Author: Matthew G. Saroff

Oh to Be a Fly on the Wall

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I would love to dial into this conference call:

Karl Rove’s Crossroads outfit is holding a phone call for its big donors Thursday to sum up the race, said Stan Hubbard, a Minnesota media mogul and mega-donor. “Obviously, somebody made a mistake and didn’t do things right. There’s no question about that,” he said.

One would assume that at least a couple of these billionaires are not complete drooling morons, and they might be aware that any number of people have started to notice that Karl Rove, and the rest of the Republican “consultants” have more in common with bunko artists than they do with actual political operators.  (see here, here, and here)

I have the feeling that they will not be pleased with their return on investment.

Reid Just Threw a Brush Back Pitch at Barack Obama

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To which I say good for him:

Nevertheless, getting to a deal won’t be easy — especially if Democrats refuse to entertain cuts on entitlements. Speaking to reporters after the news conference, Reid wouldn’t say whether Democrats would be open to cutting Medicare benefits, but he said that Social Security wouldn’t be touched.

I’m not surprised that he said this.

He picked up seats while defending twice as many seats as Republicans, and the incoming Senators are more liberal than their predecessors, and the only “Democrat” who might have been eager to take point on this, Bob Kerrey, lost his race for Senate.

More Election Updates

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Allen West, crazy man and war criminal (literally), gone.

Democrat Jon Tester, reelected from Montana, (!) in a victory for retro hair styles.

More interesting were the initiative elections.

Let’s start with Maryland, where gambling expansion and gay marriage passed.

On the gay marriage front, Maine and Washington also passed gay marriage, and in Minnesota, voters defeated an anti gay marriage constitutional amendment.

In California, things actually turned out better than I expected, with Democrats getting a super-majority in both houses of the legislature, meaning that they can raise taxes, and on initiatives, Jerry Brown’s tax increase passed, as did a moderation of their three strikes law, closing corporate tax loopholes, enhanced penalties for human trafficking, and non-partisan redistricting.

It’s kind of remarkable for California, nothing really stupid passed, though I am bumming a bit over the fact that death penalty repeal failed (by only 5%), and the ratf%$#s at Monsanto managed to kill the genetically modified foods labeling law.

Most importantly, California decisively defeated the labor union muzzling initiative(aka “paycheck prediction”).

Not a bad evening.

Since This May Be Irrelevant in a Few Hours

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This is PressTV, the Iranian goverment’s English language TV channel, and the author is Gordon Duff, who his controversial to say the least, but his allegation that the recent relieving of a significant number of military officers was because of a coup plot:

The Obama administration has had American military, both on domestic and foreign bases on high alert since October 1. However, there has been no known terrorist enemy threatening the US. The enemy is called “domestic” but its origins are far from American.

 Today, Rear Admiral Charles M. Gaouette was “fired” from his command of one of the three carrier battle groups back to Bremerton, Washington to face an investigation.

 It is impossible to adequately state how unusual this is and how serious.

 The Navy was clear that the charges had nothing to do with his personal conduct, no rape or sexual misconduct, no stolen money, no drug use, the things that usually bring down careers in the Navy, that and crashing ships into each other.

 Gaouette was sent back because the Secretary of Defense found him unfit for command, sent him across the world in the middle of one of the largest combat exercises in history, one both timed prior to an election and one at a critical location, near the Straits of Hormuz in the Persian Gulf.

 Gaouette commanded nearly one third of the Naval and air combat forces in the region.

 The decision was made based on a conversation with the Secretary of Defense who, at the end of the talk, believed Gaouette was part of a group of military officers who have been under suspicion for planning a “Seven Days in May” type overthrow of the US government if President Obama is re-elected.

Official sources list this as allegations of inappropriate judgement.

I don’t know what sort of “inappropriate judgement” would have the admiral in charge of the 2 carrier task force relieved and flown off his ship while at sea in the Persian Gulf.

I would note that the right wing “black helicopter” theory, that he was fired because he was forbidden to conduct an air strike in Libya.  But at the time his ship, the Stennis, was not in the Gulf, it was in the Western Pacific, well outside of any carrier based aircraft’s range.

Additionally, we have, “Cmdr. Joseph E. Darlak and top officers of the San Diego-based Navy frigate USS Vandegrift” been relieved for “alcohol issues” during a port call in Vladivostok.

You mean that sailors on leave in Vladivostok would drink on liberty in Russia?

This is weird.

Harry Reid was Right

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Bloomberg is reporting that Mitt Romney rented the Mormon Church’s nonprofit status to avoid taxes, meaning that he probably paid next to no taxes for the decade ending in 2009:

In 1997, Congress cracked down on a popular tax shelter that allowed rich people to take advantage of the exempt status of charities without actually giving away much money.

 Individuals who had already set up these vehicles were allowed to keep them. That included Mitt Romney, then the chief executive officer of Bain Capital, who had just established such an arrangement in June 1996.

 The charitable remainder unitrust, as it is known, is one of several strategies Romney has adopted over his career to reduce his tax bill. While Romney’s tax avoidance is legal and common among high-net-worth individuals, it has become an issue in the campaign. President Barack Obama attacked him in their second debate for paying “lower tax rates than somebody who makes a lot less.”

 In this instance, Romney used the tax-exempt status of a charity — the Mormon Church, according to a 2007 filing — to defer taxes for more than 15 years. At the same time he is benefiting, the trust will probably leave the church with less than what current law requires, according to tax returns obtained by Bloomberg this month through a Freedom of Information Act request.

 In general, charities don’t owe capital gains taxes when they sell assets for a profit. Trusts like Romney’s permit funders to benefit from that tax-free treatment, said Jonathan Blattmachr, a trusts and estates lawyer who set up hundreds of such vehicles in the 1990s.

Near Zero

 “The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said. Despite the name, giving a gift or getting a charitable deduction “is just a throwaway,” he said. “I used to structure them so the value dedicated to charity was as close to zero as possible without being zero.”

It would have been nice if the press had gotten this earlier, but it sure looks like Rmoney’s tax returns have been kept under wraps because he lied when he claimed that he was paying a reasonable amount of taxes.

This is Huge

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A Judge in Australia has just found Standard and Poors liable for bad investments:

I’d never heard of Australian federal judge Jayne Jagot before today, but she’s my new favorite jurist, thanks to her decision in a recent court case which was brought against ABN Amro and Standard & Poors.

The coverage of the decision (Quartz, FT, WSJ, Bloomberg, Reuters) concentrates, as it should, on the hugely important precedent being set here: that a ratings agency — in this case, S&P — is being found liable for losses that an investor suffered after trusting that agency.

S&P is appealing the decision, which runs to an astonishing 635,500 words, or almost 1,500 pages: it’s literally longer than War and Peace. At this point, it’s fair to assume that Jagot is one of the world’s foremost experts on structuring and rating CPDOs — crazy derivative instruments which had a brief moment of glory at the end of 2006 before imploding spectacularly during the financial crisis. And helpfully, her decision begins with a 56-paragraph summary of her findings, which lays out exactly how culpable and incompetent S&P really was.

Needless to say, I have not read the whole opinion, though I did look at the summary, which was eye glazing on its own.

The substance of this ruling is that:

  • ABN Amro had a model of risks and return that was crap.
    • And S&P used it without any consideration as to the quality of the model.
  • The data that ABN Amro used in this model was complete crap.
    • And S&P used used it without any consideration as to the quality of the data.

Basically, we are talking about is willful blindness, which does not eliminate culpability, and willful blindness is at the core of the the ratings agencies business model.

Here is hoping that this survives appeal.

Some Navel Gazing on My Part

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I’ve been fairly clear on this blog that I think that various actions of Obama renders him unfit to be President.*

I also understand that there are people who make arguments that could be called compelling to vote for him, most notably the Rude Pundit’s, “In the End, Vote for Obama Because F%$# Romney,”† (%$# mine)  because Mitt Romney is unfit to be President as well.

While I was in Ashland, I talked with my dad about this, and explained to him my position, and further explained that, living in Maryland, I had no moral dilemma, because my vote for President had not consequence.

He asked me what I would do if I lived in a battleground state, and I responded, “That way madness lies.”

My was flip, and it was a cop out. 

I simply don’t know what I would do if I lived in Ohio, or Virginia, or Florida,‡ or New Hampshire, or Wisconsin, or Colorado, or Iowa, and any statement that I might make would be self serving and shallow, and ultimately meaningless.

What I’m saying here is that, on this matter, if you think that I’m full of sh%$, then I’m full of shit, and if you think that I have a f%$#ing point, then I have a f%$#ing point. 

There are any number of times where I make an argument that is fact based, and I try my best to supply links to those facts, but this is not one of those times.

I think that I’m right, but opinions are like assholes, everyone has one.

*Normalizing torture by refusing to prosecute, his war on whistle-blowing, his steadfast refusal to prosecute the malefactors of wealth, his assertions of a executive authority that makes Dick Cheney look mild, etc.
†H/t Cthulhu for the catch.
‡OK, I know what I would do if I lived in Florida, I would kill myself.

Cloud Computing, RIP

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The Department of Justice is now arguing that you have no property rights whatsoever to your data if you use cloud storage:

Yesterday, EFF, on behalf of its client Kyle Goodwin, filed a brief proposing a process for the Court in the Megaupload case to hold the government accountable for the actions it took (and failed to take) when it shut down Megaupload’s service and denied third parties like Mr. Goodwin access to their property. The government also filed a brief of its own, calling for a long, drawn-out process that would require third parties—often individuals or small companies—to travel to courts far away and engage in multiple hearings, just to get their own property back.

Even worse, the government admitted that it has accessed Mr. Goodwin’s Megaupload account and reviewed the content of his files. By doing so, the government has taken a significant and frightening step. It apparently searched through the data it seized for one purpose when its target was Megaupload in order to use it against Mr. Goodwin, someone who was hurt by its actions but who is plainly not the target of any criminal investigation, much less the one against Megaupload. This is, of course, a bald attempt to shift the focus to Mr. Goodwin, trying to distract both the press and the Court from the government’s failure to take any steps, much less the reasonable steps required by law, to protect the property rights of third parties either before a warrant was executed or afterward. And of course, if the government is so well positioned that it can search through Mr. Goodwin’s files and opine on their content—and it is not at all clear that this second search was authorized—presumably it can also find a way to return them. .

But in addition, the government’s approach should terrify any user of cloud computer services—not to mention the providers.  The government maintains that Mr. Goodwin lost his property rights in his data by storing it on a cloud computing service.  Specifically, the government argues that both the contract between Megaupload and Mr. Goodwin (a standard cloud computing contract) and the contract between Megaupload and the server host, Carpathia (also a standard agreement), “likely limit any property interest he may have” in his data.  (Page 4). If the government is right, no provider can both protect itself against sudden losses (like those due to a hurricane) and also promise its customers that their property rights will be maintained when they use the service. Nor can they promise that their property might not suddenly disappear, with no reasonable way to get it back if the government comes in with a warrant. Apparently your property rights “become severely limited” if you allow someone else to host your data under standard cloud computing arrangements. This argument isn’t limited in any way to Megaupload — it would apply if the third party host was Amazon’s S3 or Google Apps or or Apple iCloud.  

(emphasis original)

So basically, if a prosecutor decides to go after one person using a cloud service, then they could take down the entire service, and if you do not like it, tough, you have no property rights.

Having your property seized at the whim of a prosecutor is antithetical to the very idea of the rule of law.

Still bullish on cloud storage?

H/t Ecop at the Stellar Parthenon BBS.

Chinese Claim Confirmation of Propellantless Propulsion Breakthrough

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Click for full size


It looks like a steam punk’s wet dream

The thrust is very similar to that of ion, in the millinewton range, but if this works, the ISP (seconds of thrust per pound of propellant) for such a system is literally infinite (paid subscription required):

Chinese scientists appear to have validated a propellentless space propulsion technology previously branded as impossible. Based on earlier British research, it is averred that the EmDrive concept provides sustained thrust at low cost and weight, but this has yet to be accepted even as a workable theory by the wider propulsion community.

 The EmDrive story started in 2001 when engineer Roger Shawyer set up Satellite Propulsion Research (SPR) to exploit his new concept in electrical propulsion. He was helped by a modest grant from the U.K.’s now defunct Trade and Industry Department.

 Space propulsion relies on Newton’s laws of motion: propellant is ejected backward at high velocity, and the craft is pushed forward with equal and opposite momentum. Even with high exhaust velocity, such as ion drives ejecting particles at 30 km per second (more than 62,000 mph), the mass of propellant is a limiting factor.

 Shawyer’s EmDrive does not have any exhaust. It consists of a tuned cavity shaped like a truncated cone into which resonating microwaves are channeled. Like other radiation, these exert a tiny pressure when reflected off a surface. According to Shawyer, the pressure exerted on the large end of the cavity is greater than the pressure on the small end, producing a net thrust.

………

The result , 720 mN, is just 2.5 oz. of thrust, but satellites often work with less. Boeing’s advanced XIPS thruster , which fires out Xenon ions at high speed, achieves 165 mN of thrust from 4.5 lb. It weighs 35 lb., more than an equivalent EmDrive, and the propellant for prolonged operation can weigh much more.

XIPS and EmDrive can both run off solar electricity, but the EmDrive never runs out of propellant. Propellant to maintain satellite position is a major weight contribution; Shawyer suggests that the EmDrive could halve the cost of geostationary satellites .

Either this is a massive fraud, or it will have major impact on satellite launches.

For interplanetary probes, it could be revolutionary, cutting times and costs by something like an order of magnitude.

I’d wait for more independent verification though. The Chinese seem to be playing their results pretty close to the vest, which in and of itself is suspicious.

Romania Discovers that the Euro Sucks Wet Farts from Dead Pigeons………

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Romania is technically required to join the Euro at some point, but considering that they can set the date, my guess would be that date will be decades, if not centuries in the future:

………But as the euro crisis has deepened, it has also helped that Romania and the others have kept their own currencies.

That has given these still-developing countries a host of advantages, while many economists believe the euro zone’s one-size-fits-all monetary policy has hampered Ireland, Greece and Spain in restarting their moribund economies. Indeed, many of the post-Communist states are having strong second thoughts about their long-running goal of joining the euro.

Mugur Isarescu, the governor of the National Bank of Romania, said in an interview that maintaining its own currency had given Romania the flexibility to set interest rates, control liquidity and allow the currency to depreciate to help rein in the deficit. In the absence of control over monetary policy, he noted, euro zone countries like Greece are forced to rely primarily on fiscal policy: taxing and spending.

“Of course there is a backlash and disappointment because E.U. accession was seen as a panacea,” he said. “The dreams were too high.”

In Romania’s case, maintaining its cheaper currency, the lei, has made its exports — two-thirds of which go to the euro zone — more competitive and given it a lower cost of living that has made the country a sudden draw for highly qualified workers from struggling euro zone countries.

………

Seven of the 10 former Communist countries in the European Union have yet to adopt the euro. The Czech Republic, which uses the koruna, wants a referendum before joining and has cited 2020 as the earliest target date. Hungary has stuck with its currency, the forint, and said it would not adopt the euro before 2018. In Poland, Prime Minister Donald Tusk recently deemed the euro “completely unattractive.”

Romania’s previous target for joining the euro zone, in 2015, is now “out of the question,” is actually Mr. Isarescu said.………

The Czech Republic is potentially the most interesting case.

They have a very real possibility, both by virtue of their location and history, of becoming a manufacturing powerhouse that could be a very serious competitor to Germany.

If the Czech Republic drags its feet on Euro accession, and they start grabbing market share from the Germans, one wonders when the German politicians will start sounding more “Mediterranean”.