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Democracy Against Capitalism: Capital In A Fiat Money World

In Democracy Against Capitalism the Marxist scholar Ellen Meiksins Wood says that the driving force of capitalism is the urgent desire to accumulate more capital. As we know, and not just from Marx, capitalist only expends capital in the expectation of profit, and generally can be counted on to invest capital if profit seems likely.

In the US, it has always been the norm that those with access to capital should control every possible avenue that might lead to profit. The government has always been there to provide cash to support capital, with no compensation or justification to the government except maybe new jobs. As an example, the US handed huge tracts of land and direct subsidies to the crooks and cheats who built US railroads. I learned about this from Frank Norris’ book The Octopus, but Railroaded, reviewed here, looks even better. And here’s a sympathetic explanation of this monstrous give-away. There’s an obvious question that no one asks: if railroads were so important, why didn’t the government just build them?

In this post I looked at Wood’s definition of historical materialism and its use in the evolution of the separation of politics and economics starting in the middle ages. The comments add a lot of fascinating detail; thanks to all. What’s missing from Wood’s discussion and from economics generally is the motivation behind this evolution, namely greed and indifference to other humans. As the reviewer of Railroaded, the historian Michael Kazin, says:

The history of American capitalism is stuffed with tales of industries that overbuilt and overpromised and left bankruptcies and distressed ecosystems in their wake: gold and silver mining, oil drilling and nuclear power, to name a few. The railroad barons wielded more power than other businessmen in the Gilded Age. But their behavior revealed a trait they shared with many of their fellow citizens: too much was never enough.

That still true, and governments under both parties are as willing as they ever were to let the capitalists profit and to stuff their pockets with subsidies. As an example, look at the Democrats who run Chicago. In 2008, Chicago leased its parking meters to a group of investors headed by Morgan Stanley; investors today include the wealth fund of Abu Dhabi and other hidden investors. Mayor Richard Daley agreed to a front payment of $1.15 billion to the city.

In the seven years since, the meter company has reported a total of $778.6 million in revenues. It’s on pace to make back what it paid the city by 2020, with more than 60 years of meter money still to come.

There’s the incredible story of the city getting ripped off for hundreds of millions of dollars in derivative transactions. Chicago recently offered Amazon over $2 billion to put its new headquarters here.

That eagerness to coddle capitat has always been part of our culture. Maybe it could be justified in a society hemmed in by commodity money and weak financial markets, where there might be some limitations to the amount of capital available for investment. But there is far more capital looking for profits today than there are plausible investments. We’ve just run a huge real-life experiment. The Republican tax bill gave corporations billions of dollars in tax breaks for money stashed “offshore” to avoid taxes. The brilliant CEOS had no profitable use for it and gave it to their shareholders.

Here’s an example of the amount of capital available to waste, electric rental scooters. Much of that useless capital is employed in various kinds of direct exploitation like payday lending.

Beyond the factual reality of a world awash in capital, we don’t live in a world of limited money. Money is a commodity created by the state. It isn’t pieces of metal, and it isn’t limited by how much of the metal there is in government vaults. Government can create all it wants and needs. The Republicans just passed a bill slashing US revenues for the foreseeable future. Then they passed a bill raising spending. Where is that coming from? Stephanie Kelton explains in a quick and easy introduction to Modern Money Theory.

Returning to the railroads, the government could have built them itself, using a combination of taxes, revenues and borrowing. It might have taken longer; and it would have been corrupt though it would never have been as corrupt as it actually was. Why didn’t that happen?

Or look at oil. In some countries, oil is owned by the State, which employs people directly to drill and refine, or hires private drillers and refiners. We don’t do that. We just let the capitalists take the resources out of public land for a small fee which is rebated in the form of sickening tax breaks like depletion allowances.

There was never any justification for the US system other than the demand of the rich and powerful for greater profits with utter indifference to the rest of us who are left to clean up after the bankruptcies, frauds, toxic spills, nuclear waste and whatever other trash they leave behind. Capitalists won’t make society a better place, because that isn’t profitable. Capitalists believe that they should be able to expropriate all the profits from their investments. The point of making society better is that the benefits from that either can’t be monetized, or we don’t want to lose the benefits to the demand for profit. We don’t need capitalists to make society better and we never did. We just need to be able to control our own government, making it operate for our mutual benefit.

The Political Gift Economy

Economies fall into one of several categories: market, barter and gift. In market and barter economies, exchanges are made contemporaneously between the parties, in one case for money and in the other for acceptably equivalent goods or services. In gift economies transfers are made without an explicit agreement for a return, either in the present or the future. These economies rely on honor or shame or some similar non-cash basis that creates an obligation for the donee to provide something of equivalent or greater value to the donor at some other time. Bourdieu studied a gift economy in his early field research. He observed that exchanges are driven by self-interest like any other transaction. According to David Swartz in Culture and Power: The Sociology of Pierre Bourdieu, Bourdieu says that these practices would not occur if people saw them as motivated by personal interest.

“The operation of gift exchange,” for example, “presupposes (individual and collective) misrecognition (meconnaissance) of the reality of the objective ‘mechanism’ of the exchange.” P. 91.

Isn’t this a perfect description of our legislative economy? Politicians and their staffers do favors for rich people. That translates to giving gifts to rich people, gifts that only governemnt can give such as favorable laws and regulations, litigation positions, and choices not to prosecute. Politicians and staff do not see themselves as self-interested, and do not have enforceable expectations of a return. The rich do not see themselves as doing anything wrong. They don’t make a promise of any return of the gift, and there is nothing to force them to do so.

Then, when government officials retire, the rich give them lavish gifts , meaningless jobs, exorbitant speaking fees, positions in the non-profit sector. These gifts are justified on other grounds, such as expertise or influence. But they are still gifts.

Each side hides the reality of the situation from themselves and from their opposite numbers, and from the public. The task of hiding reality falls to third parties, mostly lobbyists, lawyers, and public relations firms, and a cadre of people labeled as scholars or experts. The lobbyists and lawyers come up with fake justifications for the favored policies. The scholars create rationales that fit some version of the conventional wisdom. The PR teams translate those into pretty words. These are fed to donors and staffers and the politicians who mouth them to the public as their positions and justifications.

The rich people get to pretend, and may even believe, they are doing the right thing, because after all their experts support them. The legislators and staffers get to pretend, and may even believe, that they are acting in the public interest. The media report these lines as if they constituted genuine public discourse. In so doing, the media helps conceal the gift economy from the public. And the courts pretend this is normal. There is no quid pro quo by definition, so therefore there is nothing illegal.

The whole thing depends on the misrecognition of what’s happening. The people who see through it, and there are plenty, are either attacked as naïve or stupid, or completely ignored.

Bourdieu says that the role of the sociologist is to detect the underlying principles of this kind of economy through statistical analysis. Maybe it’s time for someone to apply his ideas, or similar frameworks from other fields, to look at this form of corruption. Until then, we have an explanation for how people avert their eyes from Zephyr Teachout’s principle that corruption is the use of public position for private gain.

Corruption Is The Use Of Public Position For Private Gain

According to a law journal article by Zephyr Teachout, the Founding Fathers had a shared understanding of corruption.

To the Delegates, political corruption referred to self-serving use of public power for private ends, including, without limitation, bribery, public decisions to serve private wealth made because of dependent relationships, public decisions to serve executive power made because of dependent relationships, and use by public officials of their positions of power to become wealthy. P. 373-4.

Of course, the Supreme Court doesn’t see it that way. The only form of corruption the politicians on the Court recognize is quid pro quo transactions, the formal exchange of value for taking a governmental action. This view carries over to the private sector. Only rarely are there prosecutions for kickbacks or other forms of corporate bribery because the laws are spotty, and anyway, who cares? The market, whatever that is, will take care of it.

The Ryan-Trump tax bill is an excellent example of of corruption in Teachout’s sense. A number of senators received personal benefits from a provision which applies low pass-through tax rules to passive investments in real estate. This clause will not increase investment or jobs. It only benefits equity holders, including Tennessee Senator Bob Corker. For details, read the articles by International Business Times’ David Sirota. Corker and Hatch deny that they are corrupt but do not describe any benefit to ordinary Americans from the changes.

Another beneficiary of changes in the law is Senator Ron Johnson, R-WI, who owns interests in a pass-through manufacturing business and several pass-through real estate businesses. Equity holders pay ordinary income tax on it at their personal rate. Johnson announced he wouldn’t vote for the bill unless it benefited him; as well as anyone else who owned investments like his. He wanted a deduction of part of the income. Senate leadership eventually made an offer, there was bargaining, and eventually they settled on 20% of a number based on a complicated formula involving wages and capital. Just as on the real estate side, this bill is just a gift to owners of unincorporated businesses. The value of their interests will go up and their taxes will go down, and nothing will change in terms of investments in the business. Johnson’s explanation for this is not his personal wealth but the fact that business income is treated differently depending on the form of business organization. But the reason people choose non-corporate forms is the personal benefit, and Johnson doesn’t explain this crucial difference or the impact of the changes.

It isn’t only government officials who can use public positions for their personal benefit. In 2015, 58 university presidents made more than $1 million. They must be really good at raising money. Fun fact: the ridiculous tax bill provides for a 1.4% tax on income from endowments greater than $500,000 per students at schools with 500 or more students. The insufferable N. Gregory Mankiw is perturbed. I say good. At least there is somewhat less incentive to raise vast sums of money at schools like Notre Dame, which estimates its tax at $6 to 9 million. Notre Dame spent $354 million from its endowment which garnered about $1.21 billion, if I read this right.

Corporate CEOs have reached even higher levels of compensation; so of course as a group they were proponents of this sickening bill. They’ll get billions to use to pay shareholders with dividends and buybacks, and they’ll benefit handsomely from both, because almost all of them are big shareholders. They also love huge mergers, and once industries are consolidated, they raise prices in excess of costs which increases corporate income and thus their own. I wrote this about drug companies showing the details. And here’s a disgusting recent example.

I’ve focused on economic corruption, but abuse of power goes beyond economics; the most obvious arean is sexual predation. Others can do a better job explaining that kind of abuse so I’ll just leave it there.

Many of the people in positions of authority in the corporate sector, the non-profit sector and the government sector use their positions for private gain. We can speculate about the reasons for it, and debate the extent of it. Maybe it’s no worse now than before; it just seems worse because Trump is president. And of course, we aren’t all corrupt, and we aren’t all corrupt all the time. For those with some self respect or some self control, there is this sickening feeling of collapse.

I think that’s because our public discourse is so barren. We have no vocabulary for analyzing the problem, or thinking about what we need to change. We think in terms of criminal law when we talk about corruption, and not the language of duty and responsibility. Let’s stop doing that.

Corruption is the use of public positions of authority for private gain.

[US Oil Fund ETF via Google Finance]

The Curious Timing of Kushner’s visit to KSA and the U.S.’ EITI Exit

Trump’s son-in-law Jared Kushner — he of the shaky memory and a massive debt in need of refinancing — met with Crown Prince Mohammed bin Salman within the same week the U.S. withdrew from an anti-corruption effort and Saudi Arabia cracked down on corruption. What curious timing.

Let’s look at a short timeline of key events:

Tuesday 24-OCT-2017 — Saudi Arabia’s Crown Prince Mohammed bin Salman helms a three-day business development conference at the Ritz-Carlton in Riyadh, referred to as “Davos in the desert.” Attendees include large investment banks as well as fund representatives; one of the key topics is the impending IPO for Saudi Aramco.

Wednesday 25-OCT-2017 — Jared Kushner departed for an unpublicized meeting with government officials in Saudi Arabia.

Wednesday 25-OCT-2017 — Treasury Secretary Steve Mnuchin and Undersecretary for Terrorism and Financial Intelligence Sigal Mandelker traveled separately from Kushner to participate in bilateral discussions, which included the memorandum of understanding with the Terrorist Financing Targeting Center (TFTC). The U.S. and Saudi Arabia chair the TFTC while Gulf States form its membership.

Friday 27-OCT-2017 — Reports emerged that at least one Trump campaign team will be indicted on Monday.

Monday 30-OCT-2017 — Jared Kushner met with Crown Prince Mohammed bin Salman, discussing strategy until 4:00 am. News reports didn’t indicate when exactly Kushner arrived or when discussions began. (Paul Manafort, Rick Gates, George Papadopolous were indicted this day, but not Kushner; good thing “excellent guy” Papadopolous as a former Trump campaign “energy and oil consultant” wasn’t involved in Kushner’s work with Saudi Arabia, that we know of.)

Thursday 02-NOV-2017 — U.S. Office of Natural Resources Revenue sent a letter to the Extractive Industries Transparency Initiative (EITI), a multinational effort to reduce corruption by increasing transparency around payments made by fossil fuel companies to foreign governments. The U.S. had been an implementing member since 2014.

Saturday 04-NOV-2017 — At 7:49 am EDT, Trump tweets,

“Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!”

Saturday 04-NOV-2017 — (approximately 5:00 pm EDT, midnight Riyadh local time) At least 10 Saudi princes and dozens of government ministers were arrested and detained under what has been reported as an anti-corruption initiative. Prince Alwaleed Bin Talal, a critic of Trump and a tech industry investor of note, was among those arrested this weekend.

Saturday 04-NOV-2017 — At 11:12 pm EDT Reuters reported Trump said he had spoken with King Salman bin Abdulaziz about listing Saudi Aramco on the NYSE. The IPO is expected to be the largest offering ever.

But wait…there are some much earlier events which should be inserted in this timeline:

Friday 03-FEB-2017 — Using the Congressional Review Act to fast track their effort, Senate passes a joint resolution already approved by the house, disproving the Securities and Exchange Commission’s Rule 13q-1, which implemented Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1504, the bipartisan product of former senator Richard Lugar and Sen. Ben Cardin (now ranking Democrat on the Foreign Relations Committee),

“…a public company that qualified as a “resource extraction issuer” would have been required to publicly disclose in an annual report on Form SD information relating to any single “payment” or series of related “payments” made by the issuer, its subsidiaries or controlled entities of $100,000 or more during the fiscal year covered by the Form SD to a “foreign government” or the U.S. Federal government for the “commercial development of oil, natural gas, or minerals” on a “project”-by-“project” basis. Resource extraction issuers were not required to comply with the rule until their first fiscal year ending on or after September 30, 2018 and their first report on Form SD was not due until 150 days after such fiscal year end.” (source: National Law Review)

Section 1504 and SEC rule 13q-1 enacted the U.S.’ participation in the EITI’s anti-corruption effort.

Monday 13-FEB-2017 — Trump signed the disproving resolution. (Probably just another coincidence that Michael Flynn resigned this day as National Security Adviser.)

From the earliest days of this administration, both the Trump White House and the GOP-led Congress have been ensuring that extractive industries including oil companies will not be accountable for taxes, fees, and other miscellaneous payments (read: dark money donations and bribes, the latter being a bone of contention to Trump) paid to foreign governments.

Some of the immediate beneficiaries are Exxon Mobil, for which Secretary of State Rex Tillerson used to work, and the Koch brothers, among U.S. oil companies which claimed additional reporting requirements under Rule 13q-1 would make them less competitive with overseas oil producers.

What’s not yet clear: How is this reduced openness supposed to help track financing of terrorism, which Treasury was supposed to be working on?

What of transparency related to arms deals involving Saudi money or Aramco? What of transactions between U.S. oil companies and other foreign companies involved in deals with Russian fossil fuel firms like Gazprom?

Can Trump, Jared Kushner, their family and minions, and members of Congress profit from this increased lack of transparency?

What happens to the U.S. and global economy when oil prices rise without adequate transparency to the market to explain price increases?

Also not yet clear: what happened to the 19.5% stake in Rosneft sold last year, allegedly bought by Qatar’s sovereign wealth fund and Glencore (the same Glencore now embroiled in Paradise Papers scandal)? This massive chunk of Russia’s largest oil company has increased in value in tandem with crude oil’s rise, especially since the Saudi crackdown on Saturday. What’s to keep this massive amount of Rosneft shares from being laundered through stock markets as Deutsche Bank did between 2011 and 2015?

It’s all just so curious, the unanswered questions, the odd timing: Aided and abetted by GOP-led Congress, Trump pulls out of an anti-corruption initiative while Treasury Department appears to work on anti-corruption, and Kushner meets on the sly with the Saudi crown prince just days before an anti-corruption crackdown.

Hmm.

Count Them: Thirty. Five. Days.

I’m not going to elaborate on MSNBC’s Maddow program last night, featuring David Cay Johnston to whom Donald Trump’s 2005 tax filing had been “leaked.”

It was two pages, revealing little more than adjusted income, income tax assessed, and the lack of any charitable contribution deduction.

One of the two pages was also marked CLIENT COPY.

Not going to get into the rambling statement issued by the White House before the show either, unusual from this administration only for its lack of spelling errors.

But I’m going to point to the calendar.

Today is March 15. It’s a little over a month to Tax Day when filings for 2016 income are due.

35 days until the deadline at the end of the night on April 18.

35 days until Donald Trump has yet another tax filing for which he has no excuse to share with voters and their representatives in Congress.

Non-Tax Filing Stuff:

Kushner family may get $400M from Chinese Anbang Insurance Group — This reeks, absolutely stinks. Anbang is linked to top officials in China’s government; it’s negotiating a stake in a Manhattan property owned by Kushner (read: Trump’s in-laws). There’s no end to the corruption with this administration.

Volkswagen toying with a Fiat Chrysler merger — This smells of desperation to me. Can’t imagine the largest shareholders of VW willingly giving up any control in spite of the financial damage from the company’s emissions fraud. Not to mention the whole Too-Big-Too-Fail size of this potential merger when Volkswagen Group is responsible for nearly 10% of all Germany’s jobs.

Trump may undo years of clean air by screwing with emissions standards — Speaking of emissions and fraud, Trump will be speaking in Detroit today where he is expected to propose undoing mileage standards and emissions regulations. Not only is the automotive industry finally headed in the right direction toward alternative energy after nearly two decades of R&D and implementation, but apparently the public needs to be sicker ahead of the loss of health care insurance.

Robot killed worker, spouse files suit — Horrible and sad; incident happened in 2015. Husband filed suit last week against five robotics companies he claims are responsible for the robot’s failure.

Energy Transfer Partners wants tribal plea rejected — Oil could start flowing through DAPL within the week if U.S. District Judge James Boasberg rejects Standing Rock and Cheyenne River Sioux tribes’ appeal based on religious grounds.

There. That should keep you busy for a while. Treat this like an open thread.

Weekend Open Thread: You’re Gonna’ Need a Bigger Boat

We’ve been rather busy around the emptywheel this weekend, but it looks like we need something for conversations about two big topics.

First, the Panama Papers — here’s a short and sweet explainer at The Guardian to get you started. It’s the biggest leak-based, multi-outlet, global journalistic investigation to date. The server where the papers are located is already ready flooded with traffic (or attempts at DDoSing).

You might be interested in watching the story’s impact on world media. Go to Newsmap (turn off technology, sports, entertainment, and health news in the very bottom toolbar if necessary). Then notice how often “Panama Papers” is mentioned. Australia and some of the earliest EU outlets have picked up this story. Watch for the story to roll westward.

Second, the Associated Press announced this weekend its style would henceforth use ‘internet’ (lowercase i) versus Internet (uppercase I) in all cases. Which is all groovy for journalists who write using AP style, but a misrepresentation of the existence of the Internet versus the internet, because the Internet is still very much a thing. In my opinion, this looks more like word guys not understanding the technology they rely on once again. Hello, future shock?

Have at it below. I’ll catch you tomorrow morning as usual.

Friday Morning: The Political is Musical

It’s Friday, and that means more jazz. Today’s genre is Afrobeat, which emerged in the late 1960s/early 1970s.

Nigerian musician Fela Kuti is credited as the genre’s progenitor, though Fela maintained drummer Tony Allen was essential to style, saying, “[w]ithout Tony Allen, there would be no Afrobeat.”

Afrobeat fuses a number of different types of music with jazz, including funk, highlife, rock, and folk music from West African cultures. In this video, Beasts of No Nation, it’s easy to hear the different styles of music added as layers underpinned and unified by drums.

The lyrics of many Afrobeat tunes are very political; the album of the same name, Beasts of No Nation, was an anti-apartheid statement released in 1989.

Recommended read to accompany today’s musical selection: The Wealth of Nations by Emmanuel Iduma (Guernica magazine).

Let’s move…

Not far from the Apple tree
Lots of developments yesterday in the  #AppleVsFBI story.

  • In support of Apple, big names in tech file amicus briefs to meet deadline. The two most powerful briefs constituted a who’s who of Silicon Valley. Amazon, Box, Cisco, Dropbox, Evernote, Facebook, Google, Microsoft, Mozilla, Nest, Pinterest, Slack, Snapchat, WhatsApp, and Yahoo filed one joint brief. AirbNb, atlassian, Automattic, Cloudflare, EBay, Github, Kickstarter, LinkedIN, Mapbox, Medium, Meetup, Reddit, Square, SquareSpace, Twilio, Twitter, Wickr filed the second. There were several other pro-Apple briefs filed, but none with the economic clout of these two briefs.
  • Cato’s Julian Sanchez may have the best take on yesterday’s filings.
  • UN’s High Commissioner for Refugees Zeid Ra’ad Al Hussein said forcing Apple to write code for the FBI “could have extremely damaging implications for the human rights of many millions of people, including their physical and financial security,” constituting a “a gift to authoritarian regimes.”
  • Michael Ramos, the San Bernardino County DA, exposed his lack of technology prowess in an ex parte application to participate as Amicus Curiae.

    “The iPhone is a county owned telephone that may have connected to the San Bernardino County computer network. The seized iPhone may contain evidence that can only be found on the seized phone that it was used as a weapon to introduce a lying dormant cyber pathogen that endangers San Bernardino’s infrastructure…”

    Emphasis mine. WHAT. EVEN. Dude just screwed law enforcement, making the case (using a made-up term) for the iPhone to never be opened.

Brazil’s former president Lula held for questioning as home raided
The investigation into state-run oil company Petrobras now reaches deeply into the highest levels of Brazil’s government. Investigators are looking into former president Luiz Inacio Lula da Silva’s role in Petrobras’ corruption, including kickbacks and influence peddling. The investigation’s discoveries threaten the viability of current president Dilma Rousseff’s ruling coalition. Wonder if the NSA was following this when they were spying on Petrobras?

Quick licks

  • Absolute insanity: Amazon’s Kindle devices no longer encrypted (Motherboard) — Well, nobody in this household is getting a Kindle any time soon.
  • Nope, not hackers, not squirrels: bird droppings suspected in shutdown of Indian Point nuke plant last December (Phys.org)
  • Joint US-UK college hacking competition this weekend (Phys.org) — Wanna’ bet some of these students will be asked about hacking Apple iPhones?
  • Connecticut wants to ban weaponization of drones, thanks to stupid teenager’s home project (Naked Security) — Seems like a federal issue, IMO, but let me guess the gun lobby will step and whine about gun-enabled drones as a Second Amendment right. Surely our forefathers anticipated flying, cellphone-controlled privately-owned gun drones.

Ugh. That’s a wrap on this week, stopping now before this really devolves though I can’t see any distance between here and absolute bottom. Have a good weekend!

Wednesday Morning: All the Range from Sublime to Silly

We start with the sublime, welcoming astronaut Scott Kelly back to earth after nearly a year in space — 340 days all told. Wouldn’t you like to know how these first hours and days will feel to Kelly as he regains his earth legs?

And then we have the silly…

Apple’s General Counsel Sewell and FBI Director Comey appeared before House Judiciary Committee
You’d think a Congressional hearing about FBI’s demand to crack open Apple iPhone would be far from silly, but yesterday’s hearing on Apple iPhone encryption…Jim Comey likened the iPhone 5C’s passcode protection to “a guard dog,” told Apple its business model wasn’t public safety, fretted about “warrant-proof spaces” and indulged in a thought exercise by wondering what would happen if Apple engineers were kidnapped and forced to write code.

What. The. Feck.

I think I’ll read about this hearing in French news outlets as it somehow sounds more rational: iPhone verrouillé: le patron du FBI sur le gril face au Congrès américain (iPhone locked: FBI boss grilled by US Congress – Le Monde). Other kickers in Comey’s testimony: an admission that a “mistake was made” (oh, the tell-tale passive voice here) in handling the San Bernardino shooter’s phone, the implication that the NSA couldn’t (wouldn’t?) backdoor the iPhone in question, and that obtaining the code demanded from Apple would set precedent applicable to other cases.

Predictably, Apple’s Bruce Sewell explained that “Building that software tool would not affect just one iPhone. It would weaken the security for all of them.” In other words, FBI’s demand that Apple writes new code to crack the iPhone 5C’s locking mechanism is a direct threat to Apple’s business model, based on secure electronic devices.

Catch the video of the entire hearing on C-SPAN.

Facebook’s Latin American VP arrested after resisting release of WhatsApp data
Here’s another legal precedent, set in another country, where a government made incorrect assumptions about technology. Brazilian law enforcement and courts believed WhatsApp stored data it maintains it doesn’t have, forcing the issue by arresting a Facebook executive though WhatsApp is a separate legal entity in Brazil. Imagine what could happen in Brazil if law enforcement wanted an Apple iPhone 5C unlocked. The executive will be released today, according to recent reports. The underlying case involved the use of WhatsApp messaging by drug traffickers.

USAO-EDNY subpoenaed Citigroup in FIFA bribery, corruption and money laundering allegations
In a financial filing, Citigroup advised it had been subpoenaed by the U.S. Attorney’s office. HSBC advised last week it had been contacted by U.S. law enforcement about its role. No word yet as to whether JPMorgan Chase and Bank of America have been likewise subpoenaed though they were used by FIFA officials. Amazing. We might see banksters perp-walked over a fútbol scandal before we see any prosecuted for events leading to the 2008 financial crisis.

Quick hits

I’m out of here, need to dig out after another winter storm dumped nearly a foot of the fluffy stuff yesterday. I’m open to volunteers, but I don’t expect many snow shovel-armed takers.

Afghan Cabinet: Nominate First, Screen Later

Just under two weeks ago, it appeared that one of the final hurdles in getting the Afghan government functioning after the disputed election may have been cleared, as a full slate for the cabinet was announced. Sadly, even though Ashraf Ghani and Abdullah Abdullah took over three months to come up with the list of nominees to run their “Unity Government”, it is clear that no screening of these candidates took place, as many are now falling by the wayside. One turns out to have an Interpol red notice, as many as eleven may have dual citizenship (a direct violation of the Afghan constitution) and one may not meet the minimum age requirement.

Rod Nordland describes some of the problems that have been encountered:

Choosing the Afghan cabinet is to government what the national sport of buzkashi is to polo: a wild and woolly version with uniquely local characteristics and notably more carnage.

President Ashraf Ghani’s presentation of new cabinet nominees to Parliament on Tuesday was a case in point. One proposed nominee had just pulled out after revelations of an Interpol warrant for his arrest. Another dropped out, complaining that he did not have enough money and jobs to bribe Parliament into approving him. A third was subject to a social media smear campaign alleging that she had just gotten a new identity card so she could add a few years to her age to qualify for the job.

Several other would-be ministers were reportedly headed to the exits before Parliament got a chance to vote on them, as revelations tumbled out about dual citizenships, frowned on by the Afghan Constitution, or even, in one case, allegedly not being fluent in any national language.

It’s impossible to make this stuff up. Nordland continues:

“The candidate for rural development studied urban development, and the candidate for urban development studied rural development,” said Ramazan Bashardost, an anticorruption crusader and member of Parliament, famous for his outspokenness.

Corruption is running rampant in the confirmation process:

A more prominent nominee, Jilani Popal, a well-regarded former government official, withdrew his name from nomination as finance minister. While he is believed to have dual United States and Afghan citizenship, Mr. Popal told friends that he had pulled out when members of Parliament asked him for a total of 400 jobs in exchange for their votes, most of them in the lucrative customs service, leaving him with no slots for unstained candidates.

We get more on bribes from ToloNews:

However, a number of MPs have told TOLOnews that presidential advisor Mohammad Akram Akhpalwak has made promises of gifts to lawmakers if they vote in favor of the nominees. MPs said they had been promised IPHONE 6 mobile sets and 5-10,000 USD. Mr. Akhpalwak has meanwhile rejected the allegations.

That same ToloNews article informs us that seven of the nominees believed to have dual citizenship have been rejected by the Foreign Affairs Commission of Parliament. But over at Khaama Press, we learn that the rejection was quite the event:

The Lower House of the Parliament – Wolesi Jirga on Thursday witnessed brawl among the lawmakers over the issue of cabinet nominees holding dual citizenship.

/snip/

In the meantime, a number of the lawmakers insisted that the nominees holding dual citizenship should also be called in the session so that they can present their plans.

The lawmakers said the cabinet nominees have signed documents to surrender their second citizenship and the decision to reject the nominees with dual citizenship was not taken by the house of representatives.

Brawl among the Afghan lawmakers started after MP Shukria Barekzai critized the recent decision by joint parliamentary commission to reject the nominees insisting that the Parliament House is not authorized to deprive the rights of an Afghan national from election and voting.

The article goes on to describe a pathway through which the nominees might be brought back into eligibility. Given the slow, argument-filled route that has brought the Afghan “government” to its present state, I wouldn’t expect these questions about potential cabinet ministers to be resolved any time soon.

Over $80 Billion Wasted in “Training” Iraqi, Afghan Forces: No Lessons Learned

There simply is no level of duplicity that Iraqi or Afghan military leaders can engage in that will lead to the US re-examining the failed assumption that “training” armed forces in those countries will stabilize them. Between the two efforts, the US has now wasted over $80 billion and more than a decade of time just on training and equipping, and yet neither force can withstand even a fraction of the forces they now face.

The latest revelations of just how failed the training effort has been are stunning, and yet we can rest assured that they will be completely disregarded as decision-makers in Washington continue to pour even more money into a cause that has long ago been proven hopeless.

Consider the latest revelations.

We learned yesterday that a cursory investigation in Iraq has already revealed at least 50,000 “ghost soldiers”:

The Iraqi army has been paying salaries to at least 50,000 soldiers who don’t exist, Iraqi Prime Minister Haider al-Abadi said Sunday, an indication of the level of corruption that permeates an institution that the United States has spent billions equipping and arming.

A preliminary investigation into “ghost soldiers” — whose salaries are being drawn but who are not in military service — revealed the tens of thousands of false names on Defense Ministry rolls, Abadi told parliament Sunday. Follow-up investigations are expected to uncover “more and more,” he added.

We can only imagine how much larger the total will become should Iraq actually follow through with a more thorough investigation, but already one Iraqi official quoted in the article hinted the monetary loss could be at least three times what is now known. But that isn’t even the worst condemnation of US practices in this report. Consider this quote that the Post seems to consider a throw-away since it is buried deep within the article:

“The problems are wide, and it’s an extremely difficult task which is going to involve some strong will,” said Iraqi security analyst Saeed al-Jayashi. “Training is weak and unprofessional.”

So the glorious training program in Iraq, which was proudly under the leadership of ass-kissing little chickenshit David Petraeus when it was being heralded, is now finally exposed as “weak and unprofessional”. And the US will do exactly diddly squat about these revelations. Recall that last week we learned that the Defense Department does not consider reducing corruption to be part of their role as advisors in Iraq. I’ll go out on a limb here and predict that when confirmation hearings are held for a new Secretary of Defense, there won’t be a single question aimed at asking how our current training program will be improved to avoid the failures that have been so clearly demonstrated in the previous attempts.

The situation in Afghanistan, although it is receiving less attention, is no better. Reuters reported yesterday on how poorly equipped Afghan forces are for dealing with the Taliban, despite over $60 billion that the US has spent to train and equip those forces:

Afghan district police chief Ahmadullah Anwari only has enough grenades to hand out three to each checkpoint in an area of Helmand province swarming with Taliban insurgents who launch almost daily attacks on security forces.

“Sometimes up to 200 Taliban attack our checkpoints and if there are no army reinforcements, we lose the fight,” said Anwari, in charge of one of Afghanistan’s most volatile districts, Sangin.

“It shames me to say that we don’t have enough weapons and equipment. But this is a bitter reality.”

The article goes on to utterly destroy the ridiculous statements from Joseph Anderson, commander of ISAF Joint Command, back on November 5. Despite Anderson claiming that Afghan forces “are winning”, Reuters points out that claims that the ANSF remains in control of most of the country are grossly overstated:

And while the coalition says Afghan forces control most of the country, the reality on the ground can be very different.

Graeme Smith, senior Kabul analyst for the International Crisis Group, says that in many remote districts, the government controls a few administrative buildings “but the influence of Afghan forces may not extend far beyond that point”.

And yet, despite this clear history of failed efforts to train and equip forces, the US now plans to spend more than another $5 billion fighting ISIS. If it weren’t for the carbon dioxide that would be released, it would probably be better for all of us if that money were simply incinerated.