Monthly Archives: July 2012

For Some Reason Penn State Will Field a Football Team This Fall

A monument to former Penn State child rapist enabler and football coach, Joe Paterno, was removed in July of 2012. The empty shell was subsequently demolished as well.

A monument to former Penn State child rapist enabler and football coach, Joe Paterno, was removed in July of 2012. The empty shell was subsequently demolished as well.

For eight days in June, former Penn State football defensive coordinator Jerry Sandusky went on trial to face the music for his sexual crimes against children. After disturbing testimony with heartbreaking and revolting detail about Mr. Sandusky’s abuse of a father-figure role to troubled youth in order to facilitate his rapist tendencies, the verdict was handed down on the 22nd of June – guilty on 45 of 48 counts: eight counts of involuntary deviate sexual intercourse, seven counts of indecent assault, one count of criminal intent to commit indecent assault, nine counts of unlawful contact with minors, ten counts of corruption of minors and ten counts of endangering the welfare of children. At the bare minimum of Pennsylvania state law, Mr. Sandusky faces a minimum sixty year sentence. For the sixty-eight year old, this amounts to a life sentence.

The crimes of Mr. Sandusky were not committed in a vacuum and, as further investigation continues to show, necessitated the involvement of top university members in order to facilitate a cover-up that allowed the ex-coach to remain around the program. The question was how far up exactly did this cover-up go, and for how long? These questions were largely answered on the 12th of July with a report from former FBI director Louis Freeh. In his report, it was determined that the most powerful leaders at the university – including former coach Joe Paterno – covered up Sandusky’s crimes from authorities in order to avoid the consequences of bad publicity.

What of the football program, though? With only weeks to go until the start of the college football season, the question posed to the NCAA was what, if any, sanctions would be brought down on Penn State. The corruption being shown to reach the highest levels of the football program and the school – the cover-up to help spare both from bad publicity which would hurt their ability to attract new recruits – what should the governing body of collegiate sports do about the matter? Loud calls came from many in sports media for the so-called “death penalty”, a literal shuttering of the school’s football program for at least one year. It’s the kind of punishment that a program has a hard time recovering from in the short term if ever. If there was a heinous enough crime that warranted such a treatment, surely it would be a systematic cover-up of a child molester.

Yet all of that in mind, this coming fall for some reason Penn State will be fielding a football team.

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“The Shatterer of Glass–Steagall” Suggests Glass-Steagall Should Come Back

Sanford Weill, former chairman at Citigroup and one of the chief proponents of neutering the Glass-Steagall Act, appeared on CNBC last week to suggest maybe megabanks should be broken up after all.

Sanford Weill, former chairman at Citigroup and one of the chief proponents of neutering the Glass-Steagall Act, appeared on CNBC last week to suggest maybe megabanks should be broken up after all.

One of the more eager and vocal proponents for ending the New Deal-era Glass-Steagall act in the 1990s was Sanford Weill. Mr. Weill was a former chairman at Citigroup – a company that was, for all intents and purposes, illegally created in 1998 by the merger between the bank Citicorp and the insurance giant Travelers. Firewalls were erected by the Glass-Steagall Act that prevented commercial banks from merging with insurance companies and investment banks – preventing potential conflicts of interest that could lead to massive amounts of corruption and a bubble-and-burst cycle that could do serious damage to the economy, as had happened in the 1920s. Had the Glass-Steagall Act remained, Citigroup would have been forced to spin off its insurance business (the company Travelers) within a two-to-five year period. That never came to pass though – within a little more than two years after Mr. Weill oversaw the Citigroup merger, Congress would bring down the firewalls that kept those institutions from merging with each other. Citigroup was validated and, amazingly enough, massive amounts of corruption and a bubble-and-burst cycle that did serious damage to the economy soon followed.

A net worth in the millions and very comfortably secured from the economic realities of what he lobbied for in the name of profit, Mr. Weill has made headlines in recent days over his mea culpa-esque pronouncement that the big banks created directly as a result of the neutering of Glass-Steagall should themselves be broken back up. In an interview on the subject with CNBC, Mr. Weill said the following:

I am suggesting that [big banks] be broken up so that the taxpayer will never be at risk, the depositors won’t be at risk, the leverage of the banks will be something reasonable… I want us to be a leader… I think the world changes and the world we live in now is different from the world we lived in ten years ago.

Irony in his statement laid on very thick since President Clinton heralded the death of Glass-Steagall’s teeth in 2000 with the announcement:

Today what we are doing is modernizing the financial services industry, tearing down those antiquated laws and granting banks significant new authority.

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Did JPMorgan Chase Manipulate Electricity Prices?

JPMorgan Chase may have been involved in the manipulation of electricity prices in California and the Midwestern United States.

JPMorgan Chase may have been involved in the manipulation of electricity prices in California and the Midwestern United States.

It’s been a banner couple of weeks for the folks over at JPMorgan Chase. Aside from the chance that they could end up in the circular firing squad over the Libor scandal, there was the bit about a “trade gone bad” costing the company $5.9 billion in the last quarter, it has been reveled over the past couple of weeks that the Federal Energy Regulatory Commission is taking a look into whether the bank manipulated electricity rates in their favor in the western and Midwestern United States over a period of years.

The electricity investigation involves whether JPMorgan’s bidding strategies extracted “inflated” or “excessive” payments from two wholesale power markets serving California and several Midwest states. The bank’s commodities business owns or has rights to output from several electric generators.

The result of such inflated or excessive payments would likely be passed along to the customers in the areas served by those markets. It’s the most efficient form of trickle down economics there is!

If this all has a twinge of familiarity it’s because a touch more than a decade ago, a company from Houston, TX, by the name of Enron was caught an energy price manipulation scheme of its own. The scandal eventually cost the company it’s existence, investors billions of dollars, and the CEO (among others) his freedom. While it does not appear the crimes of JPMorgan are anywhere near as egregious, it does raise a “really, you’re going to do that?” eyebrow that is probably both morally justified by the rest of us and looked down at disdainfully by some of the less-than-moral members of the trading markets – few as they are among the industry.

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Life’s Fragility

I was shown how fragile life was on Saturday. I saw the terror on bystanders’ faces. I saw the victims of a senseless crime. I saw lives change. I was reminded that we don’t know when or where our time on Earth will end. When or where we will breathe our last breath. For one man, it was in the middle of a busy food court on a Saturday evening.

I say all the time that every moment we have to live our life is a blessing. So often I have found myself taking it for granted. Every hug from a family member. Every laugh we share with friends. Even the times of solitude are all blessings. Every second of every day is a gift. After Saturday evening, I know I truly understand how blessed I am for each second I am given.

I feel like I am overreacting about what I experienced. But I can’t help but be thankful for whatever caused me to make the choices that I made that day. My mind keeps replaying what I saw over in my head. I hope the victims make a full recovery. I wish I could shake this odd feeling from my chest. The feeling that’s reminding me how blessed I am. The same feeling that made me leave the Eaton Center. The feeling that may have potentially saved my life.

The above was written by Jessica Ghawi, who went by the name Jessica Redfield in her professional career. She managed to avoid a mass shooting in Toronto’s Eaton Centere on the 2nd of June. There were five victims in all, two of those fatal. Ms. Ghawi was in the same spot that the shooting would transpire in, narrowly missing the rampage by a matter of minutes. Less than two months later, she would be unable to avoid the mass shooting in Aurora, Colorado, becoming one of the twelve killed. Her insight into escaping one rampage before being struck down in another underscores a fragility in life that far too many of us in the western world take for advantage.

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Memorial For the Aurora Victims, Political Footballs for the Punditocracy

The gas mask used by the Aurora theater shooter.

The gas mask used by the Aurora theater shooter.

Sunday evening brought a tearful memorial to Aurora, Colorado, where the twelve who died in Friday mornings mass theater shooting were remembered by thousands. Some of the fifty-eight who were injured in the rampage still remained in area hospitals through Monday, seven still in critical condition. The healing process has begun, both physically and mentally for the survivors, as well as emotionally for residents of Aurora and surrounding communities, who are still coming to grips with the sudden outburst of violence:

“I just wanted to come and pay my respects,” said Greg Durfee, who said he lives in Denver but considers Aurora to be his hometown. “I think this is the start of the healing.”

“When something tragic and horrific like this happens,” said Bill Stanley, who, along with his wife Colleen, traveled from Wheat Ridge for the vigil, “it hurts the whole metro area region. I just wanted to pay respects to the victims, the families, the police officers, just everyone who had to deal directly with this sad event.”

Sunday also saw a visit from President Obama for recovering victims and families of the killed.

Meanwhile, primed and ready for a knock down drag out political campaign that is trying to hold the nation’s attention through November, pundits for both sides of the gun control argument didn’t even let the final casualty counts come in before taking hold of this event and propping it up to defend their pet cause, attacking the pet cause of “the other side”. New York City’s mayor, Michael Bloomberg, took to the airwaves on Friday morning to take shots at both Presidential contenders – imploring someone to bring up the debate over gun control and to take a firm stance in favor of it. Gun advocates, for their part, ranged their reactions between “gun control wouldn’t have worked” and “this wouldn’t have happened if everyone else was packing!” There must be an ease at shooting in a crowded, darkened, tear-gas filled room and hitting nothing and no one but the bad guy who was covered head to toe in body armor. Heroes never have stay bullets, and pack armor-piercing rounds.

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14 Killed, 50 Injured in Aurora, CO, Mass Shooting During Premiere of “The Dark Knight Rises”

Police respond to the scene of a mass shooting during the debut of "The Dark Knight Rises" in Aurora, Colorado.

Police respond to the scene of a mass shooting during the debut of “The Dark Knight Rises” in Aurora, Colorado.

The midnight showing of the latest Batman movie, The Dark Knight Rises, ended in violence and death for dozens of movie goers in suburban Denver, Colorado, early this morning. According to reports, a lone gunman walked into a packed theater in Aurora, deployed gas, and began firing indiscriminately into the crowd. According to a police briefing just after 3am local time (5am eastern) 10 people were killed on-site at the theater, 4 additional died at area hospitals, and as many as 50 others were injured during the rampage.

According to some witnesses, the shooting was timed to coincide with a shootout in the early part of the movie, which had the effect of some viewers believing the initial sounds of shots were actually part of the movie and not because of a mass shooting in progress. At least one theater was the main target, though bullets made it through theater walls and struck people in adjoining rooms.  Also according to police, the shooter has been apprehended. The shooter has allegedly claimed a vehicle in the theater parking lot was rigged with explosives but did not go on, investigations to this end are currently ongoing.

The following video was made shortly after the shooting by a witness:

An additional witness account:

According to local hospitals, the youngest victim is six years old.

Some other updates from Twitter:

Syrian Uprising Becomes Civil War, Moves to Damascus

Rebel advances/uprisings have reached Syria's capital, Damascus. Lacking a fully organized force or front, rebels have taken to blocking key routes in the city.

Rebel advances/uprisings have reached Syria’s capital, Damascus. Lacking a fully organized force or front, rebels have taken to blocking key routes in the city.

Within the past week, the suppression of anti-government protesters and attacks by government forces on a rag tag bunch of army defectors and rebels has morphed into something that more constitutes a civil war. More effective and organized strikes by rebel forces in hot spots in northwestern Syria have now turned into attacks within the suburbs of the capital city of Damascus. The center of power for President Bashar al-Assad’s regime has remained mostly quiet for the bulk of this conflict, though that was violently upended Wednesday as a reported suicide bombing attack struck at the heart of the country’s government:

Defense Minister General Rajha and his deputy, Assef Shawkat, the brother-in-law of President Bashar al-Assad, were reportedly killed on Wednesday in the deadliest assault on government officials since the violence began 16 months ago.Also reported dead were Interior Minister Mohammed Ibrahim al-Shaar and General Hassan Turkmani, a former defence minister and currently Syria’s deputy vice president, who later died of his injuries.

There were additional injuries among other government officials who were at a gathering in Damascus’s National Security building. Two groups - Liwa al-Islam (The Brigade of Islam) and the Free Syrian Army – claimed responsibility for the attacks, though it is rather difficult to validate anyone’s claims on the ground. What can be verified is that the response from Mr. Assad’s side continues to be fierce:

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On a Path for El Niño

Over the latter winter months it appeared there was a major pattern shift under way in the Pacific Ocean – from the cooler leaning waters of La Niña to the warmer El Niño regime. There has been little to derail that train of thought – and an abnormally warm summer across the United States as well as a sluggish start to the Atlantic hurricane season seem to be showing off the first and most pronounced effects of the changing weather pattern.

To qualify for being an El Niño the warming of the Pacific Ocean waters must persist in a certain area and for a certain amount of time. The region that is watched most closely is the “Niño 3.4 region”, shown by the following graphic:

The various Niño regions across the equatorial Pacific Ocean.

The various Niño regions across the equatorial Pacific Ocean.

If abnormally warm waters (more than 0.5°C) persist for a long enough time (five consecutive months of three month averages – so Mar/Apr/May, Apr/May/Jun, May/Jun/Jul, so on) then it is considered a full blown El Niño. At that point the pattern shift has persisted long enough to change weather patterns around the globe, and it has done so with a fair degree of staying power. The only question left is how long it would last and how pronounced it will be – how many degrees above average will the waters be and for how long. A ‘weaker’ El Niño would tend to only keep waters above average for a long stretch of months in either the Niño 3 or Niño 4 region, whereas your stronger El Niño episodes heat the entire stretch from the coast of Ecuador all the way out to Papua New Guinea.

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Hot Summer Extends Warm & Dry 2012 in U.S. – Nearly 2/3 of Country in a Drought

As of July 10, more than 60% of the United States was in some sort of drought.

As of July 10, more than 60% of the United States was in some sort of drought.

Mostly above normal and rain-less conditions are expected to continue across the vast majority of the United States this week, gradually worsening a summer that has already shattered records that have been on the books since the time of the Dust Bowl and before. The lack of rain – except for isolated areas that see violent thunderstorms – will serve to continue to build and extend the drought that has taken hold in a nearly unbroken mass from the Appalachian Mountains westward to the Pacific Ocean, and from the Mexican border northward to the southern Great Lakes through central Montana. Over 60% of the country and counting is in some sort of a drought – almost 55% in a moderate drought or worse – and the outlook shows little relief in sight.

Some of the extremes are eye-popping. An axis of extreme to exceptional drought conditions continues to take hold across most of the state of Arkansas northeastward into portions of Missouri, Illinois, Kentucky, and now expanding up through central Indiana. In this area, the estimated departure from normal precipitation is over 16 inches over the last 90 days. As you can see from the following map, very few areas of the continental United States have seen precipitation at or above normal for the last three months – mainly confined to the edges in the northwestern U.S., far northern Idaho and Montana, the northeastern U.S., and a strip of land in Florida that was hammered with exceptional rains from the passage of Tropical Storm Debby:

Radar estimated departure from normal precipitation across the continental United States in the 90 day period ending 15 July 2012.

Radar estimated departure from normal precipitation across the continental United States in the 90 day period ending 15 July 2012.

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Banks Reach New Level of Scandal: Meet Libor

Somewhere on the right half of this chart may be the one of the largest financial scandals of the 21st century.

Somewhere on the right half of this chart may be the one of the largest financial scandals of the 21st century.

We have for some time lived in a world where a bit above all of our heads exists a rather complex financial world. Far beyond “I’ll trade you this paper for that thing”, it spirals into quotes of value’s value of value which by the time whatever ‘it’ was makes its way back to the real world, it comes in the form of the interest rate you might pay on a loan for a house, your credit card, student loans – or what your local and state governments might pay on loans to issue debt. “Debt” might have a negative connotation to certain tricorne hat-wearing really concerned citizens but it has very useful and practical purposes. Issuing short-term debt, for example, is how many companies of all shapes and sizes make payroll, purchase equipment, fund transactions – do business. Far from a credit-addicted hoarder that it may sound, the debt is needed to bridge the gap from now until money is received for whatever is sold.

A scandal has emerged in the public light this month in which some of the biggest banks in the world apparently colluded on the reporting of a key rate that had direct and tangible effects on the pricing of literally hundreds of trillions of dollars of assets – including but not limited to every sort of loan that you could possibly imagine. It would be the manipulation of one of the key pillars of the economy as it works today, and lawsuit liabilities could decimate the profits of these large banks for years to come – not to mention further shattering the confidence that the public has in the financial sector, not that the events of The Great Recession have left us with much to begin with.

What has begun with a probe in England could end up realizing the most flagrant-sounding charges from skeptics of our financial system: maybe the whole thing is a game and it is rigged, after all.

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