Category: Corruption

Not My Choice, but It’s a Start

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This post was corrected on 26 January, 2016.  

Dr. Dirk Markus has no connection to Aurelius Capital Management LP, the vulture fund in question.  

He is  the CEO of Aurelius Equity Opportunities, which is a completely unrelated financial firm, and is not involved with the attempted looting of Argentina in any way.

My apologies. 

Argentina is going to the International Court of Justic in the Hague:

Argentina has asked the international court of justice (ICJ) in The Hague to take action against the United States over an alleged breach of its sovereignty as it defaulted on its debt.

Argentina defaulted last week after losing a long legal battle with hedge funds that rejected the terms of debt restructurings in 2005 and 2010.

A statement issued by the ICJ, the United Nation’s highest court for disputes between nations, said Argentina’s request had been sent to the US government. It added that no action will be taken in the proceedings “unless and until” Washington accepts the court’s jurisdiction.

The US has recognised the court’s jurisdiction in the past, but it was not immediately clear if it would do so in Argentina’s case.

I guess that this is one avenue to take, though I think that the Argentinean investigation into possible violation of their laws by the vulture funds would likely be a better course of action:

Argentina’s markets watchdog on Monday launched an investigation into what it believes may have been unlawful speculation by holdout creditors whose litigation against the country for repayment of their defaulted bonds pushed it into a new default last week.

………

The head of Argentina’s Securities Commission Alejandro Vanoli said it had asked its U.S. counterpart for information on trade of Argentina’s sovereign debt and credit default swaps (CDS), derivatives used to insure against default.

The watchdog wanted to check if holdouts who rejected Argentina’s restructuring in the wake of its 2002 default held or traded CDS while they took part in negotiations with Argentina which could trigger a default.

“The use of insider information, which would be the case here, and market manipulation are crimes in Argentina, they are crimes in the United States, and they imply economic sanctions and eventually criminal sanctions,” Vanoli told a news conference.

While they might prevail at the ICJ, it is by no means a certainty, and it is also an open question as to whether or not the US government will obey that foreign court.

On the other hand, a prosecutor can indict a ham sandwich, and once they have file for extradition of the vulture funds senior staff.

Additionally, they could put a bounty on their heads, and if they were to promise a few million dollars for the apprehension and rendering of these people back to Argentina, you could be guaranteed that the pucker factor would skyrocket.

Additionally, it would be legal under US law, which grants extraordinary powers to bounty hunters.

If Argentina can win this, we deter from vulture fund f%$#ery, particularly if Mark Brodsky is delivered to Buenos Aires in chains with hoods over their heads.

So, How is that Whole Efficiency of the Whole Profit Driven Market Based Thing Working In Healthcare?

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It turns out as more and more for-profit hospices are entering the market, more and more of hospice patients are leaving those hospices under their own power, largely because the for-profit hospices are taking non-terminal patients, and driving out expensive terminal ones, in order to maximize their bottom line:

At hundreds of U.S. hospices, more than one in three patients are dropping the service before dying, new research shows, a sign of trouble in an industry supposed to care for patients until death.

 When that many patients are leaving a hospice alive, experts said, the agencies are likely to be either driving them away with inadequate care or enrolling patients who aren’t really dying in order to pad their profits.

 It is normal for a hospice to release a small portion of patients before death — about 15 percent has been typical, often because a patient’s health unexpectedly improves.

 But researchers found that at some hospices, and particularly at new, for-profit companies, the rate of patients leaving hospice care alive is double that level or more.

 The number of “hospice survivors” was especially high in two states: in Mississippi, where 41 percent of hospice patients were discharged alive, and Alabama, where 35 percent were.

 “When you have a live discharge rate that is as high as 30 percent, you have to wonder whether a hospice program is living up to the vision and morality of the founders of hospice,” said Joan Teno, a Brown University hospice doctor and researcher and the lead author of the article published in the Journal of Palliative Medicine. “One part of the reason is some of the new hospice providers may not have the same values — they may be more concerned with profit margins than compassionate care.”

(emphasis mine)

When people call for “Market Based Solutions,” this is what you get.

Grifting from the Rick Scotts* of the world.

*While head of Columbia/HCA, the current governor of governor’s company engaged in activities leading to their having to pay nearly a billion dollars to the government for Medicare fraud.

The New York Times Compares the CIA Torture Coverup to Catch-22

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If you recall, the Times was forced to publish its story about NSA spying on Americans when their James Risen, who co-wrote this story announced that he was going to publish on its own.

The “Gray Lady” has a long history of kowtowing to the US state security apparatus, which is why we see an OP/ED by Editorial Page Editor Andrew Rosenthal invoking the seminal Joseph Heller war farce to describe the CIA’s behavior with regard the Senate Inteligence Committee’s torture report:

In Joseph Heller’s anti-war satire, “Catch 22,” the hero, Yossarian, is assigned to a censorship detail. He amuses himself by deleting all the adverbs and adjectives from soldiers’ letters, then all the articles, then everything but the articles, and so on. His job was to delete details that threatened operational security. The result was gibberish.

It seems the Central Intelligence Agency was inspired by Yossarian’s example.

The C.I.A. was given the task of censoring the Senate Intelligence Committee’s report denouncing none other than the C.I.A. for torturing prisoners, lying to its overseers in Congress about the torture, and exaggerating how much valuable information the torture provided (if any). The result was predictable and proof, if anyone still needed it, that having the subject of the report censor that report is a very bad idea.

When the White House approved the C.I.A.’s censorship (the term of art in Washington is “redaction”) and sent the report to the Hill, James Clapper, the Director of National Intelligence, said in his usual sneering way that 85 percent of the report was intact and that half the blackouts were made to footnotes.

The issue, of course, is not merely how much is deleted, but what is deleted. On Monday, McClatchy reported that C.I.A. censors had blacked out the pseudonyms used to protect the identities of agents involved in the detention and interrogation of suspected terrorists. That, McClatchy said, rendered parts of the report unintelligible.

“Redactions are supposed to remove names or anything that could compromise sources and methods, not to undermine the source material so that it is impossible to understand,” said Senator Martin Heinrich, the New Mexico Democrat, who is a member of the intelligence committee. “Try reading a novel with 15 percent of the words blacked out.”

………

Asked about the dispute, the White House press secretary Josh Earnest, offered the usual boilerplate about national security reviews. Here’s how Yossarian might have quoted him: “It is BLANK that a BLANK process be carried out that BLANKS sources and BLANK and other BLANK that is BLANK to our BLANK BLANK.”

Let me be clear: this is not one of the unsigned Times editorials, and as such, it is not as official as that would be, but this is the f%$#ing editorial page editor of the f%$#ing New York Times, and as such, is arguably the 3rd most official statement from the paper. (something from publisher Arthur Sulzberger, Jr. coming in at number 2).

As I have said before, Obama, and the rest of his national security troika, fetishize secrecy, and you can expect a good faith declassification from them, so the Senate Intelligence Committee should exercise its statutory authority, and declassify the report on its own.

Feinstein* Accuses the CIA of Using Redactions to Muzzle Torture Report

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This is what Dianne Feinstein means when she says that “certain redactions eliminate or obscure key facts that support the report’s findings and conclusions.”

I would start getting my ducks in a row about having the Senate intelligence committee releasing the report unilaterally, because it is clear that neither the CIA, nor Barack Obama have the slightest interest interest in the public’s right to know here:

The key senator behind a landmark congressional investigation into the CIA’s use of torture has rejected redactions made by the Obama administration ahead of a planned public release of the politically charged report.

 In the latest struggle between senator Dianne Feinstein, the California Democrat who chairs the intelligence committee, and the CIA, Feinstein said she would delay a heavily anticipated disclosure of portions of the report in an attempt to reverse redactions that “eliminate or obscure key facts that support the report’s findings and conclusions”.

 “Until these redactions are addressed to the committee’s satisfaction, the report will not be made public,” said Feinstein, who added that she intended to outline the committee’s desired disclosures in a private letter to President Barack Obama.

 Another powerful senator and Obama ally, Carl Levin, the Michigan Democrat who chairs the armed services committee and who spearheaded his own investigation into US military torture, called the redactions “totally unacceptable.”

Spencer Ackerman’s analysis at this point becomes rather chilling:

Clapper left the door open to a “constructive dialogue with the committee.” In an indication of the deep strains between the committee and the CIA, that dialogue is largely brokered by the White House, which is attempting to balance the competing interests of both powerful entities while each looks to Obama for support.

So, apparently, the f%$#ing US state security apparatus is now a branch of government coequal to the Executive and the Congress, and, if the constant assertions of the State Secrets Privilege by the DoJ, the judiciary as well.

They aren’t, and the fact that the CIA is defying the Senate committee charged with overseeing their actions is wrong from almost every perspective.

*Full disclosure, my great grandfather, Harry Goldman, and her grandfather, Sam Goldman were brothers, though we have never met, either in person or electronically.

Full statement from her office after the break:

Aug 05 2014
Feinstein Statement on Redactions in Detention, Interrogation Study

 Washington—Senate Intelligence Committee Chairman Dianne Feinstein (D-Calif.) today released the following statement on the committee study of the CIA’s detention and interrogation program:

 “After further review of the redacted version of the executive summary, I have concluded that certain redactions eliminate or obscure key facts that support the report’s findings and conclusions. Until these redactions are addressed to the committee’s satisfaction, the report will not be made public.

“I am sending a letter today to the president laying out a series of changes to the redactions that we believe are necessary prior to public release. The White House and the intelligence community have committed to working through these changes in good faith. This process will take some time, and the report will not be released until I am satisfied that all redactions are appropriate.

“The bottom line is that the United States must never again make the mistakes documented in this report. I believe the best way to accomplish that is to make public our thorough documentary history of the CIA’s program. That is why I believe taking our time and getting it right is so important, and I will not rush this process.”

(Emphasis original)

Federal Reserve and FCIC Reject TBTF Banks’ “Living Will”

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To (mis)quote Bette Davis, “Fasten your seat belts. It’s going to be a bumpy ride,” because the regulators are claiming that the big banks contingency plans are worthless and leave the taxpayers on the hook:

Congress’s overhaul of the financial system aims to reshape large banks so that if they get into trouble they can descend into an orderly bankruptcy that does not set off a wider panic.

 But on Tuesday, two regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, sharply criticized the plans that the banks have prepared for winding themselves down in a controlled fashion. The F.D.I.C. said that it had determined that the so-called living wills were “not credible.”

 The agencies have sent letters to 11 banks, including JPMorgan Chase and Goldman Sachs, pointing out perceived shortcomings in the resolution plans that they submitted in 2013. The agencies demanded that the banks make improvements in living wills they submit for 2015.

 “Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn’t require unrealistic assumptions and direct or indirect public support,” Thomas M. Hoenig, the vice chairman of the F.D.I.C., said in a statement.

I am so not surprised by this.

The banksters aren’t providing meaningful “Living Wills” because it is in their interest not to do so.

Having a meaningful bankruptcy wind down plan means that, if something goes wrong, their stock options becomes worthless, and they probably lose their jobs, but if Uncle Sam is forced to bail them out, there is a pretty good chance that they get to keep their jobs and their hefty pay packages.

After all, that is what happened last time around.

The regulators should get tough with the banks:

If the banks do not make satisfactory changes, the regulators could take action, including requiring banks to sell units to shrink and simplify their corporate structures if they failed to comply with other orders, officials of the agencies said.

The regulators should give a reasonable amount of time (I would suggest 4 weeks, so that Congress won’t be back in session), and if they do not see a complete and meaningful plan, they should start breaking them up.

BTW, the big problem here is what Warren Buffet calls, “Financial weapons of mass destruction,” derivatives:

In suggesting areas the banks need to focus on, the regulators highlighted derivatives, which played a central and destabilizing role in the 2008 crisis. Derivatives can complicate bank resolutions because they may require collapsing banks to make payments to derivatives holders before other clients and creditors.

Unfortunately, derivatives allows financial institution to increase their leverage while technically staying properly capitalized.

They aren’t properly capitalized, of course, which is why the US government had to bail out AIG so that it could pay their insurance claims at 100 cents on the dollar.

It’s going to happen again, and no one is going to jail, again.

It sucks.

The right thing to do is for the Federal Reserve and the FDIC to break up the banks, as it always has been, but the banks own Washington, so it ain’t going to happen.

H/t Naked Capitalism.

Of Course Obama Expresses Confidence in John Brennan

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Because Barack Obama has made it quite clear that spying on Congress and shilling for torturers is no big deal:

President Obama said on Friday that he has “full confidence” in John Brennan, the director of the C.I.A., despite Mr. Brennan’s admission this week that his agency improperly searched the computers of the congressional committee that is preparing to release a report on the use of torture in the fight against terror.

………

Asked about the upcoming release of a report that documents American interrogation techniques, Mr. Obama said the C.I.A. exercised “very poor judgment” in its handling of the report. But he said that Mr. Brennan had apologized for the incident to Senator Dianne Feinstein, the chairwoman of the Senate Intelligence Committee.

“I have full confidence in John Brennan,” Mr. Obama said, noting an inspector general’s conclusions about the C.I.A. spying on the committee. “It’s clear from the I.G. report that some very poor judgment was shown in how that was handled. Keep in mind that John Brennan was the one who called for the I.G. report.”

Let us be clear: The CIA did not exercise, “poor judgement,” people exercised poor judgement.

People spied on Congress.

People broke cyber crime laws.

People showed contempt for the Constitutional separation of powers.

People, in this case John Brennan specifically, went on the Sunday shows and explicitly lied about this.

People were responsible, and people should be fired, prosecuted, etc. over all of this.

If We Can’t Jail John Brennan, Can We Please Fire Him?

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Remember when Congressional staffers accused the CIA?

Remember when John Brennan went on the Sunday shows and categorically denied it?

Rather unsurprisingly, John Brennan was lying through his teeth:

I don’t want to understate how seriously wrong it is that the CIA searched Senate computers. Our constitutional order is seriously out of whack when the executive branch acts with that kind of impunity — to its overseers, no less.

But given everything else that’s been going on lately, the single biggest — and arguably most constructive — thing to focus on is how outrageously CIA Director John Brennan lied to everyone about it.

“As far as the allegations of the CIA hacking into Senate computers, nothing could be further from the truth,” Brennan told NBC’s Andrea Mitchell in March. “We wouldn’t do that. I mean, that’s just beyond the, you know, the scope of reason in terms of what we do.”

Earlier, he had castigated “some members of the Senate” for making “spurious allegations about CIA actions that are wholly unsupported by the facts.” He called for an end to “outbursts that do a disservice to the important relationship that needs to be maintained between intelligence officials and Congressional overseers.”

And what compelled Senate intelligence committee chairwoman Dianne Feinstein to make a dramatic floor speech in the first place, bringing everything out in the open, was that Brennan had responded to her initial concerns not by acknowledging the CIA’s misconduct — but by firing back with an allegation of criminal activity by her own staff.

Not coincidentally, the document the CIA was hunting for, that Senate staffers were accused of purloining, and that Brennan was now lying about, was a big deal precisely because it exposed more lies.

Senator Mark UDall has called for Brennan’s resignation, but seeing as how DNI James Clapper lied under oath to Congress without consequence, I believe that Brennan’s current gig is secure.

As I have noted before, “The Cossacks work for the Czar.”

The fish rots from the head.

Well, This is Prize

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It turns out that the NRA’s chief counsel, and close confident of NRA chief Wayne LaPierre, is a murderer:

Shortly before dark on the evening of April 17, 1963, Robert J. Dowlut went looking for a gun inside the city cemetery in South Bend, Indiana. Making his way through the headstones, he stopped in front of the abandoned Studebaker family mausoleum. He knelt by the front right corner of the blocky gray monument and lifted a stone from the damp ground. Then, as one of the two police detectives accompanying him later testified, the 17-year-old “used his hands and did some digging.” He unearthed a revolver and ammunition. As Dowlut would later tell a judge, the detectives then took the gun, “jammed it in my hand,” and photographed him. “They were real happy.”

Two days earlier, a woman named Anna Marie Yocum had been murdered in her South Bend home. An autopsy determined she had been shot three times, once through the chest and twice in the back, likely at close range as she’d either fled or fallen down the stairs from her apartment. Two .45-caliber bullets had pierced her heart.

………

The following morning, Dowlut was charged with first-degree murder. A year and a half later, a jury found him guilty of second-degree murder. Before the judge handed down a life sentence, he asked the defendant if there was any reason why he shouldn’t be put away. Dowlut replied, “I am not guilty.” A day later, the Indiana State Prison in Michigan City registered Dowlut, now 19, as prisoner number 33848.

Less than six years later, Robert Dowlut would be a free man—his murder conviction thrown out by the Indiana Supreme Court because of a flawed police investigation. The court ordered a new trial, but one never took place. Dowlut would return to the Army and go on to earn college and law degrees. Then he would embark on a career that put him at the epicenter of the movement to transform America’s gun laws.

Today, the 68-year-old Dowlut is the general counsel of the National Rifle Association. As the NRA’s top lawyer, he has been a key architect of the gun lobby’s campaign to define the legal interpretation of the Second Amendment. He helped oversee the NRA’s effort to strike down Chicago’s handgun ban in the 2010 Supreme Court case McDonald v. Chicago, and he is the longtime secretary of the organization’s Civil Rights Defense Fund, which has spent millions assisting gun owners in court and sponsoring gun rights researchers. Dowlut’s journal articles have been cited by federal judges and are quoted by pro-gun activists. Chris W. Cox, the executive director of the NRA’s lobbying operation, has praised him as “a longtime distinguished Second Amendment scholar.” Dowlut’s behind-the-scenes legal work may have done as much to tighten the NRA’s grip on gun policy as its blustery talking heads and provocative PR campaigns.

BTW, it’s not just this guy, but also Harlon Carter, installed after the Cincinnati Coup at the NRA as Executive VP, who also murdered someone.

It really is remarkable just how much the intersection between groups “NRA leadership” and “law abiding citizens” is a null set.

If Mario Cuomo were Dead, He’d Be Spinning in His Grave

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I am not a big fan of New York Governor Andrew Cuomo. (See my post F%$# Andrew Cuomo)

Well, in addition to his fervent retreat from anything resembling economic liberalism, unless it is of the Neoliberal variety, we now know that he’s a corrupt hypocrite.

In the small change category, we have the fact that while he was a “crusading” Attorney General, his primary adviser for mortgage fraud by the banksters was a lobbyist for the mortgage banksters:

In early 2007, when he was New York State attorney general, Andrew Cuomo brought on a longtime confidant as a consultant on mortgage industry investigations, a move that has gone undisclosed until now.

The friend was Howard Glaser and he had another job at the same time: consultant and lobbyist for the very industry Cuomo was investigating.

 Glaser, who went on to become a top state official in Cuomo’s gubernatorial administration, was operating a lucrative consulting firm, the Glaser Group, with a host of mortgage industry clients.

 Later that year, Glaser provided insights on Cuomo’s investigations to industry players on a conference call hosted by an investment bank.

 Cuomo’s office ended up giving immunity to one of Glaser’s clients a year into his term as attorney general.

 In the end, experts say, the mortgage investigations Cuomo touted as “wide-ranging” came to little, even as he held one of the country’s most powerful prosecutorial positions through the financial crisis and its aftermath.

(emphasis mine)

Not surprising, though the story of how the denial of a Freedom of Information Act accidentally let the cat out of the bag to Pro Publica is prize.

The bigger story is how Cuomo set up an anti-corruption commission, and then shut it down when it began to point in his diriection:

With Albany rocked by a seemingly endless barrage of scandals and arrests, Gov. Andrew M. Cuomo set up a high-powered commission last summer to root out corruption in state politics. It was barely two months old when its investigators, hunting for violations of campaign-finance laws, issued a subpoena to a media-buying firm that had placed millions of dollars’ worth of advertisements for the New York State Democratic Party.

 The investigators did not realize that the firm, Buying Time, also counted Mr. Cuomo among its clients, having bought the airtime for his campaign when he ran for governor in 2010.

 Word that the subpoena had been served quickly reached Mr. Cuomo’s most senior aide, Lawrence S. Schwartz. He called one of the commission’s three co-chairs, William J. Fitzpatrick, the district attorney in Syracuse.

 “This is wrong,” Mr. Schwartz said, according to Mr. Fitzpatrick, whose account was corroborated by three other people told about the call at the time. He said the firm worked for the governor, and issued a simple directive:

 “Pull it back.”

 The subpoena was swiftly withdrawn. The panel’s chief investigator explained why in an email to the two other co-chairs later that afternoon.

 “They apparently produced ads for the governor,” she wrote.

 The pulled-back subpoena was the most flagrant example of how the commission, established with great ceremony by Mr. Cuomo in July 2013, was hobbled almost from the outset by demands from the governor’s office.

 ………

 While the governor now maintains he had every right to monitor and direct the work of a commission he had created, many commissioners and investigators saw the demands as politically motivated interference that hamstrung an undertaking that the governor had publicly vowed would be independent.

 ………

 But a three-month examination by The New York Times found that the governor’s office deeply compromised the panel’s work, objecting whenever the commission focused on groups with ties to Mr. Cuomo or on issues that might reflect poorly on him.

 Ultimately, Mr. Cuomo abruptly disbanded the commission halfway through what he had indicated would be an 18-month life. And now, as the Democratic governor seeks a second term in November, federal prosecutors are investigating the roles of Mr. Cuomo and his aides in the panel’s shutdown and are pursuing its unfinished business.

 ………

 Mr. Cuomo said early on that the commission would be “totally independent” and free to pursue wrongdoing anywhere in state government, including in his own office. “Anything they want to look at, they can look at — me, the lieutenant governor, the attorney general, the comptroller, any senator, any assemblyman,” he said last August.

 In a 13-page statement responding to The Times’s questions, Mr. Cuomo’s office defended its handling of the commission. It said the commission was created by and reported to the governor, and therefore he could not be accused of interfering with it.

 While he allowed the commission the independence to investigate whatever it wanted, the governor’s office said, it would have been a conflict for a panel he created to investigate his own administration.

That last bit is, dare I say it, Nixonian in its phrasing.

Read the whole article, it’s pretty long, and you cannot help but come away with the impression that Cuomo quashed an investigation because it came too close to him and his.

Rather unsurprisingly, the United States attorney for the Southern District of New York has expressed similar concerns:

Federal prosecutors investigating Gov. Andrew M. Cuomo’s shutdown of an anticorruption commission have subpoenaed the assistant to its former executive director to testify before a grand jury in Manhattan, suggesting that the criminal inquiry has moved to a new stage, people briefed on the matter said on Thursday.

Federal agents served the subpoena on the assistant, Heather Green, on Wednesday morning, appearing at her doorstep before 7 a.m., the people said. Ms. Green, who is not believed to be a target of the inquiry, worked as an executive assistant to the anticorruption panel’s former executive director, Regina Calcaterra, until Mr. Cuomo announced he was disbanding the panel, known as the Moreland Commission, on March 29.

The subpoena, according to two people who have seen it or been briefed on its contents, asked for documents and correspondence, including any communications with Mr. Cuomo and his senior aides. It also directed Ms. Green to appear July 28 to testify before a grand jury in Manhattan, the people said.

Separately, Mylan L. Denerstein, counsel to the governor, has agreed to be interviewed in early August by federal prosecutors about her involvement with the panel, one of the people said.

Mr. Cuomo created the Moreland Commission in July 2013, saying he wanted to root out corruption and reform state laws that for decades have enabled it. But he abruptly shuttered the panel in March after striking a deal with legislative leaders that netted only modest reforms.

The governor said at the time that in exchange for terminating the panel’s work, he had won tougher laws on bribery and corruption and improved enforcement of election law. But the action angered Preet Bharara, the United States attorney for the Southern District of New York. Mr. Bharara appeared on a radio show days later and, in an unusual move, sharply criticized Mr. Cuomo’s decision, saying his actions made it appear as though the governor had bargained away corruption cases as part of a political deal.

(emphasis mine)

Cuomo’s opponent in the Democratic primary, Zephyr Teachout (her birth name, her parents are very bad people) has gone from demanding answers to calling for his resignation.

Political realities being what they are, Ms. Teachout has no chance of winning, and Cuomo is likely to win the general by at least 20 points, we will almost certainly see 4 more years of his conservative f%$#ery, but I think that he is now officially out of the running for President 2016, and hopefully forever.

Today’s Episode of Not Surprised at All: CEO Pay Edition

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It turns out that there is No relationship whatsoever between a CEO pay and performance:

With all the public chatter about exorbitant executive compensation and income inequality, it’s useful to look at the relationship between chief executive officer pay and corporate performance. Typically, when the subject of their big pay packages arises, CEOs—usually through their spokespeople—say they are paid for performance. Does data back that up?

An analysis of compensation data publicly released by Equilar shows little correlation between CEO pay and company performance. Equilar ranked the salaries of 200 highly paid CEOs. When compared to metrics such as revenue, profitability, and stock return, the scattering of data looks pretty random, as though performance doesn’t matter. The comparison makes it look as if there is zero relationship between pay and performance.

Actually, it’s on the order of 1%, and certainly not worth it. (Click on the image for a better view of the trend line)

The cult of the overpaid CEO has no basis in reality.

It’s  all a game where one hand washes the other.

Hoocoodanode?

Seriously, Republican Judges are Just Phoning it in Now

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In the Hobby Lobby case, we have Justice Alito pulling a religious privilege for corporations out of thing air, but not for blood transfusions or psychology, because the people who oppose medical procedures are, Jehova’s Witnesses and Scientologists,  are icky.

They did the same thing with 150 years of precedent on recess appointments, etc.

Now with the ruling of the DC Court of appeals on Obamacare subsidies, they went off the deep end, and ruled that the subsidies only apply to states that have set up their own exchanges.

2 hours later, the 4th circuit court of appeals ruled the other way.

What’s more in the 4th Circuit’s opinion has an assent that absolutely nails the amazing level of hackitude in the DC Circuit’s opinion:

In fact, Appellants’ reading is not literal; it’s cramped. No case stands for the proposition that literal readings should take place in a vacuum, acontextually, and untethered from other parts of the operative text; indeed, the case law indicates the opposite. National Association of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 666 (2007). So does common sense: If I ask for pizza from Pizza Hut for lunch but clarify that I would be fine with a pizza from Domino’s, and I then specify that I want ham and pepperoni on my pizza from Pizza Hut, my friend who returns from Domino’s with a ham and pepperoni pizza has still complied with a literal construction of my lunch order. That is this case: Congress specified that Exchanges should be established and run by the states, but the contingency provision permits federal officials to act in place of the state when it fails to establish an Exchange. The premium tax credit calculation subprovision later specifies certain conditions regarding state-run Exchanges, but that does not mean that a
literal reading of that provision somehow precludes its applicability to substitute federally-run Exchanges or erases the contingency provision out of the statute.

Seriously, conservative Judges will take any cockamamie fringe idea that some desperate for tenure right law professor, desperate for tenure can scrawl on a bathroom wall, and they are running with it.

They have completely lost it, because, to quote Blazing Saddles, “The Sheriff is a Ni!!!”

Least Surprising News of the Day

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You know all those terrorism plots that the FBI uncovered?

A study has revealed that the FBI manufactured most of the terror plots that it broke up:

Nearly all of the highest-profile domestic terrorism plots in the United States since 9/11 featured the “direct involvement” of government agents or informants, a new report says.

Some of the controversial “sting” operations “were proposed or led by informants”, bordering on entrapment by law enforcement. Yet the courtroom obstacles to proving entrapment are significant, one of the reasons the stings persist.

The lengthy report, released on Monday by Human Rights Watch, raises questions about the US criminal justice system’s ability to respect civil rights and due process in post-9/11 terrorism cases. It portrays a system that features not just the sting operations but secret evidence, anonymous juries, extensive pretrial detentions and convictions significantly removed from actual plots.

“In some cases the FBI may have created terrorists out of law-abiding individuals by suggesting the idea of taking terrorist action or encouraging the target to act,” the report alleges.

Which ones weren’t? Those ones:

The four high-profile domestic plots it found free of government involvement were the 2013 Boston Marathon bombing; Najibullah Zazi’s 2009 plot to bomb the New York subway; the attempted Times Square carbombing of 2010; and the 2002 shooting at Los Angeles International Airport’s El Al counter.

So, while the FBI has been finding random idiots (read the case files, they are really stupid, while missing all of of the plots that actually went through to fruition.

But they did catch one potential terrorist that they did not sponsor ……… They just missed the other ¾ of them.

It’s an adequate batting average, for a pitcher, I guess.

You know, maybe the FBI should stop manufacturing terrorist plots, and start looking at real terror plots.

And while they are at it, how about going after the f%$#ing banksters?  They are still defrauding the rest of us.

And while we are at it, how about a pony.

I’m not gonna get that either.

Yet Another Reason not to Sext

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According to Edward Snowden NSA employees would pass around intercepted nude photos for their own amusement:

Edward Snowden has revealed that he witnessed “numerous instances” of National Security Agency (NSA) employees passing around nude photos that were intercepted “in the course of their daily work.”

In a 17-minute interview with The Guardian filmed at a Moscow hotel and published on Thursday, the NSA whistleblower addressed numerous points, noting that he could “live with” being sent to the US prison facility at Guantanamo Bay, Cuba. He also again dismissed any notion that he was a Russian spy or agent—calling those allegations “bullshit.”

If Snowden’s allegations of sexual photo distribution are true, they would be consistent with what the NSA has already reported. In September 2013, in a letter from the NSA’s Inspector General Dr. George Ellard to Sen. Chuck Grassley (R-IA), the agency outlined a handful of instances during which NSA agents admitted that they had spied on their former love interests. This even spawned a nickname within the agency, LOVEINT—a riff on HUMINT (human intelligence) or SIGINT (signals intelligence).

I think that this qualifies as the least surprising revelation so far.

The same thing would apply to your “hawt” emails.

On the other hand, if you have an urge to expose yourself to the world, you are now in heaven.

And Back in the Middle East, We Have a Captain Renault Moment………

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I’m shocked, shocked to find that gambling is going on here!

The UN Relief and Works Agency (UNRWA) is shocked to find 20 rockets in one of their schools in Gaza:

The UN agency for Palestinian refugees is investigating the discovery of 20 rockets hidden in one of its vacant schools in the Gaza Strip. The UNRWA condemned the incident as a “flagrant violation” of international law, adding that the rockets had been removed and that the relevant parties had been informed.

Israel regularly accuses Hamas and other militant groups in Gaza of using civilian installations to store and rockets, including during the current conflict, which began on 8 July.

I find the protestations of UNRWA to ring hollow.

While I understand that the agency needs to maintain good a relationship with the authorities in Gaza in order to effectively provide services, this sort of behavior has been the rule, not the exception, with UNRWA for nearly 70 years.

If You Can’t Make School Vouchers Work in Sweden, You Can’t Make it Work Anywhere

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It turns out that Milton Friedman education reform, much like all of his real word ideas, has turned out to be a huge clusterf%$#:

Every three years, Americans wring their hands over the state of our schools compared with those in other countries. The occasion is the triennial release of global scholastic achievement rankings based on exams administered by the Program for International Student Assessment, or PISA, which tests students in 65 countries in math, science, and languages. Across all subjects, America ranked squarely in the middle of the pack when the tests were first given in 2000, and its position hardly budged over the next dozen years.

 The angst over U.S. student performance—and its implications for the American workforce of the near future—is inevitably accompanied by calls for education reform: greater accountability, more innovation. Just as inevitable are the suggestions for how more accountability and innovation could be realized: more charter schools, more choice, less bureaucratic oversight.

 Advocates for choice-based solutions should take a look at what’s happened to schools in Sweden, where parents and educators would be thrilled to trade their country’s steep drop in PISA scores over the past 10 years for America’s middling but consistent results. What’s caused the recent crisis in Swedish education? Researchers and policy analysts are increasingly pointing the finger at many of the choice-oriented reforms that are being championed as the way forward for American schools. While this doesn’t necessarily mean that adding more accountability and discipline to American schools would be a bad thing, it does hint at the many headaches that can come from trying to do so by aggressively introducing marketlike competition to education.

 ………

 But Swedish school reforms did incorporate the essential features of the voucher system advocated by Friedman. The hope was that schools would have clear financial incentives to provide a better education and could be more responsive to customer (i.e., parental) needs and wants when freed from the burden imposed by a centralized bureaucracy. And the Swedish market for education was open to all, meaning any entrepreneur, whether motivated by religious beliefs, social concern, or the almighty dollar, could launch a school as long as he could maintain its accreditation and attract “paying” customers.

 For a while, at least if media accounts of the reforms are any indication, things looked like they were going pretty well. Voucher school students consistently outperformed their counterparts at government schools; in 2008, the London Telegraph described the reforms’ impact as “tremendous.” The number of private schools increased tenfold in less than a decade, with a majority run as for-profits.

 But in the wake of the country’s nose dive in the PISA rankings, there’s widespread recognition that something’s wrong with Swedish schooling. As part of ongoing efforts to determine the root cause, the Swedish Schools Inspectorate (the equivalent of the U.S. federal government’s Department of Education) called for a regrading of a subset of standardized tests administered during 2010 and 2011. In total, nearly 50,000 students at all grade levels from more than 700 schools had their tests in English, Swedish, science, and math re-evaluated.

BTW, Friedman’s ideas were implemented for about a year at the beginning of the brutally totalitarian rule of Augusto Pinochet with the assistance of his acolytes, the “Chicago Boys”.

After less than a decade, these “reforms” collapsed under the pressure of incompetence and corruption:

After the coup and the death of Allende, Pinochet and his Chicago Boys did their best to dismantle Chile’s public sphere, auctioning off state enterprises and slashing financial and trade regulations. Enormous wealth was created in this period but at a terrible cost: by the early 80s, Pinochet’s Friedman-prescribed policies had caused rapid de-industrialisation, a tenfold increase in unemployment and an explosion of distinctly unstable shantytowns. They also led to a crisis of corruption and debt so severe that, in 1982, Pinochet was forced to fire his key Chicago Boy advisers and nationalise several of the large deregulated financial institutions. (Sound familiar?)

If you hear Milton Friedman’s name invoked in support of an idea, be very, very afraid.*

*Full disclosure, I do agree with Milton Friedman that Marijuana should be legalized.†
†More full disclosure: I know Milton Friedman’s son, David Friedman, though our discussions have entirely dealt with medieval history.

The Financial Times Suggests that Private Equity is Screwing their Clients

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No, seriously. It is the Financial Times, and they are suggesting that private equity is fundamentally corrupt in their business practices:

It is too early to say whether the $30bn leveraged buyout of First Data in 2007 on the eve of the financial crash was a bad deal. KKR, the private equity group with a controlling stake, could yet recoup its investment, which it has written down by 20 per cent: the payment processing specialist will attempt to go public, possibly this year.

But one thing is certain: the Atlanta company, which has struggled under $24bn of debt since the KKR acquisition, will have paid its owner more than $100m in fees for a range of advisory, transaction and consulting services – including some that may never be required.

For the past three years alone, total fees to KKR-related parties amounted to $117m, according to First Data’s yearly regulatory filings. The bulk was an annual charge of about $20m that the company has to pay until 2019 for being “monitored”. If KKR, run by Henry Kravis and George Roberts, decides to sell or float its stake before that date, it is entitled to a termination fee.

First Data also paid KKR’s capital markets unit $21m for financing and underwriting services, and $35m for consulting work to Capstone, a company that works exclusively for the New York buyout house.

Such arrangements, struck with companies that can hardly say no to their majority owners, are coming under growing scrutiny by regulators. They are also sparking frustration among some investors, although few have incentives to reform the system.

“Those fees pump substance out of portfolio companies. It is the sort of greed you would typically see in investment banking,” says Georges Sudarskis, an industry veteran who advises Asian and Middle Eastern sovereign wealth funds.

The US Securities and Exchange Commission is taking a hard look at the industry’s fees. Andrew Bowden, a director at the SEC, said in May that his team had identified “violations of law or material weaknesses in controls over 50 per cent of the time” when reviewing payments from portfolio companies to their private equity owners.

(emphasis mine)

I just love the phrase, “It is the sort of greed you would typically see in investment banking.”

BTW, private equity do not deliver higher rates of return that would justify these fees.

I’m beginning to think that if we simply threw everyone who worked on Wall Street in jail, you would have a wrongful conviction rate in the single digit percentiles.

How Barack Obama Made People Stop Believing in Government

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Do you remember the history HARP?

Barack Obama and Timothy Geithner, said that they had a program to help distressed homeowners, when it was actually a program that consistently screwed homeowners in order to “foam the runway” for the banksters by allowing them to puff up their balance sheets.

Well, people remember this, and now that Obama is (allegedly) trying to provide real aid to homeowners, they are finding that have no takers because the homeowners in question do not trust the government to help them any more:

We all remember the fable of The Boy Who Cried Wolf. The moral of the story: Lie one too many times and nobody will believe you, even when you’re telling the truth. Now we have a case of The Government Who Cried Wolf, showing how the failure of the Obama administration’s foreclosure mitigation programs haunt them to this day.

 The Federal Housing Finance Agency (FHFA), which oversees mortgage giants Fannie Mae and Freddie Mac, wants to help around 676,000 homeowners it has identified as eligible for refinancing under the government’s Home Affordable Refinancing Program (HARP).

 ………

 But these remaining homeowners appear to have no interest in the program, and Watt explained why in Chicago. “We have written to them. We have called them, and they’re saying this is too good to be true,” he said.

 Why would homeowners exhibit so much skepticism in a government program that they feel inclined to turn down thousands of dollars in free money? You can track it back to all the promises made over the past five years to help homeowners, and the unfortunately sorry results.

 In 2009, when the foreclosure crisis was most acute, President Obama promised to save 4 million homes through the Home Affordable Modification Program (HAMP). Today, only around 900,000 hold active permanent HAMP modifications, while millions of others either re-defaulted or were rejected by the program. Mortgage servicing companies, which had a greater financial incentive to foreclose over modifying home loans, quickly figured out how to game the system, using it to pile more bad debt on borrowers for their own reward.

The process devolved into a horror show for homeowners. Servicers prolonged trial modifications well past the three-month period set out in HAMP guidelines so that they could rack up late fees. They deliberately lost borrower’s income documents to extend the default period, even shredding documents and purging records to do so. They pursued foreclosure while negotiating the modification, against HAMP rules. They granted modifications that folded servicer fees into the principal of the loan, increasing the unpaid principal balance — and thus their profit — while pushing the borrower further underwater. And they trapped borrowers after denying modifications, demanding back payments, missed interest and late fees, with the threat of foreclosure as a hammer.

This sometimes forced borrowers into “private” modifications with the servicer, usually on worse terms than the status quo. Or it led to many of the 5.6 million foreclosures we’ve seen since the collapse of the housing bubble. One set of employees at Bank of America testified that they were given bonuses like Target gift cards for pushing homeowners into foreclosure.

 Subsequent government programs, like the “Hardest Hit Fund” directed at states with the most nagging foreclosure crises, similarly failed to deliver. The failure to restructure mortgages and avert foreclosures is seen as the biggest policy mistake of the Great Recession.

It’s easy to prove to people that government cannot work, you just have to do things like HAMP, and lie to people and design programs to fail when view through the lens of their professed goals.

On the far side, however, when you actually want to help people, they no longer trust you, forever and ever.

Note that Obama and His Evil Minions™ had a completely free hand in designing these programs, so they own the fallou, or as Atrios notes:

Plenty of things are genuinely beyond Obama’s control, but we have an example of something which was 100% in his control. And it was horrible.