Monday Morning Reads

Good Morning!

This is going to be a busy week or so for me.  If you don’t see me around, just know I’m off doing things to put me on a new and hopefully higher path.  I’m defending my dissertation on the 13th, doing paper presentation on the 21st, and sending out CV packets all over the globe.  I love New Orleans but I’m headed to hopefully greener pastures.  I can’t take the war on Higher Education here any more.  Youngest daughter graduates from LSU in the spring and we’re both headed to places that aren’t dedicated to reinstating Plantation economies.  I’m cutting my losses before it gets any worse.

So, I had to bring this to the top of the links this morning.  Minx posted it down thread last night as I was actually reading it.  We have to find a way of cutting the Koch Brothers off the federal teat.  They pay small sums to loot our national resources and then they defy our national security priorities on the side.  They’ve been found getting rich off of secret sales to Iran and also bribing folks for contracts.  Thank goodness for whistle blowers!  It’s time to close them down.  This is from Bloomberg.

In May 2008, a unit of Koch Industries Inc., one of the world’s largest privately held companies, sent Ludmila Egorova-Farines, its newly hired compliance officer and ethics manager, to investigate the management of a subsidiary in Arles in southern France. In less than a week, she discovered that the company had paid bribes to win contracts.

“I uncovered the practices within a few days,” Egorova- Farines says. “They were not hidden at all.”

She immediately notified her supervisors in the U.S. A week later, Wichita, Kansas-based Koch Industries dispatched an investigative team to look into her findings, Bloomberg Markets magazine reports in its November issue.

By September of that year, the researchers had found evidence of improper payments to secure contracts in six countries dating back to 2002, authorized by the business director of the company’s Koch-Glitsch affiliate in France.

“Those activities constitute violations of criminal law,” Koch Industries wrote in a Dec. 8, 2008, letter giving details of its findings. The letter was made public in a civil court ruling in France in September 2010; the document has never before been reported by the media.

Egorova-Farines wasn’t rewarded for bringing the illicit payments to the company’s attention. Her superiors removed her from the inquiry in August 2008 and fired her in June 2009, calling her incompetent, even after Koch’s investigators substantiated her findings. She sued Koch-Glitsch in France for wrongful termination.

Every time I read about one of these things I think about the vast number of times I could’ve whistle blown on almost all the private sector companies I’ve ever worked for at one time or another.  It just makes me wonder what else is out there going unreported. The Federal government should make sure that they get severely fined, taken to court, and banned from accessing federal resources. But, given the lessons of GE, I doubt that will happen.   However, please boycott these brands owned by the Koch brothers: Stainmaster, Brawny, Dixie Cups, and Quilted Northern.

The Hill reports that Republicans are getting restless and eating their young  yet again.  It’s the blame game and the election season rolled into one!  I will pass out some popcorn if you need it!

GOP lawmakers told The Hill that redistricting pitting incumbents versus incumbents, coupled with the threat of Tea Party primary opponents, has sparked a lot of anxiety among House Republicans.

At separate closed-door conference meetings held last month as GOP leaders scrambled for votes on the appropriations bill that would ultimately fail, the topic of primaries and uncertain political futures ranked high among members’ complaints.

A freshman GOP member attributed the initial failure of the bill to assumptions on the part of the leadership. There were expectations, the member said, that enough Democrats would vote yes and that Republicans who backed the debt-reduction deal this summer would also approve of the stopgap appropriations bill. Yet, only 6 Democrats voted yes and 15 Republicans who embraced the debt deal — that set the baseline funding level — rejected the spending bill that fell 195-230.

“It was assumptions being made, not understanding the political landscape, Republicans running against Republicans in primaries and it not being a conservative position that we believe in. Continuing resolutions are not the way to run a government,” the lawmaker explained.

Other GOP lawmakers told The Hill, on the condition of anonymity, that redistricting and the threat of tough primary battles will cause problems for GOP leaders as they seek to round up votes on politically difficult budget bills.

One senior GOP lawmaker said, “[Speaker John] Boehner’s (R-Ohio) starting to have a problem internally because redistricting is pitting Republican versus Republican.”

Just wanted to let you know that it is likely that the Maconda Well is likely leaking again and you’re probably not hearing about it unless you read and watch AJ or live around here. A sheen has been reported since August and throughout September.  Some folks say the oil sheen has been around since March.

Fresh oil has been washing ashore in many areas which took a direct hit from last year’s disaster, including the Chandeleur Islands, Ship Island, Breton Island and the north part of Barataria Bay, Louisiana. AJE reports BP has reactivated clean-up operations with its Vessels of Opportunity program. Some suggest the oil is coming from natural seeps, which always occur in the Gulf. Others note oil could be leaking from the broken riser pipe, still on the ocean floor, which connected the Deepwater Horizon rig to the well. Another possibility, the most serious, is oil could be leaking at the seafloor beneath the capped wellhead, making it impossible to control.

On  September 27th, the Coast Guard said the oil sheen in Gulf could be sign of release from riser pipe and not the Macondo well not itself.  I guess that beats the natural leakage from shale formations we keeping hearing from BP.   Meanwhile, I still have serious questions about Gulf Seafood which is a horrible thing to have to say.  Here’s some information on research on Marsh Fish that are still showing signs of oil effects written up in the Miami Herald.  I’ve personally had some friends in the shrimping business tell me they’ve been hauling up shrimp with no eyes.  Meanwhile, there’s more drilling afoot and I bet you’re not hearing any of this where you live.

“The message that seafood is safe to eat doesn’t necessarily mean that the animals are out of the woods,” said Andrew Whitehead, an assistant professor of biology at Louisiana State University and a lead researcher in the study, which was published this week in the Proceedings of the National Academy of Sciences.

The researchers measured cellular responses in the liver tissue that showed which genes were being turned on and off. Those patterns allowed researchers to predict problems of health and reproduction.

The responses were detected even though the water was clean and only very low or non-detectable concentrations of oil components showed up in fish tissues.

“Where’s the oil? It’s in the sediments,” Whitehead said. Scientists assume that fish can be exposed when waves and storms stir sediments..

The study found the same kind of cellular responses in killifish as were observed in herring, salmon and other animals that later had large population losses as a result of the Exxon Valdez spill, Whitehead said.

It will take several years before it will be known whether the population of Louisiana killifish, an important food for other fish, declines, Whitehead said.

“Ultimately, that’s what we’re interested in – the population consequences over the long term,” he said.

The researchers found that when they exposed developing fish embryos to the same water and sediment in the lab, they showed the same cellular responses.

They also found that the gill tissues weren’t healthy. The gills are important for helping the fish compensate for changes in its environment such as shifts in temperature and levels of salt and oxygen in the water, Whitehead said.

Doug Inkley, a senior scientist with the National Wildlife Federation, said the killifish, also known as the bull minnow or cacahoe, was an important part of the food chain.

“This study is alarming because similar health effects seen in fish, sea otters and harlequin ducks following the Exxon Valdez spill in Alaska were predictive of population impacts, from decline to outright collapse,” he said in a written statement.

So, we’ll leave those living with dispersant and oil toxins alone awhile and move to Georgia where there’s a radioactive leak of “unknown size”.  Minxy, you might want to get a Geiger counter and buy bottled water.  Tritium is said to be 200x over the EPA limit right now.

Radioactive water found beneath Georgia nuclear Plant Hatch, Associated Press, September 30, 2011:

[Emphasis added]

Radioactive water has been found underneath [Hatch nuclear power plant]  in southeast Georgia [...]

[The operator] identified radioactive tritium in two test wells about 25 feet below the ground, said Dennis Madison, a utility vice president who oversees the plant. [...]

How much is leaking?

  • While the size of the leak was unknown, it was enough to raise the water table in the wells about five feet.
  • “We really don’t know what the rate is,” Madison said. “We know it’s more than a drip.”

How concentrated is the leakage?

The maximum concentrations of tritium reported inside the wells was more than 200 times the limit set by the U.S. Environmental Protection Agency for drinking water [...]

So, here’s some quotes about the health of the economy from people you should know (i.e. Wall Street insiders) that was sent to me by one of our readers.

#1George Soros: “Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation.”

#2 PIMCO CEO Mohammed El-Erian: “These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy.”

#3Attila Szalay-Berzeviczy, global head of securities services at UniCredit SpA (Italy’s largest bank): “The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits.”

#4Stefan Homburg, the head of Germany’s Institute for Public Finance: “The euro is nearing its ugly end. A collapse of monetary union now appears unavoidable.”

#5 EU Parliament Member Nigel Farage: “I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine.”

As I’m writing this, the Hong Kong exchange is down to its May lows.  The global markets and finance gods are not happy.  Frankly, I’m still thinking a coffee can buried in your back yard may be your best investment for awhile. I have no idea how President Obama is going to get reelected if this keeps up.  His message and policies just don’t stand up to current events.  But, hey, look over there.  Another Islamic Terrorist is toast, feel safer? Frankly, I’m not too worried that Al Qaeda will be after me and my bags and my grocery cart with my fat cat Miles in the kiddie sit.

Oh, here’s my personal favorite.  Try not to panic.

Ann Barnhardt, head of Barnhardt Capital Management, Inc.: “It’s over. There is no coming back from this. The only thing that can happen is a total and complete collapse of EVERYTHING we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly, sadly mistaken.”

If you’re curious about what the difference is between Operation Twist and QE2--no, they are not recreational activities–from the FED here’s a post that might interest you. Doubt it will make much difference because treasuries are still the place to be and we’re still at the zero bound, but at least some one’s doing something.  Basically, the FED’s trying to twist the yield curve and if you’ve had macroeconomics 101, here’s the exact moves.

Is this different from quantitative easing? QE2 was equivalent to the combination of two open market operations:

  • (1) Buying short-term Treasuries with newly created money.
  • (2) Swapping short-term Treasuries for longer-maturity ones.

The Fed’s new policy is just operation (2), disconnected from (1). Operation Twist is less effective than a potential QE3, therefore, to precisely the extent that operation (1) makes a difference.

Does it? First, let’s be even more precise, breaking down (1) into two smaller components:

  • (1A) Buying T-bills (extremely short term Treasuries with duration less than a year) with newly created money.
  • (1B) Swapping T-bills for a broader mix of short-term Treasuries (e.g. those with remaining maturity “3 years or less”).
  • (2) Swapping short-term Treasuries for longer-maturity ones.

You should be able to see that it’s just basically rearranging the chairs on the Titanic.  It’s an asset swap. But, there’s all this wishful thinking that it will send a message to the markets that the FED is serious and tame the deficit hawks a little. Remember that herd I wrote about last weekend?  That’s kind of what the Fed is betting on. Plus, they’re hoping that the twist will stop Perry from threatening their Chairman with bodily harm.

Nice to know that our health and national security is of no concern to our corporate overlords, isn’t it? So, there’s what’s on my mind today.  What’s on your reading and blogging list today?

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25 Comments on “Monday Morning Reads”

  1. The Rock says:

    Scary post, Dak. It’s scary because its the truth. I already put some CV’s in for the oil companies back home in Nigeria in anticipation of the collapse.

    Hillary 2012

  2. Beata says:

    Best wishes in all your endeavors, Dak. I’m sure it is nerve-racking for you right now but your future sounds very exciting!

  3. Delurking here for a moment. I had just read the Soros “opinion” piece and came dashing over to see what you had to say. And what is this “project syndicate” that published this piece.
    I know you are busy- and am sending positive thoughts your way- hope to see you deconstruct the Soros piece.

    • dakinikat says:

      Project Syndicate is just an independent journalism site that publishes a lot of people’s op-eds that can be used by independent papers. I read it all the time because some of the best economists will post op eds there.

      I think it’s a real possibility that some of these countries will be forced out of the EU until they get their act together. The big problem is that the European banks loaded up on sovereign debt the way the US banks loaded up on mortgage derivatives thinking they were safe without looking at the underlying way that the securities were underwritten. Goldman Sachs should be held accountable for how they underwrote Greek Debt for the Olympics. That shouldn’t have been done. Greece is not a big enough economy to take on a losing proposition like that. Ireland was brought down by corrupt politicians and banks that goosed their mortgage and real estate markets. Portugal and Spain are both well known weak governance countries and Italy has been about as problematic in that regard. All of these countries had known weaknesses before they joined the EU. The problem is that the current crop of politicians in German and France are now off on some austerity binge–like we are–rather than dealing with the problems intrinsic to their banking systems. The Scandinavian countries aren’t having this problem. Neither is Switzerland because they have healthy, independent central banks and political will to do the right thing on fiscal policy as well as monetary policy. A lot of the European banks were allowed to over-invest in areas. The problem is that every one lets their banks go wild these days. Banks are abusing implicit government guarantees and underestimating risk. Some of them should be nationalized, then broken up and sold, then babysat until they behave. Banks are like roads, dams, and electric grids. They’re not like normal businesses. They’re more akin to public utilities and can create massive damage in capitalistic economies. I’d punish the banks and corral them as much as I’d move to corral Greece.

      When you join an economic union, it is well known the weakest links will need cross country fiscal policy. It seems rather chicken shit to pull the rug out from under them now. I personally believe they need to set up some kind of institution that is shared by all countries that can do fiscal rescues and has the power to do its own financing bonds. Then, rather than punish the weaker links, they need to take their ability to do independent fiscal policy away from them until they get their political acts together. There’s too much trade and financial gain at stake to yank them from the EU at this point plus everything is set up all over the place to use the EURO. I think a nonpolitical independent fiscal entity set up to deal with crisis would be more of a prudent idea.

      Oddly enough, my dissertation is on Optical Currency Areas like the EU. This is something I know a lot about and have done a huge amount of primary research in the area. Dumping them from the EU isn’t a solution. The EU is going to have to find a way to get veto power over countries huge fiscal projects–like financing an Olympics–and probably develop stricter rules for government debt. The debt issue isn’t fully understood right now and adding more shocks to the system is unlikely to help any one. The so-called PIIGS are well known for these kinds of issues. It should’ve been no surprise to any one. They’ve all had weak and corrupt governance for decades. Removing monetary policy from them made them stronger. Removing some fiscal policy from them would probably help too. As you can see, I’m not much on the sovereignty of nation-states when they’re working on a beggar thy neighbor basis.

  4. northwestrain says:

    Lots to think about as we travel the hot Texas highways.

    The Dems have lot all credibility — we voted for Hillary the one person who who had a chance to make a difference — the Dem leadership twisted the rules, gave 0bowma extra points — and basically gave him the nomination. NO I will never forget and never forgive. 18 million of us were right. America and the world needed a leader — and we didn’t get one.

    So now a con man occupies the White House — a con man who orders assassinations of Americans — wars are expensive — but 0bowma doesn’t see a problem.

    Good Luck DAK with your academic work. Keep us posted.

  5. joanelle says:

    Scary but terrific post Kat and you give us, as usual, solid information.

    Good luck as you pursue a future you want! Exciting stuff here – I was around when BB got her Phd. and now you – heady group to hang around with. I love it!!

    • bostonboomer says:

      Now that Dakinikat is just about at the end, I’m reliving how wiped out I was back then. They put you through hell before they finally give you the seal of approval.

      Hang in there, Dak! You’re almost at the finish line!

  6. bostonboomer says:

    Rosanne Barr says bankers should give up all but 100 million of their wealth, or else we bring back the guillitine.

    Part of my platform is, of course, that the guilty must be punished and that we can no longer let our children see the guilty get away with murder. Because it teaches them that they don’t have to have any morals and as long as they have guns and are bullies that they’ll win. And I don’t think that’s a good message.”

    “I do say that I am for the return of the guillotine and that is for the worst of the worst of the guilty.”

    She added: “I first would allow the guilty bankers the ability to pay back anything over $100 million personal wealth because I believe in a maximum wage of $100 million. And if they are unable to live on that amount then they should go to the re-education camps and if that doesn’t help then be beheaded.”

  7. mjames says:

    Good luck, dak. You’ll be an asset wherever you land.

  8. Minkoff Minx says:

    Wow, that thing about radiation at a Georgia Nuke plant is frightening. Maybe that is what caused that big http://en.wikipedia.org/wiki/Hogzilladown in south east Georgia.

    • Branjor says:

      We had the same thing here in NJ a couple of years ago – radioactive tritium leaking into the groundwater from the Oyster Creek plant. It is supposed to be OK now, but who knows.

      Dak – good luck with your dissertation defense! You’ll do fine, I know it !!

  9. paper doll says:

    Good luck with your dissertation! You have spoken of moving on from ON for awhile….good luck with as well!

  10. Dakinkat, if you do make the big move, I wish you the very best. It’s a scary thing to do — and sad too. It amounts to an admission that the home you love is no longer home.

    If fate brings you east, perhaps we’ll run into each other. Maryland is pretty, and jobs are a bit more plentiful here than in many other places.

    • dakinikat says:

      Well, Katrina did a lot of things to New Orleans, but probably the worst of it was it set Bobby Jindal up to be governor. He’s made it fairly intolerable here to be in health care or in higher education. In his continued pursuit to be set up to run for president in 4 years, he’s devastated the state’s future. Right now he’s moving to privatize our cheap and functional health care plan available to state employees. We’re just continually be looted so he can reap the rewards from his donor base.

  11. Pat Johnson says:

    Best wishes going out to dak, a classy lady and a brilliant poster as well!

  12. foxyladi14 says:

    best of luck Dak… :)

  13. Minkoff Minx says:

    The decision is in: Knox murder conviction overturned – TODAY News – TODAY.com

    I have the evening news post scheduled early today, so look for it shortly!

    • dakinikat says:

      Just got that from CNN breaking news. So many cases these days are just pasted together by overzealous police forces just to get any conviction. This seems like one of them.

  14. dakinikat says:

    Thanks every one for the best wishes! I’m a nervous wreck at the moment. I guess I thought my little house in New Orleans was going to be my life and now everything is turned upside down. I keep thinking I’m way too old for all this uproar!!! Also, I’m being overly cautious because this is definitely going to pave the way for what the rest of my life looks like and if I’ll die at the podium or wind up a bag lady! I need all the good wishes and wisdom that I can muster! Believe me! This is just highly stressful!