No surprise

Lewis Sachs is advising Treasury Secretary, Timothy Geithner

It should come as no surprise to historians of the American system that the banks that designed the investment vehicles that brought the mortgage market to its knees were betting against them all the while to their great profit. There is nothing in American history to augur that banks will be altruistic. There is much greater evidence that says altruism may be disadvantageous to profits in a hybrid-capitalist system. Gaming the system has proven profitable time and time again in the long run, not for all mind you, but for the best players. This is an important fundamental to consider when studying bankers out-sized compensation packages, the best get rich, the less fortunate go broke.

The New York Times reports that the SEC is studying the details of just how Goldman Sachs and Deutsche Bank among others designed these synthetic collateralized debt obligations, or C.D.O.’s and then bet against them. Unfortunately, they will be hard pressed to prove laws were broken (and ex-post facto justice is specious at best).

The Times says, "One focus of the inquiry is whether the firms creating the securities purposely helped to select especially risky mortgage-linked assets that would be most likely to crater...some securities packaged by Goldman...soured within months of being created...Goldman and other...firms maintain there is nothing improper about synthetic C.D.O.’s, saying that they typically employ many trading techniques to hedge investments and protect against losses. They add that many prudent investors often do the same."

The Times argues that the creation and sale of synthetic C.D.O.’s helped make the financial crisis worse than it might otherwise have been, creating a multiplier effect by providing more securities to bet against. They note that , "$8 billion [of] these securities remain on the books at American International Group."

The two most interesting revelations of the article are that, one, Morgan Stanley lost $1.5 billion to Goldman Sachs on a single deal, and two that Lewis Sachs a man who became a senior adviser to Obama's Treasury secretary earlier this year,was intimately involved in building these kind of deals. Sachs worked for Tricadia, a management company that was a unit of Mariner Investment Group. He led the team that sold products to investors that plunged more than 75% in value in a year while betting against them to the tune of a 50% profit for the firms own hedge fund.

Ugly, yes. Immoral, yes. Despicable, yes. Illegal, probably not.

The train

Taking the train? Unless one is heading to Kabul or Baghdad, President Obama is hardly more concerned about how one gets there than King George the II was. High speed trains were one of the Clarion Content's great hopes for things we might see come from the Obama administration. The country was and is mired in a deep recession. Train infrastructure is a works project that could be used in the fight against massive unemployment. Train infrastructure is a virtuous circle insofar as investing in more efficient transportation has knock-on benefits for all manner of American industries.

But alas. The candidate of change has spent $66 billion in Iraq and Afghanistan in the first half of 2009 alone. This does not account for the troop surge in Afghanistan. The non-partisan Congressional Budget Office estimates the expenditures in Iraq and Afghanistan for next eight years (again pre-surge) at $416 billion at the low end and $817 billion on the high end.

Over the next five years the Obama administration hopes to spend $8-13 billion on rail infrastructure, including high speed trains.

20 to 40 times as much spending per year on Afghanistan and Iraq than for rail infrastructure?

This is the change we could believe in?

Ralph Nader was right along. Pete Townsend was wrong.

Worse yet, America's rail infrastructure is in abysmal condition and is plagued by delays. The highways are no better, as you can ask anyone who traveled the I-95 corridor this Thanksgiving or Xmas.

The Associated Press reported many of the massive holiday week train delays were caused by problems at power stations and substations built in the 1920s near Philadelphia. 1920's!?! And Obama is pissing America's revenues into the soil of Afghanistan!?!

The Health Care Bill

Our northern most New Jersey reader was recently in Durham. Shortly after splitting town said reader sent the office an article that is a must read analysis of both the health care bill and the Obama administration's course to-date.

As loyal regulars know, the Clarion Content has been mightily disappointed with the Obama presidency. We fear that it may be careening toward a Jimmy Carter like scuppering that will lead to a very dark, eight or twelve years of hard rudder to the right. Picture two terms of Sarah Palin with Dick Cheney as her veep née viceroy.

Miles Mogulescu at the Huffington Post has the situation nailed. Much as the Clarion Content was crushed by the sellout the escalation in Afghanistan represents and the nuanced way in which we know it to be a disaster, Mogulescu is totally disappointed with the emasculated health care bill and his razor sharp analysis shows what it will change most is to cast the embrace of the corporate-capitalist ethic in bronze.

Read it here. It is positively eye opening!

Compare Mogulescu's molotov cocktails with the damp squib that is the analysis produced by the ostensibly liberal, but undeniably profit driven New York Times.

Now strangely enough the Clarion Content and old Miles Mogulescu probably come out a parsec or two apart about what we'd do about health care. But if there is one set of entities that we at the Clarion Content trust less than the Feds, it is the massive multinational corporations. And that sort of makes us Mogulescu's pal here, in an 'the enemy of my enemy is my friend' kind of way.

The devil is in the details. May bad legislation not be passed!

Long time hacker busted

During high school, when Albert Gonzalez hacked into the computers of India’s government, as well as those of NASA, he wasn’t punished, the FBI came to his high school and basically said, “Don’t do it anymore,” according to a Wired.com story about the notorious TJX hacker. Ten years out of high school, after five years as a Secret Service informant ratting out other hackers, Gonzalez spiraled out of control.

He and his attorney are appealing his 15 year sentence for hacking into TJX, the Dave & Busters chain of restaurants and numerous other businesses. He obtained 36 million card numbers from TJX, the largest international apparel and home fashion off-price department store chain in the United States, whose brands include TJ Maxx and Marshall's.

According to Wired.com's reporting, "When the Secret Service learned of his role as an administrator on Shadowcrew (one of the underground carding community’s leading forums for selling stolen card data), they turned him into an informant. He worked undercover to help snag more than a dozen cyberthieves in an investigation dubbed Operation Firewall. Gonzalez also gave lectures to law enforcement groups and the American Banking Association about the methods and technologies used by cyberthieves."

According to information that surfaced at his trial, Gonzalez maintained his criminal contacts on the side and devised methods to hack into huge companies. He had first been arrested in 2003 in Manhattan for stealing money from ATMs using numerous cloned bank cards. He had previously worked for the industrial giant Siemens, and was only twenty-one at the time of his first arrest.

Now after being chewed up and spit out by the government, he is twenty-eight and facing fifteen years. Is prison likely to rehabilitate him? Will we hear from the TJX hacker again?

Unhelpful France

So much for the French being all sorts of excited about Obama's election as President of the United States. The French were mouthing rhetoric at the time that his election marked the dawn of a new era of U.S.-French relations.

The actuality has not exactly matched up to the lofty words proffered. If the French were really considering a new tack in foreign policy they would be trying to find ways to help Obama defuse tension, especially in Eastern Europe, where it has a direct impact on them, because of the areas proximity, and in some cases countries' membership in the European Union. Not so much, instead, the French are stirring the pot, by attempting to once again cozy up to Russia.

The BBC reports the the French are negotiating a deal to sell an autocratic Russia a Mistral-class assault warship which is capable of transporting and deploying up to 16 helicopters, 13 tanks and 450 troops. France would be the first NATO member to go ahead with weapons sales to Russia. Obviously, this particular piece of hardware is for offensive not defensive purposes.

The BBC notes, "Russian generals have said that, had they had such a warship during the August 2008 conflict with Georgia, they would have been able to reach its shores within 40 minutes - rather than the 26 hours the country's navy took after setting off from their base in the Ukrainian Crimean port of Sevastopol."

This is just the kind of support Obama was hoping for from the EU for the fledgling country of Georgia.

The BBC also quotes a French military expert at the Sorbonne, "It's obvious that such weaponry would allow Russia to mount aggression against its neighbors. It looks like France is giving Russia a green light for new imperialistic wars."

Helpful, France, very helpful.

Cop Caught

One could publish a ridiculous story about the cops just about every day in America if one searched for them. Here is today's, courtesy of the Boston Herald.

"A Palm Beach County Sheriff’s Office corrections deputy, Dorethea Collier, 48, was arrested Monday for assaulting a man at gunpoint who was having sex with her daughter in the deputy’s home."

Sweet. And that seemed legal to you how, Sheriff Collier?

Of course, after the nineteen-year old she found in her daughter's bedroom closet complained, Collier was arrested and charged with false imprisonment, aggravated assault and battery.

The story: Mom the sheriff, arrived home, heard something suspicious in from her daughter's bedroom. Daughter tries to hold door shut against Mom's entry. Mom busts in anyway, finds a partially clothed daughter, and a naked man in closet. Still in uniform she grabs the dude out of the closet punches him three or four times, points her gun at him, handcuffs him and orders him to his knees. He is held until the sheriff's husband shows up. He also hits the dude a few times, before he is eventually allowed to leave.

And Sheriff Collier tops off the whole incident, in her arrogance, by filing a trespassing complaint against the dude who was doing the deed with her daughter.

Dude, well he called the sheriff’s office’s internal affairs department to complain. Sheriff Collier was arrested after a review by the state attorney’s office.

Wow.

98 year old charged with murder

From the files of truth trumps fiction, comes a wild story out of Dartmouth, Massachusetts. Prosecutors believe that Laura Lundquist is the oldest person ever charged with murder in Massachusetts. Lundquist, who suffers from dementia, claimed the 100 year old victim had been trying to takeover the nursing home bedroom they shared. Lundquist had moved a bed side table in their quarters to block her roommates path to the bathroom. She attacked a nurses aide who moved the table back to its original position.

According to the Boston Globe, "The defendant made statements prior to the victim's death that she would get the victim's bed by the window because she was going to outlive her." The 100 year old victim, Elizabeth Barrow, was reportedly healthy, friendly, and vigorous, a proud 5-foot-2 grandmother of three, who was still strong enough to walk on her own and aware enough to read two books a week.

Brandon Woods Nursing Home staff found her body at 6:20 a.m. under a bed sheet with a plastic bag tied loosely around her head. Initially it was thought that she committed suicide, but the results of an autopsy by the medical examiner found that Barrow had been the victim of "asphyxia due to strangulation and suffocation."

Whoa.

Allies?

"We don't need no stinkin' allies. Or rather we have them..."

Apparently, the Obama rhetoric isn't as from that of King George II as one might have thought.

"Because this is an international effort, I have asked that our commitment be joined by contributions from our allies. Some have already provided additional troops, and we are confident that there will be further contributions in the days and weeks ahead..."

Is this what President Obama meant? According to the Yonhap News Agency, "South Korea finalized its plan Tuesday to deploy up to 350 troops to Afghanistan for two and a half years to assist U.S.-led efforts to fight insurgency and rebuild the Central Asian country."

Wow that is awesome! Talk about Bush-like! America sends 35,000 troops, and its stalwart ally South Korea sends 350 troops. Its not like America has spent the last 50 plus years with its troops deployed to protect a (less than?) grateful South Korea.

Is it simply that South Korea much more clearly recognizes the futility of the mission?

Yonhap reports, "The plan, finalized after a Cabinet meeting presided over by President Lee Myung-bak, came after U.S. Defense Secretary Robert Gates visited Seoul in October for annual security talks between the allies...The initial contingent will be made of 320 troops, ministry policy director Jang Gwang-il told reporters, adding 30 more could be sent if needed."

Brilliant!

Facebook contact a violation

The Clarion Content is fascinated by the lines drawn in and around the new world of social networking. We recently discovered that, as it turns out, one can be arrested for violating an order of protection by making Facebook contact. In a Tennessee case, which originally came to our attention via ABC news, a woman, Shannon Jackson of Hendersonville, Tenn., was arrested for violating a legal order of protection that had been previously filed against her when she sent a Facebook "poke" to another woman. Amazingly the judge ordered her arrest when the only basis for documenting the contact was a printed screen grab.

Violating an order of protection in Tennessee is a Class A misdemeanor that can be punished with up to 11 months, 29 days of incarceration. Even if the woman wins her case, she will be saddled with the expense of retaining a lawyer. ABC quotes an expert from the Stanford Law School's Center for Internet & Society, "Although 'poking' is a somewhat passive and new form of technology-enabled correspondence, it is still a form of communication restricted by a protective order."

The times, they are in flux.

Who's got next?

The Clarion Content has been hearing some fascinating speculation about who might be the next Republican Presidential candidate. Of course, President Barack Obama has yet to even complete his first year in office, so it is awfully early to ponder. It is only Obama's wafer thin stack of accomplishments that has discussion brewing this soon.

The two most interesting names reflect a trend, one that started long before Obama and Sarah Palin, but a trend that they most definitely epitomize. In the quest for the presidency today, it is far more important to be telegenic than to be substantial. In that same vein, two names that are being thrown around as potential Republican nominees are (former) television commentators, Lou Dobbs, of CNN fame, and Glenn Beck, of the ostensibly fair and balanced Fox News.

Dobbs appeared on former senator and previous candidate for the Republican Presidential nomination, Fred Thompson's radio show. Dobbs was asked, "Have you given any thought for running for President?"

"Yes, is the answer," was his response.

The National Post of Canada reported, "Mr. Dobbs' spokesman, Robert Dillenschneider, said there was no timeline for announcing a decision." However, Dillenschneider did say, "People have always said Lou Dobbs had a bigger, brighter future. But he was very committed to CNN while he was there. He never really thought about running until the day after he left when people started coming to him."

Dobbs carries with him the baggage of all the rhetoric he spewed on the air. His rants against immigration carried with them a particularly dark vitriol and malevolence.

Dobbs has also yet to rule out challenging first term incumbent Democratic Senator Bob Menendez for his New Jersey seat in 2012.

Mr. Beck, who shares Mr. Dobbs hatred of dark skinned foreigners, has yet to make any kind of definitive statement. The New Times reports, "[Beck] says he will promote voter registration drives and sponsor a series of conventions across the country featuring conservative speakers, all leading up to a rally in Washington, D.C. in August."

It also quoted Grover Norquist, who is the president of Americans for Tax Reform, “They [TV personalities like Beck] are spokesmen for a movement that you can see emerging."

The Clarion Content agrees. While it is far from clear that either Glenn Beck or Lou Dobbs have what it takes to seize the Republican Presidential nomination, the rumblings from their camps are symbolic. An ineffective (thus far) President Obama has a small window in which to improve his performance before the speculation about his imminent replacement intensifies significantly.