Category: Schadenfreude

Live By the Self Aggrandizing Leak, Die by the Self Aggrandizing Leak

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It looks like the Obama is finally going after a leaker who isn’t a whistle blower, David Petraeus:

The F.B.I. and Justice Department prosecutors have recommended bringing felony charges against David H. Petraeus, contending that he provided classified information to a lover while he was director of the C.I.A., officials said, and leaving Attorney General Eric H. Holder Jr. to decide whether to seek an indictment that could send the pre-eminent military officer of his generation to prison.

The Justice Department investigation stems from an affair Mr. Petraeus had with Paula Broadwell, an Army Reserve officer who was writing his biography, and focuses on whether he gave her access to his C.I.A. email account and other highly classified information.

F.B.I. agents discovered classified documents on her computer after Mr. Petraeus resigned from the C.I.A. in 2012 when the affair became public.

………

But investigators concluded that, whether or not the disclosure harmed national security, it amounted to a significant security breach in the office of one of the nation’s most trusted intelligence leaders. They recommended that Mr. Petraeus face charges, saying lower-ranking officials had been prosecuted for far less.

Of course, his indiscretions with Ms. Broadwell, are only a part of the unauthorized releases that he blithely made:

………

Panetta revealed the name of the Navy SEAL unit ground commander who carried out the Osama bin Laden raid. He did so at a 2011 awards ceremony attended by the filmmaker of “Zero Dark Thirty,” a Hollywood movie that glorified the bin Laden operation and torture, and was widely criticized as agitprop the government helped make. Panetta also disclosed “secret” and “top secret” classified information on the same occasion. Petraeus gave his lover and biographer, Paula Broadwell, access to his CIA email account and other highly classified information, some of which was found on her computer.

Of course, it is all up to Eric “Place” Holder to whether to pull the trigger on the prosecution, and given HIS record on prosecuting the rich and powerful, I’m not holding my breath.

Ave Satanas*

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Satanists in Florida have convinced a Florida school district not to hand out bibles because they would have to hand out Satan coloring books:

In September of last year the Satanic Temple revealed plans to disseminate the “Satanic Children’s Big Book of Activities,” to kids in a Florida school district.

The Satanic Temple along with the Freedom From Religion Foundation (FFRF) were responding to a ruling, which let the Orange County school district allow religious and atheist organizations to distribute materials — including bibles and other pamphlets — in public schools.

Since religious and atheist materials could be handed out, the Satanic Temple made a request to hand out the aforementioned activity book, while the Freedom From Religion Foundation planned to hand out a pamphlet describing the bible as an “X-rated book.”

Now, the Satanic Temple’s request has the school district rethinking its policy, and the district is currently putting the distribution of all religious paraphernalia on hold, according to WFTV-TV.

As I mentioned 4 months ago, my Mother used this tactic when I was a wee las, when the then superintendent of the Charlottesville public schools permitted Christian bibles to be handed out at schools.

Same results too.

*Latin for, “Hail Satan.” Note that Jewish concept of Satan is very different from the one that Christianity took from Zoroastrianism. In fact a number of sages posited that the dialogues with Satan in the book of Job were an internal dialogue God was having.

This is Number 1 on my Schadenfreude hit Parade Today

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You know the story, libertarian boy makes good, doesn’t want to pay taxes, renounces his US citizenship, and is shocked when he is denied an entry visa into the United States:

Roger Ver, a high-profile member of the Bitcoin community who is commonly known as “Bitcoin Jesus,” has been denied a US visa — despite having been born in the country.

Ver is well known in the Bitcoin community as an entrepreneur and angel investor, having funded products including Blockchain, Ripple, and Blockpay. He became known as “Bitcoin Jesus” after giving thousands of coins of the virtual currency away for free. Ver was born in the US, making him a citizen there, but he renounced his citizenship in March — and now he says the government isn’t letting him back in.

As Coindesk is reporting, Ver posted on Twitter that the US government had refused his recent request for a non-immigrant visa, leaving him “effectively locked out of his native USA.”

Ver complains that the decision has forced him to miss speaking appointments at conferences and that the US embassy in Barbados refused to even consider the evidence for his application.

The official reasoning behind Ver’s rejection is that he doesn’t have sufficient “ties” to his country of residency in the Caribbean and has not demonstrated he has “the ties that will compel [him] to return to your home country after your travel to the United States,” according to a picture he tweeted of a letter that appears to be from the embassy.

In short, US officials are worried that Ver might choose to stay in his native country illegally.

I’m sure that he sees himself as a modern lieutenant Philip Nolan, but I think that the rest of us just see him as a self entitled, solipsistic, schmuck.€

It really could not have happened to a more deserving person.

H/t Cthulhu* at the Stellar Parthenon BBS.

*No, not the unspeakably malevolent super-being, the contributor to the Stellar Parthenon.†
†OK, I’ve never seen the two of them together, so Cthulhu might actually be the Cthulhu, but the mere fact that he is on a BBS, interacting with humans‡ would seem to mitigate against this.
‡Yes, I know, this is the internet, where no one knows if you are a dog.
€Not really. As anyone with an even passing knowledge, a schmuck has a head, and a turtleneck.

This is the 2nd Most Schandenfreude I’ve Felt Today

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The judge overseeing the corruption case against Bob McDonnell has denied his motion to remain free while he appeals:

A federal judge on Tuesday denied former Virginia governor Bob McDonnell’s request to remain free while he appeals his corruption convictions, which means he could begin his two-year prison sentence by 9 February.

US district judge James Spencer in Richmond denied the request, unpersuaded by arguments from McDonnell’s lawyers before his 6 January sentencing. Prosecutors had opposed the request.

On Monday, McDonnell’s attorneys had reiterated the request and argued that the appeal could take almost as long as the sentence itself. They also said the appeal would raise substantial questions, including whether the government’s interpretation of an “official act” is correct.

But in his Tuesday decision, Spencer said it’s not a “close question” that justifies release pending appeal. He also noted that he previously concluded that “substantial evidence supports the jury’s finding of a quid and fairly specific, related quo”. And he dismissed arguments raising concerns over the jury selection process and deliberations.

One would hope that some time in the slam will give him a broader view of the diverse tapestry, but I rather imagine, like the Humbug from Norton Juster’s masterpiece The Phantom Tollbooth, he will, “Swim all day in the Sea of Knowledge and not get wet.”

I could be wrong about his possibility of finding perspective or perhaps enlightenment in prison, but I do not expect this to happen.

Still, the fact that he is less than a month from going into the slam provides me a bit of (admittedly cruel) perverse satisfaction.

Pass the Popcorn

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Pass the Popcorn

In response to the scandal over incoming House Whip Steve Scalise’s giving talk at a David Duke funded group in 2002, David Duke has spoken, and he has a list:

David Duke, the former leader of the Ku Klux Klan at the center of a brewing congressional scandal, told Fusion on Monday that two of his top associates invited Rep. Steve Scalise (R-Louisiana) to a conference hosted by a controversial Duke-founded group in 2002.

Scalise, the House Majority whip, has come under fire after reports emerged he had spoken before the conference in 2002. Duke’s group, the European-American Unity and Rights Organization, or EURO, has been described as a “hate group” by the Southern Poverty Law Center, a characterization Duke rejects.

Scalise’s office didn’t deny he had spoken at the conference — stopping short of confirming it — but pleaded ignorance and said he was “never affiliated with the abhorrent group in question.”

Duke told Fusion he has met with Scalise several times, along with other members of Louisiana’s congressional delegation. He believes two close associates — Howie Farrell and Kenny Knight — invited Scalise to speak at the conference.

………

And he delivered a warning to both Republicans and Democrats: Treat Scalise fairly, and don’t try to make political hay out of the situation. Or he said he would be inclined to release a list of names of all the politicians — both Republicans and Democrats — with whom he has ties.

“If Scalise is going to be crucified — if Republicans want to throw Steve Scalise to the woods, then a lot of them better be looking over their shoulders,” Duke said.

(emphasis mine)

If you are a politician that he has called out, I’d be worried.

Relying on the kindness of David Duke is not what I could calling a winning strategy.

Reviewing Stories Over the Past Year, This One Wins the Award for Best “A Good Start”

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I did not notice this story when the Global Post published it in April, but when they republished the fact that Vietnam is executing corrupt bankers, I felt kind of jealous:

Editor’s note: This story was first published on April 3, 2014. GlobalPost is featuring it again as one of our must-reads of 2014.

BANGKOK — For the most part, American bankers whose rash pursuit of profit brought on the 2008 global financial collapse didn’t get indicted. They got bonuses.
Odds are that scandal would have played out differently in Vietnam, another nation struggling with misbehaving bankers.


The authoritarian Southeast Asian state doesn’t just send unscrupulous financiers to jail. Sometimes, it sends them to death row.

Amid a sweeping cleanup of its financial sector, Vietnam has sentenced three bankers to death in the past six months.

One duo now on death row embezzled roughly $25 million from the state-owned Vietnam Agribank. Their co-conspirators caught decade-plus prison sentences.

 I do not approve of capital punishment, but this whole “Decades-plus prison sentence” thing?  That I wholeheartedly approve.

This Isn’t a Scandal, It’s a Bullet Point on a Republican Political Resume

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It turns out that the new House Majority Whip in the Congress spoke to David Duke’s white supremacist group in 2002:

Representative Steve Scalise of Louisiana, the No. 3 Republican in the House, addressed a group of white supremacists and neo-Nazis in 2002, a Scalise spokeswoman confirmed Monday as his party prepared to take control of both chambers of Congress.

Mr. Scalise made his remarks to the European-American Unity and Rights Organization, which was founded two years earlier by David Duke, the former Ku Klux Klan leader and Louisiana politician. Mr. Scalise was a Louisiana state legislator at the time.

The Southern Poverty Law Center has described the organization — which uses EURO as an acronym — as a hate group, while noting that in recent years it has “accomplished little” and serves “primarily as a vehicle to publicize Duke’s writing and sell his books.”

Moira Bagley Smith, a Scalise spokeswoman, said the congressman “has never been affiliated with the abhorrent group in question.”

Dude?!?!?

Why are you dissing your base?

Seriously, David Duke in 2002?  How could you not know who you were talking to.

Then again, the Republican party is far less inclusive than it was in 2002, when Trent Lott was bounced as Senate Majority leader for endorsing Strom Thrumond’s 1948 segregationist bid for the White House.

Am I a Bad Person to Experience Unalloyed Glee at the Misfortune of Others?

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That’s Gotta Hurt!

Well, let me clarify:

I am talking about one entity specifically………

I’m talking about one entity who was caught trying to deceive regulators specifically………

I’m talking about one entity who was caught trying to deceive regulators and defraud the public specifically………

I’m talking about one entity who was caught trying to deceive regulators and defraud the public specifically whose business model is primarily rent seeking………

OK, spoiler alert, it’s Monsanto, who just had a fraudulent patent revoked:

Patent EP1812575 held by Monsanto has been revoked by the European Patent Office (EPO) after the international coalition No Patents on Seeds! filed an opposition in May 2014.

A further opposition was filed by Nunhems / Bayer CropScience. In November 2014, Monsanto requested that the patent be revoked in its entirety and the EPO complied with this request.
The patent covered conventionally bred tomatoes with a natural resistance to a fungal disease called botrytis, which were claimed as an invention. The original tomatoes used for this patent were accessed via the international gene bank in Gatersleben, Germany, and it was already known that these plants had the desired resistance. Monsanto produced a cleverly worded patent in order to create the impression that genetic engineering had been used to produce the tomatoes and to make it look ‘inventive’.

“Revoking this patent is an important success. It was more or less based on a combination of fraud, abuse of patent law and biopiracy. The patent could have been used to monopolise important genetic resources. Now breeders, growers and consumers have a chance of benefiting from a greater diversity of tomatoes improved by further breeding”, says Christoph Then, a coordinator of No Patents on Seeds!. “The intended resistance is based on complex genetic conditions, which are not known in detail. So genetic engineering is clearly not an option in this case.”

It would be nice if patent law were changed to invalidate gene and species patents, but it’s a start.

A School Board Has the Perfect Response to Open Carry Assholes

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After Republicans passed yet another open carry law, this time in Michigan, a school board had a problem with a parent open carrying in school.

It turns out that this is not illegal so long as you carry the proper permits (great law there, huh?), but the school came up with an ingenious response.

They determined that they did not have the ability to determine whether or not a person bringing a gun onto campus had his papers in order, so if anyone comes onto campus with a gun, the response will be a lock-down and calling 911:

A Michigan man, picking his child up at school, carried his pistol into the building in his hip holster. The staff was not amused. Since open carry is legal in Michigan, the parent was within his rights. But the Huron Valley School District’s board decided that they needed to have a procedure in place for future incidents.

Open carry is perfectly legal in Michigan but only if you have a Concealed Pistol License (CPL). The parent — who remains anonymous — did have a CPL. But both state and federal law prohibits guns on school property except for a legal parent or guardian who must leave the weapon in the car and this only applies to CPL holders, who must pass a comprehensive background check and carry the gun visibly.

That’s all well and good for open-carry folks. But the school district is committed to keeping the children in their care safe. To that end, School Board President Rebecca Walsh has set out the following plan:

“If this occurs during school hours, the building will immediately go into lockdown status, and 9-1-1 will be called so law enforcement agencies can make a determination on the status of the person with the weapon.”

She added that the same policy applies when school is not in session, without the lockdown. The police will be summoned for any visitor who brings a gun onto school property. The School District feels that they must use this procedure for everyone because they have no way of knowing who is properly licensed.

This is a proper, and well deserved, f%$# you to the ammosexuals, and I wholeheartedly approve.

Westboro Baptist is Going to be Fabulous, Whether they Like it or Not

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A federal judge has struck down the gay marriage ban in Kansas.

I am sure that those sociopaths at Westboro Baptist are feeling unhappy, and they deserve every bit of misery that the universe delivers to their door:

Federal Judge Daniel Crabtree today has found that a ban on same-sex marriage violates the violates the Fourteenth Amendment to the U.S. Constitution. The Judge has placed a temporary, one-week stay on his ruling, until November 11, unless the State of Kansas indicates it will not appeal.

The ACLU had filed the suit, Marie v. Moser, after the U.S, Supreme Court refused to review any same-sex marriage cases, including those in the 10th Circuit’s purview, Utah and Oklahoma.

Kansas voted to add an amendment to its constitution banning same-sex marriage back in 2005.

“In the past year, nearly 50 different rulings have been issued from state and federal courts in favor of the freedom to marry for same-sex couples,” Freedom To Marry notes.

Same-sex couples in Kansas had a day to marry before the state Supreme Court place a stay on an October 9 ruling.

 Fabulous!

This is a Huge and Well Deserved F%$# You to the CIA and the NSA

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It’s well deserved too.

You see the Federal Trade (FTC) commission has hired hired Ashkan Soltan as their new Chief Technical Officer.

The reason that this is a giant f%$# you to the US state security apparatus is because (wait for it) he helped the Washington Post do its news stories on the Snowden affair:

The Federal Trade Commission has hired privacy and technology expert Ashkan Soltani to serve as the commission’s chief technology officer. But security experts and former senior U.S. intelligence officials are questioning the FTC’s decision, given Soltani’s very public role as a consultant for The Washington Post, where he co-authored multiple articles based on classified documents stolen from the National Security Agency by former contractor Edward Snowden.

 The FTC said in a press release that Soltani will join FTC in November and will replace Latanya Sweeney, who is returning to Harvard University, where she founded and directs the school’s Data Privacy Lab. His job will be to advise the commission on evolving technology and policy issues, a role similar to one he held previously at the FTC before leaving government to become an independent consultant.

Needless to say, Michael Hayden and His Evil Minions™ heads are exploding:

The news has elicited wails from NSA’s mail mouthpieces, Stewart Baker and Michael Hayden.

“I’m not trying to demonize this fella, but he’s been working through criminally exposed documents and making decisions about making those documents public,” said Michael Hayden, a former NSA director who also served as CIA director from 2006 to 2009. In a telephone interview with FedScoop, Hayden said he wasn’t surprised by the lack of concern about Soltani’s participation in the Post’s Snowden stories. “I have no good answer for that.”

[snip]

Stewart Baker, a former NSA general counsel, said, while he’s not familiar with the role Soltani would play at the FTC, there are still problems with his appointment. “I don’t think anyone who justified or exploited Snowden’s breach of confidentiality obligations should be trusted to serve in government,” Baker said.


I find Hayden’s wails especially disgusting, given the way — it is now clear — the government spent so much effort covering up how he extended the illegal wiretap program in March 2004. I mean, I’m not trying to demonize the fella, but he’s a criminal, and yet he’s complaining about the press reporting on abuses?

………

At FTC, Soltani will be in a role where he can directly influence the kind of regulatory pressure placed on data collectors to protect user privacy. He understands — probably far more than we know from the WaPo stories — how NSA is capitalizing on already collected data. Which means he may be able to influence how much remains available to the spooks.

I do not expect Soltani to actually get the job.

It’s clear that Obama is very much in the pocket of the US state security apparatus, and he will find a way to stop this.

But still, it is very well deserved push-back against the what can only be described as the forces of evil in America’s shadow government.

Your Daily Schadenfreude

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The draconian voting restrictions in Arkansas have resulted in the Republican Attorney General being dropped from the voter roles:

UC Irvine law professor Rick Hasen says this development, which he describes as coming from the “Irony Dept”, is just “too delicious”.

Leslie Rutledge, the Republican candidate for Attorney General in Arkansas, has been discovered to have been registered to vote in multiple states in addition to Arkansas, and even voted by absentee ballot in Arkansas’ general election in November of 2008 — after she had registered to vote in Washington D.C. [PDF] in July of the same year.

According to the Arkansas Democrat-Gazette, Rutledge has now been removed from Arkansas’ voting rolls by the Pulaski County Clerk, after he confirmed that she was registered to vote in D.C., and possibly Virginia. The removal from the rolls may also lead to her ineligibility to be elected to office.

“For the AG candidate of the party who likes to scream about voter fraud to be registered in two (or three) places at once is ironic and amusing on its own,” writes Matt Campbell of Arkansas’ “Blue Hog Report”, which was on this story from the jump.

“However, the bigger implication is Article 19, section 3, of the Arkansas Constitution,” he adds, which states: “No persons shall be elected to, or appointed to fill a vacancy in, any office who does not possess the qualifications of an elector.” If Rutledge is not registered in Arkansas, she no longer “possess[es] the qualifications of an elector.”

I don’t expect her to be prevented from voting, nor do I expect her to be dropped from the ballot, because, after all, “Silly rabbit, voter suppression is for Democratic voters.”

I am sure that the courts will rule that way.

Still, I will enjoy a few minutes of pleasure at Ms. Rutledge’s discomfiture.

Good News Everyone!

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I invented a device that makes you read this in your head using my voice!

In response to yet another attempted shakedown by a patent troll, the courts,  in response to recent Supreme Court rulings, have started to issue significant sanctions:

This summer, the Supreme Court made it easier for defendants to collect fees when they win patent cases. The decision is starting to have an effect—the nation’s largest patent troll just got slapped with an order to pay $1.4 million in attorneys’ fees to NetApp, which it sued in 2010.

The case brought by Summit Data Systems, a branch of Acacia Research Corp., hinged on an accusation that NetApp infringed when its server-based software interacted with an end user on a Microsoft operating system. The two patents-in-suit, 7,392,291 and 7,428,581, relate to “block-level storage access over a computer network.”

But just two months before Summit filed its lawsuit, it sold licenses for those patents to 43 companies that were member companies of defensive patent aggregator RPX—including Microsoft.

“Nonetheless, Summit brought suit against NetApp barely two months after executing the Licensing Agreement,” wrote US District Judge Gregory Sleet in his order (PDF), which was unsealed on Tuesday. “It then took Summit 18 months to disclose the existence of the Licensing Agreement to NetApp.”

Summit’s expert said that Microsoft users infringe the patents, but he couldn’t determine whether Linux or UNIX systems infringed because he “didn’t have time.”

Sleet continued:

The facts of this case demonstrate that Summit pursued an action against NetApp without any basis for infringement, delayed disclosing the existence of the Licensing Agreement for eighteen months, extracted settlements from co-defendants worth a fraction of what it would actually cost them to defend the lawsuit, and then voluntarily dismissed its claims with prejudice prior to the court issuing a ruling on the merits… The claims were frivolous—Microsoft’s initiator software [was] licensed, so no system employing it could infringe the asserted patents. Summit’s motivation was to extract quick settlements that were dwarfed by the costs to litigate. Summit was objectively unreasonable in bringing a lawsuit against NetApp mere months after executing the Licensing Agreement that effectively eliminated its theory of infringement. Finally, the court is convinced that an award of attorneys’ fees in this case is necessary to deter this sort of reckless and wasteful litigation in the future.

………

Acacia is a patent-holding company that’s publicly traded on NASDAQ, and it’s sometimes considered the largest “patent troll,” since its various subsidiaries have filed more patent lawsuits than any other single company. The NetApp fee order is Acacia’s second major setback in recent months. In July, an Acacia unit holding an old Polaroid digital imaging patent lost a big case in which it was seeking royalty payments from 31 companies.

Here is the pertinent bit about the recent Supreme Court decision:

The Supreme Court overruled the lower courts. In their unanimous opinion for Octane Fitness v. Icon Health & Fitness, the justices found the Federal Circuit had taken a wrong turn in 2005 when it rejected the “holistic, equitable” approach toward attorneys’ fees and took up a “more rigid and mechanical formulation.” In order to get fees in a case, a party had to show that a litigation is both “objectively baseless” and “brought in subjective bad faith.”

That’s almost an impossible standard to meet, Octane’s lawyer Rudy Telscher told Ars in an interview before the February oral arguments. “You’ve got to show that the plaintiff brought a ‘zero merit’ case, and they knew that’s what they were doing.”

Instead, the Supremes said today that fees should be awarded in an “exceptional” case. That’s what the statute calls for, and the word “exceptional” should be given its ordinary meaning. “An ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position… or the unreasonable manner in which the case was litigated,” wrote Sotomayor.

The “Federal Circuit Court” above is formally known as the United States Court of Appeals for the Federal Circuit, but is probably better known as the “Patent Court,” which has had a ridiculously broad view of IP rights, they have literally allowed the patenting of a rainy day.

Thankfully, SCOTUS has begun routinely overturning the more extreme rulings of the patent court.

Normally, I do not Give a Rats Ass About Miss America, but ………

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The fact that the right wing Christofascists are freaking out because the new Miss America worked for Planned Parenthood is positively delicious:

If you thought her less than mind-blowing performance of “Happy” had Miss America fans in a snit, wait till they find out where Kira Kazantsev used to work.

The newly crowned beauty queen has opponents of reproductive choice up in arms this week over revelations that her résumé includes a stint with Planned Parenthood. LifeNews’ Steven Ertelt fumed Monday, “The woman representing the nation as the new Miss America interned for the very organization that has killed millions of Americans in abortions.” Other conservative sites have also quickly found themselves up in arms over Kazantsev’s past – Truth Revolt gasps that “Our new Miss America once interned for Planned Parenthood and she displays it proudly for all the world to see,” while Live Action News notes that “The new Miss America is an abortion supporter who worked for Planned Parenthood” and lists “her job duties at the company that snuffs out of the lives of young baby girls.” Right on cue, the outrage has now spilled over onto social media, with various patriotic Americans declaring sentiments like, “She should’ve been disqualified for Miss America.” Because the only choice for Miss America is an anti-choice Miss America.

In her LinkedIn profile, Kazantsev mentions a three-month internship with a Hempstead branch of the organization last year. She says she “Assisted delivery of programs in local public schools, teaching children about mutual respect & self-esteem” and “Conducted research on Planned Parenthood Education.” Sounds like baby killing to me! More damningly still, she’s also interned for Kirsten Gillibrand, who notoriously holds the public position that “a woman’s medical decisions should always be made between her, her family, and her doctor – not by politicians.” And as an intern for Solidarity Strategies, Kazantsev worked on political campaigns including that of pro-choice congresswoman Annie Kuster.

Awww ……… The poor little Talibaptist’s feelings are hurt.

You like a hot cup of f%$# you with that?

And While We are On the Subject of how Hedge Funds are F%$#ing the Pension Funds

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Mission Accomplished:
First, you get money to your cronies, and 2nd you f%$# public servants and pub lic sector unions.

Sometimes, it is not just over-priced under-performance, sometimes, it’s corruption. Case in point, the  disastrous decision by Chris Cristie to move a significant portion of New Jersey’s pension funds to Christie cronies on Wall Street:

New Jersey investment officials have directed increasingly large slices of state pension money into riskier investments, such as hedge funds, touting their strategy as a means of limiting exposure to a volatile stock market. They’ve argued that their approach would maximize overall returns and justify the higher fees paid to Wall Street money managers.

But in seven of the eight years since the state began shifting pension funds into so-called alternative investments, returns have fallen well short of the broader stock market, an analysis of state financial records shows. In those seven years, New Jersey’s alternative investment portfolio has produced gains of just more than half of the S&P 500, the widely watched index seen as a proxy for shares of large corporations.

Since Gov. Chris Christie took office, he has nearly tripled the amount of retiree cash invested in alternative investment firms — many of whose employees have made financial contributions to political groups backing Christie’s election campaigns. In that time, the gap between New Jersey’s alternative portfolio and the broader market has rapidly expanded, costing taxpayers billions in unrealized returns and threatening the financial stability of the $78 billion pension system. The state’s pension funding shortfalls — which have been exacerbated by Christie’s market-trailing investment strategy — were one of the factors cited by Fitch Ratings in its decision last week to downgrade the state’s bond rating for the second time.

………

“The idea that hedge funds, private equity funds and other alternative investments beat stock-index funds over the long haul is an urban myth like the tooth fairy,” said Jeff Hooke, a former Lehman Brothers investment banker who in 2012 published a study showing that higher alternative investment fees correlated to lower pension returns. “The managers of these big state pension funds are drinking the Wall Street Kool-Aid. The problem with these alternative investments is that they have a tough time beating the low-fee index funds because the fees for alternatives are so big.”

Even without considering fees, cheap (a 90% lower expense ratio) index funds outperform the aggressively managed money.

When you add in the rapacious fees charged, it’s not even close.

This lack of performance, and his refusal to make necessary pension payments earned him a downgrade from S&P as well:

In a significant blow to Gov. Chris Christie, Standard & Poor’s on Wednesday said it is downgrading New Jersey’s credit rating. The announcement said Christie’s management of New Jersey’s $78 billion pension system has “significant negative implications” for the state’s finances. S&P also cited the state’s below-expected tax revenues as a factor that “put additional pressure on future budgets.” The downgrade comes as Christie aides have been publicly suggesting that the governor’s fiscal-management record would be a boon should he decide to run for president in 2016.

Bloomberg News notes this is the eighth downgrade during Christie’s tenure and the Washington Post reports that “New Jersey’s credit rating has been downgraded more under Chris Christie than any other governor” in the United States.

Neither Christie’s office nor the New Jersey Department of Treasury responded to emails from International Business Times requesting comment about the S&P downgrade.

Citing Christie’s decision to not make actuarially required pension payments that he had previously agreed to, S&P’s downgrade announcement says New Jersey has “demonstrated [a] lack of commitment when it comes to funding its annual contributions.” S&P says it expects the pension system’s finances “to decline much more significantly” in the coming years.

BTW, there has been a formal ethics complaint fired on his pension policies:

New Jersey’s biggest labor union today plans to file a complaint with the State Ethics Commission against a key adviser to Gov. Chris Christie who is in charge of the agency that oversees pension investments.

In an 11-page letter to the ethics commission, New Jersey AFL-CIO President Charles Wowkanech said that the chair of the State Investment Council, Robert Grady, “has violated the Division’s own rules barring politics in the selection and retention of such funds and investments, and has further created an appearance of impropriety.”

At issue is the state’s investment of hundreds of millions of dollars of pension money with Wall Street firms, including hedge funds and other types of “alternative investments” that charge higher fees than more traditional types of investments — a practice that started before Christie was governor but has increased under him.

Some “key executives” of the firms donated to state and national Republican organizations that helped Christie, according to Wowkanech, who said those donations potentially broke state pay-to-play laws, and at the least violated the state officials’ code of ethics. Wowkanech wants an investigation.

And on top of all this, it now appears that the Christie administration is using fuzzy math to goose their return on investment.

It’s clear that Christie has moved from bombast to damage control in this matter:

The New Jersey Division of Investments has quietly sold its stake in a venture capital fund managed by General Catalyst Partners, following allegations of impropriety related to a political contribution from General Catalyst “executive-in-residence” and current Massachusetts gubernatorial candidate Charlie Baker.

Fortune has learned that the sale agreement was inked back in August, and closed within the past several weeks. It may be publicly disclosed tomorrow during an open State Investment Council meeting, and was discussed during an investment policy committee call last week. No word yet on the buyer, although a source says that the sale price was around 1.5x of cost.

I so hope that this guy runs for President.

The scrutiny he’ll get will destroy any future for him in politics.

This is the Proverbial, “Big F%$#ing Deal”

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The largest pension fund in the nation, Calpers, has decided that it will not longer have hedge funds manage its money:

The California Public Employees’ Retirement System, the nation’s largest pension fund, will eliminate all of its hedge fund investments over the next year on concerns that investments are too complicated and expensive.

The pension fund, which oversees $300 billion, said on Monday that it would liquidate its positions in 24 hedge funds and six hedge fund-of-funds — investments that total $4 billion and more than 1 percent of its total investments under management.

The decision, after months of deliberation by the pension fund’s investment committee, comes as public pensions across the United States are beginning to assess their exposure to hedge funds. It is likely to reverberate across the investment community in the United States, where large investment funds look to Calpers as a model because of its size and the sophistication of its investments.

“Hedge funds are certainly a viable strategy for some, but at the end of the day, when judged against their complexity, cost and the lack of ability to scale at Calpers’ size,” the hedge fund program “doesn’t merit a continued role,” Ted Eliopoulos, the interim chief investment officer of Calpers, said in a statement.

Typically, hedge funds charge 2% of the fund plus 20% of any appreciation.

By comparison, Vanguard’s S&P 500 index fund has an expense ratio of 0.17%, and it turns out that they don’t generally outperform index funds, so you are not getting alpha (beating the market), and notwithstanding their protestations to the contrary, they don’t deliver lower volatility (beta) either, as is evidenced by the frequency that the almost cliched phrase, “Once high flying hedge fund,” appears in the financial press.

The reason that this is a big deal is not that this is a huge change in policy by Calpers, it only had a bit over 1% of its assets managed by hedge funds, but there are a lot of other public pensions out there that follow its lead, and if they start bailing, the hedgies will have to find honest work to make a living.

H/t naked capitalism, which had the best quote on the possibility of pension funds bailing on hedge funds:

One of my interlocutors said “OMG, hedgies will be jumping out of floor to ceiling windows in fancy modern building after throwing artsy pieces of modern furniture through them. There aren’t enough dumb enough rich investors to go around once the hedgies have lost the pension fund business. Short yachts, watch markers, GT cars, and Greenwich real estate.”

Look out below.

It’s gonna be raining Katz and Goldmans and Sachs.

Lamest Man in Massachusetts New Hampshire

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Scott Brown, of course, who, after losing to Elizabeth Warren, went to work for a law and lobbying firm, got his tits in a bundle with Lawrence Lessig who put out a flyer that criticized Brown as a lobbyist.

The Scott Brown campaign sent a cease and desist letter to Lessig’s campaign finance reform PAC:

Former Massachusetts Senator Scott Brown has attempted to revive his political career by running for Senate in New Hampshire. But in the final days before his September 9 primary, he’s squaring off against another opponent — Harvard professor Lawrence Lessig, who advocates against money in politics. Lessig’s Mayday PAC endorsed Brown’s GOP primary challenger Jim Rubens, and is now sending out a mailer calling Brown a “Washington lobbyist.”

The mailer led to an angry response from the Brown campaign. “This is a flat-out lie. Scott Brown is not nor has he ever been a lobbyist. Ever,” campaign manager Colin Reed wrote, calling on Lessig to “immediately cease and desist with the mailer in question.”

In response, Lessig posted the letter on his blog, and linked to an article from The Hill about Brown joining the Boston office of “Nixon Peabody, a law and lobby firm.” The firm itself said Brown would work on “business and governmental affairs,” including those related to “the financial services industry.” Lessig writes:

Yes, according to the Senate, Scott Brown isn’t a “lobbyist.” But I submit to anyone else in the world, a former Senator joining a “law and lobbying firm” to help with Wall St’s “business and governmental affairs” is to make him a lobbyist. Because to anyone else in the world, when you sell your influence to affect “business and governmental affairs,” you are a lobbyist.

You would think that a man who is a lawyer who has spent much of his life as a public figure would understand just what it means to be a public figure after New York Times Co. v. Sullivan, which required actual malice or a reckless disregard for the truth for libel and defamation suits.

Of course, in the process of making this demand, the hapless former Cosmo centerfold has served to generate publicity for the flyer.

See, “Streisand Effect, The”.  (Heh)

Andrew Cuomo is Terrified Right Now

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First the New York Times declines to endorse the in the Democratic primary (they pretty much said that they would endorse Zephyr Teachout if she had a chance of winning), and then they endorse Teachout’s running mate, Timothy Wu for Lieutenant Government.

This makes things complex:

The conventional wisdom is that Teachout cannot win, but she can pose problems, both for Cuomo’s perception as an all-powerful and invulnerable politician and for the havoc her running mate, Columbia law professor Tim Wu, could cause if he defeats Cuomo’s handpicked running mate, Erie County’s Kathy Hochul.

 A Wu victory resulting in a Cuomo-Wu ticket in November would block Cuomo from counting votes won in the general election on several other ballot lines where the incumbent and Hochul already are on the line, such as the Working Families Party.

It’s still about as likely that Andrew Cuomo would lose the general as it is that he would lose the primary, which is to say about as likely as the proverbial snowball’s chance in hell.

There is actually a report that Cuomo may dump his running mate, Kathy Hochul. (Warning it is a New York Post link.)

BTW, if there is anyone who deserves to lose the next primary in New York State than Andrew Cuomo, it is Kathy Hochul:

There is a race for lieutenant-governor in which Tim Wu, the champion of net neutrality, is running against Cuomo’s handpicked candidate, a true Blue Dog horror named Kathy Hochul, a former congresscritter whose last days in Washington were highlighted by her staying around the Capitol to vote in favor of a move by the lunatic Darrell Issa to cite Eric Holder for contempt in the Fast And Furious mini-non-scandal.

And from the Times endorsement:

……… boasted repeatedly that she had voted many times against “Obamacare.”(H)er willingness to shift politically does not suggest she would offer any kind of independent judgment. Nor does her record give any real clue about what would happen if she took over as governor.”

She also had a 100% rating from the NRA while she was in Congress.

Andrew Cuomo chose her for one reason: as a gigantic f%$# you to the states liberals.

The state’s liberals should return the gesture.

Pass the Popcorn

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Pass the Popcorn

In 2012, Michelle Bachmann accused the Ron Paul Presidential campaign of bribing Iowa state senator Kent Sorenson for his changing his endorsement from her to the Libertarian stalwart.

Well, it turns out to be true.

Sorenson has pled guilty to taking at least $25,000.00 to switch his endorsement.

While this bit of of corruption may not seem significant beyond an indication that the Iowa caucuses are too corrupt and thus should lose their first in the nation status, there is actually more to this.

Specifically, it appears that Ron Paul’s 2012 campaign manager, Jesse Benton, is hip deep in this.

How is is significant today that the campaign manager for an iconoclast’s 2012 campaign is implicated in  bribery scandal?

Here’s how:

Neither Lori Pyeatt, Ron Paul’s granddaughter and the treasurer of his 2012 presidential campaign, nor Jesse Benton, who was Paul’s campaign manager (and is now manager of Senate Minority Leader Mitch McConnell’s re-election campaign), had responded to requests for comment at the time this post was published.

(emphasis mine)

So Mitch McConnell’s campaign manager is implicated in a bribery scandal, and what’s more, it appears that he might be rolling over to prosecutors:

It isn’t clear if the investigation is continuing, but Sorenson has been granted immunity from further prosecution on federal and state charges, as has his wife, according to the plea agreement. OpenSecrets.org has learned that two grand juries have been investigating the events in Iowa, one focused on the Paul campaign and one on Bachmann’s. Last August, OpenSecrets.org published a copy of a memo written by Aaron Dorr, the head of the Iowa Gun Owners, in which he outlined Sorenson’s demands to switch his endorsement. Included in the emails surrounding the negotiations were several top Paul campaign officials, including Benton.

(Again, emphasis mine)

So Sorenson is singing to the feds like a canary, and Mitch McConnell’s (soon to be former?) campaign manager is clearly in the prosecutor’s cross-hairs.

Open Carry This!

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Local Coverage

In an eerie echo of the actions that led Ronald Reagan to sign into California law what was then the most restrictive gun law in the United States, the the Huey Newton gun club is staging open carry demonstrations:

A Texas gun club named after one of the founders of the Black Panthers Party marched in Dallas on Wednesday to protest against police brutality, KTXA-TV reported.

 Around two dozen members of the Huey P. Newton Gun Club carried rifles and red, black and green flags as they marched through the city’s south side, sometimes chanting in support of Michael Brown, the 18-year-old man killed by a police officer in Ferguson, Missouri, on Aug. 9.

 “If they don’t get these killer cops and corrupt cops under control,” a member identifying himself as Commander Drew X was quoted as saying. “What happened in Ferguson is going to be nationwide.”

 The club’s leader, Huey Freeman, said Wednesday’s march would be the first step in a campaign of “civilian patrols” through the area. The state’s open carry law allows “long gun” owners to display them unless it is meant “to cause alarm.”

 “We believe we can police ourselves and bring security to our community, ridding our community of black-on-black crime, violence, police terror, etcetera, etcetera,” Freeman told KXAS-TV.

Needless to say, I do not approve of open carry protests, but I do find a bit of schadenfreude in the the undoubted freakout that is going on in Dallas about black men open carrying.