Thursday, April 29, 2010

Marked for Life

You’ve got an advanced college degree with a flair for dealing with the public, a few years of job experience and a reasonably impressive resume. None of the folks up for the same work have remotely your success and experience… but you have tattoos that are visible even when fully suited. Gonna get the job? Depends. The military has some pretty strict rules about tattoos that show when you are in uniform with an open collar: “Air Force Instruction 36-2903, Dress and Personal Appearance, states, ‘Excessive tattoos and brands will not be exposed or visible while in uniform.’ Excessive is defined as any tattoo/brands exceeding one-quarter of the exposed body part and those above the collarbone when wearing an open collar uniform.” (April 27th). And there are pockets of the job market that are downright hostile.

Some companies won’t let you work in a job that deals with the general public if you’re obviously marked. Advertising agencies might think it’s cool, and people who have to connect with inner city youths, people on the wrong side of the law, etc. actually might find a tattoo an advantage in making the necessary connections. But if you think a tattoo is a right of free speech that companies have to respect, think again. The First Amendment doesn’t protect you; “the law has often sided with corporations that don't approve of them. According to the Equal Employment Opportunity Commission (EEOC), employers are allowed to impose dress codes and appearance policies as long as they do not discriminate or hinder a person's race, color, religion, age, national origin, or gender.”

Are we just getting used to a change in norms, a differentiation that simply is an intergenerational dispute? Or is this a permanent vector that will sustain since those hired are likely to be tattooless and likely to continue the practice? According to the Academy of Dermatology, in 2006 one in four adults between the ages of 18 through 50 had at least one tattoo, up from 15% in 2000. It’s no longer a badge relegated to the working class. I’m picturing – decades from now – a rebellious teenager, watching his parents flesh laced with aging and spreading bluish marks, blurring with age, laughing at these misspent marks of long-ago, equally rebellious youth. Will these signatures simply date the folks who have marked their past with symbols that linger decades beyond their time? Or will this simply be the tribal norm going forward.

Tattoos are a whole harder to remove than they are to get, plus there are restrictions about getting too much sun, etc. in the spot where the tattoos were removed. Got the wrong love interest on your arm – the number one reason for tattoo removal – well, it’s gotta go! He or she is gone, after all! But it can take multiple passes to remove tattoos, and the more of them there are, the bigger they appear, well, the longer and more painful it takes to get rid of. Expensive. A growing industry, I might add, now maybe a bigger growth sector than administering the tattoo in the first place.

But in the absence of an offensive remark or picture, it’s really difficult to justify having a tattoo as a reason to deny someone a job. Sure if you think you will lose customers, but will you really? Is it fair? How about the quality of the person who has the tattoo? Do you have a tattoo? When if ever do you hide it? How do you feel about that? And if you are an employer, what’s your policy on employees with tattoos… and why? Do tattoos on the opposite sex turn you on or off? And when you see a tattoo, what do you think about the person wearing it? Remember that old “don’t judge a book by its cover” maxim? Believe it?

I’m Peter Dekom, and change serious interests me or haven’t you noticed?

Wednesday, April 28, 2010

Their Standard is Poor – Ratings and US

Credit rating agencies… gotta love ‘em… NOT. Big financial institutions learned how to read their rating policies, fan large fees before their long credit-rating noses, and lure such “objective” credit rating agencies to rate pretty crappy aggregations of subprime mortgages into A or AA or, OMG, AAA ratings. Yet when investors burned by the ratings sue the agencies, they find that these sleezeballs are either specifically exempted from the various federal securities laws, aren’t really in any of the categories regulated or are somehow exempted by exercising their free speech rights. Bottom line: issuers of crappy subprime bundles of mortgages shopped for the credit rating agency willing to issue the best ratings for a fee that was normally… significant. Without any risk related to the accuracy of their results.

Huh, the people who created the crap were the ones who got to pick who would rate the crap and they got to pay the crappy raters a fee to rate crap, a fee that they wouldn’t pay if they expected the ratings to be crap? Huh? It’s like applying for a loan and effectively then getting to rate yourself to the lender by paying a big fee to a sympathetic ear? Isn’t that sort of… er bribery? And clearly Congress is clamping down on these agencies right? Oh, yeah, there’s the filibuster thang that is stopping any reform efforts. And the rating agencies aren’t high on the list of change. How about something simple like submitting your wish to be rated to a blind pool of rating agencies and getting stuck with the luck of the draw? Naw, that would be too easy. But credit rating agencies are increasingly governing our lives… and the fate o f entire nations.

Okay, what’s the latest fun and games with these agencies… now that they are trying to prove that they really do take their jobs seriously? How about S&P’s taking the overall credit rating for the nation of Greece down to below investment grade… junk ratings in colloquial jargon? The U.S. and European stock markets took a nose dive. Portugal had its ratings dropped too, still investment grade but worse. What it means is higher interest rates for nations struggling to make the payment on loans they took out at lower rates. Greece is in deep… yeah… crap… just like the subprime bonds that were rated better than Greece or Portugal. It wasn’t pretty as the April 28th Washington Post points out: “A major ratings agency cut Greece’s debt to junk level on [April 27th], warning that bondholders could face losses of up to 50 percent of their holdings in a restructuring. The agency also downgraded Portugal’s debt by two notches.” On the 28th, S&P dropped Spain’s credit rating as well. And Spain’s economy has a much bigger GDP.

And as Europe moves to shore up the economies of member nations – the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain) – the prospect of a longer, more drawn-out recovery cycle seems all but inevitable. It gets worse as deteriorating economies raise the interest costs for the nations least able to bear the increased burden. Heavy use of austerity programs and sacrifice by the population that will just have to do with less while paying more. Weakness in the European sector means the Euro will weaken and U.S. exports will remain costly while European imports will be affordable… tough on our balance of payments. A great deal of our recovery was premised on growing the overseas market for our exports. We all lose.

“Under the burden of government debt now estimated to be 124 percent of the country's gross domestic product, Greek leaders are working on economic reforms that would raise taxes, cut government wages, rein in pension costs, and privatize government-held firms such banks, utilities and telecoms.” Washington Post (April 27th). And that’s just Greece! But Greeks, who hate to pay taxes on any basis, are 61% opposed to the austerity measures… and what government can stay in power by enacting provisions opposed by most of its citizenry? If my memory serves me right, aren’t the Greeks the society that perfected rioting to oppose economic austerity programs? Hmmm?

The Post (27th) continues: “Mounting anger over tax increases and public sector pay cuts erupted Tuesday when Greek transportation workers went on strike and rallied in the streets of Athens, warning, ‘Hands off our salaries,’ according to Reuters. Bus and metro train service came to a halt for six hours… That protest was followed by another where 2,000 people, including students, marched to Parliament and with red flags and ‘Out with the IMF’ banners in hand, expressing outrage about the Socialist administration's request for financial aid from the IMF and European Union, Reuters reported… The public outcry is expected to spill over into next week, when two large unions, representing 2.5 million workers, are expected to march to protest deficit cutting measures.”

S&P executives are mumbling that credit reductions could come directly into our own hearts (and bodies), and that would raise national debt numbers by staggering amounts: “Some even worry that the next debt crisis may materialize closer to home — in the United Kingdom or even the United States, where budget deficits and debt burdens are growing. Both countries are now issuing debt at reasonable levels of 4 percent. The long run of cheap financing may be coming to an end, though, even for the most creditworthy countries.” Post (28th). Wow, for pure raw destructive fun with little or no risk as to any consequences, isn’t being a credit rating agency fun? Hey, mom, how do I get to be a credit rating agency? Power! Heh, heh! [Insert cackling sounds] Is Lex Luthor behind this?

I’m Peter Dekom, and rating is getting a bit too grating!

Tuesday, April 27, 2010

A Republican Gift to Democrats?

Two thirds of Americans favor increasing federal oversight over the financial sector. With daily headlines about seeming ethical violations (if not legal ones) linking the collapse of the economy to mega-financial institutions like Goldman-Sachs, have the Republicans given a terrified Democratic Party facing mid-term elections an issue that might save at least a few Democratic House and Senate seats from the expected slaughter in November? Has the recent “filibuster vote” – a 41 vote (40 Republicans and 1 Democrat) managed to defeat a 57 vote (all Democrats) motion to bring the pending financial regulation bill to a vote on the Senate floor – given the Democrats a card they can play in fall elections? They did it on April 26th and again the next day, just in case you thought they weren’t sure; this as reports showed a ma ssive shift in contributions by Wall Street regulars from Democratic to Republican candidates.

Make no mistake, if the Democrats lose control of the Senate in November, the very filibuster strategy (where it takes 60 votes to bring a bill to a vote) they decry today will be the same strategy they will apply, if they have 40 votes, if and when they are the minority party. But look at the Republican objections to the proposed Chris Dodd-drafted legislation. They opposed a $50 billion fund that would be used to unwind failing financial companies in a way that would minimize the risk to the economy – they describe this piece of the bill as extending the “bailout” mentality that voters hate. Aside from the fact that Democrats are willing to negotiate this provision, in Washington-speak, this sum is hardly enough to create much of a bailout, which would require ten to twenty times this amount to make a dent. It’s simply a way to stop a snowball from becoming an avalanche. We’ve had some avalanche problems before!

Or the objection that the bill’s focus on creating stronger consumer protection will interfere with big financial institutions’ freedom to move… the same freedom to move that pretty much destroyed our economy. And if I recall, most consumers are… well… voters. Put another way, this seems to say that Republicans really are not the party of the people, just the party of big business, a criticism that marks vulnerability at a time when Republicans seem destined to change the Washington power structure in November.

Or the most amazing part of the opposition – the regulation of derivatives – that Republicans want to keep outside of the regulatory schema because that’s where Wall Street snake-oil traders make the vast fortunes that annoy Americans the most. The worst offenders, in the eyes of even the most jaundiced analysts, are the so-called “naked” or “synthetic” derivatives – literally financial side bets where the players have absolutely no real ownership of or direct interest in the assets they are betting on. While Wall Street clings to the story that they are blood flow of business, creating jobs and enabling genuine economic growth, there isn’t even the slightest linkage between such financial instruments and a single job or the slightest value-creation to a real business that produces products or services. It is simply greed o n acid.

And it’s not like the financial institutions that we bailed out with TARP money have paid us back by reopening the desperately-needed small business credit markets. In fact there is an inverse relationship between such institutions and increasing the flow of credit: those that got TARP money actually lent less than those banks that did not, but they did manage to increase the compensation levels to their senior managers and traders to a higher level. That’s where Americans are really pissed about bailouts – rogue traders making mistakes got the mistakes covered by the taxpayers with no seeming offsetting balance to most Americans… and those same rogue traders are now making fortunes again, manipulating a very uneven playing field, while ordinary citizens suffer in the job and housing markets.

The financial industry has put the full court press on the Republican Party, no holds barred. But it’s not just the financial sector: “Far afield from Wall Street, the intense debate over the overhaul of financial regulations by Congress is attracting some unlikely but powerful players. More than 130 companies from the manufacturing, retail and service sectors have retained high-powered lobbyists to weigh in on, and often oppose, the regulatory system being debated this week in Washington, according to an analysis of lobbying records by The New Yo rk Times.” Times April 26th. Companies like motorcycle manufacturer Harley-Davidson or candy maker Mars. Business fears change. Payday lenders are freaking out. Will the Republican “party of no” ride to an unstoppable victory in November or have they just stumbled from a seemingly easy victory?

Goldman Chairman Lloyd “Boom Boom” Blankfein claims that there was no real conflict of interest with clients and that the bank was simply prudently hedging its bets and changing its strategies over time (supported by a litany of self-serving testimony by Goldman traders in Senate hearings on April 27th). But investigation into this mess continues to produce evidence that Goldman bankers knew the subprime derivatives they were pedaling were crap – a series of very incriminating internal emails (at the highest reaches of the company) brings this home very clearly – and that they knowingly bet against their own clients’ interest on instruments sold to such clients by Goldman. While some on Capitol Hill know that allowing huge financial players to dominate this sector can never be healthy – the concentration of power accelerated by bad judgment during both the Clinton and Bush administrations that took away the last barriers against the combination of increasingly bigger financial companies– the Democrats as a whole seem unwilling to propose the “break them up into smaller pieces before they ruin the country again” solution.

Fact: the existing financial regulatory system, created in another era, failed massively; it just didn’t and does not work. The economy collapsed due substantially to the machinations of a financial industry skating around regulations with new financial instruments that simply did not exist when our basic securities laws were created. What happens the next time? What happens when a country already saddled with unmanageable debt faces another financial collapse orchestrated by unbridled Wall Street greed… when there is no more public money to stem the hemorrhaging? Exactly what does it take to “make the bad man stop?”

I’m Peter Dekom, and we should all be concerned.

Borders are Not Always Bookstores

The most dangerous real estate in North America lies just south of the US/Mexican border, particularly the area from Brownsville to El Paso in adjoining Texas. Ciudad Juárez – the other side of the Rio Grande from El Paso, Texas – is the murder capital of Mexico. The folks who are raking it in – addition to arms and drug dealers – are casket-makers. The sucking sound of U.S. narcotics peddlers and drug users, pulling up everything from marijuana to cocaine from all of the illicit ports of entry and manufacturers/growers in Latin America, has created a demand curve that our Border Patrol agents have been almost helpless to stop, notwithstanding attempts (mostly failed) to use state-of-the-art technology to seal the porous border.

Politicians complain of illegal immigrants coming to the U.S. to work – Arizona recently passed some pretty tough laws making undocumented aliens very uncomfortable in that state – but the harsh two-way traffic across our border is the dividing line between life or death for many: guns and other weapons moving south; drugs north. With fewer jobs in the U.S. due to the recession, sealing the border is more about this toxic trafficking than the undocumented taking jobs and consuming social services. The Mexican government is almost helpless in this battle; the billions of dollars flowing to Latin American drug lords has financed private armies of over-armed militia and “wannabees” trying to prove themselves to the drug lords that has proven to be more than a match for the federales. With so much poverty and so much drug money, corruption makes enforcement virtually impossible.

Additionally, dwindling oil revenues (Mexican oil fields are plagued with aging equipment and oil fields that are running dry), fewer dollars being sent south from undocumented workers in the north supporting families in the south and a horrific recession have strapped Mexican resources, even with US aid, to the breaking point. Mexicans caught in de facto free fire zones near the border point north and complain that if the US could reign in its drug addicts and social users, then Mexico wouldn’t have this devastation within its territory; it’s an American problem for which Mexicans are paying with their lives.

How bad is it? Mexicans are crossing into the US in search of not jobs but safety. The April 18th New York Times looked at one such community, about 57 miles from El Paso: “On the other side, a brutal war between drug gangs has forced dozens of fearful families from the Mexican town of El Porvenir to come to the border seeking political asylum, and scores of other Mexicans have used special visas known as border-crossing cards to flee into the United States. They say drug gangs have laid waste to their town, burning down houses and killing people in the street… Americans are taking in their Mexican relatives, and the local schools have swelled with traumatized children, many of whom have witnessed gangland violence, school officials say… ‘It’s very hard over there,’ said Vicente Burciaga, 23, who fled El Porvenir a month ago with his wife, Mayra, and their infant son after gang members burned down five homes in their neighborhood and killed a neighbor. ‘They are killing people over there who have nothing to do with drug trafficking,’ he said. ‘They kill you just for having seen what they are doing.’…

People who have fled El Porvenir say gruesome killings are occurring daily, though newspaper reporters have been unable to enter the town to confirm them. Last month, a man and his pregnant wife were murdered outside a primary school in El Porvenir, according to residents; the man was shot but the killers were said to have cut open the woman and taken her baby, leaving her to die. In another account, gunmen were said to have killed a beggar in a wheelchair.”

People are leaving these border towns in droves, running for their lives. “In El Paso alone, the police estimate that at least 30,000 Mexicans have moved across the border in the past two years because of the violence in Juárez and the river towns to the southeast. So many people have left El Porvenir and nearby Guadalupe Bravos that the two resemble ghost towns, former residents say.” The Times. Even the drug lords themselves have settled their families, in posh residences, in US territory. Very few are granted legal asylum in the US; the ability to document the horror is almost impossible to do on an individual level.

The trend is obvious: the drug war that seemed to be sealed off and relegated to Mexico is now moving north. With refugees and the families of drug lords on our side of the border, sooner or later the violence that makes life hell “over there” will spill treacherous “over here.” There are increased numbers of “incidents” in US border towns, but clearly time will accelerate that, as feuding drug lords reach into the United States to retaliate against their rivals, as enforcers travel north to instill their visions of “rough justice” in this horrific struggle to control the drug routes into the United States.

I’m Peter Dekom, and sooner or later, we’re going to have address exactly how we are going to control the drug trade in the U.S.; what we’re doing isn’t working.

Monday, April 26, 2010

China’s Rear View Mirror

That’s where you can see the United States and the Western World. Yes, China was slammed by a horrific earthquake on April 14th, killing hundreds and decimating thousands of buildings. Yes, there are entire towns of newly-constructed buildings – homes and businesses – that are virtually empty, pushing many to project that there is a real estate bubble in China waiting to burst. Of course we know that in the vast majority of China’s overseas markets, consumer demand is nowhere near what it was two years ago, before the big fall. We know that the United States has pressed China to allow its currency to rise relative to the dollar to decrease U.S. consumer demand for Chinese imports and stimulate the creation of economy-stabilizing jobs in the U.S. – a demand that has been repeatedly rebuffed by the PRC; if China is doing s o well, our monetary-policy folks ask, why isn’t their currency rising against the dollar unless the PRC is artificially suppressing the Yuan?

China is profoundly more successful than its Western counterparts in the economic spectrum. Their “stimulus” package – about $600 billion – was not financed with debt; they had cash on hand, well above the estimated $2 trillion in U.S. government debt instruments that they currently hold. And they are experiencing growth at level that we have not seen in decades. The April 15th New York Times: “China’s gross domestic product jumped 11.9 percent in the first quarter of this year from a year earlier, the government said Thursday, pointing to an accelerating recovery from the global economic crisis… That growth rate, the highest in thr ee years, not only surpassed most economists’ forecasts but it also handily beat the 10.7 percent expansion recorded for the final quarter of 2009… China’s National Bureau of Statistics also reported that the consumer price index rose 2.4 percent in March from a year earlier and that the producer price index was up 5.2 percent. Those figures were generally in line with analysts’ expectations… The government said consumer prices were ‘basically stable.’ In an apparent indication of its confidence that inflation was in check, the government raised retail gasoline prices by as much as 5 percent [April 14th], the first increase in those prices in more than five months.

Sure, unemployment in China is still unacceptably high, the real estate boom is in fact pushing prices into the “danger zone,” inflation still looms and the instability of overseas markets isn’t going away any time soon. That the above stimulus may have pushed the growth statistics higher is clearly one “articificial factor,” but it also points out the fundamental difference between the Chinese economy and that of the West: economic power still lies heavily with the central planning authorities in Beijing. While they can take steps to regulate financial markets just like the Western world – recently requiring that homes over 1,000 square feet take a downpayment of at least 30% and second homes 50% – the government also has trillions of dollars of capital to pile into any sector of the marketplace, replacing market forces and consumer demand at the drop of a hat. If there is a bursting bubble, China can either let the adjustment flow or, unlike the cash-strapped Western world, use its own wealth to stabilize or moderate the fall.

And right now, China is in a very heavy “investment” mood: “The statistics bureau also reported that overall investment increased at an annualized rate of 25.6 percent in the first quarter, while urban fixed-asset investment expanded 26.4 percent… Industrial production rose 18.1 percent in March from a year earlier, in line with the 20.7 percent gain for the January-February period.” The Times.

That PRC economic recovery is on track and that the government itself recognizes that there is needed emphasis on increasing domestic consumption patterns instead of relying on overseas increases in demand suggests that there may, in the not too distant future, be some relaxation of China’s insistence for an almost lockstep linkage between the value of its and the US’ currencies. When you are the biggest, baddest and most solidly built financial player on the block, you actually get to call the shots… and your debtors often are relegated to nodding in agreement or silently but helplessly fuming at the bad news.

I’m Peter Dekom, and power shifts are never easily, especially for the party losing its edge.

Saturday, April 24, 2010

Hide the Nuclear Salami

We’re all concerned about rogue nations – like Iran and North Korea – spreading nuclear weapons to other rogue states and perhaps to terrorist groups like al Qaeda. Or rogue scientists – like Pakistan’s infamous Dr. A.Q. Khan or several former Soviet nuclear experts now in the employ of the shadiest of nations – promulgating the specialized knowledge required to fabricate nuclear weapons. Or careless (and hence roguish) governments whose processes to safeguard their nuclear weapons/materials stashes leave much to be desired. That’s what the nuclear summit addressed in the recent 47-nation gathering in Washington.

Sting operations have proved beyond a shadow of a doubt that al Qaeda and other terrorist organizations are trying to buy materials for a dirty bomb (the exploding suitcase spreading nuclear contaminants over a relatively small area) or the real thing (capable of taking out New York City). Scruples? Guilt over killing millions? Not even the slightest of deterrents. It would be a badge of significant accomplishment to any terrorist group to have killed more “non-believers” with a single blast than any other debacle in the history of mankind.

Our intelligence operations have long believed that it would be easier to trace nuclear weapons in the field that it would be to keep them from being smuggled into the United States (or any other fearful Western power). After all, the border is porous, but the number of nuclear weapons and fissionable material should be easier to track. Maybe. Perhaps. You think? The problem, of course, varies from corrupt officials willing to look the other way as a few “samples” slide out of government hands into the anxious paws of well-funded terrorists to fallen governments with nuclear weapons stored somewhere that simply have no experience in guarding and tracking what they have. And then there are simply the careless handlers who really screwed up. Like the 765 kilograms of plutonium from our own Los Alamos labs which was unaccounted for in a 2004 – enough to make 150 nuclear bombs.

When the Soviet Union collapsed in the early 1990s and splintered into numerous separate nations, some with large Muslim and anti-Judeo-Christian militant groups within their borders, the nuclear weapons and fissionable material (along with more than a few key scientists) parked within their new national borders fell into the dead zone of unguarded facilities and internal power struggles where “stuff” went missing. We still don’t know where enough material to blow more than one city sky-high is located.

This little story, reported by ABC News on February 16, 2005, pretty much says it all: “[Then CIA-director Porter] Goss said: ‘There is sufficient material unaccounted for, so that it would be possible for those with know-how to construct a nuclear weapon.’ A former top official at the Department of Energy told ABC News that Goss's statement understated the threat. There could be enough missing material in the Russian inventory to make hundreds or thousands of nuclear weapons, but no one -- neither the Russians nor Western intelligence agencies -- knows for sure, the former official said. ‘There is no way to determine the quantity of missing material in Russia, the source said, because neither the Russian government nor the Soviets before them ever adopted a ‘mass balance’ inventory system that tracks how much nuclear material is produced and where it ends up being used. The U.S. government adopted a mass-balance inventory system in the 1960s, the source said.”

Is it a matter of “when” or “if” Are we living on borrowed time? Was the nuclear summit just a meeting of leaders to note the problem or will they take significant and meaningful steps to curb this menace? The threat is real and growing. There are just too many people on this planet with death in their mind’s eye and America as the likely first target. It’s not about wasting our resources on wars we cannot win, wars that make us an increasingly obvious target, but likewise, it is about deploying our resources against the specific targets that mean to do us in.

I’m Peter Dekom, and the earth is not exactly a friendly plant, especially when you are on top of a hill that everybody wants to take.

Thursday, April 22, 2010


With dropout rates in the top 10 urban school districts above 50% (Detroit’s almost 75%), with school budgets being slashed and burned as tax revenues evaporate, class size growing as public education budgets face the same downward pressures that this economy has pushed onto almost every governmental sector, as teachers get laid off, public universities turning away students for lack of funding, it seems as if we are abandoning our future to a mismanaged present. Yet somehow, the fact that education isn’t really an American priority – or we’d get the job done – gets illustrated by… well some pretty amazing decisions on where some local communities are willing to spend truly outrageous sums.

Like Allen High School in a Dallas, Texas suburb. It’s a big school, one of Texas’ largest – 5,000 students – in an obviously affluent community. And they are darned proud of their football team, the Eagles, who placed first in the Texas 5A rankings, and came in second in the 2008 RivalsHigh Top 100 football high schools of America list (the last time they ranked teams); the site notes that: “The RivalsHigh 100 is compiled with the help of the network of high school site publishers, recruiting analysts and AMP team.” They even have a stadium, built three decades ago, that seats 8,000 (a few thousand can stand as well), but given they are such a hot-ticket team, that old arena no longer fits their needs… or generates the ticket revenues that a larger venue might attract. And this is a team that filled a 50,000 seat Texas stadium last year!

So they’ve approved and are about to break ground on a new stadium that will provide all of the following (according to the April 15th,

§ Video Scoreboard

§ Two level press box with film deck and Observation deck

§ Home side reserved seating with seat backs

§ 15,000 additional parking spaces with 4,500 total parking spaces

§ 18,000 seat Stadium with upper deck seating including:

5,000 reserved seating,

2,700 General Admission

4,000 Students

5,300 Visitor

1,000 Band

Wow! That’s about the size of an NHL or NBA arena! Ka’ching! Wonder what such a wondrous stadium might cost? I mean, building a whole school could go for, I don’t know, about $18.5 million according to, and the average cost in Dallas is about $15.4 million. Even doubling those numbers to accommodate such a huge student population would run $30-$37 million, even making it luscious would push that sum to maybe… er… $50 million. Hmm…. And we are living in economically impaired times, so we really have to design and build close to the bone. So… OMG! $60,000 for the stadium alone!!!! Part of a $120 million dollar bond issue, with the rest going into a performing arts facility. Does anybody read the news?! We’re in a recession! Our kids are losing teachers and classrooms! Hmmmm!

In most of the Western world, education is provided by the central government, ensuring that a roughly equivalent public education is provided to every student. We don’t exactly do it that way. Wikipedia:

In the 2002 Census of Governments, the United States Census Bureau enumerated the following numbers of school systems in the United States:

· 13,506 school district governments

· 178 state-dependent school systems

· 1,330 local-dependent school systems

· 1,196 education service agencies (agencies providing support services to public school systems)

And maintaining local control over public education is one of those sacred cows that no politician in his or her right mind would ever challenge. ABC News (in January 2006, before the bottom fell out of the education budgets) reports that standardized testing administered at age 15 to students in the 40 moist-developed countries in the world place the American educational system at 25th (and falling as Asian school systems accelerate academic programs). But our football teams can beat the crap out all those European footballers… oh, they don’t play American football. Priorities.

I’m Peter Dekom, and it’s wrong, just plain wrong!

Wednesday, April 21, 2010

Is Pakistan Toast?

The Western Tribal District is a semi-autonomous region. Why? Because the Pakistani government has absolutely no way to enforce its rule in the area; tribal warlords and religious fundamentalists with bullet-belts crisscrossing their shoulders call the “shots.” American drones and occasional Pakistani military expeditions seeking captives and kill-zone targets break the monotony. Taliban operatives roam freely about, drinking tea with al Qaeda operatives on seemingly permanent station.

There are two groups of Taliban in Pakistan these days, those whose battle lies in Afghanistan and those who, sooner or later they believe, will topple the shaky government in Pakistan’s capital city of Islamabad, who have taken Swat and Dir by force and mounted sorties against uniformed military units within the main part of Pakistan. They dream of a unified central Asian Islamic republic, control of the 70 to 100 nuclear weapons that experts estimate the Pakistani stockpile to be, and a launching platform against Western powers, Israel and evil Hindu India next door.

The Islamist militants in Pakistan – driven by strict and drab fundamentalism, zealous rules and absolute intolerance of religious minorities, art and music, anything that smacks of Western values, fraternization of men and women in all but the most controlled and limited circumstances – are a small minority. But since they are aggressive, have no real concern if people must die to make a point and not particularly concerned for their own safety, they have the power of well-armed unscrupulous zealots with nothing to lose. They believe that their mission is to destroy anything that conflicts with their harsh teachings, showing no mercy, reveling in inflicting pain and suffering in the name of God. Worst of all, they are slowly winning.

In the smarmy world of Pakistani politics, Jamaat-e-Islami, Pakistan’s oldest and most powerful religious party, dangles its votes and political influence to the power brokers at the pinnacle of elective office, even the moderates who sit atop fragile coalitions and shaky political careers.The Jamaat's objectives are the ‘Iqamat-e-Deen’ or ‘Nizam-e-Mustafa’ - the establishment of a pure Islamic state, governed by Sharia law. The Jamaat opposes Westernization, ideologies such as capitalism, socialism and secularism, and practices such as bank interest and liberalist social mores.” Wikipedia. It is the party of the extreme, the intolerant, those who seek to stab their Islamic republic into the heart of the Pakistani body politic, to create a Sunni tyrannical power that very much mirrors the misery in nearby Shiite Iran. In exchange for trading votes, Jamaat-e-Islami gets a lot back. Their adherents are given nearly free reign to create disruptive sub-groups, planted among communities all over Pakistan, and most importantly, within even the most prestigious universities of the land.

The University of the Punjab has produced three Nobel Laureates and houses 30,000 of Pakistan’s best and brightest. It is also home to Jamaat-e-Islami’s affiliate, “the student group, Islami Jamiat Talaba (one of the largest pan-university organizations in the country), whose morals police have for years terrorized this graceful, century-old institution by brandishing a chauvinistic form of Islam, teachers here say.” (NY Times, April 20th). What exactly does this group do? To some, it offers a voice for better food, cleaner housing and even more milk in their tea. But the trade-off is Muslim fundamentalism at it tyrannical worst. Teachers who teach what the fundamentalists oppose are threatened, even beaten; one who attempted to expel violent adherents of this fundamentalism from an environmental science class was beaten so badly that there were doubts that he would survive. The music department has yet to be able to hold a class on campus, art studies are almost impossible: “[Islami Jamiat Talaba’s] members block music classes, ban Western soft drinks and beat male students for sitting near girls on the university lawn.” The Times.

For the most part, although it is spread throughout Pakistan, Islami Jamiat Talaba is a small minority on this and most campuses, one whose slight popularity is further deteriorating, an organization that is hated and feared by teacher and student alike. But because of their political parent, Jamaat-e-Islami, they are virtually untouchable. As a result, the quality of instruction at this esteemed institution is falling like a stone; great students are no longer the rule, but a rare exception. The faculty and student body are disillusioned, bitter and scared. Physical violence is no longer aberrant, threats have become the norm. Education based on facts and knowledge is fading away almost as fast as the violence has escalated.

The sad part of this reality is that it is a metaphor for Pakistan as a nation. Ruling families cling stubbornly to power under the guise of democracy, making unholy alliances that cannot serve the people or the long-term national goals. Inter-Service Intelligence officers and high-ranking soldiers – resentful of the rich family heirs – easily make allies with the fundamentalists that would someday weed out the feudalistic moneyed class (undoubtedly to substitute their own) and impose a religious dictatorship that would elevate the humble spies and soldiers necessary to enforce the cruel decrees of religious zealots, the way they do it in Iran these days. Pakistan could all topple in days; picture the 1979 revolution in Iran. Or it might crack and erode for years. Iran didn’t have nukes in 1979; whoever takes Pakistan get s nukes on day one.

I’m Peter Dekom, and what you don’t know could kill you.

Tuesday, April 20, 2010

Don’t Count Goldman Out

Fact: Goldman Sachs created, sold, invested in and profited from financial instruments betting that other financial instruments that Goldman sold clients earlier would fail. Basically, Goldman created “derivatives” that would rise in value to the extent that bundles of sub-prime mortgages sold to Goldman clients would drop in value. According to many financial pundits, this is just the tip of the iceberg at Goldman and indicative of the way Wall Street does business, regardless of the consequences. It certainly sound immoral, if not illegal, and the Securities and Exchange Commission filed an action for civil fraud against Goldman (and some key executives) based on this structure, one that apparently had blessings from the highest reaches of the company.

But we have huge financial institutions in this country, their profits literally form a tax base that supports the City and State of New York, and their lobbying/election contribution dollars are fundamental to state and federal lawmakers, from both sides of the aisle, such that it is hard to argue that Washington, D.C. is not run in fact from New York City. Amid the scandal, try this report on for size (from the April 20th NY Times): “Earnings for [Goldman Sachs] giant rose 91 percent in the first quarter of 2010, to $3.46 billion or $5.59 a share, up from $1.81 billion or $3.39 a share in the same period last year. Revenues increased 36 percent to $12.78 billion, up from $9.42 billion in the quarter a year ago.”

Wall Street’s machinations have decimated personal savings, destroyed jobs by the millions, crushed retirement accounts and rendered the real estate market a wasteland of death and destruction. The mechanism for raising money to fund worthwhile business opportunities has disappeared in a sea of market manipulation and values predicated on unfair advantage over any corporate value proposition that could provide products, services, jobs and values that actually have a benefit for society. On April 19th, Arianna Huffington (The Huffington Post) took this snapshot of what a rogue financial sector has perpetrated against America: “The SEC's action is a perfect moment for us to look at the bigger picture of how the American people were sold on the promise of never-ending prosperity while Wall Street was overseeing a massive transfer of wealth from the middle class to the richest Americans.

“The results have been devastating: a disappearing middle class, a precipitous drop in economic and social mobility, and ultimately, the undermining of the foundation of our democracy. [Dekom add: the collapse of local funding for public education and state universities/colleges eliminates the most important vehicle for upward social mobility that built the American middle class.]…Thirty years ago, top executives at S&P 500 companies made an average of 30 times what their workers did -- now they make 300 times what their workers make. And between 2000 and 2008, the poverty rate in the suburbs of the largest metro areas in the U.S. grew by 25 percent -- making these suburbs home to the country's largest and fastest-growing segment of the poor.”

Were Goldman’s actions – particularly the failure to inform buyers of the institution’s contrary bet – a violation of the law? Or are the laws so loose that such behavior passes judicial scrutiny? Goldman’s lawyers, many trained at the very SEC that is prosecuting this civil claim, along with many other Goldman lobbyists and consultants, some with training as legislative aides (if not as actual former members of Congress) on the Hill, will counter attack, and if a loss appears inevitable, will most likely cut a deal that makes little or no difference to their massive bottom line. Remember, the laws and regulations that govern the biggest financial institutions were often drafted or at least modified with significant input from these very same institutions. After all, all those campaign contributions and lobbying efforts are paying for something! And hence such laws and regulations are fraught with loopholes put there by the very persons and companies that the statutes or regulations were supposed to reign in.

Look at this SEC fraud allegation against Goldman. It’s not about a normal fraud claim: “Rather than asserting that Goldman misrepresented a product it was selling, the most commonly used grounds for securities fraud, the Securities and Exchange Commission said in a civil suit filed Friday that the investment bank misled customers about how that product was created… It is the rough equivalent of asserting that an antiques dealer lied about the provenance, but not the quality, of an old table.” NY Times, April 20th (different piece). Goldman was not required to provide market analysis as to the instruments it sold, but if it provided any information, then they would have to give full and complete analysis.

Goldman’s counsel, Sullivan & Cromwell, wrote to the SEC to explain the derivatives betting against the housing market saying, among many other things, that Goldman accurately and completely described the instruments being sold and: “It is this concrete information on the assets — not the economic interest of the entity that selected them — that investors could analyze and use to inform their decisions.” Trust me, this is not a slam dunk case for the SEC.

Republican lawmakers are claiming the SEC filing represents a manipulative attempt by the Obama administration to influence public opinion in favor of new financial regulations even though, they have stated, the existing schema are sufficient to oversee the financial sector. As I have blogged before, they have painted the pending Chris Dodd Senate bill as yet other “bailout” law,” even though the legislation is most importantly focused on consumer protection and there are no “bailout” provisions (only a fund – $50 billion – that would be used to shut down and liquidate failing companies in a manner that would minimize the shock to the system – a provision of the pending statute that Democrats are open to change).

It is time for Republicans Democrats to understand that in a hyper-changing world, statutes and regulations passed decades ago – long before computer-assisted “flash trading” was possible and long before hedge funds, private equity and derivative trading became mainstays in the financial world – simply do not work anymore. The big crash proves that beyond any doubt. Horse-and-buggy statutes, systems and regulations only provide an open field for well-educated technicians to tilt the playing field totally in their favor at the expense of not only average Americans, but our national interests as well. Any lawmaker who opposes significant change might as well opt for a clear and direct paycheck from Wall Street; we need to stop making up absolutely false reasons to oppose legislation – premises no sane legislator could ever embrace while taking a lie detector test – and deal with the fact that this country will live with an entirely lower standard of living, suffer through this prolonged impairment of our economy, because Congress sold us all out to people with Gucci loafers, homes in the Hamptons and bank accounts the size of many nations’ gross domestic product.

But perhaps this “opposition to the bill” tune may be changing in the face of public outrage; Republicans need votes as well as campaign contributions. The April 20th Washington Post: “After a week of attacking the pending legislation as a ticket to new taxpayer ‘bailouts,’ [Senate Republican Minority Leader, Mitch] McConnell is striking a different tone. [On April 19th] on the Senate floor, he called for lawmakers to move beyond ‘personal attacks and questioning each others' motives’ to ‘fixing the problems in this bill.’… And McConnell conceded, after being chastised by no less than President Obama in his weekly radio address, that ‘both parties agree on this point: no bailouts. In my view, that's a pretty good start.” Does Congress really have the stomach for the kind of change that is needed? Or is it a question of “make it look like we’re doing something, but change as little as you can”? I’m a skeptic, but we’ll see.

I’m Peter Dekom, and financial manipulation can never be a legitimate job description.