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2011 Jackass Of The Year

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There were so many contenders for TheCenterLane.com’s 2011 Jackass Of The Year award, I was ready to give up on making a decision.  Former Congressman Anthony Weiner (who never even “got lucky” with any of the women who received his “Peter Tweets”) was certainly a contender.  Another runner-up was Arnold Schwarzenegger, who chose to have an affair with his unattractive housekeeper – apparently just because she was there.

This year’s winner is Jon S. Corzine, the former Senator and Governor of New Jersey – in addition to having been the former CEO of Goldman Sachs.  Most infamously, Corzine was named chairman and CEO of MF Global in March of 2010.  It took Corzine only 20 months to drive the firm into bankruptcy.  As Stephen Foley of The Independent reported, Corzine gambled $6 billion of the firm’s money on his belief that Italy would not default on its government bonds.  When that wager was exposed, MF Global’s clients and trading partners stopped doing business with the firm.  Within a few days, MF Global went belly-up, in what became one of the ten biggest bankruptcies in American history.

On Halloween, the Deal Book blog at The New York Times discussed what happened after a discovery by federal regulators that hundreds of millions of dollars (perhaps 950) in MF Global customers’ money had gone missing:

The recognition that money was missing scuttled at the 11th hour an agreement to sell a major part of MF Global to a rival brokerage firm.  MF Global had staked its survival on completing the deal. Instead, the New York-based firm filed for bankruptcy on Monday.

Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse.

One of those customers was a gentleman named Gerald Celente.  On December 17, Mr. Celente appeared on Max Keiser’s television program, On the Edge to describe what happened with his contract (placed through MF Global in April) to purchase an undisclosed quantity of December gold for an amount slightly in excess of $1,400 per ounce.  Celente skewered more individuals than Jon Corzine while describing a travesty which exposed even more of the ways by which the Commodity Futures Modernization Act has been destroying America.  Be sure to watch the interview.

On the same day as the Celente interview, The Washington Post published a piece by Barry Ritholtz, which focused on six astonishing elements of the MF Global story.  Let’s take a look at a few of those elements:

3.  As a result of MF Global’s lobbying, key rules were deregulated.  This allowed the firm to use client money to buy risky sovereign debt.

4.  In 2010, someone from the Commodities Futures Trading Commission recognized these prior deregulations had dramatically ramped clients’ exposure to risk and proposed changing those rules. Jon Corzine, MF Global’s chief executive, successfully prevented the tightening of these regulations.  Had the regulations been tightened, it would have prevented the kind of bets that lost MF Global’s segregated client monies.

5.  None of MF Global’s Canadian clients lost any money thanks to tighter regulations there.

One would think that someone in Jon Corzine’s position would have learned something from the mistakes (such as excessive leveraging and risky bets) which contributed to the financial crisis.  He didn’t.  That’s why Jon S. Corzine is the winner of TheCenterLane.com’s 2011 Jackass Of The Year award.  Congratulations, Jackass!


 

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Transparent Dishonesty

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Immediately after assuming office, President Obama promised to provide a greater degree of transparency from his administration:

Transparency and the rule of law will be the touchstones of this presidency.

Since that moment, an enormous list of broken campaign promises has buried those false assurances of transparency.  Pondering over the heap of Obama’s discarded “bait and switch” enticements can cause a person to wonder how this man expects to get re-elected  … until the Republican aspirants come into view.

A recent gimmick of the current administration has been the “We the People” initiative.  This project resulted in the creation of a platform on the White House website, allowing for citizens to create petitions requesting government action on certain issues:

The We the People platform on WhiteHouse.gov gives Americans a new way to create, share, and sign petitions that communicate your views about your government’s actions and policies.

A signature threshold was established, requiring 5,000 on-line “signatures” within a 30-day period.  The threshold has subsequently been increased to 25,000 signatures in a month:

If a petition meets the signature threshold, it will be reviewed by the Administration and an official response will be issued.  And we’ll make sure that the petition is sent to the appropriate policy makers in the Administration.

The White House began responding to those petitions on October 26.  On November 5, Nancy Atkinson reported for Universe Today that We the People are interested in UFOs and space aliens:

The White House has responded to two petitions asking the US government to formally acknowledge that aliens have visited Earth and to disclose to any intentional withholding of government interactions with extraterrestrial beings.  “The U.S. government has no evidence that any life exists outside our planet, or that an extraterrestrial presence has contacted or engaged any member of the human race,” said Phil Larson from the White House Office of Science & Technology Policy, on the WhiteHouse.gov website.  “In addition, there is no credible information to suggest that any evidence is being hidden from the public’s eye.”

5,387 people had signed the petition for immediately disclosing the government’s knowledge of and communications with extraterrestrial beings, and 12,078 signed the request for a formal acknowledgement from the White House that extraterrestrials have been engaging the human race.

The denials made by Phil Larson are as false now as they were many years ago, when a 15-year-old high school student named John Greenwald, Jr. began sending Freedom of Information Act requests to the Pentagon, Air Force and numerous government agencies to ascertain what our officials had learned about those Unidentified Flying Objects, which have aroused so much curiosity since the advent of the Internet.  Over the years, John Greenwald has amassed a collection of over 600,000 pages of documents, which are available for free on his website, The Black Vault.

I was amused by John Greenwald’s lecture, recounting how – as a teenager – he made fools of the bureaucrats, who were charged with the responsibility of stonewalling any inquiries concerning the UFO phenomenon.  At his website, Greenwald recounted some of the highlights of this experience:

When I started researching this phenomenon fifteen years ago, you quickly learn that the government and military alike dismiss the entire topic, deny any involvement or interest in it, and they claim they could explain the mystery after their official investigation back in 1969 – and haven’t collected anything since.  Nothing could be further from the truth.

John Greenwald hit paydirt when he came across a document entitled “Air Force Instruction 10-206” or “AFI 10-206” (a 2008 edition can be seen here).  Here is Greenwald’s explanation (in the third person) of where this lead took him:

In the regulation entitled, “Operational Reporting,” chapter 5 outlines procedures for cataloguing different types of sightings, including the third on the list, “Unidentified Flying Objects” or UFOs.  Although this reference to UFOs is not a reference to alien spacecraft, the fact remains that this publication shows that the military does have an interest in the phenomena, whatever it might be.

*   *   *

Upon further investigation, Greenewald uncovered that the reports made under this Air Force document were called CIRVIS, or Communication Instructions for Reporting Vital Intelligence Sightings, reports.  He noted that they are filed and sent to the NORAD installation –which he then found out when he filed a FOIA request for the records – that NORAD was not subject to the FOIA.  This was due to the fact that it was under control by both Canadian and U.S. forces – therefore excluding it from U.S. law.

But “in good faith” the request was processed under a special NORAD instruction allowing access to their documents, but they claim they found “no records.”

Pushing forward, a simple phone call by Greenewald to the Department of National Defence (DND) in Canada yielded more than 100 pages of UFO / CIRVIS reports. According to NORAD – there was nothing.  According to Canada – there was a pile of records.

On September 2, 2011 Lee Speigel of The Huffington Post interviewed John Greenwald about the extent of UFO information obtained for The Black Vault by way of the Freedom of Information Act.  Lee Speigel provided this account of what happened after that interview:

On Sept. 2, The Huffington Post made inquiries to the Air Force about the UFO directives.  A spokesman said he’d arrange an interview with an appropriate officer.  But before the interview was set up, the 111-page instruction manual was revised on Sept. 6, and the UFO instructions were deleted, as were other portions of the document, now shortened to 40 pages.

*   *   *

For several weeks, military officials failed to respond to HuffPost inquiries about the rewritten manual, which included changes to areas unrelated to UFOs.

Finally, on Oct. 5, after several follow-up calls, an Air Force major emailed a response, informing HuffPost that UFO reporting is not a duty of the armed forces branch.  He denied any cover-up, and instead said it was a coincidence that the document was updated after this news organization asked for an explanation.

The Huffington Post piece included the reaction from John Greenwald:

“They’ve had many opportunities to take [the UFO reference] off of this publication and now look at what happens,” said Greenewald.  “All of a sudden, when a major news outlet like Huffington Post starts asking questions about why UFOs are still on the books — to have that media outlet not get a fast response, number one; and number two, the military completely re-writes the regulation, changes it and UFOs are nowhere to be found — that’s a fascinating coincidence.”

Obama’s promised “transparency” seems to have befallen the same fate as “hope” and “change”.  President Clinton’s former Chief of Staff, John Podesta, is now a Visiting Professor of Law at the Georgetown University Law Center.  Here is a video clip of John Podesta, making the case for disclosure of data compiled by the United States government on the subject of UFOs.  In a speech before the National Press Club on November 14, 2007, Mr. Podesta said this:

“I think it’s time to open the books” (on government investigations of UFOs).    .  .  .  “We ought to do it because it’s right.  We ought to do it because the American people, quite frankly, CAN handle the truth and we ought to do it because it’s the law.”

Yes, Mr. Podesta  . . .  but it’s so much easier for our officials to just lie.  They lie about everything else.  Why should this subject be treated any differently?


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Debunking Oil Industry Propaganda

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The political crisis in Egypt is being used by tools of the oil industry to – once again – put the scare into people about our dependence on “foreign oil”.  Stephen Moore was on Fox News talking-up the old “drill baby, drill” sentiment on February 2, lamenting our lack of “energy independence”.  I just wish Moore would restrict himself to a diet of Gulf shrimp.  I doubt whether it would change his mind, although it might make him more fun to watch on television as the hydrocarbons gradually work their karmic magic.

The myth of “foreign oil” is one of my pet peeves for several reasons – not the least of which is the fact that the one foreign oil company, which has done the most harm to the United States is British Petroleum, rather than some enterprise from the Middle East.

Much as been written to dispel the myths of “foreign oil” and “energy independence”, although the spokestools of the oil industry do all they can to pretend as though such information does not exist.  Take for example, the essay written by David Saied for the Ludwig von Mises Institute entitled “America’s Economic Myths”, wherein he debunked the myth of “dependence on foreign oil”:

This myth basically suggests that the problem with oil prices is due to America’s “dependence” on foreign oil.  One of the worst economic myths, it plays on economic nationalism and on xenophobic feelings that are sometimes pervasive in the United States.

The high price of oil has nothing to do with its origin; the price of oil is determined in international markets.  Even if the United States were to produce 100% of the oil it consumes, the price would be the same if the worldwide supply and demand of oil were to remain the same.  Oil is a commodity, so the price of a barrel produced in the United States is basically the same as the price of a barrel of oil produced in any other country, but the costs of labor, land, and regulatory compliance are usually higher in the United States than in third-world countries.  Lowering these costs would help increase supply.  Increasing supply, whether in the United States or elsewhere, will push prices lower.

Importing a product does not mean you “depend” on it.  This is like saying that when we “import” food from our local supermarket we “depend” on that supermarket.  The opposite is usually true; exporters depend on us, since we are the customers.  Also, importing a product usually means buying at lower prices, whereas producing in the United States often means consuming at higher prices.  This point is proven when we see the cheap imports we can purchase from China and the higher prices of many of these same products manufactured in the United States.  The amazing thing is that the protectionists claim, on the one hand, that America should be “protected” from cheap imports, but when it comes to oil, they say we should be “protected” from “expensive imported” oil.

Most, if not all, of the higher price of oil can be explained by the expansion of the money supply or the debasement of the dollar.  The foreign producers are not at fault; our national central bank is the culprit.

As a fan of the Real Clear Markets section of the Real Clear Politics website, I was pleased to see this recent commentary by John Tamny, wherein he had a good laugh at T-Bone Pickings for accidentally revealing the absurdity of the “energy independence” meme:

As this column has shown more than once, the price of a barrel of crude tends to revert to 1/15th of an ounce of gold, and as of Tuesday, oil’s price increase merely brought it in line with its historical cost.

*   *   *

Oil is oil is oil, and it’s a commodity whose price is discovered in deep world markets.

Canada is seemingly “energy independent”, but assuming ongoing Middle East uncertainty, its citizens will – like us – buy gasoline the price of which is based on the cost per barrel set in global markets.  Much as we might like to naively fantasize about walling ourselves off from international market realities, we’ll never be immune to the activities around the world that impact oil’s price.  Canada and its citizens won’t be either.

*   *   *

So while we can expect lots of breathy commentary about the need for energy independence in the coming weeks, particularly if Middle East unrest spreads, cooler heads will hopefully prevail.  The false God of independence will not wall us off from supply-driven increases, and more important, the waste of  human and financial capital necessary to achieve the silly notion would be far more economically crippling than any presumed supply shock could ever hope to be.

My own dream of “energy independence” involves owning an electric car, which I can recharge with a “solar power station” similar to what we see advertised on television – along with another “solar power station” to provide my home electricity.  “Energy independence” can only be achieved when American consumers are liberated from the tyranny of the oil companies and the power utilities.


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Jackass Of The Year Award

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January 1, 2009

At year’s end, we see retrospectives of the most important events, numerous top ten lists and recognitions of achievement in one area or another.  2008 brought a record level of cynicism to the American people because of the economic catastrophe, the Bernie Madoff scandal and the cartoon-like escapades from the Presidential campaign.  Accordingly, it seems only appropriate to pay homage to the biggest Jackass of the Year.  Since I advertise this website as a “Blago-free zone”, the current Governor of Illinois is automatically disqualified from the competition.  So, let’s take a look at some of the runners-up and finally, the winner of the Jackass of the Year Award.

Our first contestant is John Ensign.  He is chairman of the National Republican Senatorial Committee, representing the State of Nevada in the United States Senate.  On November 2, 2008 he appeared on the CBS television program, Face The Nation with Bob Schieffer.  Election day was two days away and Ensign found it necessary to blame the likely Republican losses on the economic downturn.  He described the Republicans’ fate in these terms:

“And we were starting to do very, very well, but when the financial crisis hit, that financial crisis really is — has been a — almost a body blow to Republicans.  And unfortunately, it was allowed to be portrayed that this was a result of deregulation, when in fact it was a result of overregulation.”

That’s right.  Ensign Douchebag thought he could convince the public that the economic crisis was the result of over-regulation of the financial system, rather than the deregulation described by everyone else in the world.  That noble statement certainly rates runner-up status for the Jackass of the Year Award.

Our next contestant is Reverend Jeremiah Wright, former pastor of Chicago’s Trinity United Church of Christ and embarrassment to Barack Obama.  Thank God Reverend Wright’s fifteen minutes of fame are finally over.  Although his infamous sermon with the less-than-patriotic remarks about America was given in 2003, by April of 2008, Rev. Wright made a point of resurrecting the controversy concerning his disappointing association with Barack Obama.   At that time Wright hit the road, appearing on Bill Moyers Journal, speaking before the NAACP and giving a grand performance before the National Press Club.  He made a fool of himself all three times and (perhaps to his disappointment) his bad karma never rubbed off on Barack.  The pastor has also been a disgrace to the name of the Right Reverend Carl Wright (comedic sidekick of Chicago blues maven, Pervis Spann).  Although Jeremiah Wright rated recognition, the competition for the Jackass Award was tough this year.

We cannot overlook the valiant efforts of Joe “The Tool” Lieberman to win this honor.  Although the people of Connecticut elected Joe to represent their state in the Senate, The Tool spent most of 2008 looking like a stray dog, following candidate John McCain around the campaign trial.  You can find my prior rants about Senator Lieberman here, here, here and here.

We must also give consideration to Christopher Cox, the chairman of the Securities and Exchange Commission.  John McCain was on to him.  It just wasn’t fair that poor, old Senator McCain took so much heat for pointing out that Cox had to go.  McCain made the mistake of stating that he, as President, would have authority to fire Cox.  Although he was wrong about that, he was right about the notion that Cox had been a problem for the SEC.  On December 16, Jessie Westerbrook of Bloomberg news reported that Cox was blaming his subordinates for the enforcement lapses that allowed the scam, perpetrated by Bernie Madoff, to continue for several years after the SEC should have stopped it.  Cox apparently believes in the doctrine that “the buck stops” several levels below himself on the SEC food chain.  The environment at the SEC, with Cox at the helm, was best summed up in a December 27 article from the Los Angeles Times by Amit Paley and David Hilzenrath.  Here’s what they had to say about the tenure of Chairman Cox and his performance during the economic crisis:

Though Cox speaks of staying calm in the face of financial turmoil, lawmakers across the political spectrum counter that this is actually another way of saying that his agency remained passive during the worst global financial crisis in decades.  And they claim that Cox’s stewardship before this year — focusing on deregulation as the agency’s staff shrank — laid the groundwork for the meltdown.

“The commission in recent years has handcuffed the inspection and enforcement division,” said Arthur Levitt, SEC chairman during the Clinton administration.  “The environment was not conducive to proactive enforcement activity.”

*    *    *

But former officials said enforcement suffered during his tenure.  A pilot program begun last year required enforcement staff to meet with the commissioners before beginning settlement talks in certain cases involving nonfinancial firms.  Some former officials said the change was just one example of new bureaucratic impediments that slowed enforcement work.  The commissioners also made clear that they thought staff members were being too aggressive in some cases, the officials said.

”I think there has been a sentiment communicated to rank-and-file staff, lawyers and accountants that you don’t go after the establishment,” said Ross Albert, a former special counsel in the enforcement division.
*    *    *
An analysis by law firm Morgan, Lewis & Bockius showed that the SEC’s actions against broker-dealers, who serve as intermediaries in financial trades, dropped about 33%, from about 89 cases in fiscal 2007 to 60 cases in fiscal 2008.

Heckuva’ job, Coxey!   Nevertheless, you have been overshadowed in this year’s competition.

The winner of the 2008 Jackass of the Year Award is a professor from Russia, named Igor Panarin.  He is a former member of the KGB, who is apparently so upset over the breakup of the Soviet Union, that for the past ten years, he has been predicting that the United States would also break up.  On December 29, Andrew Osborn reported in The Wall Street Journal that Panarin has been doing two interviews per day, discussing how “an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S.”  The article explained:

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar.  Around the end of June 2010, or early July, he says, the U.S. will break into six pieces — with Alaska reverting to Russian control.

Worse yet, the other five parts of the country will supposedly become republics that will be part of or under the influence of Canada, the European Union, Mexico, China or Japan.  Osborn’s article included a picture of Panarin’s map, showing how the various segments of the country would be apportioned.  Panarin’s ideas have brought him quite a bit of publicity  . . . and TheCenterLane.com’s Jackass of the Year Award for 2008!  Congratulations, Jackass!