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Top Secret Credit Crisis Bailouts

Thursday, March 5th, 2009

Interesting stories are stacking up again so it’s time for some economic potpourri starting with secret dealings by the Fed.

Fed Refuses to Release Bank Lending Data, Insists on Secrecy The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.

Bloomberg sued Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs.

On Oct. 25, Bloomberg filed another request, expanding the range of when the collateral was posted. It sued Nov. 7.

In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”

Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson said in September they would meet congressional demands for transparency in a $700 billion bailout of the banking system.

In plain English: Bernanke Lied.

Japan clears cash hand-out bill

Japan’s parliament has passed legislation to give a cash hand-out to every resident in attempt to boost the recession-hit economy. Most people will get at least 12,000 yen ($121; £86) under the $20bn plan.

China Considering New Stimulus Measures

Chinese Premier Wen Jiabao is considering new stimulus measures, adding to a 4 trillion yuan ($585 billion) spending plan as the government tries to revive growth in the world’s third-biggest economy.

Wen will announce “a new stimulus package” in his annual address to the nation’s legislature tomorrow, former statistics bureau head Li Deshui told reporters in Beijing today. He didn’t say whether spending would increase or give further details.

“The existing stimulus package may not be adequate considering the total collapse of global trade,” said Isaac Meng, a senior economist at BNP Paribas SA in Beijing. “There should be more spending, especially on the social side to cushion unemployment. This is quite urgent.”

Doting On Animals In Hard Times

When markets drip tears and For Rent signs appear over products in shops that were once For Sale, people still spend almost as much resources, time and energy as ever on a completely wasteful economic category: pets.

I once did some consulting for the chairman’s office of A&P and assumed that surely, in tough times, poor people would choose the generic cat food rather than Hill’s Science Diet Culinary Creations cat food. But I was wrong. Consumers would rather buy plain-label generic creamed corn or tomato soup for themselves than subject their four-footed treasures to what they fear will be second-rate grub.

Ellen DeGeneres promotes her Halo line, with “holistic foods for pets’ total well-being. Highest quality meats, grain and fresh vegetables.” She could be joined by the producers of Haute Canine, the Natural Gourmet Dog Snack and Dandy Doggy Bowser Brittle (with rain-forest nuts).

Of course there are countless miserable stories of pets abandoned in foreclosed homes, left off from cars in parks and simply ignored once a summer vacation is over. The story is not wholly pretty and contains abundant cruelty, exploitation and heartlessness.

Nevertheless, for a sense of proportion about broad economic forces, go to a supermarket and watch the purchasers of pet food. Observe elemental mammalian life at work, for it has been around for an endlessly long time and will be present in the future.

Brown Will Urge World to ‘Seize Moment,’ Unite on Stimulus Plan

U.K. Prime Minister Gordon Brown will use a speech to both houses of the U.S. Congress today to urge countries to “seize the moment” following President Barack Obama’s election and agree on new global financial regulations.

“Now, more than ever, the rest of the world wants to work with you,” Brown, the fifth British prime minister to address Congress, will say, according to extracts of his speech released in advance. “Never before have I seen a world so willing to come together. Never before has that been more needed. And never before have the benefits of cooperation been so far-reaching.”

Never before has there been so much meaningless political sap.

Australian Economy Grinds To A Halt

THE global recession has caught up with Australia’s economy, forcing the first fall in output in eight years and making the Rudd Government revise lower the budget forecasts it made only four weeks ago.

Wayne Swan said the downturn made it unlikely the economy would achieve the optimistic 1 per cent growth this year forecast by Treasury just four weeks ago.

The Treasurer said it was likely that revenue would also fall short of the latest forecast, which was itself a $115 billion downward revision from budget. This will push the deficit out from Treasury’s estimate of $22.5 billion.

However, Mr Swan defended the Government’s actions in launching its first economic stimulus package last October, in the face of criticism from the Opposition that it was spending too much, too soon.

“There is absolutely no doubt that things in this country would have been far worse had the Government not acted when we did with the economic security strategy announced last October,” he said.

“If we pull together, if we keep doing whatever is necessary, we can come out of this stronger than ever,” he said.

Swan needs to get together with Brown, Obama, and Bernanke to sing Kumbaya.

Hawaii: Teachers union unit files for bankruptcy

The union that represents Hawaii’s public schoolteachers says the activities and finances of a subsidiary corporation had been “grossly mismanaged.”

Member Benefits Corp., which filed for bankruptcy Monday, has been shut down. It had managed the Hawaii State Teachers Association’s Voluntary Employees Benefits Association.

The HSTA decided to dissolve the corporation last year after determining the for-profit subsidiary didn’t fit within the union’s mission.

The union has told it members the mismanagement was discovered by an outside team of attorneys and accountants that was brought in as part of the process of closing the corporation.

Bernanke grilled on latest $30B bailout of AIG

Irritated lawmakers grilled Federal Reserve Chairman Ben Bernanke Tuesday over the latest bailout of American International Group, even as the Fed chief warned that an economic recovery hinges on the government’s success in stabilizing shaky financial markets and their major players.

“I share your concern, I share your anger,” Bernanke told the Senate Budget Committee. “It’s a terrible situation, but we’re not doing this to bail out AIG or their shareholders. We’re doing this to protect our financial system and to avoid a much more severe crisis in our global economy.”

Bernanke defended the government’s repeated rescue attempts on AIG, saying “the failure of major financial firms in a financial crisis can be disastrous for the economy.”

Sen. Ron Wyden, D-Ore., and others said the identities of banks and other so-called counterparties that do business with AIG and other bailed-out institutions should be made public. Those companies also should have to make some concessions, he added.

“They ought to … have some kind of consequence,” Wyden said. “The American people are in the dark on this issue, and I think it’s time for some sunlight. I think that the public really wants to know why are these people so important.”

Sunlight is illegal. Bernanke wants us in the dark. It’s Top Secret.

Pressure to reveal major AIG counterparties grows

Calls increased Tuesday to reveal the financial institutions that got almost $40 billion in collateral from American International Group shortly after the government first bailed out the insurer last year.

AIG almost collapsed in September after ratings agency downgrades triggered demands for billions of dollars in extra collateral from firms that had bought derivative-based protection from the insurer on complex mortgage-related products known as collateralized debt obligations, or CDOs.

AIG didn’t have that much money and faced bankruptcy. But it was saved by an $85 billion emergency loan facility from the Federal Reserve.

By Nov. 5, the insurer had paid out $37.3 billion of that money to counterparties who had purchased a certain type of derivative-based protection from AIG called multi-sector credit-default swaps, according to the company’s third-quarter regulatory filing.

“AIG has given the counterparties $20 billion. Those people could be just about anybody in the world. Why won’t the Fed disclose who those are?” Sen. Ron Wyden, D-Ore., asked Fed Chairman Ben Bernanke during congressional testimony on Tuesday.

Bernanke said the counterparties made “legal, legitimate, financial transactions” with AIG and presumed at the time that the contracts would remain private. “That is a consideration we have to take into account,” he added.

Sen. Mark Warner, D-Va., suggested that AIG’s counterparties should have to take a “haircut,” rather than be made whole, because some of them probably didn’t do enough due diligence on whether the insurer was financially strong enough to be selling such protection.

“In effect, what we’re saying is, consequently, folks who bought these instruments and that, at some point in their process, should have been doing some level of credit analysis of what AIG was selling who didn’t do that credit analysis are going to still come out whole for their lack of appropriate due diligence or responsible behavior,” he said.

“I’m as unhappy as you are about that, senator,” Bernanke replied. “I just don’t know what to do about it.”

There are many problems with the handling of AIG but it all starts with the initial decision to do something as opposed to nothing. Government has no business bailing out anyone and the decision is made all the more galling by making everything a secret.

Note that the Fed is picking winners and losers. There are other creditors of AIG who might have a better claim on its assets than who the Fed is picking. Remember that the Fed promised transparency. Instead, we have gotten noting but lies and secrecy from Bernanke, Paulson, and Geithner every step of the way.

Words cannot begin to express my disgust of the lies and secret shenanigans of the Fed and Treasury.

© 2009 Mike Shedlock, All Rights Reserved

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George Bush could be next on the war crimes list

Thursday, March 5th, 2009

THE HAGUE – George W. Bush could one day be the International Criminal Court’s next target.

David Crane, an international law professor at Syracuse University, said the principle of law used to issue an arrest warrant for Omar al-Bashir could extend to former US President Bush over claims officials from his Administration may have engaged in torture by using coercive interrogation techniques on terror suspects.

Crane is a former prosecutor of the Sierra Leone tribunal that indicted Liberian President Charles Taylor and put him on trial in The Hague.

Richard Dicker, director of the International Justice Programme at Human Rights Watch, said the al-Bashir ruling was likely to fuel discussion about investigations of possible crimes by Bush Administration officials.

Congressional Democrats and other critics have charged that some of the harsh interrogation techniques amounted to torture, a contention that Bush and other officials rejected.

The prospect of the court ever trying Bush is considered extremely remote, however.

The US Government does not recognise the court and the only other way Bush could be investigated is if the Security Council were to order it, something unlikely to happen with Washington a veto-wielding permanent member.

- AP

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School begins using biometric facial recognition

Thursday, March 5th, 2009

By Kim Thomas |

“Ainsley. Babcock. Bland. Carthorse. Dint. Ellsworth-Beast Major. Ellsworth-Beast Minor.” For some of us, Rowan Atkinson’s monologue of a schoolmaster taking the register conjures up the essence of school life. Not at St Neots Community College in Huntingdon, Cambridgeshire, however, where traditional methods are being abandoned in favour of hi-tech facial recognition technology.

The school has 130 sixth-formers, 128 of whom are taking part in a pilot programme that began in January and will run until July. Students register their details by standing in front of a camera, part of a unit that also includes a processor and a keypad. The camera takes a photograph and establishes a “reference point” for the face, which is the mid-point between the eyes. From that, it takes measurements relating to the nose, upper lip and cheeks, and converts those numbers to a unique biometric, which it then encrypts.

When students check in or out of school, they enter a pin on to the keypad and look at the camera. The measurements from the photograph are matched against the student’s biometric identifier, and the time of arrival (or departure) is stored in the unit’s internal computer. The whole process takes less than two seconds.

But why? After all, the low-tech method of calling the register has worked very well for generations. Scott Preston, deputy principal at St Neots, says the system offers an easy way of gathering accurate data about sixth-form attendance, so students can claim the Educational Maintenance Allowance (EMA) - a government grant for poorer students in post-16 education.

Science lesson

The construction industry has used facial recognition systems for years to prevent employees fraudulently clocking in for colleagues, but the technology has only recently become accurate enough to justify wider use. The key innovation made by Aurora, which supplies the St Neots system, is the use of infrared light when taking the pictures, which means accuracy is unaffected by lighting conditions. “Because it splashes a consistent light over the face, it doesn’t matter whether it’s pitch black or bright sunlight,” says Hugh Carr Archer, Aurora’s chief executive.

While facial recognition doesn’t yet match the accuracy rates of iris recognition (which has a failure rate of one in several million), Carr Archer believes it does far better than most biometric technologies currently on the market. It makes no difference if the subject is wearing glasses or has grown a beard. He claims the technology can even cope with the changing bone structure of growing children, though this has not yet been fully put to the test.

Biometrics technologies are now widespread in schools: an estimated 1 million children have had their fingerprints taken for activities as mundane as borrowing library books or paying for school dinners. This rapid growth is down to the efforts of “enterprising small companies”, according to Simon Fance, project officer at the United Kingdom Biometrics Institute.

Because biometrics are a useful way of controlling access, they are being adopted by other organisations, such as nurseries. At UK borders, passport officials are being replaced by cameras that check travellers’ faces against the image held in their passports. One of the concerns for civil liberties campaigners is the blurry line between access control and surveillance: in Newham, east London, face recognition has been used in conjunction with CCTV as a means of identifying criminals in a crowd.

The dystopia envisaged by campaigners is one where the state holds increasing amounts of data on its citizens, which can then be easily matched to unique biometric identifiers. David Clouter, a parent activist from the pressure group Leave Them Kids Alone, regards the use of biometrics in schools as “a disproportionate response to a nonexistent problem” and believes it is a “giant softening-up exercise for the next generation to accept biometric identity in some form”. Children will get so used to offering their fingerprints or staring into a camera that they won’t challenge it when the state asks them to do it: “Every traffic warden, every minor official, will go round fingerprinting everybody. And people won’t see it as out of the ordinary, which it most certainly is.”

Vital statistics

The other issue worrying Clouter is that schools hold large quantities of data on children - not only names, addresses and dates of birth, but information on attendance, library-borrowing habits and attainment, raising the possibility that a single biometric could be used to access huge amounts of personal data held on different systems, including ones held by other authorities: “The more biometric information floating around in insecure places like schools, the more chance there is of it being left on memory sticks or sent somewhere on a CD and lost,” he says.

Carr Archer argues that security concerns are misplaced when it comes to the system used by St Neots. Even if the encryption were to be broken, he says, Aurora’s method of taking measurements is proprietary, so the data couldn’t be used elsewhere (although that could of course change if the Aurora technology becomes widely adopted). Preston is equally confident: “The box is a one-stop shop. There is a network connection that enables you to produce reports, but in terms of getting into the data and misusing it, you’d have to take the box off the wall.”

If the St Neots pilot is successful, Aurora will market it to other schools, though they have yet to decide a pricing model. Currently, the units cost a hefty £4,000 each (though St Neots isn’t being charged anything). In the meantime, schools’ enthusiasm for biometric technologies shows no sign of abating. Clouter and his colleagues can expect to be busy for some time yet.

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The Case for Prosecuting Bush Officials

Thursday, March 5th, 2009

By Daphne Eviatar |

The Senate Judiciary Committee’s “Getting to the Truth Through a Nonpartisan Commission of Inquiry” convened this morning to consider Sen. Patrick Leahy’s (D-Vt.) proposal for a sort of “truth and reconciliation” commission.

The hearing was full of all the predictable, lofty statements from illustrious supporters about why a commission would further the American people’s understanding of our nation’s past and true values, and also demonstrate to the world our commitment to truth and justice — most of which I agree with. But what was most surprising was that the Senate Republicans and their witnesses, in the process of ripping apart the idea, made the strongest case I’ve heard yet for why the Department of Justice should prosecute former senior officials of the Bush administration.

Sen. Arlen Specter, the ranking committee Republican, after noting his previous support for judicial review of the Bush administration’s terrorist surveillance program, referred to the recent disclosures of Office of Legal Counsel memos as potentially supporting the case for prosecutions.

“You’ve had some rather startling disclosures, with the publicity in recent days about unusual—to put it mildly—legal opinions” to justify broad executive actions, including homicide. “They’re all being exposed now,” he said, and noted that a forthcoming report from the Office of Professional Responsibility in the Justice Department will likely expose even more.  They’re “starting to tread on what may disclose criminal conduct,” he said.

Rather than going off  “helter-skelter” and conducting a “fishing expedition,” said Specter, “it seems to me that we ought to follow a regular order here … If there’s reason to believe that these justice department officials have given approval for things that they know not to be lawful and sound, go after them.”

The witnesses called to present the Republican opposition to Leahy’s proposal made the same point.

David Rivkin, a former Justice Department official in the Reagan and first Bush administrations and now a partner at the law firm Baker & Hostetler, said a truth commission “is a profoundly bad idea, a dangerous idea, both for policy and for me as a lawyer for legal and constitutional reasons.”

Objecting that Congress would be improperly delegating its oversight power, and that witnesses would be called out for criminal conduct without the right to defend themselves in a trial, he said: “this is to establish a body to engage in what in essence is a criminal investigation of former Bush administration officials,” and that “the subject matter areas, which such a commission would investigate – among them the interrogation and handling of captured enemy combatants and the gathering of electronic intelligence – are heavily regulated by comprehensive criminal statutes, and ensures that the commission’s activities would inevitably invade areas traditionally the responsibility of the Department of Justice.”

Jeremy Rabkin, a law professor at George Mason University who also opposes Leahy’s idea, similarly insisted that in the United States, where we have a fully developed legal system, prosecutions — not truth commissions — are the appropriate course.  A truth commission is something that countries like South Africa and Chile have had, not something we should do here, he said. “In those countries they had to have commissions because they couldn’t have prosecutions. Peace was really in doubt in those countries … they had to trade off prosecutions for peace. We’re not in that situation. If people think we need to have prosecutions, we should have prosecutions.”

Proponents of the truth commission idea, meanwhile, while not ruling out the idea of prosecutions, saw a truth commission as serving a different, and broader, purpose. But it was surprising that, at a hearing cautiously called to discuss “a nonpartisan commission of inquiry,” we heard the strongest case yet  for the prosecution of former Bush administration officials — being made by Republicans.

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Iran Plans War Crimes Trials for Israelis

Thursday, March 5th, 2009

By Robert Mackey |

On the same day that the International Criminal Court in The Hague issued an arrest warrant for the president of Sudan on war crimes charges, Iran’s supreme leader, Ayatollah Ali Khamenei, opened an international conference in Tehran that will press Interpol to help Iranian prosecutors arrest 15 Israeli leaders on war crimes charges related to the recent war in Gaza.

Meanwhile, discussions are reportedly continuing in The Hague on the question of the international court’s authority to open an investigation of its own into actions carried out in Gaza, since the territory is not part of any internationally recognized state.

The Iranian state broadcaster Press TV reports today that the conference, “which is to focus on Israeli war crimes in Gaza,” brought together “legal experts, politicians and religious figures” for two days to “discuss ways to bring Israel’s top political and military leaders to trial over the atrocities committed in Gaza.” Press TV says that “discussion on a series of documents, which Iran recently sent to Interpol, implicating 15 Israeli officials, are also expected to be on the agenda.”

Iran’s Fars News Agency reports that “80 delegations from five world continents” are at the conference, including leaders of Hamas.

 

On Sunday, Reuters reported that Tehran’s chief prosecutor, Saeed Mortazavi, had drawn up charges against 34 Israeli commanders and 115 individuals concerning their actions during the Gaza campaign. Mr. Mortazavi told Reuters that the charges included “war crimes, invasion, occupation, genocide and crimes against humanity.”

Mr. Mortazavi also reportedly said that his office had “completed our investigation” of “15 individuals who were among those criminals” and had “asked Interpol to arrest these suspects.”

According to a report by Press TV on Monday, the people Interpol was asked to help detain include: “Israeli Premier Ehud Olmert, Defense Minister Ehud Barak, Mossad Chief Meir Dagan, Chief of the General Staff of the I.D.F. Gabi Ashkenazi, and Attorney General Menachem Mazuz.”

Despite the very long odds against Interpol acting on this request, Mr. Mortazavi’s boss — the country’s chief prosecutor, Ayatollah Qorban-Ali Dori-Najafabadi — is proceeding with elaborate plans for trying at least some of these Israeli officials in absentia. According to The Tehran Times Iran’s prosecutors will not be deterred by not having any Israelis in custody, and the case against them “will soon be heard in a symbolic trial in Tehran.”

Half a world away from the Islamic Republic of Iran, officials at the International Criminal Court in The Hague are also considering the possibility of opening an investigation of Israeli actions during the war in Gaza.

Last month Katrin Bennhold reported on The Lede’s sib-blog DealBook that the international court was “looking into a request by the Palestinian Authority” to investigate Israeli actions during the war in Gaza. Soon after that, Marlise Simons of The New York Times quoted Béatrice Le Fraper, an aide to the international court’s chief prosecutor, saying that the prosecutor, Luis Moreno-Ocampo, “has agreed to explore if he could have jurisdiction in the case.” Still, as Ms. Simons reported, “accepting jurisdiction would not automatically set off a criminal investigation.”

This week, though, Peter Beaumont of The Guardian reported that the court “is considering whether the Palestinian Authority is ‘enough like a state’ for it to bring a case” and “is examining every international agreement signed by the P.A. to decide whether it behaves — and is regarded by others — as operating like a state.”

Although Ms. Le Fraper told Ms. Simons last month that court officials were “still very far from any decision” on the matter, Mr. Beaumont reported this week, citing an unnamed source at the court, that it would decide whether it can investigate actions in Gaza within “months, not years.”

Even if the court decides that the Palestinian Authority has standing as a state under international law, another sticking point would be that, as Ms. Bennhold wrote, Israel “never signed up to the I.C.C., which means the court has no jurisdiction over anything that happens on its territory.” Israel does not claim Gaza as its territory, though, and as Ms. Bennhold noted, “the Palestinians argue that following Israel’s 2005 withdrawal from Gaza they have sovereignty over the narrow strip, and last month handed the court an official letter recognizing its jurisdiction there.”

No matter what the court eventually decides about Gaza, of course, since Israel has not signed the Rome Statute, the 2002 treaty that created the court, it is hard to imagine a scenario under which any Israeli government would actually hand one of its citizens over to stand trial in The Hague.

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Obama ’siding with Bush over Israel’

Thursday, March 5th, 2009

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De Menezes coroner slams police conduct

Thursday, March 5th, 2009

Copyright Morning Star

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