Later On

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Archive for August 7th, 2014

Wall Street Judge Left With “Nothing But Sour Grapes”

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Kevin Drum has an extremely disheartening post on a matter that clearly illustrates that the game is rigged against the middle and lower classes: we are merely stock used to generate money for the robber barons who control our political and legal system:

A few years ago, federal district judge Jed Rakoff refused to approve an SEC settlement with Citigroup over charges that they had deliberately offloaded toxic mortgage securities into a special fund so that they could make money by betting against their own customers. Rakoff objected partly because he thought the SEC’s proposed fine was too small—”pocket change,” he called it—but mostly because there was no public reckoning of what Citigroup had done. Not only weren’t they required to admit wrongdoing, they weren’t required even to admit the bare facts of what they had done.

Sadly for Rakoff—and for the public—an appeals court overruled him, basically saying that the SEC had full discretion to reach any settlement it desired, and the judge’s only real role was to make sure it wasn’t tainted by collusion or corruption. Earlier this week, Rakoff backed off:

They who must be obeyed have spoken, and this Court’s duty is to faithfully fulfill their mandate.

….Nonetheless, this Court fears that, as a result of the Court of Appeal’s decision, the settlements reached by governmental regulatory bodies and enforced by the judiciary’s contempt powers will in practice be subject to no meaningful oversight whatsoever. But it would be a dereliction of duty for this Court to seek to evade the dictates of the Court of Appeals. That Court has now fixed the menu, leaving this Court with nothing but sour grapes.

Quite so, and the SEC’s long tradition of issuing wrist slaps to big Wall Street firms—and withholding all the details of their corruption frm the public—is now safe once again. Apparently that kind of thing is only for the little people.

Of course, Congress could intervene, giving the SEC more manpower and demanding more accountability, but that’s not going to happen either. After all, sometimes people say mean things about Wall Street firms. Surely that’s punishment enough?

Via Michael Hiltzik, who has more at the link.

 

Written by LeisureGuy

7 August 2014 at 8:14 pm

How Many People Really, Truly Believe That Abortion Is Murder?

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Pretty much no one, in fact, though it’s used as a rhetorical bludgeon quite often. Kevin Drum has an excellent post that points out the complete disconnect between words (“abortion is murder”) and actions.

Written by LeisureGuy

7 August 2014 at 7:59 pm

Posted in Daily life

Very interesting post on how language is used regarding Operation Protective Edge

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Extremely interesting column in the Washington Post by Evgeny Finkel and Sarah E. Parkinson. It begins (sans links that are in the original and can be seen by in the column):

Though Marc Lynch recently lamented that political scientists are having “the same arguments in the same terms” when it comes to Israel-Palestine, other discourses have evolved. We have spent the weeks since Israel launched Operation Protective Edge against Gaza tracing shifts in the employment of three related concepts: The distinction between combatants and noncombatants; the difference between discriminate and indiscriminate violence; and genocide. All of these terms have been deployed for years in human rights and activist circles, as well as in the daily lives of millions of Palestinians and Israelis. What is new is the increasingly commonplace usage of these terms in media, political, academic and lay discourse.

This discursive turn is important because it aligns conversations on Israel-Palestine with three central dialogues in scholarship on political violence. It would be a mistake to attribute changes in the language used to discuss Israel-Palestine exclusively to new material facts; they are also the products of both prolonged and emergent debates. It would be just as erroneous to claim that language does not have political consequences that interest scholars and policymakers, not to mention those who suffer the repercussions. Studying the political effects of discourse shifts should thus be front and center. These discussions are even more important in contemplating the way in which people who consume news related to Israel-Palestine – scholars included – are increasingly self-segregating.

Examining the potential sources of these shifts is as important as analyzing them. So, why now? One Middle East correspondent, who works for a major national U.S. media outlet and preferred to remain anonymous, said: “Mearsheimer and Walt’s book, ‘The Israel Lobby,’ paved the way for Israel to be held up to the same scrutiny other democratic countries are militarily or from a human rights perspective. The momentum continued after that book – you had Thomas Friedman join in, then shows like Jon Stewart’s.” Tim Fitzsimons, a freelance journalist who has worked in Beirut for the past two and a half years, situated the roots of the shift in the Arab Uprisings, arguing that there “is much, much more coverage of the civilian side than during [Israeli Operation] Cast Lead [in December 2008 – January 2009]” and that his theory “is the reporters who covered Syria see similar things happening in Gaza (government bombing civilians from the sky) and aren’t modifying their reporting to fit the narrative that has dominated in past Israel conflicts.”

Others have emphasized the role that journalists’ and activists’ Twitter and Facebook feeds have in complementing or contrasting mainstream media sources. Pieces such as Paul Mason’s influential article “Why Israel is losing the social media war over Gaza” have evaluated the role of on-the-ground reporting from activists, journalists and civilians through Twitter and Facebook in challenging dominant narratives. In other words, people who produce and share media now constitute a more diverse group, criticism of Israeli policies has become more commonplace, and events such as the sieges of the Syrian city of Homs and Damascus district of Yarmouk (among many, many others) have provided new analytic frames to foreign observers.

What does this mean for longer-term academic analysis? . . .

Continue reading.

Written by LeisureGuy

7 August 2014 at 7:54 pm

Posted in Mideast Conflict

How Wall Street Tobacco Deals Left States With Billions in Toxic Debt

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Cezary Podkul writes in ProPublica:

In November 1998, attorneys general from across the country sealed a historic deal with the tobacco industry to pay for the health care costs of smoking. Going forward, nearly every cigarette sold would provide money to the states, territories and other governments involved — more than $200 billion in just the first 25 years of a legal settlement that required payments to be made in perpetuity.

Then, Wall Street came knocking with an offer many state and local politicians found irresistible: Cash upfront for those governments willing to trade investors the right to some or all of their tobacco payments. State after state struck deals that critics derided as “payday loans” but proponents deemed only prudent. As designed, private investors — not the taxpayers — would take the hit if people smoked less and the tobacco money fell short.

Things haven’t exactly worked out as planned.

A ProPublica analysis of more than 100 tobacco deals since the settlement found that they are creating new fiscal headaches for states, driving some into bailouts or threatening to increase the cost of borrowing in the future.

One source of the pain is a little-known feature found in many of the deals: high-risk debt that squeezed out a few extra dollars for the governments but promised massive balloon payments, some in the billions, down the road.

These securities, called capital appreciation bonds, or CABs, have since turned toxic. They amount to only a $3 billion sliver of the approximately $36 billion in tobacco bonds outstanding, according to a review of bond documents and Thomson Reuters data. But the nine states, three territories, District of Columbia and several counties that issued them have promised a whopping $64 billion to pay them off.

Under the deals, the debts must be repaid with settlement money and not tax dollars. Still, taxpayers lose out when tobacco income that could be spent on other government services is diverted to paying off CABs. And states can’t simply walk away from the debt — bondholders have a right to further tobacco payments even after a default.

“It’s going to cost taxpayers, either directly or indirectly,” said Craig Johnson, an associate professor of public finance at Indiana University in Bloomington who has studied tobacco bonds and CABs. “I don’t doubt that at all.”

ProPublica’s analysis is the first to measure the magnitude of the high-risk debt involved in the tobacco deals and to calculate how much Wall Street’s dealmakers earned. It also shows how much of the tobacco money has been securitized — that is, turned into payments that go to investors. As of this year, at least one out of every three dollars coming in under the settlement is pledged to investors, according to bond disclosures and payment data from the National Association of Attorneys General, which tracks the flow of funds.

The sure winners so far: Investment bankers from Citigroup, the now defunct Bear Stearns and others who, along with consultants and lawyers, have pocketed more than $500 million in fees for their financial engineering, ProPublica estimates. They now stand to make more as the governments look to rework old deals and try to get even more tobacco cash upfront.

In part, the troubles in the tobacco bonds arise from the same kind of miscalculation that led to the housing bubble.

Just as mortgage lenders bet that home prices would keep rising, the tobacco deals relied on optimistic predictions of how much Americans would smoke. Forecasters rightly saw that cigarette sales would continue to decline, but now the yearly drop — about 3 to 3.5 percent — is nearly double what was cooked into the deals.

Because the bonds sold to investors can stretch 40 years or more, the outdated estimates mean an ever-widening gap between what states expected to collect under the settlement and the payments they promised investors.

The CABs promise gigantic payouts — as high as 76 times what’s borrowed — because nothing is due on them for decades. Meantime, interest compounds on both the principal and accumulating balance.

Defaults by state and local governments are rare, but rating agencies have been warning that tobacco bonds in general could go under en masse. Moody’s said in May that . . .

Continue reading.

Read the whole thing—there’s much more. Later in the article:

“The securitization scheme not only accelerated the expiration of the usefulness of that money, but basically guaranteed that it would never be used for its conceived purpose,” said Dave Dobbins, an executive with the American Legacy Foundation, a nonprofit created under the settlement to fund smoking-prevention programs.

“Now the money’s gone, the securitization scheme is sort of coming home to roost for some people … and the tobacco problem is still there: 480,000 people [are] expected to die this year due to tobacco-related disease,” Dobbins said.

“It’s a grim story.”

Whenever governments get access to a stream of money, Wall Street bankers pitch deals to turn it into a one-time payment. Bonds are sold to investors, who give the governments cash in exchange for the income stream, similar to a loan. Bankers earn fees based on a deal’s size, giving them every incentive to maximize the value.

The 1998 tobacco settlement was no ordinary revenue stream: It was the biggest financial settlement in legal history, projected to net states and other governments $206 billion just through 2025. “The money is huge,” Iowa Attorney General Tom Miller said at the time.

A cottage industry immediately sprouted up on Wall Street. The goal: Convince states to pawn the revenues.

Citigroup, JPMorgan, UBS, Goldman Sachs, Morgan Stanley and now-defunct firms like Bear Stearns, Lehman Brothers and Merrill Lynch all dedicated bankers to the cause, pitch documents show. Bear Stearns even had its own, 21-strong “Tobacco Securitization Group” devoted to monetizing the settlement.

Written by LeisureGuy

7 August 2014 at 11:00 am

Posted in Business, Government, Health

Revisiting the Axwell, and Stirling’s persistence

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SOTD 7 August 2014

I do like the Stirling soap fragrances, but I’m still not totally successful in lathering them. I carefully followed the minimalisto tutorial and got much the same wonderful lather as when I first tried the tutorial—a really fine lather. But by the third pass it was well past it’s prime. First pass was like a tree in July, third pass like a tree in late October: still some leaves attached, but most branches bare.

I do not understand why this soap is so difficult for me. It is frustrating. I shall continue to work at it, though.

The Axwell razor is a cute razor. I got a good shave, but I think the Gillette Thin blade was past its useful life because I had to work at it more than I should. One guy on Wicked_Edge didn’t care for this razor because (he said) it’s made of plastic. I strongly suspect he in fact never used the razor, because if you hold it in your hand, it’s perfectly clear that it’s made of metal—plastic coated, no doubt, but the handle and head are definitely metal. Indeed, if you look into the handle’s threads, the metal’s silvery color is plainly seen, and the thinness of the (coated) head strongly suggest that steel was used—certainly not pot metal: much too thin to have strength if it were.

I think it’s a good shaver, but I want to try it with a different blade before making a stand. Still, today’s shave wasn’t bad.

I’m continuing with the balms but starting to run out: I tilt strongly toward splashes. Today’s Institut Karité 25% shea  butter aftershave balm is a standard recommendation: it’s quite good and costs around $30, just like l’Occitane’s Cade balm and Alt-Innsbruck’s Pre- and Post-Shave Balm, both of which are also good. But IK comes in a 250ml container, and for the same price l’Occitane and Alt-Innsbruck containers hold 100ml, 40% as much.

Written by LeisureGuy

7 August 2014 at 10:03 am

Posted in Shaving

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