December 3rd, 2010
It isn't enough that Obama has taken over auto manufacturers, banks, healthcare, student loans and other industries to numerous to mention. Now the President will try to bypass Congress and take over the internet. The best way to combat this authoritarian powergrab is to call both the Whitehouse and your Congressmen and raise cain.
Below is an editorial from the Washington Times concerning the Governments upcoming effort to control and dominate our lives in ways yet unimagined via the internet.
The Federal Communications Commission (FCC) is poised to add the Internet to its portfolio of regulated industries. The agency's chairman, Julius Genachowski, announced Wednesday that he circulated draft rules he says will "preserve the freedom and openness of the Internet." No statement could better reflect the gulf between the rhetoric and the reality of Obama administration policies.
With a straight face, Mr. Genachowski suggested that government red tape will increase the "freedom" of online services that have flourished because bureaucratic busybodies have been blocked from tinkering with the Web. Ordinarily, it would be appropriate at this point to supply an example from the proposed regulations illustrating the problem. Mr. Genachowski's draft document has over 550 footnotes and is stamped "non-public, for internal use only" to ensure nobody outside the agency sees it until the rules are approved in a scheduled Dec. 21 vote. So much for "openness."
The issue of "net neutrality" is nothing new, but the increasing popularity of online movie streaming services like Netflix have highlighted an area of potential concern. When someone watches a film over the Internet, especially in high definition, the maximum available capacity of the user's connection is used. Think, for example, of the problems that would arise at the water works if everyone decided to turn on their faucets and take a shower simultaneously. Internet providers are beginning to see the same strain on their networks.
In some cases, heavy use of this sort slows the Web experience for everyone sharing the same lines. That has prompted some cable Internet providers to consider either charging the heavy users more or limiting access to the "problematic" services. Of course, if cinema buffs find themselves cut off from their favorite service, they're going to be mad. If companies don't act, they're just as likely to find irate customers who don't want their experience bogged down by others.
It's not clear why the FCC thinks it needs to intervene in a situation with obvious market solutions. Companies that impose draconian tolls or block services will lose customers. Existing laws already offer a number of protections against anti-competitive behavior, but it's not clear under what law Mr. Genachowski thinks he can stick his nose into the businesses that comprise the Internet. The FCC regulates broadcast television and radio because the government granted each station exclusive access to a slice of the airwaves. Likewise when Ma Bell accepted a monopoly deal from Uncle Sam, it came with regulatory strings attached.
Other Editorials from The Washington Times
December 2nd, 2010
Thursday, December 2, 2010; 12:15 AM
The financial crisis stretched even farther across the economy than many had realized, as new disclosures show the Federal Reserve rushed trillions of dollars in emergency aid not just to Wall Street but also to motorcycle makers, telecom firms and foreign-owned banks in 2008 and 2009.
The Fed's efforts to prop up the financial sector reached across a broad spectrum of the economy, benefiting stalwarts of American industry including General Electric and Caterpillar and household-name companies such as Verizon, Harley-Davidson and Toyota. The central bank's aid programs also supported U.S. subsidiaries of banks based in East Asia, Europe and Canada while rescuing money-market mutual funds held by millions of Americans.
The biggest users of the Fed lending programs were some of the world's largest banks, including Citigroup, Bank of America, Goldman Sachs, Swiss-based UBS and Britain's Barclays, according to more than 21,000 loan records released Wednesday under new financial regulatory legislation.
The data reveal banks turning to the Fed for help almost daily in the fall of 2008 as the central bank lowered lending standards and extended relief to all kinds of institutions it had never assisted before.
Fed officials emphasize that their actions were meant to stabilize a financial system that was on the verge of collapse in late 2008. They note that the actions worked to prevent a complete financial meltdown and that none of the special lending programs has lost money. (Some have recorded healthy profits for taxpayers.)
But the extent of the lending to major banks - and the generous terms of some of those deals - heighten the political peril for a central bank that is already under the gun for a wide range of actions, including a recent decision to try to stimulate the economy by buying $600 billion in U.S. bonds.
"The American people are finally learning the incredible and jaw-dropping details of the Fed's multitrillion-dollar bailout of Wall Street and corporate America," said Sen. Bernard Sanders (I-Vt.), a longtime Fed critic whose provision in the Wall Street regulatory overhaul required the new disclosures. "Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations. As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions."
The Fed launched emergency programs totaling $3.3 trillion in aid, a figure reached by adding up the peak amount of lending in each program.
Companies that few people would associate with Wall Street benefited through the Fed's program to ease the market for commercial paper, a form of short-term debt used by major corporations to fund their daily activities.
By the fall of 2008, credit had frozen across the financial system, including the commercial paper market. The Fed then purchased commercial paper issued by GE 12 times for a total of $16 billion. It bought paper from Harley-Davidson 33 times, for a total of $2.3 billion. It picked up debt issued by Verizon twice, totaling $1.5 billion.
"It is hard to say what would have happened without the facility, and how its absence might have affected GE, but overall the program was extremely effective in helping stabilize the market," GE spokesman Russell Wilkerson said by e-mail.
Verizon spokesman Robert A. Varettoni said that it was "an extraordinary time," adding that there was no credit available otherwise at the time.
The data revealed that the Fed continued making purchases into the summer of 2009 - after the official end of the recession - showing that it was still concerned about a fundamental part of the financial system even as economic growth was returning.
The disclosure shows "how really profound the financial crisis was in the fall of 2008 and the firepower the Fed mustered in response," said analyst Karen Shaw Petrou of Federal Financial Analytics.
Foreign-owned banks also benefited from the Fed's commercial-paper facility. The Korean Development Bank, owned by the South Korean government, used the program to the tune of billions of dollars, including a $407 million short-term loan on a single day. Many foreign banks, including the French BNP Paribas, the Swiss UBS and the German Deutsche Bank, took extensive advantage of various programs. Even a major bank in Bavaria benefited, as well as another one headquartered in Bahrain, a tiny island country in the Middle East.
Another Fed program allowed investment banks for the first time to borrow directly from the Fed as officials sought to stem the panic that had taken down Wall Street titan Bear Stearns. The central bank assisted 18 companies through this program. Among the biggest beneficiaries was Citigroup, which in a single day in November 2008 borrowed $18.6 billion from the Fed.
The data also demonstrate how the Fed, in its scramble to keep the financial system afloat, eventually lowered its standards for the kind of collateral it allowed participating banks to post. From Citigroup, for instance, it accepted $156 million in triple-C collateral or lower - grades that indicate that the assets carried the greatest risk of default.
Dallas Federal Reserve President Richard Fisher defended the Fed's actions during the financial crisis, saying the central bank "stepped into the breach" in its role as a lender of last resort.
"That's what we are paid to do," he said. "We took an enormous amount of risk with the people's money," he acknowledged. But the crisis lending programs are now all closed, he said, "and we didn't lose a dime, and in fact we made money on every one of them."
The banks universally hailed the Fed on Wednesday.
"In late 2008, many of the US funding markets were clearly broken," Goldman Sachs said in a statement, echoing similar comments made by Bank of America and Citigroup. "The Federal Reserve took essential steps to fix these markets and its actions were very successful."
By 2009, Goldman and other Wall Street firms were reporting their best profits ever. That allowed these banks to pay out huge salaries again, but it also drew the ire of lawmakers and ordinary Americans.
Sanders, for one, said these banks got off easy while receiving extraordinary aid. In rescuing these firms, the Fed never required them to lend to small businesses, modify the mortgages of homeowners or invest in a way that would create jobs.
"We bailed these guys out, but the requirements placed upon them had very little positive impact on the needs of ordinary Americans," Sanders said.
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December 2nd, 2010
US News & World Report
By Paul Bedard
Failure by Congress to extend the Bush tax cuts, especially locking in the 15 percent capital gains tax rate, will spark a sell off starting December 15 as investors move to lock in gains at a lower rate than the 20 percent it would jump to next year, warn analysts. [See who gets the most money from the financial industry.]
While it is unclear how bad the sell off could be, it could wipe out the year's gains, they warn.
"Capital gains tax rate will increase from 15 to 20 percent if the tax cuts are not extended. The last time the capital gains tax rate increased--on Jan. 1, 1987 from 20 to 28 percent--investors realized their gains at the lower tax rate," said Daniel Clifton at a Washington partner at Strategas Research Partners. "We would expect a similar effect this time around as investors see the tax rate going up and choose to realize their gains and incur the 15 percent tax." [See a gallery of political caricatures.]
In a memo to clients, Clifton says that the date most clients are focused on is December 15th for a deal in Congress before beginning to sell. One reason: Many expire that day and investors have to act.
The later Congress acts, he tells Whispers, "the more pressure that will build on the stock market."
Worse, talk that Congress will simply pass retroactive fixes to the tax system won't help, since investors will take the sure thing and sell rather than rely on Capitol Hill. "Fixing the issue next year will not negate these negative impacts," said Clifton.
Ditto for a retroactive fix to the alternative minimum tax, he writes in the client memo. "The talk of retroactively fixing the tax cuts ignores the fact that the AMT patch cannot be retroactively fixed and is the largest component of the tax increase. Hence, in March and April, 27 million taxpayers will be facing an additional $70 billion in tax payments. The hit to consumer spending would be particularly significant," he writes.
Other Stories From US News and World Report
December 2nd, 2010
By William Booth and Anne-Marie O'Connor
Washington Post Staff Writer
Sunday, November 28, 2010; A01
IN VERACRUZ, MEXICO Exploiting loopholes in the global economy, Mexican crime syndicates are importing mass quantities of the cold medicines and common chemicals used to manufacture methamphetamine - turning Mexico into the No. 1 source for all meth sold in the United States, law enforcement agents say.
Nearly three years ago, the Mexican government appeared on the verge of controlling the sale of chemicals used to make the drugs, but the syndicates have since moved to the top of the drug trade.
Cartels have quickly learned to use dummy corporations and false labeling and take advantage of lax customs enforcement in China, India and Bangladesh to smuggle tons of the pills into Mexico for conversion into methamphetamine. Ordinary cold, flu and allergy medicine used to make methamphetamine - pills banned in Mexico and restricted in the United States - are still widely available in many countries.
In the past 18 months, Mexican armed forces have raided more than 325 sophisticated factories capable of producing a million pounds of potent methamphetamine a year. Seizures of Mexican methamphetamine along the southwest border have doubled.
"As hard as everyone is working to stop it, the stuff is just going to continue to flow in massive quantities," said Michael Braun, former chief of operations for the Drug Enforcement Administration and now with Spectre Group International, a security firm.
In a typical scenario, United Nations investigators say, a legitimate pharmaceutical company in India exports cold pills to Dubai in the United Arab Emirates, where they are falsely labeled as herbal supplements and shipped to Belize, and then to Veracruz by cargo container.
"Mexico-based trafficking groups have shown tremendous resilience in getting around the precursor chemical prohibitions and controls," said Special Agent Alex Dominguez in the DEA Office of Diversion Control. "They are currently pursuing very sophisticated smuggling techniques. They are trafficking ephedrine-type medicines, just like you would smuggle any high-value contraband such as cocaine or heroin."
Ever resourceful, Mexican cartels have begun to manufacture methamphetamine using legally obtained ingredients - such as phenylacetic acid, or PAA, a honey-smelling chemical used in everything from perfumes, soaps and body lotions to food flavoring and antibiotics.
Traffickers prefer methamphetamine made from cold tablets because it is more potent, but they are increasingly relying on PAA, as resilient Mexican cartels revert to old-school recipes developed by U.S. motorcycle gangs in the 1970s that use phenylacetic acid and its chemical cousins.
At least half of all the methamphetamine seized along the border in the past year was made with precursor chemicals such as phenylacetic acid, U.S. agents told The Washington Post.
"For the cartels, the great thing about meth is it is not bound by geography," a senior U.S. law enforcement agent with direct knowledge of the Mexican drug syndicates who spoke on the condition of anonymity because of security concerns. "You can buy the precursor chemicals off the shelf. You can order them on the telephone."
Mexican mafias have quickly replaced American mom-and-pop domestic producers, who use soft drink bottles to "shake and bake" a few ounces of meth in motel rooms and rural slums, according to DEA officials.
The Chinese government concedes that it has no idea how many cold tablets its state-run companies sell each year. The Mexican government is unsure how much phenylacetic acid is used by legitimate manufacturers, such as Proctor & Gamble, and how much is diverted to the meth labs.
Mexican cartels began to produce ever larger amounts of methamphetamine over the past decade. But under heavy pressure from the United States, Mexico three years ago banned the import and sale of cold, flu and allergy medicines containing ephedrine and pseudoephedrine, the most sought-after chemicals used to make methamphetamine and ecstasy. Most Central American countries implemented their own bans.
Meth production in Mexico plummeted. In 2007, the military busted 33 clandestine laboratories and 51 in 2008, compared with the 215 it uncovered in 2009. Street prices spiked and purity dropped in the United States, an indication of relative scarcity. U.S. diplomats and law enforcement officials hailed Mexico's ephedrine ban as a major success.
But Mexican methamphetamine is surging again. After several years of declining production, the 2010 threat assessment by the Justice Department's National Drug Intelligence Center said Mexico was again "the primary source of methamphetamine consumed in the United States." A companion report was not released for fear of embarrassing Mexican President Felipe Calderon on the eve of his trip to Washington in May.
A tough opponent
U.S. diplomats praise Mexico for its fight against methamphetamine. At the port in Veracruz, where more than 1,700 ships arrive each year, disgorging 720,000 containers on the docks, Mexican marines and customs agents work side by side searching for contraband. The metal boxes are scanned with gamma rays and X-rays and sniffed by dogs. Suspicious cargo is unloaded, blue plastic drums opened and the chemicals inside tested.
"But if there are 2,000 containers a day and you can manage to get in just one or two containers with narcotics, that's a lot. That is tons," said a Mexican navy captain at the port who spoke on the condition his name not be used because of security concerns.
Masked men kidnapped the former director of customs in Veracruz, Francisco Serrano, in June 2009 as he was implementing new scrutiny measures. There have been no arrests, no ransom demands; Serrano vanished.
On the black market, a single allergy pill containing ephedrine can sell for $2.50 in Guatemala. A kilogram of bulk ephedrine from China - about 2.2 pounds of powder - goes for $10,000 on the Mexican black market.
In January, Mexican authorities found three tons of ephedrine concealed in fire extinguishers coming through the port of Manzanilla. In February, agents stopped 120,000 pseudoephedrine pills in Guatemala en route to Mexico City airport. In April, Mexican marines in Veracruz found four tons of ephedrine in jute bags that came from India by way of Europe.
According to investigators with the U.N. International Narcotics Control Board, numerous African countries import quantities of cold remedies that far exceed legitimate medical needs. In Ethiopia, for example, Mexican traffickers and their middlemen used bogus documents to import more than 12 tons of ephedrine. Similar diversions have been uncovered in Argentina, where ephedrine cold pills are still legal. U.N. investigators say most of the suspicious shipments have Mexico as their final destination.
As Mexico fights the flow of methamphetamine to the United States, the drug is ravaging citizens here.
At a rehab center in Apatzingan in the western state of Michoacan, a meth-producing hub, two dozen men huddle in a converted garage, sleeping on bunks, sharing meals, making furniture. They were all addicted to drugs, most to methamphetamine.
Francisco Rodriguez is 53 years old but looks in his 70s. Meth almost killed him. His decalcified bones are so brittle that he walks with a cane. He has lost his teeth. He left his wife, his children, his law career.
"I came to Apatzingan on vacation and tried the local crystal meth. I became an addict instantly," he said. "The streets here were filled with people who looked crazy."
Rodriquez said the local mafia - La Familia de Michoacan - blocked all street sales in the city a few years ago. The cartel said it was protecting the people from a scourge. Mexican law enforcement agents confirm that La Familia ordered a halt in local use, though they say it was a cynical ploy, a bit of propaganda.
"Now if you use it, they'll kill you," Rodriguez said. "Now it is just for the foreigners."
Researcher Gabriela Martinez contributed to this report.
December 2nd, 2010
December 2, 2010
(CBS) At some point in the recent past, an estimated 10 billion daily spam emails, one-third of the world's total, originated at the fingertips of one Russian man, according to a Milwaukee FBI agent.
Oleg Nikolaenko, 23, was arrested last month during a visit to Las Vegas on one count of violating the 2003 federal CAN-SPAM Act, an offense punishable by up to five years in prison, reports the Milwaukee Journal Sentinel.
The "king of spam" was one of the highest profile members of a ring of scammers in which international fraud artists rely on tech-savvy spammers to annoy and defraud consumers in an enterprise that generates enormous illegal profits, the Journal Sentinel reports.
Nikolaenko is scheduled to appear in federal court in Milwaukee on Friday.
His attorney, Christopher Van Wagner, told the Journal Sentinel that they are prepared to present "a rigorous defense." Van Wagner also said Nikolaenko has a wife and small child back in Moscow who are attempting to secure visas to come to Milwaukee and support him.
Nikolaenko was caught after a seller of counterfeit Rolex watches told authorities he spent $2 million to have spammers hawk his product, the Journal Sentinel reports. Rolex-seller directed investigators to a co-conspirator in Australia, who controlled a digital currency account with a company registered in the British Virgin Islands. Transaction records and e-mails finally pointed investigators to Nikolaenko in Russia.
Authorities then subpoenaed Nikolaenko's Google mail records and found executable files like the malware that ran the king of spam's robot network, called botnet.