Apparently, Scott Brown is a common man, who drives a truck, just like any other regular Joe six-pack. However, when Democrats proposed having the banks foot the $20 Billion cost of Financial Reform, he balked. Instead, he moved for taxpayers to foot the bill. Say what?
In fact, the $20 Billion will come out of the remaining TARP funds, which were supposed to be paid directly towards the deficit. Didn’t Scott Brown campaign on deficit reduction? His voters certainly considered it a priority. Huh?
Some banks, those that take deposits, will have to pay slightly higher assessments to the FDIC; however hedge funds and investment banks get off scot-free. Sound familiar? So I guess Brown should probably trade in his truck for whatever hedge fund managers are driving these days. Porche? Mercedes? Anyone have any helpful tips for the intrepid Senator?
Yesterday, the Supreme Court, in a 5-4 decision in McDonald v. City of Chicago, ruled that the 2nd Amendment applies to state and local laws, as well as federal laws. Their decision will likely end the handgun ban in Chicago, two years after a similar law was struck down in the District of Columbia. The ruling is likely the final blow to gun prohibition in this country as a principle. However, the ruling was not a free for all for gun rights. In fact, the decision supported reasonable restrictions on gun rights, enough to make the Brady Campaign President Paul Helmke happy:
‘”The crucial part of the ruling today is that it really is fairly narrow,” noting that the court acknowledged gun-control restrictions that fall short of bans. “The one extreme of handgun bans, total gun bans, that’s off the table now. But they’ve also taken the extreme any gun, anywhere, anybody, anytime–that’s off the table too,” Helmke said.’
Now, advocates of strict gun control point out that 258 Chicago public school students were shot last year. However, those guns were introduced into the city in the midst of the handgun ban, which begs the question of whether prohibition really works. Certainly, a close look at the ‘War on Drugs’ would show you that the war is being lost. Looking at guns, what level of restriction is reasonable? A consensus has grown supporting the 2nd Amendment in this country, so much so that both Sarah Palin and Harry Reid applauded yesterday’s ruling. In fact, Democrats look to benefit politically from this ruling in November.
However, what about the gun show loophole? Should potential gun owners be required to undergo a background check before purchasing a weapon? The loophole, where buyers can get guns from private dealers at gun shows, exists. The NRA argues that the loophole is a ‘myth:’
“Though Congress specifically has applied the background check requirement to dealers only, and specifically exempted from the dealer licensing requirement persons who occasionally sell guns from their personal collections, gun prohibition activists call this a “loophole.” Gun prohibitionists also falsely claim that many criminals get guns from gun shows; the most recent federal study puts the figure at only 0.7 percent.”
Obviously, there is a conflict between the report from ABC and the NRA legislative wing. There is no doubt that the NRA would be tickled pink if all gun laws were struck down. However, the consensus around the 2nd Amendment does not go as far as the NRA fantasizes. Most people would support reasonable restrictions.
Anyone who has watched the Wire has no illusions about gun restrictions keeping guns away from criminals. In fact, gun laws are often used as valid charges to arrest criminals by police. Any gun regulation should make it a sensible process to buy and sell weapons. However, there should also be enforceable restrictions, requiring background checks, that are reasonable. Education on gun safety should be part of that restriction.
I grew up in Northwest Pennsylvania, and underwent hunter safety training in middle school. Guns were very common in that rural community, but it was clear to me at a young age that they were dangerous and needed to be handled the right way. Later, in the Navy, I was responsible for many weapons, and their safe use. We conducted lots and lots of training for the folks who had to bear those weapons on watch. In the Navy, when weapons were taken for granted, the conditions for misuse were created. That is why training and education are so crucial.
At the end of the day, while some will look at yesterday’s Supreme Court decision as a victory for gun owners and the NRA, I look at it as a reflection of the growing consensus around reasonable restriction. Like abortion and other emotional issues, there will always be zealots on both sides. However, as Politico observes, the decision removes those zealots from the decision making process in November.
Do you like your gadget? Everyone likes gadgets these days, whether you own an iPhone, a Blackberry, a Kindle, an iPad, or any number of laptops cellphones, and slim cameras, you name it, they are all devices that are tiny, capable, and cool. Well, did you know that critical components may come from a country known as “the rape capital of the world?”
Nicholas Kristoff described what he has seen in the Congo in a column this weekend:
“In Congo, I’ve seen women who have been mutilated, children who have been forced to eat their parents’ flesh, girls who have been subjected to rapes that destroyed their insides. Warlords finance their predations in part through the sale of mineral ore containing tantalum, tungsten, tin and gold. For example, tantalum from Congo is used to make electrical capacitors that go into phones, computers and gaming devices.”
In the Congo, 5.4 million people have died since 1998, in what is considered the deadliest cnflict across the world since World War II. In 2006, the Congo held its first democratic election since independance in 1960, and approved a new constitution, but despite the creation of a stable government, violence persists. Time magazine described the situation after that election:
“The suffering of Congo’s people continues. Fighting persists in the east, where rebel holdouts loot, rape and murder. The Congolese army, which was meant to be both symbol and protector in the reunited country, has cut its own murderous swath, carrying out executions and razing villages. Even deadlier are the side effects of war, the scars left by years of brutality that disfigure Congo’s society and infrastructure. The country is plagued by bad sanitation, disease, malnutrition and dislocation. Routine and treatable illnesses have become weapons of mass destruction. According to the IRC, which has conducted a series of detailed mortality surveys over the past six years, 1,250 Congolese still die every day because of war-related causes–the vast majority succumbing to diseases and malnutrition that wouldn’t exist in peaceful times. In many respects, the country remains as broken, volatile and dangerous as ever, which is to say, among the very worst places on earth.”
Activists are raising awareness on the issue, as you can see in the above video. In fact, an amendment was included in the financial reform bill that will require companies like Research in Motion, Intel, and Apple to report their use of conflict minerals. However, it is up to consumers to demand that companies like Apple include minerals from Australia instead of the Congo. An iPhone with tantalum from the Congo is just not cool anymore. You can sign a petition here that will be delivered to the 21 biggest electronics companies, and you can demand that companies prove how they sourced their minerals before you buy a new gadget. It is the very least that we can do.
Last night, just before the clock turned to midnight, almost two years after the global financial system nearly collapsed, House and Senate committees reached agreement on reconciliation of their respective Financial Reform packages. The bill should be headed for a successful vote. What level of protection will we have going forward?
Looking back, the economy nearly collapsed because of too much systemic risk spread across financial institutions that are “too big to fail.” At the 11th hour, after Bear Sterns nearly collapsed, and Lehman Brothers went into bankruptcy, the surviving financial institutions converted into bank holding companies and received access to the Discount Window at the Federal Reserve, which allowed them to reduce their leverage with basically free money. In addition to that bailout, much of the toxic assets on the books of these institutions were bought or guaranteed by the Fed.
Would it be enough to require these institutions to hold more capital? Simon Johnson points out that the targeted requirement of 10-12% is actually what Lehman Brothers had on the book before they collapsed.
One good aspect of this bill is the inclusion of a compromise Volcker Rule. Paul Volcker, the former Federal Reserve Chairman who proposed the rule, intended to restrict the ability of banks whose deposits are federally insured from trading for their own benefit. Banks and large Wall Street firms, who view it as a major incursion on their most profitable activity, fiercely oppose the Volcker Rule. The compromise would allow them to continue some investing and trading activity, no more than 3 percent of a fund’s capital; those investments could also total no more than 3 percent of a bank’s tangible equity.
The proposal by Senator Blanche Lincoln that would have banned banks from any derivatives activities was loosed to a requirement that banks and the companies that own them be required to segregate the activity. In theory this would prevent depositors money from being traded in derivatives, but isn’t this just shuffling around the balance sheet instead?
The new Consumer Protection Agency is a good move. If the President puts someone like Elizabeth Warren in charge, we will see standardized, consumer friendly credit card statements, along with many other sensible reforms. Of course, an exception for Auto Dealers was negotiated at the last minute. If you go outside any military base you will she signs that say “financing available for E-1 and above.” What those signs don’t say is that the interest rates for those E-1’s will be 30%, and that those 18-year-old kids just want the shiny new car. In the same vein, I hope payday lenders will be subject to the new Agency, though I don’t doubt that powerful legislators may have exempted them as well.
Ultimately, at the end of the day, while there are admirable measures in this Reform, and while it is better than the status quo, this bill does nothing to deal with institutions being too big to fail. The Brown Kaufmann amendment, which was defeated by among other opponents, The White House, would have forced banks to become smaller and limited what they could borrow from the Fed. We taxpayers will one day have to confront these massive institutions and bail them out again, with the proverbial gun to our head. It is inevitable.
It is instructive to look at the history of Bear Sterns, as detailed in the excellent book, House of Cards. When that firm became a stalwart after the Great Depression, the partners were all personally invested in each financial investment decision. They had skin in the game, and they were much more conservative as a result. Deregulation in the 1980s and the 1990s allowed firms like Bear Sterns to leverage, more and more, their clients funds, and engage in riskier and riskier behavior. Without the personal investment, the people in charge of Bear Sterns were no longer worried about the long view, just the next quarter. Much like politicians who are simply worried about re-election and not about proper governance, these denizens of Wall St. were now only concerned with rising stock price and short term gains. We lost something along the way, and unfortunately, we are not going to get it back.
The past 48 hours featured a series of inspired sports events that captured the hearts and imaginations of people around the world. At Wimbledon, in England, American John Isner and Frenchman Nicholas Mahut played for over 11 hours of match time, with Isner prevailing in the 5th set 70-68. The match, which was twice suspended for darkness, and played over three days, shattered records for the number of games in a set (138), most games in a match (183), most combined aces (215), and most individual aces, 112 by Isner. Both players held serve for 68 consecutive games in the 5th set, and it was a display of will and heroic play that you rarely see.
At the same time, a hemisphere away in South Africa, several upstart teams played remarkable matches. Of course, the United States won yesterday, advancing after Landon Donovan scored during stoppage time to beat Algeria. Today, the Kiwis from New Zealand nearly pulled off the same feat, but failed to score against Paraguay. The World Cup is always a spectacle, because in these matches, teams do not represent a club or a paycheck, but rather their country. South Africans were visibly inspired after their team upset Les Bleus of France two days ago.
For Americans, the World Cup is just one small part of our experience; but for many other countries, the World Cup represents much more –the hopes and dreams of a nation, yearning for something more. Amid these spectacles of sport, which spoiled many a fan in the last few days, a remarkable documentary; The Two Escobars, which premiered on ESPN, tells the story of the Columbian national team leading up to, and during the 1994 World Cup:
“While rival drug cartels warred in the streets and the country’s murder rate climbed to highest in the world, the Colombian national soccer team set out to blaze a new image for their country. What followed was a mysteriously rapid rise to glory, as the team catapulted out of decades of obscurity to become one of the best teams in the world. Central to this success were two men named Escobar: Andrés, the captain and poster child of the National Team, and Pablo, the infamous drug baron who pioneered the phenomenon known in the underworld as “Narco-soccer.” But just when Colombia was expected to win the 1994 World Cup and transform its international image, the shocking murder of Andres Escobar dashed the hopes of a nation. Through the glory and the tragedy, The Two Escobars daringly investigates the secret marriage of crime and sport, and uncovers the surprising connections between the murders of Andres and Pablo.”
Americans might remember the own goal that Andres Escobar scored to propel the Americans to a 1-0 victory at the Rose Bowl. Drug kingpins assassinated Andres Escobar upon his return to Columbia. The Two Escobars is haunting; it shows the power of sports to capture the heart of a people, and the many tragedies of Columbia during those years. Luckily for you the film will appear five more times on ESPN networks during the next month.
The heartbreak kids have done it again. After 90 minutes in which another US goal, this time by Clint Dempsey, was negated by another bad (offsides) call, Landon Donovan, America’s leader, scored the winner during stoppage time, breaking a scoreless tie that would have eliminated the Americans from the World Cup. The Americans once again fought through adversity and many near-miss chances to win their Group for the first time since 1930. This team has displayed mastery in the clutch moments, scoring often at the end of matches during their qualifying run. Now they advance out of Group C as the winner. These boys deserve all the support we can give them. USA! USA! USA! USA!
Before I begin to tell you what brought me to tears this morning, I want to ask you what exactly you would be willing to sacrifice for cheap energy. Think about all the material goods that you buy with cheap energy, all of the disposable and replaceable goods. Think about all of the devices in your home that consume electricity, and all of the functions they provide for you. Now, consider what you would be willing to give up in order to ensure that the supply of cheap energy is unending. What if you learned that the water from your tap was no longer drinkable? What if you learned that you might have irreversible brain damage? What if you learned that you might lose your sense of taste and smell? Would that be worth it?
Well, this morning I watched the new documentary Gasland, which premiered on HBO last night. Immediately, my connection to the subject matter was visceral, because like the filmmaker, Josh Fox, I am a Pennsylvanian by birth. Fox owns a home on 19 acres of pristine forest that is part of the Marcellus Shale, a formation of sedimentary rock that stretches throughout the Appalachian Basin from New York, south to Virginia. Energy companies targeted the Marcellus Shale for its natural gas resources, along with other shale formations across the country. The Marcellus Shale alone was estimated in April 2009 by the Department of Energy to contain 262 Trillion Cubic Feet of Natural Gas. However, industry estimates exceed this amount. To extract natural gas from shale formations, energy companies use Halliburton-proprietary technology.
How is the natural gas extracted? A technique known as hydraulic fracturing, or fracking is used. A well is drilled deep (typically about 8,000 feet) into the shale formation, and millions of gallons of water, sand, and proprietary chemicals are injected at high pressure into the well. The pressure fractures the shale and opens fissures, which allow the natural gas to flow freely out of the well. Sounds simple, right? Well, 596 chemicals are used in the fracking process. In 2005, the Bush/Cheney Energy Bill (known officially as the Energy Policy Act of 2005) exempted natural gas drilling from the Safe Drinking Water Act? Why was that legislation necessary? It exempted the energy companies from disclosing the chemicals used in the fracking process. For each frack, 80-300 tons of chemicals may be used. Scientists have identified volatile organic compounds (VOCs) such as benzene, toluene, ethyl benzene and xylene. Fracking produces wastewater, and the VOCs in the wastewater are evaporated into the air, where they produce ground level ozone, which can travel up to 250 miles.
The really disturbing part of this process is the contamination of drinking water. Fox travels across the country to Colorado, Wyoming, Arkansas, and Texas, where this technology has been deployed, and goes into homes where the tap water is now flammable. The scale of the development is extensive.
I urge you to watch this film, and spread the word about this ongoing environmental catastrophe. This technology raises the question of what lengths we as Americans will go to for cheap energy. Is our standard of living sustainable? What are the consequences of that cheap energy? Economists consider consequences that are not reflected in the cost of a product externalities. Right now the costs of our energy are not transparent, but purposely opaque. The 2005 Bush/Cheney exemption is a prime example of this. Clean natural gas is just as much of a misnomer as clean coal. There is no free lunch. Americans need to reconsider the sustainability of our economy, of our lifestyles. Permanent damage is occuring daily.
However, there is one thing that you can do now to help the communities affected, and help to increase the safety requirements in natural gas extraction: call your Senators and Representatives, and demand that the Frac Act be passed.
The Fracturing Responsibility and Awareness of Chemicals Act (H.R. 2766), (S. 1215)—was introduced to both houses of the United States Congress on June 9, 2009, and aims to repeal the exemption for hydraulic fracturing in the Safe Drinking Water Act. It would require the energy industry to disclose the chemicals it mixes with the water and sand it pumps underground in the hydraulic fracturing process, information that has largely been protected as trade secrets. The House bill was introduced by representatives Diana DeGette, D-Colo., Maurice Hinchey D-N.Y., and Jared Polis, D-Colo. The Senate version was introduced by senators Bob Casey, D-Pa., and Chuck Schumer, D-N.Y. Needless to say, the energy industry opposes this act. Gasland breaks my heart, because the Pennsylvania that I grew up in is at risk. So is the water supply of New York City and Philadelphia. Please see this important film, and take action.