Being Grant Morrison

 (It's a rare thing for me anyway, to have my favorite writer and artist working on the same title. These are fine times to be a comic fan.--jef)

 

From "HAPPY!" To MorrisonCon & Beyond

Comic Books

Kiel Phegley, News Editor

 

For the better part of the past 20 years, Grant Morrison has been leading the charge for groundbreaking superhero stores at both DC and Marvel Comics. However, as 2012 zooms to its possibly Apocalyptic end, the writer is looking to change up where and how his counter-cultural ideas will manifest next.

This September, Image Comics will publish its first creator-owned series from the writer – the crime noir/psycheadelic pony/Christmas fable "HAPPY!" with artist Darick Robertson. And to hear Morrison describe it, the book is only the first step in a new set of stories that will see him break off from regular superhero work for the foreseeable future.

Below, Morrison tells CBR News how a cascade of events from the publishing of his superhero manifesto "Supergods" to the plans for the September Las Vegas meeting of the minds called MorrisonCon have all combined to launch him on a new phase of his writing career – one where Batman and Superman will step aside for a new wave of characters, starting with an insipidly cute cartoon horse.

 CBR News: Before we get to the books, congratulations on being named a Member of the Most Excellent Order of the British Empire! What's that whole experience been like for you?

Grant Morrison: It was absolutely unexpected. I’ve always been treated as a fairly marginal figure round our way, and it was nice to get a little recognition, but I have no idea who put me up for the honor. You have to go through a strict and rigorous check from Buckingham Palace and the government. It was funny to think that all these people had to read some of my wilder stuff in order to pass me for the award. [Laughs] But I was quite touched that I’d been acknowledged at all.

 

And so did you get to go to Buckingham Palace for a big ceremony?

Not yet. I'll be doing that in the next couple of months, I guess. They do the recipients in batches. The weird thing is that my dad got one of these things back in 1998 for a completely different reason – for his community work. So I've kind of done this before with him. I've been to the Palace before, but I've never been up close with any of the royals. I'm looking forward to seeing what it's all about.

Do you feel more chivalrous? This is supposed to be an honor of chivalry, right?

No, it actually made me feel more evil, I think. [Laughter] I mean, when a howling witch hunt turns up on cue to accuse you of "joining the Establishment" as if you’d signed up for the Secret Society of Super-Villains, what else can you do but cackle and rub your hands together?
I’d love to tell you I’m now qualified to join the Round Table and declare war on Narnia but the truth is, absolutely nothing has changed.

This award has kind of brought around the latest round of attention for you in the mainstream media, the last of which came for Supergods which is just out in paperback. I got the feeling that going out and talking so much with the readership was as much of a process for you as writing the book was. Did you learn anything about the form after all that discussion?

Once you finish these things, it really is like squatting out a bizarre, book-shaped child you've been labored over. [Laughs] Honestly, once I'd wrapped Supergods, I felt like I'd said everything I needed to say about that stuff. Besides wrapping up "Batman Incorporated" and my Superman work right now and "Multiversity" kind of getting done, it felt like a farewell. I love the book, and the paperback edition is even better, with new material and corrections but the ideas were ones I had in my head for a long time and I've kind of moved on to thinking about different areas of interest.

I think a lot of people are surprised that you've remained dedicated to writing superhero comics for this long. Did you always foresee a waning of that work, or did it sneak up on you that "I'm not sure if I need to write anymore superhero stories"?

The idea was always that I'd keep doing it as long as it gave me a lot of pleasure and allowed me to express myself . And it still does, but I can see the end coming closer. I'm coming to the end of long runs and stories I've had planned in my notebooks for years and the stuff I’m developing now is quite different.

The "Action Comics" run concludes with issue #16, "Batman Incorporated" wraps up my take with issue #12, and after that I don’t have any plans for monthly superhero books for a while. "Multiversity" is eight issues and I’m 30-odd pages into a Wonder Woman project but those are finite stories.

I'm not saying that I'll never write superheroes again. It's just that my relationship to them has changed especially after finishing the book and I’m not sure if I want to maintain the same kind of relentless level of production.

Do you think that's come from the process, or has something happened with the proliferation of superheroes in the wider culture that's impacted how you view them?
I think I've kind of worked through everything I’ve ever felt about these characters. It was a bit like going to the psychiatrist and lying on the couch for just long enough to realize "What was I thinking?" [Laughs] I don't know. I know there are plenty of different ways to use them, but right now I feel like I'm coming to the end of a long intensive period where I was talking about certain ideas using the language of superheroes, if that makes any sense. I want to try out some new ideas and explore the opportunities that keep coming up to write novels and screenplays.

 

 

I think it's safe to say that "HAPPY!" is the first project we're going to see in the wake of this change. For a while, we'd only seen a teaser and it was hard to parse what you and Darick Robertson were working up. Now that the solicits are out, it may be even harder! What's the genesis of this book? Did you want to do your own version of the kind of "hitman crime fable" we see so often these days?

I've always wanted to try a crime story. I wanted to do my take on that type of book – the hard-boiled anti-hero and the mafia villains and all that but I never had a strong enough story hook. I was looking for a way to put my own stamp on the genre and it finally clicked with "HAPPY!"

I was ambushed by this track by The Hollies, the '60s band, and it was like the most saccharine, sweetie pie music you can imagine – "Pegasus The Flying Horse." I like quite a few songs from the band’s psychedelic mid-period but this is just a hideous piece of twee. It even has this neighing sound as the last few bars play out! [Laughter] It's so sugary and weird and although it‘s probably about LSD, the lyrics of the middle 8 section bring a weird "pervy uncle" presence to the whole sordid affair. You can look it up on YouTube if you want because I just can't do it justice.

But I was listening to this music and thought, "Imagine the most cynical, fucked up man in the world having to deal with this - with a sickeningly upbeat little cartoon character - each trapped with the other." What would it be like if the Bad Lieutenant teamed up with Pegasus the Flying Horse? By this time, I knew the Happy the Horse would be tiny. And it struck me that I could throw “Christmas story” in with this as well. I've always wanted to have a go at a classic Christmas story like "It's A Wonderful Life" or “A Christmas Carol“ but with characters drawn from the shock headlines of the 21st Century. So this idea seemed to lend itself to that and it gave me a chance to do the kind of wider, symbolic pop cult critique that I like. It just grew from there. Adam Mortimer who’s directing "Sinatoro" is good friends with Darick Robertson and put us in touch. I've met Darick in the past, but we’ve never worked together. I found out that he was free, he loved the idea, we pitched it to Image and now we’re half way through a four-issue series which starts in September. It all came very naturally out of this weird combination of ideas.

Have you ever been to Disneyland and experienced "It's A Small World"?

I've never actually been to Disneyland and probably never will. My parents wanted to take me there when I was younger, but we had no money. So I was cruelly cheated! [Laughs] It just wouldn’t be the same now.

You description of the Hollies song reminds me of how that ride's music repeats over and over again and kind of drills its way into your brain. When you mash those kinds of things up against "heartwarming" stories like "It's A Wonderful Life" it can be tough to separate a positive ideal from an ingratiating experience. Do you see any aesthetic pleasure in something so saccharine?

Well, what excited me was the notion of not necessarily the song...but the story possibilities it suggested. In that sense, there’s definitely aesthetic pleasure in something saccharine but for me the pleasure only comes when you slam that rinky-dink magic kingdom stuff into its opposite and watch it all kick off, particle accelerator style. After doing all these noble super characters for so long "HAPPY!" is like the chains coming off the cellar. It’s bile and loathing, and relentless foul-mouthed scatological dialogue on every page – and Happy the Horse.

EXCLUSIVE: Art from "Happy!" #1 by Darick Robertson

 

I loved the idea of dragging this bright creature into a very unpleasant world – a creature who is absolutely cheerful and will not give in. To the point of irritation. He's this indefatigable spark of positivity, and I'm pitting him against the absolute darkness and damnation of the world of the story. The tone and setting of the book is closer to what I was doing back with "The Filth" than anything I’ve been doing on "Batman." It's a really super noir comic, though I don't want to explain what Happy is or what he looks like. You'll see that when the book comes out. But circumstances bring him into this hitman’s life, and he says, "I need your help to save a kid who's in trouble." Cue pedo-Santa. Three days to Christmas with a new twist every day. I poured everything I know about making comics into this and I‘m really pleased with it. It’s a crude, sensationalistic, trashy piece of work but it runs like a death machine.

What's it been like to work with Darick? I get the feeling that he's done so much long form work on creator-owned comics, but he's often overshadowed because he's working with Warren Ellis or Garth Ennis or whomever. What does he bring of his own to make this series uniquely what it is?

That's exactly it. Once I started to see the series' pages come in and saw how he'd designed the Happy the Horse character...I mean, it's like a special effect what he's done with this little...thing. It's quite amazing. And he’s set against this sleazy world of New York in the bleak midwinter, and there’s snow falling and filthy slush in the gutters, and everyone's fucked up, and everyone else is a bastard. Darick really captures the grime and the violence, which I knew he could do, having seen the stuff he did with Garth Ennis and Warren Ellis but I had no idea how brilliantly he’d render Happy. What I like most about the work is that it’s all very personal. It’s not airbrushed and light boxed. It's old school art with big Indian ink shadows and zip-a-tones. It's really very hand-drawn looking, and that totally suits the visceral nature of the action.

You are one of a number of guys who after years of working for DC and Marvel are packing up and moving over to do a project at Image. Of course, you were just talking about a bit of a personal sea change for what you want to do, but there does seem to be a lot of guys flocking to that publisher right now. Do you feel a part of that wave of creator-owned sentiment?

The majority of my creator-owned stuff is published at Vertigo but I’ve been putting out creator-owned stuff through all kinds of publishers since the late '70s and I still own everything from "Captain Clyde" and "Abraxas" to "St. Swithin’s Day," "The New Adventures of Hitler" and "Bible John" all the way up to the more recent stuff with Liquid. I've always put out my own books in tandem with the DC Universe trademark stuff I like to do, like "JLA" or "Batman," so in some ways this is business as usual for me. But there's definitely some kind of centrifugal movement away from the mainstream toward new and more personal, expressive, creator-owned stuff, and I think it's partly because cinema has appropriated so much of the stuff we’ve been doing in comics for the last thirty years. Movie superheroes finally look better than their comic book counterparts. And creative people are more informed and want to own their ideas, and to be able to protect them or profit from them. The audience has developed a fresh appetite for new characters and stories which is driving a shift toward those kinds of stories again. Writers and artists are experimenting again. The future’s back and you could feel the floodgates opening at Image this year, in particular. It seems like everybody’s got something new coming out.

So yeah I'm happy to join the bandwagon if only it’s to remind people I’ve been riding it for decades!

"Happy!" Seemed right for Image. Karen [Berger of Vertigo] doesn't like stuff that puts children under threat and this book definitely does that. Robert [Kirkman] and Eric [Stephenson] at Image have been great and I've agreed to do some more stuff with them. I have a few ideas brewing after "HAPPY!" It's good to feel a little afraid – to try a different company and a different way of working and get familiar with different strategies of publishing. I have more Vertigo stuff planned too so I definitely feel the pull more strongly toward the creator-owned end of the spectrum and that seems to be the general consensus. I just read Ed Brubaker talking about his farewell to trademark superheroes and moving on to concentrate on developing his own stuff. So something's going on. Migratory patterns are changing. The superhero monthlies can always use new blood anyway.

MorrisonCon is coming in a few months time. Ron Richards and James Sime brought this idea to you, but as I understand it, you dove right in. What does that opportunity to have an entire weekend of discussion and art provide to you that you haven't had before?

The idea for MorrisonCon came from James Sime and his partner Kirsten Baldock and from Ron Richards. They had this idea of doing something less like a comic convention and more of an event like a music festival where you paid to hang around backstage with the acts and everyone stayed in the same hotel in Vegas.

I saw the opportunity to stage one of those weird, life-changing events where the boss takes you out and you go hunt each other in the woods. [Laughs]. I saw the potential for a kind of Happening, as they used to say. A chance to rewire heads and get some creative sparks flying.
They asked if I’d lend my name to it and I did but I should say - if only to answer critics who’ve accused me of profiteering - that I don’t make a single cent out of this. I’m doing it for free because it seems like a brilliant idea. I wish it wasn't called MorrisonCon though because Robert Kirkman will be there, and he's like 100 times bigger than me! [Laughs] Is it too late to call it KirkmanCon and shift some more tickets? Who doesn’t want to sit around the Hard Rock Hotel in Las Vegas talking to the creator of "The Walking Dead" about why we love the dearly departed?

MorrisonCon lands in Las Vegas on September 28.We're going to have high-level anything-goes panel discussions and we're asking all the writers and artists to do something a bit different like perform eerie candle-lit readings or draw you hung-over at breakfast. You know, Darick Robertson will chase the blues away with guitar and vocals. I’m doing a new spoken word piece channeling Mr. Mojo Risin’, the Egyptian Gods and Howard Hughes with new music by Gerard Way. Stuff like that. We have surprise guests from film, TV and the alternative arts. Some of the most fertile minds in and on the fringes of the comics business will be hanging around talking about where our art form stands, and what happens next, now that we’ve conquered the world. Multimedia opens up whole new ways of creating comics that could involve, music and performance and art, so we’re bringing comics people together with film-makers, photographers, musicians, models, directors and visionaries to talk mad talk and light up the Strip.

One of the interesting things about the change in comics culture over the past ten years is that you no longer have to be centrally located in New York or London or what have you. Now you can exist wherever and collaborate via e-mail. Do you feel like there's a qualitative difference to getting together in the same physical space as a collaborator?

Oh yeah! I haven’t written an e-mail since 2005, and I can’t find the time or inclination to maintain a web presence or keep my Twitter account fed with trivia. I hardly ever talk to my collaborators aside from personal notes in the scripts, so it’s always great to catch up with them in person.

I wish I could be more like Warren Ellis, and have a commanding internet presence but I can never think of anything to say online. I waste days perfecting a few lines of an e-mail or tweet It’s pointless. For me nothing is faster, sexier and more rewarding than communicating with people in person. God knows, it’s a shocking idea, but we've been doing it for thousands of years! I kind of like all the gestures and hesitations and flashing eyes that bring a conversation to life. I've never met Jonathan Hickman, and I‘ll never write him an e-mail, for instance, but meeting him in Vegas to talk about science and futurism in comics and whatever – that's very exciting.

And everybody, including the people who've bought tickets, will all be hanging out in the same space and talking about this stuff that excites us all. Friendships will be made. Lives will be changed. It’s a unique one-off event and if you miss it you miss it forever.

The mainstream press has kind of presented this as an alternative to Comic-Con, which I wonder if that misses the point a bit.

It's nice of them to have us in the same sentence, but Comic-Con is a mega-event and we’re what’s known as "boutique" – in fact we‘re more like a drawer in a small dressing table at the back of the boutique. [Laughs] This is intimate in a way Comic-Con could never be. MorrisonCon an alternative in the sense that it’s pretty much the opposite of Comic-Con. We're not even trying to operate in that space, but it was nice of them to compare us.

Boxed In

LIBOR-gate: Here Come The Arrests

by Tyler Durden on 07/22/2012 - ZERO Hedge


For over four years, virtually everyone in the finance industry knew that Libor was manipulated.

The stench of manipulation rose to the very top and thanks to a document release of formerly confidential information, we now know for a fact that even the Fed was in on it - recall that as part of production, the Fed provided a transcript of an April 2008 phone call between a Barclays trader in New York and Fed official Fabiola Ravazzolo, in which the unidentified trader said: "So, we know that we're not posting um, an honest LIBOR." And yet without any tangible, black on white evidence, there was no catalyst for pursuing legal action.

That all changed when in a desperate attempt to protect its ass, Barclays decided to rat out everyone by settling with regulators, and "turn state" producing e-mail based evidence, most of it quite visual (after all what is more tangible to the common man that evil bankers sipping on Bollinger), which essentially threw years of quiet cartel cooperation under the bus. As a result, regulators, enforcers, and legal authorities, many of whom were in on this manipulation from the beginning, no longer had an excuse to not pursue civil and criminal charges against perpetrators, who until recently were footing the tabs at various gentlemen's venues and ultra expensive restaurants. And while the imminent waterfall of civil prosecution will force bank litigation reserves to go through the roof, here comes, with a very long delay, the criminal charges.

As Reuters reports, here come the arrests.

But before we get into it, we wanted to share something mildly curious involving that British Bankers Association: the entity that until recently at least, was implicitly in charge of the Libor fixing, submission, and distribution process (also the entity that will quite soon be non-existent).

It involves the BBA's self-professed Governance process and obligations. The extract below shows what it is currently.

All aspects of the operation and management of bbalibor as a benchmark are the responsibility of the independent Foreign Exchange and Money Markets Committee ('FX&MM Committee'). This includes design of the benchmark and the governance and scrutiny of all bbalibor data and all panel bank contributions. BBA LIBOR Ltd undertakes the day to day running of the benchmark under the supervision of the Foreign Exchange and Money Markets Committee. As of 1st January 2010, BBA LIBOR Ltd. has been governed by an independent Board.

Thomson Reuters - the 'Designated Distributor' of BBA LIBOR - is tasked with collecting the daily submissions that are inputs into the bbalibor process and submitting them to rigorous checks before publishing the resulting calculation to the market. If any bank submission falls outside a defined set of parameters, Thomson Reuters will consult the contributor and request confirmation that the rate provided is correct, thus allowing any simple typing errors to be amended promptly. These parameters are agreed by the FX&MM Committee and are regularly reviewed to ensure they reflect prevailing market conditions and maintain the highest level of scrutiny over the rates.

There is a named individual at each bank responsible for submitting the daily bbalibor rates to Thomson Reuters and this will be the person responsible for the bank's cash - usually their title is 'treasurer' or similar. There is written guidance on what information that person should take into account when calculating that day's rates for his or her bank. As all contributor banks are regulated, they are responsible to their regulators, rather than BBA LIBOR Ltd. or the FX&MM Committee, for maintaining appropriate procedures for contributing, including the maintenance of internal chinese walls.

The reason we have bolded the third paragraph is that if one had gone to the BBA's Governance section as recently as a few weeks ago, or prior to Liborgate becoming front page news, the paragraph read something totally different. However, courtesy of the Way Back Machine, we have a great idea of just what the BBA quietly and under the radar tried to change vis-a-vis its own obligations and responsibilities in the Libor scandal. This is what the third paragraph said before.

BBA LIBOR Ltd. receives the fixings and underlying contributor data at the same time as all other live data recipients and monitors all submissions into the fixing process. Any anomalous rates are queried with the submitting bank, and a log of these queries is kept and given to the FX&MM Committee on a periodic basis, who may choose at their discretion to follow up these queries in line with established governance and scrutiny procedures.

Up until literally minutes ago, the question to be asked was why was this change made on the page, on a governance page of all places, a change which shirks responsibility and accountability and begs the question, did BBA log any queries of anomalous rates, did the FX&MM Committee follow up on any queries, or are they simply trying to bury something here? Now, thanks to Reuters, we know.

With arrests on deck, the BBA is doing everything it can to distance itself from what it knows with absolute certainty is about to be a shitstorm of epic proportions:

U.S. prosecutors and European regulators are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rate-rigging scandal.

Federal prosecutors in Washington, D.C., have recently contacted lawyers representing some of the individuals under suspicion to notify them that criminal charges and arrests could be imminent, said two of those sources who asked not to be identified because the investigation is ongoing.

Defense lawyers, some of whom represent individuals under suspicion, said prosecutors have indicated they plan to begin making arrests and filing criminal charges in the next few weeks. In long-running financial investigations it is not uncommon for prosecutors to contact defense lawyers for individuals before filing charges to offer them a chance to cooperate or take a plea, these lawyer said.

The prospect of charges and arrests of individuals means that prosecutors are getting a fuller picture of how traders at major banks allegedly sought to influence the London Interbank Offered Rate, or Libor, and other global rates that underpin hundreds of trillions of dollars in assets. The criminal charges would come alongside efforts by regulators to punish major banks with fines, and could show that the alleged activity was not rampant in the banks.

Actually what it will show is that criminal activity was not only rampant, but everyone knew about it, certainly the regualtors, and most certainly the Fed and the BOE. After all how could they not: they are the ultimate entities who manipulate rates. But for them it is a matter of "policy." As such they are desperate to throw anyone under the bus, as long as public attention is redirected from them.

So where will the first arrests come? Why the world's biggest bank of course.

The source familiar with the regulatory investigation in Europe said two traders who have been suspended from Deutsche Bank were among those being investigated. A Deutsche Bank spokesman declined to comment.

Then, once DB is down and out, next it will be a turn to not only break up of the IR derivative trading cabal in Geneva, which Zero Hedge exposed first, but also extract a solid fee from the Swiss banks in the process.

The Financial Times reported on Wednesday that regulators were looking at suspected communication among four traders who had worked at Barclays, Credit Agricole, HSBC and Deutsche Bank.

And so the tide turns, as banks, all of which should have ended up as bailed out utilities in the aftermath of the Lehman collapse, will now be forced to fork over billions in cash to the same governments and administrations that bailed them out in the first place, under the guise of civil and criminal penalty disgorgement in what will almost certainly end up as the biggest financial settlement in history, one which will leave most of the world's banks sorely undercapitalized and force the Basel implementation of various capital requirements to be scrapped indefinitely.

But for now, the public will get its circus (if not corn bread: its price is about to shoot right to the moon courtesy of prayer not being a viable strategy when it comes to procuring rain... or central bank intervention) courtesy of an imminent procession of perp walks. We, for one, having waited nearly 4 years for just this, can't wait.

Bisphenol A's 'twin' may have more potent hormone effects

Another Plastics Ingredient Raises Safety ConcernsBy Janet Raloff, Science News

A largely ignored contaminant doesn’t just resemble bisphenol A, the chemical found to leach out of hard plastic water bottles. It’s BPA’s fluorinated twin — on steroids.

New laboratory studies in Japan indicate that the twin, called bisphenol AF, or BPAF, may be even more potent than BPA in altering the effects of steroid hormones such as estrogens in the body.

The unusual way that BPAF blocks some estrogen actions and fosters others “could make this a vicious compound, a very toxic compound,” says Jan-Åke Gustafsson, a molecular endocrinologist at the University of Houston. The chemical is an ingredient of many plastics, electronic devices, optical fibers and more.

The last letter in bisphenol AF’s name denotes the substitution of fluorine atoms for six hydrogens and explains why the compound is sometimes referred to as hexafluoro-BPA. These fluorines also make BPAF behave differently than BPA in the body, biochemist Yasuyuki Shimohigashi of Kyushu University in Fukuoka, Japan, and his colleagues report online April 28 in Environmental Health Perspectives.

Both chemicals act on estrogen receptors, molecular locks found in cells throughout the body. Estrogen hormones serve as their keys, turning on genes that control time-sensitive activities such as ovulation in young women. Certain contaminants, such as BPA and BPAF, can mimic those keys.

But some mimics are better than others and may even, like skeleton keys, act on a variety of locks. Most of BPA’s estrogen-mimicking effect, Shimohigashi’s group found in 2006, comes from activating a cellular switch known as human estrogen-related receptor gamma, or ERR-gamma.  It’s an “orphan” receptor, meaning a lock with no known natural key.

In its latest study, the Japanese group performed tests in isolated cells and receptor proteins. And BPAF, the researchers now report, all but ignores ERR-gamma. Instead, the chemical’s fluorine atoms appear to give it a strong affinity for the two best-studied estrogen receptors, ER-alpha and ER-beta. Indeed, the fluorines bind to ER-alpha some 20 time more effectively than BPA does, and to ER-beta almost 50 times more effectively.

After binding, BPAF proved a potent activator of ER-alpha, unleashing its actions just as the body’s own estrogen would. The big surprise, Shimohigashi says, was finding that despite BPAF’s even stronger affinity for ER-beta, it elicited no activity from this lock. The chemical enters the receptor and then just sits there like a dud. In so doing, it blocks the receptor’s access to the body’s own estrogen — preventing it from unlocking any of the myriad operations normally controlled via this important receptor.

Where ER-alpha can promote reproductive cancers, actions triggered through ER-beta tend to inhibit cancer development and foster health in a range of tissues throughout the body. “So simplistically speaking,” Gustafsson says, “ER-alpha is the bad guy and ER-beta is the good one.” Generally, he says, their actions tend to balance one another.

And that’s what appears to make BPAF such a “double-edged sword,” he contends. By increasing ER-alpha activity and shutting down ER-beta’s countervailing functions, BPAF appears to shift endocrine action toward greater toxicity, he says.

Early hints of BPAF’s hormonal alter ego prompted the National Toxicology Program in late 2008 to target it for federal toxicity testing in rodents. Shimohigashi says his team will soon begin similar studies to investigate how the newly unveiled endocrine effects play out in whole animals.

Little is known about the quantity of BPAF produced each year or likely human exposures. One federal study conducted nearly three decades ago estimated that some 4,400 U.S. workers likely encountered the chemical at the time, according to a brief online report by the National Toxicology Program. That report also notes that the contaminant has been detected in women’s fat — a sign that it could, during breastfeeding, be passed along to a baby.

+++++++

The Chemical Marketplace Series - Bisphenol AF
by Bill Chameides

Introducing bisphenol AF, BPA’s more toxic sibling.
By now, you've no doubt heard about Bisphenol A (aka BPA) and its potential for toxic mischief when leached from various plastic containers. You’ve probably also heard that companies are now falling all over themselves to declare their products ”BPA-free." (And some people claim that the public can't catalyze a national green movement.)

All in the BP Family


But you may not know that BPA is only one of a cornucopia of chemical bisphenols, or BPs, running amok in the world. (The "BP” referred to here should not be confused with a certain petroleum company that has received a good deal of media attention of late.)

Among the alphabet soup of chemical BPs are BPB, BPC, BPF, BPAF, BPE, and BPS. In fact, the National Toxicological Program lists 38 compounds [pdf] that are structurally similar to BPA. The common thread is that they all begin with the same basic bisphenol chemical structure of C12H10(OH)2 — two phenyl groups each bonded to a hydroxyl (OH) group — then are subtly added to and/or otherwise modified. For example, in the case of BPA, two methyl groups (CH3) are added along with an extra atom of carbon (C) to the basic bisphenol building block.

What About Bisphenol AF (BPAF)?

Well, not all that surprising, given the "F" in its appellation, BPAF has the same configuration as BPA except the hydrogen atoms in the methyl group have been replaced by fluorine atoms. (Technically speaking, substituting fluorine for hydrogen in the methyl groups turns them into trifluoromethyl compounds.)

From the point of view of a chemical engineer, the addition of the fluorine atoms improves BPA’s chemical, thermal and mechanical properties, making it attractive for lots of applications in plastics, electronic devices, optical fibers, and more. Thus, BPAF is one more example of a compound with wondrous new properties produced by replacing hydrogen atoms with halogen atoms (in this case fluorine) in an organic molecule.

But, alas, there is a problem: many of those halogenated compounds turn out to be mixed blessings at best. They can be quite toxic and they can be slow to break down or metabolize in the environment and in the human body. Examples include PBDEs, PCBs [video], DDT and Freons.

Lots of Unknowns With BPAF

As for BPAF, the fact is we don't know very much about its toxic properties. But recent results from short-term studies have suggested that it may act as an aggressive endocrine disruptor. Indeed, in 2008 it was one of only six chemicals accepted for further study by the National Toxicological Program.

While that work is just getting started, data trickling in from other sources are not reassuring. There are signs that BPAF may be a more effective endocrine disruptor than BPA. For example, a study published last spring in Environmental Health Perspectives by Ayami Matsushima of Kyushu University in Japan and colleagues suggests that BPAF packs a one-two punch on the reproductive system: effectively shutting off gene receptors that promote reproductive health and inhibit reproductive cancers, while activating the receptor that can promote reproductive cancers.

Okay, that's not great, but what are the chances any of us are being exposed to BPAF in dangerous quantities? I can't give you a definitive answer, but here's what TheGreenGrok team has been able to find out.

It's rather incredible to me but the National Toxicology Program reports [pdf] that there does not yet exist a comprehensive database on the types of products that contain BPAF. One application that has been documented: BPAF is used in food-contact polymers such as fluoroelastomer gaskets and in hoses used in food-processing equipment. BPAF may also be used in dental resins and plastics used to wrap foods. Not exactly what one would want to hear for a potentially toxic compound.

Patent records [pdf] indicate that we haven’t been making BPAF all that long, only since the late 1970s. According to the Environmental Protection Agency’s most recent chemical inventory database from 2006 (the inventory is updated every four years), between 10,000 and 500,000 pounds of BPAF are manufactured, imported or used annually in the United States. Why such a large range? That’s the way EPA does it; here’s the agency's explanation [pdf].

These amounts, reports EPA, have remained essentially flat since 1986. But are they significant? It's hard to say since we don't know that much about how BPAF moves through the environment or whether a significant amount leaches from products and gets into our bodies. Two relevant things to note:

• On the positive side, the amount of BPAF in use in the United States is considerably less than that of BPA (at one billion pounds or greater).
• On the other, BPAF has been detected in the environment (albeit at levels lower than that of BPA). A study in Germany found detectable levels of BPAF in about three-fourths of the surface water and sewage samples collected and in more than half of the sediment samples collected.

So that's the story on BPAF. One of some 80,000 chemicals used here that go unregulated and virtually unstudied. Are the products you use exposing you to BPAF? Your guess is as good as mine.

Global Super Rich Now Hoard $31 Trillion in Tax Havens

Sunday, July 22, 2012 by Common Dreams
Amount far exceeds previous estimates

A new report by the Tax Justice Network released Sunday reveals that between $21 trillion and $31 trillion is currently tucked away in global tax havens by the global super-rich--an amount that far exceeds previous estimates. Through exploiting gaps in global tax rules, the global financial elite are managing to hide "as much as the American and Japanese GDPs put together" from taxation, leaving the world's poor to carry the burden of global debt through harsh austerity measures.

$32 trillion of hidden financial assets in offshore tax havens represents up to to $280 billion in lost income tax revenues, according to the study released to the Guardian's Observer.

The report pools data from the World Bank, International Monetary Fund, United Nations and global central banks.

In the report, The Price of Offshore Revisited, the Tax Justice Network details the ways in which the trillions of dollars are essentially smuggled out of countries into tax free havens such as Switzerland and the Cayman Islands through private banks.

According to the calculations, £6.3tn of assets is owned by only 92,000 people--0.001% of the world's population

"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," the report says.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network. "People on the street have no illusions about how unfair the situation has become."

James Henry, who compiled the report, stated: “[Wealth is] protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy.”

Rupert Murdoch resigns from newspaper boards

(the man who has done the most to stain the unbiased reputation of the media more than anyone else while claiming to be "fair and balanced"; and who helped to cause lowest approval rating for news organizations ever; and who broke the law in England by wire tapping politicians' and celebrities' private phone lines. we're almost rid of him!--jef)

By Arturo Garcia - RAW Story
Saturday, July 21, 2012 

The (U.K.) Telegraph is reporting that media mogul Rupert Murdoch has resigned from the boards of his various newspaper holdings in both the United Kingdom and the United States.

Filings with both the United Kingdom Registrar of Companies and the U.S. Securities and Exchange Commission indicate the resignations were made within the past week.

Though a News Corporation spokesman called Murdoch’s departure from that company board, as well as NI Group, Times Newspaper Holdings and News Corp Investments, “nothing more than a corporate housecleaning exercise prior to the company split,” there is speculation mounting that it means he and his son James, at one time mentioned as a potential successor, could be on their way out from News Corp entirely.

“James and Rupert have decided that they are not welcome in the UK, and they’re right,” said Claire Enders at Enders Analysis. “There is an enforced emotional withdrawal from these assets because they are no longer useful [in terms of influence].”

Washington admits surveillance violated Fourth Amendment

 (just once, huh?--jef)

RT
Published: 22 July, 2012
 

The US government has admitted to violating the Constitution’s Fourth Amendment ban on unreasonable searches and seizures on at least one occasion during surveillance efforts.

In a letter to Sen. Ron Wyden, the Office of the Director of National Intelligence (DNI) confirmed a Foreign Intelligence Surveillance (FISA) Court finding that “some collection carried out pursuant to the Section 702 minimization procedures used by the government were unreasonable under the Fourth Amendment.”

The FISA Amendments Act, signed into law by former US President George W. Bush on July 10, 2008, provides an extension to the government’s use of wiretapping in the aftermath of the September 11 terrorist attacks, allowing the government to collect any phone or e-mail communications made when at least one party is believed to be outside of the United States – without requiring a warrant.

Wyden is the most vocal Senator to question the extent of the government’s use of domestic communications surveillance, which includes wiretapping.

Without providing details about when and how the violation occurred, or the extent of the “unreasonable” surveillance, the DNI letter confirmed that FISA has “sometimes circumvented the spirit of the law.”

The FISA Court found that the government was using unreasonable minimization procedures – meaning it was overstepping the length of time it was legally permitted to retain its surveillance data.

The government says it has “remedied” the FISA Court’s concerns regarding the constitutional violation and will continue to lawfully collect e-mails and phone calls, but the letter’s indication of at least one “unreasonable” search remains a troubling fact to Americans concerned about their privacy.

While the DNI confirmed a fault, the director’s office claimed it was in the country’s best interest to publicize the issue, stating, "the public interest in disclosure outweighs the damage to the national security that might reasonably be expected from disclosure.”

The news of the constitutional violation comes as the Obama administration is pressuring Congress to reauthorize the 2008 statute, which would otherwise expire at the end of the year. (broken campaign promise--in fact, the opposite of what he campaigned for in the primaries, then reversed his stance right before the '08 election--jef).

DNI director James Clapper says reauthorization should be a top priority to prevent terrorist attacks against Americans (since 9-11, ALL of the terrorist plots that have been stopped were  also planned by the FBI as set-ups to entrap potential terrorists. No foreign terrorist plots have been stopped by Bush OR Obama.---jef)

The law “allows the Intelligence Community to collect vital information about international terrorists and other important targets overseas while providing robust protection for the civil liberties and privacy of Americans,” he wrote Congressional leaders.

But Wyden is threatening to block the government’s requested five-year extension of the statute unless lawmakers receive more information about the extent of the wiretapping. The Senator is concerned that communication between “law-abiding Americans” is being unlawfully intercepted.

Wyden says the government could develop a large collection of personal e-mails and phone call data, and sift through it to isolate conversations between individual Americans. He maintains that such “back door searches” must be avoided.

In June, the National Security Agency (NSA) refused to disclose how many Americans have been affected by government surveillance. Wyder responded by noting that the fact that the number is unknown hides the extent of the spying.

In response to the NSA’s secrecy, Wyden offered an amendment prohibiting warrantless searches of domestic communication, which was rejected.

“This law clearly has had a bigger privacy impact than most people realize,” Wyden said. “In particular, I believe that the ‘back door searches’ loophole needs to be closed.”

From an Unlikely Source, a Serious Challenge to Wall Street

Saturday, July 21, 2012 by Rolling Stone

by Matt Taibbi

 

Something very interesting is happening.

There’s been so much corruption on Wall Street in recent years, and the federal government has appeared to be so deeply complicit in many of the problems, that many people have experienced something very like despair over the question of what to do about it all. 

But there’s something brewing that looks like it might be a blueprint to effectively take on Wall Street: a plan to allow local governments to take on the problem of neighborhoods blighted by toxic home loans and foreclosures through the use of eminent domain. I can't speak for how well the program will work, but it's certainly been effective in scaring the hell out of Wall Street.

Under the proposal, towns would essentially be seizing and condemning the man-made mess resulting from the housing bubble. Cooked up by a small group of businessmen and ex-venture capitalists, the audacious idea falls under the category of "That’s so crazy, it just might work!" One of the plan’s originators described it to me as a "four-bank pool shot."

Here’s how the New York Times described it in an article from earlier this week entitled, "California County Weighs Drastic Plan to Aid Homeowners":

Desperate for a way out of a housing collapse that has crippled the region, officials in San Bernardino County … are exploring a drastic option — using eminent domain to buy up mortgages for homes that are underwater.

Then, the idea goes, the county could cut the mortgages to the current value of the homes and resell the mortgages to a private investment firm, which would allow homeowners to lower their monthly payments and hang onto their property.

I’ve been following this story for months now – I was tipped off that this was coming earlier this past spring – and in the time since I’ve become more convinced the idea might actually work, thanks mainly to the extremely lucky accident that the plan doesn’t require the permission of anyone up in the political Olympus.

Cities and towns won’t need to ask for an act of a bank-subsidized congress to do this, and they won’t need a federal judge to sign off on any settlement. They can just do it. In the Death Star of America’s financial oligarchy, the ability of local governments to use eminent domain to seize toxic debt might be the one structural flaw big enough for the rebel alliance to fly through.

The plan only makes sense in the context of America’s overall economic paralysis. Right now the economy is stuck in a standstill, largely because of the housing bubble. Five or six or ten years ago, when Wall Street was cranking out trillions of dollars of cheap home loans so that they could later be chopped up, pooled, and sold to unsuspecting investors in the form of high-grade securitized bonds, millions of ordinary people jumped on the housing comet, buying big houses for big money.

The problem is, if you bought a house for $300,000 then, it might be worth $200,000 now. When you’re $100,000 in debt, you’re not rushing out to buy washing machines, new cars, new DVD players. As Paul Krugman put it in his column today:

There’s no mystery about the reasons the economic recovery has been so weak. Housing is still depressed in the aftermath of a huge bubble, and consumer demand is being held back by the high levels of household debt that are the legacy of that bubble.

Then there’s the other problem. Even if you manage to keep making your payments on your house, your neighbor might not. Whoever used to live next door has left after a foreclosure: there are squatters building a meth lab in the basement now. Two more houses are being boarded up down the street. So now the value of your house is getting lower and lower every day. No matter how fast you make your payments, your debt situation is still going to be moving in the wrong direction.

Instead of letting everyone be slowly ground into dust under the weight of all of that debt, the idea behind the use of eminent domain is to pull the Band-Aid off all at once.

The plan is being put forward by a company called Mortgage Resolution Partners, run by a venture capitalist named Steven Gluckstern. MRP absolutely has a profit motive in the plan, and much is likely to be made of that in the press as this story develops. But I doubt this ends up being entirely about money.

“What happened is, a bunch of us got together and asked ourselves what a fix of the housing/foreclosure problem would look like,” Gluckstern. “Then we asked, is there a way to fix it and make money, too. I mean, we're businessmen. Obviously, if there wasn’t a financial motive for anybody, it wouldn’t happen.”

Here’s how it works: MRP helps raise the capital a town or a county would need to essentially “buy” seized home loans from the banks and the bondholders (remember, to use eminent domain to seize property, governments must give the owners “reasonable compensation,” often interpreted as fair current market value).

Once the town or county seizes the loan, it would then be owned by a legal entity set up by the local government – San Bernardino, for instance, has set up a JPA, or Joint Powers Authority, to manage the loans.

At that point, the JPA is simply the new owner of the loan. It would then approach the homeowner with a choice. If, for some crazy reason, the homeowner likes the current situation, he can simply keep making his same inflated payments to the JPA. Not that this is likely, but the idea here is that nobody would force homeowners to do anything.

On the other hand, the town can also offer to help the homeowner find new financing. In conjunction with companies like MRP (and the copycat firms like it that would inevitably spring up), the counties and towns would arrange for private lenders to enter the picture, and help homeowners essentially buy back their own house, only at a current market price. Just like that, the homeowner is no longer underwater and threatened with foreclosure.

In order to make MRP work, Gluckstern and his partners needed to find local officials with enough stones to try the audacious plan. With so many regions in such desperate straits thanks to the housing mess, that turned out to be not as hard as perhaps might have been expected.

First in line was San Bernardino County in California, not coincidentally located at ground zero of a subprime bubble blown to gigantic proportions by Southern Californian mortgage giants like Countrywide and Long Beach. San Bernardino is more or less a poster child for the mortgage crisis; more than half of its homeowners are underwater on their homes, unemployment is past 12%, and the county recently had to file for bankruptcy.

It’s not surprising, then, that local officials like Acquietta Warren, mayor of the city of Fontana, were receptive to the eminent-domain plan.

“Sooner or later,” Warren told the New York Times, “all these people who are upside down on their homes are just going to leave the keys out on the door and say forget it. This was supposed to be the promised land, and now we have people waiting in some kind of hellish purgatory.”

San Bernardino County officials, along with two of its bigger cities (Fontana and Ontario), have set up the legal mechanisms needed to condemn and seize home loans, but the details of the plan haven’t been completely worked out yet. Still, officials say about 20,000 homeowners in San Bernardino would be eligible for the program; how many will get to use it is unknown.

In the meantime, other counties in other parts of the country are considering the plan. MRP has been courting local officials in Nevada, Florida, and in parts of the Northeast. In New York, officials in Suffolk County on Long Island, where 10% of homes are underwater, are seriously considering the plan.

The role of MRP and the presence of businessmen like Gluckstern in this whole gambit is going to tempt some reporters to pitch this story as a purely financial story, and certainly it does have interest as a business headline.

But MRP’s role aside, this is also a compelling political story with potentially revolutionary consequences. If this gambit actually goes forward, it will inevitably force a powerful response both from Wall Street and from its allies in federal government, setting up a cage-match showdown between lower Manhattan and, well, everywhere else in America. In fact, the first salvoes in that battle have already been fired.

For instance, the Wall Street trade association, SIFMA, this past week issued a denunciation of the eminent domain plan that includes a promise of a legal challenge. “We believe the MRP proposal is unlikely to survive a judicial challenge,” one of SIFMA’s lawyers wrote. Other trade groups are lining up to describe the tactic as illegal or "unconstitutional."

More insidiously, however, SIFMA pledged that its members will not allow future home loans originated in counties that use the eminent domain tactic to participate in something called the To-Be-Announced (TBA) markets for mortgage-backed securities. Explaining this would require a sharp detour into a muck of inside-baseball mortgage terminology, but the long and the short of it is that SIFMA is promising to make it difficult for any community that tries this tactic to obtain private mortgage financing in the future.

Essentially, SIFMA is promising a kind of collusive financial lockout of uncooperative communities. The threat would appear to be a high-handed form of redlining that raises serious antitrust questions, but in a way, that kind of response is to be expected.

Ultimately, the MRP tactic will be a fascinating test case to see exactly how much local self-determination will be allowed by the centralized financial oligarchy and its allies in the federal government.

If through boycotts, collusion, federal pressure and other forms of encirclement, local governments can be stripped of their right to condemn blighted property, we’ll know that the guts have been cut out of the very idea of regional self-rule. It will be fascinating to watch. At the very least, this story has the potential to be the first true open, pitched battle between Wall Street and the homeowners and communities who have been the primary victims of financial corruption.

Tune in for more on this front soon.

Editor's note: Readers interested in learning more about this would do well to read North Carolina congressman Brad Miller's piece on this in American Banker. Miller is not necessarily a proponent of the exact mechanism proposed by MRP, but he is intrigued by the general idea of using eminent domain to address the blighted-loan problem, and seems particularly interested in the strategic possibilities of addressing the problem at the local level. He writes:

The biggest banks have used their political power in Washington to defeat any effort that would effectively reduce foreclosures, such as allowing judicial modification of mortgages in bankruptcy, allowing a federal agency to use eminent domain to buy mortgages, or providing teeth for the chronically ineffective Home Affordable Modification Program, because those efforts would also require the immediate recognition of losses on mortgages.

But Wall Street's power in Washington may be as useless in defeating a proposal in San Bernardino County as strategic nuclear weapons are in fighting an insurgency. No wonder Wall Street is panicked.

Also, here's a piece Miller wrote a couple of years ago in The New Republic suggesting the use of eminent domain through the use of a public vehicle similar to FDR's Home Owners' Loan Corporation, or HOLC.

Again, there's going to be a lot of heated discussion about this, and it's sure to get ugly in the near future. This idea will be portrayed as radical and unrealistic, but in reality it's neither terribly radical nor even all that new. What it is, more than anything else, is uncomfortable. Anyway, more on this to come.

Cracks in the Foundation: New Fracking Information Shows More Underground Contamination, Toxic Fluids Than Previously Thought

(This is and will be the continuing reality of fracking and what it will do to deteriorate the health of those who were unfortunate enough to live close to fracking sites. Where do you get your water from?--jef)


Friday, July 20, 2012 by Switchboard/NRDC

by Kate Sinding

 

It looks like every day more and more cracks are appearing in the stock oil and gas industry argument about fracking-related water contamination.  For those who haven’t heard it before, the standard line goes something like this: fracking couldn’t possibly contaminate underground drinking water because, between the productive shale layer and groundwater, there are thousands of feet of solid, impermeable rock.  Even where contamination does occur, the claim continues, this is not due to fracking, but poor casing and cementing jobs, which are rare in practice and not worth worrying too much about. 

The argument may sound nice, but there is an increasing body of evidence (and please forgive the pun here) that it’s anything but rock solid.  I’ll highlight three recent findings:

New Findings on Casing and Cementing Failures – Industry-sponsored reports compiled by the Gasland folks (and explained in Josh Fox’s new short video, “The Sky is Pink”) demonstrate that not only are casing and cementing problems possible, they are an expected part of the drilling process.  In certain areas, anywhere from 18% to 45% of wells experience such so-called “well integrity issues.”  (For review, casings are the giant metal pipes that drillers place in the drilled wells to prevent gas and toxic frack fluid from bleeding out into underground sources of drinking water.  Because there is usually space between the outside of the casing and the drilled hole or between the outside of one casing and the next, that space is filled with cement to seal potential pathways for leaks).

According to the reports, water can become contaminated when the casing itself corrodes or otherwise leaks (for example, see here), or when gaps in the cement outside the casing allow methane and other contaminants to travel up the well from shallow pockets of trapped gas, which may explain the results of a Duke University study last year linking methane contamination to gas drilling.  Not all contamination is expected to happen immediately. Because drillers simply leave frack chemicals in the ground indefinitely after operations cease, casing and cementing problems may contaminate ground water anytime between now and the end of time.

New Computer Modeling Predicts Groundwater Contamination from Marcellus Drilling Within Years – Even where cementing and casing work perfectly, fracking fluids could still migrate up from the shale formations themselves into groundwater.  A recent peer reviewed study by hydrogeologist Tom Myers, published in last April’s edition of the journal Ground Water, predicted, using computer modeling, that natural faults and fractures in the Marcellus, exacerbated by fracking, may lead to water contamination within ten years or less.  Although natural migration without fracking would occur at a much slower rate, migration of waste fluid would be likely sped up by the pressures exerted from fracking.

(For other evidence of fluid migration from underground waste disposal wells, read Abraham Lustgarten’s recent article on the problems with underground injection control (UIC) wells.  Frack wells are structurally very similar to UIC wells, except that they are exempted from federal standards under the Safe Drinking Water Act).

New Evidence Confirming Possible Contaminant Pathways in Pennsylvania – A new study from Duke University has found brine (i.e. salt water), with the same composition of deep underground brines associated with the Marcellus formation, in shallow underground drinking water in northeastern PA.  Although the presence of brines was not correlated with gas drilling, the fact that they are in drinking water at all shows that there are more pathways between the Marcellus and shallow underground water than previously thought.  The pathways, whether from natural fractures or old abandoned wells (like the 40,000 wells drilled in NY for which no records exist), would likely also carry toxic frack water pumped into the Marcellus at high pressure by fracking activities, meaning that areas with these pathways “could be at greater risk of contamination from shale gas development.”

All of these new findings emphasize two important points: (1) that the standard industry contamination argument likely holds about as much water as a defective casing, and (2) that groundwater contamination from fracking doesn’t necessarily happen overnight – we may continue to see contamination problems from fracking in the years, decades, and centuries to come.

The Meaning of Libor-gate

The Rate-Fixing Scandal in Full Perspective

by PAUL CRAIG ROBERTS

 

The price of Treasury bonds is supported by the Federal Reserve’s large purchases. The Federal Reserve’s purchases are often misread as demand arising from a “flight to quality” due to concern about the EU sovereign debt problem and possible failure of the euro.

Another rationale used to explain the demand for Treasuries despite their negative yield is the “flight to safety.” A 2% yield on a Treasury bond is less of a negative interest rate than the yield of a few basis points on a bank CD, and the US government, unlike banks, can use its central bank to print the money to pay off its debts.

It is possible that some investors purchase Treasuries for these reasons. However, the “safety” and “flight to quality” explanations could not exist if interest rates were rising or were expected to rise. The Federal Reserve prevents the rise in interest rates and decline in bond prices, which normally result from continually issuing new debt in enormous quantities at negative interest rates, by announcing that it has a low interest rate policy and will purchase bonds to keep bond prices high. Without this Fed policy, there could be no flight to safety or quality.

It is the prospect of ever lower interest rates that causes investors to purchase bonds that do not pay a real rate of interest. Bond purchasers make up for the negative interest rate by the rise in price in the bonds caused by the next round of low interest rates. As the Federal Reserve and the banks drive down the interest rate, the issued bonds rise in value, and their purchasers enjoy capital gains.

As the Federal Reserve and the Bank of England are themselves fixing interest rates at historic lows in order to mask the insolvency of their respective banking systems, they naturally do not object that the banks themselves contribute to the success of this policy by fixing the LIbor rate and by selling massive amounts of interest rate swaps, a way of shorting interest rates and driving them down or preventing them from rising.

The lower is Libor, the higher is the price or evaluations of floating-rate debt instruments, such as CDOs, and thus the stronger the banks’ balance sheets appear.

Does this mean that the US and UK financial systems can only be kept afloat by fraud that harms purchasers of interest rate swaps, which include municipalities advised by sellers of interest rate swaps, and those with saving accounts?

The answer is yes, but the Libor scandal is only a small part of the interest rate rigging scandal. The Federal Reserve itself has been rigging interest rates. How else could debt issued in profusion be bearing negative interest rates?

As villainous as they might be, Barclays bank chief executive Bob Diamond, Jamie Dimon of JP Morgan, and Lloyd Blankfein of Goldman Sachs are not the main villains. The main villains are former Treasury Secretary and Goldman Sachs chairman Robert Rubin, who pushed Congress for the repeal of the Glass-Steagall Act, and the sponsors of the Gramm-Leach-Bliley bill, which repealed the Glass-Steagall Act. Glass-Steagall was put in place in 1933 in order to prevent the kind of financial excesses that produced the current ongoing financial crisis.

President Clinton’s Treasury Secretary, Robert Rubin, presented the removal of all constraints on financial chicanery as “financial modernization.” Taking restraints off of banks was part of the hubristic response to “the end of history.” Capitalism had won the struggle with socialism and communism. Vindicated capitalism no longer needed its concessions to social welfare and regulation that capitalism used in order to compete with socialism.

The constraints on capitalism could now be thrown off, because markets were self-regulating as Federal Reserve chairman Alan Greenspan, among many, declared. It was financial deregulation–the repeal of Glass-Steagall, the removal of limits on debt leverage, the absence of regulation of OTC derivatives, the removal of limits on speculative positions in future markets–that caused the ongoing financial crisis. No doubt but that JP Morgan, Goldman Sachs and others were after maximum profits by hook or crook, but their opportunity came from the neoconservative triumphalism of “democratic capitalism’s” historical victory over alternative socio-politico-economic systems.

The ongoing crisis cannot be addressed without restoring the laws and regulations that were repealed and discarded. But putting Humpty-Dumpty back together again is an enormous task full of its own perils.

The financial concentration that deregulation fostered has left us with broken financial institutions that are too big to fail. To understand the fullness of the problem, consider the law suits that are expected to be filed against the banks that fixed the Libor rate by those who were harmed by the fraud. Some are saying that as the fraud was known by the central banks and not reported, that the Federal Reserve and the Bank of England should be indicted for their participation in the fraud.

What follows is not an apology for fraud. It merely describes consequences of holding those responsible accountable.

Imagine the Federal reserve called before Congress or the Department of Justice to answer why it did not report on the fraud perpetrated by private banks, fraud that was supporting the Federal Reserve’s own rigging of interest rates (and the same in the UK.)

The Federal reserve will reply: “So, you want us to let interest rates go up? Are you prepared to come up with the money to bail out the FDIC-insured depositors of JPMorganChase, Bank of America, Citibank, Wells Fargo, etc.? Are you prepared for US Treasury prices to collapse, wiping out bond funds and the remaining wealth in the US and driving up interest rates, making the interest rate on new federal debt necessary to finance the huge budget deficits impossible to pay, and finishing off what is left of the real estate market? Are you prepared to take responsibility, you who deregulated the financial system, for this economic armageddon?

Obviously, the politicians will say NO, continue with the fraud. The harm to people from collapse far exceeds the harm in lost interest from fixing the low interest rates in order to forestall collapse. The Federal Reserve will say that we are doing our best to create profits for the banks that will permit us eventually to unwind the fraud and return to normal. Congress will see no better alternative to this.

But the question remains: How long can the regime of negative interest rates continue while debt explodes upward? Currently, everyone in the US who counts and most who don’t have an interest in holding off armageddon. No one wants to tip over the boat. If the banks are sued for damages and lack the money to pay, the Federal Reserve can create the money for the banks to pay.

If the collapse of the system does not result from scandals, it will come from outside. The dollar is the world reserve currency. This means that the dollar’s exchange value is boosted, despite the dismal economic outlook in the US, by the fact that, as the currency for settling international accounts, there is international demand for the dollar. Country A settles its trade deficit with country B in dollars; country B settles its account with country C in dollars; and so on throughout the countries of the world.

For whatever the reason–perhaps to curtail their accumulation of suspect dollars or to bring Washington’s power to an end–the BRICS countries, Brazil, Russia, India, China, and South Africa, are agreeing to settle their trade between themselves in their own currencies, thus abandoning the use of the dollar.

According to reports, China and Japan have reached agreement to settle their trade between themselves in their own currencies.

The moves away from the dollar as the currency of international transactions means that the dollar’s exchange value will fall as the demand for dollars falls. Whereas the Federal Reserve can create dollars with which to purchase the Treasury’s debt, thus preventing a fall in bond prices, the Federal Reserve cannot prop up the dollar’s exchange value by creating more dollars with which to purchase dollars. Dollars would have to be taken off the foreign exchange market by purchasing them with other currencies, but in order to have these currencies the US would have to be running a trade surplus, not a long-term trade deficit.

In the short-run, the Federal Reserve could arrange currency swap agreements in which foreign central banks swap their currencies for dollars in order to supply the Federal Reserve with currencies with which to soak up dollars. However, only a limited number of swaps could be negotiated before foreign central banks understood that the dollar’s fall in value was not a temporary event that could be propped up with currency swaps.

As the value of the dollar will fall as countries move away from its use as reserve currency, the values of dollar-denominated assets also will fall. The Federal Reserve, even with full cooperation from the banking system employing every fraud technique known, cannot prevent interest rates from rising on debt instruments denominated in a currency whose value is falling.
Think about it this way. A person, fund, or institution owns bonds or any debt instruments carrying a negative rate of interest, but continues to hold the instruments because interest rates, despite the increase in debt, are creeping down, raising bond prices and producing capital gains in the bonds. What happens when the exchange value of the currency in which the debt instruments are denominated falls? Can the price of the bond stay high even though the value of the currency in which the bond is denominated falls?

The drop in the exchange value of the currency hits the bond price in a second way. The price of imports rise, and this pushes up prices. The inflation measures will show higher inflation. How long will people hold debt instruments paying negative interest rates as inflation rises? Perhaps there are historical cases in which bond prices continue to rise indefinitely (or even hold firm) as inflation rises, but I have never heard of them.

As the Federal Reserve can create money, theoretically the Federal Reserve’s prop-up schemes could continue until the Federal Reserve owns all dollar-denominated financial assets. To cover the holes in its own balance sheet, the Federal Reserve could just print more money.

Some suspect that the Federal Reserve, in order to forestall a declining dollar and thus declining prices of dollar-denominated financial instruments, is behind the sales of naked shorts every time demand for physical bullion drives up the price of gold and silver. The short sales–paper sales–cancel the impact on price of the increased demand for bullion.

Some also believe that they see the Federal Reserve’s hand in the stock market. One day stocks fall 200 points. The next day stocks rise 200 points. This up and down pattern has been ongoing for a long time. One possible explanation is that as wary investors sell their equity holdings, the Federal Reserve, or the “plunge protection team,” steps in and buys.

Just as the “terrorist threat” was used to destroy the laws that protect US civil liberty, the financial crisis has resulted in the Federal Reserve moving far outside its charter and normal operating behavior.

To sum up, what has happened is that irresponsible and thoughtless–in fact, ideological–deregulation of the financial sector has caused a financial crisis that can only be managed by fraud. Civil damages might be paid, but to halt the fraud itself would mean the collapse of the financial system. Those in charge of the system would prefer the collapse to come from outside, such as from a collapse in the value of the dollar that could be blamed on foreigners, because an outside cause gives them something to blame other than themselves.

The GOP's Goal of Disabling the Government

The Know-Nothing Way

by ROBERT HUNZIKER

 

The “GOP right wing is serious about disabling government.” This is the chilling byline from The Hill’s Congress Blog, July 19, 2012 by Former Rep. Sherwood Boehlert (R-NY) referencing:  H.R. 4078- Red Tape Reduction and Small Business Job Creation Act.

H.R. 4078 will be considered by the House next week, and according to former Rep. Boehlert, “If one wants to fully appreciate the stranglehold the right wing has on the Republican Congressional agenda, and its attendant dangers, one need look no further than the bill the House plans to consider… which would shut down the entire regulatory system.” 

The message behind this Republican-sponsored bill to the Democrats is: Put this in your pipe and smoke it you wild-eyed, chicken-livered, pantywaisted, pinko, lefty liberals. And, just to reflect, Ann Coulter is the one who famously said, “ The left is out to destroy the country.”

H. R. 4078 places a moratorium on the issuance of all new major governmental regulations, until unemployment averages 6%, or less, for an entire quarter. This bill is so cleverly worded that it essentially shuts down the future of government, including the prospect that, if a newly elected President Romney wants to impose new limitations on how government funds are expended, so sorry.  He’ll be blocked. Therefore, it is clear the right-wingers do not even trust their own kind, and what an irony considering it is reasonably probable the billionaire right-wingers will purchase the presidency but will not know what to do with it!

The media has largely ignored H.R. 4078 because the whole affaire surrounding the bill seems so far-fetched and ignorant they figure there is no way that Congress could be stupid enough to literally tie the hands of the government. For example, what if a brilliant bill is initiated to help prevent another financial meltdown? Nope! No can do because the H.R. 4078 prohibits issuance of new standards and safeguards and any action that might lead to the issuance of new standards and safeguards.

This bunch of Republicans now running our Congress constitute a throw back to the acumen of an earlier era when the nation’s top ranking leadership was characterized by then-Vice President Dan Quayle, and one of his famous statements: “I was recently on a tour of Latin America, and the only regret I have was that I didn’t study Latin harder in school so I could converse with those people.”  This festering Quaylitis virus, similar to the Black Plague of old, re-emerges every so often, and it bewilders every politician it touches. The recent outbreak appears to have already infected a large component of the Republicans on the Hill.

In combination with Tea Partiers and the other heavy-duty right-wing extremists, the virus is an unbelievably toxic cocktail, something the country has never witnessed before. It is not a stretch of one’s imagination to say the country is now in the hands of a revitalized Know-Nothing Party (1850s), a bunch of xenophobes who form secretive groups to influence national policy by hiding within the dark enclaves of Citizens United, spewing out falsehoods so flamboyantly outrageous as to confuse a credulous public that falls head over heels for the faux credibility of TV’s electronic signal warfare, capturing the minds and the voters of the country by instilling fear of the present and despair for the future. This is the Know-Nothing way!

These Know-Nothings amazingly link ‘employment’ and ‘regulations’ as if a freeze on regulations will lift employment; otherwise, why set criteria of 6% unemployment as the hallmark for success of the bill? This is a patently false claim that has been roundly debunked by: the Economic Policy Institute, American Sustainable Business Council, the Bureau of Labor Statistics, and, American Association of University Professors.

Furthermore, according to the Financial Crisis Inquiry Commission, “Widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets,” leading to the Great Financial Meltdown of 2007-08. H.R. 4078 throws out the window any possibility of window dressing to address the systemic cancerous outgrowth of a failed regulatory environment that nearly shattered the country.

And, unbeknownst to the Know Nothings, their bill will step on the toes of their colleagues because the proposed act will hit the NRA and Dick Cheney’s hunting escapades right between the eyes. Every year the Fish and Wildlife Service analyzes data to determine appropriate bird hunting season for each state. The Migratory Bird Hunting study tells hunters which birds they can hunt, when seasons begin and end, where hunting is permitted, kill limits, etc. The Regulatory Freeze Act, H.R. 4078 will block this annual regulatory action. Where, when, and what will they hunt? This could lead to nationwide pandemonium with orange-suited hunters blasting away at anything, and everything, that flies!

And, even more alarming yet, the bill endangers the health of the nation at large because, every five years, Congress reauthorizes the Prescription Drug and User Fee Act, establishing the framework for FDA approval of new medicines and new medical devices. Reauthorization of this act is scheduled for 2012.

The bill sponsor is Tim Griffin (R-AR), and there are 20 Republican co-sponsors with no Democrats on board. Griffin is the one who infamously resigned from his position with George W. Bush’s re-election campaign after his Swift Boat (2004) involvement became public.

Previously Griffin was a legal advisor for the Bush-Cheney 2000 Florida Recount Team, and appearing in a BBC documentary, “Digging the Dirt,” he stated, “We think of ourselves as the creators of the ammunition in a war. We make the bullets.” During Griffin’s 2010 campaign for the House, Citizens for Responsibility and Ethics in Washington named him as one of the “Crooked Candidates of 2010.” He has served in the House since January 3, 2011.

Griffin believes new regulations and/or changes in regulations hurt the economy, and he opines a moratorium on regulations will increase employment… What?  However, it is worth noting his bill does have limited exemptions to respond to health or safety threats to the country and for national security.

Nevertheless, the Congressional Budge Office says the bill could have a big, and hard to predict, effect on revenue, spending and implementation of legislation. As currently written, the bill will prevent annual updates of Medicare service payment levels, and it will delay implementation of the Patient Protection and Affordable Care Act, 2010, informally referred to as Obamacare, including provisions for creation of a new system of health insurance.

Additionally, the bill appears to eradicate numerous pending energy-related bills like a New Refinery Standards act and a new EPA Fracking Rule as well as new energy standards for housing and industrial coolers.

You can bet your bottom dollar this bill is destined to become a very expensive affair, but whether it passes, or not, that is altogether another story for another time.

How Banks Cheat

Artful Liars

by CHRISTOPHER BRAUCHLI

I think a lie with a purpose is wan iv the’ worst kind an’ the mos’ profitable.
– Finley Peter Dunne On Lying

There was something refreshing about Bernie Madoff.  He robbed Peters to pay Pauls and it worked well until there were more Pauls than Peters. It was straightforward and simple.  And that is the difference between him and Barclays, JPMorgan Chase, Goldman Sachs and the many other large financial institutions that cheat those with whom they deal. Bernie was not subtle.  No Congressional hearings or hearings in the British parliament were required in order to understand what happened.

A man named Diamond runs Barclays and a man named Dimon runs JPMorgan Chase. The similarity in names is not all they have in common. Each man has presided over an institution that has dealt less than fairly, in the case of JPMorgan, with its customers,  and in the case of Barclays, with consumers everywhere.  JPMorgan did it by ripping off its customers and Barclays did it by manipulating the LIBOR rate.  (It is now reported that four other major European banks are being investigated for similar behavior.)

Barclays manipulated the LIBOR rate from 2005-2009.  The LIBOR rate is the rate banks charge each other for inter-bank loans.   

According to Ezra Klein from 2005 to 2007 Barclay’s placed bets that LIBOR rates would increase.  Barclays would then report artificially high rates to the authority gathering the rates from the banks to establish the LIBOR rate thus improving the chance that the LIBOR rate would go up and the bets the firm made would pay off.    Investors on the other side of the bet were losers and borrowers whose interest rates on loans were set to LIBOR were paying artificially high rates. Beginning in 2008 when the solvency of financial institutions was being questioned, instead of reporting artificially high rates Barclays reported artificially low rates leading regulators to believe the bank was healthier than it was thus reducing the likelihood that its stability would be questioned.  (When rates were low consumers benefitted since mortgages, credit card loans and other financial transactions are tied to those rates.)   When the LIBOR manipulation came to light, Mr. Diamond sent a memo to staff saying he was “disappointed because many of these things happened on my watch.” 

On July 2 he said that although disappointed he would not resign his position.  On July 3 he resigned.  Chancellor of the Exchequer, George Osborne, said the episode was “evidence of systematic greed at the expense of financial integrity and stability” and said the bank was in flagrant breach of its duty “to observe proper standards of market conduct. . . .”  Any reader who tries to understand my attempt to describe the LIBOR manipulation and its effects will certainly appreciate the simplicity of Mr. Madoff’s scheme.

JPMorgan Chase is one of the largest mutual fund managers in the country.  In addition to selling its own funds, it is in a position to sell other funds to its customers.  According to a story in the New York Times its sales personnel were encouraged to sell customers its proprietary funds rather than those of competitors, even when the competitors’ funds had historically performed better than the bank’s funds. One former employee said he was “selling JPMorgan funds that often had weak performance records, and  I was doing it for no other reason than to enrich the firm.  I couldn’t call myself objective.”  Some people might have been surprised at those disclosures thinking that the bank would have reformed its ways after 2011.  That was the year the bank was ordered to pay $373 million to American Century Investments because it failed to honor its agreement with American Century to promote American Century products when it acquired that firm’s retirement-plan services unit.  The arbitrators who heard the case said JPMorgan employees were rewarded for pushing JPMorgan’s own products.

Goldman Sachs is another venerable institution that benefits itself at the expense of its customers.  In March 2012 Chancellor Leo Strine of the Court of Chancery in Delaware issued a lengthy ruling in the case of in re El Paso Shareholder Litigation.   He criticized Goldman for its blatant conflict of interest when trying to acquire El Paso Corp describing it as “disturbing behavior.” Jonathan Weil who writes for Bloomberg,  made the observation about Goldman’s conduct in that transaction that  Goldman had “every incentive to maximize its own investment and fleece El Paso shareholders.”   

At roughly the same time Chancellor Strine’s opinion was making the news a former Goldman employee published an op-ed piece in the New York Times in which he said, among other things, that the firm’s clients were “sidelined in the way the firm operates and thinks about making money. . . . It is purely about how we can make the most possible money off them {clients.}.”

Readers should understand that the foregoing does not purport to be a complete list of banks that have devised schemes to enrich themselves at the expense of their customers. It is only a small sampling.  As I said at the outset, the nice thing about Bernie was how straightforward his malfeasance was.   Everyone can understand it.  The banks are no more honest than he-just more artful.