Update no.550

Update from the Heartland

No.550

25.6.12 – 1.7.12

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

To all,

I am still working on Carter v. Canada (Attorney General) [2012 BCSC 886] [548] – a measure of how long and complex this death with dignity case is.  It will be another week, at least.

The U.S. Supreme Court issued a number of interesting and significant decisions this week that adds more serious reading to my inbox stack.  I intend to review them over the next few weeks.

-- Arizona v. United States [565 U.S. ___ (2012); no. 11–182] – the final appeal of the state’s SB1070 immigration enforcement law [436], following:

» United States v. Arizona [USDC AZ case 2:10-cv-01413-SRB (2010)] [450]

» United States v. Arizona [9CCA no. 10-16645 (2011)] [487]

-- National Federation of Independent Business v. Sebelius [566 U.S. ___ (2012); no. 11–393] – the collective appeal regarding the Federal Patient Protection and Affordable Care Act (PPACA) [432]:

            » Florida v. HHS [USDC FL ND(PD) case: 3:10-cv-91-RV/EMT (2011)] [477]

            » Florida v. HHS [11CCA nos. 11–11021, 11–11067 (2011)] [512]

-- American Tradition Partnership v. Bullock [566 U.S. ___ (2012); no. 11–1179] – the Montana challenge of the Citizens United decision:

            » Citizens United v. Federal Election Commission [558 U.S. ____ (2010)][424]

            » Western Tradition v. Montana [MT SC 2012 MT 328] [526]

The Supremes summarily dismissed the state challenge with a Per Curiam, simple statement, “Montana's arguments in support of the judgment below either were already rejected in Citizens United, or fail to meaningfully distinguish that case.”  Associate Justice Breyer wrote for the four-justice dissent, saying, “Given the history and political landscape in Montana, that court concluded that the State had a compelling interest in limiting independent expenditures by corporations.”  Once again, I fundamentally agree with the dissent and disagree with the money-liberal majority.  Another opportunity missed!  This is also an implicit signal the Supremes will not easily countenance challenges to their controversial Citizens United ruling.

On Thursday, the House of Representatives made a historic vote on H.Res.711 – Recommending that the House of Representatives find Eric H. Holder, Jr., Attorney General, U.S. Department of Justice, in contempt of Congress for refusal to comply with a subpoena duly issued by the Committee on Oversight and Government Reform [House: 255-67-1-109(3)], in the continuing political confrontation over the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Operation FAST AND FURIOUS weapons trafficking program.  Not surprisingly, the U.S. Attorney for the District of Columbia did not waste time in announcing the government’s decision NOT to prosecute their boss.


News from the economic front:

Lawmakers reworked financial portfolios after talks with Fed, Treasury officials during economic crisis

Sunday, June 24, 2012 11:03:13 PM
EXCLUSIVE | At least 34 members of Congress recast their financial portfolios following phone calls or meetings with high-ranking Treasury Department and Federal Reserve officials at various points during the emerging economic crisis between 2006 and 2009, according to a Washington Post examination of appointment calendars and congressional disclosure forms.

The lawmakers, many of whom held leadership positions and committee chairmanships in the House and Senate, changed portions of their portfolios a total of 166 times within two business days of speaking or meeting with the administration officials.

Read more at:
http://www.washingtonpost.com/politics/lawmakers-reworked-financial-portfolios-after-talks-with-fed-treasury-officials/2012/06/24/gJQAnQPg0V_story.html

-- President Demetris Christofias of Cyprus bowed to pressure from the eurozone and sought financial help from the European Financial Stability Facility or its successor, the European Stability Mechanism, just days before a deadline to recapitalize one of the country’s largest banks.  A government announcement said, “The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spillover effects through its financial sector, due to its large exposure in the Greek economy.”  Cyprus became the fourth euro-zone country to seek a financial bailout, citing its exposure to the Greek economy.  Fitch downgraded Cyprus's sovereign-credit rating to junk territory.

-- Moody's Investors Service pointed to the debt-stress of Spain and the potential for higher losses due to commercial real estate exposure, as they lowered the long-term credit ratings on 28 Spanish banks by one to four notches.

-- Barclays PLC agreed to pay £290M (US$454M) to settle a long-running probe by the U.S. Commodity Futures Trading Commission and the UK Financial Services Authority, regarding allegations that traders at the bank manipulated interbank lending rates to enhance profits.  The bank is the first major financial institution to settle with regulators following the investigation that spanned North America, Europe and Asia, and led to individuals being fired or suspended by major banks and leading brokers.  None of the banks or individuals has been charged with wrongdoing.  I suspect the various financial institutions will buy there way out of criminal prosecution.  Barclays announced a number of top executives, including Chief Executive Bob Diamond, will forgo their annual bonuses for 2012 – oh my, how tragic.  Interestingly, Chancellor of the Exchequer George Gideon Oliver Osborne, MP, ratcheted up the pressure on Barclays Group Chief Executive Robert Edward “Bob” Diamond, Jr., as he indicated he has serious questions for the bank executives after admitting to manipulating interbank interest rates.  Hopefully, the British will do what the American regulators / prosecutors appear unwilling to do – put criminals in prison.

-- The Wall Street Journal interviewed German Federal Minister of Finance Wolfgang Schäuble, who indicated Germany may move toward acceptance of shared liability for eurozone debt and would support short-term measures to deal with the acute financing problems facing some of the region’s governments. Schäuble said, “We have to be sure that a common fiscal policy would be irreversible and well coordinated.  There will be no jointly guaranteed bonds without a common fiscal policy.”  Germany wants the process of centralized European controls over national fiscal policy to be irreversible before they agree to “mutualization” of the EU’s debt.

L’Affaire Madoff [365]:

News Alert

from The Wall Street Journal  120627

Peter Madoff, the brother of convicted Ponzi scheme operator Bernard Madoff,

will plead guilty to criminal charges Friday.

-- The former Chief Compliance Officer and Senior Managing Director of Madoff Investment Securities LLC, Peter Madoff, the brother of convicted Ponzi scheme operator Bernie Madoff, plead guilty to falsifying the records of an investment adviser and conspiracy to commit securities fraud and other crimes.  As part of the plea deal, he has agreed to a sentence of 10 years in prison – nowhere near enough from my perspective.

Comments and contributions from Update no.549:

Comment to the Blog:

Subject:  [Update from the Heartland] New comment on Update no.549.

From:  "Calvin R"

Date:  Mon, June 25, 2012 6:06 pm

To:  cap@parlier.com

Calvin R has left a new comment on your post "Update no.549":

“I read that article on the US-Israeli cyber-attacks on Iran. That particular story did not read as someone exposing something of which they disapproved. It resembled a geopolitical planned leak much more closely. Apparently, it presented two messages: (a) that the United States has so many remaining cyber-weapons that it will not suffer from the non-revelations about Stuxnet and Flame, and (b) that Israel is being publicly reprimanded for acting on its own, thus leading (so the message goes) to the exposure of Flame. Government agencies, especially intelligence agencies, often communicate “unofficially,” in ways that cannot be litigated. That’s what occurred in this article.

“On the financial front, the European Central Bank (ECB) has moved to increase risk. Does anyone at the ECB remember that excess risk got us all into this mess?

“Also, Moody’s Investors Service has downgraded 15 of the biggest banks. That’s fascinating. Does Moody’s think governments will no longer bail them out? I would like to know the rationale behind that.”

My response to the Blog:

Calvin,

            Re: national security leaks.  Smells like a political leak; it does to me as well.  However, the reason used by sources of such leaks is irrelevant to me; the action is injurious and verging upon treasonous.  The USG controls the information; they have the authority to declassify anything they wish via a well-known, established process.  The use or existence of such weapons is often a simple fact.  The Islamic Republic of Iran has been quite accomplished at carrying out violent acts via surrogates and other agents without claiming or connecting those actions to their government.  The Obama administration appears to be doing what the Bush administration did in the Plame-Wilson case.  They were both wrong!

            Re: ECB.  I believe they understand the risk, but they are caught between a rock and a hard spot.  I just hope they are correct.

            Re: Moody’s ratings.  I do not know.  I suspect they are reflecting the reality that governments associated with those banks are far less capable of intervention, thus their risk has gone up.  These news items indicate the recovery is likely to be long and slow.

Cheers,

Cap

 . . . follow-up comments:

Subject:  Re: [Fwd: [Update from the Heartland] New comment on Update no.549.]

From:  "Calvin R"

Date:  Tue, June 26, 2012 9:26 pm

To:  "cap"

Cap,

“Such behaviors as anonymous release of classified information were not really news when the Bush Administration did them. The storm over Bush’s use of that method was due to its personal nature, but that these things occur surprises few in the intelligence community or among those of us who study history. While these tactics are immoral and may well backfire, I can imagine no way to stop them. I imagine the Obama Administration is simply avoiding official attribution, which could cause retribution.

“I certainly hope the European Central Bank’s risk does not come back to bite them. The planetary financial system is so interconnected that no nation or group goes down alone; they take all of us along.

“The Moody ratings puzzle me. If, as you say, they believe that the national governments hosting the big banks are no longer able to rescue the banks that is a very unsettling sign. If, on the other hand, Moody's believes that some or all of the governments have simply become less willing to perform bailouts of the irresponsible, I would see that as a positive step.”

 . . . my follow-up response:

Calvin,

            Re: leaks.  The Valerie Plame Affair [147] got fairly high in the Bush administration.  I don’t care who does these leaks, they should be prosecuted to the fullest extent of the law.  Scooter Libby went to prison, but he deserved more.  The same is true for the Obama leaks, and I hope they get these guys.

            Re: ECB.  Agreed all the way around.  I hope they are successful for all our sakes.  As we aviators say, better lucky than good.

            Re: financial ratings.  I would like to think your positive sign is correct, but I fear it is the negative one.

Cheers,

Cap

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

Cheers,

Cap                 :-)