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Goldman Fraud Suit Link to AIG Payouts?

Sat, 04/17/2010 - 23:00

graphic: twolf1

I suspect I just missed this before, but . . .

Remember the outrage following the New York Federal Reserve’s decision to cover 100 percent of the credit default swaps claims against AIG. Well, now it appears that payout may have been for the same types of Goldman Sachs initiated securities over which Goldman is now being sued by the Securities and Exchange Commission.

From the continuing fine reporting by the Times’ Louise Story and Gretchen Morgenson we get a very helpful chart of the scheme and more clarity on how it worked.

Goldman used ACA Management as the respectable front for the alleged scam, telling potential investors that ACA Management was a disinterested independent entity compiling the mortgage-based securities that would be placed in one of the numerous Abacus investments. Meanwhile, SEC alleges, Mr. Taurre, a Goldman VP, knew that hedge fund manager John Paulson was not only helping select likely-to-fail securities for that investment, but also planning to bet against them because he believed the mortgage bonds on which the investment was based would fail. The investors betting the same securities would be fine weren’t told about this conflict.

Goldman structured the Abacus portfolios with a sharp eye on the credit ratings assigned to the mortgage bonds contained in them, the S.E.C. said. In the Abacus deal cited in the S.E.C. complaint, Mr. Paulson pinpointed those mortgage bonds that he believed carried higher ratings than the underlying loans deserved.

Goldman placed insurance on those bonds — called credit-default swaps — inside Abacus, allowing Mr. Paulson to bet against the bonds while clients on the other side of the trade wagered that they would make money.

But when Goldman sold shares in Abacus to investors, the bank and Mr. Tourre disclosed only the ratings of those bonds and did not disclose that Mr. Paulson was on the other side, betting those ratings were wrong. . . .

But that wasn’t the only Abacus investment that might have been structured this way:

In seven of Goldman’s Abacus deals, the bank went to the American International Group for insurance on the bonds. Those deals have led to billions of dollars in losses at A.I.G., which received a $180 billion taxpayer rescue. The Abacus deal in the S.E.C. complaint was not one of them.

That deal was managed by ACA Management, a part of ACA Capital Holdings, which changed its name in 2008 to Manifold Capital.

So, shouldn’t we be asking whether AIG was used in the same way that ACA Management was used? Were the Credit Default Swaps for which AIG was on the hook — and which taxpayers would eventually pay off at 100 percent — also influenced by Goldman directly or through John Paulson or other hedge funds intending to create investments that, while sanctioned by AIG, were bound to fail and make the secret creators rich?

Officials at NYFed testified earlier at the Financial Crisis Inquiry Commission and before Congress about the 100 percent payout, but that was before we knew the latest details on the alleged Goldman fraud. Maybe it’s time to haul these folks back and ask whether they were also duped by Goldman, AIG or others.

More fraud stuff:

Yves Smith: Rabobank Merrill Committed Similar Fraud to Goldman with a Magnetar-sponsored CDO

Community Power! Saturday Election Digest

Sat, 04/17/2010 - 22:32

Before heading into the election digest this week (and sending you off to take the poll), I'd like to highlight some commentary from three progressive state blogs that offer cleverness, analysis, originality or all three.

Michael Hurta writes Burnt Orange from Texas:

I'm not the biggest fan of the University of Texas' Student Government, but I do enjoy my campus's tradition for joke candidates and campaigns.  Last year, Zak Kinnaird insisted he deserved the student body presidency because he looked good in a suit.  A handful of students voted for him, but no one thought he was truly ready to run student government.

It was a joke, and it was funny.  A guy named Liam O'Rourke was elected student body president and everyone moved on.  We laughed safely because student government only slightly affected our lives.  But for a real government leader, one in a position that significantly affects my life, to put on a suit and expect us to think good of him?

Oh wait.  We have Rick Perry.  Bill White succeeded to make education a priority in the 2010 election talk, because that's part of what state government does.  In response, Governor Rick Perry just puts on a suit.  He's just disguising himself and looking good.

Michael Shay at hummingbirdminds in Wyoming:

This is old news now, but Bill Ayers is coming to speak at the University of Wyoming in Laramie on April 28. This convoluted story gets more interesting all the time. Suffice to say that it took free-speech advocate Meg Lanker a few weeks to get Ayers to Laramie. He won't be speaking on campus -- that's been ruled out by the administration. But he will be speaking somewhere in Laramie.

Empathetic Republicans are always so concerned that anger may be escalated. That's only when it comes to speeches by Liberals. Who cares when Tea Party activists threaten bodily harm against elected officials? ...

And when did Wyomingites turn into such weinies? Intimidated by a little ol' leftist? People in Laramie scared? What would The Virginian say to that?

TheGreenMiles writes at Blue Virginia:

Last month, I asked "Is there anything State Sen. Robert Hurt (R-Chatham) won't do for his donors at [American Electric Power subsidiary] Appalachian Power?" Today, we're learning more about what's in it for Hurt as he tries to win the GOP nomination to challenge Rep. Tom Perriello (D-5th).

Hurt's shilling came into the spotlight as he made outlandish excuses to defend Appalachian Power's massive rate hike in December. When 5th district voters expressed outrage at the huge price spike in the middle of a recession, Hurt claimed Appalachian Power had no choice but to raise rates because of carbon pollution regulations. Just one problem -- those regulations don't actually exist yet.

Take the poll, then find some candidate diaries to read from last week's crop.


Pataki Calls RomneyCare ‘Unconstitutional,’ Joins Growing Conservative Opposition To Mass. Reform

Sat, 04/17/2010 - 21:42
Romney's been in a precarious place from the beginning since, experts say, his health care reform effort in Massachusetts is similar to the national plan just passed. From ThinkProgress:Former Gov. George Pataki (R-NY), who is heading up an effort to petition the government to “repeal and replace” the new health care law, took a shot at Mitt Romney today, telling a Connecticut newspaper that Massachusetts’ health care reform law contained an “unconstitutional” individual mandate.


Damned If You Do, Damned If You Don't

Sat, 04/17/2010 - 21:18

Oh, terrific.

Women with a hyphenated last name or their husband's surname are judged as being more traditionally feminine, according to a new study. More specifically, surname-changers are seen as more dependent, less intelligent and less ambitious -- a triple threat of perhaps the most unflattering of female stereotypes.

And you know what that means.

When participants were asked to evaluate hypothetical women as job candidates, "these judgments affected the chance that a woman would be hired as well as the estimation of her salary: compared to a woman who kept her own name, she was less likely to be hired and her salary was estimated considerably lower" -- $1,172.36 lower, to be exact.

Okay, so women shouldn't change their names when they marry. Right?

About 70% of Americans agree, either somewhat or strongly, that it's beneficial for women to take her husband's last name when they marry, while 29% say it's better for women to keep their own names, finds a study being presented today at the American Sociological Association's annual meeting in San Francisco.

Oh, and it gets better.

Hamilton says that about half of respondents went so far as to say that the government should mandate women to change their names when they marry, a finding she called "really interesting," considering typical attitudes towards government intervention. "Americans tend to be very cautious when it comes to state intervention in family life," she says.

So women should change their names when they marry -- heck, maybe the government should even make it mandatory -- but then they'll be perceived as dependent and less ambitious. And less intelligent. And they'll be paid less. But hey, it's all for the good of The Family, so suck it up, ladies.

Who needs to be independent, fairly paid, and intelligent anyway?


FDL Book Salon Welcomes Ari Melber, Year One of Organizing for America

Sat, 04/17/2010 - 21:00

[Welcome Ari Melber, and Host Daniel Galvin, author of, Presidential Party Building: Dwight D. Eisenhower to George W. Bush]

[As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread.  - bev]

Year One of Organizing for America: The Permanent Field Campaign in a Digital Age

The Obama for America campaign assembled the largest activist and volunteer network in history: 13 million email addresses, 4 million donors, 2 million registered members of my.BarackObama.com, tens of thousands of trained activists, five thousand paid staff, and countless local volunteers. The campaign connected supporters at the grassroots level, gave them access to cutting edge technologies, and empowered them to organize on their own initiative. These individuals constituted Obama’s core group, and their dedication to the candidate was palpable. Obama credited them with his victory.

But the morning after the election, the million dollar question was what would happen to this massive, diverse group, now that victory was achieved? Clearly, Obama couldn’t just tuck his database away for four years and expect it to be ready to go again in 2012. Something had to be done to keep the network active, nurture it, and perhaps even grow it. After all, this organizational juggernaut offered more than a head-start on the reelection campaign: it was also a potentially useful resource for governing – it represented a new kind of “power tool” for the president in his effort to turn the promise of his campaign into a reality.

As Melber points out, however, converting a campaign organization into an instrument for governing was no easy task, and its prospects were uncertain: could momentum be sustained in the absence of an electoral campaign? How much of the network would want to be engaged in policy-oriented campaigns? How would disagreements over policy be handled?

The MoveOn.org model suggested that it could be done. But the Obama campaign was not MoveOn.org – it was, fundamentally, an organization designed to elect a candidate on November 4, 2008. Besides, Obama didn’t necessarily want his campaign network to become another MoveOn.org. By law, advocacy organizations must operate separately from the president and his party; if he followed the Moveon.org model, Obama would lose control of it.

Rather than tuck it away or set it free, Obama opted for a middle course. He folded it into the DNC as a quasi-independent entity, changed its name to Organizing for America (keeping the initials the same), and called it a “project” of the national party. It would share resources, staff, and strategy with the party while maintaining its ostensible “outsider” status. Its only public affiliation with the Democratic Party proper would appear in the fine print. This would allow OFA to be like Moveon.org in its activities while remaining within the president’s control.

Once these structural questions were settled, the real work began. But this is also when the curtains were drawn on the whole enterprise. The management of OFA became shrouded in mystery, as most party operations are. (Party activities are rarely designed in public, lest the opposition get wind of the strategy.) What policy priorities would OFA emphasize? How would the network be nurtured? How often would the leadership communicate with the members? What kinds of activities would OFA engage in (lobbying Congress, mobilizing at the grassroots, recruiting candidates and doing other traditional party-oriented work, or what)? How hard would OFA push elected Democrats? Republicans?

The veil has been lifted with Ari Melber’s impressive report. Throughout 2009, Melber recorded with meticulous detail every piece of information that could be found on what OFA was up to. Not content with the slow leak of public information, however, Melber undertook his own investigative work, conducting original surveys and personal interviews with OFA members and volunteers, congressional staff, and former Obama campaign workers. The result is an exhaustively researched 74-page report that penetrates the entire OFA operation and examines it from different angles: from the perspective of insiders (OFA members and former campaign staff), outsiders (scholars and observers), and the targets of many OFA activities (members of Congress). It is, in short, a unique, insightful, and invaluable report.

One of the main selling points of Melber’s report is its careful documentation of OFA’s activities. But equally important, I would argue, are the questions it raises.

Melber explains that OFA represents something new in American history, and as such, it holds the potential to change the way politics is done in this country – or not! Will it? That is one question. But there are many others.

For example, what impact will OFA – and the OFA model – have on presidential power? As OFA makes adjustments and sharpens its operations, will it enhance the president’s power vis-à-vis Congress? Will it accelerate the shift in the balance of power between the branches that we have witnessed over the last century or so? If so, is this desirable? Do we really want to add more tools to the president’s arsenal? Those sympathetic with Obama’s agenda might say yes, but is this the kind of tool that you would want a President Palin to wield in 2013?

Melber does not seem to view OFA as an instrument of presidential power so much as a potentially powerful community-building enterprise, a generator of social capital, an agent of (small-d) democratic politics. He suggests that OFA has already had some positive effects in this area. But I can’t help but wonder: can the social-capital benefits of such a people-powered organization offset the potential dangers of enhanced presidential power? Can OFA’s community-organizing function also act as a check on the president and hold him more accountable to the people? How, and through what mechanisms? Presumably, much will turn on how top-down versus bottom-up OFA becomes. (Melber offers some interesting ideas for how to make it more bottom-up.)

Such concerns may be premature, of course, as OFA has yet to prove itself either as a major force of presidential power or as a major force for democratic integration. But both are open possibilities. It’s up to us to monitor its progress and debate its significance.

Melber raises many other kinds of questions, too: for example, can OFA improve upon its performance in the health care campaign? Can it be put to use on behalf of local Democratic campaigns in the fall? How will things change now that Plouffe is back in action? Why is Rahm Emanuel ambivalent about the whole operation? Will the Republicans copy OFA?

But these only scratch the surface. I hope we can get a good discussion going in this forum. Let the comments and questions begin!

CA-Gov: Jerry Brown Shows Up To Campaign For Governor, Calls For Debates

Sat, 04/17/2010 - 20:30

Jerry Brown by roberthuffstutter (flickr)

After an introductory video where he called for the type of spending cap and rainy day fund that Californians overwhelmingly rejected last May, former California Governor Jerry Brown took to the stage in Los Angeles to chants of “Jerry! Jerry!” And he delivered a bombshell – calling for an immediate series of debates, before the end of the primary campaign, between himself, Meg Whitman and Steve Poizner, the major candidates for Governor.

Brown released a letter to both Whitman and Poizner calling for three debates around the state, in San Diego, Los Angeles and San Francisco. “We should not delay an honest and open discussion of the issues, and I believe you will agree that 30 and 60-second TV commercials are no substitute for serious debate.”

I think Whitman would disagree, actually. And typically the “call for debates” ploy is the one that the underdog adopts. But in this case, at least Brown is signaling that he wants to reach out and offer a vision for the future of the state. And that vision came today with an absolute pounding of the Wall Street banks and a hefty dose of populism. “Democrats saved this country from the Depression, now Democrats are trying to save this country from the Wall Street ripoff and the credit meltdown,” said Brown.

“Democracy is not about buying hundreds of millions of dollars in 30-second TV ads,” Brown told the assembled delegates. “We’re not consumers of advertising, we’re agents of democratic choice. I think we need a different framework. I am challenging my Democratic opponents to a three-way debate. Come out from behind those glittering poppy fields… come out and debate in prime-time.”

Obviously, Brown is trying to paint his multi-millionaire opponents, particularly Whitman, as marketing tools instead of public servants, and he is positioning himself as the man of ideas in the race instead of the product touted in TV ads.

Brown called for job creation effort through greentech, but insisted that we can’t go back to “the same practices and abuses” in the financial industry “that caused the collapse in the first place… That collapse destroyed over $11 trillion dollars. The greatest bank robbery in the history of this country. The government didn’t do that, Wall Street did that. The market scam operators did that.”

It was an interesting approach that at least shook up the conversation a bit in an otherwise torpid race on the Democratic side of the aisle.

Midday Open Thread

Sat, 04/17/2010 - 20:00
  • Dan Savage thinks teh gays should reward Iowa for that whole equal marriage thing.

    Des Moines—where I was once briefly incarcerated—is an interesting city with corn-fed gay boys (and a couple of actual gay bars) and tons of straight people who are thrilled when people drop by in between the Iowa caucuses. If teh gays got together and booked a block of rooms in a hotel in Des Moines on a Thursday night and bought out the Hotel Pattee for the rest of the weekend, I'd fly in—instead of over—for that.

  • Backwards B, Part II.
  • Closeted Out anti-gay crusader State Senator Roy Ashburn sentenced to 48 hours in jail and three years of probation for driving under the influence. But perhaps the bigger punishment is this Facebook group: 1,000,000 Gay Men and Allies Against Roy Ashburn Having Sex Ever Again.
  • Shocker: Newt Gingrich was wrong.
  • More evidence that mainstream organizations charged with protecting reproductive rights have utterly failed with the post-Roe generation.

    A survey of 700 young Americans showed there was a stark "intensity gap" on abortion. More than half (51 percent) of young voters (under 30) who opposed abortion rights considered it a "very important" voting issue, compared with just 26 percent of abortion-rights supporters; a similar but smaller gap existed among older voters, too. Worse still for NARAL, the millennials surveyed didn't view abortion as an imperiled right in need of defenders. As one young mother in a focus group told NARAL, it seemed to her that abortion was easily accessible. How did she know? The parking lot at her local clinic, she told them, was always full.

  • Celebrity sex tapes are ruining traditional porn.
  • Redemption for those of us who damn well know Han shot first.


Massey Energy – When Profit Kills

Sat, 04/17/2010 - 19:45

Upper Big Branch mine memorial by jamiev_03 (flickr)

In the late afternoon of April 5th of this year, an explosion ripped through the Upper Big Branch Coal mine. It killed 29 of the 200 or so miners that were working underground that day. Mining is a dangerous business, especially coal mining where the material you are mining is the same material that holds up the roof. There is also the added problem that coal is carbon, and where there are large amounts of carbon there will be volatile hydrocarbons, specifically methane. A methane and or coal dust ignition is the likely cause of the explosion at the Upper Big Branch Mine.

The physics of the explosion do not really tell us the cause of this disaster. We have been mining coal commercially in the United States since before it was the United States. The first commercial coal mine started operations here in 1730. In the last 280 years we have amassed a huge body of knowledge on what it takes to mine in relative safety. The problem, at least for some, is that to mine safely means mining in a more expensive way.

This brings us to Don Blankenship. He is the Chairman and CEO of Massey Energy which owns and runs the Upper Big Branch Mine. Mr. Blankenship has long been an opponent of increased regulation of mine safety. He has repeatedly said that the Mine Safety and Health Administration has no idea how to run a mine safely. He has resisted and challenged safety citations at every turn.

His opinion might carry more weight if he were actually trained in mine engineering or mine safety. Unfortunately Mr. Blankenship is an accountant not a mine engineer. He earned his degree in accounting from Marshall University in 1972. To me this is the key fact we need to know and understand about him, he does not view the business of mining from any point of view except squeezing the bottom line.

It is this hyper-capitalistic world view that led him to do whatever it took to break the union that was in place when Massey bought the Upper Big Branch mine in 1993. He finally managed to break the union in 1997. Soon after that things began to change at the UBBM. He shifted from three eight hour shifts to two twelve hour ones, which meant less workers for the same amount of production. It also meant that anyone working in the mine would be more tiered and more prone to accidents and injuries.

The goal was to run out the remnants of the union and to reduce the average age of workers in the mine to 25. The saying around the mine at the time was: “A man is like a tool. If it’s bent or broke, get rid of it, and get you a new one.” The goal of reducing the age of the workforce through attrition was also to avoid having to pay retirement benefits to the older workers. All of this to squeeze more profit from the mine.

Blankenship is obsessed with cost control. Virtually every purchase order goes straight to his office. In a Vanity Fair column Michael Shnayerson reports:

In one of the managers’ offices, I was told, a red phone was installed, with a direct line to Mr. B. Production figures were relayed to Mr. B every day; if the line stopped for even an hour, the on-site managers had to explain why. Purchase orders for the smallest items had to be cleared with Don: one manager told me of his amazement in learning, soon after arriving at Massey, that Don had to sign off on a tankful of gas for the manager’s Massey truck.

Think about that for minute. If the CEO of a company is so obsessed with cost that he wants to okay fuel for the truck of a manager, what other areas will he try to scrimp on? We actually know his thinking from the 2005 memo where he said:

“If any of you have been asked by your group presidents, your supervisors, engineers, or anyone else to do anything other than run coal (i.e. build overcasts, do construction jobs, or whatever) you need to ignore them and run coal,”

That memo was part of the reason that Massey, in the form of the Acoma mine pled guilty to 10 criminal charges in the death of two miners in a fire.

Blankenship is a throwback to the days of the early 20th Century when the Labor movement was formed. He does not see his people as the resource that allows him to make money; he sees them as interchangeable tools. He will say whatever it takes to look as though he cares about safety, will do anything he can to prevent rulings against him, up to and including buying the election of a State Supreme Court justice.

The confluence of someone who is solely focused on money and an inherently dangerous industry like mining is one destined for tragedy. There is a point where the quest for profit becomes illegal and it seems that Don Blankenship has crossed that line. His mines have nearly double the national injury rate. This combined with the former criminal convictions, and the newest disaster makes a good case for a mine leadership that has gone too far and feels unaccountable.

Massey Energy and Don Blankenship could get away with this as long as there was not too much attention on them. The death of 29 miners has turned a spotlight on them that will not go away. It seems likely that in addition to violating mine safety laws they may have been doing other things to prevent their actions from coming to light. If the intense level of investigation does not turn up some quid pro quo or even outright bribery I will be very surprised. Even if it does not, the rapacious and combative nature of Don Blankenship are likely to lead to new standards for the MHSA being able to step in and close mines until they meet safety standards.

This is a long needed step and Congress should not let the pressure from a few rouge mine operators like Blankenship prevent them from taking it. Most mines are not as dangerous as the Massey Energy mines. They do take safety seriously and act to prevent the death and injury of their workers. Still, the actions of mine companies like Massey require that someone can stop them from gaming the system before someone dies.

This is the purpose of regulation, to prevent the unending quest for profit that corporations have from killing the very people who do that work that generates that profit. If there is any justice Don Blankenship will find himself out of work and hopefully behind bars. Is there a case to be made for the callus disregard for life? However, I would settle for safer mines and a system that can actually enforce that safety.

The floor is yours.

Fashion, Again

Sat, 04/17/2010 - 19:45



I have posted this picture (from family archives) before but it is so funny it's worth posting again. Click on it to see it bigger.

It shows the 1930's version of photo-shopping an advertising pic. Only the top half would be used, not the bit with the guy standing on the crate.

Saturday Hate Mail-a-palooza

Sat, 04/17/2010 - 18:22

Last week's best of Q1 was a tight vote:

17%: "What would you say if I told you that I'm currently jiggling my testicles?"
15%: "ATTENTION BEANER FAGGOT!!!!!!!!!!!"
15%: "Is this how you spend your day, whore?"
13%: "SIEG HEIL STURMBANNFÃHRER MARKOS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Per the rules, the top-two vote getters would move on to the end-of-year competition. But out of nearly 6,000 votes cast, only eight votes separated the #2 and #3 emails. So for now, I'll consider the "whore" email a potential wild-card entrant in the end-of-year contest.

For those of you who want a walk down memory lane, or if you missed it the first time around, here's the best of 2009 edition. That was the year of the socialist fuckstick.

One more housekeeping note: This week marks the ONE YEAR ANNIVERSARY of Saturday Hate Mail-a-palooza. Here's the first edition. Time flies when we're having fun, huh?


Damage To Public Lands Part Of Web Of Negative Consequences Connected To Marijuana Prohibition

Sat, 04/17/2010 - 18:15

illegal pot grown in North Cascades National Park

When talking about ending the prohibition on Marijuana, it is almost impossible to wrap your head around the totality of problems and issues it touches. The externalities, long reaching negative effects, and indirect consequences create an enormous web that touches countless aspects of our society.

The amount that Marijuana prohibition costs us as a society can’t just be calculated based on lost tax revenue and the amount spent trying to police, prosecute, and incarcerate marijuana users and producers. There is the issue of lost wages and payroll taxes. Individuals who have been arrested for marijuana-related offenses can have trouble finding employment as a result. This can lead to extended unemployment or underemployment. Over a lifetime, this delayed start can add up to hundreds of thousands in lost tax revenue.

There is the damage done to the social contract and the public’s relationship with law enforcement when an illicit trade becomes a significant source of jobs and income in a community. Many of our rights have slowly been eroded in the name of the “war on drugs.” There are the many problems produced for our society that result in giving criminal enterprises a great source of revenues–revenues that can be used to bribe officials promoting a culture of corruption or funding the purchase of firearms for nefarious purposes. There is the side-effects on immigration into our country resulting from the power of the Mexican drug cartels.

There is also the indirect effect of what money we haven’t spent because limited state and local government resources end up going to keep marijuana illegal. Those funds could have been used to lower taxes or provide better services. How many students could afford to attend college, and go on to get higher degrees if the billions that could have be raised by tax cannabis were used to keep down tuition at public universities or provide for scholarships?

Destruction and danger in our national parks

For example, one of numerous, indirect, negative consequences of having cannabis be illegal is the increased danger and destruction to the pristine nature of national and state parks. Armed cartels have taken to growing large marijuana farms in national parks. From New York Times:

Mr. Heil [spokesman for the United States Forest Service] said drug operators could be blamed for a handful of wildfires each year in California, which is already dealing with a prolonged drought and budget-stretched firefighting resources. Environmental damage of a different kind can also be severe, with pesticides seeping into soil and streams, and trash and human waste left behind.

These clandestine operations can endanger people using the parks, and cleaning up the environmental destruction afterward can be very expensive. From a National Park Service new release:

They terrace hillsides, impound streams, introduce chemicals to pristine mountain water. “They don’t carry out their human waste or garbage,” [National Park Service Director Mary A.] Bomar said. “And they build and camouflage living quarters.” Bomar said park lands require millions of dollars of rehabilitation work – up to $15,000 per acre – and years to heal from damages growers can inflict in a single day.

This simply does not happen when things are legal

I don’t recall reading any stories about Jack Daniels running massive secret corn farms in the Great Smoky Mountains to make their mash. Charles Shaw is not destroying endangered plant species by using large amount of pesticides on illegal vineyard hidden in state forests. Samuel Adam’s Boston Beer Company is not sending armed gangs to ruin acres of Yellowstone by planting clandestine hops or getting into gun battles with Coors Brewery over the product. This does not happen in a legal and regulated market.

There is noticeable environmental, financial, and public safety damage done to our national and state parks directly as a result of cannabis being illegal. While it is unlikely to be an issue most people think about when debating possible legalization, it is a good example of a far reaching, interconnected web of negative consequences created by our current Marijuana policies. Allowing people to see the extent and nature of this web is critical to an informed debate about this issue.

Maine 'moderate' Susan Collins to filibuster financial reform; GOP claims to have enough votes to block legislation

Sat, 04/17/2010 - 17:45
Big surprise there. GOP Senator Susan Collins of Maine once again proves what Joe has been saying for years - she's a conservative Republicans that votes lock-stop with the party's far-right leadership. Does the woman actually have a mind of her own, everMitch McConnell has rounded up the necessary votes to block Democrats from bringing Wall Street reform to the Senate floor, a spokesman for the Senate Minority Leader said on Friday afternoon.

Senate Majority Leader Harry Reid (D-Nev.) said on Thursday he planned to bring the bill to the floor next week where it would be debated and amendments added. McConnell has now persuaded 41 Republicans to vote against debating reform.McConnell's office sends along a statement from Sen. Susan Collins (R-Maine), who had been the holdout, that she will indeed vote to filibuster a motion to proceed: "If the Majority Leader brings the partisan Senate Banking Committee bill to the floor next week, Senator Collins will vote against a motion to proceed."Republicans are trying to block reform at the behest of Wall Street. They've been told to use the talking point that the financial reform bill is actually a bail out bill for big business. It's the new death panel. Just lie about anything and hope it sticks. Of course, this one is even more egregious since the GOP is actually whoring for it's financial donors on Wall Street, while pretending that it's sticking up for the little guy.

Harry Reid says the GOP can "bring it on." Reid needs to force the Republicans to hold a real filibuster, force them to stay up all night block financial reform.


Mr. Smith Goes to Wall Street

Sat, 04/17/2010 - 17:32

In 1776, as things were getting a little busy in the soon-to-be United States, a former philosophy professor in the progressive city of Edinburg was publishing a book on economics.  An Inquiry into the Nature and Causes of the Wealth of Nations was an immediate hit.  Not only did Smith give a systematic explanation for the rise and fall of salaries and prices, he explained how an open marketplace could enrich both buyer and seller. Overnight he became the patron saint of the "free market" (and the most misquoted man in history).

The basic assumption that Smith makes: that the market will be constrained to behave well because good behavior benefits all participants, might as well have been carved in stone. In fact, for many people it's the basis of the One Commandment: keep thy smelly regulating hands off my market.

But, smart as Smith was (and he was a terribly bright fellow), here's a bet -- he didn't see this one coming.

Earlier this week, the government filed charges against Goldman Sachs. The exact details of what Goldman did that's against the law are a little hard to pick out of most media reports. Basically, the accusation is that they misled investors by not letting them know that they, or firms they had partnered with, were betting against the same investment vehicles that Goldman was pushing.

What's more interesting is what Goldman was doing that may not be illegal. Goldman was involved in what's become known as the Magnetar Trade.

Magnetar is a hedge fund that moved into the collateralized debt obligation (CDO) market at the end of 2005, just as everyone thought the market was about to collapse.  The way these instruments are structured is a bit like a multi-layer Tootsie Pop, with a really nasty core. That innermost layer -- the "equity tranche" -- is the riskiest part of an already risky package. Putting together a CDO is difficult unless you can find someone to buy that ugly little chunk.

For investors looking at the fading CDO market, it was Magnetar to the rescue. Magnetar swooped in and announced that they would buy the equity tranche of CDOs, and they didn't seem to be scared off by the low ratings of some of the CDOs they were buying into. Pretty soon, Magnetar's willingness to bottom feed wasn't just powering existing CDOs, it was causing new instruments to be generated. In fact, Magnetar began to order up new CDOs on demand, delivering to bankers specifications for how bad they wanted the loans involved to be. What they wanted were assets so risky that some bankers refused to sell what they wanted. If someone tried to slip good loans into one of the packages, Magnetar refused to buy. Around the industry, other analysts and hedge fund managers looked at Magnetar and snickered.

No matter what happened in the market, there seemed to be no way for Magnetar to avoid getting pasted. But everyone was relieved to have Magnetar there, because just by buying those equity bits, the CDO market wasn't just sustained, it actually grew. A lot.

It took awhile before everyone got the joke.

What Magnetar was actually doing was playing two of the markets most convoluted instruments against each other. Not only were they buying CDOs, they were buying credit default swaps. Default swaps started off as ways for investors to protect their investments, but by the time Magnetar entered the market, default swaps had become vehicles independent of original obligations. You could get someone to sell you a default swap on someone else's debt. In essence, you were insuring a loan you didn't make, and getting paid off if it failed.  And that's just what Magnetar did. They took out default swaps not on the little equity tranche that they had bought, but on the larger layers built on top of that purchase. Those other layers could be ten times, or a hundred times Magnetar's original investment. Imagine that Magnetar was building foundations, putting in the specifications that only the weakest concrete and shoddiest construction could be used, then taking an insurance policy on the whole skyscraper built on that foundation.

What Magnetar was doing was shocking. They had found a way to game the system and profit by constructing instruments literally built to fail. You'd think that would have stopped anyone from dealing with them. Maybe even send up some warning flags. Certainly you'd think that the banks involved would put out a warning to investors.

That's not what happened. Instead, a dozen other hedge funds got into the act, including Paulson & Co., the fund that's directly involved in the charges against Goldman. And none of these guys had any trouble finding banks to create the CDOs. Hell, Goldman was not only selling these instruments, they were buying the CDOs themselves, even knowing that these things were ticking time bombs.

Goldman certainly wasn't alone.  Merrill Lynch was doing the same thing.

Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, known as Rabobank, claims Merrill, now a unit of Bank of America Corp., failed to tell it a key fact in advising on a synthetic collateralized debt obligation. Omitted was Merrill’s relationship with another client betting against the investment, which resulted in a loss of $45 million, Rabobank claims.

Who was that "other client" of Merrill? Magnetar.

But why would they do this? Why would banks destroy their relationships with long term customers by selling them instruments they knew to be heading for the Dumpster? Why in holy hell would the banks swallow this poison themselves? This is where Dr. Smith's two hundred year old perscription falls short. A rational bank wouldn't do these things. But a rational banker would. Why? Because the bonus structure at these banks rewarded bankers not for scoring profits for their customers, but for just setting up the deal. Individual bankers were pocketing a percentage of each CDO. Sell a hundred million, pocket two million. Sell a billion, pocket twenty. Unlike the customers they were selling to, the bankers made their money as soon as the deal closed, so they didn't have to be concerned about the ultimate outcome.

So the hedge funds and the individual bankers collaborated in destroying the banks and robbing their customers. In the process, they got very, very rich. If you can get payouts large enough, quickly enough, you can be sitting at your upstate mansion long before anyone realizes they've been screwed.

How big this market became isn't quite clear yet, but Goldman appears to be the tip of a very large, very dirty iceberg.

My sincere gratitude to  Jesse Eisinger and Jake Bernstein at ProPublica and economics blogger Yves Smith at Naked Capitalism who brought the Magnetar trade story to light. Without their work, a group of Wall Street insiders would be the only ones who understood that the cause of the recent collapse wasn't idiocy, it was malfeasance. I realize that this year's Pulitzers have just been handed out, but the committee could do a lot worse than penciling these folks in for 2010.


CDP Convention 2010 – The Brave Face Before An Onslaught

Sat, 04/17/2010 - 17:20

I’m here in the press area at the California Democratic Party convention at the LA Convention Center downtown. Speakers today include Nancy Pelosi, as well as the top of the California ticket in November: Barbara Boxer and Jerry Brown.

The mood of the conventioneers is a little somnambulent, IMO. You have to understand that California political culture makes the US Congress seem like a model of efficiency. And Democrats are staring down the barrel of Meg Whitman’s $150 million dollar barrage of spending this fall.

It doesn’t have to be this way. From a demographic standpoint, California Democrats should be celebrating their position. They have a clear path to a 2/3 majority in the state Senate with two Republicans leaving Democratic-leaning districts in the Central Valley. The state Assembly, where Democrats successfully gained three seats in 2008, would get a 2/3 majority of their own by replicating that feat in November. This would finally break the Sacramento gridlock and allow the leadership to pass a budget and raise revenue. With the Republican Governor at historic lows – literally the lowest approval rating in the history of the state – winning the Governor’s seat back and even approaching 2/3 in one or both chambers should be in the cards. And there are eight Republican-held Congressional seats where Barack Obama won in 2008, with good Democratic challengers in half of them.

But recognize that Democrats have basically whiffed on two straight wave elections in this state, and this time the political environment won’t be nearly as favorable. The state party has been characterized by fiscal mismanagement (I’ve heard the last regime left a state party Treasury heavily in the red with cash on hand less than what I have in my wallet right now), an unwillingness to aggressively challenge Republicans throughout the state and really a disastrous lack of support in winnable races. Democratic challengers have basically had to fend for themselves, and sometimes work against a state party structure actively invested in their defeat. That’s not hyperbole – Don Perata, the former state Senate President Pro Tem, actually said he would knock on doors for Republican Abel Maldonado in 2008, and muscled every serious Democratic challenger out of the race.

These days, former Congressman and longtime California pol John Burton is the state party chair, and he is deeply invested in Barbara Boxer, his protégé, winning in November, and will basically turn the party into her satellite re-election campaign. He does see the value in using initiatives like the cannabis legalization law to drive youth turnout, but considering how bumbling the state party has been in recent years, I don’t think there’s any reason for confidence that they will provide the resources necessary to compete up and down the ticket.

As for Jerry Brown, he’s scheduled to emerge from his underground location and address the convention today, actually making himself visible for practically the first time in 2010, when his rival Meg Whitman has been blanketing the airwaves. Brown is dirt cheap and actually thinks not spending money to promote himself is something of a virtue. He also believes that not making one statement about what he would do in office is savvy political strategy. Giving Californians absolutely no motivation to turn out in November is deadly when all the key liberal constituencies coincide with drop-off voters. Brown is making Phil Angelides’ 2006 gubernatorial campaign look brilliant.

Ultimately, California Democrats have suffered through a severe failure of leadership, with nobody offering a vision of how to deal with the state’s struggling future. There’s a structural revenue gap in perpetuity. Republicans have a minority veto over fixing the problem. The worst prison system in the country is in the hands of a federal magistrate. Over 1 in 8 Californians are unemployed. Housing prices have crashed. Despite all this pain, Democrats have given no indication that they have an idea how to fix this. The state party wants to pass an initiative reducing the 2/3 requirement for passing a budget but not taxes, which would give Democrats all the responsibility for the pain of cutting spending and none of the benefit of actually dealing with the problem. Even if somebody was arguing for a progressive vision of government, they certainly don’t have any media outlet available to get out their message. The press area is one table long here at the convention, for a state of 38 million people, and it’s not crowded.

We’re in deep, deep trouble in this state, and I don’t get a sense even from the partisans in this room that they think they can reverse the trend.

Politico's Ken Vogel Versus CBS' Brian Montopoli

Sat, 04/17/2010 - 16:30

As most of you are aware, another tea party tax rally was held Wednesday in Washington D.C., where outraged Americans gathered, apparently to protest the fact that their taxes are the lowest they've been in 60 years ... but never mind that, because they're outraged.

Of course we're all familiar with tea party protester's embrace of teabonics, their oft-times blatant racism, and of course their reliance on Fox-fueled misinformation. So instead of rehashing the lunacy from the crowd, let's focus on how the protest was reported by two news organizations ... one from Politico's Ken Vogel, and the other from CBS News' Brian Montopoli ...  and see what a reader would have learned and what message they would take away from the event.

From Vogel, one would learn that a spokeswoman from the Tea Party Express thought that rallies were great but that, "if we truly want to affect change, we are going to have to get involved in the election process," and that:

... speakers at the midday Washington rally, including several Republican members of Congress, proclaimed that the tea party movement had already reordered the political landscape.

... followed by several paragraphs about "infiltrators" trying to destroy the movement, about organizers condemning "reports of slurs and threats of violence against Democratic members of Congress," and a quote from a protester:

I’ve been to five rallies and I haven’t seen any of that.

... then a couple of more paragraphs about infiltrators, the assertion that there were "few if any edgy sentiments – from infiltrators or otherwise – on tee-shirts or signs at Thursday’s midday rally," and concluded with its one and only quote from a speaker -- Michele Bachmann (R-MN):

" I say it's time for these little piggies to go home," she exhorted the crowd, urging them to help conservatives being targeted for defeat – including her. “We need to have your help for candidates like me. We need you to take out some of these bad guys."

All in all, it sounded like a lovely event, suitable for the whole family ... now let's look at Mr. Montopoli's account:

Clutching angry signs and occasionally breaking out into chants of "USA! USA!," the protesters listened to a series of fiery speeches attacking the Obama administration for what they cast as irresponsible spending and far left wing policies.

Rep. Michele Bachmann said the "gangster government" has instituted a "takeover of one private industry after another," again making her questionable claim that "the federal government owns or controls 51 percent of the private economy."   [...]

She said the Obama administration is "perfectly content with presiding over a decline in our economy," adding: "I'd say it's time for these little piggies to go home, and come November that's where they're headed."

Well, that sounds a little different, doesn't it? But that was probably just one speaker:

Earlier in the rally, former Saturday Night Live cast member Victoria Jackson played a ukulele and sang a song claiming "there's a communist living in the White House." Part of her evidence for that claim, she said, was that both of the president's parents were communists before they "abandoned him."

Okay, that was quite vicious, but at least, as Mr. Vogel reported, there were "few if any edgy sentiments" on display:

On the more extreme end was a man dressed in tar and feathers and an Obama joker mask. There was also a large bus circling the rally with "kill the bill" written on it and photos of aborted babies and grim reapers.

The Associated Press documented some of the signs being waved: "We Want Regime Change," "Save a Seal, Club a Liberal," "Down with the Gov't Takeover," "End the Fed" and "Waterboard Bernanke."

Amazing, isn't it? It's hard to believe that those two stories were about the same event ... brings to mind the expression, "consider the source," doesn't it?

And for more positive, upbeat coverage of the tea party protest, be sure to check out Vogel's follow-up story on infiltrators, or this hard-hitting news story about Michele "gangster government" Bachmann's assertion that tea party protesters are the “happiest people you would ever want to meet.”


Tim Geithner Needs to Get Out More Often

Sat, 04/17/2010 - 16:16

On Tuesday, Secretary of the Treasury Tim Geithner made a bold statement on the pages of the Washington Post:

America is close to turning the page on this economic crisis. While far too many Americans are still out of work and face deep economic hardship, we have now reported three quarters of positive growth and the beginnings of job creation.

“Close to turning the page”? Really?

Most of Geithner’s op-ed is about the financial reform efforts, and I’ll direct you to Scarecrow’s fine response on that topic. What brings me back to Geithner’s op-ed this morning is this the latest news from Topeka, Kansas.

Spoiler alert: It’s not about “positive growth and the beginnings of job creation.”

In November 2009, the state of Kansas slashed its 2009-2010 budget for the fourth time, and just a month ago was round five of cuts. Now let’s make that six:

The Kansas government’s revenue shortfall surged Friday beyond the $450 million threshold to place more pressure on lawmakers to raise taxes or cut spending to balance the budget.

A group of state fiscal analysts and economists met to revise tax revenue estimates for the current fiscal year ending June 30 and the subsequent fiscal year ending June 30, 2011.

Despite six rounds of spending cuts that reduced government expenditures by $1 billion during the past two years, the Consensus Estimating Group reported the recession’s grip on tax revenue would require additional work to balance the budget.

The group concluded the Republican-led Legislature and Democratic Gov. Mark Parkinson must address a $70 million deficit in the current budget year. The deficit next fiscal year would be at least $450 million, but would escalate to $510 million if Medicaid and K-12 enhancements sought by the governor were included.

Geithner may think the country is “close to turning the page,” but the folks in Kansas beg to differ:

Alan Conroy, director of the Kansas Legislative Research Department, said the state’s economic recovery remained “anemic” with corporate and individual tax receipts suffering. The problem reflects an unemployment rate expected to remain above 6 percent for months, he said.

Unemployment in Kansas went up again last month, and Kansas is hardly alone. Bill McBride at Calculated Risk — home to some of the best economics charts online — notes that unemployment is a mess almost everywhere.insert pic here

h/t Caluclated Risk (click for larger image)

When we look at unemployment rates in each state since 1976 (click the link for a larger version of that chart at Calculated Risk), four of the five states with the highest unemployment rates right now are at their 35 year peaks (NV, CA, RI, and FL). Only three states have unemployment rates below their 35 year median levels (WV, LA, and ND). According to the Bureau of Labor Statistics, the March unemployment figures show “Forty-four states and the District of Columbia recorded jobless rate increases from a year earlier, 5 states had decreases, and 1 state had no change.”

This is “close to turning the page”?

Then there are the banks — all around the country. The FDIC closed another 8 banks yesterday, bringing the 2010 total up to a nice round fifty. By comparison, last year we didn’t hit fifty bank failures until July 2. It sure sounds like failures are speeding up, not slowing down — which is not exactly my idea of getting closer to turning the page. (The FDIC has a rather daunting table of its own, showing the bank failures since October 1, 2000.)

Perhaps the former president of the Federal Reserve Bank of New York has too much of a Wall Street mindset. He’d do well to look beyond the Big Board, and take a look at the rest of the nation.

Maybe he could talk to Alan Conroy before he writes his next op-ed.

Obama calls out Wall Street, Republicans in weekly address

Sat, 04/17/2010 - 15:30

There were many causes of the turmoil that ripped through our economy over the past two years.  But above all, this crisis was caused by failures in the financial industry.  What is clear is that this crisis could have been avoided if Wall Street firms were more accountable, if financial dealings were more transparent, and if consumers and shareholders were given more information and authority to make decisions.

In remarks peppered with pointed specifics, from blaming AIG to quoting Warren Buffett, President Obama this morning ripped into Wall Street in a bid to garner additional support for financial reform measures on deck in Congress. And in response to the Republicans' constant lies of the past week regarding the proposed reforms, he had a couple of very clear sentences about future bailouts and taxpayer funds:

And we’re going to put in place new rules so that big banks and financial institutions will pay for the bad decisions they make – not taxpayers.  Simply put, this means no more taxpayer bailouts.  Never again will taxpayers be on the hook because a financial company is deemed “too big to fail.”

Can he make it any more clear? No. Will it shut Republicans up? Ha. No.

Is the President of the United States getting pretty sick and tired of the bullshit? Apparently so.

Now, unsurprisingly, these reforms have not exactly been welcomed by the people who profit from the status quo – as well their allies in Washington.  This is probably why the special interests have spent a lot of time and money lobbying to kill or weaken the bill.  Just the other day, in fact, the Leader of the Senate Republicans and the Chair of the Republican Senate campaign committee met with two dozen top Wall Street executives to talk about how to block progress on this issue.
 
Lo and behold, when he returned to Washington, the Senate Republican Leader came out against the common-sense reforms we’ve proposed.  In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts – when he knows that it would do just the opposite.  Every day we don’t act, the same system that led to bailouts remains in place – with the exact same loopholes and the exact same liabilities.  And if we don’t change what led to the crisis, we’ll doom ourselves to repeat it.  That’s the truth.  Opposing reform will leave taxpayers on the hook if a crisis like this ever happens again.

He finishes off with the assurance that the good guys -- the reformers, if you're keeping score at home -- will prevail.

The full transcript can be found at the White House website and beneath the fold.


Mexican Catholic bishop says 'sex education' is behind the church's ongoing child-rape scandal

Sat, 04/17/2010 - 14:50
Yes. Teach a Catholic priest how to use a condom and he simply must rape a child. And then, his boss, Cardinal Ratzinger, must then help to cover up the child rape. All because someone taught a fifth grader where babies come from. From AP:On Thursday, Bishop Felipe Arizmendi said that "when there is generalized sexual licentiousness, it is more common to have pederasty."

"In the midst of the invasion of so much eroticism, it is not easy to remain faithful in celibacy, or in respecting children," Arizmendi, the bishop of the San Cristobal de las Casas diocese in Chiapas state, said at a meeting of Mexican bishops.Okay, that is just sick. Who in their right mind suggests that when you're surrounded by eroticism you feel the tug to rape children? I don't feel that way when watching porn. I don't know anyone who does. Perhaps it's time to ask Bishop Arizmendi a hell of a lot more questions about just why he feels that any men exposed to eroticism wants to rape children. I find this admission rather troubling.


Abu Zubaydah May Have Been Waterboarded MORE than 83 Times

Sat, 04/17/2010 - 14:46

MadDog and I just realized something that should have been apparent since August. He and I have been looking at the passage of yesterday’s document dump that refers to CIA keeping OLC informed of how many times waterboarding was used.

First, and most obvious, Jay Bybee’s 1 Aug 2002 memo to John Rizzo stated, in part, “Moreover, you have also orally informed us that although some of these techniques may be used with more than once, that repetition will not be substantial because the techniques generally lose their effectiveness after several repetitions.” (p. 2) and again, “You have indicated that these acts will not be used with substantial repetition, so that there is no possibility that severe physical pain could arise from such repetition.” (p. 11). The OIG review determined that Abu Zubaydah was subjected to [redacted 2 characters?] waterboard sessions, consisting of at least 83 seperate exposures [redacted sentence] assured us that he gave regular updates to DoJ (i.e. John Yoo [redacted 2-3 words] at OLC) during this time frame, and DoJ was aware of the real numbers, but we were never able to verify this with DoJ, as INV management at the time elected not to interview witnesses outside the building. In addition to the disparity in numbers, the method of water application as recorded on the tapes was at odds with the Bybee opinion… [MadDog's transcription and emphasis]

Now, here’s what the IG Report itself said about how they came up with that number, 83. (It’s worth actually looking at this passage–on PDF 41-42; this entire discussion appears in one paragraph in the “Videotapes on Interrogations” section.):

OIG reviewed the videotapes, logs, and cables [redacted] in May 2003. OIG identified 83 waterboard applications most of which lasted less than 10 seconds.

[4-5 lines redacted]

OIG found 11 interrogation tapes to be blank. Two others were blank except for one or two minutes of recording. Two others were broken and could not be reviewed. OIG compared the videotapes to logs and cables and identified a 21-hour period of time which included two waterboard sessions that was not captured on the videotapes.

That is, they got the number 83 from not just the videotapes, but also the logs and cables. That’s because the IG couldn’t have gotten the total number of waterboard applications from the videos. As the IG Report makes clear in the same paragraph that first mentions the number 83, two entire sessions of waterboarding should have appeared on the tapes that were taped over or otherwise damaged.

Remember the context of this. CIA’s Office of General Counsel had, in November-December 2002, reviewed the tapes, purportedly to make sure they matched the guidance the interrogators had gotten from Langley and the cables they sent reporting on the interrogation. Yet, as the IG team had discovered during their investigation, the lawyer who conducted that review (according to the WaPo, John McPherson) hadn’t actually compared the guidance to what appeared in the videos. When the IG did a review themselves in May 2003, they discovered that the waterboarding in the video did not match the guidance. Perhaps that’s the only reason the IG Report seems skeptical about the self-reported number that appeared in the log and cables describing the two sessions not videotaped. Or perhaps the IG review of the videotapes had discovered a discrepancy between the numbers shown in the videos and those reported up the chain of command (which might be what the discussion in the four redacted lines is).

The bigger story remains that Abu Zubaydah’s torturers appear to have taped over or otherwise destroyed video of two of their waterboarding sessions. But one of the things that obscures about AZ’s treatment is the number of times he was actually waterboarded.

This Week in Science

Sat, 04/17/2010 - 14:00

The Bad Astronomer has a nice expert synopsis of Obama's NASA policy. One item that any self respecting, redblooded US space race kid thinks is neat: the President has challenged NASA to look beyond the moon for its next manned destination, and one obvious contender under serious discussion would be a type of asteroid affectionately known as Near Earth Object or NEO:

NASA has tracked nearly 7,000 near-Earth object that are bigger than several feet across. Of those, 1,111 are "potentially hazardous asteroids." Objects bigger than two-thirds of a mile are major killers and hit Earth every several hundred thousand years. Scientists believe it was a 6-mile-wide asteroid that wiped out the dinosaurs 65 million years ago.

Landing on an asteroid and giving it a well-timed nudge "would demonstrate once and for all that we're smarter than the dinosaurs and can avoid what they didn't," said White House science adviser John Holdren.

Despite the 'near earth' moniker, these objects are on average dozens of times farther away than the moon and on much more complicated trajectories relative to earth's orbit. But they could be worth it in more ways than inspiration: many of these objects are loaded with vast amounts of valuable stuff like nickel and iron, water/ice, and hydrocarbons, all of which would cost millions of dollars a pound to lift to deep space and be worth trillions of dollars if they were sitting on earth.

  • We have an ambitious unmanned spacecraft with a revolutionary ion drive en route to visit two large asteroids right now. NASA's Dawn spacecraft will encounter the asteroid Vesta in July 2011 and then move on to the dwarf planet Ceres in 2015.
  • Preliminary data from Eyjafjallajokull's ash suggests it won't cause much if any global cooling, but it remains a pain in the ass for Europeans and a big hazard for airplanes. Compared to the volcanoes on the planet Venus and the Jovian satellite Io, we're actually pretty cool.
  • Via Georgia10 -- we miss you! -- a nice thoughtful piece on the pace of science and the age of discovery:

    So will we fly someday to the stars? Einstein says never. But what does a patent office clerk know? I’d subscribe to Robert Goddard’s sunny optimism in his valedictory address: "It is difficult to say what is impossible, for the dream of yesterday is the hope of today, and the reality of tomorrow."

  • An evangelical scholar dares suggest that evolution could be compatible with his faith and the American Taliban goes into ruthless attack mode. Gosh, what happened to Teach the Controversy?