Category: Corruption

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It’s a PDF, and it’s 22 pages, but John Quiggen of the University of Queensland makes the fascinating point that the great financial centers of the world, primarily New York, London, Paris, and Tokyo, exist because the concentration of the financial industry facilitates corruption and cronyism of the managing class:

Recent developments in the global system of cities present a curious paradox. With the cost of communications declining almost to zero and substantial, though less dramatic reductions in transport costs, there is now little technical requirement for most kinds of production to be undertaken in any particular location, or for elements of production chains to be located close to each other. This fact has had dramatic consequences for the organisation of manufacturing industry. Simple production chains involving the import of raw materials, usually from developing countries, for processing in a specialised centre, have been replaced by far more complex structures.

Yet, in important respects, the dominance of a small number of ‘global cities’has never been greater. In this paper, it is argued that the dominance of global cities reflects a desire for clustering on the part of finance sector professionals and corporate executives. It seems likely that such clustering provides private benefits by enhancing the value of personal contacts, but reduces the efficiency and profitability of the corporate sector

 ………

 These concerns are even more pronounced in relation to personal networks connecting financial enterprises with their clients. It is reasonable to assume that such personal networks facilitate the development of business relationships between the firms in question, leading to flows of payments on services based on relationships of personal trust and shared interests, rather than on formal and transparent contractual relationships.

Such a system is commonly referred to as ‘relationship capitalism’ or, more pejoratively as ‘crony capitalism’. In general, it is viewed favourably during booms, when the disregard of process tends to facilitate rapid generation of wealth, and less favourably during recessions when the exchange of personal favours and the evasion of formal controls tends to be reclassified (often retrospectively) as corrupt.

Basically, if you are in an environment where you can run into a potential co-conspirator at a restaurant, or at a party, where small talk can allow you to tease out a deal that will benefit you, and your friend, but not your clients without the sort of transaction trail that you would see with phone calls, and emails, etc.

Essentially, it turns out that centralized financial district are a particularly criminogenic environment in terms of control fraud.

A few casual conversations at a party with, for example, a stock analyst, and that IPO you are pumping up, or the stock price of the company in which your stock options have just vested, and Ka-Ching, there you are with a vacation home in the Hamptons, a yacht, and a Ferrari.

Fracking Assholes Literally Think That They are Above the Law

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And no, I am not invoking Battlestar Galactica.

I am referring to the hissy fit that drillers in Pennsylvania are having about being prosecuted for illegal dumping:

Pennsylvania Attorney General Kathleen Kane’s decision to prosecute a major Marcellus Shale natural-gas driller for a 2010 wastewater spill has sent shock waves through the industry.

But environmentalists Wednesday hailed the prosecution of the Exxon Mobil Corp. subsidiary as a departure from the soft treatment they say the industry has received from Pennsylvania regulators.

………

Kane’s office announced charges Tuesday against XTO Energy Inc. for discharging more than 50,000 gallons of toxic wastewater from storage tanks at a gas-well site in Lycoming County.

XTO in July settled federal civil charges over the incident by agreeing to pay a $100,000 fine and deploy a plan to improve wastewater-management practices. The consent decree included no admissions of liability.

The Fort Worth, Texas, drilling company, which Exxon acquired in 2010, said it had worked cooperatively with federal and state authorities to clean up the spilled waste, known as “produced water.” XTO excavated and removed 3,000 tons of contaminated soil from the site.

“Criminal charges are unwarranted and legally baseless because neither XTO nor any of its employees intentionally, recklessly, or negligently discharged produced water on the site,” XTO said in a statement.

Kane’s office said it did not need to prove intent to prosecute the company for crimes. XTO is charged with five counts of unlawful conduct under the Clean Streams Law and three counts of unlawful conduct under the Solid Waste Management Act.

Industry leaders said the prosecution of a company for what they called an inadvertent spill creates a hostile business environment.

Because prosecuting criminals is constitutes a “hostile business environment.”

YOU see, laws are only for the little people.

The official story from XTO also stinks to high heaven:

The XTO spill received very little public attention when it occurred.

A DEP inspector discovered wastewater leaking from an open valve on a storage tank during an unannounced visit to the Marquardt well site on Nov. 16, 2010. The wastewater spilled into a tributary of the Susquehanna River and also contaminated a spring. Pollutants were present in the stream for 65 days after the spill.

The grand jury’s presentment does not say who opened the valves on the tank or why. XTO officials at the time suggested vandals might be responsible. But it noted that the drilling site had no secondary containment, little security, and no alarm system for leaks.

Yes, “vandals”.

It’s gotta be vandals, and not some corporate drone who decided that it made business sense to just dump the water, even if every now and again you get caught and have to pay a 100 Grand fine.

A tip of the hat, to Pennsylvania Attorney General Kathleen Kane.

Quote of the Day

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The upshot is that it is now known that “the N.S.A. cannot be trusted on the issue of cyber security,” said Soghoian. He continued, “My sincere hope is that the N.S.A. loses its shine. They’re the bad guy; they’re breaking into systems; they’re exploiting vulnerabilities.” It’s conceivable that they have good intentions. And yet, Soghoian continued, “they act like any other hacker. They steal data. They read private communications.” With that methodology, how easy can it be, though, to give the agency the benefit of the doubt? As many have, Thomas Drake compared the worldview of what he calls the “rogue agency” to the total surveillance of George Orwell’s “1984,” in which the only way to escape was “to cower in a corner. I don’t want to live like that. I’ve already lived that and it’s not pleasant.”

—Matt Buchanan in The New Yorker

(Emphasis mine)

Live in Obedient Fear, Citizen

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The owner of Lavabit, the now-shuttered secure email provider, has been told that he could be jailed for terminating his service:

The owner of an encrypted email service used by ex-NSA contractor Edward Snowden said he has been threatened with criminal charges for refusing to comply with a secret surveillance order to turn over information about his customers.

“I could be arrested for this action,” Ladar Levison told NBC News about his decision to shut down his company, Lavabit LLC, in protest over a secret court order he had received from a federal court that is overseeing the investigation into Snowden.

Lavabit said he was barred by federal law from elaborating on the order or any of his communications with federal prosecutors. But a source familiar with the matter told NBC News that James Trump, a senior litigation counsel in the U.S. attorney’s office in Alexandria, Va., sent an email to Levison’s lawyer last Thursday – the day Lavabit was shuttered — stating that Levison may have “violated the court order,” a statement that was interpreted as a possible threat to charge Levison with contempt of court.

This can be interpreted in two ways: Either they are threatening to jail him for fighting a broad subpoena in court, or they are threatening him because he shut down the service because he refused to run it as part of an ongoing and broad surveillance of his customers.

In either case, this is contemptible, even if it is nominally legal.

Remember When I Said that It’s Not the Cost of Healthcare, It’s the Price of Healthcare*

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Well, the New York Times just looked at the price of a 1 liter bag of saline solution, and it ain’t pretty:

It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater.

Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1.

Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York.

Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.”

And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution.

It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in the hieroglyphics of hospital bills.

At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies, purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants cannot say what the simplest component of care actually costs, let alone what it should cost.

And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.

………

But even before the finished product is sold by the case or the truckload, the real cost of a bag of normal saline, like the true cost of medical supplies from gauze to heart implants, disappears into an opaque realm of byzantine contracts, confidential rebates and fees that would be considered illegal kickbacks in many other industries.

………

The charges included “IV therapy,” billed at $787 for the adult and $393 for the child, which suggests that the difference in the amount of saline infused, typically less than a liter, could alone account for several hundred dollars.

………

Eventually the head of the family, an electrician’s helper who speaks little English, complained to HealthFirst, the Medicaid H.M.O. It paid $119 to settle the grandmother’s $2,168 bill, without specifying how much of the payment was for the IV. It paid $66.50 to the doctor, who had billed $606.

Ms. O’Neill defended the markup as “consistent with industry standards.” She said it reflected “not only the cost of the solution but a variety of related services and processes,” like procurement, biomedical handling and storage, apparently not included in a charge of $127 for administering the IV and $893 for emergency-room services.

The patient, a financial services professional in her 50s, ended up paying $100 for her visit. “Honestly, I don’t understand the system at all,” said the woman, who shared the information on the condition that she not be named.

Dr. Frost, the anesthesiologist, spent three days in the same hospital and owed only $8, thanks to insurance coverage by United HealthCare. Still, she was baffled by the charges: $6,844, including $546 for six liters of saline that cost the hospital $5.16.

At White Plains Hospital, a patient with private insurance from Aetna was charged $91 for one unit of Hospira IV [saline] that cost the hospital 86 cents, according to a hospital spokeswoman, Eliza O’Neill.

The charges all stem from a case of food poisoning  in upstate New York, where people were collected by ambulances and sent to emergency rooms.

This is why price controls are necessary.  When you are, “lying on the ground barely conscious,” the market ceases to function.

*Here, and a lot on the Stellar Parthenon BBS as well.

Obama Claims that the Reports of NSA Spying on US Citizens Show that the System Works

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Inadvertent, My Ass

The fact that Barack Obama is being sent out to tell blatant lies by the state security apparatus like some sort of poodle does not fill me with confidence.

No I’m serious. He is saying that because the system sorked”, because a strongly worded report was issued:

President Barack Obama said in an interview that aired Friday that recent revelations the National Security Agency had collected Americans’ emails prove that oversight for such surveillance programs is working properly.

 Obama told CNN’s “New Day” the data collection was “inadvertent” and attributed it to “technical problems,” which were then presented to the secret Foreign Intelligence Surveillance Court.

 “The court said, ‘This isn’t going to cut it. You’re going to have to improve the safeguards, given these technical problems.’ That’s exactly what happened,” he said. “So the point is, is that all these safeguards, checks, audits, oversight worked.”

He claims that the errors were unintentional.  He is lying through his teethe:

Some National Security Agency analysts deliberately ignored restrictions on their authority to spy on Americans multiple times in the past decade, contradicting Obama administration officials’ and lawmakers’ statements that no willful violations occurred.

 “Over the past decade, very rare instances of willful violations of NSA’s authorities have been found,” the NSA said in a statement to Bloomberg News. “NSA takes very seriously allegations of misconduct, and cooperates fully with any investigations – responding as appropriate. NSA has zero tolerance for willful violations of the agency’s authorities.”

 The incidents, chronicled in a new report by the NSA’s inspector general, provide more evidence that U.S. agencies sometimes have violated legal and administrative restrictions on domestic spying, and may add to the pressure to bolster laws that govern intelligence activities.

 The inspector general documented an average of one case per year over 10 years of intentionally inappropriate actions by people with access to the NSA’s vast electronic surveillance systems, according to an official familiar with the findings. The incidents were minor, the official said, speaking on the condition of anonymity to discuss classified intelligence.

BTW, one a year is a lie from the inspector general is a gross understatement, because we know that for years, NSA agents listened to and recorded for later amusement phone sex between overseas soldiers and their loved ones:

There have been allegations of abuse. Back in 2008 it was widely reported that NSA employees were listening to phone sex calls between American soldiers and their partners. NSA employees would save these calls and share them around for their own personal amusement. This is a textbook example of abuse. This is the kind of invasion of privacy that deeply concerns most Americans.

 The most likely reasons we haven’t heard about more abuses is because the NSA is incredibly secretive, basically never audited, and the Obama administration has engaged in such an aggressive war on whistleblowers people are scared to come forward.

I would also note that one of the controls that Obama taunts is the FISA court, and they say that the NSA program was unconstitutional and also that the NSA lied to them:

In a strongly worded opinion, the chief judge of the Foreign Intelligence Surveillance Court expressed consternation at what he saw as a pattern of misleading statements by the government and hinted that the NSA possibly violated a criminal law against spying on Americans.

 “For the first time, the government has now advised the court that the volume and nature of the information it has been collecting is fundamentally different from what the court had been led to believe,” John D. Bates, then the surveillance court’s chief judge, wrote in his Oct. 3, 2011, opinion.

This really is a profile in cowardice.

Update:
I did not realize that the video clip was auto-playing. I have corrected this. Sorry.

This is a Breath of Fresh Air………

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The SEC just settled with a hedge fund that misused funds and manipulated markets, and in addition to a fine, and a 5 year ban for the principal, they got an explicit admission of wrongdoing:

Wall Street’s regulator sent a message on Monday that it was now taking a more aggressive stance on securities settlements as it extracted its first admission of wrongdoing under a new policy.

The regulator, the Securities and Exchange Commission, said that the hedge fund manager Philip A. Falcone had agreed to admit wrongdoing and to be banned from the securities industry for at least five years to settle market manipulation accusations. As part of the settlement, he and his fund, Harbinger Capital Partners, must also pay more than $18 million.

The deal comes a month after the commission had in a rare move overruled its own enforcement staff to reject a settlement struck with Mr. Falcone and Harbinger.

That original agreement had called for a two-year ban from raising new capital and no admission of wrongdoing. It also did not include an injunction against committing fraud in the future — language common to nearly every single securities settlement.

The original settlement terms had irritated the S.E.C.’s new chairwoman, Mary Jo White, people briefed on the matter said, and frustrated many others within the agency who saw that deal as too lax.

The new, tougher terms reflect a wider policy change that Ms. White outlined this year, aiming to shift the burden of admission of guilt onto the defendant, overturning a longstanding policy of allowing defendants to “neither admit nor deny” wrongdoing.

If this is a start of a trend, then this is a big deal.

I hope that this is not just political atmospherics.

Quote of the Day

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When a government detains someone who is very clearly not a terrorist for nine hours without access to an attorney under a terrorism statute, that government has proven every point Greenwald wanted to make. The argument is over right there.

 And every “progressive” with a beef against Greenwald who attempts to defend the UK’s actions does nothing more than prove Greenwald’s point. Governments that detain civil libertarian bloggers and journalists as terrorists deserve every heaping of scorn they get, as do those who defend them.

—David Atkins

I Really Don’t Think that I Have Ever Seen Rachel Maddow this Pissed Off

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Look at this video.

Rachel Maddow is pissed off, and she is pissed off at Barack Obama.

Here are the high points, but you should watch the whole 8:02:

Journalism is not terrorism. Journalism can be enraging to people in power; journalism can sometimes even be frightening to people in power, but journalism is not terrorism. Reporting on what governments do, even when those governments prefer to keep those actions secret, is not terrorism. Terrorism is a real and discrete thing in the world. It is not an all-encompassing term you apply to everything the government doesn’t want you to do.

The White House today said it had been given a heads-up in advance that the detention of David Miranda was likely to happen…. The White House went out of their way today to say that it was Britain’s decision to detain Glenn Greenwald’s partner — it was not something the US asked Britain to do; and okay fine, but the White House did know about it in advance and it still happened.

We have that kind of special relationship with Britain where if our government were outraged that this detention was going to happen, we could have objected, right? We could have at least asked our dear friends, the British government, to not do this, maybe in the interests of not intimidating the activities of the free press, if not for any other reason. Did our government make any objections when it got advance notice from Britain that this detention was going to happen? Did our government protest? And if not, why not? I tend to think we did not protest, since it went ahead.

I know the US government is not happy about Laura Poitras and Glenn Greenwald and their reporting about US surveillance. The president said that the disclosures from their source have led to a disorderly debate about these issues and even though we ought to have a debate about these issues, it ought to be more orderly. Fine. But if the United States wants to convince the world that the Glenn Greenwalds and Laura Poitras’ of the world are correct when they say the US government is going too far — if they want to underline and put flashing red lights on that reporting that says that counter-terrorism is being used to justify all sorts of things that are not justified by the actual threat of terrorism, and that in fact have just greenlit gross government overreach and intrusion and intimidation of legitimate activity including journalism — then putting journalists and their families through marathon interrogations and seizing all their electronics is a really great way to start convincing the world that all that reporting is accurate.

Letting our closest allies do it while we stand silent is the same thing as us doing it. Journalism is not terrorism. Pretending otherwise is outrageous, and ridiculous, and a dangerous affront to who we are as a country and a democracy. It’s an absolute outrage.

My opinion is even stronger. I believe that the British called for permission, and they got it.

That being said, Obama has lost Maddow, at least on this specific instance, and this is significant.

H/t Dallasdoc at Daily Kos.,who dutifully transcribed the above quote.

Drip, Drip, Drip………

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So we have two more NSA revelations today.

First, the Washington Post uncovered an internal audit for the NSA which shows that it violated privacy regulations pretty routinely.

Additionally, the FISA court has admitted that it has no ability to verify that its orders are being followed.

It seems that every few days, another shoe drops, and each time, it reveal that both the state security apparatus and the Obama administration have been lying through their teeth.

More Lying Liars

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This time it’s Attorney General Eric “Place” Holder, and he is lying about prosecutions for mortgage fraud.

Not only did he puff up the about the numbers and amount of mortgage prosecutions, but the DoJ retroactively edited the transcript of his speech on this subject:

Not sure that even the Bushies ever tried pulling the “modify the text of old archived speeches a year later” trick.

Yes, this is a level of mendacity that would impress Karl Rove.

He is Probably Going to Win the Primary Tomorrow, but Cory Booker is a Corrupt Rat-Bastard

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You may remember his wankitude in the 2012 elections, when he said that Obama being mean to Bain Capital gave him a sad, but it’s worse than that.

He is deeply and openly on the take:

The conference room in the Mountain View, Calif., headquarters of LinkedIn was packed with the stars of Silicon Valley. Top executives of Facebook, Google and Twitter gathered around a table; the billionaire Sean Parker looked on from a back row. The guest of honor: Cory A. Booker, the mayor of Newark.

 The stated purpose of the gathering was to give Mr. Booker, already a Twitter fanatic, a seminar on social-networking technologies. But hanging in the air was an electrifying sense of being in the presence of an ascendant politician they believed understood the potential of the new digital world they were shaping.

 “He’s part of this tide,” said Gina Bianchini, an entrepreneur who was at the meeting, in May 2009. “It feels like he’s one of us.”

 Two and a half years later, some of those same Silicon Valley leaders joined forces again on Mr. Booker’s behalf. But this time, their efforts resulted in giving Mr. Booker, until then an admired outsider, the equivalent of full-fledged membership in their elite circle: an Internet start-up of his own.

 Mr. Booker personally has obtained money for the start-up, called Waywire, from influential investors, including Eric E. Schmidt, Google’s executive chairman. A year after its debut, Waywire has already endured a round of layoffs and had just 2,207 visitors in June, according to Compete, a Web-tracking service. The company says it is still under development.

 Yet in a financial disclosure filed last month, Mr. Booker, 44, revealed that his stake in the company was worth $1 million to $5 million. Taken together, his other assets were worth no more than $730,000.

 That revelation, with just a week left in Mr. Booker’s campaign for the Democratic nomination for the United States Senate, shows how a few tech moguls and entrepreneurs, many of them also campaign donors, not only made a financial bet on the mayor’s political future but also provided the brainpower and financing to help create a company that could make him very rich.

Why is this blatant influence peddling?

Well, the tell is that Waywire hired the 15 year old son of the head of CNN and gave him stock options:(Yes, it’s NY Post, but echos the New York Times story linked above, and it is far less oblique)

He isn’t even old enough to drive — but CNN President Jeff Zucker’s teenage son has already resigned from a cushy position at Cory Booker’s closely watched Internet start-up.

 After somehow scoring a seat on the advisory board of the rising Democratic star’s Waywire video-sharing site, 15-year-old Andrew Zucker abruptly quit yesterday amid questions over his qualifications.

 The rich kid’s consulting career as a “millennial adviser” ended just hours after it was revealed that he had been granted stock options in the firm co-founded by Booker, the Newark mayor who polls show is a shoo-in for the US Senate after a special election.

 “Despite the fact that his affiliation with Waywire was extremely limited to only an advisory capacity, in order to avoid even the perception of a conflict, Jeff’s son has resigned from the Waywire advisory board, effective immediately,” CNN said in a statement.

 News of Andrew’s stock deal lit up social media yesterday, with critics on Twitter branding it a “gross nepotism alert.”

 Corporate-governance experts also called his hiring highly unusual, saying they’d never before heard of anyone so young getting such a cushy gig.

 Advisory boards are usually stocked with “seasoned folks who have been through the process of making that kind of a start-up work, or enhancing the capacity of a company so it can move to an IPO [initial public offering] or the next level of business,” said Eleanor Bloxham, CEO of The Value Alliance. “So you’re not generally looking in the high-school age range.”

The defense is that he got less than qualified than, “Lady Gaga’s manager.”

Seriously, the royalty of Silicon Valley is showering their largess on this guy because it’s such a good idea? For a web site that got 2,207 visitors in June?

Seriously, I got 1,457 unique visitors in June, and I’m the worst writer on the internet.™

But wait, there’s more. There is also the case of his old law firm, which continued to pay him for years while getting lucrative contracts from the city:

Cory Booker pocketed “confidential” annual payouts from his former law firm while serving as Newark mayor.

 Booker, the front-runner in New Jersey’s Senate race, received five checks from the Trenk DiPasquale law firm from 2007 until 2011. During that time, the firm raked in more than $2 million in fees from local agencies over which Booker has influence.

 “This was a settlement buyout for my interest in the firm,” the mayor told The Post at a campaign stop in Jersey City yesterday. “I had an equity stake, and we had a negotiated settlement.”

 Booker worked at the West Orange firm for five years, leaving in 2006 when he was elected Newark’s mayor to avoid “the appearance of impropriety.”

 He refused to answer how much he received in the five years after leaving.

 “It’s all been disclosed for the last seven years,” Booker said.

 Not quite. Booker’s state financial disclosures from 2006 to 2011 list two sources of income — the city of Newark and the law firm. The forms mandate reporting of income over $2,000 a year, but do not require an exact sum or range.

 Booker’s closed lips on the earnings fly in the face of his public stances. In 2002, he released his tax returns during his unsuccessful race against incumbent Mayor Sharpe James, and ripped James for not doing the same.

 The returns “provide the only clues as to how many deals the mayor is involved in . . . and the only record of the money he’s making on the side,” Booker said at the time.

 When The Post asked Friday for Booker’s recent returns, his campaign refused to turn them over.

And then there are his positions on the issues:

  • He supports privatizing public education and handing it to Wall Street.
  • He has repeatedly allied himself with religious organizations that have sponsored Uganda’s “Kill the gays” bill.
  • His close relationship with Scaife/Olin/Koch funded political organizations.
  • His founding an organization heavily funded by the Walton (Wal-Mart) family.

If he wins the primary, he is almost certain to win the general.

First, New Jersey is very blue now, and second, the Republican field is best defined as a clown show.

Glenn Greenwald is Wondering if the Latest Intel Warning is Political Theater

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I’m inclined to agree with him:

Pointing to the recent revelations by leaker Edward Snowden that he has reported, Greenwald explains, “Here we are in the midst of one of the most intense debates and sustained debates that we’ve had in a very long time in this country over the dangers of excess surveillance, and suddenly, an administration that has spent two years claiming that it has decimated al-Qaeda decides that there is this massive threat that involves the closing of embassies and consulates around the world. … The controversy is over the fact that they are sweeping up billions and billions of emails and telephone calls every single day from people around the world and in the United States who have absolutely nothing to do with terrorism.”

I would go further, and suggest that politics has been a primary driver.

Why else would we see something as absurd as exploding pants, and by that I mean exploding clothing, not an underwear bomb:

The panic over an alleged al Qaeda plot went into overdrive Monday night, when ABC News reported that terrorists in Yemen were experimenting with a new and virtually undetectable bomb-making technique: dipping their clothes into liquid explosive that then dries and can be ignited.

 The cries of doom began almost immediately after the story went online. But people shouldn’t have been so quick to scream. A clothing bomb would almost certainly never work, explosive experts tell Foreign Policy.

………

 But given that none of his devices have worked as intended, should Americans be panicking? One explosives expert tells Foreign Policy that while this alleged blouse-bomb may sound terrifying, and remind us of something out of an action flick, it is very risky for the bomber. A device consisting of explosives-dipped clothing, the expert said, is certainly plausible. Cotton is a carbon, and if you add fuel to it, you can create an explosion. But once the attacker starts moving, the clothes will flex, causing heat, shock, friction, and static — all things that make a bomb go boom. “In my opinion, you’ll have a highly unstable bomb that doesn’t have enough power to kill someone within five feet of it,” the expert said.

 At the Aspen Security Forum, Pistole called [Chief Al Qaeda bomb maker Ibrahim al-]Asiri “our greatest threat,” and said, “All the intel folks know that is a clear-and-present danger.” If that’s true, perhaps we can take some shred of comfort: Unless Asiri, or anyone else, can come up with a device that actually kills more people than just the bomber, these plots are likely to remain aspirational. They may be the stuff of really good movies, but not very effective terror attacks.

I would argue that the US state security apparatus routinely exaggerates threats any time their prerogatives are threatened by scrutiny.

This Takes Guts

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Glenn Greenwald lives in Brazil, though he regularly returns to the United States.

In response to an offer of protection from Brazilian officials, Greenwald has stated that he will not be applying for protection from US prosecution:

A Brazilian official has taken the unusual step of publicly announcing that the Brazilian government will offer Guardian writer Glenn Greenwald protection from the U.S. government after determining he risks facing legal action if he returns to the U.S.

To receive protection from Brazil, Greenwald would have to officially request it. But though he takes the risk of prosecution seriously, Greenwald tells me he has no intention of taking the Brazilian government up on the offer — and that he plans to return to the U.S. sooner than later, come what may.

“I haven’t requested any protection from the Brazilian government or any other government because, rather obviously, I’ve committed no crime — unless investigative journalism is now a felony in the U.S.,” Greenwald said via email. “But the fact that Brazilian authorities believe there is a real possibility that the U.S. would unjustly prosecute journalists for the ‘crime’ of reporting what the U.S. government is doing is a powerful indictment of the U.S.’s current image in the world — just as was the requirement that the U.S. promise it will not torture or kill Snowden if he’s returned. It’s an equally potent reflection of the massive gap in opinion between the U.S. Government and the rest of the world when it comes to how the NSA disclosures, my reporting, and Snowden are perceived.”

………

“Given that the Obama DOJ has adopted theories that would criminalize journalism in both the WikiLeaks Grand Jury proceeding and the investigation of James Rosen, given that it has waged what most observers agree is an unprecedented war on whistle-blowers, and given that several prominent political figures and journalists have called for my prosecution, I obviously take the risk seriously,” Greenwald adds. “But I take more seriously the Constitution’s guarantee of a free press in the First Amendment. So I have every intention of entering the U.S. as soon as my schedule permits and there’s a reason to do so.”

If he sets foot in the United States while Obama is president, he will be harassed, and almost certainly detained, at least briefly. (The reality will likely be worse.)

Well, That’s Mighty White of Them

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The judge at the Bradley Manning trial has issued a ruling that reduces his maximum potential sentence from 136 years:

Bradley Manning’s maximum possible sentence for leaking state secrets to WikiLeaks was cut from 136 years to a possible 90 years on Tuesday, marking a rare victory for the defence in a trial that has so far swung almost exclusively in the US government’s direction.

The judge presiding over the court martial, Colonel Denise Lind, granted the most elements of a defence motion calling for some of the 20 counts for which Manning has been found guilty to be merged on grounds that they repeat each other. In the motion, defence lawyers argued that the government had taken single acts of criminality and split them into several separate violations – thus multiplying the possible sentence.

“By dividing this ongoing act into two separate specifications,” the motion says, referring to the soldier’s transmission of the US embassy cables to WikiLeaks, “the government takes what should be a 10-year offence and makes it a 20-year offence and unfairly increases Pfc Manning’s punitive exposure”.

FYI, this isn’t justice, this is, this is the illusion of justice, and it is telling that the judge read her ruling too fast for professional stenographers to record what she said.

Every Time Something New Comes Out, the NSA Spying Scandal Gets Worse

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First, we have Glenn Greenwald saying that the administration lied, and that Congress was never given sufficient information to evaluate surveillance programs:

Members of Congress have been repeatedly thwarted when attempting to learn basic information about the National Security Agency (NSA) and the secret FISA court which authorizes its activities, documents provided by two House members demonstrate.

 From the beginning of the NSA controversy, the agency’s defenders have insisted that Congress is aware of the disclosed programs and exercises robust supervision over them. “These programs are subject to congressional oversight and congressional reauthorization and congressional debate,” President Obama said the day after the first story on NSA bulk collection of phone records was published in this space. “And if there are members of Congress who feel differently, then they should speak up.”

 But members of Congress, including those in Obama’s party, have flatly denied knowing about them. On MSNBC on Wednesday night, Sen. Richard Blumenthal (D-Ct) was asked by host Chris Hayes: “How much are you learning about what the government that you are charged with overseeing and holding accountable is doing from the newspaper and how much of this do you know?” The Senator’s reply:

The revelations about the magnitude, the scope and scale of these surveillances, the metadata and the invasive actions surveillance of social media Web sites were indeed revelations to me.”

So, once again, we see that the Obama administration makes bald faced lies about it’s data collection of American citizens.

 But it is not merely that members of Congress are unaware of the very existence of these programs, let alone their capabilities. Beyond that, members who seek out basic information – including about NSA programs they are required to vote on and FISA court (FISC) rulings on the legality of those programs – find that they are unable to obtain it.

At the bottom of the article, he notes that Alan Grayson was threatened with sanctions by the House Intelligence Committee for reprinting slides that the Guardian had put up on the web.

And by the way, that whole bit about them not spying on us? They are lying about that too, and not only are they lying to the American public, they are lying to judges and defense counsels as well:

A secretive U.S. Drug Enforcement Administration unit is funneling information from intelligence intercepts, wiretaps, informants and a massive database of telephone records to authorities across the nation to help them launch criminal investigations of Americans.

Although these cases rarely involve national security issues, documents reviewed by Reuters show that law enforcement agents have been directed to conceal how such investigations truly begin – not only from defense lawyers but also sometimes from prosecutors and judges.

The undated documents show that federal agents are trained to “recreate” the investigative trail to effectively cover up where the information originated, a practice that some experts say violates a defendant’s Constitutional right to a fair trial. If defendants don’t know how an investigation began, they cannot know to ask to review potential sources of exculpatory evidence – information that could reveal entrapment, mistakes or biased witnesses.

“I have never heard of anything like this at all,” said Nancy Gertner, a Harvard Law School professor who served as a federal judge from 1994 to 2011. Gertner and other legal experts said the program sounds more troubling than recent disclosures that the National Security Agency has been collecting domestic phone records. The NSA effort is geared toward stopping terrorists; the DEA program targets common criminals, primarily drug dealers.

“It is one thing to create special rules for national security,” Gertner said. “Ordinary crime is entirely different. It sounds like they are phonying up investigations.”

THE SPECIAL OPERATIONS DIVISION

The unit of the DEA that distributes the information is called the Special Operations Division, or SOD. Two dozen partner agencies comprise the unit, including the FBI, CIA, NSA, Internal Revenue Service and the Department of Homeland Security. It was created in 1994 to combat Latin American drug cartels and has grown from several dozen employees to several hundred.

Today, much of the SOD’s work is classified, and officials asked that its precise location in Virginia not be revealed. The documents reviewed by Reuters are marked “Law Enforcement Sensitive,” a government categorization that is meant to keep them confidential.

“Remember that the utilization of SOD cannot be revealed or discussed in any investigative function,” a document presented to agents reads. The document specifically directs agents to omit the SOD’s involvement from investigative reports, affidavits, discussions with prosecutors and courtroom testimony. Agents are instructed to then use “normal investigative techniques to recreate the information provided by SOD.”

………

A dozen current or former federal agents interviewed by Reuters confirmed they had used parallel construction during their careers. Most defended the practice; some said they understood why those outside law enforcement might be concerned.

“It’s just like laundering money – you work it backwards to make it clean,” said Finn Selander, a DEA agent from 1991 to 2008 and now a member of a group called Law Enforcement Against Prohibition, which advocates legalizing and regulating narcotics.

Some defense lawyers and former prosecutors said that using “parallel construction” may be legal to establish probable cause for an arrest. But they said employing the practice as a means of disguising how an investigation began may violate pretrial discovery rules by burying evidence that could prove useful to criminal defendants.

………

One current federal prosecutor learned how agents were using SOD tips after a drug agent misled him, the prosecutor told Reuters. In a Florida drug case he was handling, the prosecutor said, a DEA agent told him the investigation of a U.S. citizen began with a tip from an informant. When the prosecutor pressed for more information, he said, a DEA supervisor intervened and revealed that the tip had actually come through the SOD and from an NSA intercept.

“I was pissed,” the prosecutor said. “Lying about where the information came from is a bad start if you’re trying to comply with the law because it can lead to all kinds of problems with discovery and candor to the court.” The prosecutor never filed charges in the case because he lost confidence in the investigation, he said.

So, “It’s only metadata,” it’s a lie. “We don’t knowingly use the NSA to spy on Americans,” it’s a lie.

You see a pattern?

Mexico’s President Drinks the Free Market Mousketeer Koolaid

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It’s not a surprise, the energy companies have been trying to get ownership stakes in the state owned Mexican oil company, Pemex, for years, so it was only matter of time before a useful idiot was elected to the Mexican presidency, the useful idiot in this case being Enrique Peña Nieto:

If Mexico had a crown jewel, it would be the giant state oil monopoly Petroleos Mexicanos, or Pemex. Year after year, it has poured billions of dollars into the state treasury, historically paying for schools, hospitals, dams, highways, ports and more.

The seizure of foreign oil companies 75 years ago that created the company is a cause for annual celebrations affirming Mexico’s fierce sense of independence from outside interference.

Yet even as the country’s new president, Enrique Peña Nieto, credits Pemex with building the nation, his administration acknowledges that the notoriously inefficient conglomerate is in trouble: If it is not opened to private and foreign investment, Mexico, the world’s ninth-largest oil producer, will become a net energy importer by 2020, officials say.

As Peña Nieto moves ahead with a plan to overhaul Pemex, he is navigating the most perilous political minefield of his young presidency. He is toying with taboos and challenging revered perceptions surrounding the nation’s top revenue earner. And he is meeting with impassioned opposition.

At the back of a recent rally for Pemex, Jesus Castillo Sanchez, a 46-year-old handyman, waved a giant Mexican flag as if he’d just taken a hill in battle. Booting the foreign oil companies in 1938 “gave Mexico its true independence from the great powers,” Castillo said. “After [the foreigners] bring their oil platforms, they will bring their armies and their troops.”

The president is expected to introduce landmark energy reform legislation, including proposals addressing Pemex, as early as this week.

………

The government and industry experts contend that Mexico needs advanced technical expertise from outside companies to find and retrieve oil and gas from deep water and shale-rock formations that are believed to hold more than half the country’s estimated 14 billion barrels of reserves.

But “Pemex is not allowed … to choose associations … to reduce the level of risk that you run” in deep-water exploration, Carlos Morales Gil, Pemex director of exploration and production, said in an interview. “What Pemex needs is budget autonomy and flexibility” to form joint ventures, he said.

If you look at the Deepwater Horizon case, you will notice that BP doesn’t know much of anything about oil drilling.

They hire Halliburton and Slumberger (who took one look at the well, and left) for their drilling expertise, and Transocean to operate the rig.

Oil companies no longer have much in the way of technical expertise, they outsourced those during the oil downturn in the late 1980s.

As to the money to go after harder to reach oil, Pemex clearly needs some reforms, it is a wasteful and bloated bureaucracy.

As to the fixes, the first one comes to mind would be an expansion of their refining facilities, so that Pemex would not have to import (and subsidize) fuel for internal consumption.

But one need only look at the disastrous privatization of British rail to understand that this is a solution that has everyone losing but the foreign firms.

If you bring in foreign investors, oil and gas drilling in Mexico is going to end up looking like Nigeria.

Live in Obedient Fear, Citizen

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It looks like the Feds are probably responsible for hacking an online anonymity service:

Security researchers tonight are poring over a piece of malicious software that takes advantage of a Firefox security vulnerability to identify some users of the privacy-protecting Tor anonymity network.

 The malware showed up Sunday morning on multiple websites hosted by the anonymous hosting company Freedom Hosting. That would normally be considered a blatantly criminal “drive-by” hack attack, but nobody’s calling in the FBI this time. The FBI is the prime suspect.

 “It just sends identifying information to some IP in Reston, Virginia,” says reverse-engineer Vlad Tsyrklevich. “It’s pretty clear that it’s FBI or it’s some other law enforcement agency that’s U.S.-based.”

 If Tsrklevich and other researchers are right, the code is likely the first sample captured in the wild of the FBI’s “computer and internet protocol address verifier,” or CIPAV, the law enforcement spyware first reported by WIRED in 2007.

………

By midday Sunday, the code was being circulated and dissected all over the net. Mozilla confirmed the code exploits a critical memory management vulnerability in Firefox that was publicly reported on June 25, and is fixed in the latest version of the browser.

Though many older revisions of Firefox are vulnerable to that bug, the malware only targets Firefox 17 ESR, the version of Firefox that forms the basis of the Tor Browser Bundle – the easiest, most user-friendly package for using the Tor anonymity network.

“The malware payload could be trying to exploit potential bugs in Firefox 17 ESR, on which our Tor Browser is based,” the non-profit Tor Project wrote in a blog post Sunday. “We’re investigating these bugs and will fix them if we can.”

The inevitable conclusion is that the malware is designed specifically to attack the Tor browser. The strongest clue that the culprit is the FBI, beyond the circumstantial timing of Marques’ arrest, is that the malware does nothing but identify the target.

Anyone want to guess who is behind this?

Whoever is ultimately behind this, it’s been farmed out to a contractor, “According to Domaintools, the malware’s command-and-control IP address in Virginia is allocated to Science Applications International Corporation. Based in McLean, Virginia, SAIC is a major technology contractor for defense and intelligence agencies, including the FBI.” (SAIC refused comment)

SAIC isn’t doing this on its own.  Someone in the government is paying them to do this.

As  to whether or not there is a court order authorizing the FBI to plant malware on thousands of people’s machines, possibly, but we will never know, since it is almost certainly been finessed through the FISA court somehow..

The Corrupt Educational Industrial Complex In a Nutshell

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Tony Bennet, who has been Florida commissioner of Education of 7 months just got fired resigned because it was discovered that he fabricated the ratings of a politically connected Charter school at his last position:

A national leader in the Republican effort to overhaul public education resigned as Florida education commissioner Thursday, amid allegations that when he ran Indiana’s schools, he changed the state grade of a charter school founded by a prominent GOP donor.

 In a resignation letter that surprised many, Tony Bennett dismissed the brewing scandal as “malicious and rooted in unfounded allegations” but said that it had created “a distraction from important work” and that he was leaving his post immediately.

The move came two days after the Associated Press reported that it had acquired e-mails written by Bennett in 2012, while he was running Indiana’s schools, in which he directed his staff to change the state grade for Christel House Academy. The charter school was founded by Christel DeHaan, who has given more than $2.8 million to Republicans since 1998, including $130,000 to Bennett.

 The school, which had been kindergarten through eighth grade, added grades nine and 10 in 2012, and test scores from the new students were low enough to pull down the school’s rating from an A to a C on an A-to-F scale.

At Bennett’s direction, staff used a loophole in regulations and removed the scores of ninth- and 10th-graders, bringing the school’s grade back up to an A. Bennett has said that changing the grade made the rating system credible because he knew Christel House to be a high-performing school.

 The Indiana State Teachers Association thinks otherwise. “It’s time to call the Tony Bennett letter-grading scandal exactly what it is — cheating,” union officials wrote in a statement. “There are no excuses for the actions taken by Bennett and his staff, as revealed in the string of e-mails, other than favoritism, cronyism, self-interest and hubris — none of which has a place in public school policymaking.”

He lost his last job in Indiana when voters tossed his sorry ass out in the 2012 elections, because the voters saw through his bullsh%#.

But Republicans, and the educational reform establishment didn’t see his bullsh%$.

Case in point, the biggest stars in the anti-teacher pro-privatization education establishment,  Michelle Rhee, Jeb Bush, and Bush’s  Chiefs for Change coalition, all just just offered a full throated endorsement of this ratf%$#.

This is not a an anomaly.   We now know that Rhee’s “success” was built on altered tests, and the former head of the Atlanta schools, Beverly Hall, has been literally been charged with racketeering.

The goal of people like this is to destroy the public schools and the teachers’ unions, so that private operators and their Wall Street backers can make bank, not to help our kids.

There are real problems with the education that our children receive in the US, but the biggest problem is that there are more poor children in the US, and the poverty is more intense, than in the rest of the industrialized world.

Wall Street and Their Evil Minions™ cannot help with that.

In fact, their role in our economy has to been to exacerbate these problems.

Silvio is Going to Jail

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Italy’s highest court has affirmed his jail sentence:

Italy’s highest court has upheld a prison sentence given to former PM Silvio Berlusconi for tax evasion.

The court also ordered a further judicial review on whether he should be banned from holding public office.

In an emotional video statement, Berlusconi denounced the decision as “based on nothing, and which deprives me of my freedom and political rights”.

The sentence cannot be appealed against further but Berlusconi, 76, is unlikely to go to jail because of his age.

The ruling by Rome’s Court of Cassation came after a three-day hearing. Berlusconi was not in court.

The former prime minister was sentenced to four years in prison at the conclusion of the trial in October last year, though this was automatically reduced to a year under a 2006 pardon law.

Berlusconi is likely to serve house arrest or carry out community service.

Hopefully, this spells the end of his political career.

Now go and break up his television monopoly.