Links 10/26/10

New Amazon species Telegraph

Row over war veterans facing deportation from the country they risked their lives to defend Daily Mail (hat tip reader May S)

Death throes of the monolines FT Alphaville. Cites monoline putbacks vs. GSE, but I think this is apples and oranges, since GSEs presumably are putting back on conforming and subprime pools, while the monolines would be doing putbacks only on “private label” meaning nonconforming pools. One industry source also had problems with the final paragraph:

The bond insurers aren’t really requesting – they are suing. The GSEs are requesting.
If the numbers are just for BofA, they are out of date by being from June 30 – this leaves out Ambac’s recent $6 billion or so case against Countrywide.
The “success” rate – I don’t know where this comes from or who’s success they mean – monolines, GSEs or BofA. I am fairly certain they are buying back far, far fewer than 17% of bond insurer demands. (more like .05%).

Europol Report: All Terrorists are Muslims…Except the 99.6% that Aren’t Loonwatch (hat tip reader May S)

Blue Dogs Face Sharp Losses in Midterms Wall Street Journal. It’s amusing to see the Journal feign confusion:

The upshot is one of the great political ironies of the year: A national conservative wave will hit hardest not at the most liberal Democrats, but at the most conservative Democrats. The Democratic caucus left behind will be, on balance, more liberal than it was before the election.

This isn’t about a “national conservative wave”, it’s about the Obama “change” sellout. The Blue Dogs are most closely aligned with his faux populist branding.

So What Is Insider Trading? Andrew Ross Sorkin. This story bothers me. Why is the SEC cracking down on this pair, and not on Gerson Lerman, which pays low and mid level employees to sell information about corporate activity, usually shipment and inventory levels? Gerson Lerman has institutionalized the use and repackaging of inside information. But it would take time and effort to develop a case against Gerson and its competitors.

Econ bloggers: outlook worse, again FT Alphaville. I normally participate in this survey, but I was too swamped this time.

Banks should be broken up, Bank of England Governor Mervyn King warns Telegraph. Read his full speech here.

Financial Disaster Set to Erupt Again Michael Panzner

Eschatology Rdan, Angry Bear

The Cost of the TARP: Yet Again Dean Baker

Faulty Foreclosures Adam Levitin, Credit Slips

Greek Issues Continue to Churn WSJ MarketBeat

Mortgage Modifications Slow in September New York Times

Overdrive: Who really rescued General Motors? Malcolm Gladwell, New Yorker (hat tip reader Scott). This is a great piece.

Antidote du jour:

Picture 40

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75 comments

    1. MyLessThanPrimeBeef

      So, are we to conclude from the antidote that the world is pretty much black and white when it comes to green paper money made from trees?

      Is that the symbolism here?

  1. dearieme

    The Gladwell piece is indeed a hoot. But he can’t be much of a journalist if he hasn’t found the explanation for the resignation of Mr Rattner’s Texan beloved after only nine months.

  2. SidFinster

    With all due respect, many of the liberal Democrat members of Congress come from districts so liberal that they physically hunt Republicans who trespass into their Districts. Using specially trained dogs.

    1. Jim Haygood

      Quite right, Sid. Blue dog Democrats mostly come from districts that are actually competitive. Whereas the most liberal Democrats hail from petrified one-party redoubts that resemble eastern Europe: San Francisco, Hollywood, Moscow-on-the-Hudson.

      Republicans took over the Solid South. But these time-warp coastal metropolises are still places where the proverbial ‘old yeller dawg’ could be elected as the Democratic nominee by party cadres just as blindly loyal as segregationists were to the pre-civil rights Democratic party.

      What the vulnerability of the blue dogs illustrates is the deficiencies of our first-past-the-post, winner-take-all voting scheme. A more nuanced voting scheme, such as the ability to vote for first and second preferences, would produce a more nuanced result.

      That’s why our atherosclerotic bipartisan duopoly endlessly harps on US ‘democracy’ as the ne plus ultra of our culture. Their bipartisan death grip on power (nowhere authorized in the constitution) is deeply flawed. But they’d rather their victims not reflect on that.

      1. DownSouth

        Jim Haygood said: “Republicans took over the Solid South. But these time-warp coastal metropolises are still places where the proverbial ‘old yeller dawg’ could be elected as the Democratic nominee by party cadres just as blindly loyal as segregationists were to the pre-civil rights Democratic party.”

        Is it possible that you are ignorant of how the Republicans “took over the Solid South” by appealing to the segregationists, or that the loyal segregationists that formed the cadres of the pre-civil rights Democratic Party are the same loyal racists that now populate the cadres of the post-civil rights Republican Party?

        If you are interested in some history, and not Republican talking points, you might give this program a view. The money quote is this one:

        And he [President Johnson] said to [Senator Richard] Dick Russell, “I want this Civil Rights bill passed and you nor no one else is going to stand in my way.” And I remember Richard Russell said to him, he said, “Well, Mr. President, you may do it, but I’ll tell you what — it’s going to cost you the South and it will cost you an election.”

    2. DownSouth

      The party system isn’t, never was, and never will be about expediting democracy, but about preserving and promoting the institutional interests of the parties.

      The pathologies of the party system are greatly exacerbated by the practice of gerrymandering, which creates “safe” districts.

      If all districts were competitive, representatives would be forced to pay more attention to the wants and desires of their constituents.

      Your unitary focus on safe Democratic districts, while failing to mention that the phenomenon is just as pronounced on the other side of the aisle, gives a distorted view that reveals an underlying partisanship. It also does nothing to shed light on the reasons why constituents are unhappy with their Blue Dog reps. Is it because they were too liberal, as you assume, or because they were too duplicitous and jumped on Obama’s “change” sellout, as Yves asserts?

    3. Glen

      It’s been my experience that blue dogs are somewhat stinky, impossible to house train, and demand a never ending supply of K St kibble and bits (which leads back to the house training issue).

  3. Jim Haygood

    The terrible irony of the Jamaican veteran facing deportation from the U.S. (Daily Mail article) is that his conviction (for selling pot to an undercover officer in a club) was based on entrapment, and for a victimless crime.

    At medical marijuana dispensaries, what he did is legal. And after California votes next week on a referendum, it may be legal statewide for anyone.

    Lesson: the War on Drugs is an evil, stupid and destructive policy, forced upon us by sociopaths and sadists.

    1. Chris

      It doesn’t matter if pot is legalized in California. The Feds have already said they’re prosecuting, and some fascist federal judge will probably overturn it anyway.

      Pot is the least of our problems right now.

    2. Cynthia

      The war on drugs is the bread and butter of our prison/police-industrial complex, just as the war on terror is the bread and butter of our military-industrial complex. Winning wars means no more bread and butter to those employed in either of these two complexes. Which explains why their goal isn’t to win wars, but to keep them in a perpetual state.

      1. CingRed

        While I don’t discount the premise that pot use or selling is a minor issue and probably not worthy of deportation, you have 1 very bad line of logic in your response. One “At medical marijuana dispensaries, what he did is legal.” I would also point out that killing someone by firing squad is also legal in at least one state. Do you really want to justify the actions of anyone based on the fact that said action is legal under certain regulations? There are numerous other examples of where your logic fails if you would just think about it before penning it.

  4. tyaresun

    Watch out coons, errors and mistakes might result in the banks foreclosing on your dwelling even though you never took out a loan.

    1. DownSouth

      It’s great that some are trying to revive the tradition of historical and institutional economic analysis. Certainly foreclosuregate illustrates that the limits of analytical analysis and the orgy of self-interest it champions have reached their limits.

      Perhaps the revival of historical and institutional analysis began with Ronal Coase in the 60s, to be later taken up by Douglass North and Mancur Olson:

      Yet, as Mancur Olson once observed, “the main reason, as far as my studies have been able to determine, why a country is relatively prosperous or relatively poor, is the quality of the policies and institutions of that country.”

      Similarly, in a 1997 review of the literature of economic growth, Robert Hall and Charles Jones find that “differences in levels of economic success across countries are driven primarily by the institutions and government policies (or infrastructure) that frame the economic environment in which people produce and transact.” In a survey of failures of economic-development programs in Africa, the authors conclude that “domestic policies…may be the main obstacle to grown in much of Africa,” in part because these policies contribute to an economic environment in which “transaction costs are unusually high.” North concludes that the institutional heart of the matter is the success or lack of success “of societies to develop effective, low-cost enforcement of contracts.” Looking around the world, regions or nations that have remained poor simply lack an adequate institutional structure of secure contracting. Their contracting arrangements exaggerate rather than resolve problems of opportunism, bounded rationality, principal-agent, security of enforcement, and other familiar transaction cost problems. Poor nations, North writes, typically have saddled themselves with a set of misguided arrangements for “property rights that do not induce economic growth.”

      In much of the less developed world today, it is not just that one property owner has difficulties in establishing relationships of predictability and reliability in contracts with other private owners, but that these private actors also fact the significant possibility that the government will act unilaterally to alter previous contractual arrangements. Where such government uncertainty exists, it is the functional equivalent of a large tax on every form of economic transaction—-much as money inflation can also be regarded as imposing a kind of tax on society.
      –Robert H. Nelson, Economics as Religion

      The great irony is that it’s not the greatly reviled (and deservedly so) Communists who are taking a wrecking bar to property rights, but so-called “capitalists,” and they’re doing it in the name of “free markets.” The institution of property is indispensible to the workings of liberal economic theory and capitalism, but it is anathema to the Communists. As Reinhold Niebuhr explains, the Communist dogma holds that

      Men are corrupted by a particular social institution: the institution of property. The abolition of this institution guarantees the return of mankind to the state of original innocency which existed before the institution of property arose, a state which Engels describes as one of idyllic harmony with “no soldiers, no gendarmes, no policemen, prefects or judges, no prisons, laws or lawsuits.”

      How strange it is that our modern-day American “capitalists,” in their zeal to deregulate and privatize, may be the very ones to destroy the institution of property.

  5. notfaux

    “The Blue Dogs are most closely aligned with his faux populist branding. ”

    Could you expand on that ?

    The blue dog democrats are not democrats, nor are the populists. Generally they are very conservative democrats from areas of the country where Republicans would normally win. I refer to them as “not crazy” Republicans. The Republicans that are going to replace them are far right wing, faux culture warriors.

    Really, they were Democrats in name only. Many of them actively thwarted what little good Obama was attempting to do.

    1. Calvin Jones and the 13th Apostle

      Not all Blue Dogs are from Republican leaning areas. Harold Ford, Jr., was a Blue Dog(before he decided to run for Senate and lose) and he was from a safe district. Blue Dogs are basically corporate whores and DINO’s. Why should Mississippi Democrats vote for Gene Taylor(who just came out yesterday and admitted he voted for McCain)?

    2. Cynthia

      The moment I heard from Philip Giraldi (see link below) that Obama chose Rahm Emanuel, an Israel Firster, to be his right-hand man was the same moment I knew that Obama would keep us neck-deep in war against the Muslim World. And the moment I learned from Glenn Greenwald (see link below) that Rahm Emanuel is the Dr. Frankenstein behind the Blue Dogs’ rise to power was the same moment I knew that Obama was nothing more than a puppet for our moneyed elites. So I’ve pretty much written Obama off as a president who’ll stand up against America’s war machine and standing up for ordinary working Americans!

      http://www.antiwar.com/orig/giraldi.php?articleid=13773

      http://www.salon.com/news/opinion/glenn_greenwald/2009/08/27/democrats/index.html

  6. Tracy Alloway

    Hi Yves – It’s Tracy Alloway from FT Alphaville. Just to calirfy – the success rate is for successful repurchase requests from monolines and comes from CreditSights, who also give the numbers in the previous sentence. The point I was trying to make is that the rate is relatively low (17%) especially compared with GSEs (where I think it’s something like 50% according to Moody’s). Also you can call these MBS ‘lawsuits’ but the banks themselves refer to them as repurchase requests (see for instance BAC’s Q2 Q-10)

  7. Ed

    In a electoral system where the legislature is chosen using single member districts, and there is an urban-rural political split, the urban party will always be at a disadvantage. Its supporters will be concentrated in the urban districts, meaning it will win some urban seats with overwhelming majorities, while its opponent wins tons of rural or suburban seats with narrower majorities.

    This is the case in the U.S. Looking at the presidential vote, which is the one most Americans pay attention to (sometimes exclusively), the 2008 election was the first election where the Democrats got majorities in a majority of the House seats since 1964. This could have something to do with the fact that only one Democratic presidential candidate, Carter in 1976, got a (very bare) majority of the vote in the elections between 1968 and 2004, inclusive. But he won a minority of the Congressional districts. Given a 50-50 popular vote split, the urban base party will lose a single member district legislative election.

    Now the Democrats have made up for this by being able to recrit and run locally prominent conservatives in rural areas. Hence the “Blue Dogs”. This has come at a cost of diluting the parties message and is a dwindling asset. They took serious losses in 1994, and this election would normally fit that pattern. You also have energized Republican activists going after both the RINOs and DINOs. There was actually a less well publicized movement among Democratic activists in the opposite direction in the last three cycles, which is why the Republicans hold only two out of fifty-three seats in New York and New England.

    This also partly explains why the Democrats always seem so feckless, part of it is shell shock over repeated popular vote losses, and part of it is the need to retain various rural conservative local notables for their majorities.

    I actually think this strategy on the part of both the Blue Dogs and the Democratic leadership is mistaken. The Democrats would simply be more appealing in the long run as a more cohesive party that actually seemed to believe in what their politicians were saying, instead of relying on the political equivalent of trick plays. The Blue Dogs would be better in the long run as the U.S. version of Australia’s National Party, even if they still kept an alliance with one of the big two. But the leadership is heavily invested in the approach they have been taking.

    1. Calvin Jones and the 13th Apostle

      This also partly explains why the Democrats always seem so feckless, part of it is shell shock over repeated popular vote losses, and part of it is the need to retain various rural conservative local notables for their majorities.

      Yet Democrats have won 4 out of the last 5 Presidential elections if you go by popular vote.

  8. Cynthia

    The Swedes lead the world when it comes to protecting the privacy of online users as well as safeguarding whistle-blowers from prosecution, so Julian Assange’s thinking cap was working when he chose to have WikiLeaks’ primary server located in Sweden. But apparently his thinking cap soon failed him, otherwise he would have known that Expressen (see link below), one of the most widely read tabloids in Sweden, is owned and operated by the Bonnier family, who is notorious for being very pro-American and pro-Israel when it comes to protecting all the criminal activities on Wall Street and at the Pentagon. Not to sound conspiratorial, but I wouldn’t put it past the Bonnier family to team up with the Pentagon in order to discredit Julian Assange and his efforts to expose to the world that the US has become a safe haven for some of the world’s worst war criminals.

    Let me also mention that when Julian Assange was living and working in Sweden, he should have known to take extra precautions with regards to which women he chose to sleep with. And since militant feminists tend to be hawkish in their views on war, Mr.Assange should have known better than to sleep with a militant feminist. He should have known that a militant feminist has the motive and the mindset to become a sellout to the warmongers and torturers at the Pentagon. These monsters want Julian Assange’s head on a platter and he was should have known that a militant feminist living in Sweden would help do this for them!

    http://www.counterpunch.org/shamir08272010.html

  9. Ed

    I said popular vote majority. Not 49%. You can look it up, the only Democratic presidential candidate to get a popular vote majority between 1968 and 2004, inclusive, was Carter in 1976, and just barely. Republican presidential candidates got popular vote majorities five times in this period.

    Obama’s popular vote majority may have been the real significance of his election, but it seems to have been lost. Everyone is playing by the old rulebook.

    If the Blue Dogs had not existed, the Democrats probably would have turned into one of those perennial opposition parties, like the Communists during the First Italian Republic, and there are examples in other systems. But something like this might not have worked well in the U.S. since the political system is so patronage oriented.

    1. DownSouth

      “Obama’s popular vote majority may have been the real significance of his election, but it seems to have been lost. Everyone is playing by the old rulebook.”

      Obama took a watershed election and made a mockery of it. He failed to seize upon what was nothing short of a great historical opportunity.

      Obama the candidate was a completely different person than Obama the president. He broke practically every single promise he made on the campaign trail.

  10. Cynthia

    The Swedes lead the world when it comes to protecting the privacy of online users as well as safeguarding whistle-blowers from prosecution, so Julian Assange’s thinking cap was working when he chose to have WikiLeaks’ primary server located in Sweden. But apparently his thinking cap soon failed him, otherwise he would have known that Expressen (see link below), one of the most widely read tabloids in Sweden, is owned and operated by the Bonnier family, who is notorious for being very pro-American and pro-Israel when it comes to protecting all the criminal activities on Wall Street and at the Pentagon. Not to sound conspiratorial, but I wouldn’t put it past the Bonnier family to team up with the Pentagon in order to discredit Julian Assange and his efforts to expose to the world that the US has become a safe haven for some of the world’s worst war criminals.

    Let me also mention that when Julian Assange was living and working in Sweden, he should have known to take extra precautions with regards to which women he chose to sleep with. And since militant feminists tend to be hawkish in their views on war, Mr.Assange should have known better than to sleep with a militant feminist. He should have known that a militant feminist has the motive and the mindset to become a sellout to the warmongers and torturers at the Pentagon. These monsters want Julian Assange’s head on a platter and he was should have known that a militant feminist living in Sweden would help do this for them!

    http://www.counterpunch.org/shamir08272010.html

    1. Cynthia

      I don’t know what I did to cause my comment to be posted twice, but I do apologize for doing it nonetheless.

      1. Doug Terpstra

        Thanks. The comment and link are worth repeating in case anyone missed it.

        Perhaps “deceit is a sort of rape”, but the attempted character assassination of Wikileaks’ Julian Assange looks like it’s failing. Of course if John Perkins’ formula in “Confessions of an Economic Hit Man” holds, they may well get physical—and send in the jackals. But their formulas are by now so clichéd that they may be ineffective. Anyway, Assange is now practically inoculated by the unraveling rape plot and his potential martyrdom is especially devalued by the grievous damage already inflicted on the empire.

    2. Kevin de Bruxelles

      There is a pretty good chance she set up Assange but I doubt she was motivated by a will to help the Pentagon.

      I know women like her quite well and I can assure you she was motivated by female supremacy; they tend to be quite open and refreshingly honest about it. She undoubtedly wanted to knock Assange out of his position, not to help the Pentagon, but instead because it is self-evident that WikiLeaks would be that much better and more effective if led by an honourable woman instead of an alpha dawg man who spends way too much time chasing young skirt.

      Below is a link to a report from Aftonbladet, which is a Swedish Social Democratic tabloid. There were two alleged victims, the ringleader was Anna Ardin, who is a militant Social Democratic female supremacist Christian. The younger (and I would speculate innocent) victim was Sofia Wilén who seems to have thrown herself at a high status progressive stud and was then stunned to find out she was not the only one.

      http://rixstep.com/1/20100914,00.shtml

      Here is the key portion:

      Wilén and Assange have sex that evening with a condom. They have sex again in the following morning but without a condom. After sex in the morning, Wilén goes out and buys, then cooks breakfast – oatmeal and juice. They joke about her possibly being pregnant.

      ‘I was being sarcastic to defuse the situation.’

      Wilén and Assange ride together on her bike to the train station. Assange returns to Stockholm alone. Wilén asks Assange if he’ll ring her. He says he will.

      Admittedly the whole Aftonbladet account is suspect since there is nothing contained in this account that would qualify as a crime according to my wife who is a Swedish lawyer. There is no such thing as rape by deception in Sweden.

      Here is a video from the Assange press conference that Ardin organized in Stockholm. You can see Ardin walk towards the stage at about 9:43. Sofia Wilén stares into the camera at 3:42.

      http://www.youtube.com/watch?v=qWh1Mk2_GVg&feature=related

      1. Swedish Lex

        A hotline between the Bonniers and the Pentagon, plus Swedish Dolph Lundgren – Amazones – remote controlled by the CIA?

        I think I prefer the third man.

  11. Mike

    That “loonwatch” link is highly offensive. Try telling the people who died in Manhattan or were shredded in trains in Spain or the UK that Muslim extremism is a small problem.
    Comparing terrorist “incidents” to these events is simply a horrible thing to do. Someone yelling “I’m going to kill you!” gets arrested for making a terrorist threat.
    This is the same as 9/11?

    1. CingRed

      All the definitions of terrorism I have seen share some common points. Terror inflicted on civilians in order to achieve a religious or political end. There are many acts that would fall into that definition, from honor killings to the bombing of Tokyo in WWII. We justify or condemn terrorism depending on what it achieves for us. The definition of terrorism used in that study is based on the government of each particular country cited. This accounts for the large number of separatist acts being included because those are very anti-government and therefore deserving of being demonized. Because of this I give it a rating of “meaningless”. Funny too that the article was from January and is just now hitting NC.

    2. Jim the Skeptic

      Seems to be a feeble attempt to rationalize what is still terrorism.

      They seem to have included stats for native terrorists in european countries. Why not give us the stats for native terrorists in muslim countries. Afghanistan, Iraq, and Pakistan to name a few.

    3. Walter

      Also notice that they only included Europe and the United States… if they had included the middle east and had a world total the numbers wouldn’t have made the case they were trying to make.

      Statistics can be manipulated, and this one is pretty transparant in my opinion.

      1. Kevin de Bruxelles

        Notice too they talked only of numbers of attacks in isolated years instead of looking at deaths. They also conveniently omit the years of the London Bombing, in which I was personally in an affected tube station, felt the blast waves, and saw plenty of very brave walking wounded who made their way up lord knows how many steps to the surface (Russell Square). I later just missed walking pass the bus that exploded. They also forget the Madrid bombings. Instead they concentrate on losers in Corsica who throw M80’s at the local police stations.

        I am sure if you take the whole decade of 2000-2010 and look at deaths, you would get +/- 250 killed in Europe by Islamic terrorists vs. maybe ten killed by ETA, IRA, whatever the Corsican losers are called, and other assorted misfits.

      2. Yves Smith Post author

        Funny how you reject data and assume it is manipulated because is does not hew with your prejudices. FBI stats from show a similar pattern, that only 6% of terrorist attacks on U.S. soil from 1980 to 2005 were carried out by “Muslim” extremists. The remaining 94% were from other groups (42% from Latinos, 24% from extreme left wing groups, 7% from extremist Jews, 5% from communists, and 16% from all other groups).

        http://www.fbi.gov/stats-services/publications/terrorism-2002-2005/terror02_05

        1. amateur Socialist

          Quite so. The most recent terrorist attack here where I live in Austin was committed by an insane suicidal wannabe white tax dodger, one Joseph Stack. He managed to kill an IRS manager who was also a Vietnam Vet.

          Back in my hometown of Wichita Kansas there was another terrorist who managed to assassinate Dr. George Tiller at the Lutheran Church he belonged to. His name is Scott Roeder and fancies himself a Christian.

        2. Kevin de Bruxelles

          I liked this paragraph you recently wrote:

          When it came time for his session, my colleague stood before the class, gave a brief outline of the paper’s argument and approach, and said, “I have only one comment. Typical Fed daily market operation purchases and sales are in the millions of dollars. Treasury bond actions are in the billions. The data in this paper is irrelevant to the question it purports to analyze.” He then sat down.

          I would say concentrating on the number of attacks is irrelevant to the question it purports to analyze. Number of deaths seems to me a more important metric.
          And in the link you just gave the FBI shows that between 1980 and 2005 since almost 3000 deaths are due to Islamic terrorism while around 200 are due to others. I would question whether the Pentagon deaths on 9/11 should be counted as terrorist since Al Qaida did declare war on the US and those are obviously military targets. But even taking my objections into account we are around 93% of terrorist deaths in the US during the period between 1980-2005 are due to Islamic terrorists.

          Counting the number of terrorist attacks without taking into the account the number of deaths associated with each is very much like looking at the number of banks failures in a year without taking into account the total assets of each bank. One huge WaMu equals a whole lotta small fry banks in the middle of nowhere.

          1. carping demon

            What standing does Al Qaida have to declare war on anybody? They’re a terrorist organization, not a sovereign government.

          2. skippy

            @carping demon…Al Qaida is a ideological anti western quasi religious faction, its aim is to reduce if not kick out all western forces and influence in its region. SAME as the revolutionary forces within America at a time, would you care to parse the act of war over these coals.

            Skippy…What part of off my grass does not compute with some. Whom elected the powers that be to be the arbitrators of all with out the say of indigenous peoples on this planet.

          3. Anonymous Jones

            “I would say concentrating on the number of attacks is irrelevant to the question it purports to analyze.”

            “Irrelevant” cannot possibly be the word you mean to use there. Well, I guess you would be within your rights to deem “deaths” the *only* important statistic, but neither I nor anyone else is bound by logic (or anything else) to agree with your assessment.

            3000 deaths? How many people roam the planet right now? How many die each day? If anything, 3000 deaths reveals the “irrelevance” of tracking terrorism murders at all.

            Seriously, how many humans expire by reason of the poverty and disease that attend radically disproportionate divisions of wealth perpetuated by the powerful military governments and wealthy oligarchs that do nothing but consume and acquire without any sense of enough?

            As I implied above, you do not have to agree with me or anyone else on what is important, but this seems wildly off base to me if we are starting to do any sort of utilitarian analysis of harm caused, especially given the relative paucity of deaths that seem to be caused by terrorism. I, for one at least, am concerned with all sorts of what you might term “petty terrorism.”

          4. Kevin de Bruxelles

            @carping demon

            Quite simply, the ability to wage war gives Al Qaida the right to declare it.

            And just to be clear to as where I am coming from, I think it is crucial to maintain an attitude of critical thinking towards those who may be considered enemies as well as friends. Since it is not outside the realm of possibility that America in twenty to thirty years may face an occupation of one sort or another, it is very important to be clear on the different categories and definitions since one day these may be used against your children leading guerrilla campaigns to eject foreign occupiers.

            As Skippy alluded to, very often war is waged by a State against a non-State actor.

            The American Revolution, US actions against Barbary Pirates, the Spanish Guerrilla war against Napoleon’s forces, the Algerian War (1954-62), Hezbollah vs. Israel, the list goes on forever.

            Al Qaida claims sovereignty over the entire Muslim world as well as former Muslim lands such as Spain (Al Andalus). In this sense it is a pre-state, much like the founding fathers were after declaring independence from Britain.

            International law regarding conflicts as well as labels such as “terrorism” exist in their purest form to protect civilians from the worst aspects of military conflict. Obviously the term “terrorist” is used by states for propaganda purposes as well. For example if Al Qaida ever did achieve their goal of recreating the caliphate, on Day 1 they would certainly label anyone who took up arms against it as terrorists.

            One critical part of any definition of terrorism is that civilians must be targeted. Another implied definition is that a state of hostilities should be known to both parties. That is why it was important that Al Qaida actually declared war against the US and all current Muslim regimes. So while the act of flying a civilian plane into the Pentagon was terrorism, the fact they targeted military personnel would mean the deaths of those servicemen should not count as terrorism.

            Similarly, the attack on the Marine Barracks in Lebanon should not be considered terrorism, the target was military and there was an obvious state of war at the time. The fact that it was a suicide mission is totally irrelevant to the issue of whether it is terrorism or not.

            Now there are three ways a pre-state can fight a state. The can use a uniformed militia that should receive all the same Geneva Convention rights as state armies (American Revolution for the most part). They can use disguised guerrillas to attack military objectives (Hezbollah for the most part). Or they can use disguised guerrillas to attack civilians; and it is only this last category that rightly deserves to be called terrorists. Al Qaida, PLO, etc fall into this last category when they target civilians.

          5. Kevin de Bruxelles

            AJ,

            My comments are framed within the debate of the importance of the subset of Islamic terrorism in relation the set of terrorism as a whole. What you are saying is that the subset of terrorism deaths is of small importance in relation to the set of deaths as a whole. And framed this way you are indeed correct.

            Let me give you an example of what the kind of thinking I am trying to avoid. I’m making these numbers up purely as an example, but let’s suppose some clever PR flack from BP looked at the total number of oil spills that occurred in 2010 throughout the US. And let’s just imagine that out of 400 total oils spills (including very minor spills of less than 10 barrels) BP itself was only responsible for say 10 spills, including of course the huge Gulf Spill. Now given the reasoning presented in the Islamic terrorism article, BP could say look, 97% of oil spills in the US in 2010 had nothing to do with BP! And this would indeed be a true statement but exceedingly misleading. But of course this deception is only possible if we ignore the amplitude of each oil spill. Instead, if we look at barrels spilled, BP would probably be responsible for at least 97% of the oil spilled in the US in 2010.

            And so it is with blood spilled in terrorism.

          6. carping demon

            Well, then, KdB, I guess it’s game over for civilization this time around. There couldn’t be a clearer statement of “Might makes Right” than:

            “Quite simply, the ability to wage war gives Al Qaida the right to declare it.

            If the word “war” can be used to describe the actions of any ad hoc bunch of yokels who think any issue they have with somebody allows them to go around killing anyone they want to, then the idea of war has regressed to the level of gangs fighting; the civilized rules that constrain the actions of sovereign governments vis-a-vis each other, which is the fruit of all our international struggles hitherto, are tossed aside. That is supremely stupid, and monstrously wasteful of human life and aspiration.

          7. skippy

            @CD

            Time is important, how much should be allowed in referencing an issue…eh. How many years would the West allow before individuals started to coalesce into groups to subvert external forces, this is a historical merrygoround.

            Why has human species declared war on this planet…eh…it was the first sovereign of them all…are we all terrorists.

            Skippy…a fathers lament whence the child is non conforming lineage…they should love their creator…eh.

          8. skippy

            CD with respect. I only wish to high light the terms some use and others pick up for convenience’s sake. Why one fights or declares war on another should be the only conversation me thinks, not the easy reductionist hot adjectives plied by so many these days.

            Skippy…for those that have skin in the game I would understand their reasoning, regardless of how alien it may seem and not just as a tool to defeat them but, understand them in the hope of a more equitable out come for all.

            PS. hope you did not feel I was being personal…I’ve been remiss of late…amends.

          9. carping demon

            No, no, Skippy. No offense sensed. The only thing is, that was the whole point of my original comment. I truely didn’t understand your comment @6:48. (You’re not calmo using another name, are you?)(No offense intended, he’s a smart guy. But elliptical, you know?)

          10. Kevin de Bruxelles

            Well, then, KdB, I guess it’s game over for civilization this time around. There couldn’t be a clearer statement of “Might makes Right” than:

            This thread is probably dead but I think this is a really interesting statement and discussion so let me try to explain.

            Due to human nature and man’s propensity to try to dominate somatic resources, reproductive possibilities and in general to seek glory and impose his most powerful tool, ideas, on others — “might makes right” has often been the rule of the game in human history. Co-operation, altruism, sacrificing for others, love, have been the flip side of this same coin. Man has constantly tried to dominate nature and his most audacious attempt of all was in creating civilization which would attempt to bend human nature towards the “good” altruism side and away from the “bad” fighting side. This is what is described in Hobbes as a move from a state of nature towards a civil society where a powerful sovereign uses his threat of “might makes right” to keep each citizen from having to do the same.

            So if human society is a body, human nature is the virus and civil society are the white blood cells fighting this infection. But you can see two problems here; some human nature is good and more importantly, human nature jumps from the individual to the society so that groups of people start to interact in the same sort of “state of nature” that hunter gatherers lived in for 98% of our species evolutionary time. So states are always in some tension with the basic human nature of their citizens while at the same time are deploying all the aspects of human nature in their larger struggle to compete and cooperate on the inter-societal level.

            So if we jump up a level we see a group of societies all interacting in a state of nature on the international level. But here is the paradox; a society that effectively strips the “bad” competitive portion of human nature away and only keeps the “good” sharing part will soon be invaded and dominated by a neighbouring society that emphasizes the bad more heavily. But this does not necessarily mean a race to the bottom towards brutality; since many of those “good” things like sharing, also add to the relative strength of a society in both the military and economic battlefields in which these struggles take place. So a society that finds the right balance between sharing and competing will eventually dominate the others.

            This is where we are today. Al Qaida rises up out of the ashes of an Islamic organizational model that for the past 800 years has been in decline. William McNeill uses the simile of mountain ranges rising and then being eroded back down to the level of neighbouring civilisations to describe the rise and fall of organizational principles. Islam rose to great heights very quickly and was able to dominate a huge portion of the world. Back in 1200 most observers would have imagined the whole world becoming Islamic within a couple hundred more years. But as always happens, stagnation, erosion, and decline arrived instead. Combined with the rapid rise of the West, Islamic societies find themselves at the bottom of a deep valley in relation to their neighbours. In this context it is natural that something like Al Qaida would rise in response to current conditions and seek to return to the Golden Age. The question is what should the West do?

            Because if we want to reshuffle these Islamic terrorism numbers one more time and avoid a euro-centric (or amero-centric) view, it is sure that 99.9% of the victims of Islamic terrorism across the globe are Muslims. Just look at what is happening in Algeria or Morocco for example to not even mention the more obvious hot spots.

            So does the West step back and let the two sides fight it out and risk a Rwanda. Or does the West get involved, like it has in same places, and risk making the situation even worse by undermining the current corrupt regimes even more? Or are there other possibilities? I don’t have the answer to that.

          11. carping demon

            It is interesting and I would like to continue it also, but cannot at this hour. We could email, or we could just keep comming back here.

          12. Kevin de Bruxelles

            Why not just keep it here but at the bottom on the thread so the text is not so narrow and we can use the reply button. I will be travelling a lot in the next two weeks so be patient if it takes me a while to respond.

        3. Mike

          You are claiming that Latino terrorism is the biggest terror threat we face (“42% from Latinos”)?!
          Wow.
          The fact that you are technically correct does not make this line of argument any less morally repugnant.

          1. Yves Smith Post author

            Mike,

            “Morally repugnant?” These are statistics from the FBI, I suggest you take up your charges of morality with them.

            And are you completely unaware of the impact of gang related violence? Clearly so, people who live in nice middle and upper middle class suburbs don’t have to worry about those risks. So it seems your idea of a threat is one to which you believe you are exposed to, as opposed to actual incidents.

        4. Walter

          The problem is the “on us soil” in your/their statement…

          That’s like saying only 6% of crimes committed between 10am and 11am are committed by group X, there for group X is the least criminal group in the world.

          When you limit your sample set to exclude most of the occurrences involving what you are talking about your going to draw fallacious conclusions.

    4. i on the ball patriot

      All of life is politics …

      The scamerican, NON MUSLIM, alcohol and tobacco drug cartel that kills over 500,000 scamericans EVERY year makes 9/11 look like a day with Mr. Rogers.

      And, NON MUSLIM, scamerican terrorist bankers who have poisoned the real estate and financial markets causing countless thousands of scamericans to be made homeless, lose pensions, jobs, etc., and, meet and early death, also comparatively make 9/11 look like a day at Disney.

      http://images.google.com/images?gbv=2&hl=en&safe=off&rls=ig&newwindow=1&q=homeless+people&sa=N&start=20&ndsp=20&biw=1020&bih=619

      Deception is the strongest political force on the planet.

  12. beowulf

    What is insider trading? Funny that you ask.

    Reuters has just released a stunning special report detailing how the Fed leaks all important, non-public, and ever so material, information to private parties.
    http://www.zerohedge.com/article/here-how-worlds-biggest-bond-funds-and-others-just-not-you-get-advance-notice-what-fed-about

    And yes, the Treasuries market is covered by SEC insider trading rules.
    Ex-fund manager liable for insider T-bond trading
    Mon Jun 22, 2009 5:49pm EDT
    * Jury finds ex-MFS executive liable for insider trading
    * MFS bought $65 mln in bonds before official announcement

    http://www.reuters.com/article/idUSN2251377220090622

    1. CingRed

      At least the congress has been smart enough to legally exempt themselves from prosecution for insider trading. We are all equal. It’s just that some of us are more equal than others.

      In a functioning capitalistic economy government provides sufficient (but not excessive) regulation to keep the playing field level for all who wish to participate and to prosecute and punish those who think they are above the rules of the game. Our government has failed miserably on both fronts. That is the nexus of our problems and why it won’t change regardless of which party wins the coming election because they are just different faces of the same personage. Those to whom the advantage has been given have made sure of that.

  13. joebhed

    Sorry, all but I have a hard time understanding how the other stories get any traction at all.
    The Governor of the Bank of England has proposed to end the fractional-reserve banking(money-creation) system.
    Did anyone here get that?
    The money-creation regime where private bankers get to create the nation’s money by issuing debts and then destroying the nation’s money when the debts are canceled is out of favor with Mervyn King.
    Not worthy of a single comment.
    Jeezum.
    Anyone have a clue on the cause of the financial crisis we’re in? Cause it seems you wouldn’t recognize pro-cyclicality if it came over and smashed you with a 2 X 4 .
    Yeah, I recognize that shadow-bankers created MOST of the (non-money) money with leveraged speculation over the past 10 years.
    But with commercial banks limited to narrow-banking using full-reserves, shadow banking …… WAS.
    And the people would be back to creating their own money.
    The Money System Common.

    1. craazyman

      OK here’s a comment . . . bowahahahahah. Disclaimer: Mr. King is only an inspiration and point of lift-off. Any resemblance to anyone who runs a Central Bank is purely a cooincidence and unintended by C-Man Productions. This is just what comes up on my Mind Screen when I channel after reading Mr. King’s speech.

      Spud Light Presents:

      REAL MEN OF GENIUS

      (Real Men of Jee-eee-eeen-yesss)

      Today we salute you, Mr. Global Financial System Reform Suggester Man.

      (Mr. Global-Financial-System-Reform Sug-ges-ter Maaan)

      Not even your average low-life greedy bastard would throw someone’s mother off the roof for a bigger bonus. But when you talk about the psychopathic flunkies who tanked the world’s economy by throwing entire families off their roofs, you say, “No one should blame them for that, they respond to incentives”.

      (Oh it’s just the in-sin-tives!)

      Perched behind the lectern, you helpfully articulate all the obvious possibilities for global financial reform — but somehow, two years and $2 trillion dollars in bankster bailouts later, the bodies are still flying, and the same psychos are still in charge.

      (It’s all sooo complicated!)

      Not really. But we know you mean well — in that detached, befuddled, professorial way. So when you’re stepping over the dead bodies on the way back to the limo for the ride home to the country house, crack open a Bud Light for us, you Financial Philosopher, and keep the helpful suggestions coming.

      Because any decade now, one of the prestigious committees working hand-in-hand with industry lobbyists to clean up the world’s money-toilet may actually take up one of your ideas, and produce a plan that doesn’t paper over the big stinking mess.

      And then we’ll all need a drink or two . . . to recover from our surpise.

      (Mr. Global-Financial-System-Reform Sug-ge-es-ter Man)

      http://www.youtube.com/watch?v=PotxdkKx-tA&feature=related

      bowahaha.

      1. skippy

        I dub thee the….Codgy old timer phallic beer commercial ( link disclaimer next time ok..CM ) I dropped the baby I don’t know why whilst at lectern only to see inappropriately seated young female yesterdays distractions remembered half hearted mea culpa post comment…reply.

        Skippy…be careful of your visualizations CM or the next thing you know Bud lite will come with strap on foot longs…of course 5 dogs to the six pack…the financial game must never end eh.

  14. CingRed

    Shhh! Quiet!! Yes, we get it but we don’t want to put too much light on it for fear Benny B, Turbo Timmy, Hank P and others like them will trounce them and force them to keep the fraud of NRB (no reserve banking) going.

  15. emca

    I’m not a GM fan, but “Overdrive” from the New Yorker changed my view on that company’s past ‘mismanagement’; a theme so often seen in the press and accepted as common wisdom.

    I guess one should wonder how Rattner, the private-equity turn-around specialist, could, in a short 5 months, undo supposed atrocities Wagoner had committed during his 8 year term.

    His hand-picked, non-industry background specialist Ed (rattlesnake stomping) Whitacre , would only go 9 months before quiting. Ed’s explanation:

    “At this state of my career, it was obvious that I was not going to be at GM for the long haul. My goal in coming to General Motors was to restore profitability, build a strong market position, and prepare this iconic company for success. Today, we are clearly on that path. We have put a strong foundation in place, so I am very comfortable with my timing.”

    Unfortunately, it wasn’t obvious to Bankers with the all important credit line who needled Whitacre on how long he plan to stay at GM before realizing his comfort zone.

    Equally unfortunate, Dan Akerson his replacement, a (former) board member has even less experience in automotive manufacturing than Whitacre. As the FOXBusiness observes in their review of Whitacre’s departure as CEO:

    “If the auto maker wanted to stay in-house and go with an auto industry veteran, it could have looked to Stephen Girsky, its vice chairman of corporate strategy and business development, who has 25 years of auto experience.”

    Not something you’d expect of Toyota or more aptly Hyundai or Nissan, with their turnarounds.

    As painted by the article, Wagoner’s problem was not that he was a bad CEO (he was handed a basket case of short term profitability to start), but rather that he failed primarily in not foreseeing broader financial crisis and restrictions on credit placed on a firm in transition. Bankruptcy would ease the demands from creditors bringing to fruition those positive advances made under Wagoner’s tenure, particularly in retailing a more qualitatively competitive product.

    The question could be asked, was it Rattner’s, Whitacre’s (or Summer’s?) brilliance which brought GM around, or the longer term work of Wagoner’s team already in place, which was to proved the difference?

    If it was the latter, is GM really now on the right course?

    1. DF

      Wagoner always seemed at best an okay CEO. He had his moments of brilliance (buying Daewoo, which gave GM major access to the Asian market, was one).

      Most of the product turnaround should probably be credited to Lutz (and yes, Wagoner hired him, so he gets credit there).

      At the same time, though, he had some serious screwups — Hummer’s growth ultimately didn’t make the company much money, but trashed its image. Likewise, Wagoner got into an alliance with Fiat that never worked out and cost $2 billion for GM to back out of.

      1. DF

        Overall, one of the reasons why I begrudgingly supported the GM bailout was that GM was actually successfully turning itself around, but it basically ran out of time to do so thanks to the financial crisis.

      2. emca

        Bob Lutz time at GM was also a mixed bag. He made some right decisions and some bad, but he certainly knew cars, and had a nose for public sentiment on car buying, which is more than you can say Rattner, et. al.

        This quote from Lutz:

        “Why is it that when you look at the best foreign companies — and it’s not that the foreign-owned companies have people who are smarter or work harder — what they have is senior management that didn’t go to business school.”

        and

        “Product is the royalty in our business and design is the king…everything else pales into insignificance.”

        Lutz was to backpedal a little on the last quote (he also has a MBA from UC Berkeley) ; nevertheless words of this kind totally fail financial gurus who would run the auto industry as just another business…as success to the greatest extent a measure of short term returns on investment to shareholders and Wall Street.

  16. anon48

    Re: the Levitin piece;

    I saw him on C-span last evening along with speakers from the FDIC and the GSE’s(couldn’t remember if it was Fannie or Freddie) . He’s an Attorney and Georgetown law professor.
    He was very skeptical of the BOA investigative process- he said it took them several weeks to get through only a few hundred of the case files. he questioned how this level of review could justify the restart of the foreclosure process for more than 102,000 loans.

    He also had some big picture suggestions:
    1. Fix the incentives for the servicers by splitting up the responsibilities for normal transaction management away from default management by using two different servicers with appropriate incentives for each . At the very least, create a government entity ombudsman to oversee the servicers since the way the incentives are currently structured there’s no benefit if they spend much time on the default management.

    2. He concurred with one of the FDIC speakers (who managed the IndyMac loan modification program that took place through the third quarter of 2009). That speaker went into great detail showing the results of the mod program. His conclusion was that loan mods that result in reduction of monthly payments of 10% or less would eventually fail where as monthly loan mods of 30% or more resulted in survival rates pushing 40%. Levitin took it a step further and stated that what really had to be done were significant principal reductions(the FDIC speaker did not disagree).

    3. He said for it to really work you had to be prepared to pick winners and losers among the borrowers- i.e. back those situations where for example someone could afford the payments if they were adjusted down to a certain level but just let go of the situation where someone lost a job and there’s no income coming in.

    4. Further, he suggested that a new federal level foreclosure process might better expedite things. he was in agreement with the GSE speaker that whatever Loan mod process get implemented, it should be as simple and streamlined as possible.

    5. He also said that since someone had to pay for the program it’s more of a political issue. He also addressed the 800 lb elephant in the room and stated that to be realistic, for a significant loan mod program to be viable, it must be decided ahead of time how the big banks would be restructured.

    GSE guy had some slides that stated the obvious- the states that had the largest number of underwater mortgages were Ca, AZ, Nevada & FLA. While not stating this explicitly, he implied that these states were also the states where a majority of the problem loans were located (the problem loans were not geographically disbursed).

    1. Yves Smith Post author

      It’s a really terrible complaint (the fact that it is suing pretty much the world is a tip off). That attorney has a well established track record of filing crazy cases and getting slapped down by judges.

  17. carping demon

    KdB–

    I’m gonna pack it in. I’m up to 2000 words already and haven’t got to the point. That’s too much to dump on Yves’ blog in a dead thread. I’ll just say this, somewhat by reiteration: Al Qaida is no more a proto-state than Mara Salvatrucha is a proto-state. To compare them to the Founding Fathers is just loopy. 150 years of work and progress and civilization culminating in a just and compassionate nation, equated to a gang of rootless sociopaths who have done nothing but destroy whatever little bit of what at least two civilizations have accomplished over millenia that they can get their ignorant hands on, just doesn’t compute. To allow them the discretion of “declaring war” on America, let alone “all of western civilization”, does nothing but boost them out of their rightful position. Which is: They’re not a proto-state, they’re a gang, and should be treated like no more.

    That’s really all I’ve got.

  18. kevin de bruxelles

    I think you are confusing morality with state building. Quite often states are founded by gangsters and murderers. In fact this is far more often the case throughout the world than the American founding fathers. But these are all still states, no matter how immoral their founding fathers are.

    For example the current state of Saudi Arabia was founded by Abdul Aziz Al Saud with the help of an army called the Ikhwan who are very similar to the current Al Qaida organization in terms of ideology and morality. At the point they were at war with the other Arabian tribes I would have also included them in the definiton of a “pre-State”.

    http://en.wikipedia.org/wiki/Ikhwan

  19. Kevin de Bruxelles

    And to show what the limits between a pre-state and say just a criminal organization would be, the key would be that a pre-state acts (either violently or non-violently) upon a claim to sovereignty. A criminal gang may be just as violent, but it is not seeking sovereignty but instead is after wealth and protection. It acts like a parasite on the host state without necessarily desiring to replace this host.

    These categories are not pure. For example the IRA is a classic pre-state but it often engaged in more traditional parasitical criminal activities such as bank robery to help finance their sovereignty seeking activities. Sometimes a organized crime or drug cartel for example can be pushed into seeking sovereignty as a last ditch effort to seek protection from their host state. The current insurgency in Mexico could end up falling along these lines.

    But none of this has anything to do with morality.

    Typically the only just war is a war launched in response to aggression (or at the limit imminent aggression). But even in an unjust war it is considered better if it is declared because then civilians can at least attempt to protect themselves. The reason the the Geneva Conventions place such a large emphasis on wearing uniforms is that it at the very least gives the opposing army fewer excuses to kill civilians. But these rules are obviously state-centric since it is quite difficult for a burgeoning guerrilla movement to march around in uniform.

  20. carping demon

    I can’t see what you gain from calling Al Qaida a proto-state. If we were talking about Hamas, or Hezbollah, or the PKK, or the IRA, for that matter, it might apply. Even though these organizations (“organization” being the operative term here) employ suicide bombers and other terrorist aggression, they have demonstrated that they grasp the functions of a government and that they are prepared to perform them. Not as we would prefer, surely, but to such a degree that if they ended up in power, we could expect some kind of recognizable state to result. Al Qaida has shown nothing like that. Just saying that you want to be king doesn’t make you a pretender.

    I don’t see the similarity between Al Qaida and Ikhwan, either. Their “wars” with other Arabian tribes were simply raids. The Ikhwan were Bedouin nomads until they became hip to Wahhabism, and then all they wanted to do was settle down by the water hole and be good Wahabis. They had no more idea of being a state than any other nomads. Ibn Saud, a Wahhabi from generations back, figured he could use them as a militia in his “war” against the Hashemites, and he did. It was a King of the Desert adventure until oil was discovered in 1938.

    What’s morality got to do with it? Again, if you let the bad guys frame the debate they’re going to do it in a way that lets them feel like good guys. That’s an advantage, and one we don’t need to bestow.

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