Until today, we had never heard of James Burnham or his famous Suicide of the West. We saw an apt quote cited by Scott Johnson today, so we’ll read some Burnham. He was taught by a charter member of the Inklings, and he was a Trotskyist before his enlightenment. We’ll definitely read The Managerial Revolution. Most surprising to us is that Suicide was published in way back in 1964. Kind of a slow-motion suicide for a long time, but things seem to have gone asymptotic in the last year or so.
Stratfor a month ago:
Russia’s energy sector, particularly its oil exports, is the lifeblood of its economy. Energy exports account for 25 percent of the country’s GDP and approximately 50 percent of the government’s budget. There is no choice for the Kremlin but to assist the sector or risk financial ruin should energy exports decline and revenues dry up.
With both the defense and energy sectors needing more cash in the years to come, Putin will probably draw on Russia’s massive reserve funds rather than depend on the state’s budget. Russia has approximately $641 billion in reserves: $467.2 billion in currency reserves, $87.32 billion in the National Wealth Fund and $87.13 billion in the Reserve Fund.
But these funds are intended to be used when oil prices fall below $100 per barrel in the 2015 budget ($114 per barrel in the current budget). With the budget pinned on such a high price point, the robustness of these funds and conservative use of them have always been critical to the stability of the Russian government. In 2008, the Russian government sped through more than $200 billion in the reserves to stabilize the economy during the financial crisis. Moreover, there is no guarantee that oil prices will remain in the triple digits
Stratfor today: “Russia’s Central Bank raised its main lending rate Oct. 31 by 1.5 percentage points, more than was expected, Reuters reported. The hike is meant to temper the effects of higher-than-desirable inflation, low oil prices and Western sanctions. The increase comes a day after the value of the ruble fell against the dollar and the euro, and it brings the bank’s main lending rate to 9.5 percent.” $114 a barrel oil in the current budget? Looks like trouble ahead.
Do bothersome facts matter anymore? Not really. This is an age when Americans were assured that the Affordable Care Act lowered our premiums. It…allowed us to keep our doctors and health plans, and lowered the deficit. Those fantasies were both demonstrably untrue and did not matter, given the supposedly noble aims of health care reform. The Islamic State is at times dubbed jayvee, a manageable problem, and a dangerous enemy — or anything the administration wishes it to be, depending on the political climate of any given week.
Some days Americans are told there is no reason to restrict connecting flights from Ebola-ravaged countries. Then, suddenly, entry from those countries is curtailed to five designated U.S. airports. Quarantines are both necessary and not so critical, as the administration weighs public concern versus politically correct worries over isolating a Third World African country. Ebola is so hard to catch that there is no reason to worry about causal exposures to those without clear symptoms. But then why do health authorities still try to hunt down anyone who had even a brief encounter with supposedly asymptomatic carriers?
The deaths of four Americans in Benghazi were caused by a video that sparked a riot, and then apparently not. Various narratives about corruption and incompetence at the VA, IRS, NSA, GSA and Secret Service are raised and then dropped. The larger truth is that these scandals must be quarantined from infecting the president’s progressive agenda…The Tawana Brawley case, the Duke men’s lacrosse team accusations, and the O. J. Simpson verdict were constructed fantasies. No one cared much about the inconvenient facts or the lies that destroyed people’s lives — given that myths were deemed useful facts for achieving larger racial justice.
It no longer really matters much what the grand jury will find in the Michael Brown fatal-shooting case. Whether he had just robbed a store, was high on drugs, was walking down the middle of the road and prompted a violent confrontation with a police officer, or whether the officer was the aggressor in the confrontation, these have become mere competing narratives. The facts pale in comparison with the higher truth that Brown was black and unarmed, while Officer Darren Wilson white and armed. The latter scenario is all that matters.
Language is useful for inventing new realities. “Illegal alien” is a time-tested noun denoting foreign citizens who crossed a national border contrary to law. “Undocumented immigrant” is now used to diminish the bothersome fact that millions have broken and continue to break the law. To play down the dangers of radical Islam, an entire array of circumlocutions — “workplace violence” (in the case of the Fort Hood shooting) “overseas contingency operations” and “man-caused disasters” — were the euphemisms evoked by members of the Obama administration to construct an alternate reality in which radical jihadists are no more dangerous than disgruntled office workers or gale-force winds.
Many of the current campus poster icons are abject myths. Che Guevara, for all his hipster appearance, was no revolutionary hero, but a murderer who enjoyed personally executing his political opponents. Communist leader Angela Davis was awarded the Lenin Peace Prize by the totalitarian Soviet Union.
We keep wondering how much energy it takes to live in this fantasy world where made-up things are real enough as long as they are politically useful. Can it be that these people believe the things they say at the moment they say them, or they just don’t care?
Bonus fun: let’s ban argon! What a world, what a government…
The administration and Iran, engaged in direct nuclear negotiations and facing a common threat from Islamic State militants, have moved into an effective state of détente over the past year, according to senior U.S. and Arab officials.
The shift could drastically alter the balance of power in the region, and risks alienating key U.S. allies such as Saudi Arabia and United Arab Emirates who are central to the coalition fighting Islamic State. Sunni Arab leaders view the threat posed by Shiite Iran as equal to or greater than that posed by the Sunni radical group Islamic State, also known as ISIS or ISIL.
Israel contends the U.S. has weakened the terms of its negotiations with Iran and played down Tehran’s destabilizing role in the region.
Over the past decade, Washington and Tehran have engaged in fierce battles for influence and power in Iraq, Syria, Lebanon and Afghanistan…But recent months have ushered in a change as the two countries have grown into alignment on a spectrum of causes, chief among them promoting peaceful political transitions in Baghdad and Kabul and pursuing military operations against Islamic State fighters in Iraq and Syria, according to these officials.
The administration also has markedly softened its confrontational stance toward Iran’s most important nonstate allies, the Palestinian militant group Hamas and the Lebanese militant and political organization, Hezbollah. American diplomats, including Secretary of State John Kerry , negotiated with Hamas leaders through Turkish and Qatari intermediaries during cease-fire talks in July that were aimed at ending the Palestinian group’s rocket attacks on Israel, according to senior U.S. officials. U.S. intelligence agencies have repeatedly tipped off Lebanese law-enforcement bodies close to Hezbollah about threats
Progress in getting close to the Supreme Leader! What could possibly go wrong?
JG in the Atlantic:
I was talking to a senior administration official about the foreign leader who seems to frustrate the White House and the State Department the most. “The thing about Bibi is, he’s a chickenshit,” this official said, referring to the Israeli prime minister, Benjamin Netanyahu, by his nickname.
This comment is representative of the gloves-off manner in which American and Israeli officials now talk about each other behind closed doors, and is yet another sign that relations between the US and Netanyahu governments have moved toward a full-blown crisis. The relationship between these two administrations — dual guarantors of the putatively “unbreakable” bond between the U.S. and Israel — is now the worst it’s ever been, and it stands to get significantly worse after the November midterm elections. By next year, the administration may actually withdraw diplomatic cover for Israel at the United Nations, but even before that, both sides are expecting a showdown over Iran, should an agreement be reached about the future of its nuclear program.
The fault for this breakdown in relations can be assigned in good part to the junior partner in the relationship, Netanyahu, and in particular, to the behavior of his cabinet. Netanyahu has told several people I’ve spoken to in recent days that he has “written off” the administration, and plans to speak directly to Congress and to the American people should an Iran nuclear deal be reached. For their part, administration officials express, in the words of one official, a “red-hot anger” at Netanyahu for pursuing settlement policies on the West Bank, and building policies in Jerusalem, that they believe have fatally undermined Secretary of State John Kerry’s peace process.
Over the years, administration officials have described Netanyahu to me as recalcitrant, myopic, reactionary, obtuse, blustering, pompous, and “Aspergery.” (These are verbatim descriptions; I keep a running list.) But I had not previously heard Netanyahu described as a “chickenshit.” I thought I appreciated the implication of this description, but it turns out I didn’t have a full understanding. From time to time, current and former administration officials have described Netanyahu as a national leader who acts as though he is mayor of Jerusalem, which is to say, a no-vision small-timer who worries mainly about pleasing the hardest core of his political constituency…
“The good thing about Netanyahu is that he’s scared to launch wars,” the administration official said, expanding the definition of what a chickenshit Israeli prime minister looks like. “The bad thing about him is that he won’t do anything to reach an accommodation with the Palestinians or with the Sunni Arab states. The only thing he’s interested in is protecting himself from political defeat. He’s not Rabin, he’s not Sharon, he’s certainly no Begin. He’s got no guts.”
I ran this notion by another senior official who deals with the Israel file regularly. This official agreed that Netanyahu is a “chickenshit” on matters related to the comatose peace process, but added that he’s also a “coward” on the issue of Iran’s nuclear threat. The official said the administration no longer believes that Netanyahu would launch a preemptive strike on Iran’s nuclear facilities in order to keep the regime in Tehran from building an atomic arsenal. “It’s too late for him to do anything. Two, three years ago, this was a possibility. But ultimately he couldn’t bring himself to pull the trigger. It was a combination of our pressure and his own unwillingness to do anything dramatic. Now it’s too late.”
Working on a piece that raised questions about the American Red Cross disaster response, she says a boss told her, “We must do nothing to upset our corporate partners…until the stock splits.” (Parent company Viacom and CBS split in 2006). Meanwhile, she notes, “CBS This Morning” is airing blatant advertorials such as a three-minute segment pushing TGI Fridays’ all-you-can-eat appetizer promotion or four minutes plugging a Doritos taco shell sold at Taco Bell.
Reporters on the ground aren’t necessarily ideological, Attkisson says, but the major network news decisions get made by a handful of New York execs who read the same papers and think the same thoughts. Often they dream up stories beforehand and turn the reporters into “casting agents,” told “we need to find someone who will say…” that a given policy is good or bad. “We’re asked to create a reality that fits their New York image of what they believe,” she writes.
Reporting on the many green-energy firms such as Solyndra that went belly-up after burning through hundreds of millions in Washington handouts, Attkisson ran into increasing difficulty getting her stories on the air. A colleague told her about the following exchange: “They are pretty significant,” said a news exec. “Maybe we should be airing some of them on the ‘Evening News?’ ” Replied the program’s chief Pat Shevlin, “What’s the matter, don’t you support green energy?”
We’re reminded of getting a little worked up years ago when Sumner Redstone sold a trivial amount of stock as Rathergate was falling apart. Not a big deal to him, but it’s interesting to see how closely the news is monitored and controlled by the business types.
Richard Preston on Patient Zero and beyond:
After Ebola infected the boy, it went from him to his mother, who died, to his three-year-old sister, who died, and to their grandmother, who died, and then it left the village and began moving through the human population of Guinea, Liberia, and Sierra Leone. Since there is no vaccine against or cure for the disease caused by Ebola virus, the only way to stop it is to break the chains of infection. Health workers must identify people who are infected and isolate them, then monitor everybody with whom those people have come in contact, to make sure the virus doesn’t jump to somebody else and start a new chain. Doctors and other health workers in West Africa have lost track of the chains. Too many people are sick, and more than two hundred medical workers have died. Health authorities in Europe and the United States seem equipped to prevent Ebola from starting uncontrolled chains of infection in those regions, but they worry about what could happen if Ebola got into a city like Lagos, in Nigeria, or Kolkata, in India. The number of people who are currently sick with Ebola is unknown, but almost nine thousand cases, including forty-five hundred deaths, have been reported so far, with the number of cases doubling about every three weeks. The virus seems to have gone far beyond the threshold of outbreak and ignited an epidemic.
The virus is extremely infectious. Experiments suggest that if one particle of Ebola enters a person’s bloodstream it can cause a fatal infection. This may explain why many of the medical workers who came down with Ebola couldn’t remember making any mistakes that might have exposed them. One common route of entry is thought to be the wet membrane on the inner surface of the eyelid, which a person might touch with a contaminated fingertip. The virus is believed to be transmitted, in particular, through contact with sweat and blood, which contain high concentrations of Ebola particles. People with Ebola sweat profusely, and in some instances they have internal hemorrhages, along with effusions of vomit and diarrhea containing blood.
Despite its ferocity in humans, Ebola is a life-form of mysterious simplicity. A particle of Ebola is made of only six structural proteins, locked together to become an object that resembles a strand of cooked spaghetti. An Ebola particle is only around eighty nanometres wide and a thousand nanometres long. If it were the size of a piece of spaghetti, then a human hair would be about twelve feet in diameter and would resemble the trunk of a giant redwood tree.
Once an Ebola particle enters the bloodstream, it drifts until it sticks to a cell. The particle is pulled inside the cell, where it takes control of the cell’s machinery and causes the cell to start making copies of it. Most viruses use the cells of specific tissues to copy themselves. For example, many cold viruses replicate in the sinuses and the throat. Ebola attacks many of the tissues of the body at once, except for the skeletal muscles and the bones. It has a special affinity for the cells lining the blood vessels, particularly in the liver. After about eighteen hours, the infected cell is releasing thousands of new Ebola particles, which sprout from the cell in threads, until the cell has the appearance of a ball of tangled yarn. The particles detach and are carried through the bloodstream, and begin attaching themselves to more cells, everywhere in the body. The infected cells begin spewing out vast numbers of Ebola particles, which infect more cells, until the virus reaches a crescendo of amplification. The infected cells die, which leads to the destruction of tissues throughout the body. This may account for the extreme pain that Ebola victims experience. Multiple organs fail, and the patient goes into a sudden, steep decline that ends in death. In a fatal case, a droplet of blood the size of the “o” in this text could easily contain a hundred million particles of Ebola virus.
Inside each Ebola particle is a tube made of coiled proteins, which runs the length of the particle, like an inner sleeve. Viewed with an electron microscope, the sleeve has a knurled look. Like the rest of the particle, the sleeve has been shaped by the forces of natural selection working over long stretches of time. Ebola is a filovirus, and filoviruses appear to have been around in some form for millions of years. Within the inner sleeve of an Ebola particle, invisible even to a powerful microscope, is a strand of RNA, the molecule that contains the virus’s genetic code, or genome. The code is contained in nucleotide bases, or letters, of the RNA. These letters, ordered in their proper sequence, make up the complete set of instructions that enables the virus to make copies of itself. A sample of the Ebola now raging in West Africa has, by recent count, 18,959 letters of code in its genome; this is a small genome, by the measure of living things. Viruses like Ebola, which use RNA for their genetic code, are prone to making errors in the code as they multiply; these are called mutations. Right now, the virus’s code is changing. As Ebola enters a deepening relationship with the human species, the question of how it is mutating has significance for every person on earth.
This was in the NYT in August. Here was the NYT last Friday. Here’s the WaPo in August. Here’s the WaPo last week. Guess why all the leaks of late appearing in the liberal establishment media just prior to the Ferguson grand jury’s decision about indicting the police officer. No never mind, it’s too obvious. HT:PL
The latest from Canada shows another non-religious act of killing. Of course the same has been going on in England, but you know that it’s not Terrorism — most probably standard neighborhood beheadings of unknown origin. And of course what went on in Iraq lo those many years ago was similar, whether the beheading or baking of children. And we must note also the workplace violence nature of Hasan’s crimes; hey, it was validated by the Guardian. That’s what we’ve got from the media and establishment of today. (Indeed!)
Paradigms that exist apart from reality break, often badly. Discontinuities emerging in these breaks are often radical. We go back to some thoughts from Thomas Kuhn on this. The US of Utopian sensibilities will probably suffer reversals that we can’t contemplate when the big reversals come. Not a pleasant prospect.
En route to MIA the film Blended was shown. The remarkable things were two: (a) in order to make rather obvious observations about humans in their male and female incarnations, the movie had to torture itself to remain PC enough; (b) what’s up with all the vulgarity and potty mouths on very young children? This film was followed by a bunch of NBC TV shows that we’ve never watched nor heard of. Once again, non-stop vulgarity. (We recently saw a couple of episodes of season one of the Beverly Hillbillies, which were filled with witty and arcane references — e.g., Jane is impressed because Jethro’s education included him being an eatin’ man.) Tempus fugit.
China’s economic growth will slow to about 4 percent annually after 2020 following decades of rapid expansion, according to the Conference Board.
China faces a “deep structural slowdown and broad uncertainty” in the decade ahead, the New York-based research group said in the report yesterday. China’s development model, based on state direction of capital and growth-fixated monetary policy, generated “deep seated” risks and imbalances, it said.
“The course of China’s growth has always harbored the potential for deceleration at least as rapid as its acceleration,” David Hoffman, vice president of the Conference Board’s China Center for Economics and Business in Beijing and a co-author of the report, said in a press release. “We are beginning to see the signs of this transformation take hold.”
China’s government has signaled it will tolerate slower economic growth this year by refraining from broad stimulus. Weighed down by a property slump, China’s gross domestic product probably expanded 7.2 percent in the third quarter, the slowest in more than five years
We’ll have much more to say about this after we have studied the report in question. 4% seems too low. But you know, cooked books of the past may be catching up.
NYT, not the Onion:
It was the first day of orientation, and along the picturesque paths there were cheerful upper-class student leaders providing directions and encouragement. They wore pink T-shirts stamped with this year’s orientation theme: “Free to Explore” — an enticement that could be interpreted myriad ways, perhaps far more than the college intended.
One of those T-shirted helpers was a junior named Timothy Boatwright. Like every other matriculating student at Wellesley, which is just west of Boston, Timothy was raised a girl and checked “female” when he applied. Though he had told his high-school friends that he was transgender, he did not reveal that on his application, in part because his mother helped him with it, and he didn’t want her to know. Besides, he told me, “it seemed awkward to write an application essay for a women’s college on why you were not a woman.” Like many trans students, he chose a women’s college because it seemed safer physically and psychologically.
From the start, Timothy introduced himself as “masculine-of-center genderqueer.” He asked everyone at Wellesley to use male pronouns and the name Timothy, which he’d chosen for himself.
For the most part, everyone respected his request. After all, he wasn’t the only trans student on campus. Some two dozen other matriculating students at Wellesley don’t identify as women. Of those, a half-dozen or so were trans men, people born female who identified as men, some of whom had begun taking testosterone to change their bodies. The rest said they were transgender or genderqueer, rejecting the idea of gender entirely or identifying somewhere between female and male; many, like Timothy, called themselves transmasculine. Though his gender identity differed from that of most of his classmates, he generally felt comfortable at his new school.
Last spring, as a sophomore, Timothy decided to run for a seat on the student-government cabinet, the highest position that an openly trans student had ever sought at Wellesley. The post he sought was multicultural affairs coordinator, or “MAC,” responsible for promoting “a culture of diversity” among students and staff and faculty members. Along with Timothy, three women of color indicated their intent to run for the seat. But when they dropped out for various unrelated reasons before the race really began, he was alone on the ballot. An anonymous lobbying effort began on Facebook, pushing students to vote “abstain.” Enough “abstains” would deny Timothy the minimum number of votes Wellesley required, forcing a new election for the seat and providing an opportunity for other candidates to come forward. The “Campaign to Abstain” argument was simple: Of all the people at a multiethnic women’s college who could hold the school’s “diversity” seat, the least fitting one was a white man.
“It wasn’t about Timothy,” the student behind the Abstain campaign told me. “I thought he’d do a perfectly fine job, but it just felt inappropriate to have a white man there.”
Sadly, the article doesn’t stop at this terrific punchline but goes on for another 7000 words. On a lighter note, here’s an excellent candidate for the next Dean of Students.
Amid Assurances on Ebola, He Is Said to Seethe…Beneath the calming reassurance that he has repeatedly offered during the Ebola crisis, there is a deepening frustration, even anger, with how the government has handled key elements of the response. Those frustrations spilled over when he convened his top aides in the Cabinet room after canceling his schedule on Wednesday. Medical officials were providing information that later turned out to be wrong. Guidance to local health teams was not adequate. It was unclear which Ebola patients belonged in which threat categories.
“It’s not tight,” a visibly angry man said of the response, according to people briefed on the meeting. He told aides they needed to get ahead of events and demanded a more hands-on approach, particularly from the Centers for Disease Control and Prevention. “He was not satisfied with the response,” a senior official said.
The difference between the public and private messages illustrates the dilemma he faces on Ebola — and a range of other national security issues — as he tries to galvanize the response to a public health scare while not adding to the sense of panic fueled by 24-hour cable TV and the nonstop Twitter chatter.
On Friday, he took a step to both fix that response and reassure the public, naming Ron Klain, a former aide, to coordinate the government’s efforts on Ebola. The appointment followed his statement Thursday that the job was necessary “just to make sure that we are crossing all the t’s and dotting all the i’s going forward.”
“Part of the challenge is to be assertive, to be in command, and yet not feed a kind of panic that could easily evolve here,” said David, a close adviser in his first term. “It’s not enough to doggedly and persistently push for answers in meetings. You have to be seen doggedly and persistently pushing for answers.”
For two turbulent weeks, officials have sought to balance those imperatives: insisting the dangers to the American public were being overstated in the news media, while also moving quickly to increase the president’s demonstration of action.
The Ebola outbreak in West Africa, and its arrival in the United States, is the latest in a cascade of crises that have stretched his national security staff thin. As the people scrambled to stop the spread of Ebola beyond a handful of cases, officials were also grappling with an escalating military campaign against the Islamic State, the specter of a new Cold War with Russia over Ukraine, and the virtual disintegration of Yemen, which has been a seedbed for Al Qaeda.
Senior officials said they pushed him to name an Ebola coordinator as a way of easing pressure on the staff at the National Security Council.
At the meeting on Wednesday, officials said, he placed much of the blame on the C.D.C., which provided shifting information about which threat category patients were in, and did not adequately train doctors and nurses at hospitals with Ebola cases on the proper protective procedures.
On Thursday night, in televised remarks, he sought to reassure the public about the dangers from Ebola. But the sense of crisis that emanated from headquarters was in sharp contrast to Sept. 30, when Thomas Eric Duncan, a Liberian who had traveled to Dallas, tested positive for Ebola. He received a telephone briefing from Dr. Thomas R. Frieden, the director of the C.D.C., after which they issued a sanguine statement that concluded: “We have the infrastructure in place to respond safely and effectively.”
In the days that followed, he carried on as usual while his aides gamely added Ebola to their bulging portfolios. On Oct. 1, he met with Prime Minister Benjamin Netanyahu of Israel, and later had dinner with friends at the RPM Steakhouse in Chicago, where he had traveled for fund-raisers and to deliver an economic speech.
By early October, as questions about the Dallas hospital’s treatment of Mr. Duncan mounted, federal officials began reassessing their response, even as they continued to express confidence.
C.D.C. officials publicly dismissed the effectiveness of screening for Ebola at airports in the United States. But the secretary of Homeland Security, found a way to make it work over the weekend of Oct. 4. He announced the screening protocol the following Monday.
Even after Mr. Duncan’s death on Oct. 8, officials betrayed little sense of a change in approach. He traveled to California for campaign fund-raising and on his return to Washington, received a briefing from his secretary of health and human services about the announcement that a nurse who treated Mr. Duncan had contracted Ebola.
The business-as-usual sentiment at headquarters changed abruptly, officials said, when it got word early Wednesday that a second nurse in Dallas contracted the disease. The fact that she had traveled on a Frontier Airlines flight despite having a fever added to the concern, officials said.
“This Frontier thing took it out of the abstract thing and to this level where people could identify with and made them scared,” a senior official said. Within hours, aides canceled a planned trip by him to Connecticut and New Jersey. Hours later, Thursday’s trip to Rhode Island and New York City was also scrubbed.
This piece definitively demonstrates that both the watchers and the watchees know nothing. The senior of the 2 NYT reporters has been to a lot of countries but he and his colleague have never done anything in their lives other than observing people who do things. We’re reminded of Hilton Kramer’s critique.
As for the watchees, that’s really scary. Putting ideology aside, we have idiots running things. Any executive would begin analysis of Ebola with (a) lethality; (b) incubation period; (c) ease of transmission; (d) mutability of virus; (d) current track record of containment. From there he’d get to implementing action items at Warp Speed: (1) making drugs that cure it; (2) making vaccines that prevent it; (3) emulating containment strategies that have proven successful.
In the NYT piece above the executives apparently are not consumed with the blindingly obvious action items we outlined, indeed they don’t seem to be thinking about them at all. And the reporters covering all this don’t even know enough to ask relevant questions. Recipe for disaster.
Franklin D. Raines, who resigned as chief executive of Fannie Mae in late 2004 amid revelations of extensive accounting improprieties at the mortgage finance company, has been dismissed from a long-running civil suit brought by Fannie Mae investors hoping to recover damages…the judge continued, evidence submitted by the shareholders showed that Mr. Raines “acted negligently in his role as the company’s chief executive and negligently in his representations about the company’s accounting and earnings management practices”…
The investor lawsuit was filed in 2005 on behalf of approximately one million Fannie Mae shareholders who incurred losses after regulators identified pervasive accounting irregularities at the company. Between 1998 and 2004, government investigators found, senior executives at Fannie had manipulated its results to hit earnings targets and generate $115 million in bonus compensation. The company had to restate its earnings, reducing them by $6.3 billion.
In 2006, the government sued the three former executives, seeking $100 million in fines and $115 million in restitution from bonuses it maintained they had not earned. Without admitting wrongdoing, Mr. Raines, Mr. Howard and Ms. Spencer paid $31.4 million to settle the matter
NBC in 2004:
OFHEO Director Armando Falcon, testifying under oath at the hearing, asserted that Fannie Mae improperly put off booking income to a future reporting period “to create a ’cookie jar’ reserve that it could dip into whenever it best served the interests of senior management.” Those interests included smoothing out volatility in earnings from quarter to quarter and meeting earnings-per-share targets linked to bonuses for executives, Falcon said.
Raines disputed the regulators’ allegation that in one instance in 1998, accounting rules were deliberately violated so that top executives could get full bonuses…Lawmakers have cited his assurances to investors a little over a year ago that Fannie Mae, which finances one of every five home loans in America, had not “undertaken any transactions to distort our true financial condition.”
Raines and Howard have been put on the defensive by a recent government report that criticized Fannie Mae’s “culture and environment” for making “these problems possible.” The Washington-based company, which is the second-largest financial institution in the United States, is also facing a criminal investigation by the Justice Department.
NYT in 2003:
Fannie Mae, the giant mortgage finance company, faces much bigger losses from interest rate swings than it has publicly disclosed, according to computer models used by the company to estimate the value of its assets and debts.
At the end of last year, the models showed that Fannie Mae’s portfolio would have lost $7.5 billion in value if interest rates rose immediately by 1.5 percentage points, internal company documents provided to The New York Times indicated. At that time, the market value of all the assets on Fannie Mae’s books, minus all the company’s debts, was about $15 billion. So it would have lost roughly half its market value from such a sharp increase in interest rates, according to the models. With $923 billion in assets, Fannie Mae is the second-largest financial company in the United States
WSJ, a week after the catastrophic decision in 2008 to let Lehman Brothers fail:
the vast accumulation of toxic mortgage debt that poisoned the global financial system was driven by the aggressive buying of subprime and Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and Freddie Mac. The poor choices of these two government-sponsored enterprises (GSEs) — and their sponsors in Washington — are largely to blame for our current mess.
How did we get here? Let’s review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of “affordable housing.” They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse…
If Fannie and Freddie wanted subprime or Alt-A loans, the mortgage markets would produce them. By late 2004, Fannie and Freddie very much wanted subprime and Alt-A loans. Their accounting had just been revealed as fraudulent, and they were under pressure from Congress to demonstrate that they deserved their considerable privileges…
If they were not making mortgages cheaper and were creating risks for the taxpayers and the economy, what value were they providing? The answer was their affordable-housing mission. So it was that, beginning in 2004, their portfolios of subprime and Alt-A loans and securities began to grow. Subprime and Alt-A originations in the U.S. rose from less than 8% of all mortgages in 2003 to over 20% in 2006.
During this period the quality of subprime loans also declined, going from fixed rate, long-term amortizing loans to loans with low down payments and low (but adjustable) initial rates, indicating that originators were scraping the bottom of the barrel to find product for buyers like the GSEs.
Why the 2002-2005 timeframe? Politico: From 2002 through 2005, the now-failed mortgage lender Fannie Mae paid…for an O’Melveny team, including Klain, to lobby Congress and the Housing and Urban Development Department on “regulatory issues.”
This is the appearance of action, something for the cameras that has no intrinsic merit, indeed many risks for nothing. This would be real action, but it apparently cuts so deeply against the administration’s culture of micro-control of actions and narratives that it’s literally unthinkable to them. BTW, we know we may be overreacting to the Ebola problem, but so what? There’s little cost to that versus the opposite.
Underreaction has come from the political side and its timid colleagues at CDC and NIH. The young JV team at work no doubt. Arguably some overreaction has come from the army and the marines. You know which side we’re firmly on. However, we’re puzzled with the underreactors, since it’s such a horrible PR strategy to always have to issue corrections every few days. Very puzzling indeed.
Secretary for Preparedness and Response in the Department of Health and Human Services (HHS)…“I have responsibility for getting the nation prepared for public health emergencies—whether naturally occurring disasters or man-made, as well as for helping it respond and recover,” Lurie said…
“Lurie’s job is to plan for the unthinkable. A global flu pandemic? She has a plan. A bioterror attack? She’s on it. Massive earthquake? Yep. Her responsibilities as assistant secretary span public health, global health, and homeland security.”
much of the focus has been on an experimental cocktail of three monoclonal antibodies known as ZMapp. But the current stockpile is not nearly great enough. Collins, a touch exasperated, said it would be all but impossible to have significant doses available by the end of the calendar year — with a lack of funding once again playing a disruptive role. “Had it not been for other shortages, we might very well by now know that it works and have a large stock of it,” he said.
Bonus fun: the CDC and NIH seem to have money for other critical priorities.