A Short Guide to How the Bush Administration Reacts to Crisis

The New York Times (via Naked Capitalism ) comments on Paulson's financial industry "regulation" proposal:

While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.

The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings.

......The bulk of the proposal, however, was developed before soaring mortgage defaults set off a much broader credit crisis, and most of the proposals are geared to streamlining regulation.

Basically they are continuing the pattern of proposing something they wanted to do anyway as the answer to the crisis of the day (see "Bush Tax Cuts", "Bush Tax Cuts II: Grandchild's Woe", and "Rambo IV: Operation Iraqi Freedom"). Style points as well for spinning "non-regulation" as "regulation" and for scrupulous avoidance of effectiveness.

The Coming Big Story

Paul Krugman:Taming the Beast

America came out of the Great Depression with a pretty effective financial safety net, based on a fundamental quid pro quo: the government stood ready to rescue banks if they got in trouble, but only on the condition that those banks accept regulation of the risks they were allowed to take.

Over time, however, many of the roles traditionally filled by regulated banks were taken over by unregulated institutions — the “shadow banking system,” which relied on complex financial arrangements to bypass those safety regulations.

Now, the shadow banking system is facing the 21st-century equivalent of the wave of bank runs that swept America in the early 1930s. And the government is rushing in to help, with hundreds of billions from the Federal Reserve, and hundreds of billions more from government-sponsored institutions like Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Given the risks to the economy if the financial system melts down, this rescue mission is justified. But you don’t have to be an economic radical, or even a vocal reformer like Representative Barney Frank, the chairman of the House Financial Services Committee, to see that what’s happening now is the quid without the quo.

Last week Robert Rubin, the former Treasury secretary, declared that Mr. Frank is right about the need for expanded regulation. Mr. Rubin put it clearly: If Wall Street companies can count on being rescued like banks, then they need to be regulated like banks.

Mark Thoma lays out a pretty decent summary of the change in tax laws and financial regulations that brought us to where we are today (though I noticed Bill Clinton's role in repealing Glass-Steagal was not mentioned). Basically massive tax cuts for the wealthy created a wave of new money, which financial deregulation allowed to flow into new ungoverned instruments.

Pretty soon the new money was finding its way into all sorts of formerly sleepy sectors of markets chasing the next hot thing and pretty reliably creating progressively larger catastrophes. The current catastrophe in the credit markets is large enough to really hurt. Assuming we manage to deal with the crisis successfully, the prudent thing would be to establish rules and regulations to make sure such things don't happen again. Unfortunately, Wall Street has thrown plenty of payola Washington's way which has so far stifled reform. Paradoxically, a larger crisis may be in the national interest because it would change the M.O. for political survival from fund raising and not rocking the boat to making changes before the voters throw the bums out.

Deja Vu All Over Again

VIa Naked Capitalism I found an interesting post on Robert Reich's blog. He quotes Marriner Eccles, a depression era Federal Reserve governor, on the cause of the great depression:

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation s economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

That is what happened to us in the twenties. We sustained high levels of employment in that period with the aid of an exceptional expansion of debt outside of the banking system. This debt was provided by the large growth of business savings as well as savings by individuals, particularly in the upper-income groups where taxes were relatively low. Private debt outside of the banking system increased about fifty per cent. This debt, which was at high interest rates, largely took the form of mortgage debt on housing, office, and hotel structures, consumer installment debt, brokers' loans, and foreign debt. The stimulation to spending by debt-creation of this sort was short-lived and could not be counted on to sustain high levels of employment for long periods of time. Had there been a better distribution of the current income from the national product -- in other words, had there been less savings by business and the higher-income groups and more income in the lower groups -- we should have had far greater stability in our economy. Had the six billion dollars, for instance, that were loaned by corporations and wealthy individuals for stock-market speculation been distributed to the public as lower prices or higher wages and with less profits to the corporations and the well-to-do, it would have prevented or greatly moderated the economic collapse that began at the end of 1929.

The time came when there were no more poker chips to be loaned on credit. Debtors thereupon were forced to curtail their consumption in an effort to create a margin that could be applied to the reduction of outstanding debts. This naturally reduced the demand for goods of all kinds and brought on what seemed to be overproduction, but was in reality underconsumption when judged in terms of the real world instead of the money world. This, in turn, brought about a fall in prices and employment.

Unemployment further decreased the consumption of goods, which further increased unemployment, thus closing the circle in a continuing decline of prices. Earnings began to disappear, requiring economies of all kinds in the wages, salaries, and time of those employed. And thus again the vicious circle of deflation was closed until one third of the entire working population was unemployed, with our national income reduced by fifty per cent, and with the aggregate debt burden greater than ever before, not in dollars, but measured by current values and income that represented the ability to pay. Fixed charges, such as taxes, railroad and other utility rates, insurance and interest charges, clung close to the 1929 level and required such a portion of the national income to meet them that the amount left for consumption of goods was not sufficient to support the population.

This then, was my reading of what brought on the depression.

"...an exceptional expansion of debt outside of the banking system" See Paul McCulley's "Shadow Banking System"

Consumption financed by debt, well with negative savings rates I'd say we're there.

Roaring 20s inequality, we've got it .

Strapped Consumers who can't go anymore, check

Loan Sharks

The Wall Street Journal: High-Interest Lenders
Tap Elderly, Disabled

DOTHAN, Ala. -- One recent morning, dozens of elderly and disabled people, some propped on walkers and canes, gathered at Small Loans Inc. Many had borrowed money from Small Loans and turned over their Social Security benefits to pay back the high-interest lender. Now they were waiting for their "allowance" -- their monthly check, minus Small Loans' cut.

The crowd represents the newest twist for a fast-growing industry -- lenders that make high-interest loans, often called "payday" loans, that are secured by upcoming paychecks. Such lenders are increasingly targeting recipients of Social Security and other government benefits, including disability and veteran's benefits. "These people always get paid, rain or shine," says William Harrod, a former manager of payday loan stores in suburban Virginia and Washington, D.C. Government beneficiaries "will always have money, every 30 days."

What's sad is these groups use "partner agreements" with banks to skirt the prohibition on creditors receiving direct deposits of Social Security checks. In an administration that was focused on making government work, there'd be a revision of the rules when this came to light and after 6-9 months (allowing for comment periods and so on) the problem would be solved. This administration chooses to actively avoid performing its regulatory duties, hence the subprime debacle and the ongoing Mexican trucks and Hours of Service fiascoes.

Big Brother is Watching

CNN: FBI wants palm prints, eye scans, tattoo mapping

The FBI is gearing up to create a massive computer database of people's physical characteristics, all part of an effort the bureau says to better identify criminals and terrorists.

But it's an issue that raises major privacy concerns -- what one civil liberties expert says should concern all Americans.

The bureau is expected to announce in coming days the awarding of a $1 billion, 10-year contract to help create the database that will compile an array of biometric information -- from palm prints to eye scans.

The never ending expansion of the Surveillance State under Bush is one of his most unfortunate legacies. I never have understood the belief that as long as government isn't helping someone then it's not big government. The same conservatives who carp about the "Nanny State" are the ones pushing for the "Enforcer State" where big government will spare no right, commit any atrocity, do pretty much anything to keep us safe from any threat. There's a reason our founding generation, surrounded by enemies and riven with sedition, insisted on a bill of rights and why in hindsight we have always looked with regret on those moments in our history when we chose to abridge those rights.

Why I am not watching the Super Bowl

The NFL allows bars, but not churches, to publicly show the game

Hillary's Analysis

There was a bit of controversy last week about some comments Hillary Clinton made last week. Hillary said

"I would point to the fact that that Dr. King's dream began to be realized when President Johnson passed the Civil Rights Act of 1964, when he was able to get through Congress something that President Kennedy was hopeful to do, the President before had not even tried, but it took a president to get it done. That dream became a reality, the power of that dream became a real in people's lives because we had a president who said we are going to do it, and actually got it accomplished."

My reading of this seems to set LBJ over and above JFK in his ability to "get it done" (and implicitly arguing a "competent" candidate (Hillary/LBJ) was more useful than a "change" candidate (JFK/Obama). LBJ was famous for the "treatment" he could deliver in person and for his ability to work legislation through Congress. Still, though I think a significant part of why LBJ was able to "get it done" was the moral authority of the recently slain JFK and the trauma of a stunned nation. Much like after 9/11, the President was able to run the tables on Congress for a time. I think if it had not been for the progressive rhetoric of immediately sainted JFK and of the soon to fall MLK that it would have been much tougher for Johnson to "get it done".

None of this takes away from the fact that LBJ probably showed more political courage than JFK. Kennedy had not gone to the mat for tough legislation in part because he worried about blowing up the Democratic coalition. Johnson bulled it through and did indeed blow up the coalition (being caught in a losing war didn't help). Other than a self inflicted loss in 76 the Republicans were ascendant for the next quarter century.

What is truly sad is that Republicans in the late 1800s abandoned blacks in the south to the tender mercies of the traitors after having expended so much of the nation's blood and treasure to free them and subdue said traitors. U.S. Grant was the last to try and he was finally forced to give up the fight by a recalcitrant Congress and a pro Klan Supreme Court. The Republicans not only lost black voters, they in many ways lost their identity. The whole Civil Rights controversy that roiled the nation in the 1950s and 1960s should have been in large part settled in the 19th Century.

Daggone it

I haven't checked in on The Spy who billed me lately and so I missed this hilarious CIA themed Christmas tale So if you haven't had enough Fruitcake head on over

This just irritates me

CNN: Christian Symbol appears in Huckabee ad

WASHINGTON (CNN) – For the second time in the past two weeks, presidential hopeful Mike Huckabee has aired a commercial in which a Christian symbol appears in the background.

In the campaign ad, Huckabee is addressing members of the Iowa Christian Alliance, an organization whose symbol is the ichthys which appears on a banner that is shown prominently at the open and close of the 30 second spot. The ICA is an influential social conservative organization in Iowa, and Huckabee can be seen speaking about his opposition to abortion before the group.

The ichthys, which resembles a fish, is well-known in evangelical circles as the symbol used by early Christians to secretly identify one another without attracting persecution.

Oh my goodness, a video of Huckabee speaking is shown and there is a banner for the organization putting on the event behind the podium. The space is obviously rented and the banner was put up to dress the space up and to make sure the organizations logo makes it onto any newsreel footage of the candidate, just like the UAW or the VFW or whatever organization you might think of would do. But of course since the logo contains a Christian symbol we must all be scandalized and shocked and mutter darkly about the coming theocracy. I'm sick of the liberals who want the French Revolution redux, complete with the banning of all public expressions or signs of faith. If you don't like a country with equal protection for all beliefs there are plenty of slots on the plane to France.

Hours of Service still in limbo

Today's Trucking: Court action filed against interim HOS rule

A little recap, after a 15 year process the rules that restrict the number of hours a truck driver may work in a week were significantly revised for the first time in 2003. The original rule had been written in 1937, then slightly altered in 1962. Congress had mandated that the rules be changed, had given a list of factors that the Agency should consider (the rule-making process outlasted the ICC and the FHWA and eventually became the purview of the FMCSA), but did not say exactly what the rules should be.

Under the old and the new rules drivers were restricted to working 60 hours in a 7 day period, or 70 hours in an 8 day period.
However under the new rules if you take 34 consecutive hours off your hours are "reset" and you have a fresh 60/70 to work.

Also the rules restricted the number of hours you could drive in a "day" (after 1962 the rules were no longer tied to a 24 hour day). Under the old rules you could drive for no more than 10 hours before you took an 8 hour break. You can work and drive up to 16 hours before you have to take an 8 hour break, so your "day" could be anywhere from 18 to 26 hours long. Also you could "split break" and take your sleep break in installments, extending your day. Under the new rules once you start working you have 14 hours from the start of your day until you can drive no more. Also you are allowed 11 hours of driving time in a day.

Basically it's typical sausage making. There are plusses and minuses for safety and for the carriers. The upside from a safety perspective is there is a limit on the number of hours in a day you can go before you have to get off the road and there are 2 more hours of break every night. The downside is that you can drive one more hour a day and you can, in theory work more hours in a week (theoretically you can work 88 hours in an 8 day period with the 34 hour reset). From a productivity perspective the upside is you can possibly get more miles in a day with the extra driving hour. The downside is that any time that you are sitting counts against your 14 hour clock. So if it takes 6 hours to get the truck loaded at a grocery warehouse you only have 8 hours available to drive (and that assumes no other stops or breaks). Keeping the truck moving becomes very important to maximizing revenue. Routes were rearranged, extra trucks and drivers were acquired, and everyone adapted to the new rule.

So this rule goes into effect. Several groups sue, arguing that the rule does not consider the health of the driver, one of the factors Congress had insisted be taken into account. Eventually the rule is thrown out by the courts in July 2004. The FMCSA argues that they cannot rewrite the rules in the 90 days alloted by the courts, So Congress writes a provision into a transportation bill that freezes the rules for a year allowing the agency time to redo the rules. So in 2005, the agency publishes the revised new rule, which is pretty much the same as the 2003 rule (light trucks were given an even more lenient rule and the last vestiges of "split breaking" were eliminated). They are sued again. The rule is thrown out again in 2007. They petition for a stay allowing them time to redo the rule. They get a stay (only 90 days instead of the requested year) and produce another "new" rule, which is in every way the same as the old one (only with more text justifying the rationale followed). So now they have been sued again.

You would think at some point the agency would catch on that the courts do not approve of what they are trying to do. Also, one could make the point if Congress had just written a new rule in legislation they could have gotten exactly what they wanted and we wouldn't be tied up in court. Another issue is that Congress has been steadily exempting various industries in response to lobbying. For instance, propane delivery drivers are exempt from the rules (which is kinda odd given the hazardous nature of the load). Right now we have the worst of both worlds. Congress can dodge responsibility for the rules (and loudly complain that the agency isn't doing what they want without ever specifying what exactly they want) and industries are still getting preferential treatment by lobbying.

I think that the best hope for a good rule before 2010 or so would be via legislation. The Agency has gone nowhere fast over the past 4 years and doesn't seem to have any intent other than running out the clock. Of course given the election I suspect there will not be a lot of energy left to deal with this issue. So I suppose we will wait and eventually we will have a permanent rule. Hopefully we won't be waiting another 20 years.

Guilty Pleasures

Huckenfreude:

Pleasure derived from the outrage of prominent conservative pundits over the rising poll numbers of Mike Huckabee. Particularly sharp when the pundits in question are partisans of Rudy Giuliani, but extends to supporters of Mitt Romney as well. Usually experienced by evangelicals, crunchy cons, populists, and other un-airbrushed elements of the conservative coalition. Tends to coexist with an awareness that Huckabee isn't actually ready for prime time, and that his ascendancy may ultimately do their various causes more harm than good.

I admit to enjoying some Huckenfreude at the way the GOP establishment has come unhinged over Huckabee's rise. Listening to them reminds you of the liberal establishment going ape about Bush in '04 and '05 before they learned to pace themselves. Rush even took a break from popping pills and picking at his ingrown hairs to thunder forth that Mike Huckabee was liberal (which is what Rush calls anyone he doesn't like, even that guy with the Ron Paul button at Burger King that burned his triple whopper and gave him fries instead of rings). The Wall Street types were undecided whether to express alarm or contempt, so they just punted and displayed both.

The same folks who were the picture of tough minded paternalistic condescension to the Social cons when Rudy looked likely to win the thing going away "Look Paulie, I know he isn't everything you wanted, but times are tough now don'tcha see, and he's definitely better than that Hillary gal.", are now acting like they're in one of those Jim Cramer gone wild videos.

Even if I have ambiguous feelings about Huckabee I'm still enjoying seeing a man from "flyover country" make the Wall Street and Washington crowd sweat bullets.

Strange Thoughts

I was struck while listening to a Church History course podcast the parallels between the Reformation and the transformation of Judaism that occurred under Ezra. In both cases the Religion became more "book centered". In both cases there was a dislocation in the structure of the religion. In Judaism the Temple cultus was interrupted and the people of Judah found themselves in exile. In the case of the Reformation the authority of the church had been disrupted by the "Babylonian captivity" of the pope and the Great Schism.

In both cases the people has to form a new identity.

The followers of Adonai/YHWH found themselves cut off from the Temple rites and the land, the two centers of pre-exile belief. So they had to find a new way to define who they were. What did it mean to be Jewish in this strange new world. Of course eventually this new understanding (and the diaspora) would lead to many different subgroups within Judaism with very different views of the world.

The Christians of the 14th century found themselves in a similarly alien circumstance, with various popes of varying degrees of legitimacy all claiming to be the leader of the church. The pope was not yet the infallible vicar of Christ he would become in Catholic theology later on but still there was a tremendous dislocation where the people had to find a new way of thinking about what made one a real Christian. Out of this Wycliffe, Hus, and the other prereformers began to turn the Scriptures as the way to define Christianity, a change that would eventually revolutionize (and splinter) the Western church.

I don't know the moral/theological significance of the rough parallel, but I thought it was striking.

"Profiles in Courage" by Mitt Romney

The Boston Globe: Fact Check: Romney's pardoning practices

Mitt Romney's new TV commercial questions the judgment of Mike Huckabee, his fellow Republican presidential contender, noting the rival issued 1,033 pardons and commutations as governor of Arkansas while Romney issued none while leading Massachusetts.

Left out of the spot is perhaps Romney's most noteworthy pardon denial: his rejection of the request of an Iraq war veteran who was trying to become a police officer after his National Guard service.

Anthony Circosta's offense? Shooting a friend in the arm with a BB gun as 13-year-old. The impact didn't break the skin.

....In 2005, while serving in Iraq, Circosta filed for a pardon, seeking to fulfill his dream of becoming a police officer. It was denied twice, despite a favorable recommendation from the state's Board of Pardons.

Circosta returned home a Bronze Star winner after leading a platoon in Iraq's deadly Sunni triangle.

Political analysts have suggested Romney crafted guidelines for issuing pardons and commutations that ensured he would never have to grant either, sparing him of any repeat of the Willie Horton case that dogged another Massachusetts governor, Democrat Michael Dukakis, during his 1988 presidential campaign. Dukakis was criticized for the weekend furlough granted to Willie Horton, a convicted murderer who went on to rape a woman and beat her boyfriend while free.

....He said the only reasons he would have issued a pardon or commutation would have been if he found evidence that proved a wrongful conviction, prosecutorial misconduct or errors in the judicial process.

Today, Romney uses the latter rationales for explaining why he would be open to considering a pardon for I. Lewis "Scooter" Libby, the former White House aide convicted of perjury in the CIA leak case.

Mitt wants to president, real bad. Avenge his father's honor and all that. So Mitt says what he has to say to become governor of Massachusetts, says what he has to say in order to run for Senate. Mitt Doesn't want to follow in the footsteps of Michael Dukakis, so he creates a brain dead procedure that will always reject any pardon petition. That way we will never question his judgment and interrupt his trek to the Death Star White House.

But now Mitt's path is blocked. Mitt angry, Mitt SMASH the Huckabee. Mitt creates ads attacking Mike Huckabee because Huck made a decision to pardon someone who committed another crime. Too bad Huck wasn't clever like Mitt.

But now it comes out that Mitt's "procedure" has spat out the result that Scooter Libby should be pardoned. Mitt is pleasantly surprised and all. But here we are wondering about his judgment again. D'oh!

Mitt thinks Scooter Libby, who has never admitted wrongdoing for his recent crime, is more worthy of a pardon than Anthony Circosta, who admitted wrongdoing for a crime committed as a child and has since distinguished himself in service to his country. Of course, Scooter probably knows folks who can do nice things for Mitt, and poor Anthony, well he doesn't. Maybe Anthony should have thought a little harder about how to serve his country

Public Service?

CNN: Lott to resign by the end of the year

Sen. Trent Lott, R-Mississippi, intends to resign by the end of the year and join the private sector, sources tell CNN.

Trent Lott, R-Mississippi, is serving his fourth term in the U.S. Senate.

Lott, the No. 2 Republican in the Senate, is expected to make the announcement Monday in Pascagoula, Mississippi.

A senior Republican source close to Lott said one reason for the decision is the new lobbying restrictions on former lawmakers.

A law kicks in on January 1 that forbids lawmakers from lobbying for two years after leaving office. Those who leave by the end of 2007 are covered by the previous law, which demands a wait of only one year.

Lott, the Republican whip, was elected last year to a fourth term in the Senate. His term lasts until 2012.

So the good Senator just couldn't wait till the end of his term to go be a lobbyist. So the people of Mississippi got less than a quarter of the term they voted him in for (and the replacement will be on the very bottom of the seniority ladder). Now it probably is true that they're better off without someone who would leave them high and dry like that but still....

So much for honor and public service and all that claptrap, the man's got money to make.

Bloomberg: Public School Funds Hit by SIV Debts Hidden in Investment Pools

Hal Wilson smiles at the blue numbers on his desktop screen. His money is yielding 5.77 percent. For the chief financial officer of Florida's Jefferson County school board, that means the $2.7 million of taxpayer funds he's placed in the state's Local Government Investment Pool is earning more on this October day than it would get in a money market fund.

And Wilson says he knows the Florida officials who manage the funds of the 1,559-student district have invested them wisely.

``We're such a small school district,'' Wilson, 55, says. ``We don't have the time or staff for professional money management. They have lots of investment advisers. It's risk free and easy.''

It may be easy, but it's not risk free. What Wilson didn't know in October -- and what thousands of municipal finance managers like him across the country still haven't been told -- is that state-run pools have parked taxpayers' money in some of the most confusing, opaque and illiquid debt investments ever devised.

These include so-called structured investment vehicles, or SIVs, which are among the subprime mortgage debt-filled contrivances that have blown up at the biggest banks in the world......

Among the places caught up in the SIV and subprime snarls are Connecticut, Florida, Maine, Montana and King County, Washington. Public funds hold $1 billion of defaulted asset- backed commercial paper, including $273.5 million from SIVs.

Montana entrusted $465 million, or 19 percent of its $2.5 billion investment pool, to SIVs.

Nobody knows how much more pain is coming. State funds could lose hundreds of millions of dollars, says Lynn Turner, chief accountant of the U.S. Securities and Exchange Commission from 1998 to 2001.

Wall Street peddled toxic waste to many, many bagholders. Cities and States are just some of the victims. These local governments are going to face massive losses in their investment portfolios just as they face declining tax revenues and increased expenditures in the economic slowdown. I bet it's going to play well in the Mudville Gazette: "School loses millions on subprime investments".

Wall Street is the next Detroit, they are building their legions of burned customers now. All of the institutions who purchased something toxic that their rep at the Wall Street Banks said was safe are going to remember this. Even if it cannot be proved, they will remember this as fraud. The big boys should go to Detroit and ask them what it's like to sell to a cynical customer base that does not believe what you say about the quality and safety of your products, if they listen at all.

Freedom is on the March...

CNN: Saudi court ups punishment for gang-rape victim

A court in Saudi Arabia increased the punishment for a gang-rape victim after her lawyer won an appeal of the sentence for the rapists, the lawyer told CNN.

The 19-year-old victim was sentenced last year to 90 lashes for meeting with an unrelated male, a former friend from whom she was retrieving photographs. The seven rapists, who abducted the pair and raped both, received sentences ranging from 10 months to five years in prison.

The victim's attorney, Abdulrahman al-Lahim, contested the rapists' sentence, contending there is a fatwa, or edict under Islamic law, that considers such crimes Hiraba (sinful violent crime) and the punishment should be death.

"After a year, the preliminary court changed the punishment and made it two to nine years for the defendants," al-Lahim said of the new decision handed down Wednesday. "However, we were shocked that they also changed the victim's sentence to be six months in prison and 200 lashes."

The judges more than doubled the punishment for the victim because of "her attempt to aggravate and influence the judiciary through the media," according to a source quoted by Arab News, an English-language Middle Eastern daily newspaper.

Judge Saad al-Muhanna from the Qatif General Court also barred al-Lahim from defending his client and revoked his law license, al-Lahim said. The attorney has been ordered to attend a disciplinary hearing at the Ministry of Justice next month.

Good to know that the Bush administration is focused on democracy and human rights. Our good friends the Saudis have played their nasty little games while hiding behind Uncle Sam's legs.

The Nation Formerly Known as America

Yahoo News: Intel official: Expect less privacy

WASHINGTON - As Congress debates new rules for government eavesdropping, a top intelligence official says it is time that people in the United States changed their definition of privacy.

Privacy no longer can mean anonymity, says Donald Kerr, the principal deputy director of national intelligence. Instead, it should mean that government and businesses properly safeguard people's private communications and financial information.

Kerr's comments come as Congress is taking a second look at the Foreign Intelligence Surveillance Act.

Lawmakers hastily changed the 1978 law last summer to allow the government to eavesdrop inside the United States without court permission, so long as one end of the conversation was reasonably believed to be located outside the U.S.

The original law required a court order for any surveillance conducted on U.S. soil, to protect Americans' privacy. The White House argued that the law was obstructing intelligence gathering because, as technology has changed, a growing amount of foreign communications passes through U.S.-based channels.

The most contentious issue in the new legislation is whether to shield telecommunications companies from civil lawsuits for allegedly giving the government access to people's private e-mails and phone calls without a FISA court order between 2001 and 2007.

Some lawmakers, including members of the Senate Judiciary Committee, appear reluctant to grant immunity. Suits might be the only way to determine how far the government has burrowed into people's privacy without court permission.

The committee is expected to decide this week whether its version of the bill will protect telecommunications companies. About 40 wiretapping suits are pending.

The central witness in a California lawsuit against AT&T says the government is vacuuming up billions of e-mails and phone calls as they pass through an AT&T switching station in San Francisco.

Mark Klein, a retired AT&T technician, helped connect a device in 2003 that he says diverted and copied onto a government supercomputer every call, e-mail, and Internet site access on AT&T lines.

The Electronic Frontier Foundation, which filed the class-action suit, claims there are as many as 20 such sites in the U.S.

So the government now believes it has the prerogative to listen in on your phone calls, read your e-mails, and track your internet use without trifling with probable cause, much less a warrant. To top it off this is the same crowd that believes they have the right to grab you off the street and "disappear" you, possibly sending you who knows where for who knows how long, where you have no rights, and if they ever deign to let you go you have no legal recourse. I remember a titanic struggle against such a regime back in the 80s. I guess Bush decided the wrong side won.

Congress pwned by Media Giants

Ars Technica: New bill would punish colleges, students who don't become copyright cops

A massive education bill (747-page PDF) introduced into Congress contains a provision that would force colleges and universities to offer "technology-based deterrents" to file-sharing under the pain of losing all federal financial aid. Section 494 of the College Opportunity and Affordability Act of 2007 is entitled "Campus-Based Digital Theft Prevention" that could have just as easily been called "Motion Picture and Recording Industry Subsidies," as it could force schools into signing up for subscription-based services like Napster and Rhapsody.

Under the terms of the act, which is cosponsored by Rep. George Miller (D-CA) and Rep. Ruben Hinojosa (D-TX), schools will have to inform students of their official policies about copyright infringement during the financial aid application and disbursement process. In addition, students will be warned about the possible civil and criminal penalties for file-sharing as well as the steps the schools take to prevent and detect illicit P2P traffic.

That's not all: schools would have to give students an alternative to file-sharing while evaluating technological measures (i.e., traffic shaping, deep packet inspection) that they could deploy to thwart P2P traffic on campus networks. Many—if not most—schools already closely monitor traffic on their networks, with some (e.g., Ohio University) blocking it altogether, and the bill would provide grants to colleges so they could evaluate different technological solutions.

The most objectionable part of the bill is the part that could force schools into signing up for music subscription services. In order to keep that beloved federal aid money flowing, universities would have to "develop a plan for offering alternatives to illegal downloading or peer-to-peer distribution of intellectual property."

So basically Colleges and Universities will be forced to spend valuable money guarding the Media industry's property or to cut students off from the internet to avoid losing financial aid. I thought the Credit Card issuer profit maximization act (Bankruptcy Reform) was pathetic. Every single bought and paid for Congressman should be charged with receiving bribes (maybe I'm simple minded, but when someone gives a lawmaker money and in exchange ghostwrites the laws I don't see the subtle distinction).

Congress finally draws a Line in the Sand

They can't stop the war, they can't muster the will to get working families' kids health insurance, but when Bush vetoed pork by God that cannot stand

It makes you wonder.....

....whether all these poisonous Chinese products coming over are accidents.

CNN:Millions of toys recalled; contain 'date rape' drug

Millions of Chinese-made toys have been pulled from shelves in North America and Australia after scientists found they contain a chemical that converts into a powerful date rape drug when ingested. Two children in the U.S. and three in Australia were hospitalized after swallowing the beads.

The lead paint deal I thought was just a matter of being cheap (and in part due to intricate and ever changing web of subcontractors and suppliers used by Chinese businesses which thwarts accountability). This seems like a different critter. I'm glad the kids are mostly too old to want toys this Christmas.