Category: Corruption

Holy Sh%$, We Are Running out of Gullible Idiots

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I understand that all resources are finite, but I never thought that it would apply to human gullibility and stupidity, indicating a continuing fall in trading volume.

His explanation is that we are finally running out of rubes willing to trust Wall Street:

The uptrend bit is easy: volumes, at least until 2009, always went up over time, especially when they were helped along by things like decimalization and high-frequency trading. But what explains the downtrend? It’s not the decreasing number of stocks: that might explain a bit of what’s going on in the US, but it wouldn’t explain the rest of the world.

Instead, I think that what we’re seeing is the slow death of the stock-market investor — the kind of person who subscribes to Barron’s, idolizes Warren Buffett, and thinks of stock-market investing as a do-it-yourself enterprise. During the dot-com bubble, lots of people thought they were really smart when it came to stock-market investing, and then after the dot-com bubble burst, the rise of discount brokerages helped encourage new people to step in to the market and try their luck.

Nowadays, however, the message is sinking in: it’s a rigged game, you can’t win, and you’re better off with a passive strategy.

It is very hard for me to believe, but the idea that Wall Street is finally running out of hard-working, regular folks who are willing to be cheated is not an unreasonable thesis given this data.

Because No One in Washington Believes In Public Works for the Public Good

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Duncan Black wonders why Obama’s infrastructure plans have so much added complexity in order to accommodate private investors:

I like me some infrastructure spending. I do not know why the government, which can borrow money for free, needs a rube goldberg machine with added middlemen to make it happen.

This one is simple: There is a Washington consensus about public projects these days, it’s that giving some rich dude the opportunity to earn a profit at taxpayer expense, is essential because of capitalism.

What are you a commie pinko or something?

Yes, the free market mousketeers are basically corrupt ratf%$#s.

BTW, that is one seriously fat cat.

Someone Here Should Be Going to Jail, and It Ain’t Kim Dotcom

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It turns out that most of the evidence in the case against Kim Dotcom and Megaupload was kept on their servers at the request of the US government:

A fresh legal bid to throw out the case against Kim Dotcom in the United States is being made after claims of an FBI double-cross.

 Evidence has emerged showing the Department of Homeland Security served a search warrant on Mr Dotcom’s file-sharing company Megaupload in 2010 which he claims forced it to preserve pirated movies found in an unrelated piracy investigation.

 The 39 files were identified during an investigation into the NinjaVideo website, which had used Megaupload’s cloud storage to store pirated movies.

 ………

 Mr Dotcom said Megaupload co-operated with the US Government investigation into copyright pirates NinjaVideo and was legally unable to delete the 39 movies identified in the search warrant.

 Mr Dotcom said: “We were informed by (the US Government) we were not to interfere with the investigation. We completely co-operated.

 ………

 The FBI application to seize the sites said the “Mega Conspiracy” members were told by “criminal search warrant” in June 2010 “that 39 infringing copies of copyrighted motion pictures were present on their leased servers”. The application was approved to allow the seizure of the domain names.

Someone was outright lying to judges in both the United States and New Zealand in order to do a favor for the pukes at the MPAA.

This is what happens when you make the conscious decision to use the powers of government as the enforcement arm of private interests.

It is inherently corrupt, and inherently corrupting.

(on edit)

If you want to make the argument that the MPAA is just being a zealous protector of its client studios, it’s not.  It’s about power.

If the movie studios were to look at the effect of low levels of file sharing, like that which was done by some Megaupload customers, they would know that shutting down the file storage site cost them money:

A new paper suggests that box office revenues were negatively impacted after the shutdown of Megaupload. The dip in revenues was most visible for average size and smaller films. According to the researchers this may have been caused by the loss of word-of-mouth promotion by people who used the popular file-hosting site to share movies. For blockbuster movies the Megaupload shutdown had the opposite effect.

In common with every file-sharing service, Megaupload was used by some of its members to host copyright-infringing movies.

For this reason the MPAA was one of the main facilitators of the Megaupload investigation, which ultimately led to the shutdown of the company in January.

The movie industry was quick to praise the government’s actions, but a new report suggests that Megaupload’s demise actually resulted in lower box office revenues.

Researchers from Munich School of Management and Copenhagen Business School published a short paper titled “Piracy and Movie Revenues: Evidence from Megaupload.” The study analyzes weekly data from 1344 movies in 49 countries over a five-year period, to asses the impact of the Megaupload shutdown on movie theater visits.

The researchers theorize that some films may actually benefit from piracy due to word of mouth promotion, and their findings partly support this idea.

So some level of file sharing can help, particularly with smaller films, like indie films.

There appears to be less/no benefit to larger films, probably because most of the studio blockbusters are crap, and so word of mouth is a bad thing.

This is not about protecting the artist. This is about protecting the do-nothing job of the studio chief’s brother in law.

Or, to be a little bit less flip, it’s about shutting down potential distribution and publicity channels that threaten the movie and record distributors’ ability act as an intermediary and charge a toll.

Matt Taibbi is Right

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When he observes that Paula Broadwell’s hagiography of David Petraeus was indistinguishable from what the rest of what the press corps said:

The book is so one-sided that it is almost supernaturally dull, and I was forgetting about it just minutes after I put it down.

 Then it hit me – it was an interesting book, after all! Because if you read All In carefully, the book’s tone will remind you of pretty much any other authorized bio of any major figure in business or politics (particularly in business), and it will most particularly remind you of almost any Time or Newsweek famous-statesperson profile.

 Which means: it’s impossible to tell the difference between the tone of a reporter who we now know was literally sucking the dick of her subject and the tone of just about any other modern American reporter who is given access to a powerful person for a biography or feature-length profile

.(Emphasis Mine)

Modern American journalism, by which I mean access journalism, where sucking up to highly placed sources trump shoe leather and intellect is deeply flawed.

An Open Letter to Anonymous

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Anonymous, or someone purporting to be Anonymous is claiming that they thwarted attempts by Karl Rove and other Republican activists to hack electronic voting systems in swing states.

Let me make this clear: I would like to talk to you, or to a representative.

I do not know if this legitimately from anonymous or not, and I’d like to get clarification.

If true, I’d love to have the goods on whoever attempted to hack the vote.

You could contact email, Skype, some form of secure chat, stretched string and a paper cup, or a f%$#ing carrier pigeon.

Obviously, I have no way to know if the claims are true, but I’d love to hear from you.

And yes, I know that this is serious tinfoil hat stuff.

Full letter follows.

This Might Explain the Problems We Have With General Officer Corps

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The Washington Post details the rock-star lifestyle of US General Officers (Generals and Admirals), and it goes a long way toward explaining some of the problems that exist with them.

Simply put, they have no connection to reality, and they have every incentive to delay their retirement well past the limits their usefulness:

Then-defense secretary Robert M. Gates stopped bagging his leaves when he moved into a small Washington military enclave in 2007. His next-door neighbor was Mike Mullen, the chairman of the Joint Chiefs of Staff at the time, who had a chef, a personal valet and — not lost on Gates — troops to tend his property.

Gates may have been the civilian leader of the world’s largest military, but his position did not come with household staff. So, he often joked, he disposed of his leaves by blowing them onto the chairman’s lawn.

“I was often jealous because he had four enlisted people helping him all the time,” Gates said in response to a question after a speech Thursday. He wryly complained to his wife that “Mullen’s got guys over there who are fixing meals for him, and I’m shoving something into the microwave. And I’m his boss.”

Of the many facts that have come to light in the scandal involving former CIA director David H. Petraeus, among the most curious was that during his days as a four-star general, he was once escorted by 28 police motorcycles as he traveled from his Central Command headquarters in Tampa to socialite Jill Kelley’s mansion. Although most of his trips did not involve a presidential-size convoy, the scandal has prompted new scrutiny of the imperial trappings that come with a senior general’s lifestyle.

The commanders who lead the nation’s military services and those who oversee troops around the world enjoy an array of perquisites befitting a billionaire, including executive jets, palatial homes, drivers, security guards and aides to carry their bags, press their uniforms and track their schedules in 10-minute increments. Their food is prepared by gourmet chefs. If they want music with their dinner parties, their staff can summon a string quartet or a choir.

The elite regional commanders who preside over large swaths of the planet don’t have to settle for Gulfstream V jets. They each have a C-40, the military equivalent of a Boeing 737, some of which are configured with beds.

In a war zone, I could understand why a general might have someone to take care of ordinary day-to-day tasks, but for someone deployed to the wilds of Alexandria, Virginia, they can take out their own trash, and mow their own damn lawn.

The ratio of officers to enlisted men is not now 1:5.  For most of history, it was 1:10.  Additionally, we now have more general officers, with 1.5 million active duty military, than we did at the height of the 2nd world war when we had 12+ million men under arms.

The terms “top heavy” and “bloated” come to mind.

Stewart Misses the Point

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Jon Stewart faults his own journalistic chops on l’affaire Petraeus:

Yes, he interviewed Paula Broadwell, and did not pick up anything untoward, but so did a lot of people.

What he has is enough self-awareness to realize that he missed a big story.

It could be worse. Robert MacNeil, formerly of the MacNeil/Lehrer report, on November 22, 1963, at Dealy Plaza, he ran into a man, and asked where he could find a phone.

The man he ran into was Lee Harvey Oswald.

Journalists don’t have any more senses than the rest of us, and Jon Stewart has an almost unrivaled ability to call out bullsh%$ in a clear and concise matter.

I do think, and Jon Stewart would agree, that it’s f%$#ed up that a comedian is arguably one of the finest journalists on cable today, but we are living in a f%$#ed up world.

We Finally Find Some Vote Fraud

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And it’s a Republican:

Authorities in New Mexico are investigating an Albuquerque father who allegedly showed up at a polling place to vote on behalf of his 18-year-old son, news station KOB reported on Tuesday night.

According to Bernalillo County Clerk Maggie Toulouse Oliver, elections workers got suspicious when the silver-haired father showed up to vote and told them he was born in 1994. He was still allowed to cast a ballot, but the workers took down his license plate number when he left. Later, he showed up at a different location and voted under his own name, according to KOB.

………

The elder Pino later called Schwartz to tell him he had made a mistake by voting on behalf of his son, but said his son had given him permission. Both were registered as Republicans at the same Albuquerque address, according to KOB.

Seriously, how many times have I said that the ‘Phants are like the Soviets, in that you know what they are doing, because they accuse us of doing it?

Un-dirtyword-believable.

This is Huge

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

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

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

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

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

The substance of this ruling is that:

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

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

Here is hoping that this survives appeal.

Cloud Computing, RIP

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

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

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

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

(emphasis original)

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

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

Still bullish on cloud storage?

H/t Ecop at the Stellar Parthenon BBS.

Greek Journalist Acquitted

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Costas Vaxevanis, who was persecuted prosecuted for publishing a list of Greeks with large Swiss bank accounts, has been acquitted:

A Greek journalist who published the names of more than 2,000 of his compatriots who held Swiss bank accounts was acquitted on Thursday in a case that touched a nerve over the role of tax evasion in the country’s debt crisis.

The trial of Costas Vaxevanis, editor of the weekly Hot Doc magazine, had aroused international concern and intense interest among Greeks hit by the impact of the country’s economic collapse and angry at the privileges of the elite.

He could have faced up to two year years in prison on charges of violating data privacy laws that Vaxevanis said were politically motivated and the result of politicians protecting an “untouchable” wealthy class.

His speedy arrest and trial following publication of the “Lagarde List” at the weekend – so named for Christine Lagarde, the head of the International Monetary Fund – touched a nerve in near-bankrupt Greece, where rampant tax evasion is undermining a struggle to cut public costs and raise revenue under an EU/IMF bailout deal.

It also enraged many who are already furious over the failure of consecutive governments to crack down on the rich while years of recession have wiped out a fifth of economic output and hammered middle-class living standards.

As the old saying goes, “A fish rots from the head.”

Former IMF chief economist Simon Johnson notes, in situations like this, the first priority really has to be breaking the grip of the corrupt elites has over society and over the economy.

That is not going to happen, because the Greek leadership is incapable of doing this, and the corrupt elites in the rest of the EU do not want someone telling regulators where the bodied are buried.

Pass the Popcorn

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A court has ruled that the Montgomery County (PA) Recorder of Deeds can sue MERS (Mortgage Electronic Registration Systems) and the banks over their evading recording fees:

The federal court has upheld the Montgomery County Recorder of Deeds’ right to sue an electronic mortgage registry company and banks doing business with that company for $15.7 million that she claims is owed to the county in recording fees.

 The court Friday issued a 36-page memorandum and order denying a motion by MERS, also known as Mortgage Electronic Registry System, and its participating banks to dismiss the lawsuit filed last year by Recorder of Deeds Nancy J. Becker.

 The court’s ruling, while not discussing the merits of the case, essentially states that Pennsylvania does have a law requiring that mortgage assignments be recorded with the recorder of deeds office and that the recorder of deeds has the right to bring legal action when he or she does not believe an entity is complying with the law.

 “This is one major hurdle that we have now leaped,” Becker said Monday. “Now, we can move forward on the issues.”

………

 Some 146,715 MERS mortgages have been recorded in her office from April 2004 through September 2011, according to Becker.

146,715 mortgages?  In one county?

Well Montgomery County has about 800K people, or about ¼% of the US population.

If you assume a lower number of multi-family residences, and double it, you have something in the neighborhood of 30 million mortgages, and fee evasion on the order of $3 billion.

With penalties, it might be north of $10 billion, and when you consider the potential liabilities that the banksters might have incurred because MERS did not work, and does not provide an accurate (or for that matter legal) record of who holds the note on the loan:

Becker has said that, when these mortgage loans are transferred electronically, sometimes multiple times, through MERS and not filed in the county recorder of deeds office, “it makes it difficult, almost impossible sometimes” for property owners to determine what institutions are holding their mortgages.

I would be very surprised if the liabilities incurred by this are not hundreds, if not thousands, of times more.

Yeah, This is How “Balanced” Agreements With the RIAA and MPAA Work

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The RIAA and the large ISPs have an agreement to implement a “six strikes” agreement in to limit “piracy”.

At the core of this agreement is an “independent and impartial” expert to evaluate evidence against people, but now it appears that this “expert” is an RIAA lobbyist:

A month before the controversial “six strikes” anti-piracy plan goes live in the U.S., the responsible Center of Copyright Information (CCI) is dealing with a small crisis. As it turns out the RIAA failed to mention to its partners that the “impartial and independent” technology expert they retained previously lobbied for the music industry group. In a response to the controversy, CCI is now considering whether it should hire another expert to evaluate the anti-piracy monitoring technology.

Starting next month the MPAA, RIAA and five major Internet providers in the United States will start punishing persistent BitTorrent pirates,

The scheme is being coordinated by the Center for Copyright Information (CCI) who agreed to hire an impartial and independent expert to review the evidence that will be used to accuse suspected subscribers.

However, earlier this week the news broke that the touted independent technology expert, Stroz Friedberg, is not so neutral. In fact, the company is a former RIAA lobbying firm.

The lobbying job earned the company more than half a million dollars ($637,000), which makes it hard to view the company as “independent and impartial” as the agreement between the copyright holders and ISPs requires.

This is why you don’t cut deals with the RIAA and the MPAA.

They are not, and have never been, good faith players in this debate.

The Poker Term for this a “Tell”

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The fact that the Texas Attorney General is threatening to arrest international election monitors if they monitor elections would appear to indicate that he knows that his fellow Republicans are :

The Texas attorney general, Greg Abbott, has threatened to arrest international election monitors invited by liberal groups to observe the conduct of next month’s presidential vote in states accused of attempting to disenfranchise minorities.

Abbott has written to the Organisation for Security and Cooperation in Europe warning that its monitors have no right to monitor the vote even though they have observed previous US elections.

“The OSCE’s representatives are not authorized by Texas law to enter a polling place. It may be a criminal offence for OSCE’s representatives to maintain a presence within 100 feet of a polling place’s entrance,” he said. “Failure to comply with these requirements could subject the OSCE’s representatives to criminal prosecution for violating state law.”

They are trying to cover up their voter suppression efforts, though I’m sure that they there is a bit of anti-UN whack job paranoia in the mix.

Why Hasn’t Jon Corzine Been Indicted?

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The Wall Street Journal notes that there were no effective capital controls or accounting standards at MF Global:

As MF Global Holdings Ltd. teetered last October, an accountant in its Chicago office got an urgent question from regulators: How much cash did the firm have left?

 It is supposed to be an easy question for brokerage firms to answer, even in the middle of a crisis. U.S. rules set tight controls on the accounting, oversight and movement of money that belongs to customers or firms themselves.

 This will require a significant effort,” the MF Global accountant, Matthew Hughey, wrote in an email to seven colleagues at 4:24 a.m. on Oct. 27, 2011. A copy of the email was reviewed by The Wall Street Journal.

 The reason Mr. Hughey couldn’t answer the question for regulators: Employees at MF Global couldn’t keep track of exactly how much money it had at any given moment, even before the company began to wobble, according to Mr. Hughey’s email. Officials had been trying to fix the problem for months.

 As regulators and lawmakers plow ahead with investigations that began when MF Global tumbled into bankruptcy a year ago this week, yawning gaps in the New York company’s procedures for moving and keeping track of money are getting new attention.

 A private lawsuit expected to be updated early next month is expected to highlight such issues and how they are tied to the more than $1 billion that went missing from customer accounts as MF Global failed last October, according to people involved in the suit.

 A House financial services committee report, which will be released in the next few weeks, is expected to scrutinize how regulators handled MF Global. It is unclear how much focus will be given to the deficiencies in internal computer systems and procedures at the firm.

………

There are no signs that prosecutors are planning to bring criminal charges related to the firm’s demise.

Jon S. Corzine and Henri J. Steenkamp, MF Global’s chief executive and finance chief, respectively, have told lawmakers that they believed internal controls at the company were sound when they signed securities filings in 2011. Their signatures were required under the Sarbanes-Oxley corporate-governance law.

Mr. Corzine, a former Goldman Sachs Group Inc. chairman, strongly backed the 2002 law while he was a Democratic U.S. senator from New Jersey. He has repeatedly denied any wrongdoing related to MF Global. A spokesman for Mr. Corzine declined to comment Sunday. Mr. Steenkamp’s lawyer and Mr. Hughey couldn’t be reached for comment. A lawyer for Mr. Hughey declined to comment.

(emphasis mine)

Under Sarbanes Oxley, Jon Corzine personally certified that MF Global had established and was maintainied “internal controls” and “designed such internal controls to ensure that material information relating to the company and its consolidated subsidiaries is made known to such officers by others within those entities, particularly during the period in which the periodic reports are being prepared.” (From the Wiki)

The didn’t. It wasn’t even close, and Jon Corzine was in violation of the law, and should be subject to criminal penalties.

What have we heard from the Department of Justice? **crickets**

It is a disgrace.

I Think that David Stockman Just Called Rmoney a C%$# Sucker

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I don’t think that Reagan’s former budget director finds Mitts business experience particularly meritorious:

Bain Capital is a product of the Great Deformation. It has garnered fabulous winnings through leveraged speculation in financial markets that have been perverted and deformed by decades of money printing and Wall Street coddling by the Fed. So Bain’s billions of profits were not rewards for capitalist creation; they were mainly windfalls collected from gambling in markets that were rigged to rise.

Nevertheless, Mitt Romney claims that his essential qualification to be president is grounded in his 15 years as head of Bain Capital, from 1984 through early 1999. According to the campaign’s narrative, it was then that he became immersed in the toils of business enterprise, learning along the way the true secrets of how to grow the economy and create jobs. The fact that Bain’s returns reputedly averaged more than 50 percent annually during this period is purportedly proof of the case—real-world validation that Romney not only was a striking business success but also has been uniquely trained and seasoned for the task of restarting the nation’s sputtering engines of capitalism.

Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.

It’s pretty long, but it’s well worth the read, and it is positively devastating.