Author's posts
Jun 18 2013
Life Insuarance Crooks
Insurers Inflating Books, New York Regulator Says
By MARY WILLIAMS WALSH, The New York Times
June 11, 2013, 8:50 pm
Benjamin M. Lawsky, New York’s superintendent of financial services, said that life insurers based in New York had alone burnished their books by $48 billion, using what he called “shadow insurance,” according to an investigation conducted by his department. He issued a report about the investigation late Tuesday.
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Insurance is regulated by the states, and Mr. Lawsky said his investigators found that life insurers in New York were seeking out states with looser regulations and setting up shell companies there for the deals. They then used those states’ tight secrecy laws to avoid scrutiny by the New York State regulators.Insurance regulation is based squarely on the concept of solvency – the idea that future claims can be predicted fairly accurately and that each insurer should track them and keep enough reserves on hand to pay all of them. The states have detailed rules for what types of assets reserves can be invested in. Companies are also expected to keep a little more than they really expect to need – called their surplus – as a buffer against unexpected events. State regulators monitor the reserves and surpluses of companies and make sure none fall short.
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The transactions at issue are modeled after reinsurance, a business in which an insurance company pays another company, a reinsurer, to take over some of its obligations to pay claims. Reinsurance is widely used and is considered beneficial because it allows insurers to spread their risks and remain stable as they grow. Conventional reinsurance deals are negotiated at arm’s length by independent companies; both sides understand the risk and can agree on a fair price for covering it. The obligations drop off the original insurer’s books because the reinsurer has picked them up.Mr. Lawsky’s investigators found, though, that life insurance groups, including some of the best known, were creating their own shell companies in other states or countries – outside the regulators’ view – and saying that these so-called captives were selling them reinsurance. The value of policies reinsured through all affiliates, including captives, rose to $5.46 trillion in 2012, from $2.82 trillion in 2007.
The chief problem with captive reinsurance, Mr. Lawsky said, is that the risk is not being transferred to an independent reinsurer. Also, the deal is not at arm’s length. And confidentiality rules make it difficult to see what secures the obligations.
The New York State investigators subpoenaed this information and discovered that some states were approving deals backed by assets that would not be allowed in New York; Mr. Lawsky referred to “hollow assets,” “naked parental guarantees” and “conditional letters of credit.”
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Insurers, unlike banks, have no prepaid fund like the Federal Deposit Insurance Corporation to make customers whole in the event of a collapse. That’s why Mr. Lawsky said he feared that taxpayers might have to be called to the rescue again.
The Next Crash And The Next Bailout Now
By Charles P. Pierce, Esquire
at 11:15AM Jun 13, 2013
Give them a suit with rubber pockets and they’d steal soup.
Learning from the sweet — and largely unprosecuted — techniques of their pals in the financial-services industry, it appears that the moguls, poobahs, and panjandrums in the insurance industry are finding their own special ways to game the entire system into the poorhouse.
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You think any of these guys looked at what happened in 2008 and thought, “Boy, those guys really were crooks and bought the country a helluva catastrophe. We should learn from them and not do that ourselves.” Nope, I guarantee you the first thoughts among the people who thought up this scam for the insurance companies was, “Holy crap, look at the dough those guys made!” And I guarantee you those same people all got raises. The upper levels of American capitalism is so rotten with amorality, so utterly devoid of any conventional sense of ethics, let alone social responsibility, that it hardly seems worth pointing it out any more. Congratulations to America’s graduate schools of business. You have bred three generations of vampires to feed on the rest of us. It’s as though every medical school in the country adopted the basic approach to thoracic surgery of Sweeney Todd and married it to the economic philosophy of Bialystock And Bloom.
Jun 18 2013
Unaccountable
Does Robert Reich call for creation of a Third Party?
The Two Centers of Unaccountable Power in America, and Their Consequences
Robert Reich
Thursday, June 13, 2013
There are two great centers of unaccountable power in the American political-economic system today – places where decisions that significantly affect large numbers of Americans are made in secret, and are unchecked either by effective democratic oversight or by market competition.
One goes by the name of the “intelligence community” and its epicenter is the National Security Agency within the Defense Department. If we trusted that it reasonably balanced its snooping on Americans with our nation’s security needs, and that our elected representatives effectively oversaw that balance, there would be little cause for concern. We would not worry that the information so gathered might be misused to harass individuals, thereby chilling free speech or democratic debate, or that some future government might use it to intimidate critics and opponents. We would feel confident, in other words, that despite the scale and secrecy of the operation, our privacy, civil liberties, and democracy were nonetheless adequately protected.
But the NSA has so much power, and oversight of it is so thin, that we have every reason to be concerned. The fact that its technological reach is vast, its resources almost limitless, and its operations are shrouded in secrecy, make it difficult for a handful of elected representatives to effectively monitor even a tiny fraction of what it does. And every new revelation of its clandestine “requests” for companies to hand over information about our personal lives and communications further undermines our trust. To the contrary, the NSA seems to be literally out of control.
The second center of unaccountable power goes by the name of Wall Street and is centered in the largest banks there. If we trusted that market forces kept them in check and that they did not exercise inordinate influence over Congress and the executive branch, we would have no basis for concern. We wouldn’t worry that the Street’s financial power would be misused to fix markets, profit from insider information, or make irresponsible bets that imperiled the rest of us. We could be confident that despite the size and scope of the giant banks, our economy and everyone who depends on it were nonetheless adequately protected.
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That neither Republicans nor Democrats have done much of anything to effectively rein in these two centers of unaccountable power suggests that, if there is ever to be a viable third party in America, it will may borne of the ill-fated consequences.
Jun 14 2013
Just What We Need
You see, things are getting a little hot on the domestic front what with IRS-gate (probably no there there), AP/Fox-Gate (it’s bad to spy on reporters), NSA-gate (Hey, no big. We’re spying on everybody!), and the various policy failures (No Grand Bargain for YOU! Mr. Deficit- he dead).
So we need a distraction. Something that will revive that good old mindless U-S-A! U-S-A! chanting spirit.
I’ve got it! How about another Middle Eastern war?
U.S. Confirms Syrian Government’s Use Of Chemical Weapons
By Hayes Brown, ThinkProgress
Jun 13, 2013 at 5:54 pm
The United States on Thursday confirmed that the Syrian government used chemical weapons on its own people, ending weeks of uncertainty over precisely who had unleashed the deadly agents.
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That uncertainty apparently no longer exists within the U.S. intelligence community. According to a statement from the White House, the intelligence community now with a high-degree of confidence “estimates that 100 to 150 people have died from detected chemical weapons attacks.” The White House also indicated that the United States is “going to make decisions about further action on our own timeline.”
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President Obama has long called the use of chemical weapons by the Assad regime a “red-line,” one that would be met with unspecified consequences if it were to be crossed. The determination that the line has been crossed has led to the Obama administration finally deciding to provide more and greater types of support to the Syrian rebels in their attempts to overthrow Assad.On a call with reporters, Deputy National Security Adviser Ben Rhodes said Obama has decided to give the rebels “military support,” but refused to directly say whether the U.S. had decided to arm Syria’s rebels, saying he was unable to detail every type of support the Syrian rebels will be receiving. Rhodes stressed, however, that this aid would be “responsive” to the requests of the Syrian Military Council and that it would be “substantively different” in “both scope and scale than what we have provided before.” The Obama administration has mulled arming the rebels for months now without pulling the trigger, instead insisting on only providing non-lethal aid.
Gee, didn’t we arm Osama Bin Ladin and Saddam Hussein?
What could possibly go wrong?
Jun 13 2013
Clapper Louder
Snowden Has Already Exposed Potentially Illegal Activity
By: Jon Walker, Firedog Lake
Wednesday June 12, 2013 11:21 am
Snowden’s actions have already technically revealed illegal activity. This can be proven without even engaging in a debate about whether the programs revealed have been operating in a fully legal manner.
Perjury is a crime and misleading Congress while it is trying to engage in oversight of the executive branch is very serious wrongdoing. By revealing that the NSA has been secretly collecting data on millions of Americanshttp://fdlaction.firedoglake.com/2013/06/11/clappers-lie-to-congress-was-prepared-in-advance/http:// Snowden proved that Director of National Intelligence General James Clapper’s [prepared answers to Congress were false ].
While Clapper currently engaged in extremely semantic hair splitting to make the case he didn’t actually lie but simply answered the question in the “least untruthful manner,” it is clear that Snowden’s actions exposed what was at least potentially a criminal act by a top government official. Regardless if a case is actually brought against Clapper, a serious potential act of wrongdoing was brought to light by this leak.
Fire James Clapper
By Fred Kaplan, Slate
Posted Tuesday, June 11, 2013, at 12:44 PM
Back at an open congressional hearing on March 12, Sen. Ron Wyden (D-Ore.) asked Clapper, “Does the NSA collect any type of data at all on millions or hundreds of millions of Americans?” Clapper replied, “No sir … not wittingly.” As we all now know, he was lying.
We also now know that Clapper knew he was lying.
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As a member of the Senate Intelligence Committee, Wyden had been briefed on the top-secret-plus programs that we now all know about. That is, he knew that he was putting Clapper in a box; He knew that the true answer to his question was “Yes,” but he also knew that Clapper would have a hard time saying so without making headlines.But the question was straightforward. It could be answered “yes” or “no,” and Clapper had to know this when he sat there in the witness chair. (Notice that, in his response to Mitchell, Clapper said he came up with the wife-beating analogy only “in retrospect.”) There are many ways that he could have finessed the question, as administration witnesses have done in such settings for decades, but Clapper chose simply to lie. “Truthful” and “untruthful” are not relative terms; a statement either is or isn’t; there’s no such thing as speaking in a “most truthful” or “least untruthful” manner.
Nor was this a spontaneous lie or a lie he regretted making. Wyden revealed in a statement today that he’d given Clapper advance notice that he would ask the question and that, after the hearing, he offered Clapper a chance to revise his answer. Clapper didn’t take the offer.
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It is irrelevant whether Clapper really believes his definition of “collect” or made it up on the spot. Either way, this is a man who cannot be trusted to hold an honest discussion about these issues. If he lied about what he thinks “collect” means, he will lie about lots of things. If he really thinks the English language is this flexible, it is unwise to assume that any statement he makes means what it appears to mean.This is crucial. We as a nation are being asked to let the National Security Agency continue doing the intrusive things it’s been doing on the premise that congressional oversight will rein in abuses. But it’s hard to have meaningful oversight when an official in charge of the program lies so blatantly in one of the rare open hearings on the subject. (Wyden, who had been briefed on the program, knew that Clapper was lying, but he couldn’t say so without violating the terms of his own security clearance.)
And so, again, if President Obama really welcomes an open debate on this subject, James Clapper has disqualified himself from participation in it. He has to go.
Clapper’s Lie to Congress was Prepared in Advance
By: Jon Walker, Firedog Lake
Tuesday June 11, 2013 9:19 am
Apparently, when Director of National Intelligence General James Clapper misled Congress it wasn’t simply the case of providing an inarticulate answer to a surprise question. Senator Ron Wyden let it be known today that he not only told Clapper in advance that he would ask the question about domestic surveillance, but even give Clapper a chance afterwards to officially revise his on the record remarks.
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If Clapper is not seriously investigated for misleading Congress it should bring into question why we even bother put people under Oath before testimony to Congress. If the people in power are going to be above this law, both the law and the concept of Congressional oversight are worthless.
Apparently Clapper Makes It a Habit to Lie While Defending NSA Programs
By: Jon Walker, Firedog Lake
Wednesday June 12, 2013 6:52 am
Not only did Director of National Intelligence James Clapper purposely give misleading answers to Congress while under oath to hide the existence of NSA programs, but he also apparently lies about what these programs accomplished. The Obama administration declassified details about a terrorist plot that was supposedly stopped by PRISM, but Clapper got the basic details wrong.
NYC Bomb Plot Details Settle Little In NSA Debate
By MATT APUZZO and ADAM GOLDMAN, Associated Press
06/11/13 03:58 PM ET EDT
In the rush to defend the surveillance programs, however, government officials have changed their stories and misstated key facts of the Zazi plot. And they’ve left out one important detail: The email that disrupted the plan could easily have been intercepted without PRISM.
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Zazi, an Afghan-American cab driver living in the Denver suburbs, was an al-Qaida-trained bomber. In September 2009, he sent a coded message to a Yahoo email address in Pakistan. Months earlier, British officials had linked the Yahoo address to a known al-Qaida operative.
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The NSA intercepted that email, touching off a frenzied two-week investigation in New York and Colorado that led to Zazi’s arrest. He pleaded guilty and provided information that helped send two friends to prison.
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When news of the phone-records program broke, officials quickly credited it with thwarting an attack.
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A senior intelligence official confirmed soon afterward that Rogers was talking about Zazi, but offered no explanation.
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Now, in talking points declassified by the administration, the government says that Internet eavesdropping, not archiving phone records, disrupted Zazi’s plans.The use of PRISM to catch Zazi does little to resolve one of the key questions in the surveillance debate: whether the government needs to take such vast amounts of data, sometimes sweeping up information on American citizens, to keep the country safe.
That’s because, even before the surveillance laws of 2007 and 2008, the FBI had the authority to – and did, regularly – monitor email accounts linked to terrorists. The only difference was, before the laws changed, the government needed a warrant.
To get a warrant, the law requires that the government show that the target is a suspected member of a terrorist group or foreign government, something that had been well established at that point in the Zazi case.
In using Zazi to defend the surveillance program, government officials have further confused things by misstating key details about the plot.
Director of National Intelligence James Clapper said investigators “found backpacks with bombs.” Really, the bombs hadn’t been completed and the backpacks the FBI found were unrelated to the plot.
Why Clapper’s Deception Destroys Obama’s Defense of Newly Revealed NSA Programs
By: Jon Walker Tuesday June 11, 2013 9:57 am
Not only are the prepared deceptive answers given by Director of National Intelligence General James Clapper in Congressional testimony potentially serious crimes, but the entire incident completely undermines President Obama defense of the newly revealed NSA domestic surveillance programs.
When asked about revelations Obama defended both the legality and legitimacy of the programs by repeatedly claiming they were subject checks by the other branches of government. Obama’s entire case for why these programs are acceptable is based on the premise that Congress is fully briefed and has complete oversight.
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If this member of the executive branch in charge of said programs is going to mislead Congress under oath about the program then Congress is not being “fully briefed.” If the executive branch is going to actively and potentially illegally deceive Congress then it is impossible for Congress to engage in real oversight. Congress can’t provide a real check on that which it has been lied to about.This problem is not only limited to Clapper. It should be noted that several members of the administration should have known about Clapper deceptive remarks when they were made. Yet apparently the administration did nothing to encourage Clapper to amend his answers while there was still ample time, publicly correct the record or punish him for his unacceptable behavior.
Jun 12 2013
Minor Meta
So tonight I updated the Blog Roll and it was a pain in the ass getting the new one to appear in the right order on the proper part of the page.
There are a few tweaks that still need to be done, but the main reason I’m posting is to apologize for the Twitter feed crash.
I don’t know what happened, the only thing I did was move it in the process of getting the Blog Roll in the correct place.
Anyway, you’ve really no choice at this point but to indulge me while I fix it and I hope it will be up soon. I still like Soapblox. We can do almost anything except auto-refreshing (peeder) comments and you just have to get used to the slower pace.
Other than that if you have suggestions how we can improve our service to you, our readers and contributors (other than to write better and more often), feel free to opine below.
Jun 12 2013
The Company You Keep
Ai Weiwei is a Chinese contemporary artist, active in sculpture, installation, architecture, curating, photography, film, and social, political and cultural criticism. … As a political activist, he has been highly and openly critical of the Chinese Government’s stance on democracy and human rights. He has investigated government corruption and cover-ups, in particular the Sichuan schools corruption scandal following the collapse of so-called “tofu-skin schools” in the 2008 Sichuan earthquake. In 2011, following his arrest at Beijing airport on 3 April, he was held for over two months without any official charges being filed; officials alluded to their allegations of “economic crimes” (tax evasion).
NSA surveillance: The US is behaving like China
Ai Weiwei, The Guardian
Tuesday 11 June 2013 09.30 EDT
In the Soviet Union before, in China today, and even in the US, officials always think what they do is necessary, and firmly believe they do what is best for the state and the people. But the lesson that people should learn from history is the need to limit state power.
If a government is elected by the people, and is genuinely working for the people, they should not give in to these temptations.
During my detention in China I was watched 24 hours a day. The light was always on. There were two guards on two-hour shifts standing next to me – even watching when I swallowed a pill; I had to open mouth so they could see my throat. You have to take a shower in front of them; they watch you while you brush your teeth, in the name of making sure you’re not hurting yourself. They had three surveillance cameras to make sure the guards would not communicate with me.
But the guards whispered to me. They told stories about themselves. There is always humanity and privacy, even under the most restrictive conditions.
To limit power is to protect society. It is not only about protecting individuals’ rights but making power healthier.
Civilisation is built on that trust and everyone must fight to defend it, and to protect our vulnerable aspects – our inner feelings, our families. We must not hand over our rights to other people. No state power should be given that kind of trust. Not China. Not the US.
Jun 11 2013
Good Business?
The Logic of the Surveillance State
by Ian Welsh
2013 June 9
The problem with surveillance states, and with oppression in general, is the cost. This cost is both direct, in the resources that are required, and indirect in the lost productivity and creativity caused by constant surveillance. Surveillance states, oppressive states, are not creative places, they are not fecund economically. They can be efficient and productive, for as long as they last, which is until the system of control is subverted, as it was in the USSR. We forget, in light of the late USSR’s problems, that it did create an economic miracle in the early years, and tremendously boost production. Mancur Olson’s “Power and Prosperity” gives a good account of why it worked, and why it stopped working.
Liberalism, in its classic form, is, among other things, the proposition that you get more out of people if you treat them well. Conservatism is the proposition that you get more out of people if you treat them badly.
Post war Liberalism was a giant experiment in “treat people well”. The Reagan/Thatcher counter-revolution was a giant experiment in “treat people worse”. The empirical result is this: the rich are richer and more powerful in a society that treats people like shit, but a society which treats people well has a stronger economy, all other things being equal, than one that treats them badly. This was, also, the result of the USSR/West competition. (Treating people well or badly isn’t just about equality.)
Liberalism, classic and modern, believes that a properly functioning “freer” society is a more powerful society, all other things being equal. This was, explicitly, Adam Smith’s argument. Build a strong peacetime economy, and in wartime you will crush despotic nations into the dirt.
If you want despotism, as elites, if you want to treat everyone badly, so you personally become more powerful and rich, then, you’ve got two problems: an internal one (revolt) and an external one: war and being outcompeted by other nations elites, who will come and take away your power, one way or the other (this isn’t always violently, though it can be.)
The solution is a transnational elite, in broad agreement on the issues, who do not believe in nationalism, and who play by the same rules and ideology. If you’re all the same, if nations are just flags, if you feel more kinship for your fellow oligarchs, well then, you’re safe. There’s still competition, to be sure, but as a class, you’re secure.
That leaves the internal problem, of revolt. The worse you treat people, the more you’re scared of them. The more you clamp down. This is really, really expensive and it breaks down over generations, causing internal rot, till you can’t get the system to do anything, no matter how many levers you push.
What is being run right now is a vast experiment to see if modern technology has fixed these problems with surveillance and oppressive states. Is it cheap enough to go full Stasi, and with that level of surveillance can you keep control over the economy, keep the levers working, make people do what you want, and not all slack off and resist passively, by only going through the motions?
The oligarchs are betting that the technology has made that change.
Jun 09 2013
Formula One 2013: Circuit Gilles Villeneuve
It’s a partly cloudy 72 in Montreal so there’s no reason to think the whole race will not be run on Drys of which almost everyone has a full compliment. The tire of choice will be the Super Soft on a 2 pit strategy, but they will have to run the Mediums at least once. The alternative would be to run Mediums for most of the distance, save a stop, and put the Super Softs on at the end. Given the 1 second per lap advantage and the speed of the stops I don’t imagine any except the most desperate Teams would try it.
I havent been able to find any news of Massa dropping out after yesterday’s crash so presumably he’ll start. It’s a shame, it was a brand new chassis.
Grosjean qualified 19th but will be penalized 10 grid spots for causing a collision at the previous round (Monaco). Raikkonen and Ricciardo qualified ninth and tenth respectively; penalised two grid spots each for pit-exit infringements in Qualifying. This is reflected in the pretty tables.
Brad Spurgeon thinks this is a much tougher track than I do, pointing to the heavy braking at the end of the straights. I say this gives them plenty of time to cool down. He also says the surface is abrasive and it may very well be, but if you’re getting 22 laps out of Super Softs under heavy fuel how bad can it be?
He does point out that this is the first of the really fast tracks where the Teams start using their lower downforce settings and that could make a difference for cars with good mechanical grip (like Scuderia Marlboro when their wind tunnel was screwed up).
Montreal’s contract expires in 2014 and the Harper government has shown no willingness to pony up its share of the $15 Million kickback to Formula One. At times like this it’s important to remember what Canada’s 2 largest national industries are-
Repeats on NBC Sports at 8 pm and 12:30 am Tuesday.
- Qualifying
- Canadian Grand Prix
- Circuit Gilles Villeneuve
- Guardian Interactive Track
- Formula One Interactive Track
Pretty tables below.
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