Cyprus-

Antidote-

Marches of Folly

By PAUL KRUGMAN, The New York Times

Published: March 17, 2013

Ten years ago, America invaded Iraq; somehow, our political class decided that we should respond to a terrorist attack by making war on a regime that, however vile, had nothing to do with that attack.

Some voices warned that we were making a terrible mistake – that the case for war was weak and possibly fraudulent, and that far from yielding the promised easy victory, the venture was all too likely to end in costly grief. And those warnings were, of course, right.

There were, it turned out, no weapons of mass destruction; it was obvious in retrospect that the Bush administration deliberately misled the nation into war. And the war – having cost thousands of American lives and scores of thousands of Iraqi lives, having imposed financial costs vastly higher than the war’s boosters predicted – left America weaker, not stronger, and ended up creating an Iraqi regime that is closer to Tehran than it is to Washington.

So did our political elite and our news media learn from this experience? It sure doesn’t look like it.

The really striking thing, during the run-up to the war, was the illusion of consensus. To this day, pundits who got it wrong excuse themselves on the grounds that “everyone” thought that there was a solid case for war. Of course, they acknowledge, there were war opponents – but they were out of the mainstream.

…

What we should have learned from the Iraq debacle was that you should always be skeptical and that you should never rely on supposed authority. If you hear that “everyone” supports a policy, whether it’s a war of choice or fiscal austerity, you should ask whether “everyone” has been defined to exclude anyone expressing a different opinion. And policy arguments should be evaluated on the merits, not by who expresses them; remember when Colin Powell assured us about those Iraqi W.M.D.’s?

Iraq War: An Eight-Year Massive Crime-But the US Political Class & Press Ask, ‘Was It Worth It?’

By: Kevin Gosztola, Firedog Lake

Monday March 18, 2013 12:29 pm

Let’s stay away from discussion of whether war was a “mistake” or not. It cannot be a “mistake” because the administration of President George W. Bush did not just happen to stumble into Iraq and bomb it with a campaign of “shock and awe.” The administration spent months constructing a case for war knowing there was no evidence that Saddam Hussein posed any imminent threat yet they fabricated arguments to convince government agencies, the political class, the press and the public that this was a war that had to be waged. All of which makes the war a crime, not a mistake.

There should be reflection on the crime that was the Iraq war. Throughout the week, government documents revealing the conspiracy and corruption should be highlighted. Stories from Iraqis who were subjected to bombings, torture, arbitrary detention, night raids, Iraqi security forces backed by the US that conducted themselves as death squads, abusive and exploitative private contractors, corruption that propped up Iraq’s ruling elites, etc, should all receive attention.

…

President Barack Obama’s administration, Congress and others in government do not want to see a real outpouring of empathy and remorse for what happened. That would undermine the idea of America, the myth of  the country being a force for good in the world.

…

Is it worth it that the US invaded and left behind a country where torture is pervasive? Is it worth it that the US only worsened sectarian tensions and even played groups against each other to get results desired and now that is fueling violence? Is it worth it that all war crimes committed in Iraq have gone unpunished; that few responsible for murder and torture have been held accountable, particularly those who were serving as high-ranking government officials and authorized or looked the other way when such acts were committed?

Not only did Iraq war hawks push America into war, but the House and Senate, including Democrats, authorized war. The media notoriously signed on to the war. People in power who could have spoken up and sections of society that could have been more outspoken were silent.

No persons have ever been held accountable for the war. The organization of a truth commission, where Bush administration officials and others complicit or responsible for the criminal Iraq war are exposed and shamed, has not occurred.

So last year TheMomCat and my doggie friend and I went to an Irish Festival and I insisted on picking up this cheap tacky shamrock pin.

This is why.

You can listen to it here.

Yawn.

So here’s what’s happened so far.  Q3 was slippery and then the rain came and Qualifying was closed until 8 pm tonight which was not broadcast live.  It is being aired now and the track is wet and everyone is starting on Inters, but what it means for the race is that the track will hardly be rubbered in.

The grid looks a little bit like this-

Pic is racing at the sufferance of the stewards because he was outside the 107% rule, but the field is thin this year and I’d be surprised to see it enforced ever.

Yawn.

I’m surprised to see Mercedes so high, and McLaren is much worse off than I thought they would be, though they’ve “redesigned much of the car to have a larger margin for development throughout the season“.  Scuderia Marlboro looks exactly as bad as they did last year and Red Bull just as dominant.

I was wrong about the compounds on offer, it’s Medium and Super Soft not Soft and Super Soft.  Don’t say I never acknowledge my mistakes.  There’s a second a lap beween the two.

The NBC Sports site is hopeless and has nothing nearly as useful as the Speed Racecast.  I was reduced to using one of my blind mailboxes to register with Formula One so I can get Timing and Scoring for the race, we’ll have to see how that works out.

So I apologize in advance.  First Race, New Network, we’ll see how it goes.

• Australian Grand Prix
• Albert Park
• Guardian Interactive Track

• Formula One Official Site
• NBC Sports Motor Sports

Unlike many New York celebrations St. Patrick’s day remains true to its roots-

• Find a Bar
• Get puking drunk
• Punch somebody

Fortunately queers get posted to the front like Bulls at Pamplona so that men in kilts going commando while wailing on sheep bladders generally avoid the riot.

Politicians walk alone so you can spit on them if you like, provided you have trained for range.

You should wear hip boots.

Update:

TheMomCat (who will be leading the commentary) suggests I include an Irish fighting song.

Well, maybe not them but I certainly am.  The U.S. Government is finally showing signs of regulating Arctic drilling.  In a blistering report Secretary of the Interior Salazar has forced Shell to resubmit plans for Arctic Ocean oil exploration before they’re allowed to start again, further putting into question the profits to a company that has had to cancel the 2013 season already due to catastrophic equipment failure.

When last I wrote 2 of their 4 main pieces of equipment were on a slow boat to South Korea and one had been crushed like a bug.

In recent developments-

Shell barred from returning to drill for oil in Arctic without overhaul

Suzanne Goldenberg, The Guardian

Thursday 14 March 2013 20.13 EDT

Shell “screwed up” drilling for oil in Arctic waters and will not be allowed back without a comprehensive overhaul of its plans, the Obama administration said on Thursday.

A government review found the oil company was not prepared for the extreme conditions in the Arctic, which resulted in a series of blunders and accidents culminating in the New Year’s Eve grounding of its drill rig.

Shell announced a “pause” in Arctic drilling last month. But Ken Salazar, the interior secretary, told a reporters’ conference call that the company will not be allowed to return without producing a much more detailed plan, one tailored specifically to the harsh Arctic conditions.

“Shell will not be able to move forward into the Arctic to do any kind of exploration unless they have this integrated management plan put in place,” said Salazar, in one of his last acts before standing down as interior secretary. “It’s that plain and simple.”

The findings of the review could mean further costs and delays for Shell, which has spent years and $4.5bn securing permits to drill in Arctic waters.

Salazar on Arctic drilling: ‘Shell screwed up in 2012’

By Kim Murphy, Los Angeles Times

March 14, 2013, 6:15 p.m.

“Shell screwed up in 2012, and we’re not going to let them screw up whenever they [resume] … unless they have these systems in place,” Interior Secretary Ken Salazar said after a new report found that Shell’s contractors were repeatedly ill-prepared to meet the demands of operating in the harsh Arctic environment.

“Before Shell is allowed to move forward, they’re going to have to show to the Department of Interior that they have met the standards that have been required,” Salazar said.

Although Shell has spent nearly $5 billion preparing to drill in the oil and gas-rich Chukchi and Beaufort seas – the most promising oil reserves in the U.S., outside the Gulf of Mexico – the company was unable to fully drill a single well during its initial season.

…

Salazar said the company would be required to submit a comprehensive plan describing each phase of its operations, from preparations through demobilization. The department will also require a full, third-party management system audit to ensure the company’s systems are “appropriately tailored for Arctic conditions.”

Report says Shell unprepared for Arctic drilling

AP

Posted on March 14, 2013

Environmental groups were quick to criticize the 30-page report, calling it insufficient despite recognizing Shell’s failings as unacceptable. The groups also knocked the Interior Department for failing to take responsibility for letting a company that was not ready for the challenges it met proceed in the first place.

“By and large, the review told us two things we already knew: Companies are woefully unprepared for the remote and unforgiving Alaskan waters, and our government improperly awarded Shell approvals to operate there,” Susan Murray, Oceana’s Pacific deputy vice president, said in a statement. “The Arctic Ocean is unique and important. Americans deserve better care and stewardship than oil companies or the government have provided.”

…

Shell spent $2.1 billion on petroleum leases in the Chukchi Sea in 2008 and estimates that it has spent $5 billion on Arctic drilling. The company contends that it can drill safely. Its two drill ships completed top-hole drilling on two wells last year, but the company was bedeviled by problems.

The company’s spill response plan required that a response barge arrive on site before drill bits dug into petroleum-bearing zones. That never happened. A containment dome, a key piece of equipment, was damaged in testing off the Washington coast.

Seasonal ice in the Chukchi Sea delayed Shell vessels from moving north. When Chukchi drilling began in September, a major ice floe forced Shell’s drill ship off a prospect less than 24 hours later.

When the drilling season ended, the Coast Guard announced that it had found 16 safety violations on the Noble Discoverer, which drilled in the Chukchi, when it docked in Seward, Alaska. The Coast Guard has turned over its investigation of the vessel to the U.S. Department of Justice.

The problems crested in late December when the drill vessel Kulluk, a circular barge with a diameter as long as nearly three basketball courts, broke away from its towing vessel on its way to a shipyard in Washington state.

It ran aground off a remote Alaska Island near Kodiak Island and requires repairs.

Interior Dept. Warns Shell on Arctic Drilling

By JOHN M. BRODER, The New York Times

Published: March 14, 2013

The Interior Department conducted an urgent review of Shell’s operations after a disastrous 2012 drilling season notable for ship groundings, environmental and safety violations, the failure of a spill-containment system, weather delays and other mishaps.

The review, completed last week, concluded that Shell had failed in a wide range of basic operational tasks, like supervision of contractors that performed critical work, including towing one of the company’s two drilling rigs. That rig, the Kulluk, ran aground on Sitkalidak Island in Alaska on New Year’s Eve and is now headed to Asia for extensive repairs. No oil was spilled and there were no serious injuries.

The report was harshly critical of Shell management, which has acknowledged that it was unprepared for the problems it encountered operating in the unforgiving Arctic environment. The report did not single out individual managers.

The 32-page study also faulted government agencies, including the Interior Department and the Coast Guard, for failing to anticipate some of the problems Shell faced, including accidents involving both drilling rigs as they traveled to and from drill sites in the Beaufort and Chukchi Seas.

“Government still has a lot to learn,” said Mr. Salazar, who will soon step down and is expected to be replaced by President Obama’s nominee, Sally Jewell, chief executive of Recreational Equipment Inc. in Seattle. “The Arctic is a very difficult environment to operate in. Shell is one of the most resource-capable companies in the world and it still encountered a whole host of problems trying to operate up there.”

“It doesn’t mean that exploration cannot continue,” Mr. Salazar said. “But I think the cardinal lesson is that moving forward on any Arctic exploration needs the comprehensive integration we attempted to bring to last summer and will attempt to do an even better job of in the future.”

Yawn.

So it’s that time of year again where we jet from time zone to time zone joining the Billionaires in their boxes for an orgy of excess as we spiral our way to Global Apocalypse in no small part due to the belching monoxide fumes of our chariots in these last, decadent days of empire.

Nothing has changed.

Coverage is on a new network, the NBC affliated NBC Sports. Will Buxton, Leigh Diffey, David Hobbs, and Steve Matchett will ALL be back (yay I guess).  They’ll be offering 100 hours of coverage and while I’m not sure it will persist and be consistent, here is the example weekend schedule from Albert Park-

Friday

• midnight Practice 1 (this is new)
• 1:30 am Practice 2

Saturday

• 2 am Qualifying (you’re soaking in it)
• 1:30 pm Qualifying (repeat)
• 10:30 pm Practice 2 (repeat)

Sunday

• midnight Qualifying (repeat)
• 1:30 am Pre-Race
• 2 am Albert Park
• 4 am F1 Extra
• 1 pm Albert Park (repeat)
• 3:30 pm F1 Extra (repeat)
• 10:30 pm Qualifying (repeat)

Monday

• midnight Albert Park (repeat)
• 2:30 am F1 Extra (repeat)

Tuesday

• midnight Albert Park (repeat)
• 2:30 am F1 Extra (repeat)

If you don’t want spoilers, don’t read below the fold.

There will be only 19 races, Turkey, Austria, Europe, Dubai, Portugal, France, London, and New Jersey have been dropped, at least temporarily.  Argentina is preparing a bid.

There will only 11 teams, HRT has been dropped and sold to a parts liquidator.  Qualifying has been changed in response from 7, 7, and 10 to 6, 6, and 10.

Pirelli has totally changed the design of their tires (no, they’re not square but more than reformulating the compounds).  On offer at Albert Park will be Softs and Super Softs.

Drag Reduction Systems may only be used during Practice and Qualifying where they are during the race.  This is more significant than you think because during Practice they could be used to gather data about the mechanical grip of the chassis and during Qualifying to effect your position.

There is now a “modesty plate” to cover the platypus nose step that everyone considered so ugly (as if the great honking front wing wasn’t ugly enough on its own).  There are new ‘testing’ procedures for the front wing (yeah, right).  Mercedes ‘double diffuser’ (which spoils the down force on the front wing when DRS is deployed) has been ruled illegal while McLaren’s hasn’t… yet.

Speaking of Mercedes and McLaren, the big news in driver changes is Lew Hamilton.  Good luck with that.  He is replaced by Sergio Perez.  Sauber replaced both drivers with Nico Hulkenberg and Esteban Gutierrez.  Hulkenberg is replaced at Force India by Adrian Sutil.

Kamui Kobayashi is dropped because he couldn’t raise enough money to bribe his way into a seat (What?  You didn’t know that about Formula One?).  Williams is replacing Bruno Senna with Valtteri Bottas.

Caterham dropped both Heikki Kovalainen  (we hatessss him) and Vitaly Petrov (bribe not big enough) and replaced them with Charles Pic and Giedo van der Garde.  Marussia dumped Timo Glock (bribe not big enough) and lost Pic and is  replacing them with Max Chilton and Jules Bianchi.

HRT withdrawing leaves Pedro de la Rosa and Narain Karthikeyan on the beach.

Predictions!

Please remember I am uniformly wrong.

There is no reason to believe that Red Bull will not dominate again.  Ferarri is confident that now they’ve fixed their sucky wind tunnel they’ll be competitive instead of of relying on Alonso miracle driving.

McLaren will not suddenly be better because Hamilton is gone, nor Mercedes because he is there.  They will be duking it out with Lotus (Renault) for third.  Sauber and Force India will stuggle for respectability as will Williams to avoid losing it entirely.  Caterham and Marussia will eat clag.

The podium will be Vettel, Webber, and Alonso in no particular order.  Perhaps Button or Hamilton might sneak in, but I doubt it.

Yawn.

It will take me a while to get up to Speed on using the online tools for commentary, I hope you’ll forgive me.

Most information from Wikipedia.

Terry Gilliam’s directorial debut.

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.

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.