crytical

Derivatives Ownership Even More Concentrated Than Ever

As I noted in 2009, 5 banks held 80% of America’s derivatives risk.
Since then, the percent of derivatives held by the top 5 banks has only increased.
As Tyler Durden notes:
The latest quarterly report from the Office Of the Currency Comptroller is out [shows] that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system. Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies), a mere 5 banks (and really 4) account for 95.9% of all derivative exposure …. the top 4 banks: JPM with $78.1 trillion in exposure, Citi with $56 trillion, Bank of America with $53 trillion and Goldman with $48 trillion, account for 94.4% of total exposure. As historically has been the case, the bulk of consolidated exposure is in Interest Rate swaps ($204.6 trillion), followed by FX ($26.5TR), CDS ($15.2 trillion), and Equity and Commodity with $1.6 and $1.4 trillion, respectively. And that’s your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.

Amazingly, the top 5 banks have virtually 100% of all credit derivatives held by American banks (see the second to last line in the above table).
Dwarfing the World Economy
The amount of derivatives dwarfs the size of the world economy. As Bloomerg reported in May:
Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said …“Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said.
The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008.
Huge Amount of Derivatives Are Dangerous
Credit default swaps were largely responsible for bringing down Bear Stearns, AIG (and see this), WaMu and other mammoth corporations.
And unexpected changes in interest rates could cause a major bloodbath in interest rate derivatives.
And, no, there have not been any reforms or attempts to rein in derivatives, and the Dodd-Frank financial legislation was really just a p.r. stunt which didn’t really change anything.
But the big banks and their minions claim that the huge amounts of derivatives themselves is unimportant because these are only “notional” values, and – after netting – the notional values are deflated to much more modest numbers.
But as Durden – who has a solid background in derivatives – notes:
At this point the economist PhD readers will scream: “this is total BS – after all you have bilateral netting which eliminates net bank exposure almost entirely.” True: that is precisely what the OCC will say too. As the chart below shows, according to the chief regulator of the derivative space in Q2 netting benefits amounted to an almost record 90.8% of gross exposure, so while seemingly massive, those XXX trillion numbers are really quite, quite small… Right?

…Wrong. The problem with bilateral netting is that it is based on one massively flawed assumption, namely that in an orderly collapse all derivative contracts will be honored by the issuing bank (in this case the company that has sold the protection, and which the buyer of protection hopes will offset the protection it in turn has sold). The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. And while the argument can further be extended that in bankruptcy a perfectly netted bankrupt entity would make someone else whole on claims they have written, this is not true, as the bankrupt estate will pursue 100 cent recovery on its claims even under Chapter 11, while claims the estate had written end up as General Unsecured Claims which as Lehman has demonstrated will collect 20 cents on the dollar if they are lucky.
The point of this detour being that if any of these four banks fails, the repercussions would be disastrous. And no, Frank Dodd’s bank “resolution” provision would do absolutely nothing to prevent an epic systemic collapse.
Prior to Fukushima, nuclear industry engineers said nuclear was safe.

By Washingtons Blog – 26.1.2011
ritholtz.com

Hope in reality is the worst of all evils because it prolongs the torments of man
Friedrich Nietzsche

In April this year, I was invited to give a talk on the psychology of hackers to Fidelity National Information Services (FIS) at its annual get-together in Milwaukee. FIS is one of the biggest providers of technology and card services to the banking industry worldwide. Unsurprisingly, cyber security is among its top priorities.
The talk went well and when answering the audience’s questions, I referred to a recent cybercrime case in Calgary, in Alberta, Canada, in which a cyber gang had hacked into the computer system of a company that provides pre-paid debit cards. These are familiar overseas and also offered by some British banks, aimed at young people and those who can’t get credit through the normal channels.
The scam was impressive in its simplicity and effectiveness. The gang bought a number of pre-paid debit cards in different locations and placed $15 on each card. Once they had broken into the computer system of the company that issued them, they found the network area that dealt with the limits placed on each card. They sought out the cards they had purchased and, using the control they had established over the company’s networked system, they electronically raised the spending limit on the cards from $15 to tens of thousands of dollars. Over one weekend, they extracted around $1m (£640,000) using the affected cards in ATM machines around the world.
My remarks seemed to strike a nerve, although I couldn’t put my finger on why. Three months later, the reason suddenly became clear to me when arguably the finest investigative reporter who researches cybercrime, Brian Krebs, posted a note on his website about a major security breach at a payment technology company: my old friends at FIS.
But not only that – it turned out that FIS was a victim of exactly the same pre-paid credit card scam as the company in Calgary. Except that FIS had lost $13m (£8.3m) and the scammers, according to krebsonsecurity.com, had used just 22 rigged pre-paid credit cards to syphon off this vast amount of money.
Traditional bank robbers must be absolutely gobsmacked when they hear sums like this being hoovered up by cyber criminals week in, week out. Krebs went on to point out that the FBI had made no arrests in the FIS case. Nobody expected anyone to be nabbed anytime soon. So I thought I would make some inquiries in the cyber underworld. One of my contacts was acquainted with the mastermind of the pre-paid scam at FIS. Over a three- year period, my contact told me, his organisation had earned $34m (£22m). Who knows? They might well have been responsible for the Calgary heist.
The Mr Big who orchestrated the whole operation, I was told, kept 70% of those profits for himself – only 30% went to the hackers and the so-called “cash-out” team – that is, the people who have somewhat laboriously to go from ATM to ATM and extract up to $500 each time (before, of course, transferring 70% back to Mr Big).
To my knowledge, the gang has not visited any companies in the UK. But Britain, along with the US, Canada, western Europe, Australia and New Zealand, is a top target for cyber criminals from across the globe. The British are dangerously vulnerable to cyber attack of all shapes and sizes, according to the latest report on cyber security from the UK thinktank Chatham House. It is high time, the report argues, that we got our act together. It is no longer the case that banks are the prime targets; any business, be it manufacturing, military, legal or financial, is now computer-based and therefore vulnerable to attack. A few hours after the publication of the Chatham House document last week, the government unexpectedly announced it would be postponing the presentation of its new cyber security strategy to parliament. A sign of nerves, perhaps? Certainly, getting this strategy wrong might prove very expensive.
But what exactly are we protecting ourselves against? We have heard some dire warnings in recent months about the extent of the threat posed by illegal activity on the internet. In 2009, the White House suggested that cybercrime and industrial espionage inflicted damage of around $1tn (£640bn) a year – almost 1.75% of global GDP. Can it be true? The answer is that, whatever anyone may say, nobody has the faintest idea. The $1tn could be a wildly exaggerated figure put out there by the cyber security industry in order to generate sales. Or it could be the result of some hyperactive algorithms. Or it could be true. But nobody can assert with any confidence which it is.
The activities of the pre-paid gang, according to my underworld source, were only discovered because they committed an uncharacteristic error allowing FIS’s defences to pick up on the presence of a foreign body in its networked system. If that had not happened, the gang might still be merrily ripping off FIS and everyone else, unbeknown to the rest of the world.
But although there is no precision about figures out there, there is no doubt that threats do exist. And it is high time people started to learn what they are and how to protect themselves against them.
Crime on the web is changing very rapidly. Until quite recently, most of it took place on so-called “carder” sites with names such as CarderPlanet, Shadowcrew and DarkMarket (a “carder” is simply a hacker who deals in credit cards or card details). These were in effect department stores for criminals.
The first and the most celebrated among thieves was CarderPlanet. Members would come to this website, run out of Odessa in Ukraine, to buy and sell stolen credit card details, to purchase viruses, trojans and worms with which they could compromise victims’ computers, to take tutorials in how to deploy the latest cyber weapons, or to hire a botnet – a network comprising thousands of zombie computers – to use in an attack against your enemies.
CarderPlanet’s significance in the history of cybercrime lies in its founders’ introduction of an escrow system. This worked almost like a criminal version of PayPal, using legitimate channels such as Western Union, and enabled them to overcome the central problem facing all cyber criminals – how to trade with somebody on the web when you know that, as a criminal, he or she, like you, is inherently untrustworthy. Escrow, whereby a neutral officer from the website would hold both the credit card details being sold and the money from the purchaser until they were satisfied that both sides were genuine, solved that problem at a stroke. It also led to the industrialisation of crime on the web.
One of the co-founders of CarderPlanet, the Ukrainian hacker known as Script, described the pioneers of digital thieving as “lone wolves”. In an interview with Hacker (Xakep.ru), the great chronicler of Russia’s cyber underworld, he explained that: “They don’t huddle together in groups or form their own distinctive networks; everyone works by himself, for himself.” But in the past few years, the lone wolves have begun to form packs, usually under the leadership of charismatic individuals, such as Mr Big from the pre-paid scam. “Carder” sites such as DarkMarket have slipped out of fashion because they were too easily infiltrated by law enforcement agencies such as the FBI and the Serious Organised Crime Agency here in Britain. Instead, the lone wolves have started to form packs with trusted friends and these look more like traditional organised crime groups with a clear hierarchy and division of labour.
One of the most lucrative scams revolves around so-called “scareware”, malicious software that plays on the fear of virus infection, which was perfected by a Ukrainian-based company called Innovative Marketing. IM employed dozens of young people in the Ukrainian capital Kiev, most of whom believed they were involved in a startup company that was selling legitimate security products. Except they weren’t. Computer users who had clicked on a certain link placed by a hacker on a legitimate website had become infected. Hackers, in turn, triggered a pop-up on the browser warning the user that their machine had been compromised by a virus. The only way, the advert explained, they could rid their computers of the electronic critters now crawling all over their hard disk and memory was to click on a link and purchase Malware Destroyer 2009, to name but one of their countless products. Once you had downloaded Malware Destroyer (for €40), IM would instruct you to remove your existing anti-virus system and install its product. Once installed, however, it did precisely nothing – it was an empty piece of software, although now, of course, you were open to infection by any passing virus and you had paid for that dubious privilege.
A researcher for the software company McAfee in Hamburg, Dirk Kolberg, began to monitor this operation. He followed the scareware back to its source in east Asia and found that the administrator of IM’s servers had left some ports wide open, so Kolberg was at liberty to wander into it and peruse at will. What he uncovered was quite breathtaking.
Innovative Marketing was making so much money that it had established three call centres, one in English, one in German and one in French, to assist baffled customers who were trying to install their non-functioning products. This was one of the most theatrical examples of internet crime yet discovered. Kolberg worked out from trawling through the receipts he also found on the server that the scareware scam had generated tens of millions of dollars in revenues for the management. The FBI busted the US end of that operation but its two alleged masterminds, a Swede and an Indian, who are on the agency’s most-wanted list, remain on the run.
Innovative Marketing Kiev was probably the most lucrative operation to date, but by no means the only one. Yet although lucrative, it was, for the perpetrators, labour intensive. Streamlining in cybercrime, though, has led to outsourcing. Sophisticated hackers and criminals are now able to control vast armies of zombie computers – ordinary PCs that you or I might be using this minute but whose computing power can be redirected to commit criminal acts on the internet. The only clue that this could be happening in the background would be the computer running more slowly. This army is then rented out for a significant fee to opportunistic criminals who do not want or do not have the ability to amass such a formidable computing weapon.
This network can breach its targets and intended victims (usually banks, financial institutions or, of course, ordinary account holders) by sending email after email to overload the system, creating a diversion that allows hackers to gain access. It can also seek out serial numbers, login IDs and financial information such as credit card numbers. Eventually money is transferred to so-called money mules. These are (largely) unwitting characters, usually Americans or western Europeans, who respond to advertisements offering good returns for work carried out from your home computer. Successful candidates are then required to use their personal bank accounts on behalf of their new employer. The mules would receive, say, $200 and then forward $180 to Mr Big, holding back $20 as their commission. In a recent major FBI case, codenamed Operation Trident Tribunal, the mules had been instructed to send the money to a bank in Latvia, one of the three Baltic republics, along with Lithuania and Estonia, whose role in cybercrime is out of all proportion to their combined population of seven million.
The emergence of such outsourcing accentuates one of the greatest problems that police face in dealing with organised crime. The structure acts as a mask that obscures the real money-makers: the people who assemble the zombie networks and the Mr Bigs who use their services. The mules are easy to catch but they are very small cogs in a more ruthless machine. The next challenge for law enforcement is not unlike that facing the Untouchables in Al Capone’s Chicago. Capone, of course, was eventually busted for tax evasion. But how can you track down a digital Al Capone when you don’t know who he is or where he is?
Misha Glenny guardian.co.uk

LOS ANGELES — Lewis Brown, a high school and college basketball prodigy who spent the past 10 years living on a sidewalk in Hollywood, seemed on the verge of a second chance. He had scraped enough money together to get a California identification card so he could fly to visit a sister in New York who had thought him dead. Friends said that he would finally get off the street.
That was on Tuesday. But Wednesday, around 6 a.m., Mr. Brown, breathless and frantic, was pleading for someone to call an ambulance. By the time help arrived, Mr. Brown 300 pounds, 6 feet 11 inches was lying on the ground. A half-hour of efforts by four paramedics as his neighbourhood friends shouted: “Come on, Big Lew! You can make it” could not save him.
For Mr. Brown, a star high school center who once seemed destined for a spot in the N.B.A. all that was left on Thursday was a Staples shopping cart carrying a few of his possessions: a pair of sneakers, a blanket, a laminated copy of a New York Times article from this year that detailed his sad story of decline, bitterness, drug arrests and missed opportunities. The remainder of his belongings a mattress, some tattered clothes had been put into a Dumpster.
Throughout the day, people who had known Mr. Brown, 56, from the neighbourhood, where he would wash windows and talk about his lost basketball past in Compton and at the University of Nevada, Las Vegas, stopped as they learned of his death. Tony Chauncey, a Time Warner Cable worker, said he had seen him last month and told him that he was going to a hospital to be checked for a reappearance of cancer.
“We hugged,” Mr. Chauncey said. “He said: ‘I’m giving you my healing prayer. You are going to be O.K.” Two weeks later, Mr. Chauncey said, he learned that he was free of cancer. “His last words to me were: ‘See. I told you I’m a spiritual man. Now give me $3!’ ”
Michael Kaiping, who works at a special effects rental company on the block where Mr. Brown lived, said Mr. Brown told him two weeks ago that he had raised most of the money toward his ID card so he could visit his sister, Anita, and asked to borrow $11.
“Lewis said his sister told him she needs him,” Mr. Kaiping said. “I always thought it would be very good for him to get off the streets.”
“I didn’t mind throwing him a few bucks,” he said. “He had every intention of giving me back that $11.”
Stephen Turner, who played basketball with Mr. Brown in Compton and recognised him washing windows at a gas station last year, said he would try to organize a memorial service.
Mr. Brown was long estranged from his family, though his mother had said, upon learning from a Times reporter that he was alive, that she wanted to see him before she died. Mr. Turner said the two had spoken by phone but she had not had a chance to see him in person before his sudden death.
A second sister, Jeri, who lives in Compton, had not had seen him after he resurfaced. “I pray for the best outcome for my brother,” she said after learning of his death. “God’s will is done.”
nytimes.com Adam Nagourney 15.9.2011

Two former law enforcement officers allege that they cannot get anyone to investigate allegations that the Mexican drug cartels have corrupted U.S. law officers and politicians in the El Paso border region. Greg Gonzales, a retired Doña Ana County sheriff’s deputy, and Wesley Dutton, a rancher and former New Mexico state livestock investigator, said that instead of arrests and prosecutions of suspects, their whistle-blowing activities have resulted only in threats and retaliation against themselves.
“I lost my job for a security company at the federal courthouse in Las Cruces because I would not keep my mouth shut, and someone threatened me by holding a knife to my throat,” Gonzales said.
Dutton, a rancher in Southern New Mexico, said an election official stopped by his ranch to ask him what was it going to take for him to retract his allegations concerning the official.
Confidential sources
Both men were confidential sources for the FBI in El Paso and assisted with investigations over an 18-month period.
Gonzales and Dutton allege that the FBI dropped them after “big names” on the U.S. side of the border began to surface in the drug investigations.
FBI Special Agent Michael Martinez said that the FBI cannot comment on its former or current relationships with confidential sources.
Dutton said an FBI official who used to be in El Paso sent a memo to other law enforcement agencies in the area to dissuade them from talking to him and Gonzales or having anything to do with them.
Gonzales and Dutton said both or either one of them helped with federal investigations that were successful, including the arrest of Special FBI Agent John Shipley. Shipley was convicted of weapons-related charges after a weapon he sold someone turned up in Chihuahua state at a scene where a firefight took place between Mexican soldiers and drug traffickers. However, they said, they are concerned that other serious allegations have not found their way to court.

Hit on agent
“One of the street gangs that works for the Juárez cartel put a hit out on FBI Special Agent Samantha Mikeska, and I told the FBI as soon as I heard about it,” Dutton said. “We also had information on campaign fundraisers and parties in La Union that the cartel held for officials from New Mexico and El Paso. A lot of important people were at those parties, such as bankers, judges, and law enforcement officers.”
Mikeska is a high-profile agent whose investigations of the Barrio Azteca gang led to prosecutions of gang leaders. The gang, which has members in West Texas and New Mexico, is linked to the Carrillo Fuentes drug cartel.
Gonzales said a U.S. law enforcement officer was suspected of selling to a street gang with Juárez drug cartel ties a list of U.S. Marshals that included their telephone numbers.
“With their number, the gang was able to ‘clone’ the agents’ cell phones and intercept their calls,” Gonzales said. “That way, they would know when one of the agents was trying to serve an arrest warrant against one of their members.”
Dutton and Gonzales said small aircraft regularly drop drug loads on ranches or other properties along the U.S.-Mexico border, and that some U.S. law officers escort the loads to the next stop. The two whistle-blowers said that drug cartels have managed to obtain computer access codes to U.S. surveillance systems that let them see where and when Border Patrol agents are monitoring the border. They also alleged that drug cartels have given big donations to politicians, which are unreported, to influence appointments of key law enforcement officers.
Some of these allegations were contained in a letter that Dutton provided to Gov. Rick Perry, who is seeking the Republican Party’s nomination for president in the 2012 election.
“Our office received the letter and referred it to the appropriate agency, which was the Department of Public Safety,” Josh Havens, a spokesman for the Texas governor’s office, said last Friday.
Steven McCraw, director of the Texas Department of Public Safety and a former FBI agent from El Paso, said last Friday that he was interested in talking to Dutton. Then, about a half-hour later, McCraw said that Dutton had no credibility.
‘Nothing there’
“We looked into it and there was nothing there,” McCraw said.
Dutton said in response, “How can they say there was nothing when they didn’t even look at what I have?”
Dutton said he has videos, telephone records, and other documents gathered over the 18 months he worked with the FBI.
“The DPS never asked to see any of it,” Dutton said.
During his work with the FBI, Dutton said the FBI asked him to accept drug shipments from Mexico through his ranching company.
“The drugs were concealed in horse saddles, and we started getting a lot of them,” Dutton said. “But the FBI kept putting me off when I asked for the money to pay the cartels for the drugs. I had to use my own funds. The FBI still owes me thousands of dollars for these out-of-pocket expenses.
“I asked the FBI for help when I started getting threats, but the only thing that happened is that everyone starting running for cover to protect their careers,” Dutton said. “One of the FBI agents said politics got in the way, and that they had to close out the investigation and end their relationship with me.”
As a state livestock investigator, Dutton made arrests like any other law enforcement officer, collaborated with sheriffs’ offices, seized drugs and investigated thefts. He also developed intelligence that drug cartels used cross-border cattle shipments to transport drugs across the border at Santa Teresa.
Zetas cartel
Dutton said other informants told him that the Zetas drug cartel has a high-level member in Las Cruces whose wife holds a non-law enforcement job in the “DA’s office,” referring to the Doña Ana County District Attorney’s Office.
The whistle-blowers also alleged that the corruption they’ve encountered includes a prominent doctor in El Paso who provides prescriptions for drugs to people who need to pass lie-detector tests.
“The FBI was provided with all this information, and I guess that’s why they’re now saying that we’re crazy,” Dutton said.
Dutton and Gonzales said their frustration over the lack of investigations has compelled them to turn to U.S. lawmakers and to Judicial Watch for help.
Judicial Watch is a conservative, nonpartisan educational foundation in Washington, D.C., which promotes transparency, accountability and integrity in government, politics and the law.
The organisation publishes a list each year of the “Ten Most Wanted Corrupt Politicians” of both major political parties.
Chris Farrell, Judicial Watch research director, confirmed that Dutton has been in contact with his office.
“These are very serious allegations that should be investigated by law enforcement,” Farrell said. “There are too many details and specifics to just ignore them. The threats against them (Dutton and Gonzales) also should be investigated.”
Diana Washington Valdez may be reached at dvaldez@elpasotimes.com; 546-6140.
elpasotimes.com
19.9.2011

Richard Posner has been a judge on the United States Court of Appeals for the Seventh Circuit in Chicago for the last thirty years. He is the author of many books including, most recently, The Crisis of Capitalist Democracy. Eric J. Segall is Professor of Law at Georgia State University College of Law. The following discussion took place during the last year.
Eric J. Segall: In your book How Judges Think (2008), you wrote that traditional legal reasoning, meaning reliance on text, precedent, and history, does not resolve difficult appellate cases. If judges are not introspective, their candour will not illuminate the actual springs of their decisions. Can you describe in more detail what you mean by “the actual springs of decision” in hard cases?
Richard Posner: If a case is difficult in the sense that there is no precedent or other text that is authoritative, the judge has to fall back on whatever resources he has to come up with a decision that is reasonable, that other judges would also find reasonable, and ideally that he could explain to a layperson so that the latter would also think it a reasonable policy choice. To do this, the judge may fall back on some strong moral or even religious feeling. Of course, some judges fool themselves into thinking there is a correct answer, generated by a precedent or other authoritative text, to every legal question.
EJS: What you said, “fool themselves,” leads me to a follow-up question. In your writings I think you are a little unclear on how much of this “fooling themselves,” as you just put it, is intentional and how much is not. For example, the Supreme Court cases interpreting the Eleventh Amendment, which defines when states are immune from being sued. The decisions in those cases are completely inconsistent with the clear text of that amendment, which says that states cannot be sued by citizens of another state; and yet so-called textualists like Justices Antonin Scalia and Clarence Thomas have supported that countertextual interpretation, holding that even suits by citizens of the same state as the state they are suing are banned by the amendment, despite the word “another.”
RP: I don’t think much of it is intentional. People want to avoid what psychologists call “cognitive dissonance,” which means holding inconsistent views simultaneously, such as that one is just applying the law and that one is making up the law as one goes along. It is an actor’s adage that no person is a villain in his own eyes. We were taught in law school what we are supposed to be doing as judges—apply the law, not make it up. So I don’t think that there is a lot of cynicism in judges.
In the case of the Eleventh Amendment, for example, I think that judges such as Justice Scalia honestly think that it has a nonliteral meaning that is implicit in the Constitution. But to treat it as implicit in the Constitution is of course a departure from literalism—from the mechanical application of authoritative text to resolve legal questions. But Justice Scalia has called himself a halfhearted originalist, in recognition that a judge has to make compromises with orthodoxy and be realistic, at least on occasion.
EJS: It sounds like Justice Scalia is willing to make textual and historical compromises for federalism cases like those involving the Eleventh Amendment, but he is rarely willing to make those compromises for individual rights cases. I don’t know where that distinction comes from.
RP: Yes, I think that is true. It is interesting what he said in the oral argument in the McDonald case (the 2010 Second Amendment case involving Chicago’s law prohibiting handguns in which Scalia held that the Second Amendment applies to the states). He said that even if hundreds of people die as a result of his interpretation of the Second Amendment, that would be irrelevant to the correctness of the decision. But obviously he doesn’t think of himself as a callous person.
EJS: If Justice Scalia were here and we asked him, “Why do you privilege federalism background principles but not individual liberty background principles (such as in the abortion and gay rights cases)?” he would give his answer, and you and I would agree that it is a political answer. It may be right or wrong but it is political. And I am trying to figure out how a man that smart—I am not just picking on Justice Scalia—how any justice could disagree that such a legal interpretation is inherently value-laden.
RP: I am sure he sincerely believes that he is just applying the Constitution in good faith. He is a good lawyer; he is a very good writer; he has real flair for judging, as I noticed long ago when he was a court of appeals judge. But I don’t think he or anyone can actually derive results in difficult, emotionally charged cases from the constitutional text. Still, I am sure he tries, and in that respect is unlike another very influential justice, William Brennan. Brennan was a very nice person and a very good boss [Judge Posner clerked for Justice Brennan]. But he was indifferent to what was in the opinion; he just cared about results. He had been a very good judge on the New Jersey Supreme Court. He had legal analytic abilities. He just didn’t care about them as a justice of the US Supreme Court.
It wasn’t that he was that radical. He never gave me the impression of feeling that strongly about the issues, but he was liberal and in tune with Earl Warren and I know he reacted very negatively to Felix Frankfurter. Frankfurter had been a teacher of his at Harvard. He said Brennan had been a good student but not a great one. Frankfurter was on the Supreme Court when Brennan was appointed and was, I think, condescending toward him. I thought that was a factor in Brennan’s constitutional liberalism though of course not the only factor.
EJS: Do you think Justice Brennan would agree with your descriptive account of the Court as a “political court”?
RP: Yes, I think he would agree. It was his strength that he was very quick to compromise with the other justices. This made it much easier for him to get a majority than it would have been for more “principled” justices. I had a funny experience with him once. I wrote an opinion and he’d made a few changes in it but nothing major. My wife and I went off to visit her parents for a few days and when we came back there was the opinion in page proof on my desk and I went to Justice Brennan and said there is a big chunk missing from it, so that now the two halves didn’t go together anymore. He was a little embarrassed and said that Justice Black had come to see him, didn’t like that part, so he cut it out. That was that. That was his strength because if he had refused to accede to Black’s wishes, who knows what would have happened?
The justices are all different. Frankfurter was a big self-deceiver. He was a very brilliant person and a passionate apostle of judicial restraint, but there is a famous article by a political scientist—Harold Spaeth—that systematically examined Frankfurter’s opinions reviewing decisions by administrative agencies and found that somehow Frankfurter always sided with business against labor.
EJS: I find that most law professors are unwilling to say that the Supreme Court is a political court. Why do you think that is and how can we change it?
RP: I think there are a couple of reasons. In the case of judges, I repeat that people don’t like to think of themselves as hypocrites or villains. But another thing that a judge will say—and I would agree with this to a degree—is that judicial opinions are public documents and public officials can’t be as candid as private persons. There is an accepted rhetoric of judicial expression, and judges have to write that way. They are protecting the authority of the judiciary by avoiding excessive candour. Law professors don’t labor under that constraint. Their problem is that what they are comfortable with discussing is legal doctrine and not judicial psychology or political science.
In law school I had no idea that Supreme Court justices didn’t always write their own opinions—that often they delegated the opinion writing to their law clerks. I didn’t dream of that because the law professors didn’t give the students the faintest glimpse of the realities of the judicial process. In defence of that they could have said that if they induced premature cynicism on the part of the students, the students wouldn’t learn the tools of their trade and so wouldn’t be effective lawyers. It may be good for the students to believe that these doctrinal niceties are really critical to judicial outcomes. Law professors these days are somewhat more candid about the judicial process but tend not to examine or teach it realistically.
EJS: Can I ask you on this point, how important is transparency to the rule of law? When the Court decides issues that divide the nation, it often comes forward with an opinion that is not transparent at all. I think that is a threat to the rule of law because government officials are imposing their will in a coercive way without explaining honestly why they are doing it, without being transparent. Do you agree with that?
RP: I agree in part but an example of a necessary hypocrisy is Brown v. Board of Education. It was obvious to everybody that what was wrong with public school segregation was that it was an integral part of a system of apartheid. The Supreme Court didn’t want to say that, I am sure at Justice Black’s urging because he had a sense of how the South would react. So the Court put it in terms of the educational benefits of integration, which was fine—probably it was necessary to achieve unanimity. But the implication was that it might be fine to segregate drinking fountains because drinking fountains are not important like education.
But then the Supreme Court without explaining how one gets from education to drinking fountains declared all forms of public racial segregation unconstitutional (with a partial exception for prisons) in a series of basically one-word per curium opinions. The Supreme Court didn’t want to say what the truth was about the South—that its social and political system was a vicious attempt to keep black people in a condition of quasi slavery.
Once I said something in an opinion that is obvious and that everybody knows but is never said—namely that the intensity of judicial review of a district court’s decision will depend in part on the respect in which the district judge is held by the appellate judges. That made some of the district judges angry with me. I haven’t repeated it.
EJS: I clerked in 1983 for the Northern District of Georgia and then the Eleventh Circuit. There were twelve district court judges, and most ran their chambers the same way. The law clerks would get the file off the shelf and draft the order granting or denying summary judgment, and the judges would review them and more often than not sign them as written.
RP: A lot of law clerks are smarter than their judges, because intellectual ability is a bigger factor in choosing a law clerk than in choosing a judge—judges are chosen by politicians, though the screening process assures that most federal judges are competent. I’m guessing there are more brilliant law clerks than there are brilliant judges and justices. I suspect that with the rise of the law clerks the nature of judicial appointments changed. There was a time when a lawyer would not want to be a judge if he wasn’t prepared to write a lot. No more. And even competent writers often do not like to write a first draft. They find that it’s like climbing a mountain.
EJS: Even judges?
RP: Even judges don’t like that. So nowadays few judges write their own opinions, though they edit them, sometimes so heavily as to make one wonder why bother rather than write the thing themselves. Stephen Breyer on the Supreme Court and Mike Boudin in the First Circuit are examples of judges who like to write and do write their own opinions. My colleagues Frank Easterbrook and Diane Wood write their own opinions. Others may but I’m just not familiar with their practices. Justice John Paul Stevens wrote the first draft of his opinions. I think most of the Supreme Court justices do a fair amount of writing. But throughout the federal judiciary (I imagine the state judiciary as well), few judges write first drafts of their opinions and many opinions are written by law clerks with little judicial input (except for the outcome) or revision.
EJS: The two judges I worked for were both politically active before they became judges. And they both had a sense of fairness and justice. I’m not sure we have much of that anymore.
RP: We are getting fewer judges with a political background. Many federal judges now are coming from state courts; some were magistrate judges or bankruptcy judges. The federal judiciary is becoming more like a civil service, a career job rather than a lateral-entry job. All but one of the Supreme Court justices are former judges, which historically is most unusual.
EJS: Speaking of the Supreme Court, I think Justice Anthony Kennedy comes the closest of anyone I’ve seen to actually linking his political preferences and his values to his results. The other justices, like Sandra Day O’Connor before she retired, seem to pretend that text and precedent actually resolve the cases before them. For someone who believes what you and I believe about the Court being political, is it a good thing that Justice Kennedy is up front about his values?
RP: O’Connor was political in the sense that she wanted the Court to be centrist. She didn’t want it to go too far in either direction. I had heard she had a system—it’s not uncommon—where she was presented with a draft that all her law clerks had to sign off on before it was presented to her. So one was writing, one editing, and one checking citations; they would discuss and debate the opinion thoroughly, and finally they would produce a consensus document for her to review.
As for Justice Kennedy, whom you mentioned, I don’t think he is more or less ideological, or that his opinions are more or less reflective of his political views, than the other justices. It is just that his ideology is not a standard conservative ideology; it is in business cases, but not in cases involving capital defendants and homosexuals.
EJS: He said during his confirmation hearings that there is a zone of individual privacy beyond which the government cannot go.
But given his politics, whether we agree or disagree with his politics, your criticisms of the Roper decision (where the Court held that states could not execute juveniles) in How Judges Think struck me as not necessarily consistent with your description of the Court as a political court. Justice Kennedy didn’t pretend that his conclusion that states could not execute juveniles was based in law. He used social science data, controversial judgments about the moral culpability of adolescents, and international law, etc. Although I don’t agree with him trying to distance his personal values by using those sources, at least he did not pretend that the result was generated by text and precedent. I think that is a good thing.
RP: I think the reliance he places on foreign courts is good in the sense that he is being candid. He likes to feel himself as part of the international community of justices. I don’t think he cares much about the social science studies. I am guessing that came from his law clerks. But I think you are right that he is more transparent than the other justices so one has a better sense of what actually impels him.
EJS: So in my perfect world, Justice Kennedy would have said in Roper: “I think it is wrong to execute people under seventeen, the text is ambiguous, and the precedent goes both ways. We have a degree of discretion in deciding the case and I can’t help but bring my personal values to that. I am in power and I get to say and I think it is wrong to execute juveniles.”
RP: That is what Oliver Wendell Holmes said. We have the sovereign prerogative of choice and for me [Holmes] it is worse for the government to violate the law than for a criminal to go free. Holmes could get away with that blunt statement of personal preference but it requires a degree of rhetorical skill that few judges have had. Holmes and Robert Jackson had it, though Jackson was different from Holmes. Holmes, despite his Civil War experience, was rather cloistered, bookish. He wasn’t very practical, but had great rhetorical skills and was a very thoughtful person, alert to big issues in society, though not interested in the nuts and bolts. He was very transparent in his judicial opinions, essays, and of course letters.
Jackson was different because he had such a breadth of experience as attorney general and as the chief Nuremberg prosecutor and a close adviser to Roosevelt. He also had great rhetorical skills so that he could be candid and yet be accepted as a real judge and not just a politician in robes. These are not styles that a law clerk can emulate.
One shouldn’t exaggerate the quality of judges and justices. Law isn’t the calling of geniuses. The Supreme Court today is composed of competent lawyers, and one should probably leave it at that. I don’t think the Court at present has incandescent intellects of the caliber of Holmes, Louis Brandeis, Jackson, and Frankfurter. (Frankfurter may have been the most brilliant of these, though he was not as good a justice as the others.) But maybe this is just nostalgia.
EJS: Hasn’t the nomination process become a total farce? At her confirmation hearing, Justice Sonia Sotomayor said repeatedly that she would decide hard cases based on the law, and John Roberts made the infamous analogy to the judge as an umpire.
RP: I have made fun of Roberts about the umpire thing but I don’t blame either of them because the confirmation hearings are not for real. At my confirmation hearing back in 1981, when confirmations were much less controversial (and of course court of appeals nominees don’t get the same scrutiny as Supreme Court justices, though they are getting much more than they did when I was confirmed), Strom Thurmond, the chairman of the Judiciary Committee, asked me, “Do you agree that judges should just apply the law; they shouldn’t make the law?” I said that was usually the case but some cases are indeterminate and to decide them the judge may have to create some law. Sometime later I received the printed report of the confirmation hearing, and my answer—my nuanced answer—had been changed (without notice to me) to yes, judges should just apply the law and not make the law.
EJS: You told the truth. Why can’t they now?
RP: As I said, judicial appointments were less controversial in those days, so Senator Thurmond probably wasn’t paying close attention to my answers. The morning of the day of the confirmation hearing the judges who were going to be testifying were brought to the Justice Department and we were given the questions that would be asked by the Republicans, since the administration was Republican. That was like cheating on a test.
The only senator at the hearing was Thurmond. I had been nominated because Ed Meese (I found out later), the White House counsel in the first Reagan administration, wanted to shift the ideology of the courts of appeals, and to achieve this he wanted to take the appointment power away from the senators; previously—except in the D.C. Circuit, which had no senators—court of appeals judges, like district judges, were basically senatorial appointments, and they tended to be patronage appointments often with little attention to the appointee’s political ideology.
There was a vacancy on the Seventh Circuit, and Senator Charles Percy, the senior senator from Illinois (and an influential Republican), had his candidate and it wasn’t me, and the White House decided they would buck Percy, whom they didn’t much like because he was a moderate. He was a nice person—he wasn’t a fighter—so they made a deal with him that if he would support me, they would give his candidate the next vacancy. And they did. Anyway this is what I heard had happened; it is hearsay.
EJS: I think you wrote to me that the nominees should have to answer questions about specific issues and that we should do away with the hearings altogether.
RP: The senators do a very poor job at judicial confirmation hearings. It is amazing to me that no senator took Roberts up on his umpire remark. Fifteen of them were sitting there and they let the remark pass unchallenged. I think the problem is that they are given questions to ask by their staff. They read the questions to the nominee but since they don’t really know what is going on they can’t ask a follow-up question.
EJS: How could Justice Thomas get confirmed after he said under oath that he had never discussed Roe v. Wade with anyone is his life?
RP: The problem is that if the nominee says, “I’d be lying to you if I said I didn’t have a preliminary judgment,” he is accusing his predecessors of having lied, right? It is very tricky. The problem is that we have a political system in which the definition of a gaffe is telling the truth.
EJS: Can I ask you a question about a recent book review you wrote in The New Republic where you suggested that maybe it would have been a good thing had President Roosevelt’s Court-packing plan worked? The reasons you gave struck me as all having to do with having a weaker Supreme Court. Can you go into more detail about why you want a weaker Supreme Court?
RP: I don’t think the justices are up to deciding really difficult policy issues. Maybe no one is, so probably the issues should be left to Congress and the president to decide, with very light review by the courts. I think professional judges are particularly not up to the challenge posed by such cases.
One of my favourite examples of a—may I say?—dumb decision is the Paula Jones sexual harassment case against President Clinton, Clinton v. Jones. It was just a few years from the end of Clinton’s term, and the justices could have said that we’ll let him put the lawsuit on hold for those years. You don’t want to have the president deposed about sex, let alone extramarital sex, in a lawsuit in which he’s the defendant. So give him his remaining years; or at least the district judge should consider all possible grounds for dismissing the suit before he has to be deposed (the case in fact was dismissed on grounds unrelated to what he said in his deposition).
Instead they decided unanimously to deny him the limited immunity he sought. Justice Breyer, the most politically savvy of the justices at that time, wrote a concurring opinion expressing misgivings but apparently did not have the full courage of his convictions (he was relatively new on the Court). The decision was a very serious mistake; if decided the other way we would have been spared the impeachment, which accomplished nothing. It was not an analytical error, but a lack of political savvy and simple common sense. The Clinton v. Jones fiasco argues for having more worldly justices, as used to be the case, rather than just professional judges.
I didn’t actually realise until I read Jeff Shesol’s book Supreme Power* that the Court-packing plan was rather ingenious. If you get to be seventy-five, the president can appoint another justice, so you can either retire or stay around, but on a bigger court where your influence will be diluted.
Having a fixed retirement age is really harmful to the state courts; that I know. For example, there was a very good judge on the Oregon Supreme Court, Hans Linde. He was excellent but he was forced to retire in his seventies. He went back into teaching. Charles Fried of Harvard Law School, a former US solicitor general, was appointed to the Supreme Judicial Court of Massachusetts in his sixties and there was compulsory retirement at seventy. He told me that when he was sixty-seven he realised he’d be retiring in three years and it would be a little late to be going back into teaching then, so he quit early. He was a very good judge. And you know it is a geriatric profession. Stevens is remarkable; he is going strong at ninety-one, even in retirement.
I think for anybody in a management job, ten years is the limit; you make enemies, you get stale. But I have been a court of appeals judge for almost thirty years, and the cases keep changing. The district judges tend, some of them anyway, to get tired because there is a lot of repetition in a trial court. But court of appeals judges and Supreme Court justices have the stimulation of constant variety. Holmes retired when he was ninety-two; he was definitely slowing down but he had written some really good opinions in his late eighties. There are other examples. Most judges seem to function quite well to at least eighty.
The justices in the 1930s whom Roosevelt tried to shove off the Court—I don’t think it was so much an age problem. Owen Roberts was young, and switched his views only under pressure from Charles Evans Hughes, who was old. There was a tremendous change in American society and politics between 1929 and 1933, almost a revolution, and anybody who had become a lawyer in the 1920s would have tended to have the same views as the old guys. In fact they weren’t that old. I think their average age was around seventy-two (that’s my age!). So they weren’t really such fossils.
If you compare today’s constitutional law with the Constitution of 1787 everything has changed, but it has taken 224 years, so the change has not been abrupt. The Senate started off with twenty-six members who were indirectly elected and were expected to be members of the political and social elite of the country. It was a genuine deliberative body. So you could say that the Supreme Court today is taking the place of what the framers expected the Senate to be.
nyrb.com 16.9.2011

Eric J. Segall

The news that a “rogue trader” (I hate that term – more on that in a moment) has soaked the Swiss banking giant UBS for $2 billion has rocked the international financial community and threatened to drive a stake through any chance Europe had of averting economic disaster. There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading. Here’s how the WSJ put it:
The Swiss banking giant has been struggling to rebuild trust after running up vast losses in the original financial crisis. Under Chief Executive Oswald Grubel, the bank claimed to have put in place new risk management practices, pulled back from proprietary trading and focused on a low-risk client-driven model.
All the troubled banks, remember, made similar promises in the wake of the financial crisis. In fact, some of them used the exact same language. Some will recall Goldman’s executive summary from earlier this year in which the bank pledged to respond to a “challenging period” in its history by making changes.
“We reviewed the governance, standards and practices of certain of our firmwide operating committees,” the bank wrote, “to ensure their focus on client service, business standards and practices and reputational risk management.”
But the reality is, the brains of investment bankers by nature are not wired for “client-based” thinking. This is the reason why the Glass-Steagall Act, which kept investment banks and commercial banks separate, was originally passed back in 1933: it just defies common sense to have professional gamblers in charge of stewarding commercial bank accounts.
Investment bankers do not see it as their jobs to tend to the dreary business of making sure Ma and Pa Main Street get their $8.03 in savings account interest every month. Nothing about traditional commercial banking – historically, the dullest of businesses, taking customer deposits and making conservative investments with them in search of a percentage point of profit here and there – turns them on.
In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you’re not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up, then you won’t make it on today’s Wall Street.
Nonetheless, thanks to the Gramm-Leach-Bliley Act passed in 1998 with the help of Bob Rubin, Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and a host of other short-sighted politicians, we now have a situation where trillions in federally-insured commercial bank deposits have been wedded at the end of a shotgun to exactly such career investment bankers from places like Salomon Brothers (now part of Citi), Merrill Lynch (Bank of America), Bear Stearns (Chase), and so on.
These marriages have been a disaster. The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That’s why I can’t stand the term “rogue trader,” which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else’s money.
They’re not “rogue” for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys “rogue traders” when they make a billion dollars gambling.
The only thing that differentiates a “rogue” trader like Barings villain Nick Leeson from a Lloyd Blankfein, Dick Fuld, John Thain, or someone like AIG’s Joe Cassano, is that those other guys are more senior and their lunatic, catastrophic decisions were authorised (and yes, I know that Cassano wasn’t an investment banker, technically – but he was in financial services).
In the financial press you’re called a “rogue trader” if you’re some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you’re a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.
In other words, “rogue traders” are treated like bad accidents and condemned everywhere from the front pages to Ewan McGregor films. But rogue companies are protected at every level of the regulatory structure and continually empowered by dergulatory legislation giving them access to our bank accounts.
There is a movement in the UK for a thing called “ringfencing” that would separate investment bankers from commercial bankers. Some people think this UBS incident will aid that movement, even though UBS can apparently absorb the loss without necessitating a bailout or endangering client accounts.
The U.S. missed its own chance for ringfencing when a proposal for a full repeal of Gramm-Leach-Bliley was routed during the Dodd-Frank negotiations.
That means we’re probably stuck here in the states with companies like Bank of America, JP Morgan Chase and Citigroup, giant commercial banks in charge of stewarding trillions in client bank accounts and consumer credit accounts who also behave like turbocharged gamblers via their investment banking arms.
Sooner or later, this is going to blow up in our faces, and it won’t be one lower-level guy with a $2 billion loss we’ll be swallowing. It’ll be the CEO of another rogue firm like Lehman Brothers, and it’ll cost us trillions, not billions.
rollingstone.com

BY MATT TAIBBI
SEPTEMBER 15, 2011 | 8:39AM

What Galileo has to do with the economy, or how Wall Street is moulding your taste in art.

“The universe is made of stories, not atoms,” poet Muriel Rukeyser famously proclaimed. The stories we tell ourselves and each other are how we make sense of the world and our place in it. Some stories become so sticky, so pervasive that we internalize them to a point where we no longer see their storiness — they become not one of many lenses on reality, but reality itself. And breaking through them becomes exponentially difficult because part of our shared human downfall is our ego’s blind conviction that we’re autonomous agents acting solely on our own volition, rolling our eyes at any insinuation we might be influenced by something external to our selves. Yet we are — we’re infinitely influenced by these stories we’ve come to internalize, stories we’ve heard and repeated so many times they’ve become the invisible underpinning of our entire lived experience.
That’s exactly what F. S. Michaels explores in Monoculture: How One Story Is Changing Everything — a provocative investigation of the dominant story of our time and how it’s shaping six key areas of our lives: our work, our relationships with others and the natural world, our education, our physical and mental health, our communities, and our creativity.
The governing pattern a culture obeys is a master story– one narrative in society that takes over the others, shrinking diversity and forming a monoculture. When you’re inside a master story at a particular time in history, you tend to accept its definition of reality. You unconsciously believe and act on certain things, and disbelieve and fail to act on other things. That’s the power of the monoculture; it’s able to direct us without us knowing too much about it.” ~ F. S. Michaels
During the Middle Ages, the dominant monoculture was one of religion and superstition. When Galileo challenged the Catholic Church’s geocentricity with his heliocentric model of the universe, he was accused of heresy and punished accordingly, but he did spark the drawn of the next monoculture, which reached a tipping point in the seventeenth century as humanity came to believe the world was fully knowable and discoverable through science, machines and mathematics — the scientific monoculture was born.

Ours, Micheals demonstrates, is a monoculture shaped by economic values and assumptions, and it shapes everything from the obvious things (our consumer habits, the music we listen to, the clothes we wear) to the less obvious and more uncomfortable to relinquish the belief of autonomy over (our relationships, our religion, our appreciation of art).
A monoculture doesn’t mean that everyone believes exactly the same thing or acts in exactly the same way, but that we end up sharing key beliefs and assumptions that direct our lives. Because a monoculture is mostly left unarticulated until it has been displaced years later, we learn its boundaries by trial and error. We somehow come to know how the mater story goes, though no one tells us exactly what the story is or what its rules are. We develop a strong sense of what’s expected of us at work, in our families and communities — even if we sometimes choose not to meet those expectations. We usually don’t ask ourselves where those expectations came from in the first place. They just exist — or they do until we find ourselves wishing things were different somehow, though we can’t say exactly what we would change, or how.” ~ F. S. Michaels
Neither a dreary observation of all the ways in which our economic monoculture has thwarted our ability to live life fully and authentically nor a blindly optimistic sticking-it-to-the-man kumbaya, Michaels offers a smart and realistic guide to first recognizing the monoculture and the challenges of transcending its limitations, then considering ways in which we, as sentient and autonomous individuals, can move past its confines to live a more authentic life within a broader spectrum of human values.

The independent life begins with discovering what it means to live alongside the monoculture, given your particular circumstances, in your particular life and time, which will not be duplicated for anyone else. Out of your own struggle to live an independent life, a parallel structure may eventually be birthed. But the development and visibility of that parallel structure is not the goal — the goal is to live many stories, within a wider spectrum of human values.” ~ F. S. Michaels
We’ve previously examined various aspects of this dominant story — why we choose what we choose, how the media’s filter bubble shapes our information diet, why we love whom and how we love — but Monoculture, which comes from the lovely Red Clover, weaves these threads and many more into a single lucid narrative that’s bound to first make you somewhat uncomfortable and insecure, then give you the kind of pause from which you can step back and move forward with more autonomy, authenticity and mindfulness than ever.
The book’s epilogue captures Michaels’ central premise in the most poetic and beautiful way possible:
Once we’ve thrown off our habitual paths, we think all is lost; but it’s only here that the new and the good begins.” ~ Leo Tolstoy
Maria Popova 2.9.2011
brainpickings.org

Images Flickr Commons

Former Defence Secretary Robert Gates was right when he suggested that the WikiLeaks revelations were “embarrassing” and “awkward.” But his assessment — and that of so many other government officials — stems from the magnitude of what he left unsaid.
These revelations are not merely embarrassing. They also contain evidence of government actions and policies that are an abuse of power and that violate international human-rights standards to which we as Americans are committed.
For instance, through the information coming from WikiLeaks documents, the public is now aware of “FRAGO 242” — an official order not to report evidence of prisoner abuse by Iraqi security forces. This policy violates the United Nations Convention Against Torture, which was ratified by Congress in 1994. The treaty explicitly requires allegations of cruel or inhuman treatment to be investigated and brought to a halt.
In recent days, WikiLeaks has released cables that show government officials helped conceal the heinous execution of family members of suspected combatants in Iraq. The site of the murders, which included the execution-style slaying of two children and three infants, was obliterated by a subsequent coalition airstrike.
Taken as a whole, the material shows a pattern of concealing abuse by both U.S. and coalition forces. The information revealed by WikiLeaks is thus a critically important tool for those who seek to uphold basic human-rights standards and the professional conduct of U.S. military forces.
These revelations also bring our system of classification into question. Although Pfc. Bradley Manning has not yet been brought to trial, President Barack Obama has publicly declared that the former U.S. Army intelligence analyst “broke the law” by allegedly sending this restricted information to WikiLeaks.
Many civilians — and a surprising number of military personnel — are unaware that this system of classification is not grounded in any law passed by Congress. In fact, the entire edifice that allows the use of classification rests solely on the basis of executive orders that have been renewed and modified by various presidents. The ability to restrict information from the public is essentially an unchecked assertion of executive power.
However, according to Obama’s policy for classification of government documents (Executive Order 13526), there are several situations under which government information must never be classified. The government cannot use classification procedures “to conceal violations of law, inefficiency, or administrative error; prevent embarrassment to a person, organisation, or agency … or prevent or delay the release of information that does not require protection in the interest of the national security.”
Administration officials have not provided any evidence that these WikiLeaks revelations have harmed our national security. They have, however, acknowledged that some of the material is personally, and professionally, embarrassing.
But they continue to act as if evidence of illegal or otherwise unethical behaviour simply does not exist.
If online conversations attributed to Manning are accurate, it appears that his self-described “turning point” came when his own commanding officer refused to acknowledge clear evidence of an abuse of power. According to these conversations, Manning says he was told to investigate 15 Iraqi academics who had been brought in for questioning by Iraqi security forces, for the crime of supposedly printing “anti-Iraqi literature.”
After running the printed material through a translator, Manning realised that it was actually an article titled “Where Did the Money Go?” which sought to expose corruption within Prime Minister Nouri al-Maliki’s Cabinet. Manning’s commanding officer is said to have told Manning to “shut up” and find out how he could bring in more detainees. The message was clear: He could not rely on the chain of command to address evidence of wrongdoing.
This incident would be consistent with other revelations that have since emerged from the WikiLeaks embassy cables. Several diplomatic cables express concern about al-Maliki’s politicisation of his security forces, using them to abuse political opponents.
In July, the Red Cross and a group of Iraqi parliamentarians asked for an investigation into an alleged torture facility being run by one of al-Maliki’s elite units in Baghdad’s Green Zone. That same month, the Special Inspector General for Iraqi Reconstruction issued a report that noted more than $17 billion in funds that have gone missing.
The pattern of ignoring or otherwise concealing clear evidence of abuse has become so familiar that, to many, it now seems normal. But pretending that problems don’t exist won’t make them go away.
A recent report from the Council of Europe, which convenes the European Commission on Human Rights, stated that the current “deficit of transparency” among Western security and intelligence institutions leaves no choice but for the public to rely on whistle-blowers to hold governments accountable.
Instead of punishing and silencing alleged whistle-blowers like Manning for revealing uncomfortable truths, we should honour their courage to stand up for what’s right.
That’s all we should ask any American to do.
Ann Wright is a 29-year veteran who retired as a U.S. Army Reserve colonel and who later served as a U.S. diplomat in nine countries and deputy ambassador in four U.S. embassies. She is a member of the Advisory Board for the Bradley Manning Support Network.
stripes.com 15.9.2011

theeconomist.com 12.9.2011