Update no.384

Update from the Heartland
No.384
20.4.09 – 26.4.09
Blog version: http://heartlandupdate.blogspot.com/

To all,
The follow-up news items:
-- Representative Jane Lakes Harman of California was outraged that her telephone conversations were wiretapped [210, 216, et al]. Problem is I am fairly certain (innocent) Jane was not a target; the USG has been recording an investigative target – American Israel Public Affairs Committee (AIPAC) [229] and the principles, Steven J. Rosen and Keith Weissman. She jumped into the trap. And, she should have known better. Those guys were prosecution targets, for goodness sake. And now, the Obama administration is apparently dropping charges against the AIPAC agents. I can’t imagine why! Could it be that the administration seeks to avoid exposing Harman to public wrath for interfering with a Federal investigation / prosecution?
-- The New York Times claims to have accomplished an examination of materials that shows an extraordinary consensus among cabinet members and lawmakers in 2002, embracing brutal interrogation methods [126, 133, et al], and then, goes on to suggest that none of the officials had studied the “gruesome origins of the techniques.”
-- Spain's Attorney General Cándido Conde-Pumpido has rejected an attempt to bring a criminal case against six former U.S. officials accused of giving a legal justification for harsh interrogation techniques at the Guantánamo Bay detention facility [381]. He declared the case had “no merit.” I expect Attorney General Holder will arrive at the same conclusion. For more on this topic, see below.
-- Six months after the Connecticut Supreme Court issued its Kerrigan v. Commissioner of Public Health [SC CT 17716 (2008)] [357] ruling, the Connecticut General Assembly voted (Senate: 28-7; House: 100-44) to update the state's marriage laws to conform with the landmark Kerrigan ruling, allowing gay and lesbian couples to enjoy the full status of secular marriage. Governor Mary Jodi Rell (born: Mary Carolyn Reavis) signed the bill into law on Friday.

On Thursday, the Federal Food and Drug Administration (FDA) issued the government’s decision to allow the Plan B, so-called “morning after,” pill to available to 17-year-olds without a doctor’s prescription. While I generally favor a woman’s right to choose what is best for her body, I must say the FDA’s action is wrong. I continue my campaign to enhance parental accountability up to the age of consent. I would prefer the FDA recognize the states’ rights to define the age of consent for its residents. The FDA’s action undermines parental responsibility and accountability, and thus does NOT serve the interests of individual citizens or the common public good.

The Obama administration declared a national “public health emergency” for the outbreak of mutated swine influenza. Secretary of Homeland Security Janet Ann Napolitano described the declaration as “standard operating procedure” to enable federal and state governments broader access to medical information and medicines. Acting Director of the Centers for Disease Control Richard E. Besser, MD, expects wider and more severe infections. This outbreak reportedly began in Mexico City and spread by international travelers. So far, 20 cases have been identified in the U.S.

The continued disclosure by the Obama administration of Bush era sensitive memoranda has returned the United States national intelligence interrogation techniques to the forum of public debate. I suppose the first chunk of OLC (Office of Legal Counsel, Department of Justice) memoranda [381] did not cause quite enough stir. The President released another batch of Bush administration OLC memoranda on Thursday, 16.April.2009, and then vacillated between first not to prosecute and then maybe to prosecute . The principle memorandum sparking all these convulsions appears to be an 81-page epistle from Deputy Assistant Attorney General John C. Yoo to William J. Haynes II, General Counsel, Department of Defense; subject: Re: Military Interrogation of Alien Unlawful Combatants Held Outside the United States; dated: 14.March.2003; originally classified: SECRET/NOFORN and declassified: 31 March 2008. At the heart of U.S. law regarding harsh interrogation techniques is the United Nations Convention against Torture and other Cruel, Inhuman, or Degrading Treatment or Punishment (CAT) that was signed on 18.April.1988, and ratified by the U.S. Senate on 21.October.1994. The United States enacted the treaty principles into law by the War Crimes Act of 1996 [PL 104-192; 18 U.S.C. § 2441] {WCA}. Then, we have this little disturbance I commonly refer to as the War on Islamic Fascism, and of course, traitorous citizens entrusted with protecting this Grand Republic and our national secrets, disclosing classified material to the New York Times, which in turn apparently felt no obligation toward national security. So, the Times and now the Obama administration generously gave us lemons, now let’s enjoy making lemonade. Before we get into the specifics, we should remind ourselves of the difference between combat and intelligence operations, between tactical and strategic intelligence activities. As with virtually everything legal, we boil the whole brouhaha down to words and definitions. On this topic, CAT as well as the associated WCA rests upon our interpretation of “cruel, inhuman, or degrading treatment or punishment.” Each of us can define what we believe is the threshold for each key word. Yet, there are other contextual factors that are not mentioned in the language of the law. Yoo spent some pages discussing the status of captive battlefield combatants in the current War on Islamic Fascism versus Geneva Convention defined prisoners-of-war. In this aspect alone, the current captives enjoy no official recognizable definition or protection. While Yoo addresses the potential for Fifth, Eighth and Fourteenth Amendment constitutional protections to the captives, he does not discuss the difference or applicability between judicial prosecution and intelligence collection, with respect to special interrogation procedures. It is important to note at this point that special techniques are not appropriate for general application, to every captive; however, they are often required to obtain formation possessed by high-value captives like Khalid Sheik Mohammed (KSM). Another key factor missing from the public debate is the national defense aspect covered in detail by the Yoo memorandum. As Yoo accurately notes, “Because of the secret nature of al-Qaeda’s operations, obtaining advance information about the identity of al-Qaeda operatives and their plans may prove to be the only way to prevent direct attacks on the United States.” The Yoo memorandum illuminates legal jurisdictions divided into three major areas for application of U.S. law, and international law to which the U.S. subscribes:
1. Territorial, i.e., the United States of America and it territories,
2. Special Maritime and Territorial Jurisdiction, i.e., U.S. military bases, naval ships, and diplomatic missions outside the U.S., or
3. All others, i.e., foreign countries and the high seas.
The Guantanamo detention facility falls within Category 2, while the CIA’s foreign detention sites are clearly Category 3 locations. It should be no surprise to anyone that the CIA chose foreign sites to conduct vital interrogations. Taken farther, the whole issue of legal jurisdiction in the interrogation debate is exactly the same argument involved in the piracy problem – extraterritorial jurisdiction. Also, international law, to which the United States subscribes, e.g., the Geneva Convention, addresses treatment of civilians, prisoners of war, and even spies, but it does not cover extra-national, battlefield combatants. The question of torture depends on the definition. Some citizens define torture as anything that exceeds domestic criminal interrogation techniques; while other citizens define torture as activities that cause permanent injury. Further, so much hangs upon broader central questions:
1. Is the United States at war?
2. What rights, if any, do extra-national, non-military, battlefield combatants have?
3. Is there a difference between domestic criminal and national intelligence interrogation?
4. Is there a difference between tactical military and strategic national intelligence interrogation?
Once those questions have been answered, we can then define what treatment battlefield combatants in the War on Islamic Fascism can be subjected. For the national security intelligence collection venue, there must be an inducement – encouragement – for the target captives to divulge the information they possess. Let us not forget that information derived from battlefield combatants is always treated as unreliable, by the very nature of its collection. Interrogation information is placed into context with a wide variety of other information to develop a picture – connect the dots. How then do we differentiate between “cruel, inhuman, or degrading treatment or punishment” and necessary encouragement for high-value captives to divulge the information they possess? Clearly, to me, what we saw in those infamous images of Abu Graib activities was NOT appropriate for common captive battlefield combatants. And, while the law may allow procedures up to and including death for captives believed to possess information of high threat to the United States, I restate my definition; interrogation techniques for high-value, national security, battlefield combatants should not cause death or permanent injury (physical or mental) [133]. Given this definition, our warriors would be subjected to the same processes, if any became a prisoner of war. I note for the record, the training for American military aviators, to prepare them for the potential of capture, was far worse than the commonly accepted techniques used by police in criminal prosecutorial investigations. Using enhanced intelligence interrogation techniques in excess of civil prosecutorial interrogation procedures, limitations and guidance may well taint or otherwise compromise any judicial prosecution of individual(s) subjected to intelligence collection interrogation processes. Further, intelligence interrogation is NOT punishment; there have been no criminal charges, only the capture of a battlefield combatant, who possesses information regarding enemy personnel, operations, procedures, processes and thinking. We are not talking about the common fighter, but rather the leaders who conceive and direct operations. What captives at Abu Graib were subjected to in 2003 was wrong. What KSM was subjected to at some undisclosed CIA site was not wrong. All that stated, I must proclaim that displaying our human intelligence means & methods in court, in the Press, in any public forum is societally suicidal . . . and, I do mean that literally. The New York Times was wrong in the worst and most corrosive way when they publicized the various elements of our national defense operations from naïve accusations regarding the use of torture to the NSA electronic surveillance effort. And, I must ask: if we wish to treat our enemies with milk & cookies, then what, pray tell, is the inducement for a high-value captive to offer up the information we seek? This is what happens when citizens contemplate the rigors of war, especially those citizens who believe war is never necessary, and who believe making nice with our enemies should be sufficient for all of us to live in peace & harmony. Lastly, to suggest what John Yoo wrote in his examination of the law regarding the application of harsh interrogation techniques is somehow criminally prosecutable is wrong and highly corrosive to the proper public debate. I know this is not a pleasant topic for social discussion, yet, if we are going to pass laws restricting the use of such techniques or prosecute any of those involved from Yoo to the field operatives, then we must understand the validity and consequences of such actions.

News from the economic front:
-- The Wall Street Journal reported on their analysis of Treasury Department data, showing the banks that were the biggest recipients of TARP funds, made or refinanced 23% less in new loans in February than in October, the month the Treasury initiated the Troubled Asset Relief Program, despite government efforts to support the financial sector.
-- Bank of America’s 1st Quarter net income rose to US$4.2B, buoyed by contributions from Merrill Lynch, which the bank closed on its acquisition in January. The results include a US$1.9B pretax gain on the sale of China Construction Bank shares, and US$2.2B in gains from Merrill Lynch structured notes. Credit quality continued to deteriorate across all lines of their business as housing prices continued to fall and unemployment rose, leading to higher losses in almost all consumer areas. The company cautioned that the bank continues to face extremely difficult challenges ahead.
-- The Washington Post reported that Chrysler Financial refused a US$750M government loan because executives didn’t want to be constrained by new federal limits on compensation. Interesting, but perhaps moot.
-- David B. Kellermann, 41, acting chief financial officer of Freddie Mac, apparently committed suicide in his Northern Virginia home Wednesday morning. Kellermann had been Freddie Mac’s chief financial officer since his appointment by the government last September – apparently another casualty of the financial crisis.
-- Chancellor of the Exchequer Alistair Maclean Darling believes the economy will start to recover later this year, however, massive borrowing is likely in coming years, reflecting the cost of the downturn. In his annual budget statement, Darling forecast that net borrowing may reach £606B (US$890B) by the FY2013, an increase of £226B from last November’s pre-budget report projection. He also announced a series of tax increases on higher income earners to help rein in the deficit – not a positive sign.
-- Following investigatory probes by New York Attorney General Andrew Cuomo and the SEC into an alleged kickback scheme involving the state’s US$122B pension fund, New York State Comptroller Thomas P. DiNapoli banned the involvement of placement agents, paid intermediaries and registered lobbyists in investments by the pension fund.
-- The National Association of Realtors (NAR) reported that existing-home sales dropped 3.0% to a 4.57M annual rate in March from 4.71M in February, and the median price was down 12% from a year earlier. The NAR originally reported February sales rose 5.1% to 4.72M [380]. About 50% of the March sales were foreclosures and short sales.
-- Bank of America CEO Ken Lewis told New York Attorney General Cuomo that then-Treasury Secretary Paulson and Federal Reserve Chairman Bernanke pressured him in December not to discuss issues with its then pending purchase of Merrill Lynch. The statement touched off a “who shot John” volley of broadsides between Lewis and Bernacke. Ah yes, it is only usual for leaders to deflect or spread the blame.
-- As the results of the government’s stress test of banks becomes public, the Federal Reserve announced that any bank directed to raise new capital as a result of the exercise should not be viewed as insolvent or unviable – managing the after-shocks, it seems to me. On Friday, the Fed released the methodology used for the stress test, as bank executives huddled with Fed officials to go over their results. The Fed is sharing with the banks how much capital each company might need to raise to satisfy regulators that they can continue lending, if the economy worsens significantly next year. Banks will have several days to challenge the findings before the government makes results public, week after next.
-- The United Auto Workers (UAW) union announced it has reached a concession agreement with Chrysler, Fiat and the USG. The union said the deal is painful but takes advantage of the second chance the company was given (more properly, the third or fourth chance for Chrysler). The union deal means the company has cleared another major hurdle as it races toward a Thursday deadline to restructure and sign an alliance with Italy's Fiat.

The Blago Scandal [365]:
-- Judge James B. Zagel, U.S. District Court, Northern District of Illinois, refused to modify the terms of Blago’s bail to allow him to leave the United States, to participate in a reality TV dream show in the jungle of Costa Rica. If I had not seen this news item in multiple Press sources, I would have thought it some hoax. Blago needs a real healthy dose of reality – not the faux-reality of television. Blago seems to be a few cards short of the full deck. What on Earth was he thinking?

Comments and contributions from Update no.383:
“Definitely congrats to the Navy SEALs. I've heard lots of things about the training they go through, and the marksmanship needed to just get into that unit, or any other unit, let alone specialize as a sharpshooter. Hats off to those guys. I think it speaks volumes of the character of this nation that so many people put themselves at risk to save the life of a single person they don't even know. This is the sort of thing our President should hold up as an example of the goodness of America, instead of apologizing for our actions to the world's elitists and thugs. It would be nice to think Obama would have the backbone to send a couple carrier battle groups and a ton of marines to East Africa to irradiate as many pirate strongholds as we could. Unfortunately, I won't hold my breath.
“The release of those ‘torture’ memos frustrates me to no end. I find it amazing that so many on the left and in the mainstream media freak about things like sleep depravation, slapping and putting a bug in someone's room. This is torture? What about all the stuff al Qaeda and all the other terrorist groups have done? Beheadings? Burning people and hanging their bodies on a bridge. Where's the outrage from the so-called human rights groups on that? Why do so many people have problems calling these people what they are? Evil! I honestly couldn't care less if these scumsuckers experience some discomfort, which, as ex-VP Dick Cheney said, produced information that saved lives. Obama seems more concerned with making nice with people who don't like us than protecting the citizens of this country. And I just have a feeling guys like Chavez, Castro, Grand Dear Leader Umpa-Lumpa, et al are laughing behind closed doors when they think about Obama's flowery rhetoric. I really fear for our national security over these next four years.
My response:
Indeed. Thank goodness there are citizens willing to endure the rigors of special operations training and service to this Grand Republic anonymously, with only collective recognition. The lads did a magnificent job. I also think we should offer our congratulations and gratitude to all those service personnel involved in the interdiction and rescue, and especially Commander Frank Castellano, USN, Captain of the USS Bainbridge, who took a potentially career-ending risk in green-lighting the termination event. Magnificent performance, all the way around!
Releasing the OLC memos in the middle of the War on Islamic Fascism was foolishness in the extreme. My cynical side thinks this move was intended to placate the uber-Left. It certainly did not enhance national security. On the flip-side, as an enthusiastic historian and unrepentant opinion-provider, I read the memoranda with interest and curiosity. We have discussed the definition of “torture” in this forum. Let it suffice to say that I do NOT agree with the uber-Left’s notion of what torture is. I doubt we are going to enhance that definition in the next four years; we are headed toward the uber-Left’s feeling that we need a milk-n-cookies, big-screen-television treatment of battlefield combatants. I repeat my condemnation of these naïve, feel-good, concepts of warfighting. The only benefit I see beyond making some of our citizens feel better about killing our enemies appears to be encouraging our enemies. To me, discussing these warfighting processes in public is like telling the Germans of our intention to land at Normandy – just to make sure it’s a fair fight – more blood of patriots will be sacrificed to appease the uber-Left.

My very best wishes to all. Take care of yourselves and each other.
Cheers,
Cap :-)

Update no.383

Update from the Heartland
No.383
13.4.09 – 19.4.09
Blog version: http://heartlandupdate.blogspot.com/

To all,
This weekend, we rented a 12-passenger van, gathered up the half of the family in Kansas, and trundled down to Austin to celebrate our youngest grandchild’s 2nd b-earth-day – Judson James – who put on a heroic demonstration of how will power can defy total exhaustion. We also celebrated Tyson’s 30th B-day. Thank you, Melissa & Tyson! Well done! So, if I am a little late distributing this Update, which I most likely will be, please accept my most humble apology, but family first.

The follow-up news items:
-- We learned more about the rescue of Captain Phillips [382]. Three Navy SEAL marksmen lay on the fantail of the Bainbridge with as yet unspecified weapons, waiting patiently for an instant in time. The Bainbridge rolled in Sea State 3 swells, at night, with the Alabama lifeboat bobbing at the end of a 100 meter towline behind the warship. Then, the instant the shooters sought arrived. Three, virtually simultaneous shots – three dead pirates! The fourth pirate, who had been medically treated on the Bainbridge and had been negotiating for the release of his comrades, instantly had his situation change – no way out. I trust the hapless 4th bad guy will never feel sunshine again, for the rest of his natural life . . . that is unless we find the courage to exterminate the vermin. Anyway, that was not my point here. For those who are familiar with precision marksmanship, we need no words to appreciate what those shooters accomplished. For those who may not be aware of such skills, to me, the most incredible aspect of this event was the timing & coordination between those three men, to ensure all three bad guys ceased to exist at virtually the same instant. That coordination of their individual actions is nothing short of awesome. Congratulations lads. Well done!
[SIDENOTE: At times like these, I am reminded of General “Black Jack” Pershing, USA, and his handling of the Moro uprising in the Philippines after the Spanish-American War. Taking a lesson from Pershing’s playbook, and from another professional forum, we could have handled this episode differently, to send a far more poignant message to the Somali pirates in general. Imagine if you will . . . what if we negotiated the release of the pirates in exchange for Captain Phillips and allowed the pirates to be retrieved by their mother-ship. Then, as the pirate-ship returned to port, with their comrades on the shoreline, cheering in celebration of their successful smack-down of the Americans, and after passing the channel buoys leading into the harbor, we delivered two (2) Mk-84 LGBs (2,000 lbs. High Explosive, LASER-guided bombs), impacting amidships and at the bridge, sinking the bloody thing in full sight of the waiting crowd. Done properly, the wreckage would block the harbor entrance. Perhaps a more punctuated message – if you want to play, we can play!]
-- The appointed, Minnesota, three-judge panel assessing the senatorial election results has ruled in favor of the challenger Al Franken [369, 381]. The incumbent, Norm Coleman, is expected to appeal to the state supreme court, and losing that appeal, to the U.S. Supreme Court. I doubt the results will change. This will be over, someday.
-- After defying the civilized world, the DPRK launched their rocket [198, 239, 381]. The UN Security Council condemned the provocative action. Of course, pouty little Grand Dear Leader Umpa-Lumpa got all huffy about anyone objecting to what he wanted to do, so he expelled International Atomic Energy Agency inspectors, restarted their 5MW Experimental Nuclear Reactor Plant and the Nuclear Fuel Fabrication Plant at Yongbyon, and suggested they were going to initiate plutonium enrichment, again. This is the character who threatens hope for peace.
-- The Obama administration has reportedly drafted new regulations that would limit Federal funding of scientific research with human embryos donated at fertility clinics. We need to see more of the new regulations.

On Thursday, as he headed down to Mexico enroute to Trinidad for the Americas Summit (minus Cuba), President Obama announced the government would not prosecute CIA operatives involved in the interrogation of battlefield combatants, captured during the War on Islamic Fascism. The administration released another bunch of Bush-era memoranda (reportedly over 1,000 pages) to satisfy an American Civil Liberties Union (ACLU) Freedom of Information request. I have only recovered one of the additional memoranda – an 81-page Yoo epistle on interrogation, so far – and have not completed reading the document. Based on Press reporting and my reading to date, public disclosure of these documents is an extraordinarily foolish and naïve thing to do. I am all in favor of openness in government, but these are not ordinary times. We are at war, regardless of what the uber-Left wishes to think. This is not some civic governance exercise.

This little tidbit will appear rather odd, since I have not followed through to a logical grounding. The following New York Times Book Review triggered a few thoughts I wanted to jot down.
“Genealogies of Morals”
by Charles R. Morris
New York Times
Published: April 10, 2009
http://www.nytimes.com/2009/04/12/books/review/Morris-t.html?8bu&emc=bua2
As you will note, the review involved this new book:
Neuhaus, Richard John. American Babylon: Notes of a Christian Exile. New York: Basic Books, 2009.
I have not yet read the book, but the review was sufficient ta get me ta thinkin’. I have railed against the infringement upon our freedoms by the moral projectionists in our society. Such statements tend to imply that morals in politics or the law are not good. I freely acknowledge my zealous pursuit of societal respect for a citizen’s fundamental right to privacy, broad tolerance of each citizen’s freedom of choice, and government’s proper place in the public domain and out of the private affairs of citizens. As a consequence, my words are occasionally interpreted as anti-religion, or perhaps at best, as ambivalence toward religion. Then, as I was ruminating over the central philosophical question, our local newspaper – Wichita Eagle – offered this modest blogger snippet:
“Brownback: Faith helped make America strong”
by Rhonda Holman
Wichita Eagle
Published: 14.April.2009
http://blogs.kansas.com/weblog/2009/04/brownback-faith-helped-make-america-strong/
Rhonda quoted Senator Sam Brownback of Kansas, “America has always been, and remains, a deeply religious nation. At our best, we live up to our national ideals of defending the equality and dignity of each and every human life. Public policy decisions are all about deciding what type of nation we shall be. And the sacredness of the human person is a principle that tends to get lost in that decision-making process as societies become more secular.” Brownback’s opinion fairly well represents the extraordinary challenge confronting mankind for centuries – since in part from the Magna Carta (1215), the Petition of Right of 1628, John Milton’s Areopagitica (1644), the English Bill of Rights of 1689, John Locke’s Two Treatises of Government (1689), and of course the Declaration of Independence (1776), et al – the tension between the citizen and government, and the relationship between religion and the secular State. Religion has served many functions in history . . . for millennia – civilizing mankind, blossoming of the arts, the basis for law, and establishing moral values essential to life. Yet, religion has also been one of the most powerful forces of destruction on this planet, largely due to parochial self-interest. Thinkers and philosophers in history sought the balance between those often conflicting forces. The struggle continues to this day. While I broadly agree with Brownback, I respectfully and strongly disagree with his application of that faith in law and politics. Like all Americans, I staunchly believe in “the sacredness of the human person,” yet I fundamentally disagree with his notion that we have “lost” our humanity in our societal decision-making. Half of the Judeo-Christian Ten Commandments deal with faith – the relationship between the individual and God– while the other half (for the most part) address public conduct – the relationship between individuals. “Thou shalt not murder . . . or steal,” et cetera. Those principles are essentially respect for others. Like most freedom-loving people, I want proper laws to establish order, discipline and acceptable public conduct, hopefully to help provide an encouraging environment for peace, prosperity, and our individual “pursuit of Happiness.” What I do not want is government intrusion upon and encroachment of each citizen’s fundamental right to privacy and their freedom of choice regarding their private affairs. The exception to the last point comes when there is harm or injury to others, i.e., a citizen’s individual freedom does NOT offer license to harm others or impose upon another person’s freedom. Then, of course, as is often the case with social questions, we must address the conflict of the grey areas – the intersections of public and private rights. So it is with the abortion issue – the clash between a woman’s private right to choose what she wishes to do with her body and the projected rights of a single cell with the potential to become a human being. Then, we embroil the Court within this debate by its landmark case -- Roe v. Wade [410 U.S. 113 (1973)] [319] – with one side viewing it as Court-sanctioned abortion, and the other side seeing it has validation of a citizen’s fundamental right to privacy (and control over our body). Both sides are wrong; and, stability can only come from compromise, moderation, and recognition of the rights of others.

Four (4) retired general officers – founders of an organization known as Flag and General Officers for the Military – wrote a opinion regarding the potential service of homosexuals in the military.
“Gays and the Military: A Bad Fit”
by James J. Lindsay, Jerome Johnson, E.G. “Buck” Shuler Jr., and Joseph J. Went
Washington Post
Published: Wednesday, April 15, 2009; Page A19
http://link.email.washingtonpost.com/r/F490YD/LQR5W/IYEU66/CWZZSW/4CDJK/VU/h
Needless to say, these retired officers argue forcefully against the military service of homosexuals. They wrote, “With the nation engaged in two wars and facing a number of potential adversaries, this is no time to weaken our military. Yet if gay rights activists and their allies have their way, grave harm will soon be inflicted on our all-volunteer force.” The catalyst for their opinion statement was introduction of H.R.1283 – titled: Military Readiness Enhancement Act of 2009 – which is an attempt to modify the “Don't Ask, Don't Tell” policy passed as part of the National Defense Authorization Act for Fiscal Year 1994 [PL 103-160; 10 U.S.C. §654] [312]. The arguments against such reform presented by Lindsay et al have the exact same ring as arguments made 40 years ago against racial integration or against gender integration 30 years ago; and, those arguments have absolutely nothing to do with performance – solely, the social perception of such integration. Heck, I had similar reservations and wrote an essay to document my opinion in 1998 [see: http://www.parlier.com/web1p03w.htm#gender]. My opinion has changed. I think General Shalikashvili is correct [265, 312], and General Lindsay is not. The arguments against homosexuals serving honorably in the military are specious and based on perceptions, rather than reality or actions. Once again, I must say, let us move passed our perceptions and deal with facts. The integration of homosexuals (or rather the broader non-heterosexuals) is not particularly different from racial and gender integration. The military should implement a similar service-wide training program to allay concerns, enhance tolerance, and work to achieve proper integration. The military is a special class, but not that special. Let us mature as a society and shed our traditional homophobia.

News from the economic front:
-- The investment bank Goldman Sachs posted a 1st Quarter profit of US$1.8B, and announced a US$5B public stock offering, intended to raise sufficient money to pay off the Federal TARP funds (and get out from under the government’s thumb). Another positive sign, I would say.
-- The President appointed Herbert M. “Herb” Allison, Jr. – the government appointed CEO of Fannie Mae – to supervise the US$700B Troubled Asset Relief Program (TARP).
-- The Commerce Department reported U.S. retail sales that unexpectedly decreased 1.1% during March (compared to the prior month), when economists expected an increase of 0.3% -- a shadow on the recovery.
-- The computer-chip maker Intel reported 1st Quarter net income fell 55% on lower sales and margins, however the company indicated that PC sales appeared to have bottomed out during the quarter and that the industry is returning to normal seasonal patterns – a positive sign of recovery.
-- The Wall Street Journal reported that eBay plans to spin off its Web-calling service Skype and initiated plans for an IPO in early 2010. The company thinks that “Skype has limited synergies” with the core eBay auction service and PayPal payment arm.
-- AT&T’s exclusive deal to carry Apple’s iPhone in the U.S. expires next year. The companies are in negotiations to get an extension until 2011. AT&T is attempting to transform itself amid the crumbling U.S. landline phone business and rapidly mutating wireless market.
-- The Obama administration has been conducting a stress test of the U.S. banking system and is expected to disclose the state-condition of the 19 biggest banks in the country, as it tries to restore confidence in the financial system without unnerving investors. Talk about a balancing act!
-- The Labor Department reported the consumer price index (CPI) slipped 0.1% in March from February, pretty much in line with economist forecasts. The core CPI, which excludes food and energy prices, was up 0.2%, slightly greater than expected. Oddly, an 11% rise in tobacco prices [why is it I suspect taxes] accounted for much of the rise in the core index. The year-over-year CPI decreased 0.4% – the first annual decline since August 1955.
-- The Fed Reserve’s Beige Book compiles reports from the 12 regional Fed banks and indicates the recession deepened further through early April. Yet, 5 of 12 districts reported positive signs that economic activity in some sectors was starting to stabilize. All districts reported troubled labor markets.
-- General Growth Properties – the shopping mall developer and owner – filed for Chapter 11 bankruptcy protection in one of the largest real-estate failures in U.S. history, as the company staggered under the crushing US$27B debt load, stemming from past acquisitions.
-- J.P. Morgan Chase reported 1st Quarter net income of US$2.14B (down 10%) on revenue of US$25.03B (up 48%) from a year earlier, better than analysts’ expectations. The bank noted their extension of approximately US$150B in new credit to consumer and corporate customers during the quarter.
-- The Wall Street Journal reported Google’s 1st Quarter net income rose 8.9% on higher year-over-year revenue, though a broad slump in advertising spending slowed the company’s growth.
-- Steven Lawrence “Steve” Rattner, leader of the auto task force, was one of the Quadrangle Group’s executives involved with payments now under scrutiny in a state and federal probe into an alleged kickback scheme at New York state’s pension fund.
-- Names to watch . . . Danny Pang – a California money manager – and his investment company – Private Equity Management Group Inc. (PEMGroup). The Wall Street Journal reported that Federal criminal and civil investigators are looking into a range of anomalies with his business and financial activities. We may add his name to the rogues’ gallery blooming from the current economic situation.
-- Citigroup posted 1st Quarter net income was US$1.59B, compared with a prior-year net loss of US$5.11B, on revenue that nearly doubled to US$24.79B – its first profit in 18 months – on the backs of 13,000 job cuts and continued efforts to build loan-loss reserves.
-- The U.S. Environmental Protection Agency (EPA) issued a finding that carbon dioxide (CO2) and other greenhouse gases pose a danger to the public. Unless superceded by congressional action or the courts, the EPA finding may be the tell-tale retreating shoreline in advance of a regulatory tsunami, putting stricter emissions limits on a wide range of enterprises from power plants and oil refineries to automobiles and cement makers. So it begins.

L’Affaire Madoff [365]:
-- Judge Louis L. Stanton, U.S. District Court, Southern District of New York, rejected the government’s strong objections and removed a legal obstacle to Bernie Madoff filing for bankruptcy. I have not studied the law or read the judge’s ruling, but from a public perspective, I am with the Federal prosecutors on this one. The injection of the bankruptcy court into the recovery process of stolen assets makes the government’s efforts all the more difficult. There will be more to this story.

The Blago Scandal [365]:
-- On Tuesday, impeached and convicted, former Illinois governor Rod Blagojevich pleaded not guilty at his arraignment on Federal corruption charges. Of course he would; there is no hope of Blago gaining integrity and honor. The other defendants in this sordid case —former chief of staff John Harris, former chief fundraiser Christopher G. Kelly, and Springfield millionaire William Cellini — also pleaded not guilty at their arraignment on Thursday. Former campaign manager Alonzo Monk is expected to be arraigned next week. Both Harris and Monk are reportedly cooperating with the prosecutors, which does not bode well for Blago. Well, at least he is trying to eek out his last few months of the pleasures of freedom before he becomes a guest of the State.

Comments and contributions from Update no.382:
“Regarding J.Ezra Merkin, he should go to jail, as well. As Dave Barry [in the NY Times] says, ‘You can't make this stuff up!’ Not only was Merkin getting financial advice from a felon serving time in prison, but he ignored the one piece of that he should have taken. The felon, a Victor Teicher, who had been convicted of securities fraud, told Merkin that Madoff's trading results were impossible to achieve. Amazing, Merkin was getting investment advice from a guy in prison and he ignored the best advice given.
“Merkin is in serous kim-chee for taking big bucks to reputedly do ‘due diligence’ on investments, only to simply had the funds with which he had been entrusted over to good ol’ Bernie. In a related matter, NYU, which is suing Merkin for his vaporizing US$24M of the school’s endowment, is seeking to get documentation of conversations with Merkin, which purportedly have him saying that he would do the due diligence AND invest in a broad array of stocks. Stay tuned. The Wheels of Justice grind slowly, but they do grind. Some legal experts think Merkin will be involved in civil lawsuits for decades, if not for the rest of his life.
My reply:
The best I can hope for is Merkin and the others join Bernie, and they all get to enjoy being some big bubba’s prison yard love-buddy.

[NOTE: the blog received a very long diatribe from an anonymous contributor regarding the current economic situation, the recovery efforts, and the State of the Nation. It is too long to reprint here, as is usually the custom.]

My very best wishes to all. Take care of yourselves and each other.
Cheers,
Cap :-)

Update no.382

Update from the Heartland
No.382
6.4.09 – 12.4.09
Blog version: http://heartlandupdate.blogspot.com/

To all,
The follow-up news items:
-- Another independent opinion [373] worthy of your attention:
“Begin discussion on legalizing drugs”
by Leonard Pitts Jr.
Miami Herald
Posted on Tuesday, 03.31.09
http://www.miamiherald.com/living/columnists/leonard-pitts/story/978041.html
-- Please recall the case of former Marine Sergeant Ryan Weemer [329, 353], the man accused as a consequence of a Secret Service employment polygraph examination. A military court-martial jury acquitted Weemer of murder. Unfortunately, Ryan will now bear a burden of stigma for the rest of his life and will be denied opportunities for national service as a consequence. At least he is free.
-- Judge Emmet G. Sullivan of the United States District Court for the District of Columbia angrily denounced federal prosecutors as he accepted Attorney General Holder’s request to vacate the conviction of former Senator “Ted” Stevens [381]. Prosecutor misconduct may well have (and probably did) let a guilty man free. This is NOT vindication as many of Bad Boy Ted’s supporters have claimed. Personally, I think he is guilty as sin, and probably of far worse than the crimes for which he was convicted, but I must confess, from what I’ve seen, Eric Holder did what had to be done and it was the morally proper thing to do. Unfortunately, a guilty man will not pay for his crimes. Judge Sullivan ordered an investigation into the conduct of the prosecutors, so perhaps other guilty men will pay the price for their transgressions.

I offer my condolences and prayers to our Italian brothers and sisters after the tragic earthquake in the Abruzzo region of the Apennine Mountains, east of Rome. A 6.3 magnitude earthquake is modest by conventional standards, but the destruction to ancient and relatively new buildings is all too familiar. Hopefully, the rescue efforts will yield more survivors. Life will return to normal in time. This too shall pass.

President Obama wow’d ‘em at the G-20 Summit in London. We will need at least a few years to allow historic retrospective to help us understand the importance. However, the pomp & circumstance and public display / pronouncements were up-beat and optimistic. Of course, there was quite a disturbance in the Force when a short video clip appeared to show the President bowing deeply to the King Abdullah of Saudi Arabia. He went on to a NATO summit, made a statement on the abolition of nuclear weapons, and then made his way to Turkey, to apologize for the sometimes arrogance of the country he now leads. Of course, the conservative talking heads leapt on the President’s perceived apology for the conduct of the United States. I am not so quick to condemn the President’s effort to mend fences. I have witnessed and been ashamed of American visitors in many other countries. I can appreciate what the President is trying to do.

In what we may learn to be a heroic confrontation, the SS Maersk Alabama, a U.S.-flagged container ship, was jumped by Somali pirates – the first such incident for an American merchantman since 1804. The crew managed to overcome and capture one of the pirates. They attempted to trade their captive for the ship’s hostage captain. These high seas criminals are clearly not honorable men. The U.S.S. Bainbridge (DDG-96) was dispatched – a highest prudent speed, I imagine – to render assistance. The remaining pirates fled in one of the ship’s enclosed lifeboats, with the captain still held hostage. The Bainbridge dispatched a squad to protect the Alabama as it proceeded to Mombasa, Kenya, while the Navy warship dealt with the pirates. The Navy had been fending off other pirates who had arrived to assist their cornered brethren. President Jefferson had it right in 1801. We have a choice – tolerate the irritating lawlessness of piracy or we can stamp out the vermin. I trust (maybe hope at this stage) that the Navy has clear, proper instructions in dealing with this attack on an American-flag ship. We heard late Sunday that Captain Richard Phillips, 53, of Underhill, Vermont, has been freed, unharmed, and at least three of his four captors were killed in a short, sharp firefight (reportedly near simultaneous shots from snipers, presumably American special operations operatives). I imagine we shall hear more once the situation has settled down.

In a rather bizarre mistake, the Metropolitan Police Service, Assistant Commissioner for Specialist Operations, Robert “Bob” Quick, 49, was photographed getting out of an automobile at No.10 Downing Street with a bundle of papers in his hand. Unfortunately, on top of that bundle was a secret document with the names of terrorism suspects. As a consequence of that photograph, counter-terrorism units in England executed armed raids across Northwest England, and arrested 11 men, reportedly in the final stages of planning for a major terror attack. The Specialist Operations Branch has responsibility for counter-terrorism, specialist protection and royalty protection. Regrettably, Quick, a career police officer, resigned after the moment’s lapse in judgment, but a good chunk of the bad guys are now in the care of Her Majesty’s Government.

As noted in last week’s Update [381], the State of Iowa Supreme Court rendered its judgment in the case of Varnum v. Brien [SC IA no. 07–1499 (2009)], which struck down a state law limiting civil marriage to one woman and one man. The unanimous, seven-justice opinion was written by Justice Mark S. Cady. While the ruling is not the best crafted judicial pronouncement I’ve read, the message is clear and direct. “Iowa Code section 595.2 violates the equal protection provision of the Iowa Constitution,” and “[c]onsequently, the language in Iowa Code section 595.2 limiting civil marriage to a man and a woman must be stricken from the statute, and the remaining statutory language must be interpreted and applied in a manner allowing gay and lesbian people full access to the institution of civil marriage.” Cady also observed, “[T]he constitution defines certain individual rights upon which the government may not infringe. Equal protection of the law is one of the guaranteed rights. All these rights and principles are declared and undeniably accepted as the supreme law of this state, against which no contrary law can stand.” Interestingly, that the court went directly at the separation of powers and the will of the people issue in this question, i.e., judicial fiat. The court noted, “We approach the resolution of this case with a keen and respectful understanding of our Iowa Constitution and the vital roles of the three branches of government, as well as the role of the people. It is important for these roles to be identified and expressed.” The constitution (of the State of Iowa as well as the United States of America) belongs to the people. What we see in this issue is the tension between the principles of freedom – presumably to pursue their individual choices for Life, Liberty and Happiness – intended for ALL citizens regardless of the social factors – gender, age, race, political affiliation, ethnicity, religion, language, sexual orientation, or disability – versus the will of the People, the common good, general security and welfare. In this issue, we have a majority of American citizens holding the fundamental belief that only adult, strictly heterosexual, opposite gender, strictly monogamous citizens should be allowed to enter into a contractual relationship we commonly call marriage. On the other hand, we have a minority within our society who do not subscribe to heterosexual, opposite gender, monogamous elements of that popular notion, and yet seek the same contractual rights, benefits, privileges and protections of marriage. At its most basic, fundamental level, we have the will of the overwhelming majority of our voting citizenship against the constitutional, equal protection, guarantees for a minority of citizens. Further, as noted by the court in Varnum, the hypocrisy of the traditional family argument remains profound and corrosive. If the willful, so-called “moral, majority” applied the same scrutiny, constraint and criticism to heterosexual marriage as they attempt to apply to homosexual marriages, their argument would be more weighty rather than hollow. Generalizations have caused such destruction, so it is in this debate as in so many other social questions. I believe we can all agree that there are classic, heterosexual, monogamous, opposite-gender couples who are really bad parents – negligent, complacent, uncaring. I respectfully submit to a discerning audience, might the inverse also hold true . . . that homosexual parents might be involved, caring, and nurturing. Should we not be focused on parenting, rather than be distracted by whom someone chooses as a life-partner? I am far more interested in the quality of parenting, the product of good parenting – stable, productive, respectful, contributory adults, who, in turn, raise another generation of productive citizens.

In the same week as the Varnum ruling, the Vermont legislature voted to override Governor Jim Douglas’s veto of a bill allowing homosexual men and women to marry. The vote came nine years after Vermont was the first in the United States to adopt a civil-union law. Vermont is now the 4th state to legalize same-sex marriage, following Massachusetts, Connecticut, and now Iowa.

Another related opinion:
“Why Gay Marriage Matters – The state should recognize our choice of partner”
by Michael Judge
Wall Street Journal
Published: April 7, 2009, 10:40 AM ET
http://online.wsj.com/article/SB123906051568695003.html#mod=djemEditorialPage

News from the economic front:
-- The Wall Street Journal reported that the Treasury Department plans to extend the Troubled Asset Relief Program (TARP) to certain eligible life insurers. Several life insurers have been burdened lately by capital constraints amid ailing markets. The Government is expected to include life insurance companies that are either bank holding companies or own a thrift banking unit. The Treasury indicates it has about US$130B remaining in TARP funds and may use an unspecified amount in the new application.
-- Seðlabanki Íslands – the Central Bank of Iceland – lowered its key interest rate by 1.5% to 15.5%. The action is the second rate reduction by the bank in less than a month.
-- The Wall Street Journal also reported that the Federal Reserve was divided last month on just how much to ramp up purchases of mortgage and Treasury securities, yet they eventually ponied up more than US$1T for the recovery. The Fed was ultimately swayed into action by the continued faltering economy, and appeared particularly convinced by the steep drop in overseas economies.
-- The Bank of England held its benchmark rate steady at 0.5% and said it would maintain its quantitative easing policy.
-- Another ray of light in these dark times, Wells Fargo projected 1st Quarter net income well above analysts’ expectations, becoming the latest major bank to show positive results, following devastating losses in 2008. Wells Fargo shares surged 23% in pre-market trading on the announcement, and shares of Citigroup, Bank of America, and J.P. Morgan Chase also gained.
-- The latest Wall Street Journal forecasting survey of professional economists suggests the recession may end in September, though most say it will not end until the second half of 2010, when the economy recovers enough to bring down unemployment.

L’Affaire Madoff [365]:
-- New York Attorney General Andrew Cuomo charged Jacob Ezra Merkin with civil fraud, alleging he “betrayed hundreds of investors” by funneling US$2.4B of clients’ money into of Bernard L. Madoff Investment Securities LLC. Merkin was the non-executive Chairman of GMAC. A general partner of Gabriel Capital LP (a US$5B family of hedge funds), and managed Ascot Partners LP (a hedge fund valued at US$1.8B). According to the complaint, Merkin raised billions from charities, universities and individuals, lied about putting the bulk of it with Madoff, and failed to disclose serious conflicts of interest, induced by collecting over US$470M in fees from Madoff.

Comments and contributions from Update no.381:
“OK, here comes another grammar point. Let’s define ‘war.’
“Merriam-webster.com gives as the first definition of ‘war:’ ‘a state of usually open and declared armed hostile conflict between states or nations.’ That’s certainly how I think of ‘war’ in the national, military sense. We don’t have that. The only ‘state or nation’ in this one is the United States. Everybody else is some sort of private group.
“Since that is not what we have, keep reading. The same site gives an ‘obsolete’ definition, then an ‘achaic’ one. After that comes the one that apparently applies here: ‘a struggle or competition between opposing forces or for a particular end ‘a class war’ ‘a war against disease.’” That leaves the War on Islamic Fascism (or Terror or whatever) as a ‘war on’ rather than a ‘war with.’ World War II was a ‘war with’ Germany, Japan, et al. The Vietnam War was a ‘war with’ North Vietnam. This is a ‘war on,’ more like the War on Drugs or the War on Poverty. That is, a ‘war’ on a concept, not really a national war. No clear opponent, no measurement for victory or defeat, no consistent military strategy due to our ever-shifting definitions of ‘terror’ and ‘terrorists.’ No necessary end. No limits to targets and no clear limits to the civil rights violations of anyone in the world.
“President Obama does not surprise me by avoiding those terms. He uses words precisely and very well.
“I am a grammarian. I always seek to know the meanings of my words.”
My response:
Your examination of the words is spot on; yet, as should be expected, I shall quibble with the implication that emanates from your grammatical assessment.
Until the last few decades, war has traditionally and historically been between nation-states, yet ‘nation-state’ is a product of the last millennia, perhaps two. Prior to the establishment of territorial boundaries, nations were defined by tribes or groups of individuals, i.e., Samarians, Egyptians, Greeks, Persians, Romans, et cetera. Thus, in the classical sense, war is armed conflict between groups of people. However, we are not in a classical war; there is no nation-state adversary (although I would be inclined to cite the Islamic Republic of Iran in this context); there is no tribe; there is only an ideology. Likewise, as you note, “war with” is not appropriate as there is no entity. “War on” does seem proper to me.
The key factor to my grammatical thinking is “armed,” and “who is the enemy?” Our enemy is an ideology – Islamic fascism intent upon imposition of their values, their rules, their beliefs on all those who do not believe as they do, including the majority of Muslims I might add. Al-Qaeda has close affinity to the Taliban – strict fundamentalists who impose literal Sharia Law on those within their sphere of influence. I do not think we debate “armed.”
We have discussed President Bush’s failure to seek a full & proper declaration of war in this humble forum [220 et al]. That failure is the genesis of a goodly portion of our collective, on-going, debate regarding this war, i.e., since Congress did not explicitly use the phrase “declaration of war,” then we must not be at war. Perhaps so, but it matters not when citizens are dying.
For the sake of argument, allow me to return to the root question. Are we at war? If not, then what is the proper title for the armed conflict in which we find ourselves? If yes, then with whom are we at war? By what phrase shall we refer to this conflict?
Is the President’s parsing words like Bill Clinton did with his infamous “that depends upon what the definition of ‘is,’ is?” Is such parsing a feel-good exercise for us to rationalize a particularly nasty, ugly business?
People are dying on both sides of this conflict. To me, if it looks like war, smells like war, sounds like war, feels like war, well then, maybe it actually is war. If we do not wish to call this armed conflict “war,” and we do not wish to refer to our enemy as “Islamic fascists,” that is OK by me. As I said, we can call it “picnic with Osama,” for I care. I am not so interested in labels as I am in defeating a bunch of fanatics bent upon injury to our citizens and our Allies. Plus, I am fundamentally opposed to anyone (regardless of any combination of the social factors) who seeks to impose their will upon me, my family, my fellow citizens, or any other freedom-loving people. Freedom is freedom; it cannot be parsed.
So, until I absorb a better, more descriptive, label, “War on Islamic Fascism” seems to be the most appropriate to me. What do you think is a better descriptive label?
. . . round two:
“This is interesting. You agree with my fact but miss my point. Here’s the point: ‘Our enemy is an ideology – Islamic fascism.’
“My point was not the use of the word ‘war’ per se, but the distinction between two definitions of ‘war.’ The traditional military-political definition of war makes it possible to pinpoint an enemy, to plan a consistent strategy and to define an endpoint—we win or lose, as we did in the World Wars, the War of 1812, Vietnam, etc. This kind of war may be unpopular but it accomplishes something if we win.
“The newer definition of ‘war’ used in ‘war on’ conflicts has none of those features. Your comment states, ‘our enemy is an deology—Islamic Fascism.’ As I attempted to point out, that in itself removes the traits of a traditional war. People have attempted to make war on concepts for millennia, with little to no success. I myself am living proof of this. Judeo-Christian-Islamic militarists have attempted for a very long time to eliminate the ‘enemies’ (their term and concept) of their religions. I am not their enemy, but they see me that way. I am a pagan. St. Patrick announced in the 600’s AD that we had been eliminated from Ireland, but Ireland today is one of the better places to be pagan. Witches (a pagan group) were famously hunted down and killed in Middle-Ages Europe. We are still around. Wars against ideas fail. For recognizably American examples, the War on Poverty has not eliminated poverty; the War on Drugs has wasted massive funding while changing nothing more than the prison population.
“If I thought military action could actually stop violently anti-American actions, I would consider supporting it even at the outrageous price we are paying. I don’t think it’s possible.”
. . . my response to round two:
You are quite right; I missed your point. Thank you for persevering.
Also, I mis-stated my opinion. Our enemy is not an ideology; rather, our enemies are human beings who believe the ideology and are willing to kill themselves to kill other innocent people to further their ideology. Our enemy uses terror to cower their victims; they do not seek freedom; they seek domination and the imposition of Sharia Law, on believers and infidels alike. Our enemy are those men who act upon those beliefs of such things. Six hundred years ago, Christians sought the same objectives, by the same means; they killed those who did not believe as they believed.
The reason I use the term Islamic Fascism lies with the dictatorial aspects of their ideology. If people freely choose to live under Sharia Law and submit to the harsh enforcement of the Taliban, then I am all for it, just as I was for communism, socialism or even the secular fascism of the Nazis, if that was their free choice. But, any ideology that denies free choice to others, rejects tolerance of others who do not wish to believe as they believe, must be opposed. My objection is not the ideology, but rather the projection and imposition of the ideology; thus, our enemy is the bad men who seek that domination.
If fighting violence with violence is not the answer, what is? I confess, I am one of those guys who believe that if they put one of ours in the hospital, we put one of theirs in the morgue.

Another comment / contribution:
“Actually, I think that this Administration does get it regarding AQ [al-Qaeda] and Afghanistan. The ‘war on terror’ was a terrible misnomer – former Sec State (and former Chief of Staff) Powell and SecDef Gates have gone on record against the phrase, as have many senior officers. It is misleading and gives misplaced credibility to Muslim radicals. The Administration is aiming to go after AQ, who, after all, are the people who attacked us on 9/11. They are the enemy and we are now (hopefully) going after them.
“Regarding the Minnesota Senate election, Coleman has bigger problems. He appears to be in big trouble in a criminal matter. A couple of civil lawsuits allege (with substantiating evidence) that $75,000 in cash was routed to his wife by Coleman’s main backer, through the insurance firm where she works. The FBI is investigating (the American version of the Brit ‘Scotland Yard is making inquiries’).
“And regarding the President’s comments in Prague (beautiful city, BTW) his proposal is very much in line with the bipartisan approach outlined two years ago by George Shultz, secretary of state in the Reagan administration; Henry Kissinger, secretary of state in the Nixon and Ford administrations; William Perry, secretary of defense in the Clinton administration; and Sam Nunn, a former chairman of the Senate Armed Services Committee.
“It’s also in line with the vision articulated by Ronald Reagan, who called for the abolishment of ‘all nuclear weapons,’ which he considered to be ‘totally irrational, totally inhumane, good for nothing but killing, possibly destructive of life on earth and civilization.’
“Their military relevance is being questioned by many military thinkers; our conventional weapons are such now that they aren't needed-or wanted. On the other hand, they are part of the justification for the U.S. Air Force. Listen to what the President said--he noted that this might not (and likely won’t) happen in his lifetime-- but the idea is to make steps in that regard.”
My reply:
I have never liked the term “war on terror.” As they say, one person’s terrorist is another person’s freedom-fighter. I think War on Islamic Fascism is the most descriptive label I’ve seen, but that term is not politically correct. I presume from your words, you think we should call this conflict the War with al-Qaeda? What about the Taliban? Would a better label be the War with al-Qaeda and the Taliban? If so, what about the radical fundamentalist mullahs, inciting the faithful to become martyrs, killing innocents for Allah in Egypt, Saudi Arabia, Pakistan, Palestine, ad infinitum?
I had not heard that about Coleman. If so, he should pay the price for his transgressions. I trust there will be charges and convictions, rather than the public innuendo to ruin reputations like Elliott Spitzer and Ted Stevens.
I am all for idealism. I want to see world peace, no hunger, no disease, and freedom for all who wish to live in freedom. I want a world that does not need police, or the military, or lawyers. It is nice to dream. In fact, the 3rd book of the Anod series (as yet unwritten) offers an idyllic view of future Earth. Yet, until we can thwart the bad men before they harm anyone, or all human beings can respect the choices of others, we will need nuclear weapons. I don’t like it, but they are necessary.

A neglect contribution from Update no.380:
“This is where the different standard comes in. Not in the existence of risk, but in the evaluation. I see those ‘investment advisors’ (not 100% of them, but those in the riskier, more profitable instruments) basically as liars; you seem to think that the customers had a fair chance to understand the risk.
“They were thinking $$$$.
“Taking out the insurance policy was brilliant and is paying off. The company issuing the policy, however, was clearly insane.
“They were thinking they would make money. They did, too.
“That's where my biggest complaint comes in. The job of government is to govern (duh).
“We can only do that if those claims are again made criminal.”
My response:
Re; “investment advisors.” I won’t go so far to call them “liars.” They are salesmen, not particularly different from any salesman. They will shade the truth to present their product in the best light possible. Semper caveat emptor.
They were indeed making mountains of money off of imaginary, nay fictitious, assets.
And, taking out insurance policies on fictitious assets. Insanity indeed. Cassano was one of the world-class criminals, who took away US$300M, so he got away with the idiocy (so far). But, I hope everyone noticed . . . it is AIG that is in trouble. Other large insurance companies were apparently not seduced. AIG was insane and deserves what will eventually come to them.
The financial scam artists were allowed free rein – no regulation – no law to make their nefarious work illegal – well, unless they print & distribute false claims, but those bastards are very clever liars. Yes, we need the proper level of regulation. Then again, there are regulations and regulators today, but some banks cheat; some banks no longer exist, not because of the regulators but because of their foolish greed. I want Wall Street class stealing to be illegal and the perpetrators subject to being some big guy’s prison yard love-buddy . . . repeatedly.
. . . round two:
“They differ from other sales people in two key ways. One is the enormous amounts of money involved in their transactions; the other, the difficulty of understanding the products offered. Blowing that off with ‘caveat emptor’ is precisely the attitude that brought the entire world’s economy to the current situation.
“That supports the argument for re-regulation.
“Given volume of money and the sheer ridiculousness of the policies, I’m surprised that no regulations had ever been put in place.
“We may hope that AIG will eventually get what it deserves. We may not assume that; history varies on this type of offensive behavior.
“Certainly, some of the banks cheat. That again supports re-regulation with enforcement muscle. I hope the days of ‘voluntary regulation’ (oxymoron) are over.
“I would almost bet that those stealing millions of dollars will always risk lesser punishments than those stealing hundreds or thousands. That's history.
Re: This too shall pass.
“That's the only statement that has proved true in all situations throughout history.”
. . . my round two response:
Whoa now! I am not blowing off anything. I am as angry as you are. As with political criticism of politician & presidents, with moral criticism of clerics & moral projectionists, with all of it, I seek balance. I have not, am not, and will never rationalize the unchecked greed and paucity of moral conduct of so many of the Wall Street investment bankers, mortgage brokers, hedge fund operators, derivative traders, ad infinitum, ad nauseum. I have invested our precious family assets in various sectors, tried to diversify intelligently. The rate of return (before the recession) was modest (not great, not bad). I felt no temptation to seek 15% ROI claimed by Bernie Madoff. I have not invested in one of Bob Stanford’s grand development projects. I have not signed up to a 125% mortgage on a house with a value inflated five times over true value. There are bad people on Wall Street. There are also good people. We can vilify the greed of Wall Street. I just do not want us to ignore the foolish greed of individual citizens who were seduced by the Siren’s song of making gobs of money by flipping a house in a couple of years (after all, they had friends who had done it), or invested all their assets with a guy who promised rates of return 2-3 times the prevailing market return. Let us not forget the root cause.
As I have written, I am very much in favor of regulation, just as I am in favor of laws for public conduct. I am also concerned about over-reaction, going too far, as we did with intelligence regulation in 1978. We clearly need regulation of market sectors that have been devoid of rules, laws. I trust that will change for the good.
There are more than a few folks who truly believe an absolute free market will regulate itself. And, they are correct. Of course it will. My query to such folks: at what cost? Is it OK for me to make millions & billions as I destroy thousands of lives?
True! There are no guarantees, but I suspect AIG will not exist as it was in 2-5 years. I do not assume so; I just expect so.
Yes, banks do cheat, and many have gone out of business. However, banks are more regulated than mortgage companies or investment banking, which is why the USG pulled the surviving investment banks into the banking regulation arena.
I hope you are wrong about the greedy bastards getting lesser punishment.
. . . round three:
“Certainly a wide variety of people work on Wall Street. Re-regulation will have no negative effects on those who perform with honesty and integrity.
“The ‘root cause’ is that money becomes available to corporations whose existence depends upon making money by whatever means is available. The companies and their employees realistically cannot be held responsible for regulating themselves. I’ll say it again: the sole purpose of corporations is to make money. Not to guard the customers' interests, not to benefit the market as a whole, not anything other than to make money. They naturally take advantage of those who do not have extensive backgrounds in finance. As you point out, many of the customers had friends who had flipped the houses or received the returns as promised. How would a nurse, an engineer or a musician know without extensive research that those were not ordinary market conditions? Those who make money by their expertise must be regulated and held accountable for their use or abuse of that expertise.
“That's my point. I have met people who are, in a correct political sense, anarchists. They tend to believe in that ‘free’ market as fervently as some others believe in the Second Coming. If every individual were equal in expertise and resources, they would probably be right. They are wrong. We may all be equal in moral worth, but General Motors and any number of other corporations can overwhelm almost any individual's resources at will; so much for the concept of free choice. Regulation is necessary to protect the weak from the strong. In recent U.S. history that has been turned on its head; regulation has protected corporations and the very wealthy from the rest of us.
“I wish I were wrong about that, but history still predicts the future better than any other tool I know. The history is that people who steal millions face lesser penalties than people who steal hundreds.”
. . . my response to round three:
The problem is, over-regulation can very well have a negative effect on people who perform with honesty and integrity – takes away the profit motive, risk & reward. The challenge will be finding the proper balance.
The market has no mercy. The business of most, if not all, corporations is to make money for their shareholders. They do not have other obligations. The law establishes a set of rules for the safety of customers and employees, for ethical conduct in the marketplace, for the environment. If a business does not make money for its shareholders within the law, then it goes out of business, period. Without the law, anarchy exists in the marketplace, just as it would in society, and the profit motive, as the objective of business, is a very powerful force. Yes, absolutely, there must be accountability; if a business harms anyone (customer, employee, neighbor), then penitence – their debt to the society they have offended. Making money is not a sin. Making a profit is important and good. My concern is collateral damage.
Likewise, I know a few marketplace anarchists as well. While they are friends, I do not ascribe to a true free market, no more than I do lawlessness on Main Street.
I believe we are in agreement regarding the necessity of marketplace regulation.
Perhaps you are correct about history and wealthy people paying lesser punishment for greater crimes. Perhaps so. We, the People, can and should always strive to improve the system. We do, indeed, have a long way to go.

My very best wishes to all. Take care of yourselves and each other.
Cheers,
Cap :-)

Update no.381

Update from the Heartland
No.381
30.3.09 – 5.4.09
Blog version: http://heartlandupdate.blogspot.com/

To all,
The follow-up news items:
-- The Minnesota State, three-judge panel appointed to review the election contest between Norman Bertram “Norm” Coleman Jr. [287, 369] – the incumbent senator – and Alan Stuart Franken has dealt a serious setback to the incumbent, but this case is not yet decided and Minnesota remains under represented in Congress.
-- Governor Kathleen Sebelius of Kansas [376] – Obama’s replacement nominee for HHS Secretary – and her husband paid a total of $7,040 in back taxes plus $878 in interest, in the latest personal tax irregularity for a cabinet nominee.
-- The United States Department of Justice announced its petition to the judge presiding over the trial and conviction of former Senator Ted Stevens of Alaska [295-6, 346, 359] seeking to vacate Stevens’ conviction based on a number of anomalies by the prosecution. I suspect a passel of government lawyers are going to face disciplinary action of some sort – sanction to disbarment. We can also add this sordid prosecutorial affair to an all-too long list of events that I chalk up to an arrogance of power by the Bush administration.

I note here the ruling of the Iowa Supreme Court in the case of Varnum v. Brien [SC IA no. 07–1499 (2009)] – a unanimous judgment of the seven justices – affirming the rights of all citizens to the benefits and privileges of marriage. I have not had the opportunity to read and digest the ruling, as yet, and I hope to complete my review for next week’s Update.

I have listened to more than a few folks in a variety of fora argue that the United States should destroy all of our nuclear weapons before we have any right to demand the Islamic Republic of Iran (IRI) abandon their nuclear weapons program. A similar argument is offered that if United States and Israel have nuclear weapons, why shouldn’t the IRI have them as well. After all, fair is fair. Well, I have one, direct, simple answer: because the fundamentalist Islamic radicals leading the IRI have no compunction whatsoever about finding a small group of surrogates quite willing to use such devices; they seek death and martyrdom for jihad, for Allah. The United States has had ample reason to use nuclear weapons since the end of World War II, yet we resisted the employment of those devices. We built a stockpile of weapons and developed a triad of delivery vehicles to counter the perceived threat from the Union of Soviet Socialist Republics in a policy known as Mutually Assured Destruction (MAD). Such deterrence worked with the Soviets and other nuclear nations. It will never work against radical, fundamentalist Islam and especially jihadistanis bent upon martyrdom for Allah. I want the IRI (or any other radical state) to know they will cease to exist if they use nuclear, chemical or biological weapons on the United States or our allies. For that, we need nuclear weapons and the courage to use them when necessary.

The President has apparently decided that battlefield combatants are no longer battlefield combatants, and the USG will not refer to the “war on terrorism” as such anymore. Whether this means the President is convinced we are not at war is yet to be seen. Frankly, I do not care much what he decides to call this war or the enemy we fight. Perhaps, this nonsense is a faux concession to the uber-Left, to help them feel better about killing our enemies. Regardless, he can call it a picnic with Osama, for all I care. What matters is waging war successfully, and that is the bottom line of what I care about. We will be able to judge his “picnic with Osama” soon enough.

A month ago [Monday, 2.March.2009], the Obama administration released nine documents (159 pages) from the Bush 43 White House. Reading and cross-researching those documents took me a few weeks to complete, and there is more collateral reading I want to accomplish. The predominant general impression from the process . . . why? What purpose was served in releasing those nine memoranda among the thousands of documents the previous administration generated in the West Wing alone? The bizarre aspect of this disclosure rests heavily on the last two memoranda (chronologically) in the set, both authored by Steven G. Bradbury – former Principal Deputy Assistant Attorney General, Office of Legal Counsel (OLC), Department of Justice – the last of the two dated a mere five (5) day prior to the end of the Bush administration. Bradbury rejects the content / counsel of the other memoranda. The other seven memoranda span the time from 25.September.2001 to 27.June.2002; no need to recount the history of those nine months post-9/11. The implication in Bradbury’s memoranda is: we are not at war, therefore POTUS does not possess extraordinary warfighting authority, without offering rationale. Thus, the focus of his disclosure must be the first seven documents. The memoranda represent legal inquiries by the Bush administration during the early days of the War on Islamic Fascism, regarding warfighting, intelligence, and the detention of battlefield combatants. The OLC determined that the President had ample constitutional authority to detain battlefield combatants during the course of hostilities as well as transfer detainees as he deemed appropriate. More importantly, the OLC concluded that “neither al-Qaeda nor Taliban prisoners are legally entitled to POW status” – an important finding. Relevant to this debate, the OLC quoted from Johnson v. Eisentrager [339 U.S. 763 (1950)] [312]: “It would be difficult to devise more effective fettering of a field commander than to allow the very enemies he is ordered to reduce to submission to call him to account in his own civil courts and divert his efforts and attention from the military offensive abroad to the legal defensive at home. Nor is it unlikely that the result of such enemy litigiousness would be a conflict between judicial and military opinion highly comforting to enemies of the United States.” Many in our society may have forgotten or ignored that reality, but the political convenience does not alter the reality. The analysis of the law appears accurate, at least from the Executive perspective, and yet the argument conveniently ignores the checks & balances to Executive powers to prevent or reduce the likelihood of abuses, as well as the political aspects, i.e., public perception; which weakens the basis for the President’s warfighting authority. The President’s power is codified in the Constitution and statutory provisions, but his role as the leader of this Grand Republic depends upon the perception of We, the People. The OLC also argues that the need to wage war successfully, even domestically, exceeds individual rights. The most immediate question: how do we find balance? From my assessment of these memoranda, the greatest challenge to our freedom and the greatest tension between State power vested in the Executive and our constitutional rights came in the intelligence surveillance discussion. From Yoo’s first memo, “We believe that changing FISA's requirement that ‘the’ purpose of a FISA search be to collect foreign intelligence to ‘a’ purpose will not violate the Constitution.” He was considering the use of warrantless electronic surveillance of U.S. citizens. I find it disconcerting that our fundamental right to privacy could hinge upon one simple choice of article in the laws. This is precisely the direct worry of the Founders / Framers . . . the power of the executive to “decide” what is in the best interests of the Nation. While the OLC memoranda may accurately represent the President’s authority and power to wage war successfully, the documents fail to present a balanced view of the Executive’s power against the delicate checks & balances intended within the Constitution, and more importantly, the perception of We, the People. Yet, I boil everything down to one fundamental, basic fact. We can view all the political / judicial machinations regarding various aspects of the War on Islamic Fascism (I continue to use the proper title regardless of the President’s politically correct rejection) as parochial political pushin’ & shovin’, however I remain convinced all this superheated imbroglio stems from one simple mistake by President Bush – not seeking a full and proper declaration of war [220 et al]. The OLC saw the Authorization for Use of Military Force [PL 107-40] as equivalent to a declaration of war. Many others, apparently including the Obama administration, disagree. We dealt with a troubling national question at the core of the Vietnam War; we will deal with the core question in the War on Islamic Fascism. Are we at war?

In what appears to be a consequence of the release of the memoranda noted above, a Spanish prosecutor is investigating six Bush administration legal advisors for violation(s) of the various Geneva Conventions and the 1984 Torture Convention.
-- Alberto R. Gonzales [161 et al] – former Attorney General of the United States
-- John Choon Yoo – former Deputy Assistant Attorney General, Office of Legal Counsel
-- Douglas J. Feith [344] – former Under Secretary of Defense for Policy
-- William James “Jim” Haynes II – former General Counsel, Department of Defense
-- Jay Scott Bybee – Assistant Attorney General, Office of Legal Counsel (Yoo’s boss at the Justice Department’s Office of Legal Counsel; FYI, Bybee now sits on the bench of the United States Court of Appeals for the Ninth Circuit); and
-- David S. Addington – chief of staff and legal adviser to Vice President Dick Cheney (Addington replaced ‘Scooter’ Libby [199]).
This legal initiative presents a number of interesting challenges to the Obama administration, and the reflections should give us significant insight into what we can expect from this administration.

The Obama administration has reversed a decision by the Bush administration to shun the United Nations' premier rights body to protest the influence of repressive states, according to U.N. diplomats and rights activists.

A federal judge ruled on Thursday that some prisoners at Bagram Air Base in Afghanistan can petition U.S. civilian courts for writ of habeas corpus to challenge their detention. This is bad law and terrible precedent.

Grand Dear Leader Umpa-Loompa chose to defy the civilized world and launched a long-range missile, over Japan into the Pacific Ocean, thus setting itself up for increased sanctions. The DPRK claimed the missile was intended to launch a communications satellite into space. The only problem with their claim . . . they forgot the rest of the world did not flunk high school physics. Let’s see how the World handles this challenge.

One more thing . . .
All this kerfuffle about Obama using the teleprompter to make sure he gets his words right is a bunch of hooey. I am glad he uses the device. I am thankful he cares enough about his words, and how his words are perceived by We, the People, as well as the wider World audience. It seems to me that the folks who harp on him about his use of the teleprompter simply want him to stumble . . . some for fodder to yammer on about, some because they just want him to fail, and some because they need something to complain about or seek partisan, parochial, political leverage for the next election. Whatever the reasons may be for such ludicrous criticism, I wish to publicly proclaim my admiration for President Obama’s respect for the language and the communications of public oratory.

News from the economic front:
-- Another perspective of the AIG bonus fiasco:
“Dear A.I.G., I Quit!”
by Jake DeSantis (executive vice president)
New York Times
Published: March 24, 2009
http://www.nytimes.com/2009/03/25/opinion/25desantis.html?th&emc=th
-- The chief executive of AIG’s French unit and his deputy have resigned and may have begun an exodus of employees following the public outcry over bonuses.
-- ABCNews broadcast an exposé on Joseph J. ‘Joe’ Cassano (former president of AIG’s Financial Products unit) [358], who departed with US$300M and now lives in London, with no intentions of returning to the United States. Gee, I wonder why?
-- In an unusual move, the Obama administration demanded the resignation of General Motors CEO George Richard “Rick” Wagoner, Jr., as a condition for further financial aid to avoid bankruptcy. Presumably, the new CEO Frederick A. “Fritz” Henderson enjoys the government’s confidence, for now. In addition, the USG gave the company a final 60 days to present a more aggressive restructuring plan. The President laid blame for the auto industry’s difficulties on a failure of leadership in Washington, D.C., and in Detroit. Obama said, “The pain being felt in places that rely on our auto industry is not the fault of our workers . . . And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations . . . Rather, it is a failure of leadership.” This is where I disagree with the President by his omission. The auto industry workers do, in fact, share the blame along with the union leadership, who sought short-term personal gain over the long-term health of the company. Let us call this what it is, rather than pretend it is an inconvenient portion of the whole. Nonetheless, the Obama administration’s tough-love approach to the auto industry did not sit well with the marketplace.
-- Apparently, according to the Wall Street Journal, Hewlett-Packard is considering replacing Microsoft's Windows operating system loaded on its netbook computers with software developed by Google. H-P programmers are testing Google's Android system –designed for cellphones – for applicability to the company’s new netbook computers.
-- The European Central Bank cut its benchmark rate by 0.25% to 1.25% -- a smaller cut than some economists apparently expected.
-- The U.S. unemployment jumped another 0.4% to 8.5%, the highest level since November 1983, as non-farm jobs declined by another 663,000 in March, pushing the total unemployed past five million, since the recession started 16 months ago.
-- Beleaguered, mortgage giants, Fannie Mae and Freddie Mac announced their expectation to pay about US$210M in retention bonuses to 7,600 employees over 18 months. Ah, yes, the beat goes on.
-- President Obama attended and contributed to the G-20 Economic Summit this week in London. From all the gushy Press coverage, the Summit was a success. The President took advantage of his business jet transportation to visit other European countries as well as the Islamic, European-wannabe Turkey. Regardless of our political leanings, we must admire Barack and Michele for their ability to wow our allies.

L’Affaire Madoff [365]:
-- British prosecutorial investigators have claimed good progress in their pursuit of Bernie Madoff’s helpers in London. I hope British justice hammers them all. To my knowledge, British prisons are not so cushy as their American counterparts. Perhaps, we should request Bernie and all his accomplices suffer the rigors of British prisons.
-- Regulators in the State of Massachusetts have charged Fairfield Greenwich, a feeder fund to Bernard Madoff's investment operation, with fraud. In the complaint, regulators allege a “profound disparity” between the due diligence Fairfield represented to its investors and the due diligence it actually conducted with respect to Bernard L. Madoff Investment Securities. Presumably, charges against individuals who ran Fairfield are not far behind.

The Blago Scandal [365]:
-- Former Illinois Governor Milorad R. ‘Rod’ Blagojevich has been indicted by a federal grand jury on numerous corruption charges. The 19 counts against Blago, his brother, two top aides, and two other businessmen should be sufficient to incarcerate them for a good period of time, which might enable them to contemplate the grievous transgressions of their arrogance of power.
[NOTE: With the news of the prosecutorial travesty surrounding former Senator Ted Stevens as well as my perception of grotesque abuses of power by the previous administration, I truly hope there is no similar malfeasance in the prosecution of Blago and his cronies.]

One last personal note on economic front:
Amid the swirl of bold-face greed, accusations, and the search for answers, let us not forget that this crisis would not have become what it is, if so many of our fellow citizens had not believed they could get something for nothing and had not signed up for those “too good to be true” sub-prime mortgages. This calamity began in all those escrow offices when our fellow citizens signed up for home loans they could not afford, or could not sustain or maintain. If we want to blame someone, the true blame rests with We, the People.

Comments and contributions from Update no.380:
“I will agree with Mr. Spitzer on the AIG bailout. Insuring speculative high-risk investments tends to lead to losses. So? As disgusting as the bonuses were, the actions upon which they were based have cost is a far larger amount in the bailout. AIG took suicidal risks. Those losses should be spread around to all of those speculators, not just that batch who work for that company.
My reply:
Indeed! The guy who thought insuring high-risk derivative financial instruments was a good deal – easy money – is the one who should suffer the consequences, as Bernie Madoff is now experiencing. Unfortunately, that guy is living the cushy life in London on his US$300M, take away, slush fund. Even more regrettably, millions are now unemployed, surviving on meager State assistance, because of this man’s really stupid, greedy decisions and the knock-on effects of those decisions. In principle, those who thought up credit default swaps and all the other faux-value devices should suffer the full consequences, but the reality is, those greedy men will, for the most part, NOT suffer the consequences; it will be all the rest of us who had nothing to do with those risky decisions who will bear the weight of bad money.
“That’s just my opinion, but I could be wrong.”
. . . round two:
“Your point is well taken with respect to the current villains. Whoever said ‘crime doesn't pay’ either lied or didn't know about these people. I'll note here that much of what they did was technically legal. They were able to get what regulators still existed to go along with nearly anything, under the silly premises of ‘voluntary compliance’ and ‘self-regulation.’ Despite that, the smarter ones have homes in places from which deportation would be difficult, and they have reserved part of their ill-gotten gains for excellent attorneys.
“We can, however, stop or punish the next generation of those corrupt bastards. In order to do that, two things must happen.
“(A) We must admit, as a society, that government's role in society includes setting limits to corporations; the sole purpose of corporations is to make money. That they often do that in a short-sighted and merciless way reflects the nature of the people who are drawn to work with large amounts of money. The individuals we are discussing knowingly made destructive decisions which ought to land them in prison, but a deeper issue remains here. It is government's job, not corporate America's, to keep a long-term, society-wide perspective that will keep us out of future misadventures.
“(B) We must then provide actual, appropriate paychecks for enough people who have the ability and background to set those limits. That involves stopping the endless, politically motivated tax cuts. If the regulators have been laid off or their paychecks are far lower than in the industries they attempt to regulate, good intentions and laws based on them will not prevent future disasters.”
. . . my reply to round two:
Good points all.
I advocate for regulation of the financial markets just as I support laws for public conduct. Crime, greed, and such are, in simple terms, disrespect for other citizens. We need laws to prosecute the bad men like Madoff, Stanford, Cassano, et al. We clearly have gone too far with deregulation of the mortgage, financial services, and banking businesses. Yet, conversely, I have little interest for intruding upon the internal affairs of business, except where there is the potential for injury, or it affects the public domain. If a Board is foolish enough to authorize exorbitant bonuses that ultimately bankrupt the company, so be it. Where corporate governance crosses the line occurs when they approach the public treasury for assistance; then, we have every right, nay expectation, to demand appropriate concessions, including the resignation of the Board and executives. I do not want to government regulating compensation including bonuses. The government does not belong in the Board room or executive / labor management. Nonetheless, these are extraordinary times.
. . . round three:
“I share your approach, although I suspect that my definition of ‘the potential for injury, or it affects the public domain’ will be considerably broader than yours, largely because I would not cost the customer money if he or she followed the ‘professional’ advice of the greedy people, who are required to be licensed to give this advice in many cases.
“Whether the managers of AIG, etc., run their companies into bankruptcy does not concern me beyond the above exceptions--but those exceptions matter a great deal. Given that AIG, Fannie May, Freddy Mac and many of the other companies involved in our current catastrophe have millions of customers each, many of whom are essentially innocent, I think each of those companies affects the public domain. To come back to a person I mentioned in a personal message, she had no way to know that using two mortgage loans was a risky way to buy a house. She attempted to buy her first property with no background in real estate or banking. She relied upon the advice of someone unscrupulous. She understands now, in the light of subsequent learning, that her deal falling through saved her great trouble later. If we multiply her by millions of others, most of whom completed those mortgages, do not the empty houses, high volume of bankruptcies, dropping property values of entire neighborhoods where foreclosure rates are high, and associated stressors add up to a public domain issue? Right now, the case for re-regulation seems overwhelming to me. Are the ‘internal affairs’ of these corporations really ‘internal’ if they result in this kind of mess for the entire world?”
. . . my reply to round three:
As you note, perhaps our definitions are different. I am a firm believer in risks and rewards, like mountains and valleys, or sunny and rainy days, or pain and pleasure. We need that contrast to inspire, to encourage ambition, innovation, and advancement. Risk is a necessary part of life.
The objective of regulation, in my mind, is illumination of risk, not allowing risk to be masked or hidden. I have no objection to gambling. If someone wants to gamble on futures, derivatives, derivatives of derivatives, with their money, more power to ‘em. Some folks enjoy slot machines and the crap tables; good for them; but, they play with their money, not mine. That is where deregulation failed us all.
The notion of creating fictitious financial instruments . . . credit default swaps, my word, what were they thinking? Not only that, taking out an insurance policy against loss on an already highly risky, actually deeply hidden risk, was insanity; due diligence was just too much work. There were layers of masking mechanisms, hiding the risk. The whole building was built with soft brick and mild steel. The weakness began with the individual mortgage contract – the single brick. Those were packaged together in larger & larger bundles, and then, took out insurance against loss. As I said, what were they thinking? And, there was no independent inspector to call a spade a spade – a soft brick.
Caveat emptor . . . it’s been true & valid for millennia. Let us return to rational investment and shine a bright light on greedy men claiming to consistently return 2-3 times the prevailing rate of return.

Another contribution:
“This will be brief because my time for lengthy lectures in front of captive audiences is long past, but you raised a question about the constitutionality of the House bill to implement a 90% tax on bonuses distributed to AIG employees. Now that the pitchforks and torches mentality has subsided, it's probably a moot point. However, this is a clear violation of the Constitution's prohibition on bills of attainder, and, most likely, ex post facto laws. The bonuses were permitted under the initial terms of TARP in the previous administration and reaffirmed during the conference committee resolution of the stimulus package (apparently at the behest of the Obama Treasury Department) in February because of concerns about existing contract law (in Connecticut). One could argue whether it is a wise use of Federal tax money to clean the knickers of financiers who shat all over the American people and the world in their pursuit of fantasy financial football scores; still, there can be no argument that it is unconstitutional to impose retroactive penalties on individuals who broke no existing law. Moreover, it is chilling to contemplate a government that would use the tax code to punish those with whom the majority of Americans disagree.
“It is time to look forward rather than backward, using our fingers to point to solutions rather than to identify blame. I am not a Pollyanna. I tend always to agree with Publius (Federalist Papers) about the less than angelic nature of mankind. But I also believe in the entrepreneurial and innovative spirit of the American people and the resilience and strength of our Constitution. This, too, shall pass.”
My response:
Thank you for your opinion regarding the constitutionality of the bonus tax bill [H.R.1586]. My query sought the contributor’s opinion regarding the constitutionality of H.R.1586. Article I, Section 9, Clause 3 uses plain language: “No Bill of Attainder or ex post facto Law shall be passed.” We could argue whether H.R.1586 is either, but the issue is moot, since the bill appears destined to die a fortuitous death in Senate committee – ill-advised from the get-go. I see it for what it was – political grandstanding to distract inquiry into the culpability of Members of Congress. I trust, rather I hope, senators actually read the Constitution before such a bill ever comes to the floor for debate.
There are many lessons to be learned from the last three decades of deregulation – the removal of law from the marketplace. Not least of which, the rule of law is vital in any society, on Main Street, and in the marketplace, to regulate public conduct. We removed the law from the marketplace. Flawed human beings proved themselves unworthy of trust – greed overcame morality.
We will undoubtedly debate the wisdom of Federal intervention in the current banking and economic crisis. As I have written, I am not a fan of government in private affairs, yet bankers literally gambling with other people’s money stretches the public-private boundary, and an insurance company protecting against losses of what is essentially a crap-shoot pales the question of reasonableness. My motivation is minimization of the collateral damage to predominately innocent citizens and prosecution of as many of perpetrators as the law will allow. Many in the Update forum, and elsewhere, condemn the government’s efforts as socialism. Regardless, iacta alea est.
Your closing point is actually my biggest worry – reactionary over-regulation in the aftermath. to compensate for the “less than angelic nature of mankind.” The Foreign Intelligence Surveillance Act of 1978 [PL 95-511] left us ill-prepared for the War on Islamic Fascism. I fear the regulatory reform in the wake of the mortgage crisis may leave us unable to compete in the World marketplace. We shall see.
. . . a follow-up comment:
“Ah, the dreaded specter of socialism. This is the bogeyman that proponents of laissez faire capitalism always drag out whenever any discussion of government regulation of the private sector takes place. What most do not realize is that the United States has had a mixed economy, to a greater or lesser degree, ever since the Progressive Era with its great champions, Theodore Roosevelt and Robert LaFollette. Private greed unfettered by oversight has never been an efficient or ultimately productive basis for a national economy. Even the ‘invisible hand’ of Adam Smith's Wealth of Nations, based on self interest, was not completely unregulated. What we have ultimately lost sight of is the notion of ‘enlightened self interest,’ or ‘self interest rightly understood.’ It is not rational to indulge our every whim, to borrow and spend without regard to the future, to exhaust and waste our resources and despoil our planet, and to ignore the very real threat of putting our country in hock to other nations whose own self interest is at odds with ours.
“Although there are certainly aspects of the Obama administration's recovery plan that are troublesome, by and large, I think it is on the right track. The alternatives offered by opponents border on whacko, offering more of the same that got us into this mess only worse. What will be most crucial to the success of the Obama blueprint will be a change in the mindset of most Americans. Or to be more accurate, a return to the mindset of my parent's generation when it was understood you didn't buy things you couldn't afford; that if it sounds too good to be true, it probably is (I am thinking of those wonderful derivatives invented by our world-class financiers); and that sacrifice is not a dirty word.
“My thoughts for what they are worth.”
. . . and my follow-up comment:
As a past contributor observed, “there is a little bit of communist in all of us.” Yes, the rhetoric does get a bit strained when we bandy about such catalytic monikers. Pure, ideological communism, to European-grade socialism, to laissez-faire, free market, capitalism, all have mortal flaws and limitations usually reflected in the weaknesses of mankind. Some balanced system, as we have tried to seek in fits & jerks, most likely will serve us better. We bear witness to the consequences of unchecked capitalism. The long and the short of it . . . human beings cannot be trusted. “Power corrupts, absolute power corrupts absolutely.” [Thank you, Lord Acton] As always . . .excellent commentary of the human condition and the foibles of our present situation.
When I feel a twinge of humor, I do chuckle at the politicos from the last administration / congress, who now cast aspersions upon the new administration for doing more of the same. There are aspects of the Obama administration’s economic recovery program that bother me deeply, not least of which being their unwillingness to challenge Congress on earmark spending and the paucity of accountability in the financial sector. Reservations aside, I am impressed by and supportive of the administrations’ efforts to do something. Doing nothing is simply untenable. Adam Smith’s “Invisible Hand” . . . indeed!
I absolutely agree with your “mindset” change. We can only hope our generation and our children’s generation (as they are well into their spending years) learn the lessons of this debacle.
As we see in the snippets from the periphery of the G-20 Summit, the World blames the United States for the pain of this recession, and sadly, we must humbly bear that blame. What began in the disastrous sub-prime mortgage business, became dramatically amplified by the foolish façade of Wall Street investment banking -- collateralized debt obligations, credit default swaps, derivatives, derivatives of derivatives, and insurance policies on all that foolishness; those boys thought they were just so freakin’ smart. “This is a fine mess you got us into, Ollie.”

My very best wishes to all. Take care of yourselves and each other.
Cheers,
Cap :-)