Update no.599

Update from the Heartland

No.599

3.6.13 – 9.6.13

Blog version:  http://heartlandupdate.blogspot.com/

To all,

The follow-up news items:

-- The President signed into law the latest attempt by Congress to protect the nation’s highest awards for valor in combat – Stolen Valor Act of 2013 [PL 113-012; H.R.258; Senate: unanimous consent; House: 390-3-0-40(2); 127 Stat. xxx; 3.June.2013].  You may recall the Supreme Court case – United States v. Alvarez [567 U.S. ___ (2012); 28.June.2012] [563] – that declared the previous congressional attempt unconstitutional {Stolen Valor Act of 2005 [PL 109-437; 120 Stat. 3266; 20.December.2006] [450, 454, 560]}.  The new law appears to fully address the Court’s concerns with the previous law, so it should stand up to judicial scrutiny.  I hope so, and it is about time.

Many of us have seen the General Mills Cheerios commercial with the precocious, beautiful, little girl asking her mother about the cereal being heart-healthy, and taking the box and pouring the contents on her dozing father’s chest to convey her concern for his health.  Now, we hear there are more than a few folks in this Grand Republic who have expressed outrage over this commercial because her mother has light skin pigmentation and her father has dark skin pigmentation.  Such bigoted outrage literally enrages me, which is not good for my blood pressure.  Fortunately, for all of us, General Mills has defied the racist protest and thankfully so.  Freedom of Speech is not always eloquent or proper, and such is Liberty.

As the public debate regarding the government’s electronic surveillance activities rages on, we learn the name of the traitor . . . or in some quarters, he may be referred to as a noble whistleblower.  He chose to publicly disclose his identity for reasons unknown.  He is Edward Snowden, 29, a former CIA employee, and until recently, an electronic infrastructure contractor for the consulting firm Booz Allen Hamilton assigned to National Security Agency (NSA).  How he gained access to such a highly classified compartmented program as PRISM will be a paramount concern to the government and rightly so.  Snowden apparently gathered numerous PRISM documents and flew off to Hong Kong to turn over the documents to the Guardian's Glenn Greenwald.  The Washington Post and the Guardian have confirmed Snowden’s identity as Greenwald’s source.  Snowden claims he did this to let the American People know what their government was doing.  Unfortunately, he also told the enemies of the United States valuable information regarding the capabilities of the government.

            Every citizen should hold a healthy concern for the increasing capacity of the State to intrude upon and violate our fundamental right to privacy.  Yet, I urge moderation and a broader perspective as we debate the surveillance question.  All of the publicly available information indicates the NSA collected metadata attached to electronic communication, i.e., from, to, duration, et cetera.  The Supreme Court decided in Smith v. Maryland [442 U.S. 735 (1979); 20.June.1979] [232] that pen registers, the equivalent of electronic metadata, were beyond the “reasonable expectation of privacy” test, i.e., such collection did not violate a citizen’s fundamental right to privacy. 

            Let us avoid jumping to conclusions.  I have maintained for a long time the need for and right to intelligence data collection that is respectfully of every citizen’s constitutional rights.  Concomitantly, enemies of the State cannot hide behind the Constitution.  I will say, if Snowden did what he claims to have done, then he is a traitor and must be prosecuted to the fullest extent of the law.  Lastly, I am disappointed, staggered, shocked and otherwise gobsmacked that anyone with Snowden’s background, employment status and capabilities could ever gain access to TOP SECRET – PRISM intelligence data or any other Sensitive Compartmented Information (SCI) at any level.  I am far more concerned about the protection of SCI than I am the government’s surveillance effort.

News from the economic front:

-- The Financial Stability Oversight Council, led by the Treasury Department, has finally taken the first long-awaited step to address market vulnerabilities, proposing that a first round of large, non-bank financial companies.  They voted to designate several companies, like American International Group (AIG) and Prudential Financial, as “systemically important” and should face tougher government oversight.   Better late than never, but about freakin’ time.

-- The Wall Street Journal reported that the Federal Housing Administration (FHA) could face losses as high as US$115B over the next 30 years under a previously undisclosed stress test conducted last year to determine how the government mortgage-insurance agency would fare under an extremely severe economic scenario.

-- The U.S. International Trade Commission (ITC) decided Apple’s iPhone violated a Samsung patent and issued an exclusion order barring the importation of various Apple mobile devices, including the iPhone 3GS & 4, and the iPad 2 & 3G.  The order does not affect the latest Apple products – iPhone 5 and iPad 4.

-- The Wall Street Journal also reported that investors are apparently returning to their old ways as they seek synthetic Collateralized Debt Obligations (CDO).  J.P. Morgan Chase and Morgan Stanley bankers in London are moving to assemble synthetic CDOs to satisfy the voracious demand for higher returns amid rock-bottom interest rates.  Not a good sign, it seems to me.

-- The Labor Department reported the U.S. economy added 175,000 jobs in May, although the unemployment rate rose slightly to 7.6% from 7.5% in April.  The economic recovery continues, albeit at a rather slow pace.

London Inter-Bank Offered Rate (LIBOR) Debacle [552]:

-- The European Union is seeking to put the scandal-ridden LIBOR lending rate under stricter supervision a pan-European unit based in Paris, in a far-reaching overhaul of pricing methods for everything from oil and gold to property.

-- U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays for their alleged roles in trying to manipulate benchmark interest rates, marking an escalation of a global investigation now entering its sixth year.

-- So we don’t lose focus . . . the infamous 16, involved, international banks are:

·      Barclays [UK] – US$454M fine [550]

·      Bank of America [U.S.]

·      BTMU [Japan]

·      Citibank [U.S.]

·      Credit Suisse [Switzerland]

·      Deutsche Bank [Germany] – US$654M LIBOR profit [578]; set aside €500M (US$641M) for LIBOR liability [589]

·      Lloyds TSB [UK]

·      HSBC [UK]

·      HBOS [UK]

·      JPMorgan Chase [U.S.]

·      Rabobank [Netherlands]

·      RBC [Canada]

·      RBS [UK] – £390M (US$612.6M) in fines, 21 employees involved [582]

·      UBS [Switzerland] – US$1.5B fine, two charged [575]

·      West LB [Germany]

·      Norinchuckin [Japan]

I trust none of us will lose sight of what these banks have done.

Comments and contributions from Update no.598:

Comment to the Blog:

“Housing prices have rebounded to what I suspect is their appropriate level. Let us remember that the reason the prices collapsed was a ‘bubble’ caused by speculation and fraud in derivatives markets. Under those conditions, the prices should not return to their pre-collapse levels until some future time when inflation or other “natural” factors take them there independently.

“In whose imagination would an unregulated digital currency exchange not become a tool for criminals? All together now: ‘Duuuuhhhh.’

“Yes, prosecuting Kaitlyn is clearly wrong, even more so because there is no risk of pregnancy by means of sex between two girls. Unless some hint of coercion exists (not alleged in this case), Kaitlyn’s love life is not anyone’s business. However, the puritanical forces in this country insist on sticking their noses into everyone’s bedroom.

“If/when the government seizes firearms, it will be a formality. Study the histories of Germany and Italy during the preface to World War II or any number of dictatorships since. Those who are so hysterical about supposedly rising up against a tyrannical government have already missed their chance. Bush 43 and Obama both clearly claim a “right” to kill anyone of their choice in the name of the “war on terror.” If you’re a danger to them, you’re next.”

My response to the Blog:

Calvin,

            Re: causes of banking collapse.  Housing speculation has apparently picked up where it left off in 2007.  The gambling by major banks has also restarted.  Apparently, there are few checks in place to prevent the unsustainable debt increase that got us into this mess in the first place.  This is where banking supervision is necessary.

            Re: unregulated digital currency exchange.  Spot on.  It’s about time the USG asserted its authority.

            Re: Kaitlyn.  Agreed.  The State’s intrusion into private matters must stop.  Freedom is too important.  The law must mature.  I would hope that we could evolve as a society to have a more realistic attitude toward sex and respect for privacy.  Kaitlyn is not a criminal.

            Re: firearms.  The choice is not ours, but rather each individual citizen.  Some of us trust the government; some of us don’t; the rest of us are undecided or skeptical.

            Re: right to kill.  Taken in isolation, yes, a danger and threat to us all.  However, placed in the greater context, it is not without constraints and it is consistent with the Constitution and the expectation that the Executive wage war successfully.  I do not see the president’s war powers as dictatorial as apparently you do. 

 . . . a follow-up comment:

“I'll only follow up on the ‘right’ to kill people. The context of that justification is dubious and ill-defined at best. The constraints are not accountable or transparent; therefore, they may not exist in useful forms. And no, I do not trust the governing people with this type of power. My personal political life goes back to Nixon, and my study of history goes back as far as written history. None of that gives me a reason to trust the people at the top of any given government.”

 . . . my follow-up response:

Calvin,

            Re: “right to kill.”  I certainly concede the current War on Islamic Fascism is ambiguous legally, which in turn makes the right to kill enemies of the State comparably confusing.  In this instance, I must lean toward the Commander-in-Chief, since he has far more information than we do.

            Re: “trust in government.”  I peg the genesis of my political life back to Barry Goldwater.  The right of the State to take a life in peacetime or civil circumstances is established by due process of law.  In wartime, the right is clearly the domain of the Executive.  There are numerous Supreme Court cases that substantiate the President’s war powers.  I think we all agree that we should be perpetually skeptical, watchful and critical of government.  We have to trust the government to an extent for society to function under the rule of law.

 . . . and a follow-up to the follow-up contribution:

“I'll say it again, it's not war unless someone can define a clear enemy nation or organization and state what constitutes victory or defeat in a quantifiable way.”

 . . . along with my response.

Calvin,

            Rather than continue around the same circle, I shall note the interesting legal question concerning the actions taken by Congress.  The President ended combat operations in Iraq on 15.December.2011, which presumably should have closed or terminated the Authorization for Use of Military Force Against Iraq Resolution of 2002 [PL 107-243; 116 Stat. 1498; 10.October.2002].  I have not seen either legislation or a court test of that premise.  Further, the President has publicly stated his intention to end combat operations in Afghanistan.  It is even less clear whether that action might terminate the Authorization for Use of Military Force [PL 107-040; 115 Stat. 224; 18.September.2001], since the latter law is less geographically specific.  Congress has renewed other laws associated with the War on Islamic Fascism.  At some point, we should expect them to not renew those laws and allow them to expire.  While the legal support for the War on Islamic Fascism is not as definitive as the Declaration of war with Japan [PL 77-328; 56 Stat. 795; 8.December.1941], the Supreme Court has generally supported the wartime footing of the AUMF laws, so far.  The law has a long way to go, but it is what it is.  History shall eventually judge what Congress and the two presidents so far have done in the War on Islamic Fascism.  More to follow, I’m sure.

Cheers,

Cap

My very best wishes to all.  Take care of yourselves and each other.

Cheers,

Cap                        :-)