Life takes us in many strange directions and wonderful discoveries. It never turns out the way we thought it would.
Friday, April 30, 2010
"God's Banker" Lloyd Blankfein Is Headed For Federal Prison
Goldman Sachs Case Sent To Justice Department Prosecutors By SEC
MARCY GORDON | 04/29/10 11:07 PM |
WASHINGTON — The U.S. attorney's office in Manhattan is conducting a criminal investigation of Goldman Sachs over mortgage securities deals the big Wall Street firm arranged, a knowledgeable person said Thursday.
The person said the probe stems from a criminal referral by the Securities and Exchange Commission. The source spoke on condition of anonymity because the inquiry is in a preliminary phase. The SEC earlier this month filed civil fraud charges against Goldman and a trader in connection with the transactions, alleging it misled investors by failing to tell them the subprime mortgage securities had been chosen with help from a Goldman hedge fund client that was betting the investments would fail. Goldman has denied the charges and said it will contest them in court.
News of the action came a day after a group of 62 House lawmakers, including Judiciary Committee Chairman John Conyers, D-Mich., asked Justice to conduct a criminal probe of Goldman.
SEC spokesman John Nester wouldn't confirm or deny that the agency had made a referral to the Justice Department for a criminal investigation. He declined any comment on the matter, as did Yusill Scribner, a spokeswoman for the U.S. attorney's office in Manhattan.
Goldman spokesman Lucas van Praag said, "Given the recent focus on the firm, we're not surprised by the report of an inquiry. We would cooperate fully with any request for information."
The Wall Street Journal first reported the Justice Department action.
The Justice Department move was the latest in a dramatic series of turns in the Goldman saga, which has pitted the culture of Wall Street against angry lawmakers in an election year, in the wake of the financial crisis that plunged the country into the most severe recession since the Great Depression of the 1930s.
Also on Thursday, following days of failed test votes, the Senate lurched into action on sweeping legislation backed by the Obama administration that would clamp down on Wall Street and the sort of high-risk investments that nearly brought down the economy in 2008.
And two days earlier, a daylong showdown before a Senate investigative panel put Goldman's defense of its conduct in the run-up to the financial crisis on display before indignant lawmakers and a national audience. The panel, which investigated Goldman's activities for 18 months, alleges that the Wall Street powerhouse bet against its clients – and the housing market – by taking short positions on mortgage securities and failed to tell them that the securities it was selling were at very high risk of default.
Story continues below
Goldman CEO Lloyd Blankfein testily told the investigative subcommittee that clients who bought the subprime mortgage securities from the firm in 2006 and 2007 came looking for risk "and that's what they got."
In addition to the $2 billion so-called collateralized debt obligation that is the focus of the SEC's charges against Goldman, the subcommittee analyzed five other such transactions, totaling around $4.5 billion. All told, they formed a "Goldman Sachs conveyor belt," the panel said, that dumped toxic mortgage securities into the bloodstream of the financial system.
It wasn't immediately known whether the Justice Department's inquiry also encompasses those transactions.
The investigation, even though at a preliminary stage, opens a weighty new front in the legal aftermath of the near-meltdown of the financial system.
The Justice Department and the SEC have previously launched wide-ranging investigations of companies across the financial services industry. But a year after the crisis struck, charges haven't yet come in most of the probes. In addition to fallen mortgage lender Countrywide Financial Corp. and bailed-out insurance giant American International Group Inc., the investigations also have targeted government-owned mortgage lenders Fannie Mae and Freddie Mac and crisis casualty Lehman Brothers.
The swift acquittal last November of two Bear Stearns executives in the government's criminal case tied to the financial meltdown showed how tough it can be to prove that investment bank executives committed fraud by lying to investors.
The government must show that executives were actually committing fraud and not simply doing their best to manage the worst financial crisis in decades, some legal experts say.
The SEC civil case against Goldman also could be difficult, in the view of some experts.
Political intrigue has surrounded the SEC suit, meanwhile, as some Republicans have accused the agency of timing the April 16 announcement of fraud charges against Goldman to bolster prospects for the financial overhaul legislation while it was at a critical stage in the Senate.
The speculation was heightened by the revelation that the SEC commissioners approved filing of the charges on a 3-2 vote, along party lines, with both Republicans opposing the move.
SEC Chairman Mary Schapiro has insisted there was no connection between the timing of the agency lawsuit, which followed a monthslong investigation of the firm, and the push for the legislation in the Senate. Last week, President Barack Obama denied any White House involvement in the timing of the SEC case.
"We don't time our enforcement actions by the legislative calendar or by anybody else's wishes," Schapiro told a Senate Appropriations subcommittee on Wednesday. "We bring our cases when we have the law and the facts we believe support bringing our cases."
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MARCY GORDON | 04/29/10 11:07 PM |
WASHINGTON — The U.S. attorney's office in Manhattan is conducting a criminal investigation of Goldman Sachs over mortgage securities deals the big Wall Street firm arranged, a knowledgeable person said Thursday.
The person said the probe stems from a criminal referral by the Securities and Exchange Commission. The source spoke on condition of anonymity because the inquiry is in a preliminary phase. The SEC earlier this month filed civil fraud charges against Goldman and a trader in connection with the transactions, alleging it misled investors by failing to tell them the subprime mortgage securities had been chosen with help from a Goldman hedge fund client that was betting the investments would fail. Goldman has denied the charges and said it will contest them in court.
News of the action came a day after a group of 62 House lawmakers, including Judiciary Committee Chairman John Conyers, D-Mich., asked Justice to conduct a criminal probe of Goldman.
SEC spokesman John Nester wouldn't confirm or deny that the agency had made a referral to the Justice Department for a criminal investigation. He declined any comment on the matter, as did Yusill Scribner, a spokeswoman for the U.S. attorney's office in Manhattan.
Goldman spokesman Lucas van Praag said, "Given the recent focus on the firm, we're not surprised by the report of an inquiry. We would cooperate fully with any request for information."
The Wall Street Journal first reported the Justice Department action.
The Justice Department move was the latest in a dramatic series of turns in the Goldman saga, which has pitted the culture of Wall Street against angry lawmakers in an election year, in the wake of the financial crisis that plunged the country into the most severe recession since the Great Depression of the 1930s.
Also on Thursday, following days of failed test votes, the Senate lurched into action on sweeping legislation backed by the Obama administration that would clamp down on Wall Street and the sort of high-risk investments that nearly brought down the economy in 2008.
And two days earlier, a daylong showdown before a Senate investigative panel put Goldman's defense of its conduct in the run-up to the financial crisis on display before indignant lawmakers and a national audience. The panel, which investigated Goldman's activities for 18 months, alleges that the Wall Street powerhouse bet against its clients – and the housing market – by taking short positions on mortgage securities and failed to tell them that the securities it was selling were at very high risk of default.
Story continues below
Goldman CEO Lloyd Blankfein testily told the investigative subcommittee that clients who bought the subprime mortgage securities from the firm in 2006 and 2007 came looking for risk "and that's what they got."
In addition to the $2 billion so-called collateralized debt obligation that is the focus of the SEC's charges against Goldman, the subcommittee analyzed five other such transactions, totaling around $4.5 billion. All told, they formed a "Goldman Sachs conveyor belt," the panel said, that dumped toxic mortgage securities into the bloodstream of the financial system.
It wasn't immediately known whether the Justice Department's inquiry also encompasses those transactions.
The investigation, even though at a preliminary stage, opens a weighty new front in the legal aftermath of the near-meltdown of the financial system.
The Justice Department and the SEC have previously launched wide-ranging investigations of companies across the financial services industry. But a year after the crisis struck, charges haven't yet come in most of the probes. In addition to fallen mortgage lender Countrywide Financial Corp. and bailed-out insurance giant American International Group Inc., the investigations also have targeted government-owned mortgage lenders Fannie Mae and Freddie Mac and crisis casualty Lehman Brothers.
The swift acquittal last November of two Bear Stearns executives in the government's criminal case tied to the financial meltdown showed how tough it can be to prove that investment bank executives committed fraud by lying to investors.
The government must show that executives were actually committing fraud and not simply doing their best to manage the worst financial crisis in decades, some legal experts say.
The SEC civil case against Goldman also could be difficult, in the view of some experts.
Political intrigue has surrounded the SEC suit, meanwhile, as some Republicans have accused the agency of timing the April 16 announcement of fraud charges against Goldman to bolster prospects for the financial overhaul legislation while it was at a critical stage in the Senate.
The speculation was heightened by the revelation that the SEC commissioners approved filing of the charges on a 3-2 vote, along party lines, with both Republicans opposing the move.
SEC Chairman Mary Schapiro has insisted there was no connection between the timing of the agency lawsuit, which followed a monthslong investigation of the firm, and the push for the legislation in the Senate. Last week, President Barack Obama denied any White House involvement in the timing of the SEC case.
"We don't time our enforcement actions by the legislative calendar or by anybody else's wishes," Schapiro told a Senate Appropriations subcommittee on Wednesday. "We bring our cases when we have the law and the facts we believe support bringing our cases."
Get HuffPost Business On Twitter, Facebook, and Google Buzz!
Know something we don't? E-mail us at huffpostbiz@gmail.com
Thursday, April 29, 2010
A Historical Moment That I Have Waited For All My Life; NASA Admits There Is Life On Mars
Mystery ... scientists are already planning more missions to Mars
By BRIAN COX
Sun Professor
TELL-tale signs of water on Mars are incredibly exciting because they make the discovery of alien life on our nearest neighbouring planet much more likely.
On Earth, life exists in the most unexpected places. In the oceans, miles away from sunlight, living things thrive on a diet of rock and heat from volcanoes on the sea bed.
By RHODRI PHILLIPS
and PAUL SUTHERLAND, Sun Spaceman
Published: 28 Apr 2010
Add a comment (40)
NASA scientists last night unveiled compelling evidence of life on Mars.
A special mission to the Red Planet has revealed the likely presence of a form of pond scum - the building blocks of life as we know it.
NASA unveiled the results of the recent Opportunity and Spirit probes sent millions of miles through the solar system to discover signs of extraterrestrial life.
The results are so promising boffins have already planned a host of other missions to discover whether there is extraterrestrial life in the universe.
The recent missions have gathered evidence of sulphates on Mars, a strong indication there is water on the planet and therefore life.
Previous missions to Mars have concluded there is probably water on the planet.
But the NASA boffins said the recent missions have gone further than any others in proving there is life on Mars.
They were particularly excited about the discovery of a sulphate called gypsum which, it has emerged recently, is found in large quantities among fossils in the Mediterranean.
Jack Farmer, researcher at the Arizona State University, in Tempe, Arizona, said he was "optimistic" there was - or had been - life on Mars.
Another of the scientists Bill Schopf, researcher at the University of California in Los Angeles, added: "One, thanks to Opportunity and the rovers and orbital imaging it is clear that there are literally vast areas of Mars that are carpeted with various sorts of sulphates, including gypsum.
"Two, it turns out on earth there just hasn't been hardly any work done at all to show whether gypsum ever includes within it preserved evidence of former life.
"The age doesn't matter. We just didn't know that fossils and organic matter and things like that were well preserved within gypsum.
"So, three, it turns out that now we have made that first step we are going to find out how widespread it is in other sulphate deposits on earth.
"And those lines of evidence will then give us a way to justify going to Mars and looking at gypsum because it looks as though based on these findings that is going to turn out to be a really excellent place to find evidence of ancient life, regardless of age, if in fact it is there."
Five experts took part in last night's press conference to celebrate 50 years of astrobiology research.
Dr Steve Squyres, of Cornell University, Ithaca, New York, said the only way of being sure there is life on Mars was to bring back a sample of Mars rock.
He also said that the detection of methane in the martian atmosphere - as revealed exclusively by The Sun - raised the possibility that there was still life on Mars today.
"Methane is a molecule that should go away very quickly. We need to send a mission to find out if the source is biological.
"We also need to send a mission to return samples from Mars. That would enable scientists to find out whether Mars might ever have harboured life.
"If we are ever going to show if there was ever life on Mars, I think we're going to have to study samples back on Earth."
Almost 30 other NASA missions to discover life in space - including one to bring back rocks from Mars - have already been planned.
There are also plans to visit Jupiter's moon Europa to explore its deep underground ocean and a moon of Saturn, Enceladus, which spouted ice volcanoes.
Long-term missions will also return to Saturn's biggest moon Titan, sending a balloon flying through its atmosphere and landing a probe in its surface lakes.
Future missions would also visit comets.
NASA scientists have been searching for extraterrestrial life on other planets for some time.
Last November the space organisation launched the Kepler space telescope to look for Earth-size planets in this galaxy.
The telescope is on a three-and-a-half-year mission to find planets.
NASA has so far been able to download data - but many believe there are aliens out there.
British physicist Stephen Hawking said this week aliens might be traveling through the cosmos right now - but he warned they might have evil intentions.
Advertisement
By BRIAN COX
Sun Professor
TELL-tale signs of water on Mars are incredibly exciting because they make the discovery of alien life on our nearest neighbouring planet much more likely.
On Earth, life exists in the most unexpected places. In the oceans, miles away from sunlight, living things thrive on a diet of rock and heat from volcanoes on the sea bed.
By RHODRI PHILLIPS
and PAUL SUTHERLAND, Sun Spaceman
Published: 28 Apr 2010
Add a comment (40)
NASA scientists last night unveiled compelling evidence of life on Mars.
A special mission to the Red Planet has revealed the likely presence of a form of pond scum - the building blocks of life as we know it.
NASA unveiled the results of the recent Opportunity and Spirit probes sent millions of miles through the solar system to discover signs of extraterrestrial life.
The results are so promising boffins have already planned a host of other missions to discover whether there is extraterrestrial life in the universe.
The recent missions have gathered evidence of sulphates on Mars, a strong indication there is water on the planet and therefore life.
Previous missions to Mars have concluded there is probably water on the planet.
But the NASA boffins said the recent missions have gone further than any others in proving there is life on Mars.
They were particularly excited about the discovery of a sulphate called gypsum which, it has emerged recently, is found in large quantities among fossils in the Mediterranean.
Jack Farmer, researcher at the Arizona State University, in Tempe, Arizona, said he was "optimistic" there was - or had been - life on Mars.
Another of the scientists Bill Schopf, researcher at the University of California in Los Angeles, added: "One, thanks to Opportunity and the rovers and orbital imaging it is clear that there are literally vast areas of Mars that are carpeted with various sorts of sulphates, including gypsum.
"Two, it turns out on earth there just hasn't been hardly any work done at all to show whether gypsum ever includes within it preserved evidence of former life.
"The age doesn't matter. We just didn't know that fossils and organic matter and things like that were well preserved within gypsum.
"So, three, it turns out that now we have made that first step we are going to find out how widespread it is in other sulphate deposits on earth.
"And those lines of evidence will then give us a way to justify going to Mars and looking at gypsum because it looks as though based on these findings that is going to turn out to be a really excellent place to find evidence of ancient life, regardless of age, if in fact it is there."
Five experts took part in last night's press conference to celebrate 50 years of astrobiology research.
Dr Steve Squyres, of Cornell University, Ithaca, New York, said the only way of being sure there is life on Mars was to bring back a sample of Mars rock.
He also said that the detection of methane in the martian atmosphere - as revealed exclusively by The Sun - raised the possibility that there was still life on Mars today.
"Methane is a molecule that should go away very quickly. We need to send a mission to find out if the source is biological.
"We also need to send a mission to return samples from Mars. That would enable scientists to find out whether Mars might ever have harboured life.
"If we are ever going to show if there was ever life on Mars, I think we're going to have to study samples back on Earth."
Almost 30 other NASA missions to discover life in space - including one to bring back rocks from Mars - have already been planned.
There are also plans to visit Jupiter's moon Europa to explore its deep underground ocean and a moon of Saturn, Enceladus, which spouted ice volcanoes.
Long-term missions will also return to Saturn's biggest moon Titan, sending a balloon flying through its atmosphere and landing a probe in its surface lakes.
Future missions would also visit comets.
NASA scientists have been searching for extraterrestrial life on other planets for some time.
Last November the space organisation launched the Kepler space telescope to look for Earth-size planets in this galaxy.
The telescope is on a three-and-a-half-year mission to find planets.
NASA has so far been able to download data - but many believe there are aliens out there.
British physicist Stephen Hawking said this week aliens might be traveling through the cosmos right now - but he warned they might have evil intentions.
Advertisement
Wednesday, April 28, 2010
US Spelling Error Allowed Nigerian Terrorist To Board Plane To Detroit
This Day (Lagos)
Nigeria: U.S. - Spelling Error Aided Abdulmutallab's Terror Mission
Tokunbo Adedoja
28 April 2010
New York — Four months after the botched bomb attack on an American aircraft by Umar Farouk Abdulmutallab, the United States has revealed that spelling error by its embassy officials who processed the information provided by the suspect's father before the incident, allowed him to travel unspotted.
Also, the US has reviewed its visa issuance and revocation criteria, introducing technological and procedural enhancements to facilitate and strengthen visa related processes.
The latest information on the Abdulmutallab case was revealed in the transcript of the testimonies of top US officials who appeared before the Senate Committee on Homeland Security and Governmental Affairs last week.
In her testimony before the Senator Joseph Lieberman-led committee, during the hearing on, 'Lessons and Implications of the Christmas Day Attack: Securing the Visa Process', Assistant Secretary of State for Consular Affairs, Ambassador Janice Jacobs, offered an extensive explanation on what transpired.
"In the case of Umar Farouk Abdulmutallab, on the day following his father's November 19 visit to the embassy, we sent a cable to the Washington intelligence and law enforcement community through proper channels (the Visas Viper system) stating that 'Information at post suggests (that Farouk) may be involved in Yemeni-based extremists.'
At the same time, the Consular Section entered Abdulmutallab into the Consular Lookout and Support System database known as CLASS.
"In sending the Visas Viper cable and checking State Department records to determine whether Abdulmutallab had a visa, embassy officials misspelled his name, but entered it correctly into CLASS. As a result of the misspelling in the cable, information about previous visas issued to him and the fact that he currently held a valid US visa was not included in the cable."
She however noted that the correctly-spelt CLASS lookout was shared automatically with the primary lookout system used by Department of Homeland Security and accessible to other agencies.
She explained that on the basis of this, Abdulmutallab would have been identified by the Customs and Border Protection (CBP) for secondary screening had flight 253 landed normally in Detroit, US.
Jacobs noted that the attention of the US government was now on addressing the deficiencies identified following the attack.
"After reviewing these events, we took immediate action to improve the procedures and content requirements for Visas Viper cable reporting to call attention to the visa application and issuance material already present in the data that we share with our national security partners.
"In cabled instructions to the field, all officers were instructed to include complete information about all previous and current U.S. visa(s) in Visas Vipers cables," explained the ambassador.
"The guidance cable included specific instructions on methods to comprehensively and intensively search the database of visa records so that all pertinent information is obtained. I can confirm that these new requirements have been followed in all Visas Viper cables submitted since December," she added.
In his testimony, Assistant Secretary (Policy), David Heyman, said the attempted attack by Abdulmutallab was one more reminder of the importance of ensuring that visa screening procedures utilise tools to counter terrorism.
According to him, screening must include functionally related measures such as document verification capabilities and enhanced international information sharing.
He added that emphasis should be placed on information sharing with trusted international partners because it is critical.
Nigeria: U.S. - Spelling Error Aided Abdulmutallab's Terror Mission
Tokunbo Adedoja
28 April 2010
New York — Four months after the botched bomb attack on an American aircraft by Umar Farouk Abdulmutallab, the United States has revealed that spelling error by its embassy officials who processed the information provided by the suspect's father before the incident, allowed him to travel unspotted.
Also, the US has reviewed its visa issuance and revocation criteria, introducing technological and procedural enhancements to facilitate and strengthen visa related processes.
The latest information on the Abdulmutallab case was revealed in the transcript of the testimonies of top US officials who appeared before the Senate Committee on Homeland Security and Governmental Affairs last week.
In her testimony before the Senator Joseph Lieberman-led committee, during the hearing on, 'Lessons and Implications of the Christmas Day Attack: Securing the Visa Process', Assistant Secretary of State for Consular Affairs, Ambassador Janice Jacobs, offered an extensive explanation on what transpired.
"In the case of Umar Farouk Abdulmutallab, on the day following his father's November 19 visit to the embassy, we sent a cable to the Washington intelligence and law enforcement community through proper channels (the Visas Viper system) stating that 'Information at post suggests (that Farouk) may be involved in Yemeni-based extremists.'
At the same time, the Consular Section entered Abdulmutallab into the Consular Lookout and Support System database known as CLASS.
"In sending the Visas Viper cable and checking State Department records to determine whether Abdulmutallab had a visa, embassy officials misspelled his name, but entered it correctly into CLASS. As a result of the misspelling in the cable, information about previous visas issued to him and the fact that he currently held a valid US visa was not included in the cable."
She however noted that the correctly-spelt CLASS lookout was shared automatically with the primary lookout system used by Department of Homeland Security and accessible to other agencies.
She explained that on the basis of this, Abdulmutallab would have been identified by the Customs and Border Protection (CBP) for secondary screening had flight 253 landed normally in Detroit, US.
Jacobs noted that the attention of the US government was now on addressing the deficiencies identified following the attack.
"After reviewing these events, we took immediate action to improve the procedures and content requirements for Visas Viper cable reporting to call attention to the visa application and issuance material already present in the data that we share with our national security partners.
"In cabled instructions to the field, all officers were instructed to include complete information about all previous and current U.S. visa(s) in Visas Vipers cables," explained the ambassador.
"The guidance cable included specific instructions on methods to comprehensively and intensively search the database of visa records so that all pertinent information is obtained. I can confirm that these new requirements have been followed in all Visas Viper cables submitted since December," she added.
In his testimony, Assistant Secretary (Policy), David Heyman, said the attempted attack by Abdulmutallab was one more reminder of the importance of ensuring that visa screening procedures utilise tools to counter terrorism.
According to him, screening must include functionally related measures such as document verification capabilities and enhanced international information sharing.
He added that emphasis should be placed on information sharing with trusted international partners because it is critical.
Tuesday, April 27, 2010
Argentina Case Evokes Memories Of The Dirty War
Argentina case evokes ‘dirty war’ memories
By Jude Webber in Buenos Aires
Published: April 26 2010 16:00 | Last updated: April 26 2010 16:00
Just as Argentina jailed its last “dirty war” leader, a bitter political row has flared over whether the children of the owner of the country’s top media group were stolen from people who disappeared under the military dictatorship.
The emblematic case, mixing human rights abuses perpetrated by the 1976-83 junta with the high-profile barrage of attacks between media group Clarín, the judiciary and President Cristina Fernández, illustrates how the country’s past continues to cast a long shadow over the present nearly 30 years since the return of democracy.
Mar-31
“This case is one of public interest. It goes beyond a private case,” said Gastón Chillier, executive director of CELS, a leading human rights group.
Felipe and Marcela Noble Herrera, both 34, broke their silence last week with a full-page advert in newspapers and a television appearance, saying they feared they had become “pawns in the [government’s] onslaught” against Clarín, owned by their mother, Ernestina Herrera de Noble.
On television, Marcela Noble Herrera said the “government is pursuing us and pressurising the judges who have to resolve our cause” instead of taking issue with the delays in resolving a matter “that would bring peace to three families”.
“Do they care about us or do they need, politically, for us to be the children of disappeared?” she asked.
Her comments came after Ms Fernández last month used the anniversary of Argentina’s 1976 coup, now a national Day of Memory, to attack the “impunity of the media’s power . . . almost a mafia power” and to make a personal pledge to pursue the case in international courts “if we don’t find justice in Argentina”.
Though the president, who has publicly championed the cause of human rights, did not mention Clarín or the family by name, her meaning was clear. The government has often criticised journalists in general, and Clarín in particular, for what it sees as a failure to report its achievements.
The president has also clashed with the judiciary in recent months over controversial plans to use central bank reserves to repay debt. One politician from her party even suggested recently that judges should take exams every four years and be forced to retire at 75 – a swipe at one of the supreme court judges, Carlos Fayt, who is 92 and who had described as “nonsense” a remark by Ms Fernández.
Human rights groups say as many as 30,000 people died or were “disappeared”– some dumped at sea from aeroplanes – during the dirty war, and hundreds of babies were stolen from victims and often given to military families to raise.
The Grandmothers of the Plaza de Mayo, with their trademark white headscarves, began marching every week in the square in front of the presidential Pink House to demand news of their lost relatives. To date, they have traced the identity of 101 grandchildren, some via ingenious means, such as airing a photograph in a popular television soap opera which led to one man finding his biological family.
“We have never had any concrete evidence that we could be the children of disappeared,” the Noble Herreras wrote in their newspaper advert, in which they said they had voluntarily given DNA samples to be compared with those of two families who are searching for their grandchildren.
The Grandmothers agree there is no certainty that the pair were stolen children, but the circumstances of their adoption have long been questioned and Mr Chillier said the family had used a barrage of legal tactics to delay judicial rulings in a case that has been dragging on for nine years.
The Grandmothers want the DNA samples compared not just with the two petitioning families, but with the entire contents of a national genetic databank, which belongs to the government. The Noble Herreras say that does not offer them the same guarantees as conducting the test in a forensic laboratory owned by the judiciary. They are currently waiting for the supreme court to rule on procedural issues.
“This isn’t a fight between the government and the media,” said Estela de Carlotto, the head of the Grandmothers. “It’s a question of defending human rights.”
The latest events in the adoption saga come after 82-year-old Reynaldo Bignone, the last president of the 1976-83 military junta, was jailed on Wednesday for a quarter of a century for his role in 56 cases of kidnapping, torture and murder.
“Justice is slow to arrive but it comes – look at the Bignone ruling,” said Mr Chillier. “They [the Noble Herreras], their families and society have to know the truth.”
By Jude Webber in Buenos Aires
Published: April 26 2010 16:00 | Last updated: April 26 2010 16:00
Just as Argentina jailed its last “dirty war” leader, a bitter political row has flared over whether the children of the owner of the country’s top media group were stolen from people who disappeared under the military dictatorship.
The emblematic case, mixing human rights abuses perpetrated by the 1976-83 junta with the high-profile barrage of attacks between media group Clarín, the judiciary and President Cristina Fernández, illustrates how the country’s past continues to cast a long shadow over the present nearly 30 years since the return of democracy.
Mar-31
“This case is one of public interest. It goes beyond a private case,” said Gastón Chillier, executive director of CELS, a leading human rights group.
Felipe and Marcela Noble Herrera, both 34, broke their silence last week with a full-page advert in newspapers and a television appearance, saying they feared they had become “pawns in the [government’s] onslaught” against Clarín, owned by their mother, Ernestina Herrera de Noble.
On television, Marcela Noble Herrera said the “government is pursuing us and pressurising the judges who have to resolve our cause” instead of taking issue with the delays in resolving a matter “that would bring peace to three families”.
“Do they care about us or do they need, politically, for us to be the children of disappeared?” she asked.
Her comments came after Ms Fernández last month used the anniversary of Argentina’s 1976 coup, now a national Day of Memory, to attack the “impunity of the media’s power . . . almost a mafia power” and to make a personal pledge to pursue the case in international courts “if we don’t find justice in Argentina”.
Though the president, who has publicly championed the cause of human rights, did not mention Clarín or the family by name, her meaning was clear. The government has often criticised journalists in general, and Clarín in particular, for what it sees as a failure to report its achievements.
The president has also clashed with the judiciary in recent months over controversial plans to use central bank reserves to repay debt. One politician from her party even suggested recently that judges should take exams every four years and be forced to retire at 75 – a swipe at one of the supreme court judges, Carlos Fayt, who is 92 and who had described as “nonsense” a remark by Ms Fernández.
Human rights groups say as many as 30,000 people died or were “disappeared”– some dumped at sea from aeroplanes – during the dirty war, and hundreds of babies were stolen from victims and often given to military families to raise.
The Grandmothers of the Plaza de Mayo, with their trademark white headscarves, began marching every week in the square in front of the presidential Pink House to demand news of their lost relatives. To date, they have traced the identity of 101 grandchildren, some via ingenious means, such as airing a photograph in a popular television soap opera which led to one man finding his biological family.
“We have never had any concrete evidence that we could be the children of disappeared,” the Noble Herreras wrote in their newspaper advert, in which they said they had voluntarily given DNA samples to be compared with those of two families who are searching for their grandchildren.
The Grandmothers agree there is no certainty that the pair were stolen children, but the circumstances of their adoption have long been questioned and Mr Chillier said the family had used a barrage of legal tactics to delay judicial rulings in a case that has been dragging on for nine years.
The Grandmothers want the DNA samples compared not just with the two petitioning families, but with the entire contents of a national genetic databank, which belongs to the government. The Noble Herreras say that does not offer them the same guarantees as conducting the test in a forensic laboratory owned by the judiciary. They are currently waiting for the supreme court to rule on procedural issues.
“This isn’t a fight between the government and the media,” said Estela de Carlotto, the head of the Grandmothers. “It’s a question of defending human rights.”
The latest events in the adoption saga come after 82-year-old Reynaldo Bignone, the last president of the 1976-83 military junta, was jailed on Wednesday for a quarter of a century for his role in 56 cases of kidnapping, torture and murder.
“Justice is slow to arrive but it comes – look at the Bignone ruling,” said Mr Chillier. “They [the Noble Herreras], their families and society have to know the truth.”
Monday, April 26, 2010
It Would Take 103 Months (Almost 9 Years) To Clear The Inventory Of Unsoldf Homes In The USA
APRIL 24, 2010, 6:00 AM ET
Number of the Week: 103 Months to Clear Housing Inventory
By Mark Whitehouse
103: The number of months it would take to sell off all the foreclosed homes in banks’ possession, plus all the homes likely to end up there over the next couple years, at the current rate of sales.
How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern.
As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.
Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses.
The government is understandably worried about the situation, and its Home Affordable Modification Program has made an impact by helping people stay in their homes and avoid foreclosure. As people who enter the program catch up on their payments, the number of homeowners 60 or more days delinquent has fallen 9% over the past two months.
Now, though, the effect of modifications could be on the wane. According to Goldman Sachs, HAMP started less than 80,000 trial modifications in March, less than half the number in the peak month of October 2009. At the same time, a growing number of modifications are being canceled as borrowers prove unable to pay. By Goldman’s count, about 68,000 were canceled in March.
All this means that little can stop banks’ inventory of distressed homes from growing. Too many people owe too much more on their homes than they can afford. For the housing market, that could mean a long-lasting hangover.
« Previous
Number of the Week: 103 Months to Clear Housing Inventory
By Mark Whitehouse
103: The number of months it would take to sell off all the foreclosed homes in banks’ possession, plus all the homes likely to end up there over the next couple years, at the current rate of sales.
How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern.
As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.
Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses.
The government is understandably worried about the situation, and its Home Affordable Modification Program has made an impact by helping people stay in their homes and avoid foreclosure. As people who enter the program catch up on their payments, the number of homeowners 60 or more days delinquent has fallen 9% over the past two months.
Now, though, the effect of modifications could be on the wane. According to Goldman Sachs, HAMP started less than 80,000 trial modifications in March, less than half the number in the peak month of October 2009. At the same time, a growing number of modifications are being canceled as borrowers prove unable to pay. By Goldman’s count, about 68,000 were canceled in March.
All this means that little can stop banks’ inventory of distressed homes from growing. Too many people owe too much more on their homes than they can afford. For the housing market, that could mean a long-lasting hangover.
« Previous
Learning How To Fight The Debt Collectro
Learning How to Fight the Collector
By ANDREW MARTIN
Published: April 23, 2010
Among debt collectors, Steven Katz is known as a “credit terrorist.” For years, he has run what he calls the Steven Katz School of Bill Collector Education, otherwise known as the “credit terrorist training camp.”
Enlarge This Image
Samantha Sais for The New York Times
Steven Katz, a former bill collector, says debtors can “use the laws as they are on the books as both a shield and a sword” against unscrupulous collection efforts.
Enlarge This Image
Samantha Sais for The New York Times
Steven Katz with a framed copy of a $1,000 check he said was his first damage award for fighting a bogus collection effort.
Mr. Katz, a 58-year-old accountant in suburban Tucson, spends his free time schooling debtors on the finer points of consumer protection law to help them turn the tables on debt collectors. On occasion, he thumbs his own nose at them too.
“How many times can I sue you? Let me count the ways,” he wrote under his pseudonym, Dr. Tax, in a March posting on Inside ARM, a debt collectors’ Web site.
A former bill collector himself, Mr. Katz rebelled after a debt buyer damaged his credit score with what he says was a bogus bill. Mr. Katz sued, and in 2003 he collected his first damage award, a $1,000 check that he now keeps framed behind his desk.
“The bill collectors, when they call, make you feel like the only option you have is to lay down and play dead. That’s not true,” said Mr. Katz said, who does not charge for his advice. “Nothing validates this more than getting a check.”
Call this movement revenge of the (alleged) deadbeats. Even as collectors try to recoup debts from millions of Americans struggling to pay their bills, a small but growing number of lawyers and consumers are fighting back against what they describe as harassment, unscrupulous practices — and, most important to their litigiousness, violations of the Fair Debt Collection Practices Act.
In fact, 8,287 federal lawsuits were filed citing violations of the act in 2009, a 60 percent rise over the previous year, according to WebRecon, a site that tracks collection-related litigation and the most litigious consumers and lawyers on behalf of debt collectors.
On Wednesday, the Supreme Court made it even easier for consumers to use the courts to fight debt collectors, ruling that collectors cannot be shielded from suits by claiming they made a mistake in interpreting the law.
When a consumer stops paying a bill, creditors often try to collect on their own for a few months. In many instances, the creditor hires another company to collect the debt. In other cases, they may dispose of the debt by selling it to a debt buyer for a steep discount.
Debt collectors and debt buyers are the targets of litigious consumers, since the debt collection law primarily applies to third-party collectors.
Peter Barry, a Minneapolis trial lawyer, is so bullish on the future of debt collection litigation that he holds several “boot camps” each year to share his secrets with other lawyers who want in on the action. If the debtor wins a court case under the act, the debt collector must pay the lawyer’s fees.
The next boot camp is being held in early May in San Francisco, at a cost of $2,495 a person for two and a half days of instruction.
“I can’t sue every illegal debt collector in America, although I’d like to try,” Mr. Barry said.
Mr. Katz can also claim some credit for the increase in lawsuits. For six years, he has run a free Web site called Debtorboards.com, where people share tips on topics like keeping a paper trail and recording calls from collectors.
He said the site received two million hits in 2009, a 60 percent increase over the previous year.
“Debtorboards is geared to help people use the laws as they are on the books as both a shield and a sword,” said Mr. Katz, who says he has won $36,000 from his own litigation against collection agencies. (Since many of the settlements are confidential, it is difficult to prove the claims of Mr. Katz and others).
Of course, debt collectors are hardly pleased with the litigation trend.
Rozanne M. Andersen, chief executive of ACA International, a trade association for the debt collection industry, said she was “extremely concerned” about the increase in lawsuits, which she said cost her industry hundreds of millions of dollars a year. She said much of the increase was the result of ambiguous language in the Fair Debt Collection Act.
Debt collectors are required, for example, to identify themselves on a voice message left for a consumer, she said. But they are also prohibited from telling a third party — including someone who might overhear a phone message — about a consumer’s debt.
“We are between a rock and a hard place,” Ms. Andersen said.
Ms. Andersen said she had little patience for Web sites that encouraged consumers to thwart debt collectors.
“We believe those types of Web sites are encouraging people to not take responsibility for just debt,” she said.
Jack Gordon, who runs the fee-based WebRecon site, said it was no wonder lawsuits were increasing, because consumers were being bombarded with ads from lawyers when they searched online for information on debt collection. He said the proliferation of discussion sites like Mr. Katz’s had, to a lesser extent, also contributed to the trend.
On the boards, he said, “There’s a lot of hot air, a lot of people who overinflate their accomplishments.”
Regardless, Mr. Gordon’s database has become a badge of honor among the devotees of Debtorboards.com. As Brandon Scroggin, a 37-year-old from Little Rock, Ark., puts it, “That’s one list I’m a proud card-carrying member of.”
Mr. Scroggin, who provides price estimates at a body shop, said he was the type of person who refused to be taken advantage of, even for petty offenses. For instance, years ago, he said he joined in the class-action suit against the pop group Milli Vanilli, accused of lip synching, and collected a $1.25 check.
After a messy divorce, Mr. Scroggin was stuck with a $7,000 bill that he said belonged to his ex-wife. Instead of paying it, he began researching the law and stumbled on Debtorboards.com.
Armed with lessons he learned on the site, he demanded proof of the debt from the collection agency, and the calls stopped. But two and a half years later, they started up again so he sued the collection agency, National Loan Recoveries, for failing to provide proof of the debt, among other things.
The case was settled in 2008. The terms were confidential, but he says he never paid National Loan a dime. “Let’s just say I’m a very happy person,” he said. A lawyer for National Loan, Kathryn Bridges, did not return messages seeking comment.
Mr. Katz said his Web site was not intended to help people avoid paying legitimate debts. But if they do so, so be it — he feels no need to apologize.
He said Congress gave consumers certain rights, and he is simply making people aware of them, sometimes colorfully.
As Mr. Katz says at the bottom of each Dr. Tax posting, “A telephone in the hands of a collector is like a crowbar — it can be used to pry a mouth open wide enough to insert a foot.”
Barbara Thompson, 46, of Atlanta, said she challenged $11,000 in credit card debt using online research about collection laws. She does not dispute the debts but reasons that the credit card company wrote off her charges long ago. By her account, she owes the credit card company, not the debt collector.
“The credit card company, they sell it off, they charge it off, it’s just business as usual,” she said, adding, “I’m adamant about not paying a collection agency.”
By ANDREW MARTIN
Published: April 23, 2010
Among debt collectors, Steven Katz is known as a “credit terrorist.” For years, he has run what he calls the Steven Katz School of Bill Collector Education, otherwise known as the “credit terrorist training camp.”
Enlarge This Image
Samantha Sais for The New York Times
Steven Katz, a former bill collector, says debtors can “use the laws as they are on the books as both a shield and a sword” against unscrupulous collection efforts.
Enlarge This Image
Samantha Sais for The New York Times
Steven Katz with a framed copy of a $1,000 check he said was his first damage award for fighting a bogus collection effort.
Mr. Katz, a 58-year-old accountant in suburban Tucson, spends his free time schooling debtors on the finer points of consumer protection law to help them turn the tables on debt collectors. On occasion, he thumbs his own nose at them too.
“How many times can I sue you? Let me count the ways,” he wrote under his pseudonym, Dr. Tax, in a March posting on Inside ARM, a debt collectors’ Web site.
A former bill collector himself, Mr. Katz rebelled after a debt buyer damaged his credit score with what he says was a bogus bill. Mr. Katz sued, and in 2003 he collected his first damage award, a $1,000 check that he now keeps framed behind his desk.
“The bill collectors, when they call, make you feel like the only option you have is to lay down and play dead. That’s not true,” said Mr. Katz said, who does not charge for his advice. “Nothing validates this more than getting a check.”
Call this movement revenge of the (alleged) deadbeats. Even as collectors try to recoup debts from millions of Americans struggling to pay their bills, a small but growing number of lawyers and consumers are fighting back against what they describe as harassment, unscrupulous practices — and, most important to their litigiousness, violations of the Fair Debt Collection Practices Act.
In fact, 8,287 federal lawsuits were filed citing violations of the act in 2009, a 60 percent rise over the previous year, according to WebRecon, a site that tracks collection-related litigation and the most litigious consumers and lawyers on behalf of debt collectors.
On Wednesday, the Supreme Court made it even easier for consumers to use the courts to fight debt collectors, ruling that collectors cannot be shielded from suits by claiming they made a mistake in interpreting the law.
When a consumer stops paying a bill, creditors often try to collect on their own for a few months. In many instances, the creditor hires another company to collect the debt. In other cases, they may dispose of the debt by selling it to a debt buyer for a steep discount.
Debt collectors and debt buyers are the targets of litigious consumers, since the debt collection law primarily applies to third-party collectors.
Peter Barry, a Minneapolis trial lawyer, is so bullish on the future of debt collection litigation that he holds several “boot camps” each year to share his secrets with other lawyers who want in on the action. If the debtor wins a court case under the act, the debt collector must pay the lawyer’s fees.
The next boot camp is being held in early May in San Francisco, at a cost of $2,495 a person for two and a half days of instruction.
“I can’t sue every illegal debt collector in America, although I’d like to try,” Mr. Barry said.
Mr. Katz can also claim some credit for the increase in lawsuits. For six years, he has run a free Web site called Debtorboards.com, where people share tips on topics like keeping a paper trail and recording calls from collectors.
He said the site received two million hits in 2009, a 60 percent increase over the previous year.
“Debtorboards is geared to help people use the laws as they are on the books as both a shield and a sword,” said Mr. Katz, who says he has won $36,000 from his own litigation against collection agencies. (Since many of the settlements are confidential, it is difficult to prove the claims of Mr. Katz and others).
Of course, debt collectors are hardly pleased with the litigation trend.
Rozanne M. Andersen, chief executive of ACA International, a trade association for the debt collection industry, said she was “extremely concerned” about the increase in lawsuits, which she said cost her industry hundreds of millions of dollars a year. She said much of the increase was the result of ambiguous language in the Fair Debt Collection Act.
Debt collectors are required, for example, to identify themselves on a voice message left for a consumer, she said. But they are also prohibited from telling a third party — including someone who might overhear a phone message — about a consumer’s debt.
“We are between a rock and a hard place,” Ms. Andersen said.
Ms. Andersen said she had little patience for Web sites that encouraged consumers to thwart debt collectors.
“We believe those types of Web sites are encouraging people to not take responsibility for just debt,” she said.
Jack Gordon, who runs the fee-based WebRecon site, said it was no wonder lawsuits were increasing, because consumers were being bombarded with ads from lawyers when they searched online for information on debt collection. He said the proliferation of discussion sites like Mr. Katz’s had, to a lesser extent, also contributed to the trend.
On the boards, he said, “There’s a lot of hot air, a lot of people who overinflate their accomplishments.”
Regardless, Mr. Gordon’s database has become a badge of honor among the devotees of Debtorboards.com. As Brandon Scroggin, a 37-year-old from Little Rock, Ark., puts it, “That’s one list I’m a proud card-carrying member of.”
Mr. Scroggin, who provides price estimates at a body shop, said he was the type of person who refused to be taken advantage of, even for petty offenses. For instance, years ago, he said he joined in the class-action suit against the pop group Milli Vanilli, accused of lip synching, and collected a $1.25 check.
After a messy divorce, Mr. Scroggin was stuck with a $7,000 bill that he said belonged to his ex-wife. Instead of paying it, he began researching the law and stumbled on Debtorboards.com.
Armed with lessons he learned on the site, he demanded proof of the debt from the collection agency, and the calls stopped. But two and a half years later, they started up again so he sued the collection agency, National Loan Recoveries, for failing to provide proof of the debt, among other things.
The case was settled in 2008. The terms were confidential, but he says he never paid National Loan a dime. “Let’s just say I’m a very happy person,” he said. A lawyer for National Loan, Kathryn Bridges, did not return messages seeking comment.
Mr. Katz said his Web site was not intended to help people avoid paying legitimate debts. But if they do so, so be it — he feels no need to apologize.
He said Congress gave consumers certain rights, and he is simply making people aware of them, sometimes colorfully.
As Mr. Katz says at the bottom of each Dr. Tax posting, “A telephone in the hands of a collector is like a crowbar — it can be used to pry a mouth open wide enough to insert a foot.”
Barbara Thompson, 46, of Atlanta, said she challenged $11,000 in credit card debt using online research about collection laws. She does not dispute the debts but reasons that the credit card company wrote off her charges long ago. By her account, she owes the credit card company, not the debt collector.
“The credit card company, they sell it off, they charge it off, it’s just business as usual,” she said, adding, “I’m adamant about not paying a collection agency.”
Sunday, April 25, 2010
Steven Hawking Warns-Don't Talk To Aliens
From The Sunday Times
April 25, 2010
Don’t talk to aliens, warns Stephen Hawking
Hawking has depicted what kinds of alien could be out there
Jonathan Leake
197 COMMENTS
RECOMMEND? (184)
THE aliens are out there and Earth had better watch out, at least according to Stephen Hawking. He has suggested that extraterrestrials are almost certain to exist — but that instead of seeking them out, humanity should be doing all it that can to avoid any contact.
The suggestions come in a new documentary series in which Hawking, one of the world’s leading scientists, will set out his latest thinking on some of the universe’s greatest mysteries.
Alien life, he will suggest, is almost certain to exist in many other parts of the universe: not just in planets, but perhaps in the centre of stars or even floating in interplanetary space.
Hawking’s logic on aliens is, for him, unusually simple. The universe, he points out, has 100 billion galaxies, each containing hundreds of millions of stars. In such a big place, Earth is unlikely to be the only planet where life has evolved.
RELATED LINKS
Oops, that was a bad call, Earth
Hello... Are we alone in the Universe?
“To my mathematical brain, the numbers alone make thinking about aliens perfectly rational,” he said. “The real challenge is to work out what aliens might actually be like.”
The answer, he suggests, is that most of it will be the equivalent of microbes or simple animals — the sort of life that has dominated Earth for most of its history.
One scene in his documentary for the Discovery Channel shows herds of two-legged herbivores browsing on an alien cliff-face where they are picked off by flying, yellow lizard-like predators. Another shows glowing fluorescent aquatic animals forming vast shoals in the oceans thought to underlie the thick ice coating Europa, one of the moons of Jupiter.
Such scenes are speculative, but Hawking uses them to lead on to a serious point: that a few life forms could be intelligent and pose a threat. Hawking believes that contact with such a species could be devastating for humanity.
He suggests that aliens might simply raid Earth for its resources and then move on: “We only have to look at ourselves to see how intelligent life might develop into something we wouldn’t want to meet. I imagine they might exist in massive ships, having used up all the resources from their home planet. Such advanced aliens would perhaps become nomads, looking to conquer and colonise whatever planets they can reach.”
He concludes that trying to make contact with alien races is “a little too risky”. He said: “If aliens ever visit us, I think the outcome would be much as when Christopher Columbus first landed in America, which didn’t turn out very well for the Native Americans.”
The completion of the documentary marks a triumph for Hawking, now 68, who is paralysed by motor neurone disease and has very limited powers of communication. The project took him and his producers three years, during which he insisted on rewriting large chunks of the script and checking the filming.
John Smithson, executive producer for Discovery, said: “He wanted to make a programme that was entertaining for a general audience as well as scientific and that’s a tough job, given the complexity of the ideas involved.”
Hawking has suggested the possibility of alien life before but his views have been clarified by a series of scientific breakthroughs, such as the discovery, since 1995, of more than 450 planets orbiting distant stars, showing that planets are a common phenomenon.
So far, all the new planets found have been far larger than Earth, but only because the telescopes used to detect them are not sensitive enough to detect Earth-sized bodies at such distances.
Another breakthrough is the discovery that life on Earth has proven able to colonise its most extreme environments. If life can survive and evolve there, scientists reason, then perhaps nowhere is out of bounds.
Hawking’s belief in aliens places him in good scientific company. In his recent Wonders of the Solar System BBC series, Professor Brian Cox backed the idea, too, suggesting Mars, Europa and Titan, a moon of Saturn, as likely places to look.
Similarly, Lord Rees, the astronomer royal, warned in a lecture earlier this year that aliens might prove to be beyond human understanding.
“I suspect there could be life and intelligence out there in forms we can’t conceive,” he said. “Just as a chimpanzee can’t understand quantum theory, it could be there are aspects of reality that are beyond the capacity of our brains.”
Stephen Hawking's Universe begins on the Discovery Channel on Sunday May 9 at 9pm
April 25, 2010
Don’t talk to aliens, warns Stephen Hawking
Hawking has depicted what kinds of alien could be out there
Jonathan Leake
197 COMMENTS
RECOMMEND? (184)
THE aliens are out there and Earth had better watch out, at least according to Stephen Hawking. He has suggested that extraterrestrials are almost certain to exist — but that instead of seeking them out, humanity should be doing all it that can to avoid any contact.
The suggestions come in a new documentary series in which Hawking, one of the world’s leading scientists, will set out his latest thinking on some of the universe’s greatest mysteries.
Alien life, he will suggest, is almost certain to exist in many other parts of the universe: not just in planets, but perhaps in the centre of stars or even floating in interplanetary space.
Hawking’s logic on aliens is, for him, unusually simple. The universe, he points out, has 100 billion galaxies, each containing hundreds of millions of stars. In such a big place, Earth is unlikely to be the only planet where life has evolved.
RELATED LINKS
Oops, that was a bad call, Earth
Hello... Are we alone in the Universe?
“To my mathematical brain, the numbers alone make thinking about aliens perfectly rational,” he said. “The real challenge is to work out what aliens might actually be like.”
The answer, he suggests, is that most of it will be the equivalent of microbes or simple animals — the sort of life that has dominated Earth for most of its history.
One scene in his documentary for the Discovery Channel shows herds of two-legged herbivores browsing on an alien cliff-face where they are picked off by flying, yellow lizard-like predators. Another shows glowing fluorescent aquatic animals forming vast shoals in the oceans thought to underlie the thick ice coating Europa, one of the moons of Jupiter.
Such scenes are speculative, but Hawking uses them to lead on to a serious point: that a few life forms could be intelligent and pose a threat. Hawking believes that contact with such a species could be devastating for humanity.
He suggests that aliens might simply raid Earth for its resources and then move on: “We only have to look at ourselves to see how intelligent life might develop into something we wouldn’t want to meet. I imagine they might exist in massive ships, having used up all the resources from their home planet. Such advanced aliens would perhaps become nomads, looking to conquer and colonise whatever planets they can reach.”
He concludes that trying to make contact with alien races is “a little too risky”. He said: “If aliens ever visit us, I think the outcome would be much as when Christopher Columbus first landed in America, which didn’t turn out very well for the Native Americans.”
The completion of the documentary marks a triumph for Hawking, now 68, who is paralysed by motor neurone disease and has very limited powers of communication. The project took him and his producers three years, during which he insisted on rewriting large chunks of the script and checking the filming.
John Smithson, executive producer for Discovery, said: “He wanted to make a programme that was entertaining for a general audience as well as scientific and that’s a tough job, given the complexity of the ideas involved.”
Hawking has suggested the possibility of alien life before but his views have been clarified by a series of scientific breakthroughs, such as the discovery, since 1995, of more than 450 planets orbiting distant stars, showing that planets are a common phenomenon.
So far, all the new planets found have been far larger than Earth, but only because the telescopes used to detect them are not sensitive enough to detect Earth-sized bodies at such distances.
Another breakthrough is the discovery that life on Earth has proven able to colonise its most extreme environments. If life can survive and evolve there, scientists reason, then perhaps nowhere is out of bounds.
Hawking’s belief in aliens places him in good scientific company. In his recent Wonders of the Solar System BBC series, Professor Brian Cox backed the idea, too, suggesting Mars, Europa and Titan, a moon of Saturn, as likely places to look.
Similarly, Lord Rees, the astronomer royal, warned in a lecture earlier this year that aliens might prove to be beyond human understanding.
“I suspect there could be life and intelligence out there in forms we can’t conceive,” he said. “Just as a chimpanzee can’t understand quantum theory, it could be there are aspects of reality that are beyond the capacity of our brains.”
Stephen Hawking's Universe begins on the Discovery Channel on Sunday May 9 at 9pm
Saturday, April 24, 2010
A Brave 28 Year Old Woman Loses Her Battle With Cancer
Alicia Parlette, who wrote of her cancer, dies
Meredith May, Chronicle Staff Writer
Friday, April 23, 2010
Print E-mail Share Comments (550) Font | Size:
Penni Gladstone / The Chronicle
Alicia Parlette, who died Thursday at age 28, wrote about her struggle with a rare cancer in the hip and breast after her 2005 diagnosis.
IMAGES
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ALICIA PARLETTE
Alicia Parlette faces final stages of journey 04.16.10
Alicia's Story -- Cancer, Despair, Hope and Faith 06.18.07
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Alicia Parlette, who turned her incurable cancer diagnosis at age 23 into a Chronicle series about her experience, died just before noon Thursday at UCSF Medical Center.
She was 28.
Ms. Parlette's 17-part series, "Alicia's Story," drew tens of thousands of followers, who read about her trips to the doctor's office, the therapist's couch, her relationships with family and friends, and her faith in God.
Ms. Parlette had just begun her career as a copy editor for The Chronicle after graduating from the journalism department at the University of Nevada Reno when she found out in 2005 that she had a rare form of cancer in her hip and breast called alveolar soft part sarcoma.
She got the news three years after her mother died of cancer.
Despite treatments of interferon and chemotherapy, the cancer later spread to her lungs.
Ms. Parlette went to the emergency room on April 2 with breathing problems and debilitating pain in her hip. Tumors in her lungs had grown to the point she could no longer breathe on her own, and the tumor in her hip had caused it to fracture.
By mid-April, Ms. Parlette and her medical team decided to end treatment.
Days later, she and Lucas Beeler, the boyfriend she had met on BART in October, had a private commitment ceremony. He gave her the wedding ring worn by his mother and grandmother.
As her stamina declined, a steady flow of friends came to say goodbye, and thousands more sent messages via Facebook and a Web site set up for her.
Ms. Parlette recorded her thoughts on a digital recorder, and friends are planning to transcribe them. In her last days, she listened to friends read aloud from her favorite book, "To Kill a Mockingbird." She died 20 minutes after her high school English teacher finished the last chapter.
In an April 14 interview with The Chronicle, Ms. Parlette said writing "Alicia's Story" made her feel like a writer with a capital W.
"It became really like a lifeline in a way for me because I would often come to conclusions about things - things I didn't even realize until I had written them."
From the beginning, Ms. Parlette said her illness was linked with blessing. She didn't think it was a coincidence that just as she was starting to feel creatively restless, she now had every reason to write.
She continued to work on her series despite her illness, and the first seven chapters were turned into a book.
For the past three years, Ms. Parlette shared a studio apartment in the NoPa neighborhood with her beloved rescue dog, Clarabelle.
Ms. Parlette also volunteered in the cancer center at UCSF Medical Center, sitting with patients waiting for chemotherapy treatments. Most recently, she celebrated Palm Sunday at Grace Cathedral with friends.
One of her last wishes was to turn all 28 chapters and updates of "Alicia's Story" into a comprehensive book.
"Alicia loved working at The Chronicle," said her brother, Matthew. "It gave her an outlet and made her feel good to help others with cancer. She appreciated all the love and support from everyone who read her story. She wants everyone to know that cancer sucks but always choose life and just do your best."
In one of the earliest installments of "Alicia's Story," Ms. Parlette wrote:
"If I get through this, this story will help me remember the important moments along the way, the details, the dizzying emotions. And, in the worst of all circumstances, if I go through this life-changing ordeal and my body just wears out and I die, I will die a writer. The one thing I've always wanted to be."
Ms. Parlette is survived by her father, Dave Parlette, and brother, Matthew Parlette, both of Roseville; and her fiance, Lucas Beeler of Fremont.
A memorial is pending.
Remembering
-- To read "Alicia's Story" from The Chronicle, go to sfgate.com/Alicia.
-- Remembrances may be sent to msparlette.com or the Friends of Alicia Facebook page.
-- On Twitter: www.twitter.com/AliciaParlette. Memorial information will also be posted on msparlette.com.
-- Contributions in her memory may be sent to the Alicia Parlette Fund for Aspiring Journalists, Reynolds School of Journalism, Mail Stop 310, University of Nevada, Reno, NV 89557.
-- The Chronicle has a limited supply of "Alicia's Story," a paperback compilation of the first installment of the series. All proceeds after tax and shipping will go to the Alicia Parlette Fund for Aspiring Journalists. To order a copy, send a check for $15 to "Alicia's Story," San Francisco Chronicle, 901 Mission St., San Francisco, CA 94103.
E-mail Meredith May at mmay@sfchronicle.com.
This article appeared on page C - 5 of the San Francisco Chronicle
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/23/BAMP1D11M1.DTL#ixzz0m1yHjTGh
Meredith May, Chronicle Staff Writer
Friday, April 23, 2010
Print E-mail Share Comments (550) Font | Size:
Penni Gladstone / The Chronicle
Alicia Parlette, who died Thursday at age 28, wrote about her struggle with a rare cancer in the hip and breast after her 2005 diagnosis.
IMAGES
View All Images (5)
ALICIA PARLETTE
Alicia Parlette faces final stages of journey 04.16.10
Alicia's Story -- Cancer, Despair, Hope and Faith 06.18.07
MORE BAY AREA NEWS
New chief at Point Reyes National Seashore 04.24.10
Robert Grimes dies - wounded pilot evaded Nazis 04.24.10
Hoofers move to beat to kick off dance week 04.24.10
Alicia Parlette, who turned her incurable cancer diagnosis at age 23 into a Chronicle series about her experience, died just before noon Thursday at UCSF Medical Center.
She was 28.
Ms. Parlette's 17-part series, "Alicia's Story," drew tens of thousands of followers, who read about her trips to the doctor's office, the therapist's couch, her relationships with family and friends, and her faith in God.
Ms. Parlette had just begun her career as a copy editor for The Chronicle after graduating from the journalism department at the University of Nevada Reno when she found out in 2005 that she had a rare form of cancer in her hip and breast called alveolar soft part sarcoma.
She got the news three years after her mother died of cancer.
Despite treatments of interferon and chemotherapy, the cancer later spread to her lungs.
Ms. Parlette went to the emergency room on April 2 with breathing problems and debilitating pain in her hip. Tumors in her lungs had grown to the point she could no longer breathe on her own, and the tumor in her hip had caused it to fracture.
By mid-April, Ms. Parlette and her medical team decided to end treatment.
Days later, she and Lucas Beeler, the boyfriend she had met on BART in October, had a private commitment ceremony. He gave her the wedding ring worn by his mother and grandmother.
As her stamina declined, a steady flow of friends came to say goodbye, and thousands more sent messages via Facebook and a Web site set up for her.
Ms. Parlette recorded her thoughts on a digital recorder, and friends are planning to transcribe them. In her last days, she listened to friends read aloud from her favorite book, "To Kill a Mockingbird." She died 20 minutes after her high school English teacher finished the last chapter.
In an April 14 interview with The Chronicle, Ms. Parlette said writing "Alicia's Story" made her feel like a writer with a capital W.
"It became really like a lifeline in a way for me because I would often come to conclusions about things - things I didn't even realize until I had written them."
From the beginning, Ms. Parlette said her illness was linked with blessing. She didn't think it was a coincidence that just as she was starting to feel creatively restless, she now had every reason to write.
She continued to work on her series despite her illness, and the first seven chapters were turned into a book.
For the past three years, Ms. Parlette shared a studio apartment in the NoPa neighborhood with her beloved rescue dog, Clarabelle.
Ms. Parlette also volunteered in the cancer center at UCSF Medical Center, sitting with patients waiting for chemotherapy treatments. Most recently, she celebrated Palm Sunday at Grace Cathedral with friends.
One of her last wishes was to turn all 28 chapters and updates of "Alicia's Story" into a comprehensive book.
"Alicia loved working at The Chronicle," said her brother, Matthew. "It gave her an outlet and made her feel good to help others with cancer. She appreciated all the love and support from everyone who read her story. She wants everyone to know that cancer sucks but always choose life and just do your best."
In one of the earliest installments of "Alicia's Story," Ms. Parlette wrote:
"If I get through this, this story will help me remember the important moments along the way, the details, the dizzying emotions. And, in the worst of all circumstances, if I go through this life-changing ordeal and my body just wears out and I die, I will die a writer. The one thing I've always wanted to be."
Ms. Parlette is survived by her father, Dave Parlette, and brother, Matthew Parlette, both of Roseville; and her fiance, Lucas Beeler of Fremont.
A memorial is pending.
Remembering
-- To read "Alicia's Story" from The Chronicle, go to sfgate.com/Alicia.
-- Remembrances may be sent to msparlette.com or the Friends of Alicia Facebook page.
-- On Twitter: www.twitter.com/AliciaParlette. Memorial information will also be posted on msparlette.com.
-- Contributions in her memory may be sent to the Alicia Parlette Fund for Aspiring Journalists, Reynolds School of Journalism, Mail Stop 310, University of Nevada, Reno, NV 89557.
-- The Chronicle has a limited supply of "Alicia's Story," a paperback compilation of the first installment of the series. All proceeds after tax and shipping will go to the Alicia Parlette Fund for Aspiring Journalists. To order a copy, send a check for $15 to "Alicia's Story," San Francisco Chronicle, 901 Mission St., San Francisco, CA 94103.
E-mail Meredith May at mmay@sfchronicle.com.
This article appeared on page C - 5 of the San Francisco Chronicle
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/23/BAMP1D11M1.DTL#ixzz0m1yHjTGh
Friday, April 23, 2010
America's New Super Weapon Is Conventional And Not Nuclear
U.S. Faces Choice on New Weapons for Fast Strikes
By DAVID E. SANGER and THOM SHANKER
Published: April 22, 2010
WASHINGTON — In coming years, President Obama will decide whether to deploy a new class of weapons capable of reaching any corner of the earth from the United States in under an hour and with such accuracy and force that they would greatly diminish America’s reliance on its nuclear arsenal.
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Yet even now, concerns about the technology are so strong that the Obama administration has acceded to a demand by Russia that the United States decommission one nuclear missile for every one of these conventional weapons fielded by the Pentagon. That provision, the White House said, is buried deep inside the New Start treaty that Mr. Obama and President Dmitri A. Medvedev signed in Prague two weeks ago.
Called Prompt Global Strike, the new weapon is designed to carry out tasks like picking off Osama bin Laden in a cave, if the right one could be found; taking out a North Korean missile while it is being rolled to the launch pad; or destroying an Iranian nuclear site — all without crossing the nuclear threshold. In theory, the weapon will hurl a conventional warhead of enormous weight at high speed and with pinpoint accuracy, generating the localized destructive power of a nuclear warhead.
The idea is not new: President George W. Bush and his staff promoted the technology, imagining that this new generation of conventional weapons would replace nuclear warheads on submarines.
In face-to-face meetings with President Bush, Russian leaders complained that the technology could increase the risk of a nuclear war, because Russia would not know if the missiles carried nuclear warheads or conventional ones. Mr. Bush and his aides concluded that the Russians were right.
Partly as a result, the idea “really hadn’t gone anywhere in the Bush administration,” Defense Secretary Robert M. Gates, who has served both presidents, said recently on ABC’s “This Week.” But he added that it was “embraced by the new administration.”
Mr. Obama himself alluded to the concept in a recent interview with The New York Times, saying it was part of an effort “to move towards less emphasis on nuclear weapons” while insuring “that our conventional weapons capability is an effective deterrent in all but the most extreme circumstances.”
The Obama national security team scrapped the idea of putting the new conventional weapon on submarines. Instead, the White House has asked Congress for about $250 million next year to explore a new alternative, one that uses some of the most advanced technology in the military today as well as some not yet even invented.
The final price of the system remains unknown. Senator John McCain of Arizona, the ranking Republican on the Senate Armed Services Committee, said at a hearing on Thursday that Prompt Global Strike would be “essential and critical, but also costly.”
It would be based, at least initially, on the West Coast, probably at Vandenberg Air Force Base.
Under the Obama plan, the Prompt Global Strike warhead would be mounted on a long-range missile to start its journey toward a target. It would travel through the atmosphere at several times the speed of sound, generating so much heat that it would have to be shielded with special materials to avoid melting. (In that regard, it is akin to the problem that confronted designers of the space shuttle decades ago.)
But since the vehicle would remain within the atmosphere rather than going into space, it would be far more maneuverable than a ballistic missile, capable of avoiding the airspace of neutral countries, for example, or steering clear of hostile territory. Its designers note that it could fly straight up the middle of the Persian Gulf before making a sharp turn toward a target.
The Pentagon hopes to deploy an early version of the system by 2014 or 2015. But even under optimistic timetables, a complete array of missiles, warheads, sensors and control systems is not expected to enter the arsenal until 2017 to 2020, long after Mr. Obama will have left office, even if he is elected to a second term.
The planning for Prompt Global Strike is being headed by Gen. Kevin P. Chilton of the Air Force, the top officer of the military’s Strategic Command and the man in charge of America’s nuclear arsenal. In the Obama era — where every administration discussion of nuclear weapons takes note of Mr. Obama’s commitment to moving toward “Global Zero,” the elimination of the nuclear arsenal — the new part of General Chilton’s job is to talk about conventional alternatives.
In an interview at his headquarters at Offutt Air Force Base, General Chilton described how the conventional capability offered by the proposed system would give the president more choices.
“Today, we can present some conventional options to the president to strike a target anywhere on the globe that range from 96 hours, to several hours maybe, 4, 5, 6 hours,” General Chilton said.
That would simply not be fast enough, he noted, if intelligence arrived about a movement by Al Qaeda terrorists or the imminent launching of a missile. “If the president wants to act on a particular target faster than that, the only thing we have that goes faster is a nuclear response,” he said.
But the key to filling that gap is to make sure that Russia and China, among other nuclear powers, understand that the missile launching they see on their radar screens does not signal the start of a nuclear attack, officials said.
Under the administration’s new concept, Russia or other nations would regularly inspect the Prompt Global Strike silos to assure themselves that the weapons were nonnuclear. And they would be placed in locations far from the strategic nuclear force.
“Who knows if we would ever deploy it?” Gary Samore, Mr. Obama’s top adviser on unconventional weapons, said at a conference in Washington on Wednesday. But he noted that Russia was already so focused on the possibility that it insisted that any conventional weapon mounted on a missile that could reach it counted against the new limit on the American arsenal in the treaty.
In a follow-on treaty, he said, the Russians would certainly want to negotiate on Prompt Global Strike and ballistic missile defenses.
If Mr. Obama does decide to deploy the system, Mr. Samore said, the number of weapons would be small enough that Russia and China would not fear that they could take out their nuclear arsenals.
A version of this article appeared in print on April 23, 2010, on page A1 of the New York edition.
CO
By DAVID E. SANGER and THOM SHANKER
Published: April 22, 2010
WASHINGTON — In coming years, President Obama will decide whether to deploy a new class of weapons capable of reaching any corner of the earth from the United States in under an hour and with such accuracy and force that they would greatly diminish America’s reliance on its nuclear arsenal.
Multimedia
Graphic
An Alternative Weapon
Readers' Comments
Share your thoughts.
Post a Comment »
Read All Comments (143) »
Yet even now, concerns about the technology are so strong that the Obama administration has acceded to a demand by Russia that the United States decommission one nuclear missile for every one of these conventional weapons fielded by the Pentagon. That provision, the White House said, is buried deep inside the New Start treaty that Mr. Obama and President Dmitri A. Medvedev signed in Prague two weeks ago.
Called Prompt Global Strike, the new weapon is designed to carry out tasks like picking off Osama bin Laden in a cave, if the right one could be found; taking out a North Korean missile while it is being rolled to the launch pad; or destroying an Iranian nuclear site — all without crossing the nuclear threshold. In theory, the weapon will hurl a conventional warhead of enormous weight at high speed and with pinpoint accuracy, generating the localized destructive power of a nuclear warhead.
The idea is not new: President George W. Bush and his staff promoted the technology, imagining that this new generation of conventional weapons would replace nuclear warheads on submarines.
In face-to-face meetings with President Bush, Russian leaders complained that the technology could increase the risk of a nuclear war, because Russia would not know if the missiles carried nuclear warheads or conventional ones. Mr. Bush and his aides concluded that the Russians were right.
Partly as a result, the idea “really hadn’t gone anywhere in the Bush administration,” Defense Secretary Robert M. Gates, who has served both presidents, said recently on ABC’s “This Week.” But he added that it was “embraced by the new administration.”
Mr. Obama himself alluded to the concept in a recent interview with The New York Times, saying it was part of an effort “to move towards less emphasis on nuclear weapons” while insuring “that our conventional weapons capability is an effective deterrent in all but the most extreme circumstances.”
The Obama national security team scrapped the idea of putting the new conventional weapon on submarines. Instead, the White House has asked Congress for about $250 million next year to explore a new alternative, one that uses some of the most advanced technology in the military today as well as some not yet even invented.
The final price of the system remains unknown. Senator John McCain of Arizona, the ranking Republican on the Senate Armed Services Committee, said at a hearing on Thursday that Prompt Global Strike would be “essential and critical, but also costly.”
It would be based, at least initially, on the West Coast, probably at Vandenberg Air Force Base.
Under the Obama plan, the Prompt Global Strike warhead would be mounted on a long-range missile to start its journey toward a target. It would travel through the atmosphere at several times the speed of sound, generating so much heat that it would have to be shielded with special materials to avoid melting. (In that regard, it is akin to the problem that confronted designers of the space shuttle decades ago.)
But since the vehicle would remain within the atmosphere rather than going into space, it would be far more maneuverable than a ballistic missile, capable of avoiding the airspace of neutral countries, for example, or steering clear of hostile territory. Its designers note that it could fly straight up the middle of the Persian Gulf before making a sharp turn toward a target.
The Pentagon hopes to deploy an early version of the system by 2014 or 2015. But even under optimistic timetables, a complete array of missiles, warheads, sensors and control systems is not expected to enter the arsenal until 2017 to 2020, long after Mr. Obama will have left office, even if he is elected to a second term.
The planning for Prompt Global Strike is being headed by Gen. Kevin P. Chilton of the Air Force, the top officer of the military’s Strategic Command and the man in charge of America’s nuclear arsenal. In the Obama era — where every administration discussion of nuclear weapons takes note of Mr. Obama’s commitment to moving toward “Global Zero,” the elimination of the nuclear arsenal — the new part of General Chilton’s job is to talk about conventional alternatives.
In an interview at his headquarters at Offutt Air Force Base, General Chilton described how the conventional capability offered by the proposed system would give the president more choices.
“Today, we can present some conventional options to the president to strike a target anywhere on the globe that range from 96 hours, to several hours maybe, 4, 5, 6 hours,” General Chilton said.
That would simply not be fast enough, he noted, if intelligence arrived about a movement by Al Qaeda terrorists or the imminent launching of a missile. “If the president wants to act on a particular target faster than that, the only thing we have that goes faster is a nuclear response,” he said.
But the key to filling that gap is to make sure that Russia and China, among other nuclear powers, understand that the missile launching they see on their radar screens does not signal the start of a nuclear attack, officials said.
Under the administration’s new concept, Russia or other nations would regularly inspect the Prompt Global Strike silos to assure themselves that the weapons were nonnuclear. And they would be placed in locations far from the strategic nuclear force.
“Who knows if we would ever deploy it?” Gary Samore, Mr. Obama’s top adviser on unconventional weapons, said at a conference in Washington on Wednesday. But he noted that Russia was already so focused on the possibility that it insisted that any conventional weapon mounted on a missile that could reach it counted against the new limit on the American arsenal in the treaty.
In a follow-on treaty, he said, the Russians would certainly want to negotiate on Prompt Global Strike and ballistic missile defenses.
If Mr. Obama does decide to deploy the system, Mr. Samore said, the number of weapons would be small enough that Russia and China would not fear that they could take out their nuclear arsenals.
A version of this article appeared in print on April 23, 2010, on page A1 of the New York edition.
CO
Thursday, April 22, 2010
Most Californians Want Legal Marijuana
SAN FRANCISCO (CBS 5) ―
Click to enlarge
1 of 1
A marijuana user smokes a large joint for 4/20.
John Moore/Getty Images
Related Slideshows
Pot Enthusiasts Light Up On 4/20 Pot Enthusiasts Party At Cow Palace Pot Smoking Stars 'Higher' Education: Oakland School Of Pot
Related Links
Download The Complete CBS 5 Poll Results (.pdf)
A new KPIX-TV CBS 5 poll released Wednesday showed a majority of Californians now support legalizing marijuana for recreational use.
California was the first state to approve medical marijuana, in 1996, and has been the hub of the so-called "Green Rush" to legalize marijuana — a decision California voters will make in the November election.
In the poll, conducted for CBS 5 by SurveyUSA, it found that 56 percent of Californians support legalization and just 42 percent oppose it. Only three percent were unsure.
Support for legalizing marijuana was the strongest among young voters, according to the poll. Three out of every four people in the 18 to 34 age group favored legalization.
Those like Jeff Boggs, 25, of Visalia, who support legalization said opponents have overstated any potential dangers associated with the drug.
"People are scared about things they don't know about," said Boggs, who is married and works for an auto damage appraisal company.
But John Lovell, a spokesman with the California Narcotics Officers' Association, said pot legalization would just exacerbate widespread existing abuses of legal prescription drugs and alcohol.
"Given that reality, we don't need to add another mind-altering substance that compromises people's five senses," Lovell said.
The CBS 5 poll was conducted on April 20 and involved interviews with 500 adults across California. It had a margin of sampling error of plus or minus 4.4 percentage points.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
Click to enlarge
1 of 1
A marijuana user smokes a large joint for 4/20.
John Moore/Getty Images
Related Slideshows
Pot Enthusiasts Light Up On 4/20 Pot Enthusiasts Party At Cow Palace Pot Smoking Stars 'Higher' Education: Oakland School Of Pot
Related Links
Download The Complete CBS 5 Poll Results (.pdf)
A new KPIX-TV CBS 5 poll released Wednesday showed a majority of Californians now support legalizing marijuana for recreational use.
California was the first state to approve medical marijuana, in 1996, and has been the hub of the so-called "Green Rush" to legalize marijuana — a decision California voters will make in the November election.
In the poll, conducted for CBS 5 by SurveyUSA, it found that 56 percent of Californians support legalization and just 42 percent oppose it. Only three percent were unsure.
Support for legalizing marijuana was the strongest among young voters, according to the poll. Three out of every four people in the 18 to 34 age group favored legalization.
Those like Jeff Boggs, 25, of Visalia, who support legalization said opponents have overstated any potential dangers associated with the drug.
"People are scared about things they don't know about," said Boggs, who is married and works for an auto damage appraisal company.
But John Lovell, a spokesman with the California Narcotics Officers' Association, said pot legalization would just exacerbate widespread existing abuses of legal prescription drugs and alcohol.
"Given that reality, we don't need to add another mind-altering substance that compromises people's five senses," Lovell said.
The CBS 5 poll was conducted on April 20 and involved interviews with 500 adults across California. It had a margin of sampling error of plus or minus 4.4 percentage points.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
Wednesday, April 21, 2010
Some Frightening Facts About The US Housing Market
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The Future of U.S. Housing – Projections of Household Formation, Loan Modification Data, 500,000 Option ARMs Still Active, and a Decade of Stagnation.
Posted by mybudget360 in baby boomers, bailout, debt, economy, housing, loan modification, real estate
1 Comment
Take what you knew about projecting housing for the last fifty years and throw it out the window. The big problem with using models post-World War II is that they base growth on a baby boomer population that was the largest affluent middle class cohort known to the world. That model is now disappearing. Some point back to the Great Depression but forget to mention that life expectancies in the first half of the 1900s weren’t that fantastic. So you had a population that was constantly churning and emptying out homes that many had paid down. Yet after World War II the Levittown model of housing took hold with suburban life being the driving force of future home building. When linked up to cheap oil and 30 year fixed mortgages this seemed to be a good balance for entry into the middle class. Those days are seemingly no longer here.
This isn’t to say that our best days are behind us. But if you base excellence on massive consumption, you will be hard pressed to adapt in the new world. For example, today our birth rate is near replacement levels:
One of the biggest pushes to buy a home was based on the “household formation” stages. But many Americans are now delaying this stage. Part of it has to do with shifting values but another cause is more practical. People don’t want to start a family in a horrible economy:
“(WaPo) That same survey found that women with low incomes were particularly likely to report postponing having a child. Nine percent of those earning less than $25,000 annually postponed having a child, while only 2 percent of those earning more than $75,000 did so.
“Certainly younger folks have the ‘luxury’ of delaying their childbearing in an attempt to hold out for better economic conditions, while older people may feel the press of the biological clock prevents too much of a delay,” said Gretchen Livingston, a senior researcher at Pew.”
This is understandable. But another more hidden reason has to do with the near religious idea that housing is always a great investment. You have an entirely new generation of Americans who will never believe the hollow mantra that real estate only goes up. There have even been articles talking about the new American Dream revolving around renting. Times and motivations change.
Is There Such a Thing as Too Much Homeownership?
We found out that owning a home should be based on economic fundamentals. For so long have we lived in this Wall Street bubble machine that people have forgotten what sound lending involved. People fret about “high interest rates” shattering the housing market but back in the early 1980s people were still buying homes with double-digit mortgage rates. Why? Because prices still made sense and people came in with a down payment. Today, we still have a market artificially being pumped up by the Federal Reserve. Wall Street would like you to believe that things are so complex that only a Ph.D. can understand what is going on and therefore we warrant complex securities. Nonsense. We had over 150,000,000 Americans in 1950 and somehow boring banking and lending seemed to work. And we certainly didn’t have a financial crisis like the one we just had that was the worst since the Great Depression. We reached the apex of homeownership in this bubble and are quickly reversing course:
Source: The Urban Land Institute
69 percent was the absolute upper-bound range. And keep in mind what it took to get there. This involved using every toxic mortgage product imaginable and actually creating rampant accepted fraud where people didn’t even verify incomes. In fact, we had a period where you could structure a housing deal where you received money (i.e., cash back deals, 125% LTV products). Wall Street knew this was the case and fueled the fire over and over so they could structure deals to keep the casino card game going. Why? Every person that wanted a home with good credit and income had one. The next group was basically anyone that wanted a home irrespective of income and credit. The birth of subprime, Alt-A, and other junk. And these toxic products still linger on bank balance sheets even while they announce record profits:
Source: OCC/OTS
Just look at the amount of active loans. Nearly 20 percent of active loans fall in the Alt-A and subprime category. The “other” category also has questionable loans. So total that up and you have roughly 10 million active mortgages that fall in this risky category. We have yet to work through this. Banks keep announcing solid profits and putting on a smile for the public but behind closed doors they are keeping their money tight and are churning profits internally for their corporatocracy. The last thing they are doing is placing a bet on the American people even though they have taken $13 trillion in bailouts and handouts.
For all the hype regarding loan modifications most are failing only after a few months:
After 9 months nearly half of modified loans re-default. And this is what you would expect when 17 percent of the population is underemployed. How are they going to pay their mortgage? The problem of course stems from the inability to pay at nearly any cost. That is why we have lost over 1 million households since the recession started. People are moving in with friends, families, and consolidating households. This too is another reason why new home formation will be lagging in the next few years.
All you need to do is look at those who have their ear to the ground, home builders:
That minor bump is merely the reflective reaction of cheap money trying to do something. Yet you can see for yourself above that homebuilders are not optimistic about building to meet new demand. And why should they? A large part of the current sales are occurring with existing home sale inventory. We have plenty of that to last us for years.
The massive concentration of all this debt is put into the hands of a few big banks:
Source: SIGTARP
The top six banks in the U.S. control 60 percent of all banking wealth. This in a market where 8,000 banks exist. But that number is dwindling but only because those banks that are able to fail are doing so:
And this year is quickly outpacing 2009. So banks are failing yet the too big to fail are turning giant profits even as we have shown, still have the bulk of toxic loans on their books. At a certain point this has to break and as we saw with the case against Goldman Sachs, even the mere mention of shedding light on banking balance sheets is enough to cause a market tremble. Why? Everyone still understands that toxic debt is still alive and well.
What About Short Sales and Option ARMS?
There is this hype regarding short sales and how they’ll be a big factor in today’s market. I highly doubt that. Will we see more? Of course. But not enough to shift the dynamic of the housing correction. All this will do is push more inventory out:
37,000 completed short sales in the last reported quarter. Measure that with 128,000 actual completed foreclosures. Foreclosures still dominate the market. Until that foreclosure number settles down, the housing market will be in a complete state of flux.
The broccoli of the housing dinner plate, option ARMs is still alive and well. It is still sitting there, waiting to be eaten after the steak is devoured. Most of the over 536,000 option ARMs are in housing battered states like California and Florida. Maybe this is why national attention has fallen by the wayside for this topic but these states should care because it is another shoe to drop. And the data on these loans gets worse and worse:
34 percent of option ARMs are non-performing. This is astronomical given that most won’t hit their recast periods until 2010 and 2012. The data gets worse as time goes along. There is little reason to believe that these will turn out to be good deals. You’ll notice above how the number has quickly fallen. Part of this is because of foreclosures but another reason involves banks shifting these loans into “other” categories like interest only loans but that doesn’t make them any better. It buys more time.
Where Next?
Mortgages rates will rise and this seems to be an obvious reality that few even factor in:
Current rates are absurdly low because of the Federal Reserve monetizing debt. They recently completed buying up $1.25 trillion in mortgage backed securities. Why did they have to buy? Because no one else would buy this debt at this artificially low rate. Even as early as 2000 the 30 year mortgage rate was close to 8.5 percent. With current rates near 5 percent, people fail to understand how big a move back to 8.5 percent would be (the 40 year historical average is 9 percent).
How big is this difference? For a $300,000 mortgage it works out like this:
@ 5% PI = $1,610
@8.5% PI = $2,306 (a 43 percent increase)
With household budgets running tight, this is a massive jump. Current rates are unsustainable and by definition something that is unsustainable will change.
Next, you have many baby boomers remaining put because they have now had to reevaluate retirement options. This was thought to be a new boom for vacation resort areas where many new condos went up. Yet that vision isn’t coming to pass. Right now, the market seems to be pushing sales by one person losing their home and another one picking that home up for a price that was unthinkable just a few years ago. Yet all that does is churn current inventory. No new home building and move up buying is stagnant.
The trend is rather clear. Housing is in for a long and hard struggle. Things are being held together with a thin string right now. With so many balls in the air, it is hard to envision what breaks the current back of the system. Wall Street hasn’t had any serious reform so there is no reason to believe that things are now somehow better. In fact, the too big to fail have now gotten even bigger. They are earning profits from merely stock market voodoo. The real economy is still languishing and current home data tells us that story in vivid color.
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The Future of U.S. Housing – Projections of Household Formation, Loan Modification Data, 500,000 Option ARMs Still Active, and a Decade of Stagnation.
Posted by mybudget360 in baby boomers, bailout, debt, economy, housing, loan modification, real estate
1 Comment
Take what you knew about projecting housing for the last fifty years and throw it out the window. The big problem with using models post-World War II is that they base growth on a baby boomer population that was the largest affluent middle class cohort known to the world. That model is now disappearing. Some point back to the Great Depression but forget to mention that life expectancies in the first half of the 1900s weren’t that fantastic. So you had a population that was constantly churning and emptying out homes that many had paid down. Yet after World War II the Levittown model of housing took hold with suburban life being the driving force of future home building. When linked up to cheap oil and 30 year fixed mortgages this seemed to be a good balance for entry into the middle class. Those days are seemingly no longer here.
This isn’t to say that our best days are behind us. But if you base excellence on massive consumption, you will be hard pressed to adapt in the new world. For example, today our birth rate is near replacement levels:
One of the biggest pushes to buy a home was based on the “household formation” stages. But many Americans are now delaying this stage. Part of it has to do with shifting values but another cause is more practical. People don’t want to start a family in a horrible economy:
“(WaPo) That same survey found that women with low incomes were particularly likely to report postponing having a child. Nine percent of those earning less than $25,000 annually postponed having a child, while only 2 percent of those earning more than $75,000 did so.
“Certainly younger folks have the ‘luxury’ of delaying their childbearing in an attempt to hold out for better economic conditions, while older people may feel the press of the biological clock prevents too much of a delay,” said Gretchen Livingston, a senior researcher at Pew.”
This is understandable. But another more hidden reason has to do with the near religious idea that housing is always a great investment. You have an entirely new generation of Americans who will never believe the hollow mantra that real estate only goes up. There have even been articles talking about the new American Dream revolving around renting. Times and motivations change.
Is There Such a Thing as Too Much Homeownership?
We found out that owning a home should be based on economic fundamentals. For so long have we lived in this Wall Street bubble machine that people have forgotten what sound lending involved. People fret about “high interest rates” shattering the housing market but back in the early 1980s people were still buying homes with double-digit mortgage rates. Why? Because prices still made sense and people came in with a down payment. Today, we still have a market artificially being pumped up by the Federal Reserve. Wall Street would like you to believe that things are so complex that only a Ph.D. can understand what is going on and therefore we warrant complex securities. Nonsense. We had over 150,000,000 Americans in 1950 and somehow boring banking and lending seemed to work. And we certainly didn’t have a financial crisis like the one we just had that was the worst since the Great Depression. We reached the apex of homeownership in this bubble and are quickly reversing course:
Source: The Urban Land Institute
69 percent was the absolute upper-bound range. And keep in mind what it took to get there. This involved using every toxic mortgage product imaginable and actually creating rampant accepted fraud where people didn’t even verify incomes. In fact, we had a period where you could structure a housing deal where you received money (i.e., cash back deals, 125% LTV products). Wall Street knew this was the case and fueled the fire over and over so they could structure deals to keep the casino card game going. Why? Every person that wanted a home with good credit and income had one. The next group was basically anyone that wanted a home irrespective of income and credit. The birth of subprime, Alt-A, and other junk. And these toxic products still linger on bank balance sheets even while they announce record profits:
Source: OCC/OTS
Just look at the amount of active loans. Nearly 20 percent of active loans fall in the Alt-A and subprime category. The “other” category also has questionable loans. So total that up and you have roughly 10 million active mortgages that fall in this risky category. We have yet to work through this. Banks keep announcing solid profits and putting on a smile for the public but behind closed doors they are keeping their money tight and are churning profits internally for their corporatocracy. The last thing they are doing is placing a bet on the American people even though they have taken $13 trillion in bailouts and handouts.
For all the hype regarding loan modifications most are failing only after a few months:
After 9 months nearly half of modified loans re-default. And this is what you would expect when 17 percent of the population is underemployed. How are they going to pay their mortgage? The problem of course stems from the inability to pay at nearly any cost. That is why we have lost over 1 million households since the recession started. People are moving in with friends, families, and consolidating households. This too is another reason why new home formation will be lagging in the next few years.
All you need to do is look at those who have their ear to the ground, home builders:
That minor bump is merely the reflective reaction of cheap money trying to do something. Yet you can see for yourself above that homebuilders are not optimistic about building to meet new demand. And why should they? A large part of the current sales are occurring with existing home sale inventory. We have plenty of that to last us for years.
The massive concentration of all this debt is put into the hands of a few big banks:
Source: SIGTARP
The top six banks in the U.S. control 60 percent of all banking wealth. This in a market where 8,000 banks exist. But that number is dwindling but only because those banks that are able to fail are doing so:
And this year is quickly outpacing 2009. So banks are failing yet the too big to fail are turning giant profits even as we have shown, still have the bulk of toxic loans on their books. At a certain point this has to break and as we saw with the case against Goldman Sachs, even the mere mention of shedding light on banking balance sheets is enough to cause a market tremble. Why? Everyone still understands that toxic debt is still alive and well.
What About Short Sales and Option ARMS?
There is this hype regarding short sales and how they’ll be a big factor in today’s market. I highly doubt that. Will we see more? Of course. But not enough to shift the dynamic of the housing correction. All this will do is push more inventory out:
37,000 completed short sales in the last reported quarter. Measure that with 128,000 actual completed foreclosures. Foreclosures still dominate the market. Until that foreclosure number settles down, the housing market will be in a complete state of flux.
The broccoli of the housing dinner plate, option ARMs is still alive and well. It is still sitting there, waiting to be eaten after the steak is devoured. Most of the over 536,000 option ARMs are in housing battered states like California and Florida. Maybe this is why national attention has fallen by the wayside for this topic but these states should care because it is another shoe to drop. And the data on these loans gets worse and worse:
34 percent of option ARMs are non-performing. This is astronomical given that most won’t hit their recast periods until 2010 and 2012. The data gets worse as time goes along. There is little reason to believe that these will turn out to be good deals. You’ll notice above how the number has quickly fallen. Part of this is because of foreclosures but another reason involves banks shifting these loans into “other” categories like interest only loans but that doesn’t make them any better. It buys more time.
Where Next?
Mortgages rates will rise and this seems to be an obvious reality that few even factor in:
Current rates are absurdly low because of the Federal Reserve monetizing debt. They recently completed buying up $1.25 trillion in mortgage backed securities. Why did they have to buy? Because no one else would buy this debt at this artificially low rate. Even as early as 2000 the 30 year mortgage rate was close to 8.5 percent. With current rates near 5 percent, people fail to understand how big a move back to 8.5 percent would be (the 40 year historical average is 9 percent).
How big is this difference? For a $300,000 mortgage it works out like this:
@ 5% PI = $1,610
@8.5% PI = $2,306 (a 43 percent increase)
With household budgets running tight, this is a massive jump. Current rates are unsustainable and by definition something that is unsustainable will change.
Next, you have many baby boomers remaining put because they have now had to reevaluate retirement options. This was thought to be a new boom for vacation resort areas where many new condos went up. Yet that vision isn’t coming to pass. Right now, the market seems to be pushing sales by one person losing their home and another one picking that home up for a price that was unthinkable just a few years ago. Yet all that does is churn current inventory. No new home building and move up buying is stagnant.
The trend is rather clear. Housing is in for a long and hard struggle. Things are being held together with a thin string right now. With so many balls in the air, it is hard to envision what breaks the current back of the system. Wall Street hasn’t had any serious reform so there is no reason to believe that things are now somehow better. In fact, the too big to fail have now gotten even bigger. They are earning profits from merely stock market voodoo. The real economy is still languishing and current home data tells us that story in vivid color.
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Tuesday, April 20, 2010
Monday, April 19, 2010
Mexico Is "Laughing All The Way To The Bank" As The Drug Cartel War Heats Up
Mexico and the Failed State Revisited
April 6, 2010
By George Friedman
STRATFOR argued March 13, 2008, that Mexico was nearing the status of a failed state. A failed state is one in which the central government has lost control over significant areas of the country and the state is unable to function. In revisiting this issue, it seems to us that the Mexican government has lost control of the northern tier of Mexico to drug-smuggling organizations, which have significantly greater power in that region than government forces. Moreover, the ability of the central government to assert its will against these organizations has weakened to the point that decisions made by the state against the cartels are not being implemented or are being implemented in a way that would guarantee failure.
Despite these facts, it is not clear to STRATFOR that Mexico is becoming a failed state. Instead, it appears the Mexican state has accommodated itself to the situation. Rather than failing, it has developed strategies designed both to ride out the storm and to maximize the benefits of that storm for Mexico.
First, while the Mexican government has lost control over matters having to do with drugs and with the borderlands of the United States, Mexico City’s control over other regions — and over areas other than drug enforcement — has not collapsed (though its lack of control over drugs could well extend to other areas eventually). Second, while drugs reshape Mexican institutions dramatically, they also, paradoxically, stabilize Mexico. We need to examine these crosscurrents to understand the status of Mexico.
Mexico’s Core Problem
Let’s begin by understanding the core problem. The United States consumes vast amounts of narcotics, which, while illegal there, make their way in abundance. Narcotics derive from low-cost agricultural products that become consumable with minimal processing. With its long, shared border with the United States, Mexico has become a major grower, processor and exporter of narcotics. Because the drugs are illegal and thus outside normal market processes, their price is determined by their illegality rather than by the cost of production. This means extraordinary profits can be made by moving narcotics from the Mexican side of the border to markets on the other side.
Whoever controls the supply chain from the fields to the processing facilities and, above all, across the border, will make enormous amounts of money. Various Mexican organizations — labeled cartels, although they do not truly function as such, since real cartels involve at least a degree of cooperation among producers, not open warfare — vie for this business. These are competing businesses, each with its own competing supply chain.
Typically, competition among businesses involves lowering prices and increasing quality. This would produce small, incremental shifts in profits on the whole while dramatically reducing prices. An increased market share would compensate for lower prices. Similarly, lawsuits are the normal solution to unfair competition. But neither is the case with regard to illegal goods.
The surest way to increase smuggling profits is not through market mechanisms but by taking over competitors’ supply chains. Given the profit margins involved, persons wanting to control drug supply chains would be irrational to buy, since the lower-cost solution would be to take control of these supply chains by force. Thus, each smuggling organization has an attached paramilitary organization designed to protect its own supply chain and to seize its competitors’ supply chains.
The result is ongoing warfare between competing organizations. Given the amount of money being made in delivering their product to American cities, these paramilitary organizations are well-armed, well-led and well-motivated. Membership in such paramilitary groups offers impoverished young men extraordinary opportunities for making money, far greater than would be available to them in legitimate activities.
The raging war in Mexico derives logically from the existence of markets for narcotics in the United States; the low cost of the materials and processes required to produce these products; and the extraordinarily favorable economics of moving narcotics across the border. This warfare is concentrated on the Mexican side of the border. But from the Mexican point of view, this warfare does not fundamentally threaten Mexico’s interests.
A Struggle Far From the Mexican Heartland
The heartland of Mexico is to the south, far from the country’s northern tier. The north is largely a sparsely populated highland desert region seen from Mexico City as an alien borderland intertwined with the United States as much as it is part of Mexico. Accordingly, the war raging there doesn’t represent a direct threat to the survival of the Mexican regime.
(click here to enlarge image)
Indeed, what the wars are being fought over in some ways benefits Mexico. The amount of money pouring into Mexico annually is stunning. It is estimated to be about $35 billion to $40 billion each year. The massive profit margins involved make these sums even more significant. Assume that the manufacturing sector produces revenues of $40 billion a year through exports. Assuming a generous 10 percent profit margin, actual profits would be $4 billion a year. In the case of narcotics, however, profit margins are conservatively estimated to stand at around 80 percent. The net from $40 billion would be $32 billion; to produce equivalent income in manufacturing, exports would have to total $320 billion.
In estimating the impact of drug money on Mexico, it must therefore be borne in mind that drugs cannot be compared to any conventional export. The drug trade’s tremendously high profit margins mean its total impact on Mexico vastly outstrips even the estimated total sales, even if the margins shifted substantially.
On the whole, Mexico is a tremendous beneficiary of the drug trade. Even if some of the profits are invested overseas, the pool of remaining money flowing into Mexico creates tremendous liquidity in the Mexican economy at a time of global recession. It is difficult to trace where the drug money is going, which follows from its illegality. Certainly, drug dealers would want their money in a jurisdiction where it could not be easily seized even if tracked. U.S. asset seizure laws for drug trafficking make the United States an unlikely haven. Though money clearly flows out of Mexico, the ability of the smugglers to influence the behavior of the Mexican government by investing some of it makes Mexico a likely destination for a substantial portion of such funds.
The money does not, however, flow back into the hands of the gunmen shooting it out on the border; even their bosses couldn’t manage funds of that magnitude. And while money can be — and often is — baled up and hidden, the value of money is in its use. As with illegal money everywhere, the goal is to wash it and invest it in legitimate enterprises where it can produce more money. That means it has to enter the economy through legitimate institutions — banks and other financial entities — and then be redeployed into the economy. This is no different from the American Mafia’s practice during and after Prohibition.
The Drug War and Mexican National Interests
From Mexico’s point of view, interrupting the flow of drugs to the United States is not clearly in the national interest or in that of the economic elite. Observers often dwell on the warfare between smuggling organizations in the northern borderland but rarely on the flow of American money into Mexico. Certainly, that money could corrupt the Mexican state, but it also behaves as money does. It is accumulated and invested, where it generates wealth and jobs.
For the Mexican government to become willing to shut off this flow of money, the violence would have to become far more geographically widespread. And given the difficulty of ending the traffic anyway — and that many in the state security and military apparatus benefit from it — an obvious conclusion can be drawn: Namely, it is difficult to foresee scenarios in which the Mexican government could or would stop the drug trade. Instead, Mexico will accept both the pain and the benefits of the drug trade.
Mexico’s policy is consistent: It makes every effort to appear to be stopping the drug trade so that it will not be accused of supporting it. The government does not object to disrupting one or more of the smuggling groups, so long as the aggregate inflow of cash does not materially decline. It demonstrates to the United States efforts (albeit inadequate) to tackle the trade, while pointing out very real problems with its military and security apparatus and with its officials in Mexico City. It simultaneously points to the United States as the cause of the problem, given Washington’s failure to control demand or to reduce prices by legalization. And if massive amounts of money pour into Mexico as a result of this U.S. failure, Mexico is not going to refuse it.
The problem with the Mexican military or police is not lack of training or equipment. It is not a lack of leadership. These may be problems, but they are only problems if they interfere with implementing Mexican national policy. The problem is that these forces are personally unmotivated to take the risks needed to be effective because they benefit more from being ineffective. This isn’t incompetence but a rational national policy.
Moreover, Mexico has deep historic grievances toward the United States dating back to the Mexican-American War. These have been exacerbated by U.S. immigration policy that the Mexicans see both as insulting and as a threat to their policy of exporting surplus labor north. There is thus no desire to solve the Americans’ problem. Certainly, there are individuals in the Mexican government who wish to stop the smuggling and the inflow of billions of dollars. They will try. But they will not succeed, as too much is at stake. One must ignore public statements and earnest private assurances and instead observe the facts on the ground to understand what’s really going on.
The U.S. Strategic Problem
And this leaves the United States with a strategic problem. There is some talk in Mexico City and Washington of the Americans becoming involved in suppression of the smuggling within Mexico (even though the cartels, to use that strange name, make certain not to engage in significant violence north of the border and mask it when they do to reduce U.S. pressure on Mexico). This is certainly something the Mexicans would be attracted to. But it is unclear that the Americans would be any more successful than the Mexicans. What is clear is that any U.S. intervention would turn Mexican drug traffickers into patriots fighting yet another Yankee incursion. Recall that Pershing never caught Pancho Villa, but he did help turn Villa into a national hero in Mexico.
The United States has a number of choices. It could accept the status quo. It could figure out how to reduce drug demand in the United States while keeping drugs illegal. It could legalize drugs, thereby driving their price down and ending the motivation for smuggling. And it could move into Mexico in a bid to impose its will against a government, banking system and police and military force that benefit from the drug trade.
The United States does not know how to reduce demand for drugs. The United States is not prepared to legalize drugs. This means the choice lies between the status quo and a complex and uncertain (to say the least) intervention. We suspect the United States will attempt some limited variety of the latter, while in effect following the current strategy and living with the problem.
Ultimately, Mexico is a failed state only if you accept the idea that its goal is to crush the smugglers. If, on the other hand, one accepts the idea that all of Mexican society benefits from the inflow of billions of American dollars (even though it also pays a price), then the Mexican state has not failed — it is following a rational strategy to turn a national problem into a national benefit.
Tell STRATFOR What You Think
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Read What Others Think
Reader Comments
April 6, 2010
By George Friedman
STRATFOR argued March 13, 2008, that Mexico was nearing the status of a failed state. A failed state is one in which the central government has lost control over significant areas of the country and the state is unable to function. In revisiting this issue, it seems to us that the Mexican government has lost control of the northern tier of Mexico to drug-smuggling organizations, which have significantly greater power in that region than government forces. Moreover, the ability of the central government to assert its will against these organizations has weakened to the point that decisions made by the state against the cartels are not being implemented or are being implemented in a way that would guarantee failure.
Despite these facts, it is not clear to STRATFOR that Mexico is becoming a failed state. Instead, it appears the Mexican state has accommodated itself to the situation. Rather than failing, it has developed strategies designed both to ride out the storm and to maximize the benefits of that storm for Mexico.
First, while the Mexican government has lost control over matters having to do with drugs and with the borderlands of the United States, Mexico City’s control over other regions — and over areas other than drug enforcement — has not collapsed (though its lack of control over drugs could well extend to other areas eventually). Second, while drugs reshape Mexican institutions dramatically, they also, paradoxically, stabilize Mexico. We need to examine these crosscurrents to understand the status of Mexico.
Mexico’s Core Problem
Let’s begin by understanding the core problem. The United States consumes vast amounts of narcotics, which, while illegal there, make their way in abundance. Narcotics derive from low-cost agricultural products that become consumable with minimal processing. With its long, shared border with the United States, Mexico has become a major grower, processor and exporter of narcotics. Because the drugs are illegal and thus outside normal market processes, their price is determined by their illegality rather than by the cost of production. This means extraordinary profits can be made by moving narcotics from the Mexican side of the border to markets on the other side.
Whoever controls the supply chain from the fields to the processing facilities and, above all, across the border, will make enormous amounts of money. Various Mexican organizations — labeled cartels, although they do not truly function as such, since real cartels involve at least a degree of cooperation among producers, not open warfare — vie for this business. These are competing businesses, each with its own competing supply chain.
Typically, competition among businesses involves lowering prices and increasing quality. This would produce small, incremental shifts in profits on the whole while dramatically reducing prices. An increased market share would compensate for lower prices. Similarly, lawsuits are the normal solution to unfair competition. But neither is the case with regard to illegal goods.
The surest way to increase smuggling profits is not through market mechanisms but by taking over competitors’ supply chains. Given the profit margins involved, persons wanting to control drug supply chains would be irrational to buy, since the lower-cost solution would be to take control of these supply chains by force. Thus, each smuggling organization has an attached paramilitary organization designed to protect its own supply chain and to seize its competitors’ supply chains.
The result is ongoing warfare between competing organizations. Given the amount of money being made in delivering their product to American cities, these paramilitary organizations are well-armed, well-led and well-motivated. Membership in such paramilitary groups offers impoverished young men extraordinary opportunities for making money, far greater than would be available to them in legitimate activities.
The raging war in Mexico derives logically from the existence of markets for narcotics in the United States; the low cost of the materials and processes required to produce these products; and the extraordinarily favorable economics of moving narcotics across the border. This warfare is concentrated on the Mexican side of the border. But from the Mexican point of view, this warfare does not fundamentally threaten Mexico’s interests.
A Struggle Far From the Mexican Heartland
The heartland of Mexico is to the south, far from the country’s northern tier. The north is largely a sparsely populated highland desert region seen from Mexico City as an alien borderland intertwined with the United States as much as it is part of Mexico. Accordingly, the war raging there doesn’t represent a direct threat to the survival of the Mexican regime.
(click here to enlarge image)
Indeed, what the wars are being fought over in some ways benefits Mexico. The amount of money pouring into Mexico annually is stunning. It is estimated to be about $35 billion to $40 billion each year. The massive profit margins involved make these sums even more significant. Assume that the manufacturing sector produces revenues of $40 billion a year through exports. Assuming a generous 10 percent profit margin, actual profits would be $4 billion a year. In the case of narcotics, however, profit margins are conservatively estimated to stand at around 80 percent. The net from $40 billion would be $32 billion; to produce equivalent income in manufacturing, exports would have to total $320 billion.
In estimating the impact of drug money on Mexico, it must therefore be borne in mind that drugs cannot be compared to any conventional export. The drug trade’s tremendously high profit margins mean its total impact on Mexico vastly outstrips even the estimated total sales, even if the margins shifted substantially.
On the whole, Mexico is a tremendous beneficiary of the drug trade. Even if some of the profits are invested overseas, the pool of remaining money flowing into Mexico creates tremendous liquidity in the Mexican economy at a time of global recession. It is difficult to trace where the drug money is going, which follows from its illegality. Certainly, drug dealers would want their money in a jurisdiction where it could not be easily seized even if tracked. U.S. asset seizure laws for drug trafficking make the United States an unlikely haven. Though money clearly flows out of Mexico, the ability of the smugglers to influence the behavior of the Mexican government by investing some of it makes Mexico a likely destination for a substantial portion of such funds.
The money does not, however, flow back into the hands of the gunmen shooting it out on the border; even their bosses couldn’t manage funds of that magnitude. And while money can be — and often is — baled up and hidden, the value of money is in its use. As with illegal money everywhere, the goal is to wash it and invest it in legitimate enterprises where it can produce more money. That means it has to enter the economy through legitimate institutions — banks and other financial entities — and then be redeployed into the economy. This is no different from the American Mafia’s practice during and after Prohibition.
The Drug War and Mexican National Interests
From Mexico’s point of view, interrupting the flow of drugs to the United States is not clearly in the national interest or in that of the economic elite. Observers often dwell on the warfare between smuggling organizations in the northern borderland but rarely on the flow of American money into Mexico. Certainly, that money could corrupt the Mexican state, but it also behaves as money does. It is accumulated and invested, where it generates wealth and jobs.
For the Mexican government to become willing to shut off this flow of money, the violence would have to become far more geographically widespread. And given the difficulty of ending the traffic anyway — and that many in the state security and military apparatus benefit from it — an obvious conclusion can be drawn: Namely, it is difficult to foresee scenarios in which the Mexican government could or would stop the drug trade. Instead, Mexico will accept both the pain and the benefits of the drug trade.
Mexico’s policy is consistent: It makes every effort to appear to be stopping the drug trade so that it will not be accused of supporting it. The government does not object to disrupting one or more of the smuggling groups, so long as the aggregate inflow of cash does not materially decline. It demonstrates to the United States efforts (albeit inadequate) to tackle the trade, while pointing out very real problems with its military and security apparatus and with its officials in Mexico City. It simultaneously points to the United States as the cause of the problem, given Washington’s failure to control demand or to reduce prices by legalization. And if massive amounts of money pour into Mexico as a result of this U.S. failure, Mexico is not going to refuse it.
The problem with the Mexican military or police is not lack of training or equipment. It is not a lack of leadership. These may be problems, but they are only problems if they interfere with implementing Mexican national policy. The problem is that these forces are personally unmotivated to take the risks needed to be effective because they benefit more from being ineffective. This isn’t incompetence but a rational national policy.
Moreover, Mexico has deep historic grievances toward the United States dating back to the Mexican-American War. These have been exacerbated by U.S. immigration policy that the Mexicans see both as insulting and as a threat to their policy of exporting surplus labor north. There is thus no desire to solve the Americans’ problem. Certainly, there are individuals in the Mexican government who wish to stop the smuggling and the inflow of billions of dollars. They will try. But they will not succeed, as too much is at stake. One must ignore public statements and earnest private assurances and instead observe the facts on the ground to understand what’s really going on.
The U.S. Strategic Problem
And this leaves the United States with a strategic problem. There is some talk in Mexico City and Washington of the Americans becoming involved in suppression of the smuggling within Mexico (even though the cartels, to use that strange name, make certain not to engage in significant violence north of the border and mask it when they do to reduce U.S. pressure on Mexico). This is certainly something the Mexicans would be attracted to. But it is unclear that the Americans would be any more successful than the Mexicans. What is clear is that any U.S. intervention would turn Mexican drug traffickers into patriots fighting yet another Yankee incursion. Recall that Pershing never caught Pancho Villa, but he did help turn Villa into a national hero in Mexico.
The United States has a number of choices. It could accept the status quo. It could figure out how to reduce drug demand in the United States while keeping drugs illegal. It could legalize drugs, thereby driving their price down and ending the motivation for smuggling. And it could move into Mexico in a bid to impose its will against a government, banking system and police and military force that benefit from the drug trade.
The United States does not know how to reduce demand for drugs. The United States is not prepared to legalize drugs. This means the choice lies between the status quo and a complex and uncertain (to say the least) intervention. We suspect the United States will attempt some limited variety of the latter, while in effect following the current strategy and living with the problem.
Ultimately, Mexico is a failed state only if you accept the idea that its goal is to crush the smugglers. If, on the other hand, one accepts the idea that all of Mexican society benefits from the inflow of billions of American dollars (even though it also pays a price), then the Mexican state has not failed — it is following a rational strategy to turn a national problem into a national benefit.
Tell STRATFOR What You Think
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Read What Others Think
Reader Comments
Sunday, April 18, 2010
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