US banks have $80 billion exposure to EU debt crisis

In theory the exposure is less but the numbers are still substantial. Add to this the ongoing soft economy plus the fundamental weakness in the financial sector, the fat profits are likely to be hard to find in 2012. NY Times:

Five large American banks, including JPMorgan Chase and Goldman Sachs, have more than $80 billion of exposure to Italy, Spain, Portugal, Ireland and Greece, the most economically stressed nations in the euro currency zone, according to a New York Times analysis of the banks’ financial disclosures. But these banks have made extensive use of a type of financial insurance, called credit default swaps [cnbc explains] , to help them offset any losses that might occur if defaults swamped the five troubled nations. Using these swaps, along with other measures, the five banks have cut their theoretical exposure to the troubled countries by $30 billion, to $50 billion. The analysis also shows that Citigroup has the greatest percentage of its exposure potentially protected at 47 percent, while Bank of America has bought the least protection at 12 percent. Big banks have reduced their sovereign debt exposure, but they still have tens of billions of dollars of it.

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Islamophobic general pulls out of West Point event after controversy

West Point says they welcome a broad range of ideas, that's why they defend the general's right to be the featured speaker at their annual prayer breakfast (nothing says "prayer" like a guy who hates an entire religion).  Fortunately, he's now pulled out of the event.  But one still wonders if West Point would be as welcoming of a bigot if he were, say, anti-Christian.  Kudos to Vote Vets, with the help of ThinkProgress, for dogging this one. Read the rest of this post...

Laughing at Federal Reserve meetings increased as bubble neared

If only the joke wasn't on everyone other than Wall Street.

Even today, there's a complete disconnect between the political class and the rest of the country who are still fuming over the easy ride for the people who caused the crisis. Everyone has a laugh at big meetings but in this case, the coziness of the Federal Reserve is something that should disturb everyone. They were asleep at the wheel and blew it. It's time to gut the Fed and bring in people who are much more serious about protecting the best interest of the public and not just the banks and bankers. The public is stuck with this poor excuse for an economy and if we're through it by 2020 we should feel lucky. Ha, ha, isn't this funny?

The blog, The Daily Stag Hunt, tracked the times “laughter” was recorded by the Fed’s stenographer during the FOMC meetings. In 2001, the FOMC averaged 16.5 moments of guffaws per meeting. In 2006, there were, on average, 44 outbreaks of laughter. As found by the blogger, one of the more TV sitcom-like moments came during the Fed’s January 2006 meeting when then-Vice Chairman Tim Geithner said to the departing Greenspan during his last gathering: “I’d like the record to show that I think you’re pretty terrific, too. [Laughter] And thinking in terms of probabilities, I think the risk that we decide in the future that you’re even better than we think is higher than the alternative.[Laughter] With that, the economy looks pretty good to us, perhaps a bit better than it did at the last meeting. With the near-term monetary policy path that’s now priced into the markets, we think the economy is likely to grow slightly above trend in ’06 and close to trend in ’07.”

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Romney campaign showcases support from pastor who said gay marriage helped cause 9/11

A beard is a woman a gay man uses as a fake girlfriend to pretend to the world that he's straight. This pastor is the beard Romney uses to pretend to conservative voters that he's not a flaming, gay-loving liberal. Read the rest of this post...

Video: Santorum for President, because women are too stupid to think for themselves (humor)

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Man arrested for DWI, held in solitary for two years, remembers almost none of it

We go to Raw Story for this hellacious tale (my emphasis):

In August of 2005, Stephen Slevin was arrested for driving while intoxicated (DWI). He spent most of the next two years in the Dona Ana County Detention Center without his case ever going before a judge.

Slevin was rarely allowed to go outside, fungus grew underneath his skin and his toenails curled around his foot because they were so long. At one point, he even had to pull his own tooth.

“He can’t really remember any of it,” Dart Society Reports’ Susan Greene, who interviewed Slevin, told Raw Story. “It’s all sort of lost in his mind, which is a typical trauma response, a pretty extreme though not unheard of trauma response.”

Attorney Matt Coyte explained to MSNBC.com that police had mistakenly believed that Slevin had stolen the car he was driving when police pulled him over and arrested him for a DWI. Slevin informed authorities that he had been depressed, but instead of getting mental help, he found himself on suicide watch in a padded cell. Three days later, he was transferred to solitary confinement.

Coyne commented: "Their policy is to then just put [detainees with mental health issues] in solitary. He disappeared into delirium...".

It's a horrifying story. Apparently, at some point he snapped alert. Once released, he sued, winning a $22 million award just last week. It's the award that makes this news, but the underlying thought is stunning.

How do you go from DWI to two years in solitary without ever seeing a judge? I knew we were a prosecutorial, punishing lot. But are we that prosecutorial, that mindlessly punishing? Guess so.

I hope it just a species thing, and not something in the American water supply.

One last quote. In an interview, Slevin said this:

“Prison officials were walking by me every day, watching me deteriorate. ... Day after day after day, they did nothing, nothing at all, to get me any help.”

Lord help him. As the article makes clear, he'll have PTSD for the rest of his life. As for the county, they're offering media tours of the facility — apparently there's nothing a PR campaign can't totally cure.

Update: I haven't chased it down, but note this comment. Worth looking into.

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Romney pulling ahead in Florida

Sad. It would have been fun to watch Gingrich really muck things up. Via Slate:

Mitt Romney widened his lead in Florida over the weekend as the last fumes from Newt Gingrich's South Carolina momentum dissipated in the Sunshine State.

According to Reuters, Romney's lead had grown to 12 percentage points as of Sunday. Even more striking is Newt's decline in the three-day Reuters poll's hypothetical head-to-head between the two front-runners: On Friday, Gingrich and Romney were two percentage points apart, with Romney barely leading. On Saturday, the gap was eight percentage points. On Sunday, 11.

Other polls released over the weekend confirm Romney's widening lead.

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The real consequences of holding banks accountable

Robert Kuttner, in the course of a long post about the federal mortgage fraud task force and what it means to have New York AG Eric Schneiderman on it as a co-chair, includes a number of details about the fecundity of various avenues of investigation. Kuttner looks at the wide assortment of frauds associated with the inflation of the housing bubble and the ongoing foreclosure crisis and notes that real accountability would require a scale far greater than what we've seen so far from any law enforcement or regulatory body anywhere in the country. The scale of true accountability, Kuttner notes, could necessitate a total restructuring of the banking industry:

Bankers have escaped prosecution, and housing has stayed in a deep hole, in large part because of a disastrous decision that Geithner made in early 2009 -- the policy of extend and pretend. Rather than cleaning out and breaking up big banks, Geithner claimed that "market confidence" required the Treasury to collude in the fiction that all was well. It was just a temporary problem of liquidity.

Propping up the banks and their balance sheets, in turn, precluded serious relief of the mortgage crisis, since a write-down of mortgage debt would require banks to acknowledge real losses.

In some ways, a successful prosecutorial initiative returns us to the debates of early 2009: if cleaning up the mortgage mess requires banks to take a big hit to their balance sheets, how then do we proceed with a restructuring of the banks?

Since markets have already acknowledged reality by driving down the value of the banks' share prices, a settlement withY much larger penalties, principal write downs, and even some prison sentences would actually be good for the banking industry because it would provide a fresh start with honest books. We could get beyond the "Japan" phase of this crisis, where the Fed has to keep pumping in trillions of dollars to disguise the real weakness of the economy and the banking industry.

It's helpful that the Fed recognizes the perilous effect of the mortgage collapse on the recovery, since Fed intervention will be central to restructuring and recapitalizing the banking industry after the task force brings bankers to justice.

It's good to see some honest assessment of what the full accountability pathway would mean for the larger banking system. There isn't really a way to put bank executives in jail for criminal behavior, while also pursuing appropriately large civil damages, restitution for defrauded homeowners, and principle reduction to help borrowers now and not see the writing on the wall. Namely, that the big banks can't afford to truly face up to the consequences of their action without being brought to bankruptcy and going through a restructuring process. This is a little discussed fact that undoubtedly has had some impact in the minds of political and financial elites in their thinking of what sort of accountability banks would be allowed to face.

If Kuttner is right and there can be accountability on the scale requisite by the extend of criminal behavior by banks, then the side effect of this will be that we can finally do what should have been done in late 2008 and early 2009 - rebuilding the banking system with stability, not can-kicking, in mind.

There are two core principles at play in the discussion of accountability for illegal behavior during the inflation of the housing bubble and in the ongoing foreclosure crisis. The first is that we must uphold the rule of law and no one should get away with breaking the law (let alone the centuries-old property law on which the entire economy is based) simply because they are a banker. The second is that the foreclosure crisis is producing a massive human cost which needs to be mitigated immediately. These two thrusts do not, in fact, contradict with each other. What Kuttner is identifying is the reality that the largest possible vehicles for aid to suffering and wronged homeowners is robust law enforcement and accountability measures. This is part of the reason why so many of us have pushed for there not to be any settlement of any matter which hasn't been fully investigated. Investigation produces knowledge which informs law enforcement as to what appropriate punishment looks like.

It remains to be seen if this new subgroup that includes Schneiderman will pursue criminal investigations on the scale that Kuttner speculates (and which is clearly necessary). Hopefully good things will come from it. But I'd hope that in the course of these investigations, the consequences of really holding banks accountable do not deter law enforcement from doing just that. Instead, as Kuttner says, seize this opportunity to do what should have been done years ago and leverage this moment to rebuild the banking system in a way that stabilizes the economy and directly helps the American public. Read the rest of this post...

Massive amounts of money still missing or unexplained in Iraq

At least democracy is now firmly established in Iraq.

The Pentagon doesn’t know what happened to more than $100 million in cash held at Saddam Hussein’s palace in Baghdad during the Iraq war, according to a new report by the Special Inspector General for Iraq Reconstruction. What’s more, the Pentagon can’t find documents to explain what it spent as much as $1.7 billion on from funds held on behalf of the Iraqi government by the New York Federal Reserve, the report says. The missing records raise new questions about how the US government handled billions of dollars in Iraqi funds during the war.

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The human cost of your iPad and iPhone: child labor and poisoning the environment

We covered Apple earlier, but there's a lot more to the story than just loss of U.S. jobs.

Props to the New York Times for making the "human cost" point a feature story, and making it so well. Given the Tabloid Saint status of Steve Jobs these days (Tabloid Saint: He of whom no ill can be publicly spoken), this is quite a brave act.

But yes, children, there's a human cost to your iPad, your iPhone, your iLife. And it's not a small one.

The article's overview (my emphasis):

In the last decade, Apple has become one of the mightiest, richest and most successful companies in the world, in part by mastering global manufacturing. ... However, the workers assembling iPhones, iPads and other devices often labor in harsh conditions, according to employees inside those plants, worker advocates and documents published by companies themselves. Problems are as varied as onerous work environments and serious — sometimes deadly — safety problems.

Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.

More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu, killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the Chengdu plant, according to a Chinese group that published that warning [pdf].

“If Apple was warned, and didn’t act, that’s reprehensible,” said Nicholas Ashford, a former chairman of the National Advisory Committee on Occupational Safety and Health, a group that advises the United States Labor Department.

The whole article is eye-opening and painful.

But maybe not eye-opening at all. Let's look at just two pieces of it:

Piece 1 — I highlighted a short list of sins in the paragraphs above. Stand till you can't walk. Under-age workers. Ordered to use poisons as cleaning agents. There are other kinds of abuse, but just take those.

What does this add to? Pre-union conditions in U.S. manufacturing plants — 12-hour days, child labor. Standing on assembly lines until you couldn't stand; peeing in a can because if you left the line you'd get fired. Unsafe machinery (think loss of hands and feet, arms and legs). Unsafe chemistry, including acids with toxic fumes.

Economic servitude created those conditions; and control of bought political actors (retainers) by giant economic predators (the Rockefellers and Pullmans of the world) perpetuated it.

Apple — that self-advertised faux-hip company with the secret control-freak center, just like its founder — is one of this-gen's major predators, eaters of men, heirs to the Carnegies and the Pullmans.

(Why do I keep mentioning Pullman? Read on. The Pullman Company, like Apple, is an actual demon, not just a tabloid one; and Eugene V. Debs, its victim, is a Labor Saint.)

That's what you do when you buy an iPad; you enable Apple in its two pronged assault. The right hand of Apple makes ads that make you look cool; the left hand of Apple lays waste to workers you'll never be allowed to see, kills in another country.

Not to put too fine a point on it (my favorite phrase these days) — Our hipster life is bought with Dickensian blood; loss of limbs; loss of life. Or, to paraphrase Mel Brooks, "It's good to be the middle-class in America" — at least for now. (Don't worry, you who love justice; our day is coming, I fear.)

Piece 2 — You thought that last part was bad? How's this — Didn't you always know this? As I said, maybe not eye-opening at all.

Maybe it's time for us, we as a nation, to unite behind Labor, to Occupy the Truth and act differently. Not just economically; but politically.

And isn't it time for Labor to actually pick a side, instead of just pretending to? There may not be a ton of time left to decide.

GP Read the rest of this post...

University presidents react to Obama’s cost control plan

President Obama is not wrong to demand cost control and efficiency at universities, but the university presidents are also not wrong when they say the problem is more than that.

When I went to Ohio State back in the 1980's, I recall my tuition increasing from $400 per quarter up to nearly $800 per quarter or at least somewhere in that range. It was possible to work (I worked 2-3 jobs and 40 hours per week) and pay for school and books, but that seems to be a lot more difficult to do today. When I look at the cost of college today, wow, it's beyond belief. Schools that always struck me as good, but not great, easily cost $25,000 or more. Even in-state tuition for state schools is high.

The university presidents are right to talk about the budget issues that are out of their control, but really, there's also something wrong about the money many university presidents are receiving. It's an important job, but the pay is mind boggling, and the superstar pay for them is just as ridiculous as the superstar pay for athletes or movie stars. The difference is, the mission of the universities is not the same. It's a complicated problem and if we want to have a competition country, education has to be a lot more affordable than it is today.

The President's pitch may be a bit of election-year political theater, but he's right to get the discussion started.

The reality, said Illinois State's Al Bowman, is that simple changes cannot easily overcome deficits at many public schools. He said he was happy to hear Obama, in a speech Friday at the University of Michigan, urge state-level support of public universities. But, Bowman said, given the decreases in state aid, tying federal support to tuition prices is a product of fuzzy math. Illinois has lowered public support for higher education by about one-third over the past decade when adjusted for inflation. Illinois State, with 21,000 students, has raised tuition almost 47 percent since 2007, from $6,150 a year for an in-state undergraduate student to $9,030. "Most people, including the president, assume if universities were simply more efficient they would be able to operate with much smaller state subsidies, and I believe there are certainly efficiency gains that can be realized," Bowman said. "But they pale in comparison to the loss in state support."

What do you think? If you went to college "then" could you afford to go now?

NOTE FROM JOHN: I left grad and law school with $60,000 in loans over twenty years ago. My monthly payment on my debt was equal to my rent. I had friends who went to private undergrad, and they owed more like $120,000. Twenty years ago. What people have to pay now for an education is obscene. I've often wondered what the economic cost is of education debt. How much money does it suck out of the economy, and what's the spin off effect? I know for me, I put off buying my first place until I was in my mid 40s because I didn't finish paying off my schooling until then (that, and do-gooder jobs in this town don't pay as much as law jobs). I'm curious about the aggregate effect of such debt on the economy over a period of decades. Read the rest of this post...

Bailed out UK bank CEO waives annual bonus after pressure

The bonus - significant for normal people, pocket change for bankers - was waived following calls by the opposition to hold a vote in parliament on the payout. The CEO backed down. The good news is that the banker did back down but this still means that there's nothing stopping the payout happening in the future. These events have a way of slipping back in later if there's no law preventing it from happening. Good for Labour to make this a public issue. Bloomberg:

Royal Bank of Scotland Group Plc Chief Executive Officer Stephen Hester decided to waive his 963,000-pound ($1.5 million) bonus after the opposition Labour Party said it would ask Parliament to vote on the award. Hester, 51, has been at the center of a political storm over executive pay since the announcement on Jan. 27 that he would receive a bonus for 2011 on top of his 1.2 million-pound salary. Britain’s biggest taxpayer-controlled bank has fallen 35 percent in the past year to about half what the government paid for its stake in the lender. Chairman Philip Hampton has also waived his 1.4 million-pound stock award. “While nobody doubts Hester has done a decent job, there are grounds for real doubt about whether this really justifies a bonus which practically doubles his salary,” Labour leader Ed Miliband wrote on his website last night. “Labour was right to seek a parliamentary vote on this so that the people’s voice could be heard. But the debate about fair executive pay and responsible capitalism is only just beginning.”

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Video: Kitten’s first experience in a bath, loves it

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