Ron Paul’s Audit the Fed Fails

Ron Paul’s Audit the Fed Fails 229-198

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By RonPaul.com on July 1, 2010

Ron Paul’s attempt to audit the Federal Reserve, which was previously co-sponsored by 320 members of the House (HR 1207), failed by a vote of 229-198. All Republicans voted in favor of the measure with 23 Democrats crossing the aisle to vote with Republicans. 122 co-sponsors of HR 1207, all Democrats, jumped ship and voted against the measure.
The GOP had offered the Fed audit as the minority’s last chance to alter the financial regulation bill. The bill does have an watered-down audit provision in the conference report, but it is limited to loans made by the Fed during the height of the economic crisis. Ron Paul’s bill would have allowed a total examination of the Fed’s books.

Audit the Fed: Vote on House Floor Today!

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By RonPaul.com on June 30, 2010

As the House debates the financial regulatory reform bill, the Republicans will offer the thorough Paul-Grayson Audit language as part of their motion to recommit.
In support of this motion, Representative Paul has written an “Audit the Fed” post for the “America Speaking Out” website. Check it out here and show your support by voting for the idea and leaving a comment.
You can find out more about the motion to recommit here.

GOPers To Push Fed Audit
House GOPers will make a push to audit the Federal Reserve in a last-ditch effort to stop financial regulatory reform legislation, leaning on a popular proposal from Rep. Ron Paul (R-TX) to make their case.
The GOP will offer the Fed audit as a motion to recommit, the minority’s last chance to alter a bill before final passage. A motion to recommit is subject only to an up-or-down vote, not to debate or amendments.
The regulatory reform measure does have an audit provision in the conference report, but it is limited to loans made by the Fed during the height of the economic crisis. Paul’s bill would allow a total examination of the Fed’s books.
Paul’s legislation has 320 co-sponsors, including Dems as diverse as Reps. Jason Altmire (D-PA), a centrist, and Steve Cohen (D-TN), a liberal.
But it’s unlikely to pass as a motion to recommit, which would send the conference committee back to the drawing board for a third time. House and Senate Dems reached agreement Tuesday night on a revamped package after Sen. Scott Brown (R-MA) and Olympia Snowe (R-ME), 2 key GOPers who voted for the Senate version, said they could not vote for the first conference report. Negotiators ended up dropping a proposed $18B bank tax to help pay for the bill.

Call Congress and urge your representative to support Audit the Fed (especially if they’re a cosponsor) by voting for the motion to recommit on H.R. 4173. If final passage of the Dodd-Frank bill comes up for a vote, demand they oppose this latest government move to interfere in the economy.

Ron Paul on Federal Reserve Audit and Financial Regulation

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By RonPaul.com on June 30, 2010

Ron Paul says the monetary system is the cause of the crisis, and giving more power to the Fed doesn’t make sense since they are the cause of the crisis. The original language of HR 1207, calling for a full audit of the Fed, was neutered but there is still a chance to revive the original intent. Without a full audit, we will never understand why bubbles form and why more regulations fail. The Fed audit that Paul is calling for does not challenge the supposed independence of the Federal Reserve.

P. Krugman-The Icelandic Post-crisis Miracle

New York Times Blog

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June 30, 2010, 6:09 pm

The Icelandic Post-crisis Miracle

Iceland is, of course, one of the great economic disaster stories of all time. An economy that produced a decent standard of living for its people was in effect hijacked by a combination of free-market ideology and crony capitalism; one of the papers (pdf) at the conference I just attended in Luxembourg shows that the benefits of the financial bubble went overwhelmingly to a small minority at the top of the income distribution:

Olafsson and Kristjansson

And in the process of building short-lived financial empires, a handful of operators built up enormous debts that their fellow citizens are now expected to repay.
But there’s an odd coda to the story. Unlike other disaster economies around the European periphery – economies that are trying to rehabilitate themselves through austerity and deflation — Iceland built up so much debt and found itself in such dire straits that orthodoxy was out of the question. Instead, Iceland devalued its currency massively and imposed capital controls. [ΑΥΤΗ ΕΙΝΑΙ Η ΛΥΣΙΣ ΔΙΑ ΤΗΝ ΕΛΛΑΔΑ, ΜΟΝΟΝ ΑΥΤΗ!!!]
And a strange thing has happened: although Iceland is generally considered to have experienced the worst financial crisis in history, its punishment has actually been substantially less than that of other nations. Here’s GDP:

Eurostat

And here’s employment:

Eurostat

The moral of the story seems to be that if you’re going to have a crisis, it’s better to have a really, really bad one. Otherwise, you’ll end up taking the advice of people who assure you that even more suffering will cure what ails you.

P. Buchanan- The Prisoner of Gen. Petraeus

June 29th, 2010

The Prisoner of Gen. Petraeus

By Patrick J. Buchanan
President Obama is being hailed for toughness in his firing of Gen. McChrystal and brilliance in his replacing him as Afghan field commander with Gen. David Petraeus, who managed the George W. Bush “surge” in Iraq that saved this nation from an ignominious defeat.
Herewith, a dissent.
By firing a fighting general, beloved of his troops, Obama just took upon himself full responsibility for the McChrystal Plan. The general is off the hook.
As of now, the plan is not succeeding. And given the inability of Kabul to deliver the “government in a box” to Marja, after Marines supposedly de-Talibanized the town, the McChrystal Plan is failing. The Battle of Kandahar has not yet begun, though the June D-Day has come and gone.
Should we be in this same bloody stalemate in December, Obama will be blamed for having fired his field commander who devised his battle plan, and was carrying it out, over some stupid insults from staff officers to some counterculture magazine.
More critically, Obama just made himself hostage to a savvy general who is said to dream of one day holding Obama’s office.
Consider the box Obama just put himself in.
In 2009, he sacked Gen. David McKiernan and replaced him with his own man, Gen. McChrystal. Now, he has sacked McChrystal and replaced him with Petraeus.
The former community organizer and acolyte of Saul Alinsky cannot now possibly fire the most popular and successful general in the U.S. Army, who accepted a demotion to take command of U.S. and NATO forces in Afghanistan, without a firestorm that would consume his presidency.
If Obama has not noticed, the neocons, who want a “long war” in the Islamic world and a new war with Iran, are celebrating the Petraeus appointment with far greater unanimity than Obama’s own staff.
Why is the War Party celebrating? Petraeus is one of them.
And the untouchable general’s demands have begun to come in.
Clearly, Obama has been told he must back away from his declared deadline of July 31, 2011, for beginning withdrawals of U.S. troops from Afghanistan. And Obama is already moving to do so.
Vice President Joe Biden’s statement in Jonathan Alter’s “The Promise” that, “in July of 2011, you’re going to see a whole lot of people moving out, bet on it,” has already been challenged by Defense’s Robert Gates.
No such decision has yet been made, said Gates.
Look to Obama, soon, to walk back that July 2011 date and declare that any withdrawal of U.S. troops will be “conditions-based” — another way of saying that if we are not winning the war in July 2011, we are not coming home.
Here is the likely scenario.
At the December review of the Afghan war, Petraeus will argue that, while progress is being made, we cannot meet our goals by July 2011. Years more of combat will be required to win the war.
Petraeus will ask the president for more time, perhaps years more, and perhaps ask for more troops, 20,000 or 30,000, to complete the mission and ensure Afghanistan is not again a sanctuary for al-Qaida.
Thus, in December 2010, Obama becomes LBJ in December 1967, when Gen. William Westmoreland, with 500,000 troops in Vietnam, came to the White House to ask for 200,000 more. LBJ said no.
And as the Republican right hammered him for not bombing Hanoi and blockading Haiphong, Sens. Eugene McCarthy and Robert Kennedy entered the primaries against him from the left.
Richard Nixon, saying five years of unsuccessful prosecution of a war called out for new leadership, was marching to the nomination of a party he had helped reunite after the Barry Goldwater disaster.
The outlook bleak, his party splintering, LBJ declared on March 31, 1968, that he would not run again.
If Obama repudiates his July 2011 date for first withdrawals of U.S. troops, if he agrees to any new Petraeus troop request, his party will split and he will face a primary challenge from the antiwar left.
But if he stands with Biden and says the July 2011 date holds, and the troops start home in July, Petraeus would likely put out word that his hands are being tied and he will not fight a no-win war.
Should Petraeus resign his command under such circumstances, he would become a Douglas MacArthur-like hero to the GOP, and could wind up as No. 2 on the ticket. And that could send Barack Obama home to Chicago.
Obama should have left McChrystal to succeed or fail with the McChrystal Plan. Had he succeeded, Obama also would have succeeded. Had he failed, Obama would have been free to relieve him and tell the nation: “We gave it our best shot, with our best general, with all the resources he requested. Regrettably, we did not succeed. Now we are coming home.”
That option was closed when he fired McChrystal and made himself the political prisoner of Gen. David Petraeus.
Brilliant.

The International Monetary Fund

June 29, 2010

Trust Them? Why?

Is Advice From the IMF Better Than Advice From a Drunk on the Street?

By DEAN BAKER

That is the question that people around the world should be asking as the International Monetary Fund dishes out its prescription for austerity. The IMF program calls for cutbacks in government support for health care, pensions and a wide range of other public services. It also calls for weakening labor market regulations that provide workers with job security.

These recommendations are being given in a context where the world economy is suffering from a massive shortfall of demand. In other words, tens of millions of people are unemployed right now because there is not enough spending to keep them employed. The IMF’s program is almost certain to reduce spending further leading to even larger shortfalls in demand and more unemployment.

But, the IMF says that we should trust them. The question we should all be asking is “why?”

Where was the IMF when the housing bubble in the United States and elsewhere was inflating to ever more dangerous levels? Was it frantically yelling at governments to rein in the bubbles before they burst with disastrous consequences? After all, what could possibly have been more important than warning of the dangers of these bubbles?

It was easy to both recognize the housing bubbles and that their collapse would have devastating consequences for the economy. Economies don’t adjust easily to a loss of wealth that in some cases exceeded 50 percent of GDP.

Real economists know this, but apparently the folks at the IMF did not, or if they did, they didn’t think it was worth saying anything. One will look in vain through IMF publications during the buildup of the housing bubble for serious warnings of the potential dangers. While the IMF can scream about the need for austerity today, it couldn’t be bothered to say much about the bubbles that got us here.

The IMF’s track record gives us reason not only to question the institution’s competence but also its motivations. This question comes up most clearly in the case of Argentina. At the end of 2001 Argentina defaulted on its debt, enraging the IMF. Prior to the default, Argentina had been an IMF poster child eagerly embracing the IMF's program. The IMF's growth forecasts clearly reflected its change of attitude towards Argentina. Prior to the default the IMF was consistently overly optimistic about Argentina's growth prospects, projecting much higher growth than Argentina actually experienced. After the default, the IMF was hugely over-pessimistic, projecting much lower growth rates than it subsequently experienced. It is difficult to explain this pattern of errors except by a political motivation.

It is possible to see a similar pattern in the IMF’s latest set of policy recommendations to deal with the economic crisis. The impact of most of its proposals will be to reduce the benefits received by ordinary workers. The proposed changes in labor market regulations will likely also weaken workers’ bargaining power, leading to cuts in wages. Furthermore, the reduction in demand caused by the turn to austerity will leave millions more out of work, both depriving these workers of income and further weakening the bargaining power of those who still have jobs.

There are alternatives. Central banks like the European Central Bank, the Bank of England and the Federal Reserve Board could just buy and hold large amounts of government debt. These central banks can both ensure that there are no questions of solvency by providing a ready market for government debt and that there is no build-up of interest burdens. The interest paid on the debt held by the banks is refunded to governments.

Large-scale central bank purchases of government debt will not create inflation in a context of massive unemployment and excess capacity. This is not a point we have to debate. Japan’s central bank has bought an amount of government debt roughly equal to its GDP, yet it remains far more concerned about deflation than inflation. While we could hope to do better on the stimulus front than Japan, inflation is simply not a problem it faces now or even on the distant horizon.

It is especially painful to see these calls from austerity coming from the IMF. This organization is distinguished not only by its dismal track record in pushing economic policies that don’t work; it also is known for the exorbitant benefits that it gives its economists. Under the IMF’s pension program, many staffers can retire in their early 50s with six-figure pensions. Imagine the folks who completely missed the housing bubble or who got it totally wrong on Argentina lounging around the tropics at age 51 on their $100,000 a year IMF pension. At least a street drunk giving economic advice would be honest.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the Bubble Economy.
This column was originally published by The Guardian.

Guns of August in the Middle East?

July 1, 2010

Dispatches From the Edge

Guns of August in the Middle East?

By CONN HALLINAN

Crazy talk about the Middle East seems to be escalating, backed up by some pretty ominous military deployments. First, the department of scary statements:

First up, Shabtai Shavit, former chief of the Israeli spy agency Mossad, speaking June 21 at Bar Ilan University, Tel Aviv on why Israel should launch a pre-emptive strike at Iran: “I am of the opinion that, since there is an ongoing war, since the threat is permanent, since the intention of the enemy in this case is to annihilate you, the right doctrine is one of presumption and not retaliation.”

Second up, Uzi Arad, Israeli prime Minister Benjamin Netanyahu’s national security advisor, speaking before the Jewish Agency in Jerusalem June 22 on his belief that the “international community” would support an Israeli strike at Iran” “I don’t see anyone who questions the legality of this or the legitimacy.”

Third up, Italian Prime Minister Silvio Berlusconi speaking to reporters at the G-8 meeting in Toronto June 26: “Iran is not guaranteeing a peaceful production of nuclear power [so] the members of the G-8 are worried and believe absolutely that Israel will probably react preemptively.”

Fourth up, Central Intelligence Director Leon Panetta predicting on ABC’s “This Week” program June 27 that Iran could have two nuclear weapons by 2012: “We think they [Iran] have enough low-enriched uranium for two weapons…and while there is continuing debate [within Iran] right now about whether or not they ought to proceed with a bomb…they clearly are developing their nuclear capacity.” He went on to say that the U.S. is sharing intelligence with Israelis and that Tel Aviv is “willing to give us the room to be able to try to change Iran diplomatically and culturally and politically.”

A few points:

1) Iran and Israel are not at war, a fact Shavit seems confused about.

2) Since the recent rounds of sanctions aimed at Iran would have lost in the United Nations General Assembly, it unclear who Arad thinks is the “international community.”

3) Berlusconi is a bit of a loose cannon, but he is tight with the Israelis.

4) An Iran that is different “diplomatically and culturally and politically” sounds an awful lot like “regime change.” Is that the “room” Panetta is talking about?

And it isn’t all talk.

Following up the London Times report that Saudi Arabia had given Israel permission to fly through Saudi airspace to attack Iran, the Jerusalem Post, the Islam Times and the Iranian news agency Fars report that the Israeli air force has stockpiled equipment in the Saudi desert near Jordan.

According to the Post supplies were unloaded June 18 and 19 outside the Saudi city of Tabuk, and all civilian flights into the area were canceled during the two day period. The Post said that an “anonymous American defense official” claimed that Mossad chief Meir Dagan was the contact man with Saudi Arabia and had briefed Netanyahu on the plans.

The Gulf Daily News reported June 26 that Israel has moved warplanes to Georgia and Azerbaijan, which would greatly shorten the distance Israeli planes would have to fly to attack targets in northern Iran.

The U.S currently has two aircraft carriers—the Truman and the Eisenhower—plus more than a dozen support vessels in the Gulf of Hormuz, the strategic choke point leading into the Gulf of Iran.

The Saudis have vigorously denied the reports they are aiding the Israelis, and Shafeeq Ghabra, president of the American University of Kuwait, says “It would be impossible for the Saudis to allow an Israeli attack on Iran.”

But Ephraim Inbar, director of the Begin-Sadat Center for Strategic Studies in Ramat Gan, Israel, argues that Saudi Arabia and Israel both fear a nuclear-armed Iran. “This bring us together on a strategic level in that we have common interests. Since the Arab world and Saudi Arabia understand that President Obama is a weak person, maybe they decided to facilitate this happening.” He also said the story might not be true because “I don’t think the Saudis want to burden themselves with this kind of cooperation with Israel.”

According to military historian Martin van Creveld, a professor at the Hebrew University in Jerusalem, “The real fear is that someone will get carried away by his own rhetoric and fear mongering” and start a war. He also thinks, however, that Israel should not take a preemptive strike “off the table.”

Trita Parsi of the Woodrow Wilson Center in Washington argues that the escalation of rhetoric is dangerous. “When you have that kind of political environment, you are leaving yourself no space to find another solution,” she told the Christian Science Monitor. “You may very well end up in a situation where you are propelled to act, even though you understand it is an unwise action, but [do so] for political reasons.”

The rhetoric is getting steamy, the weapons are moving into position, and it is beginning to feel like “The Guns of August” in the Middle East.

Conn Hallinan can be reached at: ringoanne@sbcglobal.net

What do we know about the Deepwater Horizon disaster?

 http://news.bbc.co.uk/2/hi/world/us_and_canada/10370479.stm

What do we know about the Deepwater Horizon disaster?

 

Firefighters battled in vain to save the rig

The Deepwater Horizon rig disaster caused the deaths of 11 crew and a massive oil spill in the Gulf of Mexico.

Since the 20 April catastrophe there has been much discussion in US Congressional hearings and the media about the sequence of events that led up to it.
Here is a summary of what we know so far about the BP oil spill, and the primary questions that are still being investigated.

BACKGROUND

The Deepwater Horizon rig was drilling an oil well in the Macondo prospect that was intended to be plugged with cement and then completed later to become a production well.
The top of the well was about 5,000ft (1,524m) beneath the surface of the Gulf of Mexico.
The Deepwater Horizon was owned and mostly staffed by employees of exploration firm Transocean, under contract to BP.

THE NATURE OF THE WELL

GLOSSARY

Continue reading the main story

• BOP: Blowout preventer - stack of valves designed to stop blowouts
• Blind ram shear: Last line of defence in BOP - cuts pipe
• Centraliser: Device to keep pipe or casing in centre of well
• Cement bond log: Tests to make sure cement is sound
• Annulus: Gap between pipe and rock, or between pipe and another pipe

Underwater oil wells are not just holes with a drilling pipe stuck into them. As the drilling is done, a fluid, usually mud is forced out of the drill bit and debris is thus pushed upwards.
This fluid also counteracts the pressure to stop oil and gas forcing their way upwards.
Once each passage of drilling is completed, metal casing is cemented into place in the hole.
In this case the well had already been cemented ready for abandonment. At the point the disaster occurred, the well was essentially finished.

HOW CEMENT AND CASING IS PLACED IN DRILLING BOREHOLE
Drill, lowered from rig, bores through seabed creating a borehole for sections of casing pipe to be lowered into Casing pipe is lowered into borehole allowing cement to be pumped down the pipe to fix it in place Once the cement is set and secure another stage of drilling begins

CASING AND CEMENT

The first of the two catastrophic problems was in the well itself.
In his evidence to a Congressional committee on 19 May, Transocean chief executive Steve Newman noted that the well was "essentially complete" with drilling having finished three days before the disaster on 17 April.
He said: "The one thing we do know is that on the evening of 20 April, there was a sudden catastrophic failure of the casing, the cement or both. Without a failure of one of those elements, the explosion could not have occurred."
The cementing job was done by Halliburton to specifications ultimately determined by BP.

CENTRALISERS

Much has been made in Congressional hearings of the number of centralisers used. These devices make sure that the pipe or casing is centralised during cementing, to ensure a good job is done.
Congressmen say Halliburton recommended that 21 should be used, but BP decided only six should be used.
In an e-mail, a BP engineer said : "But, who cares, it's done, end of story, will probably be fine and we'll get a good cement job."

CEMENT BOND LOG

Because of the importance of getting a good cement job in the well, one that is bonded both to the casing and to the geological formation in which the well is dug, a series of measurements called a "cement bond log" is usually run.
A sonic scanning device is lowered through the well on a wireline. It checks whether there are imperfections in bonding or other problems in the cement. If there are, more cement can be squeezed into affected sections.
Documents presented to Congress show a team from Schlumberger were called to the rig to be ready to do such work, but that they departed on the morning of the disaster having been told their services were not required.
Other documents suggest the cost saving in not having a "cement bond log" to be about $118,000.

CEMENT ISSUES

Henry Waxman, chairman of the House Energy and Commerce Committee, noted "the failure to circulate potentially gas-bearing drilling muds out of the well". This should have been done before cementing.
Another issue was the type of casing that would be used on the final, bottom section of the well. BP opted for a single line of casing from the seabed down to the bottom of the well, Congressman say. The more expensive option would have been to use a "liner", a bit of casing hung from the bottom of the casing section above. Inside this would have been a further piece of tubing called a "tieback".
This arrangement would have created more barriers to the upward flow of oil and gas, but it would also have been more expensive.
Other cementing issues being investigated by Transocean include the type of nitrogen-foamed cement used, the volume and the time it was allowed to "cure".

WHAT IS A BOP?

Whatever the exact cause of what happened, it is clear there was some sort of gas-kick and blowout resulting in an uncontrolled upward surge of oil and gas flow to the surface.
The blowout preventer (BOP) is supposed to stop this happening. The BOP, the size of a five-storey building, consists of a series of high-pressure valves, designed to prevent such a surge or kick from damaging the drilling operation.
In this particular BOP, built by US firm Cameron to specifications by Transocean, there are five ram-type preventers and two annular preventers, according to Transocean's chief executive.
These devices did not stop the blowout. Nor has it been possible to activate them using remote-operated vehicles.

WHY DID THE BOP FAIL?

Blowout preventer

Investigations into the US oil spill are focused on the blowout preventer system of valves on the seabed.

The system's control panel is its electronic "brains", keeping valves open to allow flow from well to rig.

In an emergency, hydraulic valves or shear rams should close shut on the pipe, sealing it and preventing flow.

BACK 1 of 3 NEXT

Two possible scenarios have been discussed. One - suggested by Transocean - is that the kick was so catastrophic it pushed fragments of cement debris through the BOP so fast that it was damaged and could not activate.
The sheer force of what happened is indicated by the fact that cement debris travelled all the way up the 5,000ft of riser and on to the deck of the drilling rig.
The other possibility is that the BOP was faulty in the first place.
There were initial allegations that the batteries in a control pod for the BOP may have been flat. Transocean denies this.
A rig worker has also told the BBC's Panorama programme that a leak had been spotted in one of the BOP's control pods.
The last line of defence in a BOP is usually the blind shear ram. This device, activated hydraulically, uses piston-driven blades to cut the pipe, thus stopping the flow.

Tyrone Benton: 'We saw a leak'

This did not work. One possible explanation is that the section of pipe it was trying to shear was a section of "tool joint". These joints between the pipes are typically so strong that a blind shear ram cannot deal with them.
Another possibility is that something in the hydraulic mechanism of the blind shear ram had failed.

WHAT HAPPENED NEXT?

With the failure to prevent the blowout, the rig was in danger. Everything happened very quickly, according to Transocean boss Steve Newman's hearing evidence.
"It is also clear that the drill crew had very little, if any, time to react. The initial indications of trouble and the subsequent explosions were almost instantaneous."
The surge of gas that reached the surface ignited. Transocean identified two nearby vessels, the rig's own engines and some equipment as the possible source of the accidental ignition.
In the blast and fire, 11 rig workers died, with more injured. Just over 36 hours later the rig sank.