Tag: ek Politics

Nov 30 2011

Dr. Doom:

Italy’s Debt Must Be Restructured

Author: Nouriel Roubini, EconoMonitor

November 29th, 2011

Even if austerity and reforms were eventually to restore debt sustainability, Italy and countries in a similar position would need a lender of last resort to support them and prevent sovereign spreads exploding while they regained market credibility. But Italy’s financing needs for the next twelve months alone are not confined to the €400bn of debt maturing. At this point most investors would dump their entire holdings of Italian debt to any sucker – the ECB, European Financial Stability Facility, IMF or whoever – willing to buy it at current yields. If a lender of last resort appears, Italy’s entire debt stock of €1,900bn will be soon supplied.

So using precious official resources to prevent the unavoidable would simply finance the exit of others. Moreover, there is no official money – some €2,000bn would be needed – to backstop Italy, and soon Spain and possibly Belgium, for the next three years.

…

If, as appears likely, Italy remains stuck in an uncompetitive recession and is unable to regain market access in the next twelve months, then even if such large official resources were mobilised, they would be wasted on financing investors’ exit and thus postponing an inevitable debt restructuring that would then be more disorderly.

…

Italy’s public debt needs to be reduced now to at worst 90 per cent of GDP from the current 120 per cent. This could be done by offering investors the choice to exchange their securities either for a par bond – with a longer maturity and a low enough coupon to reduce the net present value by 25 per cent – or for a discount bond that has a face value reduction of 25 per cent. The par bond would suit banks that hold bonds to maturity and don’t mark to market. There should be a credible commitment not to pay investors who hold out against participating in the offer – even if this triggers the payment of credit default swaps.

With appropriate regulatory forbearance, it would allow banks to pretend for a while that no losses had occurred and thus give them more time to raise fresh capital. Since about 40 per cent of Italy’s public debt is held by non-residents, a debt restructuring will also imply some burden sharing with foreign creditors.

The bottom line is that it will take at least $2.666 Trillion to bail out the Euro which considering we just spent $7.7 Trillion bailing out the Too Big To Fail banks doesn’t seem out of line as an estimate.

Also bondholders will have to take a 25% haircut.  Too bad, so sad.

Nov 29 2011

Freshwater Economics == Insider Trading

Hank Paulson’s inside jobs

Felix Salmon, Reuters

Nov 29, 2011 09:55 EST

(I)n secret meetings, Paulson was hanging out with his old Goldman Sachs buddies, giving them invaluable information about what he was thinking in his new job.

…

Paulson had met with the entire board of Goldman Sachs in a Moscow hotel suite for an hour at the end of June 2008. He told them his views of the US and global economies, he previewed a market-moving speech he was about to give, and he even talked about the possibility that Lehman Brothers might blow up. Maybe it’s not so surprising that Goldman Sachs turned out to be so well positioned when Lehman did indeed do just that a few months later.

Today we learn that the Goldman meeting in Moscow was not some kind of aberration. A few weeks later, on July 28 2008, Paulson met with a who’s who of the hedge-fund world in the headquarters of Eton Park Capital Management – a fund founded by former Goldman superstar Eric Mindich.

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(W)e have no idea how many of these meetings there were, or how long they went on for – the only way that we ever find out about them is when reporters like Sorkin or Bloomberg’s Richard Teitelbaum manage to find a source who was in the meeting and is willing to talk about what happened.

Given that it’s taken two years since the release of Sorkin’s book for the Eton Park meeting to be made public, it’s fair to assume that there were other meetings, too – possibly many others. Paulson was giving inside tips to Wall Street in general, and to Goldman types in particular: exactly the kind of behavior that “Government Sachs” conspiracy theorists have been speculating about for years. Turns out, they were right.

Paulson, says Teitelbaum, “is now a distinguished senior fellow at the University of Chicago, where he’s starting the Paulson Institute, a think tank focused on U.S.-Chinese relations”. I’d take issue with the “distinguished” bit. Unless it means “distinguished by an astonishing black hole where his ethics ought to be”.

So when is the indictment Mr. Holder?

Nov 29 2011

Monopolies

mr money bagsIt’s a fundamental fact of economics that corporations and wealthy individuals do not aspire to free market competition which reduces their margins of profit and forces them to work hard to reduce the “uncertainty” that some upstart will out innovate them.  Instead they prefer the predictability of commercial monopolies enforced by the coercive power of a state monopoly of violence.  This is in fact one of the main themes of Adam Smith’s The Wealth of Nations.

As Lord Cutler Beckett put it- “It’s just good business.”

Thus it comes as no surprise to me, and I’m sure to Glenn Greenwald either, that in the age of the Internet, when ownership of a Press is practically free (ok, $15 a month but consider how much you spend on coffee, cable, or cell phone), establishment “journalists” celebrate a culture of secrecy accessible only though their personal contacts and Rolodexes.

It’s not as if they’re particularly bright, or prescient, or even good writers.  What else do they have to sell?

In economics this is called ‘raising barriers to competition’, on the Internet we call it ‘gatekeeping’.

So Cohen, as a journalist, must be furious about this systematic lack of accountability, transparency and democracy. After all, journalists – as they tirelessly tell everyone – are steadfastly devoted to those values; transparency for political officials is their North Star. Surely, nobody who would devote themselves to this profession would celebrate a President who drenches his entire foreign policy in secrecy – beyond any mechanism for democratic accountability – and who fights numerous covert wars without even any clear legal basis for doing so?

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(I)t’s simply a given that war with all of these Muslim countries, including Iran, is necessary and inevitable – despite the fact that none is attacking the U.S. or threatening to do so. Warring against all these countries is America’s imperial responsibility and exceptionalist right. The only question, then, is whether the wars will be fought (a) democratically, legally and out in the open, or (b) in secret, with no legal basis or democratic accountability. Cohen, the journalist, chooses (b).

As usual, American journalists are the leading proponents not of transparency but of secrecy, not of accountability but of covert decision-making in the dark, not of the rule of law but the rule of political leaders. As Cohen’s Washington Post namesake put it: “it is often best to keep the lights off.” That, with some exceptions, is the motto not only of The Washington Post but of American establishment journalism generally. That’s what NYU Journalism Professor Jay Rosen meant when he said that the reason we got WikiLeaks is because “the watchdog press died.” With some exceptions – some of this we have learned about from whistleblowers leaking to reporters, who then publish it – the American media does not merely fail to fulfill its ostensible function of bringing transparency to government; far beyond that, it takes the lead in justifying and protecting extreme government secrecy. Watching a New York Times columnist stand up and cheer for multiple covert, legally dubious wars and an underground foreign policy highlights that as well as anything one can recall.

…

It is indeed so very baffling. This is one of those bizarre mysteries of life: I find that the more you ponder it – as I’ve been so diligently doing ever since it was raised so powerfully by Jon Chait – the more inscrutable it actually becomes. Why in the world would any liberals possibly not find President Obama as dreamy as those long-time leading lights of liberalism, Jon Chait and Andrew Sullivan, do? There is no rational reason whatsoever for this disenchantment, this refusal to reverently stand and cheer for this great President. Why some liberals insist on complaining is such a deep and impenetrable puzzle that it makes one’s head hurt trying to understand it.

Nov 29 2011

Friend of the Environment

Report highlights Obama’s broken environmental promises

Posted by Suzanne Goldenberg, US environment correspondent, The Guardian

Monday 28 November 2011 17.37 EST

The steady stream of oil and coal industry lobbyists to Oira did not end when Bush left office – arguably it turned into a flood. Environmental regulations made up only 10% of Oira business in Bush’s time, but 36% of the office’s business was meeting with outside lobbyists.

Under Obama, Oira has dedicated more than half of its meetings, 51%, to discussing pending environmental regulations with industry lobbyists, the report says.

And for industry the meetings paid off – about as much under Obama as under Bush. Following those meetings with outsiders, Oira changed 84% of EPA rules during the Bush era. Depending on how you calculate it, the change rate was even higher under Obama. Oira changed 81% of environmental rules after meetings with lobbyists. But the change rate rises to 85% once all Oira decisions on environmental regulations are factored in.

…

Is there any chance that Obama is unaware of what Oira is up to? Rena Steinzor, the law professor at the University of Maryland who wrote the report, doesn’t think so. She notes that Sunstein is a longtime friend of Obama, who has for years advocated against government regulations.

Obama will have to own those decisions – and the failure to live up to his election promises of 2008 to run a government that made decisions based on science and expertise, not political calculus.

“To us this is a sharp departure from what we were promised when this president was elected,” Steinzor said. “From sound practice what we really want is for the experts to be making decisions at government agencies – the toxicologists, the pediatricians, the geologists. That’s what modern government is supposed to be about, not having the decisions made by an office that is not accountable for what it does.”

But it’s not just Cass Sunstein, It’s Aust(eri)an Goolsbee as well.

Goolsbee Says U.S. Opponents of TransCanada’s Keystone Pipeline Are Naive

By Sean B. Pasternak, Bloomberg News

Nov 28, 2011 2:12 PM ET

“It’s a bit naïve to think the tar sands would not be developed if they don’t build that pipeline,” said Goolsbee (former chairman of the White House Council of Economic Advisers), speaking today in Toronto at the Economic Club of Canada. “Eventually, it’s going to be built. It may go to the Pacific, it may go through Nebraska, but it’s going to be built somewhere.”

Oh, who’s being naive Kate?

The stranded oil sands: A worst-case scenario

Claudia Cattaneo, Financial Post

Oct 31, 2011 9:39 AM ET

“Everybody in the industry is thinking about this,” said Bob Dunbar, president of Strategy West Inc., an oil sands consultancy based in Calgary. “Keystone XL is not the only solution, but it is a very elegant solution and it really would have an impact on the industry if it doesn’t proceed in a timely way.”

…

Industry growth plans would also be in doubt. Aggressive expansions may be revisited if there is no way to sell the oil. According to a new study by international petroleum consultancy Purvin & Gertz Inc., existing pipelines to U.S. markets could run out of space by 2013 to 2016, depending on how quickly oil sands production grows. In fact, after looking at all pipeline options, the consultancy concluded that additional capacity would be needed to accommodate oil sands growth by 2017 to 2019, even if Keystone XL is in operation.

Keystone XL: Game over?

raypierre, RealClimate

2 November 2011

(O)il-in-place is not the same as economically recoverable oil. That’s a moving target, as oil prices, production prices and technology evolve. At present, it is generally figured that only 10% of the oil-in-place is economically recoverable.

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Currently, most of the energy used in production comes from natural gas (hence the push for a pipeline to pump Alaskan gas to Canada).

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A knock-on effect of oil sands development is that it drives up demand for natural gas, displacing its use in electricity generation and making it more likely coal will be burned for such purposes.

The evil twin of the Keystone XL oil pipeline

By Michael Byers, Salon

Saturday, Oct 15, 2011 11:59 AM

The U.S. State Department has accepted assertions that the production of heavy oil will increase regardless of whether Keystone XL is built, because the Northern Gateway pipeline would bring oil for shipment to China.

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Canadians know better. Although the Canadian government supports Northern Gateway, and the government-appointed National Energy Board can be expected to approve, the same cannot be said of the First Nations (i.e. indigenous peoples) living along its path.

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The Northern Gateway pipeline faces decades of litigation over indigenous rights before construction could begin. As former Canadian environment minister Jim Prentice told an Enbridge shareholder meeting in May 2011: “The reality on the ground is that the constitutional and legal position of the First Nations is very strong.”

In the 1970s, opposition from First Nations postponed a proposed natural gas pipeline in the Northwest Territories, initially for 10 years. Four decades later, the line still has not been built. In November 2010, Murray Edwards, the vice-chairman of Canadian Natural Resources Ltd., said securing the necessary consensus on the Northern Gateway project would be “just as challenging.” He described the proposal as “very, very difficult.”

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Fully 80 percent of British Columbians oppose Northern Gateway, and that public opinion has translated into political opposition. All four opposition parties in the Canadian Parliament – who together won 60 percent of the vote in the last federal election – are opposed to Northern Gateway and support an oil tanker ban.

Another proposal, to expand the capacity of a 50-year-old conventional oil pipeline from Alberta to Vancouver and use it for tar sands oil, is likewise dead.

The current pipeline, named “Trans Mountain” and owned by Kinder Morgan, ends at a terminal in Vancouver’s upper harbor. The oil must be offloaded onto tankers there, then shipped through the “Second Narrows,” a shallow strait that is subject to strong tidal currents, and confined by the piers of a railway bridge. The Canadian Coast Guard has assigned the highest possible navigational hazard rating to the bridge.

(h/t Think Progress)

Nov 28 2011

Viral Bank Fraud

$7.7 Trillion in unsecured loans to the Too Big To Fail Accounting Fraud Banks on which they generated $13 Billion profit from the float between their .01% (free) interest borrowing costs and the usurious amounts they charged their customers.

Which they promptly paid out in bonuses and dividends and didn’t use to deleverage the toxic waste they are still carrying on their books as assets at full fictional value instead of marking to market at the 50% discount it deserves.

Umm, this is not news.  It’s been blog reported for months now but perhaps this piece from Bloomberg with it’s fancy interactive graph will finally get it the attention it deserves.  I’ll note their headline is designed to minimize the amounts involved and point out the total-

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

Some reports from around the web-

Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up — a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported.

“Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?”

In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise — to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).

The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.

Nov 27 2011

Depends on your definition of the word- ‘Deepens’

The Tax Mess Deepens

By LAURA SAUNDERS, The Wall Street Journal

NOVEMBER 26, 2011

The tax code is wondrous for investors. Not only is the top rate on long-term capital gains 15%, but investors also can time gains and losses to minimize tax. Also, up to $3,000 of long-term losses can be deducted against ordinary income from wages or other sources, which are taxed at up to a 35% rate. Unused losses carry over to future years.

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The current top rate of 15% on long-term gains and dividends is a historic low, and a new 3.8% tax on net investment income is set to take effect in 2013 for many joint filers.

That tax will affect taxpayers with adjusted gross incomes of $250,000 or more (or $200,000 for single filers), and the levy applies to taxable interest, dividends, rents, some annuities, royalties and capital gains, including the sale of a house, after a $500,000 exclusion ($250,000 for single filers).

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Sole proprietors and other businesses reporting on Schedule C of a personal return should check expanded write-offs that become less generous at the end of 2011.

One provision allows an immediate deduction for up to $500,000 of qualified costs, which can be for a car, truck, computer, desk, chairs or other equipment, as long as it is purchased and placed in service before the end of the year. Small retailers may deduct up to $250,000 in leasehold improvements under this provision.

Another provision, “bonus” depreciation, is also changing. A favorite use is to take a full write-off of SUVs over 6,000 pounds in the first year.

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Despite rampant rumors, this area  (Estate and Gift Taxes) is expected to remain stable through the end of 2012. At that point, the estate tax is slated to snap back to its 2001 version, with a $1 million exemption per individual and a top rate of 55%.

That is far worse for taxpayers than current law, which has a gift- and estate-tax exemption of $5 million per individual and a top rate of 35%.

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Separate from the $5 million gift-tax exemption, any taxpayer may give anyone up to $13,000 of cash or property a year, free of gift tax. So if Ed and Edna have three married children and six grandchildren, they could give away up to $312,000 per year free of tax. If the property isn’t cash, the giver’s cost basis carries over to the recipient.

In one twist, some taxpayers use this provision to forgive up to $13,000 of intrafamily loans a year. In another, a taxpayer may bunch up to five years of such annual gifts-$65,000 per donor-in one contribution to a “529 plan” that will be used for qualified education costs. The giver may withdraw principal free of penalty if needed.

Nov 22 2011

Pobrecitos.

Que lastima.

Egyptian generals to cede power early

By Leila Fadel and Ernesto Londoño, The Washington Post

Updated: Tuesday, November 22, 1:21 PM

CAIRO – Egypt’s military chief announced Tuesday that the embattled armed forces leadership would hand over power to an elected president no later than July 1, 2012 – earlier than previously expected – even as he defiantly defended the military’s handling of mounting opposition protests.

In his first address to the nation since he took power in February, Field Marshal Mohammed Hussein Tantawi appeared angry, accusing protesters of “insulting” the military despite its efforts to govern the nation during a difficult transitional period. He warned  that “any other efforts aimed at hitting us and destroying our spirits and the trust between the armed forces and the people will not be helpful.”

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“We never killed a single Egyptian, man or woman,” Tantawi said in his speech. “The Egyptian military believes it is part and parcel of the Egyptian people.”

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As his speech ended, many protesters in Cairo’s Tahrir Square responded in unison with loud chants of “Get out! Get out! We will not leave! He will leave!”

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The pledge to hand over power to a civilian leadership was first announced by presidential hopeful Mohammed Salim al-Awaa after a meeting with the ruling generals. The promise marked the biggest concession by the military leadership since anti-government protests began last weekend, mushrooming into a national revolt.

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Awaa told the state-run news agency MENA that the generals agreed to halt the bloody clashes that have left at least 33 people dead, try individuals responsible for violence against protesters and release dozens of people arrested in the past four days.

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After emergency meetings with civilian political leaders, the military council also said it would accept the resignation of Egypt’s caretaker cabinet and institute a national salvation government, MENA quoted Awaa as saying.

The cabinet, which offered to resign Monday to protest the crackdown by security forces, is still waiting for a written response from the generals, a spokesman said.

Think it can’t happen here?  USA!  USA!

Nov 22 2011

“It’s a food product.”

Pregnant #OccupySeattle Protester Miscarries After Being Kicked, Pepper Sprayed

By David, Crooks and Liars

November 22, 2011 08:00 AM

Jennifer Fox, 19, told The Stranger that she had been with the Occupy protests since they started in Westlake Park. She said she was homeless and three months pregnant, but felt the need to join activists during their march last Tuesday.

“I was standing in the middle of the crowd when the police started moving in,” Fox recalled. “I was screaming, ‘I am pregnant, I am pregnant. Let me through. I am trying to get out.'”

She claimed that police hit her in the stomach twice before pepper spraying her. One officer struck her with his foot and another pushed his bicycle into her. It wasn’t clear if either of those incidents were intentional.

“Right before I turned, both cops lifted their pepper spray and sprayed me. My eyes puffed up and my eyes swelled shut,” Fox said.

Seattle Post-Intelligencer photographer Joshua Trujillo snapped a picture of Fox in apparent agony as another activist carried her to an ambulance.

…

While doctors at Harborview Medical Center didn’t see any problems at the time, things took a turn for the worst Sunday.

“Everything was going okay until yesterday, when I started getting sick, cramps started, and I felt like I was going to pass out,” she explained.

When Fox arrived at the hospital, doctors told her that the baby had no heartbeat.

“They diagnosed that I was having a miscarriage. They said the damage was from the kick and that the pepper spray got to it [the fetus], too,” she said.

“I was worried about it [when I joined the protests], but I didn’t know it would be this bad. I didn’t know that a cop would murder a baby that’s not born yet… I am trying to get lawyers.”

Yup.  Culture of Life.  Fetuses are people too, except when Corporate ‘People’ use their Police to kill them.

Dirty Fucking Hippy.

Nov 22 2011

Tahrir Square

24 dead in 3 days of Cairo anti-military protests

By MAGGIE MICHAEL, Associated Press

34 minutes ago

The night before saw an escalation of the fighting as police launched a heavy assault that tried and failed to clear protesters from the square. In a show of the ferocity of the assault, the death toll leaped from Sunday evening until Monday morning. A constant stream of injured protesters – bloodied from rubber bullets or overcome by gas – were brought into makeshift clinics set out on sidewalks around the square where volunteer doctors scrambled from patient to patient.

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(T)he vote has been overshadowed by mounting anger at the ruling Supreme Council of the Armed Forces, which will continue to hold power even after the vote. Activists accuse the generals of acting increasingly in the same autocratic way as Mubarak’s regime and fear that they will dominate the coming government, just as they have the current interim one they appointed months ago.

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“What does it mean, transfer power in 2013? It means simply that he wants to hold on to his seat,” said a young protester, Mohammed Sayyed, referring to the head of the Supreme Council, Field Marshall Hussein Tantawi.

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“I will keep coming back until they kill me,” he said. “The people are frustrated. Nothing changed for the better.”

CLGC Memo (.pdf)

Video continues after commercial break.  You have to pause manually.

U.C. Davis Calls for Investigation After Pepper Spraying

By BRIAN STELTER, The New York Times

November 19, 2011, 7:44 pm

In one of the videos, the officer steps over a line of seated protesters, holds the pepper spray bottle in the air, then sprays it in the protesters’ faces in a coordinated fashion as eyewitnesses gasp and shout, “Shame on you.” Most of the protesters remain seated; police officers then forcibly remove and arrest them.

In a video taken from another direction, two officers can be seen dousing protesters with pepper spray at the same time. Though not visible in the videos, the operator of the Facebook page for the Occupy U.C. Davis organization claimed that one police officer “shoved a pepper spray gun down a student’s throat and pulled the trigger.” On Saturday afternoon, the Facebook page announced that protesters would be working with attorneys to pursue legal action.

…

A spokesperson for the U.C. Davis police did not respond to a request for comment Saturday. Annette Spicuzza, the U.C. Davis police chief, told The Sacramento Bee that the officers used pepper spray on Friday because the police were surrounded by students. “There was no way out of that circle,” she told the newspaper. “They were cutting the officers off from their support. It’s a very volatile situation.”

The videos, however, show officers freely moving about and show students behaving peacefully. The university reported no instances of violence by any protesters.

Eyewitnesses uploaded their recordings late Friday. In a statement on Saturday that acknowledged the role of the eyewitnesses in raising awareness about the police’s behavior, the university’s chancellor, Linda P.B. Katehi, said she was saddened by “the events.”

Nov 21 2011

Good.

Foreclosure Firm Steven J. Baum to Close Down

By PETER LATTMAN, The New York Times

November 21, 2011, 2:51 pm

On Saturday, Joe Nocera, The Times columnist who originally wrote about the firm’s Halloween party, published another column about the controversy. In it, he quoted an e-mail that Mr. Baum had sent him last week.

“Mr. Nocera – You have destroyed everything and everyone related to Steven J. Baum PC,” said the letter. “It took 40 years to build this firm and three weeks to tear down.”

Good.  Mr. Baum, you are a heartless sack of shit and your firm and its employees are lying perjurers.  I hope you rot in a cell for the rest of your life, penniless and forgotten like the scum you are.

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