Religion is too important a matter to its devotees to be a subject of ridicule. If they indulge in absurdities, they are to be pitied rather than ridiculed.
Through laziness and cowardice a large part of mankind, even after nature has freed them from alien guidance, gladly remain immature. It is because of laziness and cowardice that it is so easy for others to usurp the role of guardians. It is so comfortable to be a minor! .....Emanuel Kant
Published on Jan 26, 2013
Important Video: http://youtu.be/_yy3YJBOw_oTODAY's LINKS:
The Heavens and Their Story: http://ia700408.us.archive.org/12/items/cu31924031323797/cu31924031323797.pdf
NOAA Spaceweather Scales: http://www.swpc.noaa.gov/NOAAscales/
Biggest Flares this Cycle: http://en.wikipedia.org/wiki/Solar_cycle_24
ANOTHER Solar Quiet Article for Reference: http://news.nationalgeographic.com/news/2009/05/090504-sun-global-cooling.html
Maunder Minimum Chart: http://science.nasa.gov/science-news/science-at-nasa/2008/11jul_solarcycleupd... [It's better just to google one]
Solar Magnetic Field: http://wso.stanford.edu/gifs/Polar.gif
An Unlikely but Relevant Risk: The Solar Killshot: http://youtu.be/X0KJ_dxp170
U.S. Weighing Scope of Help for French Military in Mali
By DAVID E. SANGER and ERIC SCHMITT
WASHINGTON — The Obama administration is debating whether the
possibility of a major blow to Qaeda-linked fighters in Africa outweighs
concern about being drawn into a lengthy conflict there.
The OCC’s Tragic Response to the Frontline expose: The Untouchables
Saturday, 26 January 2013 01:11
On January 25, 2013, I made this comment on Frontline’s web site discussing its documentary: “The Untouchables” and an accompanying (January 22, 2013) article by Jason Breslow entitled: Were Bankers Jailed In Past Financial Crises?
Were bankers jailed in past financial crisis
I addressed two statements in that article. The first statement reads:
“Equally important in the S&L crisis was a much tougher framework of banking laws, according to Black, who is critical of the deregulation that began during the Clinton administration.
‘Deregulation was bound to produce widespread fraud,’ he said. ‘We know better. If we learn the lessons from this, we need not have these fraud epidemics.’”
I responded in my comment that:
“The quotation at the end that the reporter attributes to me was actually me quoting the famous concluding paragraph of George Akerlof and Paul Romer's 1993 article entitled ‘Looting: the Economic Underworld of Bankruptcy for Profit.’"
[Here is the full quotation from Akerlof & Romer.
“Neither the public nor economists foresaw that [S&L deregulation was] bound to produce looting. Nor, unaware of the concept, could they have known how serious it would be. Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better. If we learn from experience, history need not repeat itself” (George Akerlof & Paul Romer.1993: 60).]
The second statement in the Frontline article that I commented reads:
“One key tool used during the S&L crisis was criminal referrals from regulators to government prosecutors, explained William Black, who served as the government’s point man for litigation in the S&L crisis. Such referrals ‘are absolutely essential,’ said Black, because they provide a road map for a Justice Department already short-staffed in the area of white-collar crime. According to Black, criminal referrals have been missing in the response to the 2008 crisis.
Black, now a professor of law at the University of Missouri at Kansas City, said the Federal Home Loan Bank Board — the predecessor to the Office of Thrift Supervision (OTS) — passed along thousands of referrals to prosecutors. ‘Flash forward in the current crisis, the same agency made zero,’ he said.
In a statement, a spokesman for the Office of the Comptroller of the Currency, which merged with OTS in 2011, said that referrals are a ‘poor indicator of the quality of supervision’ because they ignore the Suspicious Activity Report process, in which banks are required to report known or suspected criminal offenses.
The statement said that ‘using the number of referrals to compare the crisis of the 1980s to the most recent economic crisis is comparing apples to oranges.’ It continued: ‘A significant number of thrifts failed in the 1980s because of fraud and insider abuse. That has not been the major factor behind the most recent crisis.’”
[I actually told the reporter that we made over 30,000 criminal referrals as an agency during the S&L debacle. The remainder of this document is the comment I posted on the Frontline web site discussing the OCC claims in their statement to Frontline.]
“The OCC statement about SARs (the technical jargon for "criminal referrals"), is sad. Banks virtually never make criminal referrals against their senior officers, so the number of SARs filed by banks is not relevant to the subject being discussed. The OTS made over 30,000 criminal referrals during the peak years of the S&L debacle. It made zero in this crisis -- a crisis in which the losses and the frauds by senior managers were roughly 70 times larger than during the debacle. Apparently, the OTS and the OCC are trying to excuse their failure to examine, supervise, regulate, and investigate, much less make referrals on the claim that this is the first Virgin Crisis.
Readers are invited to read my testimony before the FCIC and the Senate. The ultra brief version is (1) by 2006 roughly 40% of total mortgage loans originated were "liar's loans", (fyi, roughly half of all loans called "subprime" were also liar's loans -- the categories are not mutually exclusive, (2) the incidence of fraud among liar's loans is 90%, (3) an honest real estate lender would not make pervasively fraudulent loans because doing so would inevitably cause the firm to fail (absent a bailout), (4) liar's loans, however, are optimal "ammunition" for "accounting control fraud", (5) investigations (and logic) have confirmed that it was overwhelmingly lenders and their agents who put the lies in liar's loans, (6) no lender was ever required or encouraged by the government to make or purchase liar's loans -- the opposite was true, the government discouraged such loans and industry documents confirm this fact, (7) liar's loans make an excellent "natural experiment" because even Fannie and Freddie were not encouraged to make these loans -- because they did not aid them in meeting the "affordable housing goals", (8) Fannie and Freddie, eventually, purchased enormous amounts of liar's loans for the same reason that the investment banks (not subject to the CRA or any affordable housing goals did) they created massive (albeit fictional) short-term accounting income, which flowed through to the bonuses of many Fannie and Freddie executives. Let me put these data in another format -- by 2006, lenders were making over two million fraudulent liar's loans annually. Fraudulent liar's loans grew massively because lenders (and purchasers) created perverse incentives to make and purchase massive amounts of these fraudulent loans.
This level of fraud is massively greater than during the S&L debacle, where accounting control fraud never became a dominant national lending strategy. Liar's loans grew so rapidly, and became such a large share of the market that they constituted the loans "on the margin" that hyper-inflated the financial bubble, which drove the Great Recession.
The S&L debacle was halted by vigorous reregulation that was successful precisely because we targeted the accounting control frauds as our top priority to shut down, remove their senior managers, and prosecute those managers. The liar's loans "crisis" of 1990-1992 in Orange County, California was stopped in its tracks without any expensive failures because we (the OTS West Region) realized that such loans inherently would lead to endemic fraud and losses. We drove entities like Long Beach out of the industry (it became a mortgage banker, and gave up its federal depositi insurance) for the sole purpose of escaping OTS jurisdiction). The OCC and the OTS not only failed to regulate the accounting control frauds they had jurisdiction over -- they engaged in a vigorous "competition in laxity" with each other that included a heavy focus on which agency could most aggressively "preempt" state efforts to stop the fraudulent lenders.
Beginning with Federal Home Loan Bank Board Chairman Gray in 1984 (through 1993), the S&L regulatory agency made one of its top priorities the prosecution of fraudulent senior officers who led the accounting control frauds. The agency did so because it understood that criminal prosecutions were the only remedy that CEOs really fear. The OCC's head, Mr. Curry, has a very different view:
"Curry said bank regulators were more focused on getting problems corrected rather than criminal penalties. 'From our standpoint, as a bank regulatory agency, our job is to, one, identify the problems and then mandate that they get fixed,' he said. 'I don't think it's our role to avenge or to punish per se.'"
We secured over 1,000 felony convictions in cases designated as "major" by the Justice Department. We worked with the FBI and DOJ to prioritize the 100 worst fraud schemes. Those schemes involved roughly 300 S&Ls and over 600 elite targets for prosecution. Virtually all of them were prosecuted. We secured over a 90% conviction rate -- against the best criminal defense lawyers in the world.
One of our mantras in white-collar criminology is: "if you don't look, you won't find." The Frontline documentary begins the process of explaining what those of us who are aware of what a real investigation is and what it requires have been saying for years -- neither the Bush nor the Obama administration has been willing to conduct a real investigation of the elite banksters whose frauds made them wealthy and drove the financial crisis and the Great Recession. This is one of the hallmarks of crony capitalism. It cripples our economy, our democracy, and our integrity. The statue of Lady Justice is blindfolded to symbolize that justice is blind to power. No one is above the law. The Department of Justice is now, officially, an oxymoron given its senior officials' admissions that they deliberately refuse to hold accountable (or even investigate) the systemically dangerous institutions (SDIs) and their senior officers because of fears of causing a global financial crisis. As a former senior regulator, an effective regulator, I am astounded that anyone believes that the route to financial stability is leaving elite frauds in charge of many of our banks. Any bank that is too big to fail and to prosecute is a clear and present danger that should be promptly shrunk to the point that it can no longer hold the global economy hostage in order to extort immunity from the criminal laws for the controlling officers who became wealthy by being what Akerlof and Romer aptly described as "looters."
Congratulations to everyone at Frontline involved in producing the documentary. I urge Frontline to revisit this issue because it is one of defining matters that will decide whether our Nation will restore the rule of law and return to greatness.
William K. Black
Associate Professor of Economics and Law
University of Missouri-Kansas City”
Economics of the 99% Guilt and Debt? How I learned to love it
Saturday, 26 January 2013 01:04
Will the US government go the same way?
[Thanks to Wikipedia, "bankruptcy" entry.]
"Another Day Older and Deeper in Debt"
[From "16 tons", lyrics claimed by George Davis, Kentucky coal miner.]
As we approach the new debt ceiling Doom's Day (in the merry month of May) a reflection on the nature of the public debt itself seems appropriate. I begin with the hard-Right take on the debt.
During 2012 all us Americans every day went further into debt by about $1.7 billion dollars. If you work that out, it means $6 million for every woman, man and child (I leave the reader to make the calculation per hour, minute and second). As I wrote in another column, the German (and Dutch) word "schuld" means both "debt" and "guilt" (I thank Stuart Holland, former UK Labour Party Member of Parliament, for reminding me of this, which I must have missed in my college German courses). This dual meaning immediately suggests the question, should we all feel mega-guilty because every day we go deeper into mega-debt? Selling our souls to who-knows-what?
Actually, no. If anything, we should be pleased about that daily dose of schuld and hope for more. The debt builds up because our economy, largely thanks to legislation passed during or inspired by the New Deal, has several automatic mechanisms to protect us against instability far worse than we have suffered over the last five years. I explained that in article here in the Real News, posted on 10 November, and will not repeat myself ('Why Public Sector Deficits are the Solution, not the Problem").
The purpose of this 99%'er is to show why we should shed all fiscal schuld and learn to love the public debt. It is a harbinger of neither fiscal disaster or economic ruin. On the contrary, the public debt is a counter-weight, helping to prevent further contraction of the economy in recessionary times.
Why Some Think the Debt is a Problem
It is no mystery why the reactionaries point to the US public debt and revel in predictions of imminent damnation (perhaps even the immanence of damnation; i.e., divine retribution for our schuld). The Right, from the superficially respectable to the Troglodyte Tea Party, wants to rid the public sector of expenditures on social support such as Medicare and social security. Provoking fear and loathing about the public debt play a very important role in the campaign to convince people that there-is-no-alternative (TINA) to eliminating the civilizing elements in public expenditure, to prune it down to the business of war (killing people) and corporate welfare.
But, we also find a lot of people out there, even sensible and progressive people, who think something must be done about the debt. There are several standard reasons for this debt anxiety. First, and foremost, is the belief that because it is very big, it represents a per se problem. Second, lodged in the folklore of public debt is the idea that it is a "burden on our children". And, third, accumulating debt allegedly invites speculative attack by the gnomes of New York and other centers of financial malfeasance. The Right tells us that this would have devastating effects on the federal budget by inflating interest payments.
The chart below frequently makes people's blood run cold, as they reflect on the implications of the federal debt exceeding our annual national income itself. The debt to GDP ratio almost doubled, going from 56 percent of GDP in 2001 to over 100 percent in 2012, in just twelve years. Shocking? When reflecting on shock value of this increase, it is worthwhile to look back a few years. We can notice an earlier twelve years, 1980 to 1992, when the debt GDP ratio did more than "almost double", double it did, with some to spare (33% to 67% of GDP).
To my knowledge no one in the Republican Party threatened to close the federal government down during 1980 to 1992 as a result of the debt increase. The reason for this oversight by the forces of reaction is obvious. The growing debt-GDP ratio resulted from tax breaks for the rich bestowed by the late and unlamented Ronald Reagan (unlamented by me in any case). My point is simple. There is nothing transcendentally disastrous about 100 percent of GDP, especially because the ratio at the end of this calendar year is almost certain to be no larger and likely to be lower. Leveling off or decline will be the necessary consequence of US economic growth (see my article in the Real News, "what Deficit? What Cliff?", 28 November 2012).
In any case, the much feared and loathed 100 percent of GDP is a faux figure, a statistic with no practical significance. As I and many others point out, the federal government owes a substantial portion of the debt to itself. To be specific, a large part of it consists of the manner by which we fund the social security system. Many countries, the United Kingdom being an example, fund pensions out of the general budget. In this form of funding public expenditure on pensions is part of current expenditure allocated annually by the legislature when it passes a budget bill.
The designers of the US social security system, including President Roosevelt himself, decided against this form of funding, for a very practical political reason. They feared that some future reactionary Congress and/or president might attempt to cut or even dismantle the pension system (tell me, were they right?). To reduce the likelihood of this they designed the system to be "self-funding" through a specific tax, "social security contributions".
A complication arises with this type of funding. Some years benefit payments might exceed or be less than the revenue from the "contributions". This means that the system finds it necessary to maintain a surplus over time. This surplus should not sit idle (as "cash"). It should be invested to earn a return. Invest in what? The Great Crash of 1929 made it obvious that placing the social security surplus in private stocks and bonds would be extremely unwise (George Bush fills would unsuccessfully seek to do this in his second term).
What would be the safest possible asset? Federal bonds; that is, federal debt. To bring this story to a close, as a result of funding social security through a "fund" rather than annual budget allocations, about one-fifth of our debt represents the assets that pay social security benefits (go to the Economic Report of the President 2012, Table 78). This is not debt that any sane person would ever want to "pay off" (I am implicitly excluding Representative Paul Ryan here). The maximum debt for "paying off" purposes consists of that part not held by the federal government itself ("by the public" in the jargon, which is the measure used in the chart below, though its is an overestimate for reasons explained blow). That debt represented only 74 percent of GDP at the end of 2012.
Another substantial portion of the federal debt serves as assets of state and local government pension funds, as well as private sector funds. A frequently encountered estimate of the part held by private investors and foreign governments is 48 percent (found at http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-National-Debt.htm). That is to say, the part of the federal debt that anyone might be motivated to "redeem" may be less than fifty percent of GDP, not over 100 percent.
Federal government debt, total and non-federally held,
as percentage of GDP, 1977-2012
Why the Debt is not a Problem
But all of that fiddly calculation of what part of the debt is held by what, which and whom really is beside the point. The US government is quite capable of carrying a debt much larger than the current level. How could I suggest such heretical foolishness? Take a look at the next (and final, I promise) chart. At the end of 2012 the interest on the entire federal debt was just less than 1.5% of GDP, compared to well over three percent in 1991, when it reached its thirty-five year peak.
When we take out the part of the interest payments going to the federal government itself, most of which funds pensions, the percentage drops to one percent. As for interest payments to foreign holders of the federal debt (think China), for 2012 that edged below one-half of one percent of GDP.
In case you wonder how much of the federal budget goes to interest payments, the total was 5.9% of all expenditures, the lowest percentage for the thirty-five years except for 2008 and 2009 (when it average 5.5% of all federal spending). The peak, as might be guessed from the chart below, was back in 1989, when it hit 14.8 percent of federal expenditure, well over double the present level.
Interest on the federal debt as a percentage of GDP, total,
not held by the federal government and held by "foreigners"
1977-2012
Source for both charts: Economic Report of the President, 2012, Table 78. No reliable estimate of foreign debt holding before 1989.
Neither the size of the debt nor the cost of it represents a problem to anyone except those who want to dismantle what is left of the social expenditure of our federal government. Even more, a very large portion of that debt is good for us, an asset funding us in old age. But what about the "burden on future generations" and speculative attacks by the evil empire of financial capital? That's for next column. In the meantime, follow the Real News Network and contribute to getting a bit of good sense out there.
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