Update no.553

Update from the Heartland

No.553

16.7.12 – 22.7.12

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

To all,

An interesting editorial . . .

“Staples vs. Solyndra – Mitt Romney needs to make a better argument for Bain capitalism.”

Wall Street Journal

Updated: July 17, 2012, 7:26 p.m. ET

http://online.wsj.com/article/SB10001424052702303933704577532981276269006.html?mod=djemEditorialPage_h

They said, “Americans will choose Bain capitalism over Solyndra crony capitalism, if Mr. Romney makes the case.”  The Journal editors may well be correct.  However, I suspect the moderate majority will opt for some version between those two extremes.  I am living the reality of “Bain capitalism,” and it is not pretty.

Several key national security figures in the Bashar al-Assad regime in Syria were assassinated or wounded by a bomb blast in Damascus on Wednesday.  The most prominent victims were:

·      Defense Minister General Dawoud Abdallah Rajha (also, the most prominent Christian in the government)

·      Deputy Chief of Staff of the Armed Forces Major General Asef Shawkat (also, the husband of the president’s older sister, Bushra)

·      Major General Hassan Ali Turkmani (top military aide to Vice President Farouk al-Sharaa)

·      Director of the General Security Directorate Major General Hisham Ikhtiar

·      Interior Minister Lieutenant General Mohammed Ibraim al-Sha’ar

Conflicting reports leave the method of attack in question; however, the prevalent hypothesis suggests a bodyguard wearing an explosive vest carried out the suicide attack.  The Free Syrian Arm (FSA) claimed responsibility for the operation. The government mounted a show of normality and quickly appointed a new defense minister, the military Chief of Staff General Fahd Jassem al-Freij.  Some reports suggest the president and his family fled the capitol for a coastal stronghold.  As defections of general-grade and lower ranked military officers and soldiers continue to mount, the Alawite al-Assad dictatorship appears to be on the downhill slope; yet, the government still possesses a substantial chemical weapon stockpile that makes the loyalists very dangerous.  This is the closest the rebels have struck to the heart of the regime.  The end may be near.

The tragedy in Aurora, Colorado, spanned a few minutes and left 12 dead (so far) and 58 injured.  The deceased all died of gunshot wounds and ranged in age from just 6 years old to 51 years of age.  The perpetrator James Eagen Holmes, 24, was arrested without resistance at the scene.  State and Federal Law Enforcement (LE) agents discovered more weapons in his automobile, again at the scene, and a significant array of homemade explosives booby-trapped in his apartment, intended to inflict more casualties presumably against LE agents after his heinous crime.  The motive for this despicable act has not been established, and so far does not appear to be a terrorist-related event. The public debate will eventually reach the inevitable question of capital punishment in Colorado.  To my knowledge, the state retains a statutory death penalty law for first-degree murder, involving at least 1 of 17 aggravating factors.  I suspect in the Holmes case there is a few more than one of those factors involved; I count three factors for Holmes.  Once again, I go on record espousing for swift conviction and punishment of such crimes, and further in those rare events like this one, I think the medieval punishment of being “drawn and quartered” is too kind and merciful for Holmes; he deserves a slow, tortuous and inevitable death for what he has done.  Of course, like other such events, the movie theater massacre generated a cacophony from gun control advocates that erupted again in a very rapid and predictable fashion.  No gun committed this crime!  A cold, calculating, planning, homicidal animal executed this event.  The guns and ammunition Holmes accumulated were legally and properly obtained, at least from what has been reported to date; it is not clear whether a background check was performed, but at least one news source indicates that the requisite background check raised no flags.  Constraints on gun ownership and/or use will only disarm peaceful, law-abiding citizens; it will never stop determined criminals.  I absolutely believe that just one person in that theater with a concealed-carry permit could have and would have stopped the carnage and reduced the number of dead and wounded.  The answer to such events is NOT disarmament; rather, the reaction should be responsible armament of good citizens.  Abridgment of our constitutional right to keep and bear arms is no different from all our other freedoms – prohibition or restriction will never succeed in a free society.  Let us realign our focus from diminishing freedom for all citizens to spotting aberrant injurious behavior that threatens our freedom before he has a chance to act or to diminish the impact of his deviant conduct.

News from the economic front:

-- The European Central Bank (ECB) has apparently shifted position from that which they adopted during the 2010 bailout of Irish banks, when it prevailed in its insistence on senior bondholders in bailed-out banks should not suffer losses.  The ECB now takes the opposite position for the Spanish bank senior bondholders.  EU finance ministers rejected the ECB advice out of concern that financial markets would react badly to the decision.

-- The Wall Street Journal reported that executives of HSBC Holdings ignored warnings for years that the bank’s worldwide operations were being used by money-launderers and potential terrorist financiers, all in pursuit of profits.  This conduct by international bankers is quite reminiscent of similar conduct by international bankers doing business with Nazi Germany throughout World War II.  Profits are a powerful contaminant to rational behavior.

-- Last week [552], I noted the Chapter 7 liquidation of Peregrine Financial Services and the arrest of its founder and former Chief Executive Officer Russell Wasendorf Sr.  This week, I only note in passing the rather lame and quite frankly bizarre rationale for his behavior offered by the disgraced financial services executive.  The Wall Street Journal reported that Wasendorf might claim the “devil made me to it” defense.  He blames his fraudulent conduct on “mean spirited” regulators that pestered his firm, looking to put firms like his out of business rather than protect commodities investors.  In an even more bizarre twist, Wasendorf also indicated that deceiving the regulators was “relatively simple.”  I guess to succeed in business, it must always be someone else’s fault.

-- The Wall Street Journal also reported that Bank of England Governor Sir Mervyn King proposed the world's leading central banks meet in Basel, Switzerland, on 9.September, to reform the hugely influential London InterBank Offered Rate (LIBOR) – the reference interest rate for US$800T in securities and loans worldwide.

-- The Bundestag (Germany’s Parliament) voted 473-97-13 to approve a rescue package worth up to €100B billion (US$122B) for Spain's struggling banks.

Comments and contributions from Update no.552:

“I wanted too! Appreciate your comments. I expect one of your correspondents will ask what's this got to do with some ill-informed limey? We could see some sparks yet!

“I was interested in your comments re flight AF 447. I hadn't picked that up over here. The report is much as you suggested months ago. Angle of Attack indicators, well, an old aid to airmen surely? As always Cap we must learn from incidents such as this dreadful one and the Concorde in Paris although I never saw the final report on that.

“English summer is disaster this year, they're blaming the jet stream, too far south some say caused by the arctic ice melting. An interesting hypothesis but if true we in the western Europe can expect some very wet summers.”

My response:

Peter,

            No worries.  As always, take your time with responses.  We all have lives to live, first and foremost.  Also, all’s well in the colonies.  We could use some rain; we are bit short on the Great Plains this year.

            Re:  health care.  Again, no worries.  I do endeavor to keep the rhetoric civil, which is one reason I keep the identity of contributors private; no need to make things personal.  The debate in the U.S. is a long way from over; this year’s election should vent a lot of the steam.

            FYI: Did you know the euphemistic reference to British citizens as “limeys” stems to the 1st controlled medical experiment in history, conducted by Royal Navy surgeon James Lind, who solved the problem of shipboard scurvy [1757]; henceforth, sailors under sail regularly added lime juice to their daily ration of grog – a little factoid from my history journal – and, I dare say, one of the key discoveries that contributed to Britannia rules the waves for several centuries.

            Re: AOA indicators.  Indeed, an old aid to aviators that was considered unnecessary in the modern computer age – how wrong they were! 

            Re: Concorde.  Now that you mention it, I’ve not seen the BEA Concorde final report either; I’ll have to give it a look-see.

            Re: London weather.  Yeah, the weather was rather dreary for the Queen’s Jubilee Celebration.  Hopefully, y’all will get a break during the Olympics, due to commence in a few weeks time.  Of course, I do not know the cause.  However, I do recall four decades ago the “scientists” whining about the onset of a new ice age.  Weather on the Big Blue Marble waxes and wanes.  We are also at the Solar Maximum phase of our star’s periodic cycle . . . perhaps no correlation.

Thx for sharing your thots.  Take care and enjoy.

Cheers,

Cap

 . . . round two:

Subject: RE: Update no.552

From: "peter gipson"

Date: Tue, July 17, 2012 9:34 am

To: "'cap'"

Cap, thanks for below.

“We've had glimpses of your weather forecasts, it looks warm. I take it the harvest will be intact. Ours looks weighty but needs a month of sunshine, don't we all.

“I had only a vague idea about limeys. Good job he selected limes and not lemons! I imagine our mariners turned their noses up at having their grog 'infected' with lime juice.

“On the contrary Cap, I believe the periodic cycle has a great bearing on the planet's weather. There have been articles to support this. We shall have to see.”

 . . . my response to round two:

Peter,

            Re: weather.  Beyond warm, I’m afraid . . . hot, damn hot, as they say.  No rain for the Great Plains in the forecast either.  We’ve got plenty of sunshine to spare.  Hope it all breaks up for the London Games.

            Re: limes.  I suspect the sailors gladly took the limejuice in their grog, when given the choice between scurvy, limes outright, or the grog additive.  Then again, knowing the Royal Navy back in the days of sail, I doubt they were given any choice at all.  The Royal Navy needed healthy sailors to operate their ships of the line.

            Re: global warming.  I cannot attest to the validity of the hypothesis, but I do believe we go through these cycles.  Indeed, we shall see.

Cheers,

Cap

 . . . round three:

Subject: RE: Update no.552

From: "peter gipson"

Date: Tue, July 17, 2012 3:00 pm

To: "'cap'"

Cap,

“Strange we should be having this exchange at this time. Tonight on BBC television we saw pictures of a mid-west corn field (maize) looking very sad indeed and a commentary about your hot summer. Really the discussion was about our inflation level falling but expecting to rise again because of your possible poor harvest and the price of crude that seems to be firming again.

“Again on Global warming and the solar cycle, since my earlier on the subject I have done some research and find conflicting views on the subject. Indeed Cap it seems as though the jury is still out on the matter which has surprised me somewhat.”

Ps, I'll send you some rain!

Regs Peter eastside.

 . . . my response to round three:

Peter,

            Re: weather, crops & economy.   The linkage is clearly established.  This weather and drought is hitting the American “bread basket” square on.  The wheat crop is in and did fairly well.  The corn crop is taking a major hit.

            Re: global warming.  The science is quite confused.  Yet, as I have long said, it does not matter whether there is global warming, climate change, or whatever, or whether humans have had any impact whatsoever, we still need to reduce (headed toward eliminate) our dependence on fossil fuels.  We can do better.  If it makes us feel better that we are helping the environment, then great . . . so be it.  Let’s get on with what must be done.

Comment to the Blog:

“Hawker Beechcraft seems to be suspended ‘between the Devil and the deep blue sea.’ The issues of separating the Defense part of the business from the part going to the Chinese buyer ought to be interesting from an academic point of view. I’m sure the affected employees will have more colorful adjectives for that. I imagine other issues will also arise. I wish Wichita well.

“It seems obvious to me that you are right about keeping standards of performance rather than of gender or other irrelevant factors, not just for this military function but in general. Now to convince the rest of the world.

“The LIBOR scandal is large and fascinating. I would not miss Secretary Geithner were he caught in the net of investigations, but the important outcomes will concern the banks. I see the time for shoring up confidence in banking in its current form as past. The next step is backwards eighty years; reinstate the banking regulations brought on by the Great Depression, or rather their equivalents updated for technical developments. Addressing the revolving door between regulators and industries would also help, as would campaign finance reform.

“Your UK questioner comes closer to my situation than your comments. He did not claim his operation was free; in fact, he said it was a good deal. ‘Just give up and die’ is not rhetorical here in Ohio, where 14,000 people die annually due to lack of medical care. It seems a reasonable assumption to me that most of them are poor people. Anyone who has access to medical coverage and passes it up probably needs some sort of care for whatever mental condition leads them to risk bankruptcy or worse for lack of medical care. Medical bills are the largest cause of bankruptcy, so maybe there are more other-than-poor uninsured than I would like to think. Also, many conditions, including each of mine, cannot be treated by an emergency room. I will either live with or die from mine. Your citing of ‘inherent distrust of government’ baffles me. I fail to understand your comparison of medical insurance to J. Edgar Hoover, Richard Nixon, et al. (Going back to Locke is strictly for academics and historians.) They were destructive, but in civil rights issues. Those malefactors gained power by controlling, defaming and otherwise harming anyone who stood in their way. They did not give medical advice or try to control doctors, hospitals, etc. I have mislaid ‘the camel and tent proverb’; please advise.”

My reply to the Blog:

Calvin,

            Re: Chinese buyers.  Well said.  The court has approved the company entering a 45-day exclusive due diligence and negotiation with Superior.  Assuming that phase is completed successfully, there will be a court-supervised, public auction phase where other companies will have the opportunity to out-bid Superior.  I believe most employees want to keep their jobs and especially want the product lines to continue and flourish.  Goldman-Onex so heavily laded the company with debt that it was unable to sustain the debt when the market contracted sharply in the Great Recession.

            Re: standards of performance.  At least there are two of us.  We just need to enlist the support of our friends, and their friends, and their friends.  Pretty soon, we have a real, big voice.

            Re: LIBOR scandal.  The big banks have NOT helped their public reputation.  I am not a fan of regulation because it is another word for government.  However, regulation is an essential element of contemporary life – things move too fast and the impact is too great to allow pure, unadulterated capitalism to run rampant.  There must be rules to retain some semblance of order, fairness and normalcy.  The revolving door is a not so subtle form of corruption, and yet the regulators must have a degree of expertise to recognize the tricks.

            Re: distrust of government.  I was not speaking for myself.  Rather, I was attempting to explain why a large chunk of American citizenry is so adamant in their opposition to PPACA – some because they hate doctors, or some because PPACA was signed into law by Barack Obama.  For whatever reason, a portion of our population does not support PPACA, and I was trying to explain why.  Hoover & Nixon amplified the distrust of government.  The wisdom of John Locke influenced the thinking of the Founders / Framers and sought freedom for the common man from the oppression of royalty and the elitist government.  Again, I was trying to illuminate the genesis of our inherent distrust of government.

            Re: proverb. "If the camel once gets his nose in the tent, his body will soon follow" – the classic metaphor for governmental intrusion into our private lives.

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

Cheers,

Cap                 :-)