Sunday, December 16, 2012

Shushing down the Fiscal Slope - PNN - 12/16/12

PNN - 12/16/12

07:00 - 07:10 - RWS
07:10 - Luis Cuevas - Co-host
07:15 - 07:30 - Jay Alexander
07:31 - 07:45 - Keith McHenry
07:45 - 08:00 - Sandy Leon
07:55 - 08:25 - Denis Campbell


1. Jiji: Cover-up of true radiation levels Fukushima residents were exposed to? WHO accused of underestimating disaster’s impact on human health
A German doctor and member of a Nobel Peace Prize-winning physicians’ group has criticized a World Health Organization report on the Fukushima nuclear catastrophe for underestimating its impact on human health. [...]
[Alex Rosen] noted that the WHO’s estimate on the amount of radioactive fallout emitted from the plant’s destroyed reactors was significantly lower than projections provided by research institutes in many other countries.
The WHO report also failed to take into account the radiation exposure of people living within 20 km of the No. 1 plant and who were evacuated in the first few days of the calamity, after the area was designated a no-go zone, Rosen said [...]
The most flawed aspect of the WHO report is “its apparent lack of neutrality,” he said.
Rosen further asserted that the report reflects an effort to downplay the effects of the disaster, as it was compiled chiefly by IAEA staff and members of nuclear regulatory bodies that were closely colluding with Japan’s nuclear power industry.
“It is unclear why a report written mainly by the IAEA and collaborating nuclear institutions would need to be published in the name of the WHO, if not to provide an unsuspicious cover” for the true radiation levels Fukushima residents were exposed to, Rosen argued. [...]

2. Salt Dome Update
Top Expert: Fears Napoleonville salt dome to continue to break up below giant sinkhole; “An underground Mt. Everest” — Over 50 caverns inside, some with explosive gas
[...] The assessment by Jeffrey Nunn, [LSU's] Ernest and Alice Neal professor of geology and geophysics and Pereboom professor of science, was a step beyond what other officials and scientists working on the sinkhole response have presented in public meetings [...] during a luncheon talk at Mike Anderson’s restaurant to the Baton Rouge Geological Society. [...]

LSU Professor Jeffrey Nunn (Source: Baton Rouge Geological Society)
Nunn, who has been speaking with a group of scientists working closely on the sinkhole, pointed to 3-D seismic imagery of the salt dome from 2007 to make his case.
“What this indicates is that the bottom part of this abandoned cavern completely dissolved away the salt and the cavern was in direct contact with whatever formation is in the area,” Nunn said.
The seismic data indicates that the western side of the dome has an overhang [...]
One suspicion of scientists working on the sinkhole has been that the overhang, which is above the Texas Brine cavern, collapsed as part of the cavern failure.
Nunn told geologists Friday that one of the scientists’ worst-case fears is that the salt dome could continue to break up from its western edge and threaten other underground caverns. [...]
Describing what scientists fear, Nunn added: “ ‘OK, you know, this one cavern has collapsed, so is that going to have any impact on the adjacent caverns or not?’ ” [...]
The dome, a solid salt deposit that Nunn described Friday as an underground Mt. Everest, was thrust up over geologic time through overlying sediments. [...]
According to this December 11, 2012 email, there is still nearly half a million barrels of butane in Crosstex’s nearby caverns. (h/t Louisiana Sinkhole Bugle)

3. Radioactive Materials Dispersion Simulation for Nuclear Regulatory Authority Was Done by One Worker, Using a Pocket Calculator

(Update 12/14/2012) I asked Ryuichi Kino (who's now allowed back in TEPCO press conferences) about these maps. As far as he knows, these maps still ignores geographical information, and treat the land as flat. He says he will ask about it in the next press conference of the Nuclear Regulatory Authority/Agency.


The dispersion simulation maps first announced by the Nuclear Regulatory Authority right were full of errors and had to be redone. NRA announced the corrected maps on December 13, but according to the article by Tokyo Shinbun, the real story is not the maps but how the maps were created.

According to the Tokyo Shinbun article as quoted at "Zamamiyagarei" blog, the history is as follows:
    1.    Nuclear and Industrial Safety Agency under the Ministry of Economy, Trade and Industry, before it was shut down, decided to have the simulation maps created for each nuclear power plant in Japan. It contracted Japan Nuclear Energy Safety Organization (JNES) to do the job. [I've read elsewhere that the job was for mere 10 million yen, or US$119,000).]
    2.    JNES had one person in charge of the job, and he gave it to a long-term subcontractor called CSA Japan in Tokyo, as usual.
    3.    CSA Japan had one person doing the job of creating the simulation maps for the entire nuclear power plants in Japan, who used his pocket calculator to calculate the dispersion models. He apparently made numerous errors, resulting in the inaccurate simulation maps that NRA announced, to their embarrassment.
    4.    No one at JNES or NRA checked the work.

It's not that using a pocket calculator is bad. An Indian "computor" (a person who computes) calculated the height of Peak XV in Himalaya by hand calculation. It is all in the brain, after all.

CSA Japan was incorporated in 1999 with the capital of 10 million yen. Its main customers are government agencies and large corporations in nuclear industry. JNES comes near the top of the customer list. TEPCO also seems to be their regular customer:
Japan Atomic Energy Agency
Japan Nuclear Energy Safety Organization
Tokyo Electric Power Company
The Japan Atomic Power Company
TEPCO Systems Corporation
Institute of Nuclear Safety System ,Incorporated
Genden Information System Co.
Mitsubishi Heavy Industries, Ltd.
Nuclear Fuel Industries ,Ltd.
Mitsui Engineering & Shipbuilding Co., Ltd.
MHI Nuclear Engineering Company, Limited
Itochu Techno-Solutions Corporation
TOiNX (Tohoku Information Systems Company, Incorporated)

Why did NISA need to create simulation maps by contracting them out cheaply, which ended up on the lap of one unhappy employee at a subcontractor who used a pocket calculator? They have SPEEDI.

My guess is that NISA figured it was cheaper to contract out anew than to run SPEEDI.

"Cheap, cheap", sang a NISA bird. So sings just about every government agencies in Japan, large and small. Money before safety. That's what two "lost decades" have done to the country.

By the way, the first set of maps not only got the wind directions wrong, but they didn't consider the topography at all, treating the land in Japan as flat. I don't know if that has been corrected in the new version. With a pocket calculator, it may have been a bit too complicated.

4. Security
When a former senior White House official describes a nationwide surveillance effort as “breathtaking,” you know civil liberties activists are preparing for a fight.

The Wall Street Journal reported today that the little-known National Counter terrorism Center, based in an unmarked building in McLean, Va., has been granted sweeping new authority to store and monitor massive data sets about innocent Americans.

After internal wrangling over privacy and civil liberties issues, the Justice Department reportedly signed off on controversial new guidelines earlier this year. The guidelines allow the NCTC, for the first time, to keep data about innocent U.S. citizens for up to five years, using “predictive pattern-matching,” to analyze it for suspicious patterns of behavior. The data the counterterrorism center has access to, according to the Journal, includes “entire government databases—flight records, casino-employee lists, the names of Americans hosting foreign-exchange students and many others.”

Notably, the Journal reports that these changes also allow databases about U.S. civilians to be handed over to foreign governments for analysis, presumably so that they too can attempt to determine future criminal actions. The Department of Homeland Security’s former chief privacy officer said that it represents a “sea change in the way that the government interacts with the general public.”

The snooping effort, which officials say is subject to “rigorous oversight,” is reminiscent of the so-called Total Information Awareness initiative, dreamt up in the aftermath of 9/11 by the Pentagon’s research unit DARPA. The aim of the TIA initiative was essentially to create a kind of ubiquitous pre-crime surveillance regime monitoring public and private databases. It was largely defunded in 2003, after civil liberties concerns. However, other similar efforts have continued, such as through the work of the Department of Homeland Security’s intelligence-gathering “Fusion Centers.” Most recently, Fusion Centers were subjected to scathing criticism from congressional investigators, who found that they were accumulating masses of data about “suspicious” activity that was not of any use. The intelligence being swept up, the investigators found, was “oftentimes shoddy, rarely timely, sometimes endangering citizens’ civil liberties and Privacy Act protections.”

5. Did he or propaganda
Ed Haislmaier, a senior scholar at the Heritage Foundation, made himself famous in this video  where he appears to be assaulting people protesting a conference organized by Fix the Debt. While this act of bad temper may be uncharacteristic of the public behavior of this corporate-sponsored crusade to cut Social Security and Medicare, it does reflect the way in which they hope to bully their agenda through the political process.

The line from Fix the Debt, an organization that includes the CEOs of many of the country's largest corporations, and  allies like The Washington Post  is that we better have cuts to Social Security and Medicare because they say so.

Note that they did not try to push this line in the elections. Everyone knows that cuts to these programs are hugely unpopular across the political spectrum.

The Fix the Debt strategy was explicitly to wait until after the election. They would then go into high gear pushing their agenda of cutting Social Security and Medicare regardless of who won the elections. Remember, we need these cuts because they say so.

It is worth repeating the "they say so" part, because this is the only way we could know that cuts to Social Security and Medicare are necessary. It is possible to tell stories about countries where a meltdown in financial markets forced sharp budget cuts, but there is zero evidence of that for the United States.

Investors are willing to lend the U.S. government vast amounts of money at extremely low interest rates. The only reason that we have for believing that financial markets will panic if we don't make the Social Security and Medicare cuts that the Debt Fixers want to make is because they say so.
For this reason, it is worth considering what the Debt Fixers know or don't know about the economy. This means bringing up a still fresh wound: why did none of these people see the housing bubble whose collapse wrecked the economy?

It is important to understand the bubble was not hard to see, nor did it require much knowledge of economics to realize that its collapse would devastate the economy.

The bubble was an unprecedented nationwide run-up in house prices. For the 100 years from 1896 to 1996, nationwide house prices had, on average, just tracked the overall rate of inflation. In the decade from 1996 to 2006, house prices rose by more than 70 percentage points in excess of the rate of inflation.

How could anyone following the economy miss this? There are reports on house prices released every month; did none of the Debt Fixers ever look at them during the bubble years?
And there was no explanation for this extraordinary run up of prices in the fundamentals of the housing market. Population and income growth in the last decade were slow, not fast. And there was no corresponding increase in rents. If fundamentals were driving the explosion in house prices, then there should have been some pressure on rents, as well. And vacancy rates were hitting all-time highs. How does that fit with a supply-and-demand story driving up house prices?

The fact that the housing bubble was driving the economy was also not hard to see. Typically, housing construction is less than 4 percent of gross domestic product (GDP). It peaked at more than 6 percent of GDP in 2005. Couldn't the Debt Fixers find the GDP data released every month by the Commerce Department?

Housing wealth was also driving a consumption boom as the saving rate fell to nearly zero in the years from 2004-2007. Did the Debt Fixers think that people would keep borrowing against their homes when the equity in their homes disappeared?

The bursting of the bubble meant a loss in  annual demand of more than $1 trillion when the construction and consumption boom both collapsed. What exactly did the Debt Fixers think would replace this demand?

Did they think that firms would suddenly double their investment as they saw their markets collapse? Did they think that consumers would just spend like crazy even as their housing wealth vanished? If they have a theory as to how the economy could quickly replace the demand generated by the housing bubble without large government budget deficits, it would be great if they would share.

The reality is that the Debt Fixers and their allied economists and policy wonks saw none of the above. They were completely out to lunch in their understanding of the economy.
The Debt Fixers and their allies will have to explain for themselves how they managed to miss something as huge and important to the economy as the housing bubble. However, missing an $8 trillion housing bubble is not a small mistake. It is the sort of thing that, in other lines of work, gets you fired and sent looking for a new career.

What would Michelle Rhee, the hero of the "school reform" movement, do to a public school teacher if all of that teacher's students had huge drops in scores from the prior year? The economic experts among the Debt Fixers all fit this failed-teacher description.

This means that when we get a whole bunch of seemingly important and knowledgeable people telling us that we must cut Social Security and Medicare because the markets demand it, we have to remember that these are people who were just recently shown to be completely out to lunch in their economic judgment. If the Debt Fixers expect the country to take their pronouncements seriously, they should be forced to answer one simple question: when did you stop being wrong about the economy?

Pete Peterson and the Deficit
Some commentators have vilified Peter Peterson, the investor and former Commerce secretary, for raising alarms about the deficit. They argue that Mr. Peterson is really trying to shred the American safety net. I’m not among the vilifiers. We should be taking the deficit more seriously, and Mr. Peterson is trying to make that happen.
But it’s certainly true that he and his foundation would help their case by supporting more deficit-reduction measures that hurt wealthy investors like him. Landon Thomas Jr. of The Times wrote a good article in 2008 explaining Mr. Peterson’s support for a special tax provision for investment income, and now the group Citizens for Tax Justice points out the following:

The Peter G. Peterson Institute, which is ostensibly concerned about the U.S. fiscal imbalance, has come out against provisions in [a Senate bill] that would prevent multinational corporations from abusing foreign tax credits…. [T]he credit is really being used by corporations to reduce their U.S. taxes on their U.S. income. Or, put another way, it’s being used to subsidize foreign countries by helping U.S. corporations pay their foreign taxes.
I’m not suggesting that anybody in favor of reducing the deficit needs to be in favor of every proposal to reduce the deficit. But it’s symptomatic of the larger problem if you’re opposed to too many deficit-reduction proposals that would actually affect you.
To quote Robert Choate, as I’ve done before here:
The public has a sort of sense that there’s a problem … They’re not daft. They realize that there’s a significant adjustment to come, but they tend to think it can be solved by increasing taxes that they don’t pay and cutting spending that they don’t benefit from.

7. Naked Capitalism
It would appear the ground has been laid rather effectively for (among other things) an assault on Social Security and Medicare. As we have pointed out before, Social Security is not under any immediate stress, and it would take only some minor tweaks to alleviate the (well off in the future) strains. And contrary to popular perception, the reason Medicare spending will get out of hand is due to projected medical cost escalation, not demographics.

In other words, the “crisis” in Medicare is a symptom of our broken health care system, and not an entitlements problem per se. But in addition to the continued ability of Big Pharma and the health insurance industry’s ability to make a bad situation worse, as witness our healthcare “reform,” consumers have also been deeply conditioned to see more treatment as better. From both a cost and side effects perspective, this is simply not often the case. As reader Francois T stated apropos a New York Times article that caused consternation among people who know the terrain:

My oh my! One could write a volume or two about that. I’ll limit myself to the obvious, at the expense of the details.

Their [Abelson and Harris] article and the saga surrounding its writing:
is a prime example of, when it comes to health care, Americans in general harbor very deeply rooted preconceived notions that pretty much preclude any meaningful and long-lasting reform.

The one operating in the minds of Abelson and Harris is the most toxic: More is always better. They cannot possibly bring themselves to admit, despite the overwhelming evidence of 30 years (!!) of solid, peer-reviewed research demonstrating there are ways to provide better health care outcomes while doing less, but in a SMARTER way. The evidence is crystal clear, but so are the prejudices. Since this is politics, prejudices win, hands down. Being journalists for the NYT, Abelson and Harris seem incapable of going beyond the vulgus populus.

It is important to note here that the attacks on the Dartmouth research were almost inexistent during the period post Clinton failure to reform health care…until Obama started his own attempt. A cursory Lexis-Nexis search is quite convincing in this respect. Those who stand to lose income or power during a health care reform will first and foremost attack it. Mind you, they have the tremendous advantage of playing on those preconceived notions I alluded to above.

So ingrained are these, that even senators and congresspersons who know the Dartmouth very well (yes, there are some that do) will never, ever tout the evidence publicly. Press them a bit about why they don’t, and one shall witness oratory escape maneuvers that would put Houdini to shame. It is just not (yet) “politically feasible”, as they say.
Apart from the Dartmouth research, there is another irrefutable piece of evidence that, when it comes to health care, smart beats more: The VA system.
Now, before everyone jump at my throat with the Walter Reed scandal, I would recommend reading Best Care Anywhere, by Philip Longman (updated edition 2010)
As per Maggie Mahar:
In the 2010 edition of Best Care Anywhere Longman also recounts how the Bush administration attempted to dismantle the open-source VistA software culture that Kizer had built, “doing its best to recreate the dysfunctional VA of the 1970s.” Meanwhile, as more vets turned to the VA for care (in part because the care was so much better than it had been in earlier years), the Bush administration failed to provide enough funding, leading to long lines and not a few complaints.
Fortunately for the veterans, the situation has dramatically improved since the change in Administration. (There is still a lot of work to be done, but the trend is toward improvement)
The bottom line is this: Since 1994, the turnaround of the VA system demonstrate it is possible to provide good outcomes with high patient satisfaction (except in psychiatric services, but this is another long and complex story) by following what the evidence provides, instead of being guided by which reimbursement schemes is the flavor du jour.
Similarly, the fear about rising deficits is misplaced right now. As George Soros pointed out in a speech today in Vienna, the action of righting an economy when it faces serious financial stresses is a lot like straightening out a car that has gone into a skid: you need to turn the wheels into the skid, which looks like taking it further off the track where you want it to go, until it regains traction and you can then steer it back to its proper path. In this case, we need an expansion of public debt to offset the needed contraction in private sector debt, and then to (Soros did point out that this was a tricky operation). Otherwise, a resumption of the crisis is in the cards.
There is considerable evidence that the deficit fears in general, and the attack on entitlements in particular, has been marketed actively. Our colleague Tom Ferguson explains below:

Glen Greewald
8. HSBC, too big to jail, is the new poster child for US two-tiered justice system
DOJ officials unblinkingly insist that the banking giant is too powerful and important to subject to the rule of law
The US is the world's largest prison state, imprisoning more of its citizens than any nation on earth, both in absolute numbers and proportionally. It imprisons people for longer periods of time, more mercilessly, and for more trivial transgressions than any nation in the west. This sprawling penal state has been constructed over decades, by both political parties, and it punishes the poor and racial minorities at overwhelmingly disproportionate rates.
But not everyone is subjected to that system of penal harshness. It all changes radically when the nation's most powerful actors are caught breaking the law. With few exceptions, they are gifted not merely with leniency, but full-scale immunity from criminal punishment. Thus have the most egregious crimes of the last decade been fully shielded from prosecution when committed by those with the greatest political and economic power: the construction of a worldwide torture regime, spying on Americans' communications without the warrants required by criminal law by government agencies and the telecom industry, an aggressive war launched on false pretenses, and massive, systemic financial fraud in the banking and credit industry that triggered the 2008 financial crisis.
This two-tiered justice system was the subject of my last book, "With Liberty and Justice for Some", and what was most striking to me as I traced the recent history of this phenomenon is how explicit it has become. Obviously, those with money and power always enjoyed substantial advantages in the US justice system, but lip service was at least always paid to the core precept of the rule of law: that - regardless of power, position and prestige - all stand equal before the blindness of Lady Justice.
It really is the case that this principle is now not only routinely violated, as was always true, but explicitly repudiated, right out in the open. It is commonplace to hear US elites unblinkingly insisting that those who become sufficiently important and influential are - and should be - immunized from the system of criminal punishment to which everyone else is subjected.
Worse, we are constantly told that immunizing those with the greatest power is not for their good, but for our good, for our collective good: because it's better for all of us if society is free of the disruptions that come from trying to punish the most powerful, if we're free of the deprivations that we would collectively experience if we lose their extraordinary value and contributions by prosecuting them.
This rationale was popularized in 1974 when Gerald Ford explained why Richard Nixon - who built his career as a "law-and-order" politician demanding harsh punishments and unforgiving prosecutions for ordinary criminals - would never see the inside of a courtroom after being caught committing multiple felonies; his pardon was for the good not of Nixon, but of all of us. That was the same reasoning hauled out to justify immunity for officials of the National Security State who tortured and telecom giants who illegally spied on Americans (we need them to keep us safe and can't disrupt them with prosecutions), as well as the refusal to prosecute any Wall Street criminals for their fraud (prosecutions for these financial crimes would disrupt our collective economic recovery).
A new episode unveiled on Tuesday is one of the most vivid examples yet of this mentality. Over the last year, federal investigators found that one of the world's largest banks, HSBC, spent years committing serious crimes, involving money laundering for terrorists; "facilitat[ing] money laundering by Mexican drug cartels"; and "mov[ing] tainted money for Saudi banks tied to terrorist groups". Those investigations uncovered substantial evidence "that senior bank officials were complicit in the illegal activity." As but one example, "an HSBC executive at one point argued that the bank should continue working with the Saudi Al Rajhi bank, which has supported Al Qaeda."
Needless to say, these are the kinds of crimes for which ordinary and powerless people are prosecuted and imprisoned with the greatest aggression possible. If you're Muslim and your conduct gets anywhere near helping a terrorist group, even by accident, you're going to prison for a long, long time. In fact, powerless, obscure, low-level employees are routinely sentenced to long prison terms for engaging in relatively petty money laundering schemes, unrelated to terrorism, and on a scale that is a tiny fraction of what HSBC and its senior officials are alleged to have done.
But not HSBC. On Tuesday, not only did the US Justice Department announce that HSBC would not be criminally prosecuted, but outright claimed that the reason is that they are too important, too instrumental to subject them to such disruptions. In other words, shielding them from the system of criminal sanction to which the rest of us are subject is not for their good, but for our common good. We should not be angry, but grateful, for the extraordinary gift bestowed on the global banking giant:
"US authorities defended their decision not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the 'collateral consequences' of taking the bank to court. . . .
"Announcing the record fine at a press conference in New York, assistant attorney general Lanny Breuer said that despite HSBC"s 'blatant failure' to implement anti-money laundering controls and its wilful flouting of US sanctions, the consequences of a criminal prosecution would have been dire.
"Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised.
"HSBC, Britain's biggest bank, said it was 'profoundly sorry' for what it called 'past mistakes' that allowed terrorists and narcotics traffickers to move billions around the financial system and circumvent US banking laws. . . .
"As part of the deal, HSBC has undertaken a five-year agreement with the US department of justice under which it will install an independent monitor to assess reformed internal controls. The bank's top executives will defer part of their bonuses for the whole of the five-year period, while bonuses have been clawed back from a number of former and current executives, including those in the US directly involved at the time.
"John Coffee, a professor of law at Columbia Law School in New York, said the fine was consistent with how US regulators have been treating bank infractions in recent years. 'These days they rarely sue individuals in any meaningful way when the entity will settle. This is largely a function of resource constraints, but also risk aversion, and a willingness to take the course of least resistance,' he said."
DOJ officials touted the $1.9 billion fine HSBC would pay, the largest ever for such a case. As the Guardian's Nils Pratley noted, "the sum represents about four weeks' earnings given the bank's pre-tax profits of $21.9bn last year." Unsurprisingly, "the steady upward progress of HSBC's share price since the scandal exploded in July was unaffected on Tuesday morning."
The New York Times Editors this morning announced: "It is a dark day for the rule of law." There is, said the NYT editors, "no doubt that the wrongdoing at HSBC was serious and pervasive." But the bank is simply too big, too powerful, too important to prosecute.
That's not merely a dark day for the rule of law. It's a wholesale repudiation of it. The US government is expressly saying that banking giants reside outside of - above - the rule of law, that they will not be punished when they get caught red-handed committing criminal offenses for which ordinary people are imprisoned for decades. Aside from the grotesque injustice, the signal it sends is as clear as it is destructive: you are free to commit whatever crimes you want without fear of prosecution. And obviously, if the US government would not prosecute these banks on the ground that they're too big and important, it would - yet again, or rather still - never let them fail.
But this case is the opposite of an anomaly. That the most powerful actors should be immunized from the rule of law - not merely treated better, but fully immunized - is a constant, widely affirmed precept in US justice. It's applied to powerful political and private sector actors alike. Over the past four years, the CIA and NSA have received the same gift, as have top Executive Branch officials, as has the telecom industry, as has most of the banking industry. This is how I described it in "With Liberty and Justice for Some":
"To hear our politicians and our press tell it, the conclusion is inescapable: we're far better off when political and financial elites - and they alone - are shielded from criminal accountability.
"It has become a virtual consensus among the elites that their members are so indispensable to the running of American society that vesting them with immunity from prosecution - even for the most egregious crimes - is not only in their interest but in our interest, too. Prosecutions, courtrooms, and prisons, it's hinted - and sometimes even explicitly stated - are for the rabble, like the street-side drug peddlers we occasionally glimpse from our car windows, not for the political and financial leaders who manage our nation and fuel our prosperity.
"It is simply too disruptive, distracting, and unjust, we are told, to subject them to the burden of legal consequences."
That is precisely the rationale explicitly invoked by DOJ officials to justify their decision to protect HSBC from criminal accountability. These are the same officials who previously immunized Bush-era torturers and warrantless eavesdroppers, telecom giants, and Wall Street executives, even as they continue to persecute whistleblowers at record rates and prosecute ordinary citizens - particularly poor and minorities - with extreme harshness even for trivial offenses. The administration that now offers the excuse that HSBC is too big to prosecute is the same one that quite consciously refused to attempt to break up these banks in the aftermath of the "too-big-to-fail" crisis of 2008, as former TARP overseer Neil Barofsky, among others, has spent years arguing.
And, of course, these HSBC-protectors in the Obama DOJ are the same officials responsible for maintaining and expanding what NYT Editorial Page editor Andrew Rosenthal has accurately described as "essentially a separate justice system for Muslims," one in which "the principle of due process is twisted and selectively applied, if it is applied at all." What has been created is not so much a "two-tiered justice system" as a multi-tiered one, entirely dependent on the identity of the alleged offender rather than the crimes of which they are accused.
Having different "justice systems" for citizens based on their status, wealth, power and prestige is exactly what the US founders argued most strenuously had to be avoided (even as they themselves maintained exactly such a system). But here we have in undeniable clarity not merely proof of exactly how this system functions, but also the rotted and fundamentally corrupt precept on which it's based: that some actors are simply too important and too powerful to punish criminally. As the Nobel Prize-winning economist Joseph Stiglitz warned in 2010, exempting the largest banks from criminal prosecution has meant that lawlessness and "venality" is now "at a higher level" in the US even than that which prevailed in the pervasively corrupt and lawless privatizing era in Russia.
Having the US government act specially to protect the most powerful factions, particularly banks, was a major impetus that sent people into the streets protesting both as part of the early Tea Party movement as well as the Occupy movement. As well as it should: it is truly difficult to imagine corruption and lawlessness more extreme than having the government explicitly place the most powerful factions above the rule of law even as it continues to subject everyone else to disgracefully harsh "justice". If this HSBC gift makes more manifest this radical corruption, then it will at least have achieved some good.
By coincidence, on the very same day that the DOJ announced that HSBC would not be indicted for its multiple money-laundering felonies, the New York Times published a story featuring the harrowing story of an African-American single mother of three who was sentenced to life imprisonment at the age of 27 for a minor drug offense:

"Stephanie George and Judge Roger Vinson had quite different opinions about the lockbox seized by the police from her home in Pensacola. She insisted she had no idea that a former boyfriend had hidden it in her attic. Judge Vinson considered the lockbox, containing a half-kilogram of cocaine, to be evidence of her guilt.
"But the defendant and the judge fully agreed about the fairness of the sentence he imposed in federal court.
"'Even though you have been involved in drugs and drug dealing,' Judge Vinson told Ms. George, 'your role has basically been as a girlfriend and bag holder and money holder but not actively involved in the drug dealing, so certainly in my judgment it does not warrant a life sentence.'
"Yet the judge had no other option on that morning 15 years ago. As her stunned family watched, Ms. George, then 27, who had never been accused of violence, was led from the courtroom to serve a sentence of life without parole.
"'I remember my mom crying out and asking the Lord why,' said Ms. George, now 42, in an interview at the Federal Correctional Institution in Tallahassee. 'Sometimes I still can't believe myself it could happen in America.'"
As the NYT notes - and read her whole story to get the full flavor of it - this is commonplace for the poor and for minorities in the US justice system. Contrast that deeply oppressive, merciless punishment system with the full-scale immunity bestowed on HSBC - along with virtually every powerful and rich lawbreaking faction in America over the last decade - and that is the living, breathing two-tiered US justice system. How this glaringly disparate, and explicitly status-based, treatment under the criminal law does not produce serious social unrest is mystifying.

Book Review: With Liberty and Justice for Some by Glenn Greenwald
This is an infuriating book. There were many times during last weekend when I was reading it that I wanted to hurl it against the wall though I am not by nature prone to such dramatic displays of emotion.
The reason is not the usual one, which is that one hates the book. It is because the story that Greenwald tells, in his typically direct and lawyerly style, about how the US has steadily deteriorated to become a nation to which the labels 'oligarchy', 'plutocracy', and 'banana republic' have become so apropos, was so infuriating. I am old enough and follow politics closely enough that almost all of the individual cases that Greenwald talks about are familiar to me, at least in general terms. But to see it all carefully laid out end to end, to see the steady and deliberate and knowing erosion of the rule of law, to see the corruption and hypocrisy that is at the core of the government-business-media oligarchy that runs the US, to see the cheerleading for this process by the establishment media all the while relentlessly preening themselves on being watchdogs, is to realize how terrible is the current state of affairs.
The subtitle of the book How the Law is Used to Destroy Equality and Protect the Powerful pretty much says it all. He points out that equality before the law is one of the bedrock principles upon which the US was built, and indeed is seen as the basis for any just society, but that ideal has been dramatically undermined in the last four decades. This does not mean that there is, or has ever been, perfect equality in the past. As he writes:

Wealth and power have always conferred substantial advantages, and it is thus unsurprising that throughout history the rich and well-connected have enjoyed superior treatment under the law. In the past, those advantages were broadly seen as failures of justice and ruefully acknowledged as shortcomings of the legal system. Today, however, in a radical and momentous shift, the American political class and its media increasingly repudiate the principle that the law must be equally applied to all. To hear our politicians and our press tell it, the conclusion is inescapable: we're far better off when political and financial elites-and they alone-are shielded from criminal accountability.
It has become a virtual consensus among the elites that their members are so indispensable to the running of American society that vesting them with immunity from prosecution-even for the most egregious crimes-is not only in their interest but in our interest, too. Prosecutions, courtrooms, and prisons, it's hinted-and sometimes even explicitly stated-are for the rabble, like the street-side drug peddlers we occasionally glimpse from our car windows, not for the political and financial leaders who manage our nation and fuel our prosperity. (p. 15)

The Height of Fiscal Folly'
Laura Tyson echoes the message at the end of the post below this one (here too):
The Trade-Off Between Economic Growth and Deficit Reduction, by Laura D’Andrea Tyson, Commentary, NY Times: ...After three years of recovery, the economy is still operating far below its potential and long-term interest rates are hovering near historic lows. Under these circumstances, the case for expansionary fiscal measures, even if they increase the deficit temporarily, is compelling.
A recent study by the International Monetary Fund finds large positive multiplier effects of expansionary fiscal policy on output and employment under such circumstances. ... The rationale for expansionary fiscal policy is particularly compelling for federal investment spending in areas like education and infrastructure...
The economy does not need an outsize dose of fiscal austerity now; it does need a credible deficit-reduction plan to stabilize the debt-to-G.D.P. ratio gradually as the economy recovers. As I contended in an earlier Economix post, the plan should have an unemployment-rate target or trigger that would postpone deficit-reduction measures until the target is achieved. ...
The goal of deficit reduction is to ensure the economy’s long-term growth and stability. It would be the height of fiscal folly to kill the economy’s painful recovery from the Great Recession in pursuit of this goal.

11. A former financial firm exec said via e-mail:
Much (though not all) of what we define as the financial crisis happened without any whistleblowing at all. When asked about their questionable behavior in front of committees or judges, the bankers and industry insiders say that it’s just the way the world works – immoral, but not illegal. It’s part of why bankers react so strongly against Obama and OWS – they feel they are now being persecuted for stuff that everybody was doing and nobody – that they knew – thought it was wrong or illegal.
For 3 employees in a bank, 2 of whom were pretty senior, to speak up about the same deal, something unusual was happening.

And let’s get to the basic issue. The LSS trade, if properly modeled and accounted for, would never have been done in the volume that it was and Canadian investors would have been spared at least some of the disruption and losses that they suffered. But the traders and their managers were able to pull out more in bonuses by booking the trade in a way that exaggerated its profits. This is looting, pure and simple. Tough accounting and controls won’t catch all bad or sloppy behavior, but it would have stopped this trade, and you can be sure it would have prevented others.

The state’s established parent groups – including the PTA – began signaling the day before Tony Bennett’s appointment as Florida’s new education commissioner that the BOE’s  selection of candidates promised to be so divisive that it would  assign them as the spiraling out of control status quoers.. They did it anyway.  Blind to the realities of what Florida’s collapsing multiple accountability system actually means, the BOE unanimously appointed the one candidate who could deliver the most fuel to the fire.  The Herald-Tribune writer Lloyd Dunkelberger has this statement from FEA president Andy Ford:

The Florida Education Association is disappointed and disheartened at the selection of Tony Bennett to be Florida’s education commissioner. Bennett proved to be divisive in his tenure in the same position in Indiana and was voted out of office last month in the conservative state. He is a champion of the testing mania, unchecked expansion of charter schools and voucher programs and has proven to advance the Jeb Bush education agenda that has drawn fire from teachers, parents and experts in the field. That’s the same approach that has led to a flawed and chaotic system in Florida that has frustrated parents and teachers alike. In Indiana, teachers and education professionals felt he was blaming them for all of the state’s education woes.
“We certainly hope he has learned his lessons by being rejected in Indiana. But we’re skeptical. This decision does not indicate that the State Board of Education and Gov. Rick Scott understand that parents, teachers and those who question a flawed reform agenda deserve their voices heard and their insights and expertise incorporated into Florida’s strategy for public education. The Board and the governor once again have ignored the parents and teachers of our state.”
Two days of news from Florida’s parent group opposition trumps hyper-partisans on the board like Kathleen Shanahan who will want to blame the state’s teacher unions. We’ve yet to hear from any of the local school board members across the state who passed resolutions against high-stakes testing or have been battling the state board on charter schools. If Bennett’s history is any clue, he’ll have them riled up within a few weeks of taking the post in January.


13. You may know Florida is getting a new education secretary named Tony Bennett.
(No, not that Tony Bennett … though that’d be kind of cool.)
What you may not know is we’re getting him only because Indiana tossed him out. Voters of that very conservative state — Mitt Romney won by 10 points in Indiana — booted this conservative reformer from office just last month.
Apparently a big reason is that Bennett’s version of “reform” involved a whole lot of teacher-bashing.
Don’t take my word for it. Take it from one of Indiana’s leading voices of conservative school reform, lawyer and blogger Paul Ogden. He penned a piece titled: “Why Tony Bennett Lost —The Folly of Beating Up Teachers for Public Education’s Problems.”
We all know our schools need help. And maybe Bennett learned a lesson. But the last thing this state needs is another teacher-trasher.
Florida’s teacher trasher-in-chief, Jeb Bush, who is close to Bennett, likely used his political capital to assure Bennett was appointed.  But Maxwell goes to the politics of the matter and looks to one of Indiana’s most influential political columnist in Paul Ogden. Here’s a key part of Ogden’s bomb damage assessment of the aftermath of Bennett’s defeat:

When Tony Bennett was elected four years ago, I was puzzled when he made classroom teachers a primary target. I didn’t think that part of his reform philosophy was correct. As it turns out targeting classroom teachers is also bad politics. Teachers are great at networking and voting as a coalition. Unlike what many conservatives think, however, many teachers are, in fact, Republican.
My Democratic friends though are going to be pretty disappointed when they find out that electing Glenda Ritz Superintendent of Public Instruction is unlikely to stop the pace of education reform in this state. Education reform is driven primarily by the Governor and the Indiana General Assembly. Working around Ritz will be a piece of cake. In fact, an untold story is that Bennett’s abrasive style and reluctance to listen to input from others had actually started alienating supporters of education reform, including Republican state legislators.
Bush has been able to stay out of the line of fire during Florida’s recent debacles of its accountability systems that are of his doing. Bennett’s presence will allow his to continue to do so. Yet Bennett has been put into a job where he’s got to be a fixer and not a changer like he was back in Indiana. This may not what he’s all about. I lost count of how many times he used “accountability” during his interview.
Some board members coaxed contrition out of Bennett during his public interview on Tuesday, but he still has to prove it’s genuine. Rick Scott wasted several months on a good will tour he obviously had no intention of following through on, but he has a lightening rod in Bennett and a partisan state board to hide behind now. But the realities of Indiana politics translate to Florida. Republican voters will throw out republicans.

14. Florida School Superintendent: SB 736 Teacher Evaluations “Inconsistent, Unfair, Unscientific”
By: Bob Sikes – Scathing Purple Musings
Just 8 months ago, two retiring Florida superintendents of schools warned that the of SB 736 are “unworkable and may be the tipping point” in Florida’s education accountability system. Bill Vogel (Seminole) and Ron Blocker (Orange) spoke with Orlando Sentinel reporter Dave Weber.
Florida’s runaway school accountability system is destined to fail and take with it the positive goals it was intended to accomplish, the superintendents of Orange and Seminole county schools agreed Friday.
Orange Superintendent Ron Blocker and Bill Vogel, superintendent of Seminole schools, said the state’s school districts are being overwhelmed by demands of the continually expanding accountability system. Teacher evaluations based in large part on student test scores — the latest requirement imposed by the Legislature — are unworkable and may be the tipping point, they said
We have an accountability system that is going to fall apart like a house of cards,” said Vogel,
criticizing state leaders for “making up the rules as they go along” without listening to educators.
…….But what initially started out as testing students to correct their deficiencies has gone astray, Blocker and Vogel said. Using student test scores to evaluate teachers is unproven and costly, they said…….The cost is in the millions and it will bring down the entire accountability system,” Vogel said. Blocker said the increasingly heavy student testing schedule “tends to narrowly focus” on immediate results, bringing concern whether students are gaining lasting knowledge.
Writing in this morning’s Gainesville Sun, Alachua county superintendent Dan Boyd obviously agrees with his colleagues:

The new evaluation system the state rushed to implement is based on what’s called the value-added model, VAM for short. Essentially the state predicts what a student’s score will be on the FCAT, then looks at how the student actually did and evaluates teachers accordingly.
It’s a system that’s been tried and studied in other places across the country. There’s no evidence it’s valid, but the state went ahead with it anyway.
What the state refused to do was come up with one consistent formula for using VAM scores statewide. Instead, it dumped that responsibility onto the districts, which were left to come up with their own formulas with little guidance from the state and without any actual data.
As a result, we’ve got 67 districts with 67 formulas……That’s only one of the system’s many flaws. The law forces districts to assign student VAM scores to all teachers, including those who didn’t teach FCAT subjects or grade levels. As a result, 75 percent of Alachua County’s teachers got scores for subjects they don’t teach, students they don’t teach, or both. It makes no sense, but it’s what we’re stuck with……….Alachua County is sending up a revised plan. The DOE will still have to approve it and it will still have to comply with the law. And there’s the rub, because any way you slice it, this system is badly flawed. It’s inconsistent, it’s unfair and it’s unscientific. Worst of all, there’s no proof that it does anything to actually help students.
One striking agreement between the three is their assertion that SB 736 does nothing for  students. Yet the rhetoric of legislators like now thankfully retired Senator Steve (R-Jacksonville : “kids will be irreparably  harmed”) and Senate President Don Gaetz (R-Niceville: “I’m shocked, shocked that a union doesn’t want to have their members evaluated on the basis of performance.”) leads one to believe they are only interested in getting their way on the backs of Florida’s children.
You can be assured that it is naysayers like the three superintendents that Tony Bennett – the man who wants to be Florida’s next education commissioner is trying to eliminate with the changes in professional educator standards he and Governor Mitch Daniels shoved down the throats of Hoosiers last week.  The folly of not listening to educators and the  arrogance of state policy-makers couldn’t be more obvious for Floridians.

15. Tony Bennett’s Plan to Degrade and Cheapen the Education Profession
By: Bob Sikes – Scathing Purple Musings
In two days, recently ousted Indiana education boss Tony Bennett will sit down for an interview with members of the state board of education at the Tampa Airport Marriott. He’ll find kindred spirits on the board as with the exception of one, all were appointed by either former governor Jeb Bush or current governor Ricks Scott. The lone exception, John Padget, was appointed by Charlie Crist. It’s noteworthy that the only educator on the board is Crist’s appointee, Padget.
Bennett clearly scoffs at the notion that experience, training and professionalism are important in educating the nation’s children. One only needs to look at the plan that Bennett and Indiana governor Mitch Daniels have just rammed through. Here’s the details from an editorial in the Terra Haute Tribune-Star:
*You can get an “adjunct teaching permit” if you have a four-year college degree with at least a 3.0 grade point average and the ability to pass a test of your proficiency to teach a subject — as one newspaper reporter noted, with “no special teacher training, student teaching or experience necessary.”
* If you are a licensed teacher of, say, chemistry, you can also teach, say, French, if you pass a test — no additional classwork required.
*If you want to be a superintendent and don’t have a doctorate but have a master’s degree, go ahead.
* If you want to be a principal but have no master’s but do have two years of teaching experience, a bachelor’s degree and can complete a training program, congratulations.
Bennett is part of the education privatization conspiracy and with the help of Daniel’s clout is greasing the slide for two entities to move into Indiana. With Indiana’s hyper-charter school fetish well underway, Bennett is looking for more opportunities for Teach for American recruits. Wendy Kopp’s corporation received over $70 million in federal taxpayer money in 2011 to churn out new college grads to teach the nation’s schools. Hoping they stay only 2 or 3 years and work cheap, TFA cadets are a preferred option for charter school operators who want to take down a huge salary.
The Bennett-Daniels scam also wants to get people – like those TFA cadets – into principal and superintendent positions who buy into public education as a profit-driven institution. Perhaps even more Broad Foundation candidates who have no education credentials will find their way into Indiana.
One test apparently means everything to Bennett as it’s the only standard that matters in his new plan for teachers. Presumably, the same is true for students. Such narrowness has failed many Florida kids as evidenced by lagging graduation rates and the 54 percent of college freshmen who need remediation. A witness of the Bennett-Daniels education record, the editors of the Tribune-Star add this condemnation of the imposition on new educator standards:
We thought the whole stated point of the Mitch Daniels-Tony Bennett torrent of breakneck changes exacted upon Indiana’s primary and secondary schools was to improve the quality of education so our students would learn better and our teachers and administrators would work smarter.
But actions taken last Wednesday by the Bennett-dominated State Board of Education seem, instead, to lessen the quality of instruction. And, with apologies to “Sesame Street,” the timing the board’s actions was sponsored by the letter “P” — for Politics.
…..But as the days of Bennett’s rule counted down, the fix was in, the rush was on, and the politics won out over reason. If you were looking for an instant example of why Bennett’s style and influence have so inflamed Indiana’s teachers — and not a few administrators — here it is.
Is the fix in for Florida with Bennett being the ultimate hired gun to impose Jeb Bush’s vision? The last-minute maneuvers and protestations in the aftermath of Bennett’s ouster by Indiana voters are  another instance of ideological zealotry the ed reform movement is famous for. We’ll see this week if some Florida ed reformers on the state board are similarly irrational and bring in  a candidate ill-suited to Florida’s needs, but someone just like them.
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16. Has the Florida Department of Education Become a Propaganda Arm of the Education Reform Movement?
By: Bob Sikes – Scathing Purple Musings
It should come as no surprise to anyone that the hacks at the Florida Department of Education would quickly respond to a U.S. Department of Education report which found Florida graduation rates to be, well, abysmal.  It took four days. Lets compare the two reports.
On Monday, Gradebook’s Jeff Solocheck wrote this of the federal report:
The new federal comparison, from 2010-11, doesn’t paint a pretty picture for Florida. For all students, Florida’s graduation rate was 71 percent, lower than all but five states (Alaska, Georgia, Nevada, New Mexico and Oregon) and the District of Columbia.
The state’s rates for minority groups were lower than the total — 69 percent of Hispanics and 59 percent of African-Americans. In comparison to other states, Florida’s Hispanic graduation rate surpassed that of 17 states and D.C., while its African-American graduation rate was better than five states and D.C.
Orlando Sentinel education reporter Leslie Postal wrote this yesterday:
Florida’s high school graduation rate for 2012 was 74.5 percent, an “unprecedented” jump from the previous year, according to the Florida Department of Education.
The graduation rate — calculated using a new federal formula — is 3.9 percentage points higher than last year’s rate 70.6 percent. That is the largest, single-year increase since 2003, using the federal calculation, the department said.
State officials said they were delighted, particularly with the hikes in graduation rates for black and Hispanic students, who have lagged behind when it comes to earning diplomas.
Florida’s graduation rate last year, however, was among the lowest in the nation, according to federal data on most states. Based on 2011 data, Florida’s rate of about 71 percent was better than that of only five other states.
The state’s high schools have been waiting for their grades for eight months, yet the FDOE was able to churn out this past year’s graduation numbers in the matter of hours. How convenient.
Meanwhile a one time charter school owner turned charter school bureaucrat quickly generated favorable data for state charter schools. On November 15, State Impact reporter John O’Connor wrote of UCF professor Stanley Smith research which concluded that the state’s charter schools were not performing as well as public schools. Just six days later, Adam Miller, the FDOE’s charter school director released a contrary report.
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473 + 107 + 10=590

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