06/05/2014 archive

(Part 1)

Former Chief of Navy SEALs Finds Keystone XL an Easy Terror Target

By Brad Wieners, Business Week

June 04, 2014

Hedge fund billionaire Tom Steyer, a climate change activist and staunch opponent of the prospective 1,179-mile pipeline from Alberta, Canada, to Cushing, Okla., has hired retired Navy SEAL chief David “Dave” Cooper to assess how vulnerable the Keystone XL might be to deliberate sabotage. In a 14-page report made public today (but redacted to keep it from being a playbook for aspiring terrorists), Cooper concludes that a small group of evildoers could easily cause a catastrophic spill of millions of gallons of diluted bitumen, or tar sands crude, from the Keystone XL. They could do it with as little as four pounds of commercial-grade, improvised explosives. Cooper even did a dry run, using the completed Keystone I pipeline as a proxy; he hung out at a critical valve station long enough to content himself that he could have planted some explosives and left without a hitch.

In what Cooper deems “the most likely scenario,” a single attack could result in 1.2 million gallons of Alberta crude tarring Nebraska farms and waterways. He calculated this using published emergency shutdown response times and pipeline flow forecasts from the government and TransCanada (TRP:CN), the company that wants to build and operate the line. A coordinated attack at multiple locations, Cooper suggests, could trigger a 7.24 million gallon flood.

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Cooper is a highly decorated, 25-year veteran of the special forces and ran the elite unit known as the Naval Special Warfare Development Group that’s far better known as “SEAL Team Six.” He declines to give details, but he served in Afghanistan and Yemen and was in the unit’s command during the rescue of Maersk Alabama Captain Richard Phillips off Somalia and the killing of Osama bin Laden. He was the top-ranking enlisted SEAL at Dam Neck Annex, in Virginia Beach, until his retirement in 2012.

Former Navy SEAL Commander Says Keystone XL Would Be Extremely Vulnerable To Terrorist Attack

By Ryan Koronowski, Think Progress

June 5, 2014 at 12:08 pm

Throughout Keystone XL’s approval process, both proponents and opponents have paid a lot of attention to pipeline safety. Some say that pipelines are safer than shipping oil by rail, while others point to pipeline explosions, spills, leaks, and failures that threaten aquifers, sensitive lands, and populous areas. The security vulnerabilities of the pipeline receive little mention. In fact, Cooper points out that the detailed discussion of how safe a completed Keystone XL pipeline would be actually provides detailed information to would-be criminals, saboteurs, or terrorists like the route, vulnerable areas, and the thickness of the pipeline. Even though much of this disclosure is unavoidable – on the part of owners and government officials – Cooper said it was “concerning” that neither spoke much about security.

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He conducted a “red cell scenario” analysis of a domestic pipeline’s security vulnerabilities, accessing only the information available to someone with an internet connection and no inside knowledge from TransCanada or government. This involved a site visit to one existing pipeline – Keystone 1 – to ascertain how easy it would be for someone to gain access to a completed Keystone XL pipeline. This was done as a “cold shot,” meaning a mock penetration of a target with no practice or notification and very little planning. Cooper just went to the small town of Stanton, Nebraska and walked up to the pipeline.

He wrote that he was able to “stand at a Keystone 1 pump station for over 15 minutes snapping photos,” and “was not approached, questioned, or ever noticed.”

The assessment “found that a handful of terrorists could use just four pounds of explosives at each of the three pump facilities located [REDACTED] to cause explosives that could trigger a catastrophic spill of 7.24 million gallons of dilbit (with its highly toxic chemicals).” In the most damaging scenarios depicting a coordinated attack across dozens of miles of pipeline, several explosions at pump stations would cause 60 percent of the oil in those sections of pipeline to spill. Worryingly, it would take eleven and a half minutes to shut down the pipeline to stop the flow. Both of those numbers came directly, according to Mr. Cooper, from TransCanada’s own estimates. He used this to calculate that the amount could reach 8.21 million gallons.

Questions Raised About Integrity of Keystone XL’s Southern Route After Conditions Added for Northern Leg

By Julie Dermansky, DeSmogBlog

Thursday, 05 June 2014 09:36

The new conditions weren’t based solely on the construction issues found in the southern route of the pipeline, now called the Gulf Coast pipeline. They were the result of “observations in the field during construction projects from several pipeline operators over the past few years,” Damon Hill, spokesperson for PHMSA, told the Associated Press.

The new conditions were based on “systemic problems regulators found in the pipeline industry, not just the Keystone XL’s southern route,” Richard Kurpewicz, president of Accufacts Inc., a consulting firm that provides pipeline expertise, told DeSmogBlog.

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Fairchild and Crawford are part of a group of landowners who live with the southern route of the Keystone XL pipeline on their property and who, along with environmentalists, met with Roderick Seeley, director of the Southwest Region of PHMSA, to ask questions about the inspection process they witnessed in January.

The group presented documentation of shoddy construction practices and questioned the regulators about their absence during the pipeline installation and repair process. PHMSA representatives conceded they don’t have enough inspectors to watch everything but said, despite their absence in the field, they have “faith in the process.”

“At the meeting, PHMSA assured us that all the problems we referenced had been fixed, even though that assertion was based almost entirely on taking TransCanada’s word for it,” the Tar Sands Blockade recently wrote on its blog. “PHMSA’s inspections only occurred an average of 2-3 times per month.”

The group that attended the meeting requested that a new pressure test of the pipeline be done to test the welds on the numerous repairs. A pressure test can pinpoint faulty girth welds. For each repair that required a segment of pipe be replaced, new girth welds were made.

“If girth welds fail, there is the danger of a rupture,” Kurpewicz told DeSmogBlog.

Evan Vokes, a former TransCanada mechanical engineer turned whistleblower, points out: “Flaws in girth welds are not easy to catch, so each new section introduced into the pipeline adds another potential weakest link.” He too believes a new pressure test is merited.

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“We have very few tools to work with,” Jeffrey Wiese, PHMSA’s safety official, told industry insiders at a pipeline safety conference in New Orleans in 2013,  according to an Inside Climate News report. But that doesn’t explain why regulators did nothing more than issue warning letters to TransCanada after identifying code violations, opting not to fine or sanction the company.

Vokes doubts the new conditions will change anything. “If sanctions are not levied, there will be no improvement in the system,” he said.

“If PHMSA believes the public is in danger, they have the power to shut down a project,” Kurpewicz told DeSmogBlog.

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David Cay Johnson: Americans fared better after Great Depression than today

The economy is improving – or so headlines tell us almost every day. But is that true?

The answer to that question depends on the time frame used for comparison, whether inflation is taken into account and how you measure improvement.

News reports tend to focus on the short term – on yesterday, on last year compared with the year before. But look back farther in time and an overwhelming case can be made that the vast majority of Americans are worse off. Indeed, coming out of the Great Depression eight decades ago, the vast majority fared vastly better than most people have coming out of the Great Recession, which officially ended on June 30 six years ago.

It may be jarring to hear that the vast majority of Americans, the 90 percent, enjoyed bigger income gains in the 1930s than in recent years, but that is what the data show.

The data also indicate tandem increases in both want and wealth, with the vast majority worse off in 2013 than in 2009, while those at the apex of the economy are enjoying a much larger – and growing – share of national income.

Dean Baker: CEO pay and performance link? For Coke, zero

The Wall Street Journal came out with its annual survey of CEO compensation last week. To absolutely no one’s surprise, CEO compensation is up again. In 2013 the median pay for CEOs at 300 companies with revenue of more than $8.7 billion was $11.4 million, up 5.5 percent from 2012. This means that the gap in pay between CEOs and employees is continuing to grow, as average hourly compensation rose just over 2.0 percent during the same period, roughly keeping pace with inflation. [..]

Under an honest free market story of CEO pay, corporate boards of directors would constantly analyze compensation packages. The boards would act to ensure that CEOs are paid in line with what they contribute to the company and not a penny more. Corporate directors would also look to see if there might not be potential CEOs who are willing to work for less, not just at other companies but in other countries. If there is a CEO is Germany, Japan or China who could do the job as well and cost shareholders a few million less, the directors would rush to make the hire.

Yes, that is the way the market for CEOs is supposed to work. But we got yet more evidence that the market for CEOs doesn’t work anything like this last month. It turns out that the CEO and other top executives at Coca-Cola have been giving themselves lavish bonus packages. According to the calculations of investment adviser David Winter, the bonuses issued last year had a value of $13 billion, which could rise to $24 billion over a two-year period. These bonuses would be shared among 6,000 managers, coming to an average $2 million per person per year.

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Nope, more complicated than that.

What Excuse Remains for Obama’s Failure to Close GITMO?

By Glenn Greenwald, The Intercept

3 Jun 2014, 9:18 AM EDT

The excuse-making on behalf of President Obama has always found its most extreme form when it came time to explain why he failed to fulfill his oft-stated 2008 election promise to close Guantanamo. As I’ve documented many times, even the promise itself was misleading, as it became quickly apparent that Obama – even in the absence of congressional obstruction – did not intend to “close GITMO” at all but rather to re-locate it, maintaining its defining injustice of indefinite detention.

But the events of the last three days have obliterated the last remaining excuse. In order to secure the release of American POW Sgt. Bowe Bergdahl, the Obama administration agreed to release from Guantanamo five detainees allegedly affiliated with the Taliban. But as even stalwart Obama defenders such as Jeffery Toobin admit, Obama “clearly broke the law” by releasing those detainees without providing Congress the 30-day notice required by the 2014 defense authorization statute (law professor Jonathan Turley similarly observed that Obama’s lawbreaking here was clear and virtually undebatable).

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But the eagerness of many Democrats to radically change everything they claimed to believe as of January 20, 2009 is far too familiar and well-documented at this point to be worth spending much time on. Far more significant are the implications for Obama’s infamously unfulfilled pledge to close Guantanamo.

The sole excuse now offered by Democratic loyalists for this failure has been that Congress prevented him from closing the camp. But here, the Obama White House appears to be arguing that Congress lacks the authority to constrain the President’s power to release detainees when he wants. What other excuse is there for his clear violation of a law that requires 30-day notice to Congress before any detainees are released?

But once you take the position that Obama can override – i.e., ignore – Congressional restrictions on his power to release Guantanamo detainees, then what possible excuse is left for his failure to close the camp? As Jason Leopold notes in an astute article at Al Jazeera, this week’s episode “has led one human rights organization to question why the Obama administration has not acted to transfer dozens of other detainees who have been cleared for release for many years.”

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Obama defenders seem to have two choices here: either the president broke the law in releasing these five detainees, or Congress cannot bind the commander-in-chief’s power to transfer detainees when he wants, thus leaving Obama free to make those decisions himself. Which is it?

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.

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June 5 is the 156th day of the year (157th in leap years) in the Gregorian calendar. There are 209 days remaining until the end of the year

1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold. The United States had been on a gold standard since 1879, except for an embargo on gold exports during World War I, but bank failures during the Great Depression of the 1930s frightened the public into hoarding gold, making the policy untenable.

Soon after taking office in March 1933, Roosevelt declared a nationwide bank moratorium in order to prevent a run on the banks by consumers lacking confidence in the economy. He also forbade banks to pay out gold or to export it. According to Keynesian economic theory, one of the best ways to fight off an economic downturn is to inflate the money supply. And increasing the amount of gold held by the Federal Reserve would in turn increase its power to inflate the money supply. Facing similar pressures, Britain had dropped the gold standard in 1931, and Roosevelt had taken note.

Prolongation of the Great Depression

Some economic historians, such as American professor Barry Eichengreen, blame the gold standard of the 1920s for prolonging the Great Depression. Others including Federal Reserve Chairman Ben Bernanke and Nobel Prize winning economist Milton Friedman lay the blame at the feet of the Federal Reserve. The gold standard limited the flexibility of central banks’ monetary policy by limiting their ability to expand the money supply, and thus their ability to lower interest rates. In the US, the Federal Reserve was required by law to have 40% gold backing of its Federal Reserve demand notes, and thus, could not expand the money supply beyond what was allowed by the gold reserves held in their vaults.

In the early 1930s, the Federal Reserve defended the fixed price of dollars in respect to the gold standard by raising interest rates, trying to increase the demand for dollars. Its commitment and adherence to the gold standard explain why the U.S. did not engage in expansionary monetary policy. To compete in the international economy, the U.S. maintained high interest rates. This helped attract international investors who bought foreign assets with gold. Higher interest rates intensified the deflationary pressure on the dollar and reduced investment in U.S. banks. Commercial banks also converted Federal Reserve Notes to gold in 1931, reducing the Federal Reserve’s gold reserves, and forcing a corresponding reduction in the amount of Federal Reserve Notes in circulation. This speculative attack on the dollar created a panic in the U.S. banking system. Fearing imminent devaluation of the dollar, many foreign and domestic depositors withdrew funds from U.S. banks to convert them into gold or other assets.

The forced contraction of the money supply caused by people removing funds from the banking system during the bank panics resulted in deflation; and even as nominal interest rates dropped, inflation-adjusted real interest rates remained high, rewarding those that held onto money instead of spending it, causing a further slowdown in the economy. Recovery in the United States was slower than in Britain, in part due to Congressional reluctance to abandon the gold standard and float the U.S. currency as Britain had done.

Congress passed the Gold Reserve Act on 30 January 1934; the measure nationalized all gold by ordering the Federal Reserve banks to turn over their supply to the U.S. Treasury. In return the banks received gold certificates to be used as reserves against deposits and Federal Reserve notes. The act also authorized the president to devalue the gold dollar so that it would have no more than 60 percent of its existing weight. Under this authority the president, on 31 January 1934, fixed the value of the gold dollar at 59.06 cents.

Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover  we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Join us every weekday morning at 9am (ET) and weekend morning at 10:30am (ET) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.

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Caaaaaaaaaaaaaaaain!

Dan Esty

Stephen cleaned up his chin but as always there is more discussion below the fold.