It's a Disaster

Seven friends and one newcomer gather for a Sunday “couples brunch.” Because most of them have known one another for years, and because they are fairly petty and duplicitous, they embed covert barbs and hidden agendas in almost everything they say and do. Conversations appear familiar and convivial on the surface but carry a disconcerting undertone of cattiness that’s almost a private language.

Even before they sit down to a feast of mimosas, Tracy’s vegetable crockpot stew-that-started-out-as-soup and Emma’s vegan quiche (Lexi’s new trendy thing is not eating animal products, so everybody has to suffer), they are annoyed to find that the smartphone reception in the neighborhood is spotty and the cable is out. Then the electricity goes off. A neighbor in a bright yellow hazmat suit stops by to borrow some D batteries and informs them that several dirty bombs have been detonated a few miles away, in downtown Los Angeles. Hedy, the scientist in the group, estimates they have about three hours before enduring slow, agonizing deaths by tasteless, odorless VX nerve gas. It’s the start of a really awkward afternoon. 

“It’s a Disaster" is a comedy. The casting of David Cross (“Arrested Development,” “Mr. Show”) and several Second City Chicago alumni, should tip you off to that. But I’m not sure I’d describe the movie as a “black comedy,” although the specter of imminent annihilation is, I grant you, a little on the “dark” side. This is more like a comedy of manners — really bad manners. The humor is indirect and relatively low-key, like the random sirens outside that nobody pays any attention to. (Why would they? They’re just sirens. Only later do the insistent wails of emergency vehicles take on greater significance.)

The movie’s funniest touches are quiet flashes of character, expertly timed and nimbly played by a deft ensemble. “It’s a Disaster” is consistently funny, but you wince more often than you laugh out loud. It’s like a Christopher Guest improvisational farce with the volume turned down to 5. 

Hosts Emma (Erinn Hayes) and Pete (Blaise Miller) are preparing to drop their own relationship bombshell on their friends. Hedy (America Ferrera) and Shane (Jeff Grace) are stuck in a six-year engagement with no end in sight. Lexi (Rachel Boston) and Buck (Kevin M. Brennan) fancy themselves as free-spirited rebels (she plays the glockenspiel, man). Nervous Tracy (Julia Stiles) is introducing her friends to mild-mannered Glenn (Cross) on their third date. 

The movie’s sense of humor is expressed in its opening credits, which appear over a slow reverse-zoom on a vintage black-and-white photograph of a tropical beach, with palm trees and a couple of rustic, thatched-roof shelters in the foreground. At some point you notice a huge column rising out of the water in the distance. Eventually you see that it’s topped by a mushroom cloud. It’s an image of the 1946 Bikini Atoll nuclear test. That’s the way things detonate in “It’s a Disaster”: gradually building up to climactic revelations (like Tchaikovsky’s “1812 Overture” and Ravel’s “Bolero” on the soundtrack), always teetering on the brink of … disaster. 

The film’s premise appears to have been adapted from Luis Buñuel’s famous 1962 satire “The Exterminating Angel,” in which a group of aristocrats gather for dinner and then find themselves inexplicably unable to leave the dining room. “It’s a Disaster,” written and directed by Todd Berger, traps its privileged Angelenos in a handsomely remodeled California bungalow, the plausible rationale for their confinement being the presence of deadly nerve gas outside. The crows don’t seem to be bothered by it, but you know crows. Probably nothing can kill them.

I read somewhere (and sentences that begin like this one are the stuff of which awkward brunch conversations are made) that Berger’s comedy was rooted in the characters’ inappropriate reactions to their situations. But I don’t think that’s quite accurate. What’s funny is that, apart from acknowledging the whole impending death thing, they do exactly what most people do all the time: They lapse into denial and retreat into the familiar patterns of behavior they’ve become accustomed to, as if stubbornly determined to act just like themselves even under the most extreme of circumstances. It’s easier to get outraged over some newly discovered relationship betrayal than it is to wrap your head around a possible alien invasion or nerve gas attack, which you can’t really do a whole lot about with a single roll of duct tape, anyway. 

While it’s always bad form to give away a comedy’s jokes, in this case there isn’t much that anybody could give away because the best material isn’t dependent on punch lines. Julia Stiles and America Ferrera prove themselves adept comedic actors, and they’re in good company. While we know that David Cross is a genius of funny, it’s still amazing how much he can get out of an inconsequential throwaway line like, “Mmmm, good carrots.”

Read More

In Memoriam: Roger Ebert

The
late Roger Ebert's writing would have left a mark if he had never
gone on television in his life, but it was his TV show with Gene
Siskel that made him a celebrity. You wouldn't have expected that
from their
first show together: two writers droning on, not always sure
where exactly they should be looking, with no excitement beyond the
possibility that Siskel's 'stache will start eating his face. But
it wasn't long before they perfected the bickering-brothers dynamic
that made their show more entertaining than at least 60% of the
movies they reviewed. Instead of suppressing their offscreen
rivalry, which is on display in various outtakes
floating around the Web, they channeled it into arguments about
movies; and made those arguments meaningful by actually giving a
damn about the pictures they were rating. They also had a healthy
sense of self-aware humor about their personas, as their inevitably
entertaining guest spots on
Letterman and other shows proved. The act could be
imitated but it could never be equaled, as countless other programs
-- including, eventually, Ebert & Roeper -- would
learn.

But if the TV show ensured that Roger Ebert was
famous while he was alive, it's his writing for newspapers and the
Web that should ensure he'll be remembered long after he's dead.
For one thing, he was an exceptional stylist. I might disagree
strenuously with Ebert's opinion about a movie; I might bristle at
a factual flub or two about the plot; but I was almost always awed
at his prose, which was thoughtful, graceful, funny, and
accessible. He didn't just write about movies: He had been a
sportswriter early on, and an interview he did for his college
paper with the left-libertarian author Paul Goodman was good enough
to get reprinted in
one of Goodman's books. (He invoked Goodman in at least one of
his reviews too -- a thumbs-up
take on Paul Schrader's underappreciated Blue Collar
-- and there was a time when I had hopes that underneath it all
Ebert was some sort of anarchist. Alas, when he unleashed his
political-pundit side late in life he turned out to be a
standard-issue liberal.) In the last few years he wrote many
wonderful memoirs for his website, and then a much-admired
autobiography. But of course it was his movie writing that
defined him, and it was here that he made his other great
contribution to American culture.

Ebert, you see, didn't care about those old
highbrow/middlebrow/lowbrow distinctions that occupied so many
debates about criticism in the middle of the 20th century. If you
were interested in learning about cinema as a high art, he could be
your gateway to the greats, writing capably about Bergman and
Welles and Kurosawa and other filmmaking giants. (I'm pretty sure I
first heard of Fassbinder in a Roger Ebert essay. Or, at least,
that essay was the first time I wanted to run out and rent a
Fassbinder movie right away.) On the other hand, if you wanted
to know if the latest spy flick was exciting or if the new Mel
Brooks movie was likely to make you laugh, Ebert was perfectly
capable of waxing enthusiastic about those kinds of films too. It's
not that he liked everything, you understand. (Check out his

evisceration of Priest.) It's that he was
capable of liking everything, or at least everything that
was done well. Even when he joined in the chorus denouncing the
slasher genre in the '80s, -- he had to confess that yes, he
was the guy who gave three and a half stars to
Last House on the Left.

And that
leads us to what may be my all-time favorite Roger Ebert review: a

joyful little essay about the pleasures to be found in even the
most indefensibly trashy pictures. The subject is a
blink-and-you'll-miss-it release called Rapa Nui. I've
never seen it, and I don't think I even would have heard of it if I
hadn't read Ebert's review. He gives it just two stars, and much of
the piece consists of a litany of everything ridiculous about the
picture. But then he says this at the end:

Concern for my reputation prevents me from recommending
this movie. I wish I had more nerve. I wish I could simply write,
"Look, of course it's one of the worst movies ever made. But it has
hilarious dialogue, a weirdo action climax, a bizarre explanation
for the faces of Easter Island, and dozens if not hundreds of
wonderful bare breasts." I am however a responsible film critic and
must conclude that "Rapa Nui" is a bad film. If you want to see it
anyway, of course, that's strictly your concern. I think I may
check it out again myself.

My head can't bring itself to believe in an afterlife. But my
heart hopes that Ebert gets another chance to see it.

Read More

Covered at Reason 24/7: Sequestration Fearmongering Failing

The “Administration That Cried Wolf” is
now reaping the consequences. As the sequestration drags on, more
and more Americans are wondering what the big deal was about the
cuts.

Via
Greg Sargent at The Washington Post:

A
new McClatchy-Marist poll finds that the percentage of
Americans who don’t believe the sequester cuts are hurting the
economy has actually jumped 13 points over the last month,
while the percentage who think they are damaging the economy is
going down:

When it comes to the impact of the automatic spending cuts on
the economy, 40 percent of adults nationally say they have had no
effect on the economy. 36 percent believe they have had a negative
impact while 14 percent say the sequester cuts have had a positive
one. 10 percent are unsure.

There has been an increase in the proportion of Americans who
think these across-the-board spending cuts have had little impact
on the nation’s economy.

That wasn’t what the president was hoping to hear.

Follow this story and more at Reason 24/7.

If you have a story that would be of interest to Reason's
readers please let us know by emailing the 24/7 crew at
24_7@reason.com, or tweet us stories at @reason247.

Read More

Louisiana Police Claim Hakkens Said They Were "Taking a Journey to the Armageddon”

In response
to overwhelming calls for information about the Florida couple who
"abducted" their own children yesterday, the Slidell Police
Department in Slidell, Louisiana, has issued a press release about
the
June 2012 arrest of Joshua Hakken and the confiscation of his
children: 

In June of 2012, Joshua and Sharon Hakken were staying at a
local hotel in Slidell. The Slidell Police Department
was called in reference to a disturbance involving Mr. and
Mrs. Hakken. When police arrived, both Mr. and Mrs.
Hakken were acting in a bizarre manner that alarmed officers.
They were talking about “completing their ultimate journey”
and were traveling across the country to “take a journey to
the Armageddon”. Let it be noted that both of their
children were present in the hotel room at the time.

Based off their behavior, and the fact that narcotics and
weapons were located inside of the hotel room,
officers contacted the Office of Child Services (OCS). OCS
determined that the children were in danger and needed to be
taken into custody by the State of Louisiana and temporarily
placed in a foster home. Mr. Hakken was placed under arrest
for Possession of Marijuana, Possession of Drug Paraphernalia,
and the Use of a Controlled and Dangerous Substance in
the Presence of Minors. Officers also took custody of several
weapons for safe keeping.

Approximately two weeks later, Slidell Police were notified that
Mr. Hakken had shown up to the foster family home (somewhere
in Hammond, LA) with a firearm demanding the return of his
children. The foster parents called 911, and Mr. Hakken fled
without his children. We have heard nothing until yesterday.
Slidell Police was contacted by the FBI and the authorities
from Florida to inform us about the kidnapping. They requested any
and all information that we had on the Hakken’s.

I asked the Slidell Police Department for Hakken's arrest
report, and was told that it's being kept private because Hakken's
drug charges are still pending. As I noted in an update a few
minutes ago, the Slidell Police Department says the claim that
Hakken was arrested at an "anti-government rally" simply isn't
true, and they don't know where it came from.

Earlier today, the Tampa Bay Times reported that Hakken
uses the name "SailingBull" on various message boards (he owns a
sailboat, and he's a graduate of USF, which has a bull mascot).
After looking through nearly all of
Hakken's 190+ posts on the Kel-Tec Owner's Group, I got the
impression of a normal guy with libertarian/Tea Party leanings. He
posted about opposing the death penalty, the war on drugs, and the
Patriot Act; about loving his wife and sons; and about his
enthusiasm for sailing, firearms, and building a new grill in their
backyard. The "Armageddon" line is particularly confusing seeing as
Hakken appears to be a member of secularhomeschool.com,
where, in 2010, he described himself as an atheist: 

I definitely plan on teaching about different religions to my
children when it comes up in context of other studies: i.e.
history, social studies, geography, philosophy... Right now we're
in the pre-preschool phase so I've got time.

As far as teaching the dogma of any particular religion, I will
probably limit my teaching of that in context with what / why
people believe and how it has / will affect the actions of
people. 

Personally, I think every religion from Christianity to Athiesm
is a plague. The notion that we can answer questions we have no
knowledge base for is rediculous. While there may be redeeming
lessons from a particular religion, most organized faiths have
historically been used to shed personal responsibility while
stripping the individual of personal rights and freedoms of it's
congregation.

Religion does not teach moral value, the best it can accomplish is
to coexist and not intrude on such values.

It's worth noting that law enforcement in Florida are painting
the Hakkens as anti-government extremists at the same time police
in Louisiana are describing them as death cultists. I suppose they
could be both, but they could also be neither. 

Previous posts on the Hakkens, who are still at large,
here and
here. 

Read More

Tomorrow's Doctors Will Be Nothing More Than Technicians

I grew up in a solidly middle class neighborhood of second and third generation Jewish immigrants. Our grandparents lived in enclaves like Bensonhurst and the South Bronx. Our parents moved to Queens and Long Island where they became salesmen or shop owners.

It fell to my generation to earn advanced degrees and join the professional class. We had a few lawyers, some accountants, and one or two dentists. (My best friend Billy Ebenstein and I were the only ones to become professors.) Becoming a doctor was the pinnacle of success, with prestige, guaranteed financial security, and a lifetime of professional fulfillment.

As kids, our iconic physician was Marcus Welby, the eponymous lead character of television’s top rated drama series. Dr. Welby’s world of an independent private practice, free from interference from administrators and insurers, has ended. Not coincidentally, Marcus Welby was portrayed by Robert Young, who had previously played the lead role of Jim Anderson on Father Knows Best. Our doctors were parent figures, get it?

Physicians can no longer expect to enjoy similar relationships with their patients. Even the world of Gregory House, where the practice of medicine was reduced to finding the best application of diagnostic skill and modern technology, seems a distant memory. At least Dr. House held sway over his boss, Dr. Cuddy, and he never let costs get in the way of his medical decisions. When we last saw Dr. House, he was motorcycling off into the sunset with his dying friend Dr. Wilson. House got out just in time.

In the blink of an eye, the world of medicine has changed. We are witnessing massive vertical integration as providers try to make money from ACOs. At the same time, Medicare and private insurance have gone all-in on pay-for-performance. Only they have forsaken outcomes measurement and instead given us strict process guidelines. As a result of these changes, newly minted physicians can expect to spend the bulk of their careers employed by a hospital or a large multi-specialty group practice. They will not build and maintain a practice – their employer will do that for them. And they will have little discretion over diagnostic testing and treatment plans – they will instead follow strict treatment guidelines.

As a result of these changes, I see the end of professionalism. Tomorrow’s doctors will not be in loco parentis, instead, they will be more like carpenters or electricians, applying their tradesman-like skills to blueprints laid down by others. No one will place tomorrow’s doctors on a pedestal. Parents will no longer brag to their neighbors, “Let me tell you about my son, the doctor.”

Medicine will still be a financially rewarding career path. But if money is what matters, there will be far better choices. It will still take 8-10 years to finish medical school plus residency. During that time, a bright young college graduate could have instead completed three years at a top ranked law school and taken up with a big law firm, or worked at a financial firm, gone to a top business school, and taken a job in consulting. Not only would they earn money sooner, as a lawyer or consultant, they would not have to worry about Medicare slashing their fees.

Recent increases in marginal tax rates make medicine even less attractive. College students who choose medicine may give up 8-10 years of good income, but they could reasonably expect to make even more money once they finish their residencies. The net present value of a medical degree just might be worthwhile. Yet if you combine new federal marginal income tax rates that approach 45 percent with state income tax rates that often exceed 5 percent, then the net present value calculations do not look so good. Many college students will be wondering why they should give up a solid, steady income today in for a higher income as a doctor in the future, when the government is going to take over half of that higher income.

When I grew up, I was always told that medicine was a “calling.” Perhaps it was, though the money didn’t hurt. I don’t know how many young people will be “called” to become technicians. But technicians they will be. And with no real financial argument to support the choice, I wonder why anyone would choose to become a doctor.

Please follow Careers on Twitter and Facebook.

Join the conversation about this story »

Read More

What Stockton's Bankruptcy Means for the Rest of Us

What happens when the government goes bankrupt? This question is
one that sounds like a hypothetical exercise in a law school
classroom from just a few years ago, where it might have been met
with some derision. But today, it is a realistic and terrifying
inquiry that many who have financial relationships with governments
in America will need to make, and it will be answered with the
gnashing of teeth.

Earlier this week, a federal judge accepted
the bankruptcy petition of Stockton, Calif., a city of about
300,000 residents northeast of San Francisco, over the objections
of those who had loaned money to the city. The lenders -- called
bondholders -- and their insurers saw this coming when the city
stopped paying interest on their loans -- called bonds. In this
connection, a bond is a loan made to a municipality, which pays the
lender tax-free interest and returns the principal when it is due.
Institutional lenders usually obtain insurance, which guarantees
the repayment but puts the insurance carrier on the hook.

The due dates of many of these bonds have come and gone, and the
bondholders and their insurers want Stockton to repay the loans.
But the city lacks the money with which to make the repayments. It
borrowed money from the bondholders during good financial times,
when its real estate-generated tax receipts were greater than
today, and when its advisers predicted no foreseeable end to the
flow of cash to the city. The expected flow of that cash, the
natural inclination of those in government to want to give away
other people's money, and the self-serving manipulations of those
in power who rewarded their friends and themselves with rich
pensions combined to cause the city to make generous pension
commitments to its employees.

It is politically easier to offer generous pension payments to
municipal employees in the future than it is to raise their
salaries today. The promise to pay a pension to qualifying retirees
upon their entry into the retirement system, just like the promise
to repay bondholders the money they loaned, is a legally
enforceable contract.

So, confronted with an obligation to repay more than $200
million in loans to bondholders and more than $900 million to the
California pension system for its current and former employees, and
confounded by a serious reduction in real estate tax revenue, so
serious that Stockton cannot afford to pay either the bondholders
or the pension system, let alone both, the city that over-borrowed
and over-spent and over-promised has sought the protection of a
federal bankruptcy court.

Bankruptcy in America is a strange bird. It permits debtors to
be relieved of their financial obligations by paying less, often
far less, than they owe. It compels creditors to accept less, often
far less, than they are due. It is generally an orderly and
mechanical process presided over by a neutral judge without a jury.
Its goal is to get the creditors something, leave the debtors with
something, and let all parties go home in peace and resume their
livelihoods.

But it rarely happens to the government. That's because the
government, which has no competition, creates no wealth, doesn't
produce anything of value and needn't attract clients, has a
monopoly on the use of force with which it can extract what it
needs to pay for its mistakes in the form of higher taxes. These
extractions, of course, are not voluntary transactions as when you
buy gas for your car or food for your table. They are mafia-style
transactions: Pay us more, or else.

But there must be a limit even to the Stockton taxpayers'
willingness to part with their wealth in the form of taxes, hence
the filing for bankruptcy. The Stockton case presents a rare
opportunity for a federal judge to interfere with the contractual
obligations of a municipal government and actually modify or even
nullify them.

It also presents a confluence of a culture in California of high
taxes and generous -- often non-contributory -- pensions for even
short-term government employees and a federal system that when it
faces a shortfall simply goes to its banker -- the Federal Reserve
-- and asks it to print more cash. Stockton cannot legally print
cash the way the Fed can.

How does this affect the rest of us? Currently, state and local
governments owe about $4 trillion in pension benefits that they do
not have to current and former employees, and they know they cannot
politically acquire it by raising taxes. This affects all 50
states. So the odds are that the states and the similarly situated
Stocktons in America will go to the Obama administration and ask
for free cash. And the president will no doubt find it for them.
That "found" cash will be borrowed from the Federal Reserve and,
like all of the federal government's debts to the Fed, will never
be repaid. But countless generations of American taxpayers will
make enormous and endless interest payments on it.

Does that sound too apocalyptic for you? Well, consider this:
The federal government is still paying interest on the $30 billion
it borrowed to wage World War I nearly 100 years ago. So, to the
feds, mortgaging your children's future to save the Stocktons of
the country from the consequences of their own profligate ways is a
no-brainer.

Should Americans yet unborn pay for all of this? Is this what
you elected the government to do? What will it take to keep the
government within the confines of the Constitution?

Read More

On My Honor Eagle Scout Coalition Says 'Discreet' Gay Boy Scout Participants Are Already Allowed

The Boy Scouts of America (BSA) aren't slated to make a decision regarding their controversial policy on gay participants until May, but that hasn't stopped a new group from coming forward with an unusual interpretation of the guidelines.

As Fox News is reporting, a coalition of Eagle Scouts, Scoutmasters and parents have come together as a new organization called OnMyHonor.net. Members of the group say they believe that the BSA's existing policy should not be amended because "discreet" gay participants are already permitted, according to the report.

Calling the BSA "one of the great jewels of American culture," OnMyHonor founder John Stemberger said, "What they want is full-blown gay activism in scouting, and that’s what they can’t have under the current policy.”

Read More...
More on LGBT

Read More

DAVID STOCKMAN: We've Been Lied To, Robbed, And Misled

Then, when the Fed’s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to $850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the thread of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history.

David Stockman, The Great Deformation

David Stockman, former director of the OMB under President Reagan, former US Representative, and veteran financier is an insider's insider. Few people understand the ways in which both Washington DC and Wall Street work and intersect better than he does.

In his upcoming book, The Great Deformation: The Corruption of Capitalism in America [37], Stockman lays out how we have devolved from a free market economy into a managed one that operates for the benefit of a privileged few. And when trouble arises, these few are bailed out at the expense of the public good.

By manipulating the price of money through sustained and historically low interest rates, Greenspan and Bernanke created an era of asset mis-pricing that inevitably would need to correct.  And when market forces attempted to do so in 2008, Paulson et al hoodwinked the world into believing the repercussions would be so calamitous for all that the institutions responsible for the bad actions that instigated the problem needed to be rescued -- in full -- at all costs. 

Of course, history shows that our markets and economy would have been better off had the system been allowed to correct. Most of the "too big to fail" institutions would have survived or been broken into smaller, more resilient, entities. For those that would have failed, smaller, more responsible banks would have stepped up to replace them - as happens as part of the natural course of a free market system:

Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.

Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.

Stockman's anger at the unnecessary and unfair capital transfer from taxpayer to TBTF bank is matched only by his concern that, even with those bailouts, the banking system is still unacceptably vulnerable to a repeat of the same crime:

The banks quickly worked out their solvency issues because the Fed basically took it out of the hides of Main Street savers and depositors throughout America. When the Fed panicked, it basically destroyed the free-market interest rate – you cannot have capitalism, you cannot have healthy financial markets without an interest rate, which is the price of money, the price of capital that can freely measure and reflect risk and true economic prospects.

Well, once you basically unplug the pricing mechanism of a capital market and make it entirely an administered rate by the Fed, you are going to cause all kinds of deformations as I call them, or mal-investments as some of the Austrians used to call them, that basically pollutes and corrupts the system. Look at the deposit rate right now, it is 50 basis points, maybe 40, for six months. As a result of that, probably $400-500 billion a year is being transferred as a fiscal maneuver by the Fed from savers to the banks. They are collecting the spread, they've then booked the profits, they've rebuilt their book net worth, and they paid back the TARP basically out of what was thieved from the savers of America.

Now they go down and pound the table and whine and pout like JP Morgan and the rest of them, you have to let us do stock buy backs, you have to let us pay out dividends so we can ramp our stock and collect our stock option winnings. It is outrageous that the authorities, after the so-called “near death experience" of 2008 and this massive fiscal safety net and monetary safety net was put out there, is allowing them to pay dividends and to go into the market and buy back their stock. They should be under house arrest in a sense that every dime they are making from this artificial yield group being delivered by the Fed out of the hides of savers should be put on their balance sheet to build up retained earnings, to build up a cushion. I do not care whether it is fifteen or twenty or twenty-five percent common equity and retained earnings-to-assets or not, that is what we should be doing if we are going to protect the system from another raid by these people the next time we get a meltdown, which can happen at any time.

You can see why I talk about corruption, why crony capitalism is so bad. I mean, the Basel capital standards, they are a joke. We are just allowing the banks to go back into the same old game they were playing before. Everybody said the banks in late 2007 were the greatest thing since sliced bread. The market cap of the ten largest banks in America, including from Bear Stearns all the way to Citibank and JP Morgan and Goldman and so forth, was $1.25 trillion. That was up thirty times from where the predecessors of those institutions had been. Only in 1987, when Greenspan took over and began the era of bubble finance – slowly at first then rapidly, eventually, to have the market cap grow thirty times – and then on the eve of the great meltdown see the $1.25 trillion to market cap disappear, vanish, vaporize in panic in September 2008. Only a few months later, $1 trillion of that market cap disappeared in to the abyss and panic, and Bear Stearns is going down, and all the rest.

This tells you the system is dramatically unstable. In a healthy financial system and a free capital market, if I can put it that way, you are not going to have stuff going from nowhere to @1.2 trillion and then back to a trillion practically at the drop of a hat. That is instability; that is a case of a medicated market that is essentially very dangerous and is one of the many adverse consequences and deformations that result from the central-bank dominated, corrupt monetary system that has slowly built up ever since Nixon closed the gold window, but really as I say in my book, going back to 1933 in April when Roosevelt took all the private gold. So we are in a big dead-end trap, and they are digging deeper every time you get a new maneuver.

Click the play button below to listen to Chris' interview with David Stockman (56m:33s):

iTunes [3] | Download [4] | Report Problem [5]

Click here to read the full transcript

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »

Read More

Criminals Have So Much Freedom In Cairo They Stole This Bridge Over A Major Street

It's one thing to talk about Cairo police and their inability to ensure order. But learning how a group of criminals leisurely stole a major bridge from over a bustling city street, during a three-and-a-half hour escapade, is something else entirely.

The following pictures of the former Al Goria pedestrian bridge are in Hussein, Caro and taken from a major road connecting the airport and other parts of the city. My translator explained the thieves stole the bridge sometime throughout the night six months ago and he heard it took them nearly four hours to remove it. They were after costly copper in the railings and infrastructure.

The theft was confirmed by my hotel desk clerk who said thieves steal whatever they want, no police to call, and if anyone says anything the thieves gang will shoot them. A group stole some ornate copper railing from the stairway in the hotel a few months ago, he said, and there was nothing he could do.

The chaos is so extreme many here believe it must be supported by their new government.

It's true the new government seems to be one of the few groups benefiting from the revolution. The government and the police, who have seen their salaries nearly double.

Please follow Business Insider on Twitter and Facebook.

Join the conversation about this story »

Read More

The Illusion of Effective Marijuana Regulation in Colorado

"We need to maintain the edifice of what
continues to work in Colorado," declared Norton Arbelaez of the
Medical Marijuana Industry Group at a January 24 meeting of the
Amendment 64 Implementation Task Force's Regulatory Framework
Working Group. Crucial to that system, explained Meg Sanders of
Gaia Plant-Based Medicine, is "seed-to-sale production tracking,"
because "we need to make sure we are accountable for what we're
producing until it reaches the consumer." The alternative, Arbelaez
warned, is California-style chaos, which he presented as "a
cautionary tale" of "cannabis run amok." The problem in California,
he said, is that "the lack of a statewide seed-to-sale regulatory
framework has made controlling diversion and effective regulation a
near impossibility."

Arbelaez, Sanders, and their allies in the
medical marijuana industry, who stand to benefit from rules that
impede new competitors, argued that the state's strict regulations
explain why the Justice Department has been relatively light-handed
in Colorado, allowing hundreds of dispensaries to continue
operating. They said preserving that system, including a rule
requiring marijuana retailers to grow at least 70 percent of what
they sell, would discourage federal interference with the new
recreational market. And in the end, as I noted
last month, their views were reflected in the task force's
recommendations to the state legislature, based on the premise
that, as Erica Freeman of Choice Organics put it, "you have a
regulatory system in front of you that works very well." 

But as a
state audit issued this week confirms, that system never really
existed. Sure, there was an impressive-looking, 220-page book of
Colorado Medical Marijuana Statutes and Regulations, and
there was a Medical Marijuana Enforcement Division (MMED) within
the state Department of Revenue. But Colorado's vaunted
"seed-to-sale" monitoring system, which was supposed to include
electronic plant tags, 24-hour video surveillance, and records of
every marijuana transfer, was never actually implemented. "The
envisioned seed-to-sale model does not currently exist in
Colorado," reports State Auditor Dianne Ray, and in any case "may
not make sense," especially now that the legal marijuana market is
expanding to include recreational users. As a result of inadequate
manpower, funding shortages, and poor financial management, Ray
says, the MMED not only has failed to create the high-tech tracking
system it envisioned; it does not even "review forms designed to
track medical marijuana activities and inventories and ensure
that medical marijuana is not being diverted from the system."
That's right: Although medical marijuana businesses are required to
file forms whenever they move any of their product, no one ever
looks at them.

Furthermore, state inspectors visit medical marijuana businesses
during the application process but generally do not check in again
after they are up and running, so it is hard to say how many of
1,440 or so operations officially overseen by the MMED (including
producers of cannabis edibles as well as dispensaries) are actually
complying with regulations such as the 70 percent rule or the limit
of six plants per patient. MMED Director Laura Harris tells me
enforcement is "complaint-driven," although "we have to prioritize
our complaints because we have a limited number of investigators
whose primary mission at this point has to be conducting
pre-licensing inspections." The auditor's report recommends
discontinuing those inspections in favor of "risk-based
on-site inspections of the licensed businesses as part of a
comprehensive monitoring program."

The report estimates that pre-approval inspections of all 2,400
applicants who sought state licenses prior to a two-year moratorium
that began in August 2010 "would take about 12,300 hours,
 which equals the work of six full-time equivalent staff in a
year." It adds that "the number of Division staff available to
perform these on-site inspections has been as high as 19 but has
been reduced to 10 as of February 2013." You can start to see why
it takes so long to obtain a license. According to the audit, "The
shortest approval time was 436 days, while the longest approval
time was 807 days." The average was about two years. "Out of about
2,400 pre-moratorium applications," the report says, "the Division
has approved or denied only 622, or about 26 percent [as of last
October]. The rest of the applications were still pending (41
percent) or were voluntarily withdrawn by the applicant (33
percent)." Pre-moratorium cannabis businesses are allowed to
continue operating in the meantime.

The extra time spent processing applications does not
necessarily translate into extra care. In a a sample of 35
applicants, the audit found "potentially disqualifying information"
about 13 (37 percent), including four out of the 10 who had
received licenses. The audit likewise found that the occupational
licensing required for employees of cannabis businesses "is not an
efficient and effective method for determining eligibility to work
in the medical marijuana industry." It does not reliably screen out
people with disqualifying criminal records, for example, largely
because the MMED typically issues employee licenses before it sees
the results of background checks.

Other problems noted in the audit include "weaknesses in the
Division's fee-setting, strategic planning, and expense controls"
that have contributed to chronic revenue shortfalls, which led the
MMED to lay off most of its staff last year. The audit questions
the wisdom of "large capital purchases, such as furniture, computer
equipment, and software for a marijuana plant tracking system" (the
one that still does not exist). Meanwhile, the MMED "underreported
sales tax revenue generated by 56 dispensaries by about $760,000
for Fiscal Years 2011 and 2012 combined."

This is the same agency that the Amendment 64 task force wants
to entrust with regulation of the recreational market. Some state
legislators are skeptical. "If they couldn't handle the little
piece they have now,"
says Rep. Brian DelGrosso (R-Loveland) "there's no way we can
trust them to handle more." But The Denver
Post reports
that supporters of the current system are undeterred:

Michael Elliott, executive director of the Medical Marijuana
Industry Group, said the state's regulation works but needs
funding. Although the state might lack oversight, he said, "the
vast majority of business owners are staying in strict compliance
with state law."

I don't know if that's true or not, and it really doesn't matter
to me whether the current marijuana businesses are complying with
the state's arbitrary rules. But Elliott and other advocates of
strict control have sold those rules as the key to preventing
massive diversion of marijuana to other states, which they warn
would provoke a federal crackdown. It may well be the case that the
appearance of careful, comprehensive regulation has
helped keep the feds out, and it may also have reassured some of
the voters who supported Amendment 64. But we should not confuse
appearances with reality.

"There are folks in this industry [who] are interested in
maintaining that status quo," says Harris, who as head of the MMED
should know a thing or two about the reality of marijuana
regulation in Colorado. "What you will hear from many in industry
is that this works. Well, I'm not as optimistic about it working.
If it worked, we would be able to present evidence of how the model
works toward good enforcement....I'm not as optimistic that the
theoretical model works as well as I think they hoped it
would."

Read More

Steven Greenhut on Union Greed Driving California to Bankruptcy

Few non-Californians pay much attention to
the goings-on in Stockton, a hard-pressed Gold-Rush-era industrial
city of 300,000 that sits in the agriculturally rich San Joaquin
Valley. But bond-holders, taxpayers, and government officials
throughout the country will be listening to U.S. Bankruptcy Judge
Christopher Klein’s expected ruling on Monday as he decides whether
the city may remain in bankruptcy. As Steven Greenhut explains, if
Klein sides with the city, then municipalities will face a
disturbingly low bar for pursuing bankruptcy. They will be
emboldened to choose Stockton’s course—i.e., using bankruptcy as a
strategic policy tool to offload debts without having to confront
the main reasons that they went bankrupt in the first place, such
as lush pensions for public employees.

View this article.

Read More

The Warm Air Of Cities Creates Bug Infestations

We often think of cities as dampening zones for wildlife, with bustling human activity and inhospitable concrete surfaces keeping many critters at a distance. But in reality the opposite might be the case, at least for insects: They seem to love basking in the toasty air of the urban heat island.

That's the take-away of a new study out of Raleigh conducted by Emily Meineke at North Carolina State University and entomology enthusiasts around the state. Meineke and friends wanted to know if urban pest outbreaks had anything to do with the warm air wafting off of cities. So they set their sights on Parthenolecanium quercifex, or the oak lecanium, a type of scale insect whose extreme slothfulness makes it the Al Bundy of the bug world.

Many people have probably seen the creatures without even realizing they're there. They look like small, unmoving bumps, coated in wax or cottony fluff, sucking plant juices and pooping out sweet nectar that's sometimes farmed by opportunistic ants. Meineke's posse tromped through Raleigh examining street oak trees to establish where the arthropods lived. They then compared population numbers between cooler and warmer neighborhoods while eliminating factors like the presence of natural predators. Their conclusion: The insects really prefer to hang out in the warmer 'hoods, with infestations as much as 13 times larger than those in chillier nabes.

This is a thermal map they made showing scale-insect populations scattered throughout the warmer areas of Raleigh. The black dots represent bug abundance per 30.5 centimeters of plant stem:

The study is kind of a groundbreaking effort in the research niche where insects, cities and weather intersect. As the scientists note:

Urbanization of an area changes the species that dwell in it. Previous studies have analyzed these effects in terms of loss of resources or changes to habitat, but this is the first research to focus on the effects of "heat islands" created in cities. Meineke explains that, "Urban warming can lead to higher insect pest abundance, a result of pest acclimation or adaptation to higher temperatures."

The study concludes that since current urban warming is similar in magnitude to the higher temperatures predicted by global warming in the next fifty years, their results may indicate potential changes in pest abundance as natural forests also grow warmer.

That doesn't sound too bad until you start wondering if the heat island influences the multitudes of other pests – mosquitoes, obviously, and <shudder> bed bugs. Get on that follow-up study immediately, guys. (Here's the full paper in PLOS ONE.)

Please follow Science on Twitter and Facebook.

Join the conversation about this story »

Read More