22 September 2008

Update no.353

Update from the Heartland
No.353
15.9.08 – 21.9.08
Blog version: http://heartlandupdate.blogspot.com/
To all,
Before we get into this week’s extraordinary and historic events, let us remember the incredible moment in history 68 years ago. The 15th of September was Battle of Britain Day – the day when a comparatively miniscule number of British and Allied fighter pilots turned the tide of the Nazi juggernaut. We need their courage, commitment and fortitude, today.

The follow-up news items:
-- Monday, Pope Benedict XVI gave a speech in Lourdes, France, stating that people must accept death at “the hour chosen by God.” For citizens who wish to believe that Joseph Alois Ratzinger has been anointed as God’s spokesman on Earth, his words may provide comfort and solace. To me, Joe is just a man like all the rest of us; yes, he has an interesting and rather unique job. Joe can also dictate what he wishes to those who choose to accept his dictum. I am not a citizen who trusts Joe anymore than I trust Barack, John, Bob or Ralph. I defend Joe’s right to say and believe whatever he wants. I categorically, absolutely, and manifestly reject and condemn any transformation of Joe’s wants into intrusive dicta upon my freedom of choice regarding my “Life, Liberty and pursuit of Happiness.” [349A]
-- As you may recall in this forum from last winter, we noted the arrest of former Marine Sergeant Ryan Weemer [329], after he disclosed his involvement in a possible wrongful death situation during the Second Battle of Fallujah, during a polygraph examination for entry into the Secret Service. Several of Weemer’s Marine buddies were caught up as a consequence of his disclosure. Weemer and fellow Marine Sergeant Jermaine Nelson still await general court martial at Camp Pendleton, California. The news this week is the acquittal of former Marine Sergeant Jose Luis Nazario Jr., who was tried under the Military Extraterritorial Jurisdiction Act of 2000 (MEJA) [PL 106–523] [351] – a terrible application of the law. A civilian jury had to judge Nazario’s conduct in combat operations in Iraq four years earlier. We are not talking about war crimes or crimes against humanity; we are debating an unfortunate event during intense combat operations. At least Nazario obtained a reasonable outcome, if we ignore the trauma to his life by standing before the bar. The oddity in the Nazario case sprouts from the fact that MEJA was intended to plug the gap identified in Reid v. Covert [354 U.S. 1 (1957); no. 701] [351] and address the exceptions associated with contractor violence like Blackwater [305-310, 329]. But, the truly sad reality of all this, if we applied the same criteria to past wars, we would be missing many presidents, judges, congressmen, corporate executives, doctors, lawyers, and many other leaders in our communities and society. We appear to be hell-bent on applying political correctness to warfighting – a fatal endeavor. Even if we never allow our military to fight again, war will come to us, and it will be just as ugly as it always has been. We have an unprecedented ability to peer inside combat operations, virtually on a moment-by-moment basis. The fact that we do not like what we see, does not mean we should interfere and punish those who stand guard at the gates.

Thursday, I watched and listened to an amazing story on CNN – an iReport from the East Texas coast about the destruction of Hurricane Ike. The simple image they used for the report is the best place to start.
Adams House, Gilchrist, Texas, post Ike
[Adams house after Ike.jpg]
First, before anyone jumps too fast, this is truly NOT a PhotoShop’d image; it is real.
Now, to the story . . .
On 24.September.2005, Hurricane Rita made landfall between Sabine Pass, Texas and Johnsons Bayou, Louisiana, as a Cat-3 storm. The home of Pat & Warren Adams, on a spit of land known as the Bolivar Peninsula, in the village of Gilchrist, Texas, was destroyed. They decided to rebuild, which they did in February 2006, but this time they designed and built the house to withstand a Category 5 hurricane. On the 13th of September, Hurricane Ike made U.S. landfall near dead-on Galveston, Texas, as a Cat-2 hurricane, placing Gilchrist smack-dab in the danger quadrant, barely 12 miles from the center. The image above is the Adams’ home after Hurricane Ike – everything else is gone, but the Adams’ House withstood the storm’s fury.
. . . and, my observations . . .
To begin, when we first moved to Wichita, we bought a nice house near Four-Mile Creek, south of Andover. Long story short, our home flooded twice; we sold the house; and, the creek overflowed again and flooded the house. FEMA condemned the property, along with a dozen plus other homes along the creek – flooding would not improve, even though it was outside the 100-year flood plain. The same rules need to be applied to Galveston (Gilchrist), New Orleans, and all other areas prone to broad, general storms like hurricanes or floods. The Adams, their beach house, and especially the image above show us what can be done with proper construction. If you build a conventional, stud & drywall house on the beach in Gilchrist, Texas, or anywhere else, a moderate hurricane will make easy work it, leaving nothing but a slab. If a citizen accepts that risk, that is their choice, and all well & good; but, where the choices of others, to live and build in such areas, rubs me really raw comes when they expect the government – any government from village to Federal – to provide any resources whatsoever for re-construction. This is the basis of my major objection to what many believed was an obligation to rebuild New Orleans. No! They chose to live near the coast, below sea level, and I respect the choices of anyone who wishes to do so. Just do not expect the public treasury to help you rebuild. I must note that despite the construction of the house, the Adams evacuated as directed by the government. The home did sustain damage, but it is a remarkable image. In any region exposed to general broad damage, buildings must be built to withstand the risk, e.g., houses in flood zones on stilts, or Adams’ House construction in hurricane prone areas. I have no problem whatsoever if folks spend their money to live on the beach in hurricane prone areas as long as they do not expect me to pay for their pleasure. Lastly, the image says a lot about construction standards in disaster prone regions, doesn’t it?

Now, please forgive me, the urge for a rant can no longer be resisted . . . .
I am really tired of all these politicians of any and all colors chattering on about tax cuts, like little squirrels collecting nuts for the winter. Reducing Federal revenue is NOT the answer in the bright light and reality of the massive Federal debt created by Congress and the President, and the far bigger, looming, entitlement mountain ahead of us. Drastic reductions and re-allocation of Federal spending is, has been and always will be the real issue. All the yammering about tax cuts is quite simply subterfuge, slight of hand, pabulum for the masses, and smoke screen to keep us focused on the wrong thing, i.e., what is in this for me? This tax cut trash reminds me of the abortion issue – the symptom, NOT the root issue. I want to argue about where to spend limited resources, to argue about priorities as I must do virtually every day at work and at home. There never will be enough resources, and the same reality applies to the Federal government as it does to every company and every citizen. Yet, we are fooled and distracted by this foolishness of tax cuts. We are spending billions upon billions on things the U.S. Government (USG) should never have undertaken, let alone continuing the perpetual spending like a never-ending bleed. We must demand zero earmarks, zero spending not presented in a bill, debated in Congress, subjected to public scrutiny, and validated by the President as vitally necessary spending; and, even in those cases, I want to see the USG do what every state government and every household in this Grand Republic must do everyday . . . what must we give up to pay for this new things. There are exceptions as we bear witness today (see below). Further, we must eliminate all those Federal spending projects that intrude upon the lives of common citizens – wasted treasure doing what the government should NOT be doing. If you are not willing to work, you will starve and die. If you have children, we will take them and give them to someone who will care for them properly. Am I angry? Yes! Absolutely! All this garbage coming from McCain and Obama is nonsense. Redistribution of income, under any name and any process, is communism in some other guise, which has been repeatedly proven to be a failed ideology – idealistic, not realistic or pragmatic. Let us condemn such foolishness, no matter what they call it.

Since I am all fired up, one more thought. All this gibberish from both major parties about the other guy lying . . . give me a break. They all shade the truth as it suits their perceived advantage. They clip a snippet out of a sentence or paragraph, and then place that snipped in an entirely different context to make the point they wish. They spit on the voting record of the other like everything the other does is wrong – based on political party ideology or partisanship, rather that what is best for the American People. They both accuse the other of lying, and the reality is, as with all propaganda, there are elements of truth. But, please, do not shine me on that either are righteous and pure. None of them are either righteous or pure; they are all dirty. So, let’s call a pig a pig, rather than pretending our side is right and the other side is wrong. It’s crap, I tell you. And, what’s more, the War on Islamic Fascism did not begin on 11.September.2001, but at least 22 years earlier; and the current banking crisis did not begin with the Financial Services Modernization Act of 1999 [PL 106-102; AKA Gramm-Leach-Bliley Act]. So, let’s quit pretending all our woes began with W; he is not Satan incarnate.

This has been an immensely extraordinary and historic week – one for the books. In many respects, events of the last few weeks are unprecedented, far more serious than the Savings & Loan crisis of the late 1980’s, or the banking meltdown that began in 1929 and led to the Great Depression.
-- First, the huge, venerable, 158-year-old, investment bank, Lehman Brothers [net worth: US$7B; total assets: US$691B] filed for Chapter 11 bankruptcy on Monday, after feverish negotiations with several potential buyers, including the USG. They have begun selling off assets to Barclays, PLC, and others.
-- Bank of America agreed to acquire Merrill Lynch for US$50B in stock. The acquisition joins Bank of America’s earlier acquisition [1.7.08 (11.1.08)] of the troubled mortgage giant Countrywide Financial Corp. for US$4.1B in stock.
-- After backing away from helping Lehman Brothers, the USG put up US$85B as a loan at 11.3% interest for an 80% stake in American International Group, Inc. (AIG) – one of the largest insurance companies in the world and the 18th-largest company in the world.
-- The Federal Reserve Board of Governors decided to leave interest rates ‘as is,’ citing their continuing concern about inflation and the stress of the money market liquidity crisis.
-- The central banks in Europe, Japan and the United States agreed to work jointly to stabilize the international credit markets by injecting US$180B into the banking system. Even Russia injected Rub500B (US$20B) into their marketplace.
-- New York Attorney General Andrew Mark Cuomo began a comprehensive investigation into potential criminal activity by short sellers, alleging they planted false rumors about the stability of Morgan Stanley and Goldman Sachs – the two remaining independent investment banking companies – to make money on the resultant falling stock price. Then, at the end of the week, the USG reclassified both investment banks as holding companies to allow direct deposits and other financial actions not otherwise available.
-- Wednesday, The top executives of the big three U.S. automakers met with House Speaker Pelosi and Democratic congressional leaders in an effort to obtain US$25B in USG loans authorized by the Energy Independence and Security Act of 2007 [PL 110-140] but not yet appropriated – probably necessary but odd timing.
-- Thursday evening, a comparably extraordinary, joint, public announcement by Treasury Secretary Paulson, Fed Chairman Bernacke, SEC Chairman Cox, House Speaker Pelosi, Senate Majority Leader Reid, and assorted congressional committee chairmen, proclaimed Federal action for relief of the money market liquidity crisis.
-- Friday, SEC issued a ban on short trading of 799 companies to curb the speculative volatility that has contributed so much to the wild fluctuation in the market place from oil prices to the value of companies and associated credit ratings (the ability to raise funds).
-- As we close the week, the USG is working aggressively to form a process by which the Government absorbs all the banking system bad debt to allow more liquidity and hopefully raise confidence in the stability of the financial system. The administration has requested that Congress allocate US$700B for the debt acquisition scheme.
-- All in this week alone --
We had warning signs . . . just like we had warnings before the Germans invaded Poland, before the DPRK invaded the RoK, and before al-Qaeda attacked the U.S. Homeland. We chose to ignore the warnings and pretend everything would get better on its own. Well . . . surprise, surprise! Two financial cases, among so many in the last 20 years, come to mind. On Tuesday, 26.February.1995, Barings, PLC – a 233-year-old, family, merchant bank and the oldest commercial bank in London – failed due to the actions of one employee –Nicholas ‘Nick’ Leeson, who traded and lost a massive derivatives position totaling £827M (US$1.4B), more than the bank could cover. Even Queen Elizabeth II suffered loss in the collapse. The other case was that of French short trader Jérôme Kerviel, who caused the loss of €4.9B for his employer, Société Générale, SA, on Monday, 21.January.2008. We called them rogue traders – anomalies – but, we know now they were the canaries in the mine. They represent the failure of a financial system to protect stack holders, customers, and uninvolved citizens from the consequences of rabid greed. [Just a quick side note: please compare the size of the numbers involved in my examples with those in the upper part of this section.] At difficult times like these, we must take the long view . . . keep our eye on the horizon, as pilot’s say. We see dramatic, unbelievable events on Wall Street. The vast majority of this Grand Republic churns on. The USG’s tasks . . . contain the damage, prevent spreading, and destroy the cancer that caused this nightmare. The Enron debacle pales to insignificance in comparison to what happened this week. So much of the national and international economy depends upon confidence. When doubt spreads, people withdraw from the market, money dries up, growth stops, and virtually all aspects of the economic fabric contract or collapse. We have seen what speculators can do to the base price of a barrel of oil; what should be roughly US$60/barrel, they inflate to US$150/barrel is short order on what is condoned economic gambling. What these speculators, short-sellers, derivative traders, and other ne’er-do-wells did is no different from what Usama bin Ladin and his al-Qaeda cronies have done for the last 20 years – they have injured or killed innocent people by their selfish, egocentric, monetary megalomania. We should treat speculators as we treat any enemy of the State. While we are at or near the cusp of a monumental change and I am rarely in favor of government intrusion into the market place anymore than into private homes & families, yet this unprecedented Federal action has become a necessary evil. If the economic engine slows, our warfighting capacity decreases, and regardless of what happens at home, we remain in a serious War on Islamic Fascism. This week was the 9/11 of an equally serious and threatening economic war against speculators. Capitalism is inherently good, but like any other human activity with no moral or legal constraints, it can readily take on a destructive character.
P.S.: Next week is likely to be historic as well.

Paul Krugman said, “There are no atheist in foxholes, and no libertarians in a financial crisis.” We have heard the first portion before. The second portion seems appropriate and applicable.

Comments and contributions from Update no.352:
“Hi, haven't had much time to correspond of late, the [Royal British] Legion absorbs most of my mental and physical energies! I retire from that in January except for my local work, I then must get on with my writing which has suffered badly for three years. That little piece I sent you was just bit of fun. Such people exist though I'm sure.
“We've lost three men in the Middle East this week. Will the work of veteran's organisations ever be done?
“Read the item re your Mom, it's a subject that rises above the parapet quite regularly over here, especially when those dying are carted off to a Swiss clinic where it appears to be legal. My own father died an inhuman death to cancer. We never discussed the subject but if he had been my dog.....”
“PS, please get on with your blasted election, we're feed up hearing about it over here.”
My reply:
We colonialists are equally as tired of our ‘blasted election.’ Unfortunately, painfully, this is the American way. Even more regrettably, this particular election will go down as the longest in history.
Tending to veterans’ affairs is never easy, and I especially understand what they have been through. Keep the faith, my friend.
It seems many of us share the same opinion regarding Death with Dignity. You noted the salient point; we are not allowed to show our closest family members the dignity we give so freely to our ‘other family members.’

Another contribution:
“Let us hope that law enforcement nationwide learned a good lesson from the St. Paul police and undercover operatives. The nutjobs failed in their attempts to ruin the Republican convention. We will see.
“The bailing out of the mortgage firms is different from Chrysler in that they are more government than private firms as you note in your label of pseudo gov’t agencies. Let us hope the bailout succeeds for all of us. But, I remain troubled about bailing out private firms for profit. The behavior of private firms is regulated by the marketplace. If you can fail without the consequence of closing your doors, the free market loses in the end. On the other hand, the size of the failures is mind boggling in some cases as noted today, Monday, Sep 15. We will see how and when common sense emerges.
“The only way to win the war on terror is to eliminate the terrorists. The only evidence needed to note we are in danger is to pay attention to terrorists being set free to terrorize again. Fear has found its way to court. These are dangerous times.”
My response:
We are a long way from perfect, but we have learned from our enemies. The coordination between Federal, state, and city agencies is far better than it was just a few years ago.
Oh, I do share your apprehension, indeed. As sad as it is to see venerable companies like Lehman Brothers cease to exist, it is a natural course of business – you live by the sword, you die by the sword. Their greed got ‘em.
Ditto on the way to wage war successfully. I continue to search for the balance between war & justice, between warfighting & law enforcement.
. . . a follow-up:
“As far as I'm concerned, the balance between war and justice is when war is won and justice is served.”
. . . and my follow-up reply:
Amen. Unfortunately, the American Judiciary and the not-so-loyal opposition do not see it the same way, and therein lays the rub.
. . . lastly:
“The not-so-loyal opposition's inability to grasp the obvious is what gets good people killed...enough said.”

A different contribution:
“Regarding the arrests in St Paul at the RNC- while they might have tightened up on the would-be anarchists, the St. Paul police also arrested a large number of peaceful demonstrators and press members. There has been strong criticism of the police - particularly in blocking off streets for demonstrators and then demanding that they disperse-- they had no way of doing that and were hemmed in and arrested. I have read where former and active police from other cities strongly criticized the over-reaction—especially compared to what happened in Denver at the DNC. (Where at least two would-be assassins were arrested.) There is now a review being undertaken in the Twin Cities over the reaction.”
My response:
True. Yet, peaceful demonstrators and journalists among the rowdies deserve to be caught up; they chose to associate with the unlawful ones. They were also sorted out rather quickly, as I recall. I am not seeing the over-reaction. We do have a constitutional right of assembly, but there is no amplifier protecting assembly anywhere, anytime and under any conditions they wish. Public safety draws the line. I would hope to shout St. Paul as well as Denver are examining their actions, to learn and document what worked and what did not. When anyone, from Fred Phelps to the RNC Welcoming Committee (RNCWC) or the Aryan Nation, decides to disrupt another group’s lawful assembly, then the State has an interest in constraining disruptive assembly or activity. Overreaction perhaps, but I’m not convinced.

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

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