Links 7/25/11

Hacker Caught With 675k Stolen Credit Cards Gets Maximum Prison Sentence Security Week

Maid presses case against Strauss-Kahn Financial Times

The Maid’s Tale Newsweek. Maybe I’m just too much of a contrarian. We know DSK is aggressive, probably a predator, so the idea he did something seriously out of line is plausible. But we ALSO know this woman is a very skilled liar. She lied about a gang rape that never happened, so convincingly that she reduced some (presumably pretty hardened) listeners on the prosecution staff to tears. And we have the taped call to her buddy in prison in which she said (IIRC), “Don’t worry, I know what I am doing, he has a lot of money.” I’m concerned that if this woman is merely embellishing what happened, she does damage to the credibility of rape victims.

Columbia U., Race, Class and the Gentrification of Harlem The Real News Network

Money market funds cut euro bank exposure Financial Times

Europe’s ideologues took the whole world to the brink of disaster Ambrose Evans-Pritchard, Telegraph

Jefferson County in Alabama May Vote to File Largest Bankruptcy July 28 Bloomberg. This is LONG overdue.

80% chance Jefferson County to file for bankruptcy, commissioner Sandra Brown says (hat tip reader May S)

Collateral Rules Criticized Wall Street Journal. Major industry BS alert. Yes, Virginia, OTC derivatives trades were too often undercollateralized (in particular, credit default swaps, which as we have discussed ad nauseum, are not attractive economically to dealers if they are adequately collateralized). And they may not like cash, Treasuries, and agencies, but the alternatives are even less pretty. And we have this coming a week after the Obama propagandists were out blaring what a great success Dodd Frank was.

The NYT is Wrong: Officials Do Not Say That Medicare Is Not Sustainable In Its Current Form Dean Baker

What Were They Thinking? Elizabeth Drew, New York Review of Books

Messing With Medicare Paul Krugman

Even Larry Tribe Now Agrees: Fourteenth Amendment is a Viable Option. So Why Won’t Obama Use It? Phoenix Woman, FireDogLake

Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined The Onion (hat tip reader Doug Tempstra)

Debt Ceiling Poker DocG (hat tip Scott Fullwiler)

Antidote du jour (hat tip reader James B, and no I don’t have the backstory for this one):

But I do for this one! Richard Smith will be taking a yet to be determined two of these Bengal kittens. Poor momma cat. Richard notes, “She is eating and drinking rather a lot to keep up.”

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  1. Paul Hodgson

    Yves: I’m an old bloke and I haven’t come to grips with the protocols for making comments online.

    I saw this article today that I thought represented a very useful history of why we are on target to achieve Great Depression Mark 2 and just what an epic struggle ensues when the rich work to protect their patch. Your 1936 FDR election campaign speech extract yesterday from Jessie couldn’t be a more telling.

    In response to this article, I posted the following comment at marketoracle:

    Andrew: I found this (and Part 2) very illuminating and helpful. I’m amazed it hasn’t been commented on more. I’ll forward links to friends. I hadn’t heard the word “plutonomy” before: it describes things very well, not only in the UK, US, Canada and Australia but also in all sorts of places, eg China where Rolls Royce has its two most profitable car dealerships or India where some sociopathic prick spent a billion building a “house” for himself. The conditions for the French Revolution are ripe just about everywhere (but the turkeys in the democracies, thanks to the power of people like the Koch Brothers, Rupert Murdoch etc etc, keep voting for Christmas).

    Thanks for the great read!

    Paul Hodgson

  2. Ciccina

    And here I was enjoying your writing until I read your comments on “The Maid’s Tale.” What a gullible man you are to swallow DSK’s lawyers’ whisper campaign hook, line and sinker. Forensic evidence supports the woman’s accusations. It has not been verified that she said anything like the words you quoted. And while it is possible that her immigration lawyer misrepresented certain events, that does not translate to lying about rape, then or now.

    But by all means, rush to judgement based on the rumors planted by DSK’s well-connected legal team, the best representation money can buy, and echoed by his friends in the media elite.

    I won’t be reading anything else you write.

    1. aet

      You are the one “rushing to judgment”.
      The prosecutors may not even bring the case. if they do, it will be up to the Judge – not you, not the press, not the advocacy groups for the reduction of sexual violence, not – the Judge herself – who shall judge.

      What’s YOUR rush? You don’t think charges need to be proven in a Court of Law?

      Another person who “judges ” with their gut…maybe you ought to eat better food.

    2. Yves Smith Post author

      I don’t know where you’ve been, but as I indicated, the PROSECUTION informed the defense of her very convincing act re a prior claimed rape, as well as the damaging phone call to her “friend”. This was most assuredly not something done by the immigration lawyers but the woman herself.

      If you aren’t willing to consider information, you are better off sticking to sites that confirm your prejudices.

      1. N

        Did everyone read the entire article? Of critical importance here:

        “The article said they talked the day after the incident at the Sofitel and quoted a “well-placed law enforcement official”: “She says words to the effect of, ‘Don’t worry, this guy has a lot of money. I know what I’m doing.’” But at the time, prosecutors did not have a full transcript of the call, which had been conducted in a dialect of Fulani, Diallo’s language. The quote was a paraphrase from a translator’s summary of the tape, and the actual words are somewhat different, sources told NEWSWEEK.”

        Prosecutors did not have a full transcript. The actual words are somewhat different. Well what exactly was said? What was the context? So the prosecution clearly did not have all of the information, and acted irresponsibly, if what Newsweek says is true.

        The article discusses the gang rape, which was consistent with events on the ground in Guinea at the time. It discusses the money floating through her bank accounts. She can not read or write and English is not her first language–she can’t be taken advantage of by a con man in jail? And the prostitution story has been de-bunked.

        Having lived in Africa, I can tell you that many in the US are guilty of looking at her story through an elitist American cultural lens (i.e., immediate extortion/prostitution assumption). We should not do so. Just because she is low income does not mean she is out to extort (others have pointed out that her quote could have meant she knew she had to protect herself because he was powerful). I don’t know in this case–I am not rushing to judgment either way as it is up to the courts to decide. I do know, when you go through a traumatic experience, it can be difficult to recount things. Experiments have shown that people witnessing crimes remember facts differently. Do you think being attacked makes it easier?

        All this concern for “damaging the credibility of rape victims”…I would like to see the same focus turned on the alleged rapists for once. There seems to be a disproportionate amount of attention paid to dissecting the story of the victim, even to the point of turning “innocent until proven guilty” onto her. In what other crime would this be acceptable? Or is this even done?

        1. ScottW

          There is an old saying that it better that 10 (or 100) guilty men go free than to convict an innocent man. For those who like a lesser burden of proof, or fear more that a victim may not actually see a perpetrator found guilty, there are many other countries that will accommodate.

          1. N

            Red herring. I am saying (or implying) nothing of the sort. I refer to DSK as alleged. Same balance to victim, please. And you did not answer my question. Yves could just as well have been concerned for rape victims that will no longer come forward because they see what will be done to them in the media.

            But it is interesting how another comment of yours points out an inability to process contradictory comments, so you resort to a red herring.

            I also find it interesting that comments throughout keep referring to the “implicating comment” she made when I will refer to my above statement again–“Prosecutors did not have a full transcript. The actual words are somewhat different. Well what exactly was said? What was the context? So the prosecution clearly did not have all of the information, and acted irresponsibly, if what Newsweek says is true.” Clearly these people did not read the linked article. Or did, and chose to ignore the contradictory evidence.

            Yes, let’s parse this evidence. Release the full transcript. Let’s have the statement in context.

          2. aet

            Well by all means let’s have a trial of the evidence.
            But it’s up to the prosecutors to prove a case bet yond a reasonable doubt, which I certainly have not seen so far.

          3. MyLessThanPrimeBeef

            I am for N’s call for full release.

            Whether one likes it or not, there is the court of law and the court of public opinion. It happens sometimes, for example when a court rules too blatantly for corporations, that one finds solace in the court of public opinion.

  3. Diego Méndez

    Yves, you are being unfair on DSK’s alleged rape victim, as I wrote three weeks ago:

    I cannot see how being a prostitute or having lied in an asylum application may change the basic fact: she was raped. That’s a very serious crime in most of the world, but seemingly not for the powerful in the US.

    An excerpt out of context, such as “Don’t worry, this guy has a lot of money. I know what I’m doing”, amounts to no new information about the truth of the charges. E.g. she may have been answering about concerns on her safety (“you may be killed” – “Don’t worry, he’s got money. He could just buy me”).

    Again, IMHO, the fact that all this bullshit is published as ultimate evidence that there was no rape and DSK is innocent (and just a day after being replaced at the IMF, on top of it) should get more critical attention on an enlightened blog as yours, Yves.

    1. aet

      What part of “presumed to be innocent until guilt is proven beyond a reasonable doubt” do you not understand?
      The rape itself has not been ‘proven”, not at all: not until the accuser is subjected to public cross-examination by a competent advocate for DSK: if her testimany withstands that, which it has yet to do, then, and only then, may we talk of “a rape”: until then, it’s just a story, another un-evidenced story.

      1. aet

        It is the “fact” of the rape which is in dispute – you seem to have already decided that it happened, based on what you have read , somewhere….

        1. MyLessThanPrimeBeef

          We all tend to ‘rush’ things.

          Here is a good example, two posts in less ten minutes.

          I guess, no one is exempt from rushing.

      2. Diego Méndez

        @aet. “Presumed to be innocent until guilt is proven” should also apply to the rape victim, which is being portrayed as “embellishing things”.

        You could have opened the link and read my comments from three weeks ago:

        “DSK had no need to lie about what happened if it was business as usual, compensated as usual. He is the only one found to be lying about the important facts.”

        “Anyway, I’m not saying DSK must be jailed without a fair trial. What I am pointing out is that no new real information has been produced, and everyone is acting as if DSK had been proved not to be a rapist.”

        1. ScottW

          Do you believe people are more credible who tell you the truth about past events, or who are proven liars about similar events? And what about all of the cash that ended up in five different bank accounts around the Country? Where did it come from, as she told prosecutors the maid job was her only source of income, and that she had no other bank accounts? This woman’s lying runs deep and she is not just being smeared because she might be a prostitute. My guess is some folks would still believe she was raped even if she recanted. The question I cannot answer is why so many people have such a need to believe she is a victim of a crime? Is it because they made up their mind she was telling the truth after the initial reports and cannot come to grips with the fact they jumped to an erroneous conclusion? Yet another example of the research that shows people actually strengthen opinions they hold when presented with contradictory facts. The contradictory facts presented here are this woman is a long history of lying.

          1. Diego Méndez


            “Do you believe people are more credible who tell you the truth about past events, or who are proven liars about similar events?”

            DSK has been lying about his sexual incontinence and his brutal affairs for decades. AFAIK, the alleged rape victim has never said she was raped when she wasn’t. Why don’t you go visit any black African country and then tell me whether you would embellish some gang rape (you had to submit to for real) in order to escape that hell?

            “And what about all of the cash that ended up in five different bank accounts around the Country?”

            As soon as I get all information about DSK’s current accounts and corrupt affairs, I’ll tell you who the biggest liar is.

            All I can say is one the most powerful men on this planet got non-romantic sexual benefits from one of the weakest people on the planet (which is, of itself, perverse, offensive, evil and repulsive) and that man is now throwing all his weight around to make the weakling seem perverse, evil and repulsive.


            I just read, in a Google search, that DSK’s DNA was found on the maid’s shirt… This was from unidentified sources… I would presume that if this is true, that the DNA is probably from semen and that either consentual sex occured, or it was a rape event…. Again, hearsay….!

            If a sexual event between these two characters did in fact occur, I would wager that it was either a rape event or a prostitution event… I’m leaning a couple of degrees toward rape, because the environment where this would have occured was more conducive to rape than prostitution…

            Either way, something’s rotten in Denmark….

          3. Yves Smith Post author


            You don’t seem to be up on the state of play with this case. Read this letter FROM THE PROSECUTION and the related commentary at the Times:



            His attorneys claim it was consensual. One theory that has been advanced is he refused to pay her. And her comment to her boyfriend is really problematic.

            The part I have trouble with is that she claims she saw him naked when he entered the living room. She is much bigger than he is and was closer to the entrance. Why didn’t she leave? He was not between her and the door, at least when he entered the room.

        2. MichaelC

          Trying to keep an open mind on this is difficult and arguments pro and con expose a lot of unexpected bias.

          Its not unusual for an (illiterate, presumably uneducated) immigrant seeking asylum to stick to a script. Is that evidence of a broader propensity to lie, or a pragmatic norm for all asylum seekers. I’m thinking its the norm and as a result sheds little light on her veracity. Does the usual asylum seeker foresee that their “lies” needed to land here will come back to destroy them if they are in conflict with one of the most powerful men in the world? Unlikely.

          Her connection to a convicted drug dealer is also not terribly unusual or extraordinary given the world she survives in. Have any of you had any experience living in the illegal immigrant community? I have a priveleged (because I’m a white guy living in an immigrant neighborhood) but passing contact with that community but I don’t think DSK or any of the reporters at the NYT has, although DSK should be more aquainted with that huge community in his homeland, especially since he was in the running to lead it.

          I may be wrong, but the DSK defenders and the ones who are ready to write this off as a low life extortion scam are extremely naive and viewing this through a first world middle class lens. The fact she lied in her immigration interviews and druggie boyfriend using her account are generally small beer, especially to an experienced prosecuter in NYC. The only one’s shocked would be NYT readers.

          The only question in my mind is, “Did DSK force this womam to give him a blow job on the date in question?”

          The dismissive “why didn’t she just bite him” argumnent (thankfully for those making it) reveals a profound ignorance of sexual violence. It’s hard to breathe with a d**k jammed in your throat.

          I’m only interested in what happened in that 9 minutes in that hotel room on that date. What happened before or after ,for either of them is of no relevance.

          Yet as usual what happened before and after is the only thing we focus on.

          Is it important that she seek to exploit this for subsequent gain (as a form of justice)? Or is it important that the rule of law prevail?

          Let’s look at the full transcript of the conversation w her pal in prison. Did the conversation take place during negotiatopns w DSKs team. Did he offer her something to shut her up?

          None of this smells right to me.

    2. Tony Gruener

      As any prosecutor will tell you, witnesses and (sometimes) victims in criminal prosecutions are generally not Ivy league graduates and McKinsey consultants – although the latter is rapidly changing.

      It is a fact that there was a sexual encounter in the hotel room that commenced and ended within 15 minutes so we can assume that it was not romantic in nature. There is more than ample evidence to proceed with a trail. There is NO excuse for this not to happen just because the prosecutors’ office winning record may be diminished.

      The alleged victim may or may not be a liar, may be illiterate and may be unpleasant in numerous ways. However, the criminal laws in this country protect scoundrels against crimes as much as they protect upper-middle class professionals.

      I am always amused when the “progressive” bourgeois show their true colors when one of their own is threatened by an unwashed peasant. Of course, “all men are equal under the law”, but let’s not get carried away!

      1. Yves Smith Post author


        You are not parsing the evidence such as it is as of this date. The fact that a sexual act took place and it was comparatively fast does not prove that it was rape. The media was completely on her side until the prosecution divulged to the defense that she had told numerous lies, including about a prior alleged rape. And the prosecution apparently freaked out when they heard the tape of her extortion-sounding conversation with her “friend” in prison.

        She’s simply not credible as a witness and this case depends on her testimony.

        This is all a “he said, she said” re intent, as to whether this was a commercial transaction (and he happens to be very rough, which has been reported in France). I’m not saying it was, but her word on this one will carry NO weight in court, particularly if the defense played the recording of her conversation iwht her “friend”.

        1. Kim Kaufman

          I think DSK was Spitzered. As in, set up to get him out of the way of heading IMF, even though he does not appear to be much of a socialist — although apparently more left than his colleagues and enough to perhaps scare someone or two.

          I haven’t read the article (yet, not sure if I will) but I wonder about the credibility of Newsweek.

          1. KFritz

            Beyond a shadow of a doubt, Spitzer’s enemies were looking for anything to bring him down. It’s a shame he fell because no one of comparable energy & intelligence has taken his place.

            On the other hand, it couldn’t have happened to a nicer guy. While he was at play, he was prosecuting men & women for the same ‘crime’ he was committing. He earned what he got.

        2. Tony Gruener

          You reveal quite a bit about yourself when you make that statement. Juries in criminal prosecutions very often find witnesses credible even though they have lied about other things and may be criminals themselves (often the case). Step out of your upper-middle class world and see the reality of how the world really works – go to court someday and watch!

          There is more than sufficient evidence to go to trial. If it is his word against hers (and the semen on the carpet), let the jury decide. Why you would argue against giving this possible rape victim a fair day in court is really beyond me!

  4. GA

    The constitutional argument: I may not agree with any other aspect of how the Admin has handled this, but I will say that – if it comes to it – having said publicly that you would _not_ use the constitutional argument, and then changing your mind ‘for the good of the world, because the GOP forced us to, etc.’ will play far better with the public than pre-announcing.

    The Admin certainly has the arguments readied and mustered ready to be deployed. They will probably inform the GOP leadership at the last trigger point/ultimatum stage.

    At that point, the GOP either goes along, or doesn’t – and the only reason it would not agree at that stage is because it couldn’t get the votes.

    Any way you cut it, it is a far better strategy in this case to have an extra weapon and only threaten to use it later in the process.

  5. BDBlue

    I don’t even need to read Phoenix Woman’s post to answer her question. Obama won’t invoke the 14th Amendment because he wants to slash strengthen Social Security and Medicare. He doesn’t care about the Constitution (see, e.g., Libya) when he wants to do something. He doesn’t want to.

  6. Ben

    I’m still not convinced if what’s driving Obama is that he’s cowardly or he hates medicare. I flip-flop (and so does everyone else, so quit judging) back and forth between the two possibilities. I think there is credible evidence for either theory. I want to believe cowardly because that, unlikely insane beliefs, can be cured.

  7. ambrit

    Re. the Birmingham Bankruptcy; I particularly liked the quote from the al website: “Jeff Cohen, a Washington attorney… who specializes in municipal bankruptcy and financial meltdowns.” What a niche to have settled into! A growth industry for sure! Also notice that they mention that Klee, the consulting attorney talking to the Birmingham City Council, is being paid $975USD per hour. (I don’t usually hang around this type of crowd, so I don’t know if this is usual or not.)
    Plus, the City ‘suggests’ that the Sewer bondholders take a ‘haircut’ of about a third. Where’s the truth in all this? Anyone with more information about the situation have a reasoned opinion as to what is an equitable solution?
    Thanks to all in anticipation.

    1. Jim

      975 isn’t unreasonable; strategy consulting firms bill out 22-year olds at 250 dollars an hour. I do take issue with the 33% haircut, however. A couple of years ago, those sewer bonds were trading at 50 cents on the dollar.

      I will agree that distressed debt investing/consulting will become a growth industry. So much unsustainable debt out there, especially at the municipal/sovereign level.

  8. LeeAnne

    In the midst of crimes being committed against the American people by the very system they have supported, DSK and the maid is a distraction worthy of bought and paid for Main Street Media.

    Is that where we’re going?

    It would be interesting to know more about the NYPD perp walk, and how that all works.

    Credibility in the charge of a crime no one witnessed is on the side of the victim right now. The willingness of a French woman and her mother to come forth with their own horrifying experience of DSK being apparently motivated by sympathy for the maid.

    I was in a crowd of neighbors in NYC where a pedestrian had been mowed down by a guy rushing backwards in his car for a parking space without so much as a glance back. The NYPD, once the woman was pronounced dead, carefully kept the driver out of sight for at least three-quarters of an hour, forced all photographers with their lenses pointed at the spot where he would be exiting in custody, and spectators far away from the scene, increasing the taped off crime scene area to the inconvenience of several business at that location, and then cautiously escorted the perp out with some garment on his head to conceal his identity and prevent his face from being photographed.

  9. LeeAnne

    Profiting by becoming a victim in the US is standard proecedure. No? That doesn’t mean there wasn’t a crime -and a perpetrator.

  10. Philip Pilkington

    Rebel Economist and I were having a discussion yesterday about MMTers working at central banks. Bill Mitchell has done a piece that deals in part with this today (I wonder if he saw our conversation). Just wanted to call your (i.e. Rebel Economist’s) attention to it:

    1. Jim Haygood

      Mitchell cites a single MMT working paper, no. 297 (one of hundreds) with some MMT-like propositions to suggest that MMT has penetrated into the citadel of central banking.

      His topic sentence, though, is much more revealing:

      I have noticed some discussions abroad that criticise Modern Monetary Theory (MMT) on the basis that none of the main proponents have ever actually worked on the operations desk of a central bank.

      There is, of course, a reason for this anomaly. No one who believes that the issuance of sovereign debt to fund government spending is merely a ‘political constraint’ is ever going to serve in a senior central banking or finance ministry role in any serious country, unless it is intent on crashing its own currency.

      1. Cedric Regula

        hahaha ha. Now we know.


        AP reports banks around the world are still making loans before obtaining reserves/deposits.

        Gold is up but Platinum market is flat.

        P.S. Then why are those called “working papers”?

      2. Philip Pilkington

        I think you’ve misread this a little. MMTers don’t expect central bankers to listen to us. But we take careful note of when central bankers begin to realise what’s really going on due to reality pressing upon them.

        Oh, and as for your statement about people who thought in such terms never being in charge of a central bank that wouldn’t crash, history ain’t your friend on this. The following is a famous quote from Marriner Eccles, chairman of the Fed from 1934-1948 (and, in my opinion, one of the best central bankers ever to have lived):

        ““Chairman of the Federal Reserve Board, Marriner Eccles testified before the House Banking and Currency Committee September 30, 1941. He was asked by Congressman Patman, “Mr. Eccles, how did you get the money to buy those two billions of government securities?” Eccles replied, “We created it.”

        Patman asked, “out of what?” Eccles answered, “out of the right to issue credit-money.” Patman then asked, “And there is nothing behind it, is there, except our government’s credit?” Eccles responded, “That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.”””

        1. Cedric Regula

          Yes, and there are even more problems facing central bankers after they create this debt-money. They are always “pushing on a string” or visa versa. Or the ones with keynesian leanings sometime fret about “liquidity traps”.

          Then sometimes the stuff just disappears! Happened to the BOE and the Asian Tigers!

          We can only hope they get this thingy figured out someday?!

        2. MyLessThanPrimeBeef

          Why would people want to politcally constrain themselves if an MMT government can arrive on stage, promise to vanquish the private sector and force everyone to relocate to the public sector at $250,000/yr?

          1. Philip Pilkington

            I think I’ll start asking for links to the outlandish intentions that people attribute to the MMT crowd on here. So, go on, if MMTers say this please provide evidence.

          2. Cedric Regula

            Washington DC is running a test program. So far everyone (except the interns of course – they have to earn their wings) makes a G15 salary ($140K salary, $20K healthcare plan, plus 80% pension).

            Problem is they outsource all the work to private sector contracting firms, whom give it to normal people making $80K, $5k health plan with employee contribution and a 401K plan. The private firm then marks up the billing at 200% to 500% depending on the status of the professional work being done.

            So they have a ways to go yet, but expect slow, methodical moves towards improvement.

            Disclaimer: This is just a rumor I heard from someone in DC and haven’t personally verified it.

          3. MyLessThanPrimeBeef

            No one has said that.

            I am the one who is asking ‘why not?’

            Why not put everone on government payroll (so there is no private sector), except a fictious corporation as the private sector and let it have all the savings that must be satisfied (per the accouting identity)?

            If a fictious corporation is a problem, then let someone volunteer to be the private sector so he can have all the ‘savings.’

            The accounting identity is not violated. And everyone has a job.

          4. ambrit

            Mr Regula;
            Hey there! I’m living in the wrong quadrant of ‘Known Space!’ Around here, most people would consider $80,000 USD per year to be the big time! (Even the Academics over at the Universitys would not sneer at this salary and benefit programme.)

        3. Cedric Regula

          I don’t know if this counts or not, but I recall – I think it was Bill Mitchell – claim he was Marriner Eccles once. Not by name, just by origonal theory.

          But you gotta earn your google click money somehow.

    1. Jim Haygood

      Sorry, let’s try that again. Kurgman asserts:

      [Medicare] has been more successful in controlling costs [than private insurance]. While Medicare expenses per beneficiary have soared over the past 40 years, they’ve risen significantly less than private insurance premiums.

      Medicare has achieved this feat in two ways. One is by suppressing payments to below-market rates, such that hospitals are going bankrupt and physicians are dropping out of the program en masse.

      That’s ‘successful’?

      The second way Medicare has achieved this marvelous feat is by running up a negative net worth estimated, in the most recent Financial Report of the United States, at $22.812 trillion. See Table 5 in this link:

      Why is it that Kurgman never cites actual, authoritative government accounting sources? Probably he don’t even understand what accrual accounting is.

      Kurgman is a polemicist, not an economist.

      1. Anonymous Jones

        “One is by suppressing payments to below-market rates, such that hospitals are going bankrupt and physicians are dropping out of the program en masse.

        That’s ‘successful’?”

        Long-form answer: “Yes.”

        Well, I guess I can help elucidate this for you, but I can see why someone who wants only to find evidence for their position cannot understand that he is asking a stupid question.

        If the market is so full of asymmetries (payor-customer divorce, catastrophic occurrences dominating, oligarchic pharma companies), then yes, driving down the “market” price is the *exact thing you want to do*. And by driving down the market price of the provision of medical services is necessarily going to bankrupt some because *that’s how business works*. If your business “over-spends” for fixed investment on anticipation of high revenues and then the market shifts on you, you have less operating income (or more operating losses), and you may go under if you levered too highly.

        So, yes, this is *exactly*, and I mean *exactly* what one should expect.

        Tip o’ the Day: Trial lawyers are taught never to ask a question of which they are not completely sure of the answer.

        1. Jim Haygood

          If the market is so full of asymmetries, then yes, driving down the “market” price is the *exact thing you want to do*.

          You’ve got it exactly backwards, Counsellor. Medicare’s administered price is *not* a market price. The farther below market it goes, the higher the market prices go: that is, the negotiated ‘volume price’ charged to insurers, and the even higher ‘rack rate’ charged to uninsured individuals.

          Don’t believe it? Read the link:

          A careful recent study of hospital pricing in California, however, found that 49 percent of the uninsured in 2005 were treated at hospitals where prices charged the uninsured were higher than those paid by Medicare, and 27 percent were treated at hospitals whose charges to the uninsured exceeded the prices paid by commercial insurers.

          Like ‘Don’t believe it?’, ‘That’s successful?’ was a rhetorical question. If you were a real trial attorney, you would know that.

      2. ScottW

        So we are underpaying for our medical care? I am sure that the individuals driven into bankruptcy (and I don’t mean doctors and healthcare providers) will be happy to hear it. We spend more on healthcare than any other Country and it is not enough? Your argument actually bodes well for tighter controls and savings otherwise we will end up with a Country in which maybe even you cannot afford to get treated.

  11. YY

    Sorry no links because all I’ve found have been in the Japanese press. The Chinese high speed train wreck is becoming an interesting story. It appears that the authorities in their infinite stupidity have literally buried in the ground at site the lead carriage that ran into the stopped train. Generating accusations of a cover-up as well as questions with regard to loss of bodies, body parts, and belongings.

    In the meantime Taiwan is stressing the “made in Japan” nature of its high speed train to say it can’t happen here.

  12. Ray Duray

    Yves Smith’s interview at The Real News Network on the debt ceiling issue is now up:

    Headline: “Debt Ceiling Extortion

    Yves Smith: The finance sector used extortion against the American people in 2007-09 and are doing it again now”

  13. BondsOfSteel

    This was the most hilarious thing I’ve read in the WSJ:

    “The law requires that much of the collateral be held in cash or high-quality government securities, such as Treasury bonds. But some critics claim such a requirement could steer more money into U.S. securities just when many investors are getting nervous about the nation’s debt load.”

    Then I realized that some in the financial sector are thinking a default would help them dodge regulation. Now it just seems scary and sad.

  14. Hugh

    Yves is correct about the maid-DSK case. In this case, the physical evidence shows only that a sexual act occurred but not that it was rape. The rape allegation hinges on the maid’s credibility and she has none. She has been caught 1)lying to prosecutors, 2)lying about a previous rape allegation, 3)seeking to profit off her allegations, and 4)consorting with felons. Any of these by itself would be enough to blow up this case. Taken together, they obliterate it.

    DSK has the reputation of being a thoroughly dreadful person, but that in itself is not a crime. The burden of the prosecution is to prove that he did something criminal in this instance. To do so, it must depend upon the maid’s credibility and from a legal point of view she has none.

    The maid’s actions have not just harmed her own case but, because of their high visibility status, rape victims generally. They leave the public with the memory that women (because they are usually its victims) do lie about rape.

    I am not sure why the maid came forward at this point. Perhaps she did feel it was important to get “her” side out. Perhaps it was to soften public opinion toward her in case prosecutors might be thinking of charging her with lying to them or to gain leverage in a civil suit against DSK. You see that’s the thing about credibility. Once it is shattered it stays shattered.

    1. The lives of others

      Yves is not correct. It is not true that only Virgin Maries get raped. Prostitutes get raped, liars get raped, women get raped by the thousands in Africa and elsewhere.Women of no credibility raped.
      Even if DSK is innocent of rape, he had no business to try to buy sex from somebody in a subordinate position and retain his credibility as a socialist. Another socialist in name only. Abuse of power.

      And why do we have to read again and again about DSK’s semen? Does it control the markets? Enough already.

      1. Yves Smith Post author

        We still don’t know whether this was rape or not. And we are never gonna know given the lack of credibility of the woman. You presume there was rape when there is no way of knowing, and now pretty much a zero chance of a successful criminal prosecution.

        And I have to tell you, not exactly consensual sex is common for women. It’s particularly gross in DSK’s if the stories about him are accurate (probable given how many there are) but if you don’t think this happens all the time, you are smoking something very strong. So your cranked up ire re DSK smells awfully funny to me.

    2. JR

      “You see that’s the thing about credibility. Once it is shattered it stays shattered.”

      Yes, it does.

      As I recall the story, when Monsieur was accosted by the police he first claimed diplomatic immunity. Then when he was hauled off the plane he claimed the hotel sex never happened. Then, when it was proven, he claimed it was consensual.

      So, whose credibility is weak?

      Some say, “Well, it’s either rape or prostitution.” OK, fine, that makes sense. After all, nine minutes is barely enough time to open the wine and let it breathe, let alone drink a glass and retire to the boudoir. If prostitution is the claim, how much does Monsieur claim to have paid? When? How? Was it cash? Euros or dollars? Details, please.

      And what’s this I hear about Monsieur’s semen being found in odd places? Is it true that there are physical injuries?

      As far as a criminal conviction is concerned, it may be that there is insufficient evidence to convict M. DSK beyond a reasonable doubt, for which I say “God Bless America” – though I would welcome a trial. But as human beings, our experience of the world may lead us to different conclusions when we consider probabilities.

  15. Cedric Regula

    File: Boehnergeddon – Second Round

    Mr. B once again is demonstrating his sensitivity towards the markets and those cute, cuddly HFT robos that reside there and do our daily work for us.

    ” Boehner has just called for a news conference precisely on the closing bell at 4pm.”

    As far as anyone can tell, he is going to talk about his “two tier” advances towards Mr. O.

    This is where we fund the US until it’s time to run for president again, then we will work on the debt ceiling problem again.

    As far as anyone can tell, Mr. O doesn’t want to do it that way.

    Alt. Black Swan Scenario: They reached agreement and Mr. O doesn’t want to announce it during market hours.

    1. Cedric Regula


      Mr. O calls emergency press conference and demands “Halt 3 ring-circus – avert US default”

      Impressed with the logic, S&P 500 futures advance .2%

      Losing something in translation, Asian markets rally strong.

      Gold flat, platinum flat.

      Elsewhere, AP reports banks in Asia still making loans before obtaining reserves/deposits.

      The Peterson G. Peterson Foundation issues an urgent message:

      Peter Peterson picked a peck of pickled peppers;
      A peck of pickled peppers Peter Peterson picked;
      If Peter Peterson picked a peck of pickled peppers,
      Where’s the peck of pickled peppers Peter Peterson picked?

  16. Don Levit

    Thanks for providing those links to the 2010 Financial Report of the U.S. Government.
    There are basically 2 perspectives in governmental accounting, the trust fund perspective and the government-wide perspective.
    “From the government-wide perspective, the present value of the total resources needed for the Social Security and Medicare programs over and above current law funding sources is $30,760 billion. From the Trust Fund perspective, which counts the trust funds ($2,921 billion in present value)and the general revenue transfers to the SMI program ($20,130 billion)in present value)as dedicated funding sources,
    resources to fund the programs are $7,709 billion in present value.
    As described above, from the trust fund perspective, the SMI program is fully funded, from a Government-wide perspective, the substantial gap that exists between premiums and state transfers and program expenditures in the SMI program ($31.5 trillion and $21 trillion) represents future general revenue obligations of the federal budget.”
    In other words, the trust fund perspective considers the trust funds fully funded, even though new revenues must be raised to cash in both principal and interest just like for any other pay-as-you-go government expenditures.
    In addition, it considers SMI fully funded, even though 75% of its revenues come from general revenues with a direct, immediate impact on the budget.
    So, from the trust fund perspective, there is $23,051 billion available in present value terms, even though new money must be raised for every dollar of it!
    That’s why the government-wide perspective is considered to be more comprehensive and objective than the trust fund perspective.
    Don Levit

  17. Typing Monkey

    A little dated, but interesting reading (at least, it was for me):

    Despite the fact the Reykjavík Energy had been heavily in debt for years, little had been said about it. “The state of the company should have been pretty clear for some time now,” Jón Gnarr told me, “but for some reason, while Icesave featured heavily in the public discourse, nobody talked about the state of Reykjavík Energy though the company debt is four to five times the Icesave debt.”

  18. Typing Monkey

    Just an offbeat question, incidentally:

    My understanding is that people who have declared bankruptcy over the last seven years can’t get any type of sensitive clearance (eg: secret, Top secret, anything above top secret). Is this correct? If so, what is going on in all those agencies that require these people? (surely, just by the law of numbers, a fair number of these employees must be struggling with the aftermath of the various bubbles, and presumably a lot of these people must hold relatively important positions from a government perspective–otherwise they wouldn’t have been granted clearance).

    I only ask out of random curiousity–I don’t even know how the thought came up, actually….

    1. PQS

      Reminds me of a story from Terkel’s “Hard Times” about a labor organizer (a single mom) who, after being evicted from her apartment due to the Landlord’s unhappiness with her political activism, (she “turned the whole building to Roosevelt”) decamped to the public sidewalk and set up house there. “You can’t evict me from the public sidewalk.” After living there a while, she was eventually let back into her apartment.

      Today she’d be tased by the polizei and hauled off to jail, with a Youtube video to boot.

  19. Tony

    I found this interesting: the influential climate change blogger Joe Romm gives Obama an ‘F’ for his climate policies.

    I somehow think that this blog and its commentators would also give Obama an ‘F’ for his economic policies.

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