourse just yet. And the last thing leaders want is to create the expectation that they will change the filibuster rules in the middle of the current Senate session. But they are occurring in the wake of a series of GOP filibusters of top nominees, including a cabinet secretary (Chuck Hagel), the CIA director (John Brennan), and a federal judicial nominee (Caitlin Halligan) whom Republicans have effectively blocked from confirmation to the D.C. Circuit Court of Appeals for years.

Elizabeth Warren Slams Republicans For Filibustering Consumer Protection Agency Chief

by Sahil Kapur, Talking Points Memo

“From the way I see how other agencies are treated, I see nothing here but a filibuster threat against Director Cordray as an attempt to weaken the consumer agency,” she said at a Senate Banking Committee hearing on the CFPB nomination. “I think the delay in getting him confirmed is bad for consumers, it’s bad for small banks, it’s bad for credit unions, it’s bad for anyone trying to offer an honest product in an honest market.

“The American people,” Warren said, “deserve a Congress that worries less about helping big banks and more about helping regular people who have been cheated on mortgages, on credit cards, on student loans, on credit records.” [..]

“What I want to know is why, since the 1800s, have there been agencies all over Washington with a single director, including the OCC, but unlike the consumer agency, no one in the U.S. Senate has held up confirmation of their directors demanding that the agency be redesigned,” Warren said.

“What I want to know is why every banking regulator since the Civil War has been funded outside the appropriations process but unlike the consumer agency no one in the United States Senate has held up confirmation of their directors demanding that that agency or those agencies be redesigned.”

Now the president decides to get involved.

Obama To Senate Dems: We Need Solution To GOP’s Confirmation Filibusters

by Brian Beutler, Talking Points Memo

n a closed door lunch meeting with Senate Democrats on Tuesday, President Obama expressed his frustration with Republican slow-walking and filibustering of key nominees, and urged them to address the issue, according to a senior Senate Democratic aide. [.]

The White House official said Obama “made it clear that it was a priority – particularly with judges and asked for more help identifying nominees and getting them passed.”

Though some of his supporters complain the administration has been slow to name people to fill judicial vacancies, Republicans have blocked or slow-walked the confirmation many of the people he has nominated.

Pres. Obama may may have another motivation to push for filibuster reform with the threats from Independent Vermont Sen. Bernie Sanders to filibuster any cuts to entitlements.

Given that it’s stupid from a macro-economic sense, one silver lining in the sequester is that the cuts fall equally on the military budget.

Of course the likelihood is that the Pentagon will take it out of soldiers’ and veterans’ wages and benefits, but here are two programs from Lockheed that are absolute boondoggles.

The first is the C-130 program.  Over 2,300 of these planes have been built, far in excess of any operational need.  Good airframes are mothballed in the desert because National Guard units can’t find any useful purpose for them.  The latest upgrade, the C-130J has been plagued with counterfeit parts and propeller cracks.

C-130 Math and a Cargo of Pork

Posted by Jeremiah Goulka, TomDispatch and Mother Jones

8:54am, March 10, 2013

After 25 years, the Pentagon decided that it was well stocked with C-130s, so President Jimmy Carter’s administration stopped asking Congress for more of them.

Lockheed was in trouble.  A few years earlier, the Air Force had started looking into replacing the Hercules with a new medium-sized transport plane that could handle really short runways, and Lockheed wasn’t selected as one of the finalists.  Facing bankruptcy due to cost overruns and cancellations of programs, the company squeezed Uncle Sam for a bailout of around $1 billion in loan guarantees and other relief.

…

Then a scandal exploded when it was revealed that Lockheed had proceeded to spend some $22 million of those funds in bribes to foreign officials to persuade them to buy its aircraft.  This helped prompt Congress to pass the Foreign Corrupt Practices Act.

So what did Lockheed do about the fate of the C-130?  It bypassed the Pentagon and went straight to Congress.  Using a procedure known as a congressional “add-on” — that is, an earmark — Lockheed was able to sell the military another fleet of C-130s that it didn’t want.

To be fair, the Air Force did request some C-130s.  Thanks to Senator John McCain, the Government Accountability Office (GAO) did a study of how many more C-130s the Air Force requested between 1978 and 1998.  The answer: Five.

How many did Congress add on?  Two hundred and fifty-six.

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According to its 2011 annual report, “82% of our $46.5 billion in net sales were from the U.S. Government, including 61% from the Department of Defense.”  And don’t forget that a significant part of the 17% of its sales that went to international customers in 2011 were actually paid for by Uncle Sam under the rubric of foreign military aid.  Only 1% of its sales that year were to “U.S. commercial and other customers.”  Its CEO made $20,538,981, while the company paid only $722 million in net federal and foreign taxes in that same year.

When it came to the C-130, the process worked like a dream. “By following this strategy from year to year,” writes a team of scholars of lobbying, “Lockheed has been able to turn what was to be the C-130’s doom in the 1970s into a regularly funded military spending program, all without a single request having been sent by the administration to Congress.” Lockheed was so successful on Capitol Hill that its work even garnered a name in honor of the 50 planes bought for every one requested: “C-130 math.”

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So what happened to those extra planes?  The Air Force didn’t have the space for them, so they retired some older models that still had plenty of life in them and shunted most of the rest off to the Air Force Reserves and Air National Guard.

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The C-130J has been plagued by problems.  In 2004, after the military had acquired 50 of the planes, the Pentagon’s Inspector General found that, even while the Air Force and Congress kept ordering more of the planes, they didn’t meet contracted standards.  The weather chasers couldn’t chase storms because propellers would crack in bad weather.  The military wouldn’t use C-130Js for air drops in Iraq or Afghanistan because they didn’t think they were safe.  “The design of the C-130J is not stable and the C-130J aircraft has not passed operational testing,” the Inspector General concluded.  It “is not operationally effective or suitable.”

Then there is the F-35.

F-35’s ability to evade budget cuts illustrates challenge of paring defense spending

By Rajiv Chandrasekaran, Washington Post

Published: March 9

The biggest barrier to cutting the F-35 program, however, is rooted in the way in which it was developed: The fighter jet is being mass-produced and placed in the hands of military aviators such as Walsh, who are not test pilots, while the aircraft remains a work in progress. Millions more lines of software code have to be written, vital parts need to be redesigned, and the plane has yet to complete 80 percent of its required flight tests. By the time all that is finished – in 2017, by the Pentagon’s estimates – it will be too late to pull the plug. The military will own 365 of them.

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When the F-35 finishes testing, “there will be no yes-or-no, up-or-down decision point,” said Pierre Sprey, who was a chief architect of the Air Force’s F-16 Fighting Falcon. “That’s totally deliberate. It was all in the name of ensuring it couldn’t be canceled.”

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Initial tests already have yielded serious problems that are forcing significant engineering modifications. The entire fleet was grounded earlier this year because of a crack in the fan blade in one jet’s engine. The Marine Corps’ version has been prohibited from its signature maneuver – taking off and landing vertically – because of a design flaw. And the Navy model has not been able to land on an aircraft carrier because its tailhook, an essential feature to alight aboard a ship, needs to be redesigned. The Pentagon’s top weapons tester issued a scathing report on the F-35 this year that questioned the plane’s reliability and warned of a “lack of maturity” in performance.

When the F-35 program was first approved by the Pentagon, Lockheed Martin said it could develop and manufacture 2,852 planes for $233 billion. The Pentagon now estimates the total price tag at $397.1 billion. And that is for 409 fewer planes.

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A bigger problem was the fundamental concept of building one plane, with stealth technology, that could fly as far and fast as the Air Force wanted while also being able to land on the Navy’s carriers and take off vertically from Marine amphibious assault ships.

Instead of meeting the original plan of being about 70 percent similar, the three versions now are 70 percent distinct, which has increased costs by tens of billions and led to years-long delays. “We have three airplane programs running in parallel,” Bogdan said. “They are very, very different airplanes.”

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An electrical engineer who worked as a manager at Lockheed’s F-35 program headquarters in Fort Worth beginning in 2001 said the development effort was beset with “tremendous organizational inadequacies” and “schedule and cost expectations that never were achievable.” In his unit, he said, there were no firm development timetables and no budgets. “It was all on autopilot,” he said. “It was doomed from the beginning.”

In 2005, the engineer, who spoke on the condition of anonymity because of concerns he will risk job opportunities in the close-knit aviation industry, participated in a two-week-long assessment of the program.”There were reds and yellows across the board,” he recalled. But when he briefed his superiors, “nobody was interested,” he said. And when he gave a copy of the assessment to those at the Pentagon office responsible for the plane, he said, “they didn’t want to hear it.”

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The Pentagon’s latest five-year budget plan, released last year, calls for a smaller volume of annual purchases to save money. Sequestration-related cuts this year also will defer a few more planes. But the overall purchase of 2,443 jets remains unchanged.

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Although Air Force and Marine leaders have held fast, an unofficial reexamination is occurring within the Navy, which is not as desperate for the F-35 because it possesses a relatively new fleet of F/A-18 Super Hornets. While toeing a public line of support for the F-35, some Navy experts are looking at whether it makes sense to reduce its planned order and plow some of the savings into high-speed drones that can operate off aircraft carriers, according to senior military officials.

Should that occur, or should Defense Secretary Chuck Hagel decide to shrink the overall purchase, it could prompt howls from key U.S. allies, including Britain, Italy and Norway, which all have contributed to the development of the aircraft. Their purchase price has been based on a U.S. order of about 2,500 jets. If that number drops, the per-plane cost will rise for the allies, possibly leading them to buy fewer then planned.

For some of them, cost increases and delays over the past decade have been significant enough to prompt a reexamination. Australia is deciding whether to halve its 100-plane order and Canada is reconsidering its plan to buy 65.

A smaller total purchase, of course, further increases unit costs for the United States, which likely would increase pressure to cut more. Procurement officers have a term for the phenomenon, borrowed from the world of aviation: a death spiral.

These are not the only examples of waste, fraud, and graft in the U.S. military inventory (the M1 Tank, Osprey VTOL, and Littoral Combat Ship spring to mind) but when you consider that the U.S. spends as much as the next 20 countries combined you have to ask yourself “Why?”