Saturday, March 23, 2013

The War on Gun Ownership III: DHS, Bullets, and Conspiracies

The Department of Homeland Security has been making the news for its purchase of 1.6 billion rounds of ammunition, a purchase it explains as a strategic sourcing contract whereby it buys in bulk to get a lower price.  Aside from the fact that it strains credulity to believe that a federal agency is seeking to buy anything at a lower price, one has to pause to consider the lunacy of buying so much ammunition, even if you accept the breakdown offered by the Department of Homeland Security:

-750 million rounds will go to DHS
-850 million rounds will go to ICE
-DHS uses 15 million rounds a year for training at federal centers like the Federal Law Enforcement Training Center in Glynco, Ga, where local and state law enforcement officers receive training in everything from survival shooting to reactive shooting.

Assuming that the DHS is using 750 million rounds for training purposes at federal centers, it just purchased enough ammunition to supply 50 years worth of its needs.  The blogosphere, as well as the usual compilation of suspects amongst the conspiracy theorists, is alight with speculation as to the reason DHS would need 1.6 billion rounds of ammunition, and why the Social Security Administration would need another 200 million rounds on top of that.

The most innocent answer is use or lose it provisions in the departmental budget. Every year, some 60 percent of the federal government's budget is spent around the beginning of the fourth quarter or during the fourth quarter due to use it or lose it provisions in budgets.  Agencies book increased travel, order supplies, and find ways to spend the money they haven't already spent so as not to lose it.  Additionally, by spending the money each and every year, they pre-empt any assertion that they have so much money in their budgets that they can't even spend it all.

This year, the trend changed because of impending sequestration cuts. The Pentagon spiked its spending in the third quarter, and as a result, its spending plummeted 22% in the fourth quarter.  The net result was that the GDP shrank by 0.1% in a quarter that many economists expected to generate overall growth.  To give you an idea of how large the Pentagon is as a percentage of our economy, if its spending had stayed the same economic growth would have registered at 1.27% rate.

It may well be that the government is anticipating civil unrest and preparing accordingly.  Even if that were the case, it does not have enough people to man 2,700 armored personnel carriers if the target in question involves American civilians.  The Department of Homeland Security has no rhyme or reason to its spending, which includes sno-cone machines for anti-terrorism in Michigan and underwater robots for Columbus, Ohio. Like many other government agencies, DHS sometimes spends money simply for the sake of spending money.

A more plausible explanation on the sinister side is the ambition of the federal government to generate an outsize demand for ammunition in order to corner the market on supply, thereby denying gun owners access to ammunition.  This is not an unheard of idea for left-wing advocates of gun control, as a recent column by Marc Ambinder in The Week illustrates:

Because ammunition is gun food, if we can starve the guns a bit, or change the way ammunition sales are regulated and controlled, perhaps we can change the way guns are used. 
What gun manufacturers and ammunition manufacturers ought to realize is that having the government as the sole client of consequence for their product is inimical to their long-term interests.   Make no mistake about it, the government we currently have is increasingly dominated by individuals who get hysterical over guns, and they are looking to increase gun regulations so as to limit or eliminate private gun ownership.  

Our president, despite his public rhetoric about believing in the Second Amendment, has a history of private hostility to gun rights, one that is documented in John R. Lott's book On the Brink, which recounts an encounter Lott had with then constitutional law lecturer Barack Obama while both were on the faculty at the University of Chicago:

"I don't believe people should be able to own guns," Obama told Lott one day at the University of Chicago Law School.
Lott explains that he first met Obama shortly after completing his research on concealed handgun laws and crime.
"He did not come across as a moderate who wanted to bring people together," Lott writes.
After he introduced himself to Obama, Lott suggested that they have lunch one day to discuss their views on guns.  According to Lott, Obama "grimaced and turned away."  That was the way many conversations with Obama ended, Lott says.
Although the Law School was famous for the openness of its faculty and friendly engagement, Lott says, "Obama...preferred silent, scowling disdain to collegiality."

As a practical matter, making it more difficult for gun owners to attain ammunition by using their tax dollars to corner the market on demand is a devious way of achieving control.  

While the underlying motive of the Department of Homeland Security in purchasing 1.6 billion rounds of ammunition is a mystery, especially given the refusal of DHS to answer to congressional inquiries as to its ammunition purchases. For an administration that swept into office on the promise of being the most transparent administration in history, the Obama Administration and its agencies seem utterly determined to ignore any congressional attempts to push transparency where the purchase of ammunition is concerned.

While DHS has responded to queries from Senator Tom Coburn's office about past ammunition purchases, it has yet to respond in meaningful fashion to other queries about the orders for the 1.6 billion rounds of ammunition, other than to avoid answering Rep. Tim Huelskamp directly. Instead, DHS decided to go to Washington Whispers with its response.  Whispers is a blog of the U.S. News and World Report, and the method by which DHS chose to answer Huelskamp only further evinces a contempt for transparency, accountability, and the checks and balances of our government that is ubiquitous throughout the Obama Administration.

In their response via Washington Whispers, DHS denied making a purchase of 1.6 billion rounds, saying it only solicited bids to purchase up to 750 million rounds for itself.  We shall see if Congress puts Homeland Security Secretary Janet Napolitano under oath about the ammunition purchases, but given the fecklessness of the House GOP, it isn't likely.  

Amy Kremer is a Slut for Authoritarianism

Amy Kremer, chairwoman of the Tea Party Express, stirred controversy with a CNN appearance during which she said that American people had to trust the president, because we have no other choice. "We have to trust our leaders. I think that's really the only alternative we have."

Kremer said this in the context of the 2003 Iraq War and George W. Bush's assertions of a link between 9/11, Al-Qaeda, WMDs, and Iraq. By 2007, the second highest ranking Democrat in the Senate, Dick Durbin of Illinois, had taken to the Senate floor to highlight the difference in intelligence the Senate Select Committee on Intelligence had received and the portrayal of that information to the American public.  Mr. Durbin claimed that he couldn't have said anything in the lead-up to the war without revealing classified information, and his claims have to be juxtaposed against the fact that five of the nine Democrats on the committee voted to authorize the use of force against Iraq.

However, Tyler Drumheller, the former chief of the CIA's European division, said on 60 Minutes that the CIA had penetrated the inner circle of Saddam Hussein by using the Iraqi foreign minister as a spy. In the fall of 2002, CIA Director George Tenet delivered the news to George W. Bush, Condoleeza Rice, and Dick Cheney that the foreign minister had reported that there were no weapons of mass destruction in Iraq.

But that's not all: according to journalist Ron Suskind, the White House ordered the CIA to forge a letter from the head of Iraqi intelligence, a man named Tahir Jalil Habbush al-Tikriti, to Saddam Hussein stating that 9/11 hijacker Mohammed Atta had trained for his mission in Iraq:

"The White House had concocted a fake letter from Habbush to Saddam, backdated to July 1, 2001. It said that 9/11 ringleader Mohammad Atta had actually trained for his mission in Iraq – thus showing, finally, that there was an operational link between Saddam and al Qaeda, something the Vice President’s Office had been pressing CIA to prove since 9/11 as a justification to invade Iraq. There is no link.”

The Habbush letter, as it came to be known, was passed to a journalist in Baghdad by the name of Con Coughlin, who worked for the Sunday (London) Telegraph, and the Telegraph published a front-page story entitled “Terrorist behind September 11 strike ‘was trained by Saddam" detailing the letter's claims on December 14, 2003.  Though Habbush had been in contact with American intelligence before the Iraqi invasion, and though he had denied that there were weapons of mass destruction, the Bush Administration went ahead with the invasion as planned.

Understand the significance of this: Habbush would be the second high-ranking Iraqi official working for American intelligence and denying the existence of weapons of mass destruction.  In other words, the Bush Administration had not one but two Iraqi insiders who debunked their WMD theory in advance of the invasion of Iraq, yet they continued to misrepresent the threat of WMDs to the American people and went on to forge a document from one of those insiders to Saddam Hussein after the invasion that falsely claimed that Mohammed Atta had been trained for 9/11 in Iraq.  The Sunday Telegraph published the front page story detailing the Habbush letter's contents on the exact same day Saddam Hussein was captured.

But that wasn't the only bit of fraud going around as a result of willful deceit on the part of the Bush Administration.  Some 50 days after the fall of Baghdad, on May 29, 2003, President Bush stood before news cameras and claimed that two small trailers captured in Iraq were mobile weapons labs that confirmed the existence of WMDs in Iraq. The problem was that the Pentagon had already sent a fact finding group of nine scientists and engineers to examine the trailers, and they had unanimously agreed in a field report sent on May 27, 2003 that the trailers were not used to manufacture any form of WMDs.  The Bush Administration went before the American people and lied in order to justify the war in Iraq, and it did so knowing that the Pentagon's own intelligence directly contradicted the public statements it was making to the American people.

The report never saw the light of day, because the Bush Administration quickly classified it.

There is also the matter of the yellowcake uranium letter, which formed the basis for the sixteen infamous words in George W. Bush's January 29, 2003 State of the Union address:
"The British Government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa."
There was one simple problem with asserting that Saddam Hussein was trying purchase uranium from Africa: he wasn't.  Moreover, the document used as a foundation for the claims, which would go on to infamy as the Italian letter, was debunked by French intelligence. The letter contained numerous misspellings of official's names, and by October 16, 2002, the State Department's analysts had determined that the letter was a fraud.  Ambassador Joseph Wilson had already been to Niger to investigate the Iraq-Niger yellowcake connection, and he had determined that there was no Iraqi effort to purchase uranium yellowcake from Niger.  On March 17, 2003, before the invasion had started, the head of the International Atomic Energy Agency, Mohammed El-Baradei, informed the UN Security Council that the letters had been forgeries.

The Italian reporter who had originally received the documents from Rocco Martino, Elisabetta Burba of Panorama, had gone to Niger to investigate the claims within the documents. She found that it would have been logistically impossible for the government of Niger to smuggle uranium to Iraq due to the number of trucks required and the fact that a French company controlled the uranium trade and would have picked up on the transaction.

Additionally, the October 2002 claims of President Bush during a speech in Cincinnati that “we’ve learned that Iraq has trained Al Qaeda members in bomb making and poisons and gases" was preceded by a February 2002 intelligence report indicating that the source for President Bush's assertions, a captured al-Qaeda operative named Ibn al-Shaykh al-Libi was misleading his debriefers:

In outlining reasons for its skepticism, the D.I.A. report noted that Mr. Libi’s claims lacked specific details about the Iraqis involved, the illicit weapons used and the location where the training was to have taken place.
“It is possible he does not know any further details; it is more likely this individual is intentionally misleading the debriefers,’’ the February 2002 report said. “Ibn al-Shaykh has been undergoing debriefs for several weeks and may be describing scenarios to the debriefers that he knows will retain their interest.’’
In other words, every bit of the intelligence, information, and anecdotal evidence cited by the Bush Administration to justify the war in Iraq was based on known fabrications or the assertions of individuals with extreme credibility issues, issues that were known in advance of the invasion and disclosed in government reports. While the Bush Administration has done a nice job of conflating what we as ordinary citizens knew with what they knew in the lead-up to the invasion of Iraq, every bit of evidence that has since emerged has served to thoroughly debunk their claims on a substantive level, and as it relates to their veracity as individual government officials.

What we know about the Bush Administration is that they had the intention of going after Saddam Hussein well before 9/11. Ten days after the Bush inauguration, Treasury Secretary and National Security Council member Paul O'Neill sat in an NSC meeting in which the removal of Saddam was the primary topic. Even as 9/11 unfolded, the notes of Department of Defense staffer Steven Cambone, which were heavily cited in the 9/11 Commission's reports, indicate a desire to go after Iraq but note that the case against Iraq was "hard to make."

For Amy Kremer to stand up on CNN as a representative of the Tea Party, a movement based on limited government and a healthy suspicion of government power and the motives underlying that power, and say that the America people have no alternative but to trust the President, is an outrage. In one televised appearance, Kremer has abdicated any authority she might have to speak on behalf of proponents of a constitutionally limited government, and she has revealed herself as yet another slut for authoritarianism, at least as it relates to the president she happens to like due to the R representing his party affiliation.

If history has taught us anything, it is that presidents, no matter who they are and what party they represent, cannot be trusted.  They will lie if they are trusted, and the price of their lies will be American lives and American blood spilled on the sands of some faraway country.  This is too high a price to pay for naiveté, regardless of what Amy Kremer may think, and contrary to what she says, we do have an alternative. That alternative is for our elected representatives like Dick Durbin to stand up with their advance knowledge and say clearly to the American people that we are being led into war under false pretenses.

If Dick Durbin could stand on the floor of the Senate in 2007 and make those statements, he could have done so in 2002 before thousands of Americans lost their lives in foreign theaters like Iraq.  As an official of our government, one might expect Dick Durbin to be a slut for authoritarianism, but as a representative of a political movement predicated on challenge establishmentarian politics, Amy Kremer's endorsement of blind trust in any president is inappropriate and wrong.  We have enough sluts for authority in our government; the point of the Tea Party is to replace those individuals with people who will do their job and ask the tough questions while taking the tough stands necessary to save American soldiers from unnecessary and unwarranted dangers in places like Iraq.

Friday, March 22, 2013

Obama's Greatest Sequestration Misses

President Obama, who seems determined to destroy any political momentum he might have, has followed his suspension of White House tours with a $500 million aid donation to the Palestinians. This,  despite his insistence that sequestration has really tied his hands as it relates to both the White House tours and the 135th Easter Egg Roll. On the heels of that miscue, the Vice-President followed up with a trip to London that cost $459,388.65, and another trip to Paris that cost $585,000.50.  

The head of ICE, Director John Morton, released some 2,228 illegal alien detainees and later admitted he could have sought alternatives to release such detainees, thirty percent of whom had criminal records, but he never did. All Morton would have needed to do was request permission from Congress to reprogram, or spend the money allocated to ICE in a different manner, but he simply didn't seek permission.  Instead, Morton released 2,228 illegal alien detainees.  

The entire sequestration debacle could have been averted by simply canceling the $83 billion a year in subsidies given to banks, but both parties enjoy the financial support their re-election campaigns receive from the financial sector.  However, given this reality, it is impossible to believe President Obama's assertions that suspending White House tours and canceling the Easter Egg Roll are necessary consequences of sequestration.  Instead, they are the venal outgrowth of a childish President's fit-pitching response to a Republican House that refused to knuckle under and give him the concessions he wanted.  

However, the subsidies to our financial sector are even higher if you factor in the estimates of Chris Whalen, a financial analyst whose comprehensive measurements of all subsidies and backstops to the financial sector peg the total annual amount of financial subsidies at $360 billion a year just through the Federal Reserve's lowering of the cost of funds for the entire financial sector.  While the cost of borrowing for the financial sector was $100 billion at the beginning of 2007 during the fourth quarter of 2006, but by the fourth quarter of 2012, thanks to quantitative easing, the Fed had lowered those costs to just $15 billion. Whalen goes on to note that banks insure $7.405 trillion in deposits with just $2.937 billion in quarterly premiums via the FDIC.  That's four basis points, and the market is at 40 basis points, which means that their premiums would go from $2.9 billion a quarter to $30 billion a quarter if their deposit insurance premiums were based on market rates.   

In fact, between ending subsidies to banks, and government agencies asking Congress for permission to shift their budget funds around, every bit of the sequestration mess could have been fixed. If Obama had not proposed sequestration in the first place, none of this would have happened. But that isn't happening, because Obama and his subordinates in the Cabinet and throughout the agencies he oversees are determined to play a political game to exacerbate a mess of their own devising.  

While the sequester Obama proposed has supposedly led to canceled parades and issues with cleanliness at national parks, he is designating five new national monuments.  At every turn, the President's own actions and those of his subordinates belie any claim that he might make that sequestration cuts have led to the specific cuts in question, from the White House tours to the Easter Egg Roll to the various furloughs of government employees and the release of illegal alien detainees.  

Moreover, the fact that President Obama has lied about who proposed the sequestration in the first place only further serves to reveal his deceit and willful political chicanery.  If House Republicans can't win this narrative war, then they deserve to be run out of office en masse in 2014.  The most lethal course of action for Republicans would be to target the financial sector and its subsidies, and to highlight the president and his alliance with Wall Street.  The American people already have a negative view of the financial sector and its corruption, and all the Republicans would have to do would be to simply articulate the obvious: the financial sector is run through with fraud, money laundering, and all manner of corruption.  

Then again, the Republicans would likely find themselves inculpated on all fronts for their own record of overlooking the malfeasance in the financial sector.  It is a telling indicator of the GOP's present condition that it cannot take on the President without incriminating its own.  As a result, Obama's greatest sequestration misses are likely to receive softer treatment.  

Elizabeth Warren and Money Laundering

"Now, in December, HSBC admitted to money laundering $881 million that we know of for Mexican and Columbian drug cartels, and also admitted to violating our sanctions for Iran, Libya,  Cuba, Burma, the Sudan...and they didn't do it just one time, it wasn't, like, a mistake, they did it over and over and over again across a number of many billions of dollars do you have to launder for drug lords, and how many economic sanctions do you have to violate, before someone will consider shutting down a financial institution like this? "  

-Elizabeth Warren, March 7, 2013

Elizabeth Warren, erstwhile Harvard professor, U.S. Senator from Massachusetts, has taken to lambasting bank regulators over their complicity in refusing to enforce meaningful punishment against banking institutions over rampant money laundering.  Each hearing of the Senate Banking Committee brings with it some new highlight of Senator Warren and her grandstanding, safe as it is, because the questions Warren asks never get to the core issue with money laundering. 

The basic reason for our government to tolerate money laundering, which in this country comprises an estimated $250 billion to $500 billion a year, is that it is economically necessary.  The simple reality is that United States runs annual trade deficits in the hundreds of billions of dollars, and it also borrows in the hundreds of billions of dollars to finance its government. The outflow of currency associated with trade deficits and interest payments on our national debt is staggering.  

For the year, the U.S. current account deficit was a stunning $475 billion.  Add to that the $220 billion a year we spend on servicing our national debt, and what you have is total price of $695 billion annually.  That's $695 billion a year flowing out of our economy to foreign governments, investors, and businesses.  

When you have that much liquidity flowing out of your economy, what ordinarily occurs is an economic implosion. This does not occur in the United States because money laundering injects liquidity back into the economy on a massive scale.  Drug smugglers and criminals need to buy finished goods just like businessmen in any other line of work.  

Four Planes

3600 S. Moulton Dr. in Oklahoma City, Oklahoma is a non-descript street in the middle of an office park, concrete block buildings with generic facades rising out of asphalt and sidewalk a story or so, with few if any signs identifying the businesses within.  In the middle of this office park, there is a business by the name of U.S. Aircraft Titles, Inc., an aircraft broker that assisted with the purchase of a DC-9 that would later turn up in Mexico at Ciudad del Carmen, a port city 500 miles east of Mexico City. 

Law enforcement officials, suspicious of the crew's behavior, searched the plane and found $100 million in cocaine.  In subsequent investigations, they found that the plane had been purchased with $300,000 in funds transferred from Casa de Cambio Puebla SA, a currency-exchange company in Puebla, to a Bank of America account in Oklahoma City.  The bank that handled the transfer was Wachovia, and no evidence exists to suggest that either Wachovia or Bank of American complied with federal laws requiring the reporting of money transfers in excess of $10,000.  

Pedro Alatorre, a Puebla executive who ran a branch in Mexico City, would later be charged with setting up front companies for the Mexican cartels, and he used HSBC to open front accounts on their behalf.  None of this triggered disclosures or suspicion on the behalf of HSBC, but two individuals within Wachovia, Martin Woods and Jim DeFazio, sounded the alarm as early as 2005, when DeFazio informed Wachovia of a DEA investigation into the money transfers used to purchase the DC-9 in Oklahoma City and three other planes.  

Woods was a former Scotland Yard investigator who headed up Wachovia's anti-money laundering division in London; while DeFazio was a 21-year FBI veteran based in Charlotte. When Woods came across illegible signatures on traveler's checks from Mexican exchange companies like Puebla, he reported the activity via a suspicious activity report as required by law in both the United States in the United Kingdom.  Woods was later told by his superiors that he should have kept quiet and abstained from filing the suspicious activity report, even though the report was required by law.  

Though DeFazio and Woods both recommended to their superiors that Wachovia close suspicious accounts, their recommendations were overruled.  Woods alleges that he was targeted for termination, and he resigned in May 2009 and now works as an advisor to banks on preventing money laundering.  

A year before Woods resigned, in May 2008, the Justice Department was seeking the extradition of Pedro Alatorre, alleging that he had presided over the laundering of $720 million through shell corporations and firms.  However, Wachovia would later be forced to admit that it had not complied with U.S. anti-money laundering laws for transactions in excess of $378.4 billion from Mexican exchanges.  While many U.S. banks closed their accounts with the exchanges, Wachovia continued to do business with the exchanges, ignoring U.S. laws requiring disclosure of transactions in excess of $10,000 and ignoring its obligation to detect potential money laundering within its clients' accounts.  

While Elizabeth Warren sits up on Capitol Hill and excoriates HSBC for laundering $881 million, Wachovia managed to avoid the due diligence on $378.4 billion from Mexico.  Even if a mere one percent of that money was laundered from drug cartels, it would dwarf the HSBC episode.  In the meantime, a DC-9 purchased with $300,000 in transferred money between Bank of America and a Mexican financial institution with the assistance Wachovia was later used to smuggle at least $100 million in cocaine.  

Elizabeth Warren makes hay over the issue of money laundering, and wonders aloud why bank regulators aren't shutting banks down, which is a valid question, but she would do well to ask why she expects the government to do anything, given the fact that the same government smuggled guns to Mexican cartels that have since been linked to hundreds of homicides in Mexico and have been found as far away as Columbia.  

It isn't that Wachovia didn't know. Indeed, its own employees tasked with detecting and preventing money laundering informed Wachovia executives of the money laundering problem, and were told to be quiet by those executives.  

When Puebla lost its Wachovia accounts due to seizure by the DEA U.S., it merely switched banks by using the front companies Grupo ETPB SA and Grupo Rahero SC to make 12 deposits at HSBC that would come to $1 million in total.  That money would be used to purchase a Beechcraft King Air 2000 that would later be seized in a drug bust in Cuernavaca.  

Two Sets of Scales for Lady Justice: Fresh Smelling Twenties

It is instructive to look at the difference in punishment for banking institutions and their customers who are charged with money laundering and offenses related to money laundering.  The banks get deferred-prosecution agreements, promise to strengthen their prevention protocols; their customers, on the other hand, receive lengthy prison sentences.  

Oscar Oropeza, a Brownsville, Texas resident, and his wife Tina Marie, along with their daughter Paulina Marie, deposited money several times a day in at the Bank of America branch on Boca Chica Boulevard, usually in bundles of fresh-smelling $20 bills.  The tellers knew the Oropeza's money by the way it smelled, because it smelled like a Bounce dryer sheet.  

Federal authorities were aware of the Oropeza's deposits, and did nothing until Oscar Oropeza was stopped for a traffic violation in Saraland, AL.  When authorities there checked his record, they became aware of the Texas investigation and proceeded to search his van.  They found 185 lbs of cocaine, and Oropeza, his wife, and his daughter, found themselves in front of judge on federal drug and money laundering charges.  

Oscar Oropeza received a sentence of 15 years; his wife and daughter received sentences of 10 months and 6 months, respectively.  Despite the fact that the Oropezas deposited large amounts money scented like dryer sheets three times a day, no one at Bank of American bothered to report a thing.  Apparently, it wasn't suspicious enough that the Oropezas were depositing money that smelled like dryer sheets.  

Bank of America received no punishment whatsoever, despite the fact that the personal bank accounts of the Oropeza family had cash deposits in excess of $1 million over a two year period, utilizing the multiple daily deposit method to avoid triggering the automatic reporting requirement for deposits in excess of $10,000.  The Oropezas owned  a car wash, landscaping business, and a trucking company that generated another $2 million in cash deposits over two years utilizing the same methods.  In total the Oropeza's businesses generated $3.6 million 2006 alone, and Oscar Oropeza paid for a building related to his landscaping business with $341,000, mostly in $20 bills.  

While Oscar Oropeza justifiably went to jail for 15 years, Bank of America faced no culpability whatsoever.  There are two scales of justice for money laundering; one for the individuals who commit money laundering, and other another for the banking institutions that aid and abet their activity with a blind eye.  

Deferred Prosecution: Laughing all the way to the bank

American Express Bank International stands as one of the rare instances of enforcement action that caught a banking employee. In 1994, senior director Antonio Giraldi was convicted, but American Express Bank International paid to defend him, and kept him in his position with pay until he was convicted.  

The laundering started while Giraldi was Bankers Trust with his subordinate Maria Lourdes Reatagui, and they established bank accounts in Switzerland and New York to receive money from the drug proceeds of Juan Garcia Abrego via his aide Ricardo Aguirre Villagomez, who had deposited the money in an exchange house in Monterrey, Mexico.  When Giraldi was forced to resign at Bankers Trust, he simply switched over to American Express and brought Reatagui with him.  American Express then used the drug money as collateral for loans that enabled the Abrego cartel to invest various companies in the Rio Grande Valley and Mexico.  

American Express forfeited $40 million in what was then the largest money-laundering case ever prosecuted, but within five years, the bank had gone back to its old habits.  From 1999 to 2004, clients of American Express Bank International funneled $55 million of drug money through its accounts. The end result was predictable: another deferred prosecution agreement where American Express paid a fine, agreed to never do it again, and effectively got away with money laundering.  

HSBC: Record Fines, But...

HSBC found itself faced with a $1.9 billion fine for its role in a money laundering scandal involving $7 billion in funds from its Mexican subsidiary that regulators said was likely linked to drug cartel activity, as well as over 25,000 transactions linked to money transfers to Iran in violation of sanctions.  The $1.9 billion paled in comparison to reported profits, and given the history of HSBC and its peer banks among the Too Big To Fail echelon, it made little sense to believe even a nearly $2 billion fine would suffice as a deterrent in a money laundering market that exceeds $250 billion to $500 billion a year.  


Money laundering, economically necessary as it is, to the United States economy and many other national economies during the economic crisis, isn't likely to be confronted by any government interested in maintaining the flow of liquidity.  In Italy, the first half of 2010 saw an uptick of 52% from 2009 in suspicious transactions as the mafia moved its liquidity into legitimate markets as credit markets froze.  It had money to lend, because organized cime groups had generated revenue in excess of $174 billion.  

Former chief mafia prosecutor Pier Luigi Vigna estimates that money laundering in Italy equals as much as 11% of that country's GDP, while the IMF pegs money laundering at 2-5% of world GDP.  

As Elizabeth Warren grandstands in front of cameras for the benefit of viral Youtube videos, those who launder money, and the governments who benefit by the injections of their liquidity, continue to tolerate the endemic corruption of money laundering.  Additionally, Elizabeth Warren is likely aware of the structural corruption within her own government, and while she grandstands about money laundering by asking a regulator from the U.S. Treasury about shutting a bank down, she knows that his agency has no authority whatsoever to close a bank.  Warren's performances, while they score some points in the court of public opinion, do little to advance any legislation to address the underlying corruption and mismanagement within our government that lies at the heart of the money laundering epidemic.  

Thursday, March 21, 2013

On Marriage

Recently, CNN published an article entitled Gay marriage, then group marriage? The article picked some of the more inflammatory quotes by gay marriage advocates, such as journalist Victoria Brownworth, who predicts that gay marriage will "weaken the institution of marriage," and in doing so "will make marriage a far better concept than it previously has been."  They go on to cite others, such as Michelangelo Signorile:

Author Michelangelo Signorile urges same-sex partners to "demand the right to marry not as a way of adhering to society's moral codes but rather to debunk a myth and radically alter an archaic institution." They should "fight for same-sex marriage and its benefits and then, once granted, redefine the institution of marriage completely, because the most subversive action lesbians and gay men can undertake ... is to transform the notion of 'family' entirely."
Now, most gay couples who want to get married aren't after some conspiratorial destruction of  the institution of marriage.  They do want some concept of equal standing and equal recognition before the law of their relationship, especially when that recognition carries with it the conferring of tax benefits and the ability to make end of life decisions.  They'd like the ability to adopt a child, to raise a family, and to live a normal life.

And if they are after the radical alteration of "an archaic institution," so what?  Marriage has been whatever we've made it over time.  The Biblical patriarchs had multiple wives and concubines, and they had extramarital sex with their wives' handmaidens and the like for the sole purpose of procreation.  Today's radicals seek not the restoration of sexual bondage and slavery; rather, they seek to define marriage according to their own predilections and preferences.

The kingdom of heaven is compared to ten virgins who take their lamps and go forth to meet the bridegroom in Matthew 25:1, so the idea that polygamous marriage is some abomination in the eyes of God does not wash.  The only command of God is that a man who takes another wife has to provide for his first wife without diminishing the quality of her food, clothing, and the duties of marriage, as in Exodus 21:10.

The idea that marriage has always been monogamous, or between one man and one woman as an institution ordained by God, does not wash.  If anything, marriage only transformed into an institution between one man and one woman among the Jews because of the customs of their host country while they were in exile or under the civil authority of Gentile nations and empires.  It was the pagans who disapproved of polygamy, and the Christians adapted their disdain for polygamy, just as they adapted the pagan God Mithra's birth date as the date of Jesus's birth.

Jesus himself does not condemn polygamous marriage when confronted with the possibility in Matthew 22:23-32, which references the circumstances of Deuteronomy 25:5, where a brother has to take the wife of his deceased brother as his own.  He simply says that in heaven men and women are not married.

No one believes that the institution of marriage was weakened by the 18 wives of Rehoboam, or his sixty concubines.  Gideon's many wives bore him 70 sons, and Abijah was said to have been mighty due to his marriage of 14 wives.  The institution of marriage survived each of these instances, and the instances that are omitted from Biblical mention.  It will survive the regulation of the state, and the extension of marriage to same sex couples, just as it has throughout history, and just as it has survived the rampant divorce and extramarital sexual affairs of modern times.

Marriage is whatever you make of it.  To excuse your own failings in marriage by pointing to the expansion of marriage to encompass same sex couples is dishonest.  To suggest that marriage can't be as special, or as unique, because the definition of marriage changes to fit the preferences of the participants is to deny the obvious uniqueness of what those participants have, and it isn't for you to say. It isn't for the state to say.

The regulation of the state has done nothing to prevent divorce, and it has done nothing to lower rates of divorce.  The state cannot institute a wholesale change of heart within any individual.  It cannot regulate a moral condition within the heart and soul of any individual; moreover, those who suggest that it can mandate morality with the force of law miss the point of morality: freely chosen virtuous behavior by individuals who voluntarily conform their lives to moral conduct because something within their hearts and minds has changed.

What the law can accomplish is the identification of wrongs, and it can prescribe punishments or remedies for those wrongs.  It cannot prevent or deter wrong conduct, because the willful pursuit and volitional choice to engage in immoral behavior arises from the inner condition of man.  This dichotomy between the desires of the flesh and the desires of the spirit is outlined in Romans 7, and to suggest that the law itself can compel a man to change or to be conformed to moral conduct is absurd on its face.

Those who self-identify as Christians and put their faith in statutes to defend or accomplish this view of morality reveal themselves to be utterly ignorant of what their holy scriptures actually say, and they further reveal themselves to be either naive or stupid as it relates to the world around them. We have laws upon laws, and we still have people breaking the laws.  We incarcerate more people in this country than in all other industrialized countries, and yet the deterrent effect is virtually non-existent.

You cannot defend a moral or traditional concept of marriage with the force of a statute.  That defense, if there is to be any defense at all, is within yourselves and your own marriages.  If you wish to defend traditional marriage, by all means, do so, but do so with the way that you practice marriage instead of sending the message that ordinances and statutes can do it for you.  The problem with marriage is not a lack of regulation, or a government that condones immorality; instead, it is the participants within marriage.  It always has been.

Michelangelo Signorile and others may entertain the notion that they can assail or undermine marriage, but the institution has survived far worse than anything they can muster, and it will survive whatever they wish to hurl against it.  The battle to defend traditional marriage, or to preserve it from those who insist that it is archaic and unmoored from fact, will not be fought or won in a courtroom or on the floor of legislature.  It will unfold in the households of husbands and wives who choose each other each and every day.

Those who deny the efficacy of government on the one hand as it relates to the regulation of business, or the power of taxation; but who insist on the ultimate efficacy of government action when it comes to defining and defending their concept of marriage, are advancing an inherently contradictory position.  Government can proscribe and prescribe any number of nostrums when it comes to marriage, but the marketplace of morality ultimately determines what marriage is.  There are polygamous and bigamous marriages even now, throughout this country, and it is not the existence of those marriages that we should worry about.  There are same-sex marriages throughout this country, and those marriages have not one iota of effect on the marriages of opposite sex couples.

What determines the success or failure of a marriage is the determination of those within that marriage to persevere onward through difficulty, despite the tax breaks and the increased expense involved in rearing children, or any other factor related to civil authority or economic reality.  If you would defend your concept of traditional marriage, do so within your home and within your marriage. Be a better husband, or a better wife, and do not excuse your failures to do what is necessary by pointing to the non-traditional marriage arrangements of other individuals or the state's action or inaction towards those individuals and their marriages.  You are responsible for yourself and how you treat your spouse, regardless of how many tax breaks you qualify for or how the state regulates marriage as a concept.

It is this message of individual, personal responsibility within marriage that proponents of traditional marriage ought to stress, for this is the number one reason marriages in this country fail: the choices of those within marriages, incompatible as they are with responsibility and obligations towards spouses and children.  It is only when this perspective is restored that traditional marriage can be saved.

Wednesday, March 20, 2013

Rand Paul's Evolution Begins...

Rand Paul, the Kentucky junior senator who managed to rise in the public eye as a result of his recent 13-hour filibuster regarding drone strikes against American citizens on U.S. soil, appeared on The Situation Room with Wolf Blitzer, where he was asked again about his pro-life stance:

Blitzer : Just to be precise, if you believe life begins at conception, which I suspect you do you would have no exceptions for rape, incest, the life of the mother is that right?
Paul: I think that once again puts things in too small of a box. What I would say is there are thousands of exceptions. I’m a physician and every individual case is going to be different. Everything is going to be particular to that individual case and what is going on that mother and the medical circumstances of that mother…. There are a lot of decisions made privately by families and doctors that really won’t, the law won’t apply to, but I think it is important we not be flippant one way or the other and pigeon hole and say this person doesn’t believe in any sort of discussion between family and physician.
Blitzer: It sounds like you believe in some exceptions.
Paul: Well, there is going to be like I say thousands of extraneous situations where the life of the mother is involved and other things that are involved so I would say that each individual case would have to be addressed and even if there were eventually a change in the law let’s say people came more to my way of thinking there would still be a lot of complicated things the law may not ultimately be able to address in the early stages of pregnancy that would have to be part of what occurs between the physician and the woman and the family.

As the Atlantic notes,  Paul isn't 100% pro-life anymore, given that he previously stressed that he was against abortion even in cases where the mother's life was in danger.

Politicians evolve positions over time, and they should be afforded that right in most cases, but when the issue involves the extermination of an unborn child, we should pause at how easily a previously staunch pro-life politician evolves his position.  It's interesting to watch how Rand Paul, fresh off of some newfound prominence as a result of his stand against drone strikes and the suspension of due process, has evolved so easily into a candidate outlining "thousands of extraneous situations where the life of the mother is involved and other things are involved" as potential exceptions to his pro-life stance.

It's not the first evolving position of Rand Paul, who went from calling for the total elimination of the TSA to introducing two pieces of legislation to privatize its functions.  Paul's consistent inconsistency is perhaps the greatest insight into his truly political nature, because on every issue from birthright citizenship to open borders to English as an official language, he manages to evolve as the situation decrees.  With every step closer to national prominence and the 2016 elections, Paul has shown that he's willing to say whatever it takes to make people comfortable with his pseudo-libertarian positions.

For those of us hoping for a different type of politician, Rand Paul's ability to shift so easily ought to give us pause as we look forward to 2016.  His willingness to take up meaningless fights like the filibuster over John Brennan's nomination as CIA director should not be seen as an insight into his commitment to civil liberties, because his track record is one of staking an extreme position one moment only to back away from it as it become politically expedient.

All the Republican Fail

The Republican Party can't get it together. A Rasmussen Poll indicates that 45% percent of Americans want Obamacare repealed, while 11% are undecided.  And so what are the Republicans doing? Not much.  In fact, Speaker of the House John Boehner recently said the United States didn't have an immediate debt crisis, despite the fact that the majority of our debt is being purchased by our central bank.

We can't get actual investors to buy our debt. We can only get banks that are pressured by the Federal Reserve to buy our debt, to the tune of $700 billion and counting since 2008.  If this isn't an immediate debt crisis, what is?  With banks not counting the sovereign debt they purchase against their Basel capital requirements, their true bottom line is further obscured.

But this isn't an immediate debt crisis.  It's not a reason to start jettisoning Obamacare, although to their credit, Republicans have tried to jettison the program in the face of a Democratic controlled Senate on multiple occasions.  It's a largely symbolic gesture, but nevertheless...

The SEC and the Justice Department are now in the business of retaliating against rating agencies who downgrade the debt of the U.S., as they did with Egan-Jones and Standard & Poors.  The government is now pursuing a lawsuit against S&P for its role in rating subprime mortgage backed securities, but it isn't pursuing litigating against either Moody's or Fitch.  Moody's and Fitch both gave the same AAA ratings to the CDOs that torpedoed the U.S. financial sector and the broader economy, but they didn't downgrade U.S. debt.  In fact, Egan-Jones and S&P have one thing in common that sets them apart from Moody's and Fitch: they've both downgraded U.S. debt; in the case of Egan-Jones, the debt downgrades have occurred on multiple occasions.  The punishment for Egan-Jones further evidenced the underlying motive for the enforcement action: Egan-Jones is banned from rating U.S. government debt for 18 months.  The SEC does not contend that Egan-Jones's ratings were inaccurate, or that they were anything other than the opinion of Egan-Jones on U.S. debt, but they do assert that Egan-Jones lied on an application about its experience rating government debt.

The Republicans could highlight this with hearings, and expose the Obama Administration's hypocrisy. On the one hand, the Justice Department isn't interested in significant enforcement of fraud regulation or statutes against the banks who actually ruined the economy, but the rating agencies, on the other hand, are prime targets, but only those rating agencies that downgrade U.S. debt.

And then there's Fast and Furious, which has utterly disappeared.  Where is Fast and Furious?  No one seems to know, but there's no real news on it, despite the fact that Republicans were ready to excoriate the president over his assertion of executive privilege to cover wrongdoing.  According to Katie Pavlich over on her Townhall Tip Sheet, the Terry murder files have disappeared.

And now, the Fast and Furious guns that were walked over the border at the behest of the ATF have been located as far away as Medellin, Columbia.  But there's more: a similar federal operation in Florida by the name of Operation Castaway has been linked to violence in Columbia, Puerto Rico, and Honduras.  Two days ago, U.S. District Judge Amy Berman ordered Attorney General Eric Holder and the House Oversight Committee to enter mediation over Fast and Furious, even though Holder was facing civil contempt charges and would have faced criminal contempt charges had his appointee in Washington, D.C. followed the statutory law and take the criminal contempt charges to the grand jury as required by law.

The Republicans have also managed to propose budgets that will do nothing to cut current spending, but will cut future projected spending increases.  Instead of spending $46 trillion in the next ten years, Paul Ryan's budget proposes to spend a mere $41 trillion.  It won't actually cut baseline spending; instead, like so many of the spending "cuts" that come out of D.C. these days, it only cuts projected spending increases.  It assumes that we won't face an eventual spike in the cost of servicing our debt that will force spending cuts and/or tax increases, which is naive to say the least, given that quantitative easing brings with it an inevitable interest hike or the promise of staggering price increases over time.  It actually assumes $700 billion in interest savings, which is an unfathomably optimistic outlook. Ryan's budget also exempts the Defense Department from sequestration, which will have the obvious effect of sending a message to the Pentagon that they don't have to exhibit the same fiscal discipline and responsibility as other agencies in our government.

If the Republicans want to establish a modicum of credibility, they'll cease offering budgets that add $1.2 trillion to the debt while merely reducing the deficits over a decade. They'll start taking a fiscal hard line, and they'll start offering up impeachment proceedings against a president who has his subordinates walking guns over the border to drug cartels.  They'll start holding hearings and investigating the retaliatory enforcement of the SEC and the Justice Department against those ratings agencies that downgrade the U.S. debt.  They'll start proposing the elimination of entire agencies, and the rollback of federal authority in entire areas.  They'll present an actual contrast with the Democrats, as opposed to embracing the same overreaching concept of federal power deployed towards different ends.

Otherwise, they'll continue to fail.

Afterthoughts: How CPAC Fails Conservatives

In the aftermath of CPAC 2013, two things jumped out to me: first, how could anyone look at many of the speakers at CPAC and see conservatives; and second, how had CPAC laid out any form of action to advance conservatism forward by making inroads to new demographics of voters?  I looked at Rick Santorum and saw a man who supported TARP, in much the same way that Mitt Romney and Paul Ryan supported that odious program.  Nearly $30 trillion (that we know of) later, the biggest 20 banks in our country are still insolvent and still reliant on outright government support of $83 billion a year.

There were no calls at TARP by any of the aforementioned speakers to break up the big banks.  There were no fire and brimstone sermons about the evils of government subsidies to our financial sector, nor were there any calls for the subsidies and giveaways to end immediately.  Never mind that calling for these solutions would automatically endear the Republican Party to the larger portion of the American electorate and leave the Democrats exposed for the corporatist lackeys they are.

Conservatism, at least insofar as the board of CPAC is concerned, seems to consist of two things: being pro-life in the sense that you refer to women having abortions in the most venal ways imaginable, and being pro-family in the sense that you vilify gays, lesbians, bisexuals, and transgendereds.  They've gotten rid of the Islamophobe types like Pamela Geller, or at least pushed them to a side stage where Breitbart has to hold a special forum for their appearances.

Geller and her American Freedom Defense Initiative gained a new measure of infamy this week by rolling out an ad campaign on the side of San Francisco Municipal buses.  The campaign contained quotes by various jihadists acclaiming the murder of Jews as worship resulting in a closer relationship with Allah.  Not surprisingly, the Muslims and Arabs of San Francisco were less than thrilled.

The incident highlights a basic problem within the conservative movement: how to reach a demographic that is a natural fit with conservatism in terms of values, without alienating the bigots who make all the noise.  Muslims are conservative in their outlook on everything from personal responsibility to finances to sexual morality; yet the Republican Party seems reticent to welcome them into the fold, lest they offend the rabble-rousing likes of Pamela Geller.

It's a mistake to exclude Geller and her ilk from CPAC rather than confronting them head-on.  What Geller imputes to the American Muslim community is nothing less than libelous, because most American Muslims are not involved in terrorism in any way, shape, fashion, or form.  It's akin to taking the actions of Tim McVeigh and imputing the underlying sentiments to the entirety of American Christendom.

But what Geller and her ilk have to say about certain CPAC board members, on the other hand, is less than libelous.  Grover Norquist is, first and foremost, a creature of convenience.  He's never held an actual job in his life, and beyond his work in lobbying and advocacy, he's show no particular genius for anything but cultivating monetary support from whomever.  Grover's conscience is a commodity for sale on the open market, hence his affiliation with radical Islamists, such as Abdurahman Alamoudi and  Khaled Saffuri, the former of whom describes himself as a supporter of Hezbollah and Hamas and the latter of whom claimed to be involved in the support of suicide bombers' families.  Saffuri cut his teeth in Bosnia running support operations for Muslims and the global jihadists who came to that country.

As for Suhail Khan, the fact remains that he has pledged himself, in public, to work for the ummah, or Islamic nation. Indeed, Khan was effusively praised by Alamoudi at a 2001 American Muslim Council conference in Washington, D.C.:

We have with us a dear brother, a pioneer, somebody who really started political activism in the Muslim community …. When it was a taboo for the Muslim community, no doubt about it. When Suhail Khan started not too many people were aware that we had to do something….Some of you saw him today in the White House, but inshallah soon you will see him in better places in the White House, inshallah. Maybe sometime as vice president soon, inshallah. Allahu Akbar!
Khan was a prince of the Islamist movement in America, a young lion of sorts who had gone on to work in the Bush White House on Grover Norquist's endorsement, even after his controversial remarks in 1999:

The earliest defenders of Islam would defend [against] their more numerous and better equipped oppressors, because the early Muslims loved death—dying for the sake of Allah Almighty—more than the oppressors of Muslims love life.   This must be the case when we are fighting life’s other battles [i.e., politics].  What are our oppressors going to do with people like us? We are prepared to give our lives for the cause of Islam.  I have pledged my life’s work, inspired by my dear father’s shining legacy, and inspired further by my mother’s loving protection and support, to work for the ummah.
Alamoudi went on to be convicted and imprisoned for his activities, which included raising over a million dollars for al-Qaeda, yet Khan managed to be nominated to the American Conservative Union board by none other than Grover Norquist.  Anyone who objected, from Frank Gaffney to David Horowitz, found themselves excluded from the ACU's annual CPAC, despite the fact that Khan and his allies never disputed the underlying facts of his association with jihadists and terror funders like Alamoudi.

To be fair, as Muslims speak of bringing American under Islam, evangelical Christians speak of keeping America Christian and converting the masses in the Middle East to Christianity. The difference is that evangelical Christians don't train in camps to fight with machine guns and bombs as part of their preparation for missions work in the Mideast.  They don't fund armed terrorist groups through charities. They don't have to, because they have a government that will kill their own countrymen abroad with drone strikes without due process in the form of a trial and eventual conviction for any crime meriting capital punishment.  That same government will kill sixteen year old children looking for their deceased fathers as well.

Both extremes have their abhorrent features, but the point is this: conservatism is about tradition, restraint, incremental change, and a resistance to the radicalism and impulsiveness that characterizes so much of leftism.  Is conservatism always right? No. Our treatment of gays is reprehensible, and our trust in civic institutions and civil authority to arrive at the right result with capital punishment is unfounded.  There is a vein of fear within the right that makes it easily prone to the demagoguery of the Pamela Gellers of the world, with their inflammatory efforts to stir up hatred against largely benign communities of Americans who would be with us were it not for our embrace of individuals like Pamela Geller.

There's a reason Muslims come to the United States; and that reason is their intimate familiarity with the sectarian intolerance and violence that is ubiquitous throughout the Middle East.  Here Muslims have the ability to worship freely and peacefully, without their identity as Shia or Sunni resulting in explosions of sectarian warfare.  Their children are not recruited by neighborhood strongmen to strap bombs to their bodies.  They can practice a brand of Islam that is no less faithful to the Quran, but is more faithful to the spirit of that text in its practices.

To say that Muslims are not a natural demographic for the Republican Party, with their emphasis on family, virtue, and hard work, is to engage in suicidal absurdity.  At a time when we desperately need new demographics on the right, we can ill afford to alienate such a natural constituency.   The message of reduced government, lower taxation, individual responsibility, and an emphasis on traditional values is naturally suited to Islam.

Grover Norquist, who has shown himself to be for sale to the highest bidder, does not belong at the ACU, and he does not belong at CPAC.  He does not belong at CPAC because he has shown himself to be willing to take money in order to overlook the radical Islamist views of his associates, even when those views conflict with the interests of this country and the open, tolerant society that enables America's Islamic community to exist in peace.  If America's Muslims are ever radicalized, they will be radicalized by the foreign Muslims that Norquist associates with and works to advance.

The conservative and libertarian movements can confront libel, and because of this, there is no reason to feel threatened by the speech of Geller. The answer is more speech by those of us who know American Muslims in order to rebut Geller's speech.  But there is no answer for the efforts of a man like Grover Norquist, who, in the name of personal profit, will introduce Islamic radicalism into the heart of American conservatism and its organizations.

It's not that Grover Norquist is himself a Muslim fundamentalist; rather, it's that he is so unprincipled in his embrace of whoever will pay him money that he will advance the most irresponsible radicalism in order to get more money.  Grover Norquist and Pamela Geller are two sides of the same extremist coin, and both will do whatever it takes to make inroads and accrue power.  The difference is that Norquist is a hired gun with no compunction about excluding any counterpoint that undermines his ability to make more money by whoring himself and his organizations out.  Geller actually believes in her work.

Conservatism's other natural constituency exists within the Hispanic community; a community of Catholics who work and emphasize strong families and traditional values.  Yet the fanatics who oppose illegal immigration would have those Hispanics exist in perpetual fear of deportation, requiring them to carry papers proving their citizenship with them whenever they go out in public.  That's the net effect of Arizona's S.B. 1070, and there's more than a little bit of a Soviet-style undertone to such policies.

Of course Hispanic-Americans oppose such heavy-handed tactics, just as they oppose deporting children of illegals born on U.S. soil, or throwing children out of school.  They oppose it because it's draconian, cruel, and the Supreme Court has ruled it to be unconstitutional.  The 14th Amendment grants birthright citizenship, both as a practical and historical matter.  In the former sense, birth on American soil will get you a passport from the State Department. In the latter sense, it was the understanding of the supporters and opponents of the amendment at the time it was ratified.  Subsequent Supreme Court decisions undermined this understanding, but the intent of the Framers could not have been any clearer in extending birthright citizenship via birth on American soil.

There is a simple answer to the issue of illegal immigration, and that is E-verification. Once you remove eligibility to work, you remove any incentive for illegal immigration.  Securing the border in a meaningful way would be another method of addressing the issue.  In short, there's no need whatsoever to vilify Hispanics, or to require them to carry papers around to avoid being caught up in unconstitutional dragnets by state and local police organizations.

By choosing the worst possible solution, today's Republican Party might cater to a narrow nativist cadre within its ranks, but it will lose the fastest growing constituency in this country today, a constituency tailor made for its message of individual responsibility, traditional values, and hard work.

CPAC isn't paving a way forward to meet Muslims and Hispanics and reach them with the message of conservatism; rather, it's being infiltrated by the very worst radicals imaginable: a jihadist associating board member and his lobbyist lackey, neither of whom can appeal to the wider portion of moderate American Muslims who abhor the sectarian violence of Hezbollah, Hamas, and other such groups so much that they fled to the United States.  Indeed, having Suhail Khan on your board signals to Muslim Americans that your group is not a group they want their children growing up to esteem, lest they lose those children to the radicalism of Khan and his cronies.

There's no radicalism or complexity involved in the way forward for conservatives, who have obvious solutions available to them: one, ceasing to cater to the loudest minorities in the room such as Pamela Geller and her ilk; two, ceasing to cater to false moderates like Grover Norquist, who is nothing more than a lobbyist paid to obscure the very real extremism of his sponsors; and three, insisting on stressing the common values shared by conservatism, Muslims, Hispanics, and other such groups who emphasize strong family units and traditional values.  You can make inroads to two growing demographics and begin cultivating their political support in the process while remaining true to your ideals.

The other obvious solution would be to highlight the rule of law and the order that follows it: the top banks must be broken apart in orderly bankruptcies, with their illiquid assets accounted for in the process.  Only then can the economy begin to move forward as a catalyst for broad prosperity, as opposed to the stock market bubble we presently have, which only benefits a narrow segment of the populace in a very disproportionate manner.  We need jobs, and until our systemic issues within the financial sector are addressed, we will not have jobs.  All of our capital will go towards shoring up failed financial institutions that will remain insolvent no matter how much money is thrown at their over-leveraged debt.

We must break these banks up, punish their manipulation of the LIBOR fairly and expeditiously as the fraud it truly is, and we must move forward.  There is nothing anti-conservative in saying so, and everything anti-conservative in saying that these financial institutions are too big to fail.  The conservative view of the economy knows of no more preposterous concept than too big to fail.  To suggest that the answer is more government spending, only to a different end, is to reveal yourself as a Keynesian liberal rather than a conservative.  Such is the case with most major Republicans these days, from Eric Cantor on down to Paul Ryan.

To expect CPAC to pave a way forward for conservatives when it gives a stage to TARP supporting faux-conservatives like Mitt Romney, Paul Ryan, Rick Santorum, and Sarah Palin is utter foolishness.  Each of these figures will parrot the same bromides and generalized complaints about unfair treatment by the left, but their policies are leftist when it comes to bailouts as government action.  Americans want a credible conservative movement that stands as a functional alternative ready to deal with problems in a defined way, not with budgets that promise to overcome deficits by canceling loopholes while refusing to specify which loopholes will be closed.  A credible conservative movement has to offer specifics, backed by credible conservative figures who actually walk the walk with their records.

Until CPAC facilitates this, it will continue to fail conservatives because it presents neither real conservatives nor any forms of action to advance conservatism to greater relevance and broader appeal.

Monday, March 18, 2013

Cyprus and the United States: Future Robbery

Angry Cypriots have taken to the streets to protest the European Union's bailout plan, which would require a €5.8 billion repayment from a country with a GDP of just $24.69 billion by taxing bank deposits. That's €19.06 billion in GDP, which puts the issue in perspective.  The problem with Cyprus is that its banking sector dwarfs the rest of its economy, and as of 2010, its banking sector was 896% of GDP.  That ratio has gone down, as Eurogroup president Jeroen Dijsselbloem noted when he recently pegged the size of the Cypriot banking sector at five times GDP.

For those angry Cypriots, the problems with Cyprus's banking sector began with the very same European Union bailouts that forced a haircut on bondholders of Greek debt.  Cyprus's government heeded calls from Cyprus's banks for a bailout, which in turn triggered a rise in government debt as a percentage of GDP, which not so coincidentally has led Euro bureaucrats to cite that debt to GDP ratio as a justification for downgrading Cyprus's bonds, and for downgrading Cyprus's banking sector.

In other words, the European Union created the crisis by forcing Cyprus's banks to take a haircut on their exposure to Greek debts, which then forced Cyprus's government to issue a taxpayer backed bailout of its banking sector, which in turn triggered a request by Cyprus's government to the European Union for a sovereign bailout.  In turn, the European Union has the audacity to attempt to force Cypriots and non-Cypriot bank depositors to take a tax on their bank deposits in order to lower the cost of the bailout from €17 billion.

As a result of this plan, Cypriots rushed to withdraw their savings from the banks in advance of the government's vote on the tax, which further destabilized the banking sector.  The banking sector was forced to close until Thursday, when a vote will likely have been taken.  It is indisputable that Cyprus's financial sector would not have needed a bailout by Cyprus's government absent the decision of the European Union to allow Greece to force a bailout on bondholders.

The decision to tax savings deposits to finance such a bailout is unprecedented, although South American countries did tax financial transactions as part of a package of IMF bailouts in 2001.  While the world and the people of Cyprus absorb the implications of this idea, and depositors in Spain, Italy, and elsewhere look on with the realization that their savings will be at risk if this moves forward, most Americans likely feel immune from this sort of program.

They're wrong.

The Consumer Financial Protection Bureau's director Richard Cordray explored the idea of helping older Americans manage their retirement plans as a means of reducing their susceptibility to fraud in a January 2013 interview with Bloomberg.  In other words, Cordray worried out loud about seniors whose retirement date is coming near being ripped off of their retirements, and he said that the CFPB was weighing options on how to proceed to help those Americans manage their retirements.  

Moreover, the idea of helping to manage private retirement accounts was being kicked around in committee hearings before the House Committee on Education and Labor, where New School for Social Research  professor Teresa Ghilarducci presented her ideas, taken from her 2007 paper on the topic:

"The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs..." 
In other words, your retirement tax breaks should be taken from you, so that you will lose one of the major incentives to maintain control over your private retirement account, and the proceeds from the repealed tax breaks would be used to accomplish Ghilarducci's agenda, as expressed in a radio interview:
“I’m just rearranging the tax breaks that are available now for 401(k)s and spreading — spreading the wealth.”
Indeed, your retirement should be used to spread the wealth, ensuring a consistent rate of return and plowing you into the same pool as everybody else, where you won't have the ability to maximize your retirement by determining the investments of that retirement according to your own wisdom.  This is because Ghilarducci believes you are too uninformed to accomplish this on your own, despite the fact that Americans have managed to save over $19 trillion for their retirements.  

While this was widely reported as a confiscation plan, Ghilarducci prefers the word allow, and nowhere in her testimony did she talk about forced confiscation.  The end effect of eliminating the deductibility of 401(k) plans would be simple enough: Americans who are already struggling to maintain their lives and save for retirement would be confronted with the removal of one of the main advantages of saving for their retirement in the tax break their contributions yield.  They would then be "allowed" to roll their existing retirements over into "guaranteed retirement account," and while this isn't technically confiscation, it is coercion towards a desired end, much as the tax break for contributions to a retirement plan was intended to be a carrot to encourage Americans to save for their retirements via 401(k) accounts.

You couldn't get the tax break for saving or investing for your retirement in other plans, only 401(k) plans.  The net result of eliminating the tax break for 401(k) contributions would be the elimination of 401(k) plans, because 65% of employers surveyed indicated they would drop their 401(k) offerings if employees lost the ability to deduct their contributions, according to a survey by the Prudential Financial Group.  Given that Teresa Ghilarducci is not stupid, she is well aware of this likely outcome, and she knows that she won't have to confiscate 401(k) plans or eliminate them altogether to accomplish her goals of converting worker retirements into GRAs.  She can do so simply by eliminating the tax deduction for contributions to those plans.

Additionally, Ghilarducci's GRAs would only be partially inheritable, with only half the value of a GRA passing to heirs.  The other half would go to the government.  To represent this feature of a GRA as anything other than confiscation is absurd.  By comparison, 401(k)s are fully inheritable. What Ghilarducci and her enablers are most concerned about is the withdrawal of significant portions of that $19 trillion in retirement savings from the wider market to finance the retirements of retirees in the next decade or so.

The individuals advocating for this recognize that their contributors in the financial sector do not want to let go of that money, and under the arguments of fairness and greater equality they will stop at nothing to advance any program that enables them to hold on to that money for as long as possible, and with as much control as possible diverted from the individual to government bodies that they can then influence.  This is important, because Ghilarducci's GRA plan calls for political appointees in the Thrift Savings Plan to manage the fund by hiring commercial money managers.  You can only imagine the potential for political pressure being brought to bear to determine who gets hired to manage those GRAs, and the fees that they can charge.

Given the proliferation of cost-plus, no-bid contracts and the like across all departments and agencies of our government, it's not hard to imagine corruption growing out of GRAs.

Your retirement savings are being eyeballed, and our government is looking to raise revenue in the process. Given that banks are being pressured to buy U.S. government debt, it's not a stretch to imagine some of the investments in GRAs being plowed into U.S. government debt by those commercial money managers.

What's happening in Cyprus is a microcosm of the systemic issues across our global economy.  First, the government creates a problem with its mismanagement of economic policy and its corruption; and second, the government proposes a solution to the problem that it creates that involves either confiscatory or coercive policies towards the property of its citizens.

Americans should not assume that the ideas playing out in Cyprus could never happen here. Indeed, similar ideas are already being entertained by our government, and have been for some time.

Laphamizing CPAC: Obviously.

Robert Stacy McCain's blog sidekick Smitty has a post up over at The Other McCain vehemently protesting the inaccurate reporting of the Huffington Post, as though the Huffington Post ever had a reputation for veracity.  Most readers of the Huffington Post, including the liberals I know, take its "reporting" with a grain of salt.  Indeed, one of the duties of reading the mainstream media these days is vetting their reports.

For instance, in a recent piece detailing the War on Gun Ownership, Screed of Momus actually conducted a phone interview with Lynette Phillips, the California woman whose commitment to a mental hospital in December 2012 led to a raid by the California Justice Department on her home, during which her husband's guns were confiscated.  This is significant, because Bloomberg reported that two of the three guns confiscated belonged to Phillips.  Additionally, Bloomberg neglected to report on the particulars of Phillips's stay in the hospital; namely, that she had voluntarily checked herself into the facility to have her new medication adjusted, and only after her intake interview with a registered nurse did her stay become an involuntary 5150 commitment.  For that matter, Bloomberg didn't bother to report on the fact that less than 48 hours later, Phillips was released after a psychiatrist concluded that she was not a threat to herself or to others, and she still faced gun confiscation as a result.

With a simple phone interview, Screed of Momus managed to clarify that the guns confiscated belonged to Phillips's husband David; the guns only showed up in her name because she had purchased the guns for him as gifts at his request.  Indeed, Phillips's involuntary commitment takes on a whole new light when you consider that it was a nurse rather than a psychiatrist who transformed her commitment from voluntary to involuntary; moreover, a psychiatrist who later examined her and interviewed her family determined that she was fit to be released less than 48 hours after she had checked into the hospital. Given the way that California law is written, a voluntary commitment only results in deprivation of gun ownership while you are committed, while an involuntary commitment results in a five year ban.

Smitty objects to the Huffington Post's misrepresentation of Steven Crowder's speech at CPAC, in which he joked about the following:

So HuffingtonPost is outright lying and trying to slander me, and I could really use support.
As you know, Ashley Judd has recently been heard equating both mining and purchasing Apple Products to “rape.” So my commentary at CPAC on her stupid, and insensitive comparisons was exactly this
“This just in, Ashley Judd just tweeted that purchasing apple products is akin to rape… from her iPhone”
I followed it up with “Rape? Really, now she knows what my mind felt like after Divine Secrets of YaYaSisterhood”
Clearly taking aim at Ashley Judd for her stupid rape comments. Instead, HuffPo says that I made a “rape joke” about Ashley Judd. Obviously this narrative is important, and I would reeeaaally welcome some any support in resetting it.

Now consider the Huffington Post's actual reporting on the matter:

Steven Crowder, a Fox News contributor who hosted part of Saturday's activities at the 2013 Conservative Political Action Conference, made a questionable remark about actress and possible Kentucky Senate candidate Ashley Judd.
"What is this obsession with Ashley Judd and rape?" Crowder asked while joking about Judd and Apple products. "It's pretty unnerving."
What happened was simple enough. First, Crowder opened his remarks with a joke about Ashley Judd tweeting from her iPhone that buying Apple products was akin to rape.  Second, he made a joke about how his mind felt after watching Divine Secrets of the YaYa Sisterhood, equating that afterglow to rape.  Finally, he asked what was with Ashley Judd's obsession with rape.

Huffington Post then reported that Crowder had made a questionable remark about actress and possible Kentucky Senate candidate Ashley Judd.  Whether or not his remarks were questionable depends largely on your perspective; if you think watching a terrible movie is the rough equivalent of having your mind raped, then you probably don't take issue with what Crowder said, but if you have been raped, you might take umbrage to the comparison.

It's worth noting that Huffington Post included a video of Crowder's remarks at the top of their post.  As a libertarian, and a guy who consistently falls to the extreme right on abortion and gun rights, while supporting gay rights and gay marriage as a civil libertarian who believes in very limited government, which apparently makes me left-wing, I don't see that Huffington Post outright lied or slandered Steven Crowder at all.  I don't like the Huffington Post and its consistently hostile and mocking tone towards those of us who aren't full blown Keynesians, but they didn't libel Steven Crowder at all.

There's a really simple way to avoid being charged with making questionable remarks about rape: just don't joke about rape.  Don't equate buying a product with rape, because you might wind up in one of my posts as the butt of ridicule.  But most of all, don't accuse a liberal media outlet of defaming you on some level when they merely quote exactly what you said at a public event, call it questionable, and then include a video of your remarks in an article that isn't even two full paragraphs long.

Huffington Post didn't lie about Steven Crowder, who, like many other Fox News types, wants the rest of us to take up his cause as he tries to court controversy in order to build his own brand.  Crowder is, as many of you may recall, the man who courted controversy by performing his rap song "Mr. America" at CPAC as one-half of the rap duo Powdered Zombies.

During that live performance, Crowder had a black technician get up and walk out of the room after he rapped the word "knickers," in an obvious play on words.  In fact, his music video for the song pauses after he raps about how he's come back from the dead, and he's bringing back all his knickers, as he and the black sound technician in the studio eyeball each other as Crowder explains that he can say knickers.  Crowder knew damn well what he was doing, and how he was playing the song to be perceived, by using a word similar in sound to niggers and having a black man eyeball him in the video while the music stopped, and by having a black man walk out of the room at CPAC during the same part of the song.

When a variety of left-wing news sites took the bait, Crowder took to, where else, the Huffington Post to claim that he had been unfairly maligned and defamed by the insinuation or outright statement that he had used nigger in his rap at CPAC.  In the interest of full disclosure, I write this as a guy who used nigger repeatedly in an episode of Libertariate TV, because I believe in free speech. I also believe that vilifying the use of a word is ludicrous, even though I don't personally call anyone a nigger.  I also don't  call women bitches, either, but I have used the word bitch in conversation.

If Crowder had used the word nigger, so what?  What's more offensive is his attempt to go right up to the edge in order to incite people to accuse him of engaging in the use of racist language, so that he could then play the victim in the aftermath.

I write all of this to make one point: Steven Crowder and others like him, who view conservatism and the small government movement as a convenient wave to ride, should not be able to use our ire to magnify their own publicity by trumpeting up controversies that they created knowing damn well what would happen.  He's not one of us for anything other than the publicity he can generate for himself and his brand.  People like Steven Crowder are inherently dangerous to the momentum of this movement, because they'd take the our focused rage away from big government where it belongs, and focus it on self-created controversies that serve only to get some free publicity.

We have a president who required a thirteen hour filibuster to answer a simple question about whether or not he could execute Americans with drone strikes on American soil.  I don't think Steven Crowder's non-existent defamation by the Huffington Post means much of anything by comparison.  He wasn't defamed.  He wasn't harmed.  His remarks on the subject of Ashley Judd and rape were presented in their entirety by the Huffington Post, in what might be a first for that site: an instance where they didn't selectively present and distort facts in order to serve a narrative.

Instead of jumping on Steven Crowder's bandwagon, Smitty should have simply taken the opportunity to rip Steven Crowder for thinking that he could yet again take the focus off of Obama and the failed policies of our government.  Steven Crowder is nothing more than an opportunist who courts controversy in order to gain a spotlight for himself, and he constantly seeks to insert himself into stories for no other reason.  He doesn't care to let the story be about unions, or big government, or government overreach; no, the story has to be about Steven Crowder and whatever slight he suffered by putting himself in the position to be slighted.  Even if he isn't slighted, his perception of a slight becomes the basis for him to invite others to take umbrage on his behalf and waste the energy of conservatism and libertarianism sticking up for him.

It's time to reject self-promoters of this ilk as damaging to the team, its goals, and the overall brand.  Steven Crowder's latest debacle with the Huffington Post over non-existent libel would be a great place to start.