Subject: Click on his nose. Several times!

This is an alcohol test: If you pass it, you can keep drinking, if not, it's time to stop. Follow the simple instructions below:

1. Click on the man's nose
2. A new window will open - click on the man's nose again
3. For each time you click on his nose, you can drink another glass of wine!!!

THE UNITED STATES IS THE ONLY COUNTRY IN THE WESTERN HEMISPHERE THAT STILL PRACTICES CAPITAL PUNISHMENT. WHY THIS REMAINS SO STUBBORNLY IMPORTANT AND NECESSARY HAS NEVER BEEN CLEARLY EXPLAINED.

HR/12/171

17 July 2012

DEATH ROW: UNITED NATIONS EXPERT URGES UNITED STATES AUTHORITIES TO STOP EXECUTION OF TWO PERSONS WITH PSYCHOSOCIAL DISABILITIES

The United Nations Special Rapporteur on arbitrary executions, Christof Heyns, urged the United States Government and those of Georgia and Texas “to demonstrate leadership and prevent the execution of two individuals with psychosocial disabilities,” due to be put to death tomorrow, Wednesday 18 July, in the states of Georgia and Texas. 

“It is a violation of death penalty safeguards to impose capital punishment on individuals suffering from psychosocial disabilities,” warned Mr. Heyns. “It is also contrary to the United States Supreme Court ruling Atkins v Virginia which held that such executions are unconstitutional.”

Warren Hill and Yokamon Laneal Hearn were both convicted of murder in separate incidents. The convictions have been the subject of a number of legal appeals based on the defendants’ mental health; however, their death sentences were upheld despite claims that the defendants had psychosocial disabilities, and the existence of a federal ban on such executions. On Monday, the Georgia Board of Pardons and Paroles rejected clemency for Mr. Hill.

The United Nations independent expert called on the state authorities “to demonstrate the moral and legal leadership expected of the strong democracy that the United States is by commuting the death sentences of Hill and Hearn, and show the importance it gives to the fundamental right to life.” Mr. Heyns underscored that there is also a risk that “other Governments would follow the same approach in justifying the imposition of the death penalty for people suffering from psychosocial disabilities rather than applying a more humane punitive measure.”

In respect of Mr. Hill’s case, the expert is particularly disturbed that Georgia is now the only state in the United States that requires proof of what it calls ‘mental retardation beyond a reasonable doubt,’ rather than a preponderance of the evidence as in other jurisdictions, although Georgia was the first state in the United States to recognize that such defendants should not be executed.

“This higher standard of proof, making it very difficult to demonstrate that one actually suffers from a psychosocial disability may, I fear, mean that Mr. Hill, scheduled for execution tomorrow, would be a fatality in violation of international as well as domestic law,” he stressed.

Regarding Mr. Hearn’s scheduled execution in Texas, the human rights expert noted that “there is evidence to suggest that he also suffers from psychosocial disabilities. This includes an expert opinion that he is affected by structural brain dysfunction likely to have been caused by his mother’s alcohol abuse during pregnancy.”

Information received by the Special Rapporteur raises issues of a lack of a proper investigation including mitigating factors, arbitrariness and non-compliance with fair trial safeguards that potentially constitute violations of international standards applicable to the death penalty.

Christof Heyns, from South Africa, was appointed by the Human Rights Council as Special Rapporteur on extrajudicial, summary or arbitrary executions in August 2010. He is Professor of Human Rights Law at the University of Pretoria and Co-director of the Institute for International and Comparative Law in Africa.  He is independent from any government and serves in his individual capacity. Learn more, log on to: http://www2.ohchr.org/english/issues/executions/index.htm 

UN Human Rights, Country Page – USA: http://www.ohchr.org/EN/Countries/ENACARegion/Pages/USIndex.aspx

For additional information and media requests, please contact: Irina Tabirta (Tel: +41 22 917 9125 / email: [email protected]) or write to: [email protected].

For media inquiries related to other UN independent experts:

Xabier Celaya, UN Human Rights – Media Unit (+ 41 22 917 9383 / [email protected])  

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STATE STILL SHORT ON FOREIGN SERVICE WORKERS, GAO FINDS

By Eric Katz, GovtExec.com, July 16, 2012

The State Department must update its hiring plans in light of persistent Foreign Service staffing gaps, according to a Government Accountability Office report released Monday. (see attached).

The report found that 28 percent of mid-level positions either were vacant or filled by officers working in positions above their grade. In an investigation conducted in 2008, GAO found the same percentage of vacant or “upstretched” positions.

State has made multiple efforts in the last decade to increase its Foreign Service personnel, but efforts in the early 2000s were thwarted by the need for workers in Iraq and Afghanistan, and more recent plans were halted by budget cuts.

“These gaps will continue to affect diplomatic readiness as positions remain unfilled, or are staffed by Foreign Service employees whose experience does not match the position requirements,” GAO wrote in its report.

State increased the size of the Foreign Service by 17 percent in fiscal 2009 and 2010, but these were largely entry-level hires who will not reach the understaffed mid-level positions for two to three years. The vacancies, GAO found, can lead to diminished reporting, lost institutional knowledge and more work for supervisors.

GAO recommended a revision to State’s five year workforce plan to address the problem.

“Since State has not developed a specific strategy for addressing mid-level gaps,” the auditors wrote, “it can neither fully assess the success of its efforts to close these gaps nor determine the optimal course of action for enhancing diplomatic readiness.”

Sen. Daniel Akaka, D-Hawaii, chairman of the Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia, requested the GAO investigation.

“State must continue to develop effective workforce strategies and address staffing gaps to effectively respond to quickly evolving diplomatic challenges,” he said.

The State Department already has taken steps to address the issue -- including relying more heavily on civil service workers and hiring retirees -- but has accepted GAO’s recommendation to seek a more cohesive plan.

WHAT GAO FOUND

The Department of State (State) faces persistent experience gaps in overseas Foreign Service positions, particularly at the midlevels, and these gaps have not diminished since 2008. In fiscal years 2009 and 2010, State increased the size of the Foreign Service by 17 percent. However, these new hires will not have the experience to reach midlevels until fiscal years 2014 and 2015. GAO found that 28 percent of overseas Foreign Service positions were either vacant or filled by upstretch candidates—officers serving in positions above their grade—as of October 2011, a percentage that has not changed since 2008. Midlevel positions represent the largest share of these gaps. According to State officials, the gaps have not diminished because State increased the total number of overseas positions in response to increased needs and emerging priorities. State officials noted the department takes special measures to fill high-priority positions, including those in Afghanistan, Iraq, and Pakistan.

State has taken steps to increase its reliance on Civil Service employees and retirees, as well as expand mentoring, to help address midlevel experience gaps overseas; however, State lacks a strategy to guide these efforts. State is currently implementing a pilot program to expand overseas assignments for Civil Service employees. Efforts to expand the limited number of these assignments must overcome some key challenges, such as addressing new gaps when Civil Service employees leave their headquarters positions and identifying qualified Civil Service applicants to fill overseas vacancies. State also hires retirees on a limited basis for both full-time and short-term positions. For example, State used limited congressional authority to offer dual compensation waivers to hire 57 retirees in 2011. As a step toward mitigating experience gaps overseas, State began a pilot program offering workshops that include mentoring for first-time supervisors. State acknowledges the need to close midlevel Foreign Service gaps, but it has not developed a strategy to help ensure that the department is taking full advantage of available human capital flexibilities and evaluating the success of its efforts to address these gaps.

Why GAO Did This Study

In 2009, GAO reported on challenges that State faced in filling its increasing overseas staffing needs with sufficiently experienced personnel and noted that persistent Foreign Service staffing and experience gaps put diplomatic readiness at risk. State is currently undertaking a new hiring plan, known as “Diplomacy 3.0,” to increase the size of the Foreign Service by 25 percent to close staffing gaps and respond to new diplomatic priorities. However, fiscal constraints are likely to delay the plan’s full implementation well beyond its intended target for completion in 2013. In addition, State’s first Quadrennial Diplomacy and Development Review highlighted the need to find ways to close overseas gaps. GAO was asked to assess (1) the extent to which State’s overseas midlevel experience gaps in the Foreign Service have changed since 2008 and (2) State’s efforts to address these gaps. GAO analyzed State’s personnel data; reviewed key planning documents, including the Five Year Workforce Plan; and interviewed State officials in Washington, D.C., and at selected posts.

What GAO Recommends

GAO recommends that State update its Five Year Workforce Plan to include a strategy to address midlevel Foreign Service gaps and a plan to evaluate the success of this strategy. State reviewed a draft of this report and agreed with GAO’s recommendation.

For more information, contact Michael Courts at (202) 512-8980 [email protected].

Recommendation for Executive Action

Recommendation: To help guide State’s efforts to address midlevel gaps in the Foreign Service, the Secretary of State should direct the Bureau of Human Resources to update its Five Year Workforce Plan to include a strategy to address these gaps and a plan to evaluate the success of this strategy.

Agency Affected: Department of State

DEAR OVERSEAS AMERICAN FRIENDS,

Unless and until overseas Americans get their own direct representation in the U.S. Congress, voting from abroad is essentially a Potemkin Village endeavour.

Why should any Member of Congress care about overseas American issues when only about 1% of any single constituency lives outside the United States, and saying anything positive about this 1% could highly annoy a big chunk of the other 99% living back home who have long swallowed the Kool-Aid whose main existential ingredient is that living abroad is solely to avoid U.S. taxation?

Enjoy and take care,  Andy

ROMNEY FOREIGN TRIP HIGHLIGHTS SIGNIFICANCE OF OVERSEAS U.S. VOTERS

By Tom Curry, NBC News national affairs writer, 18 July 2012.

Although the presidential campaign rhetoric in recent days has been dominated by “sending jobs overseas,” more than 5 million Americans do live and work overseas and some of them vote and contribute to candidates. Highlighting their importance, Mitt Romney will be appearing at fundraising events when he visits London and Jerusalem at the end of July.

As with candidate Barack Obama’s speech in Berlin during the 2008 campaign, Romney’s foreign tour is a reminder that Americans living abroad are no longer forgotten citizens in election years. They’re a source not only of votes, but of campaign funds: one of Romney’s London events is a dinner with a minimum contribution of $25,000 and his event in Jerusalem asks $50,000 per couple (unless you've raised $100,000 for the Republican's campaign).

Susan Dzieduszycka-Suinatat, president of the Overseas Vote Foundation said,

“Too many Americans abroad still think they need to be maintaining a U.S. residence or mailing address to vote -- that is totally untrue. Some think their ballots aren't counted -- another myth!”

If it’s a close election this November, the outcome might come down to a few thousand votes in swing states such as Florida, Virginia and Ohio. And some of those last few thousand swing-state voters may be residing not in Miami, Charlottesville or Cincinnati, but in Tel Aviv, Shanghai and Berlin. The votes of Americans overseas are counted in the state in which they last resided: the Virginian residing in China has his or her vote counted in Virginia.

According to the federal Election Assistance Commission, in the 2008 election those three states had almost 150,000 overseas votes counted:

26,300 in Ohio

28,000 in Virginia

95,000 in Florida

Matt Brooks, the executive director of the Republican Jewish Coalition -- who just returned from a voter-mobilization trip to Israel with Ari Fleischer, former press secretary for President George W. Bush -- said about 150,000 Americans living in Israel are eligible to vote.

“We wanted to go over there to help raise awareness of the critical issues facing Israel and facing the Jewish community in the 2012 election and encourage those folks who are eligible to register and to vote in November,” Brooks said.

“We believe this is going to be a very close election and if we’re able to mobilize a significant number of U.S. citizens living abroad who are eligible to vote, especially in the battleground states -- Florida was decided in 2000 by a little over 500 votes -- we’re going to leave no stone unturned,” Brooks said.

He contended that

“President Obama has a problem with the Jewish vote and the Jewish community” partly due to his “failed policies” in the Middle East.

David Harris, the president of the National Jewish Democratic Council, the Democrats’ counterpart to the RJC, said,

“We hope to travel there or get Democratic surrogates -- including elected officials -- to Israel,” to make the case for Obama to American voters there.

Of the RJC, Harris said,

 

“We have a much easier sale than they do,” since Jewish voters have long preferred Democratic candidates by about a three-to-one ratio.

Another group working on facilitating voting by Americans living in Israel is iVoteIsrael, formed last year.

National Director Elie Pieprz said,

“By creating a streamlined process, sort of a voting concierge, iVoteIsrael seeks to overcome the largest obstacle to voter participation,” which is overseas residents receiving their ballots too late from their state or county elections official in the United States, or sending them back too late for the vote to be counted.

“The goal of the campaign is to maximize the absentee vote from Israel,” Pieprz said. “We are not endorsing any candidate or party, and our message is targeted at both sides of the aisle.”

But the Federal Voting Assistance Program, the agency in charge of helping overseas Americans vote, recently stirred a furor by changing the form used to register to vote or request a ballot.

On the revised federal post card application, the would-be voter is asked to check whether they “intend” or “do not intend” to return to the United States.

Roland Crim, a spokesman on voting issues for American Citizens Abroad, said in a statement that if overseas Americans declared an intent not to return they would

“risk having state election officials improperly disqualify their votes in federal elections.” He said, “The language of the new form acted as a form of voting repellent, particularly for voters uncertain as to what the future might portend.”

“No voter should be asked to check that box,” Dzieduszycka-Suinatat said, partly because state and local election officials might not send the ballot to the voter if they think he’s never coming back to the United States.

According to Defense Department Spokesperson Cmdr. Leslie Hull-Ryde, the FVAP, which is part of the Defense Department, changed the language on the 2011 form

 

"to assist voters in complying with voter eligibility laws in most states."

She said 40 states and the District of Columbia have statutory language regarding the intent of an absent voter to return to the state or district.

Now on the FVAP website, both the older post card application -- which does not ask about intent to return to the United States -- and the 2011 revised form are available. Voters

 

“can use either form depending on their needs and comfort level,” Hull-Ryde said.

Apart from that controversy, Dzieduszycka-Suinatat said voting for overseas Americans is often smooth since they can receive their ballots online. (Go to the Overseas Vote Foundation website.)

And she said,

“FedEx teams with [the Overseas Vote Foundation] every election year to offer at-your-doorstep pick up for ballots to be sent back to U.S. election offices in a matter of a day or two at very reduced rates, special for U.S. voters overseas.”

She added that this year U.S. citizens residing abroad have another incentive to vote: their unhappiness with a 2010 law called Foreign Account Tax Compliance Act, which imposes fines for those who do not report information on their foreign bank accounts (if their aggregate value exceeds $50,000) to the Internal Revenue Service. The minimum penalty for failing to submit the information is $10,000; the maximum penalty is $50,000.

“It makes all kinds of sense to find people who are hiding money overseas to keep it from being taxed,” she said. “But what happened is that in their net, they ended up persecuting the average Joe who lives overseas.”

She said,

“It’s almost as if the U.S. doesn’t appreciate the fact that we’re out here representing the country, building trade.” She said, “without representation, overseas Americans can be somewhat persecuted.”

DEAR BUBBAS AND BUBBETTES,

One of the greatest current tragedies on planet Earth is our unwillingness to recognize the horror of what is taking place every day in this metaphysically iconic land.

Who really gave this land to whom, and on what real justification can those whose families have lived here for so many centuries be expelled and made homeless today?

Can religion really be the reason?? Or are there other factors lurking here that need to remain unmentionable?

What do you think about this?

All the very best and take care,

Andy

‘I AM AN ILLEGAL ALIEN ON MY OWN LAND’

By David Shulman, NYRB, 17 July 2012.

A Palestinian couple inspecting their former cave dwelling in Susya following an earlier expulsion, September 6, 2004

In 1949, shortly after Israel’s War of Independence, S. Yizhar—the doyen of modern Hebrew prose writers—published a story that became an instant classic. “Khirbet Khizeh” is a fictionalized account of the destruction of a Palestinian village and the expulsion of all its inhabitants by Israeli soldiers in the course of the war. The narrator, a soldier in the unit that carries out the order, is sickened by what is being done to the innocent villagers. Here he is in Nicholas de Lange and Yaacob Dweck’s translation (Ibis Publications, 2008):

I felt a terrifying collapse inside me. I had a single, set idea, like a hammered nail, that I could never be reconciled to anything, so long as the tears of a weeping child still glistened as he walked along with his mother, who furiously fought back her soundless tears, on his way into exile, bearing with him a roar of injustice and such a scream that—it was impossible that no one in the world would gather that scream in when the moment came….

Still, the narrator goes along with the expulsion without overt protest. Yizhar himself was an intelligence officer during the war; he describes events he may well have seen himself:

“We came, we shot, we burned; we blew up, expelled, drove out, and sent into exile. What in God’s name were we doing in this place?”

Somewhat surprisingly, this story was taught for many years in Israeli secondary schools as part of the modern Hebrew canon; even today it is still on the books as an optional text for the matriculation exam (unless the Netanyahu government has secretly removed it). The story embodies the conscience of Israel at the moment of the state’s formation. It also gives voice to a much older Jewish tradition of moral protest and the struggle for social justice. When I was growing up in the Midwest in the 1950s and 1960s, I mistakenly thought that this tradition was at the core of what it meant to be Jewish.

A Susyan woman holding an Israeli demolition order, June 2012

Sixty-three years have passed since Yizhar wrote “Khirbet Khizeh.” I wish I could say that what he described was an ugly exception and that such actions don’t happen any more. It is not, and they do. This week I find myself in Susya, in the South Hebron hills, near the southern corner of the West Bank. Like their counterparts in many other Palestinian villages, Susya‘s approximately 300 inhabitants are impoverished, badly scarred, terrified, and defenseless.

The week before last the officers of the Civil Administration, that is, the Israeli occupation authority, turned up with new demolition orders in their hands; these orders apply to nearly all the standing structures in the village—mostly tents, ramshackle huts, sheep-pens, latrines, and the wind-and-sun-powered turbine that Israeli activists put up some three years back to generate electricity on this stony, thirsty hilltop in the desert. If the orders are carried out—this could happen at any moment—then it means the nearly complete destruction of an entire village and the violent expulsion of its people. They will be, quite literally, cast into the desert.

Not, however, for the first time. Depending on how you count them, there have already been three, perhaps four, expulsions at Susya.

The first one happened in 1986, when Palestinian families—over 1500 people— were driven from their homes in Susya al-Qadima, “Old Susya,” which sat on top of an archaeological site that, to their misfortune, contained a second-Temple-period synagogue. They took up residence at a site nearby, on lands belonging to them, called Rujum al-Hamri, which happened to be close to the new Israeli settlement of Susya (established in 1983).

The new settlers, put there by the state, were not good neighbors. In fact, for the last nearly three decades they’ve done whatever they could to drive the Palestinians out—including many violent, sometimes murderous attacks on them, continuous harassment, and efforts to use the courts, both military and civil, against them. Together with several of my colleagues, I myself have had the honor of being brutally assaulted by Susya settlers.

A tent in Susya that may soon be demolished by Israeli authorities, June, 2012

The second expulsion took place in 1990, when Rujum al-Hamri was evacuated by the army. The inhabitants were loaded onto trucks, exactly as in Yizhar’s story from 1949, and driven some fifteen kilometers north, where they were dumped by the roadside at the edge of the desert. Still, most of them came back, building the encampment of present-day Susya on a rocky escarpment within their historic agricultural and grazing grounds.

Their daily life—I can tell you from long first-hand experience—is a fierce struggle to survive in this arid land in the face of a hostile system that has devoured most of their property, destroyed the caves they lived in, and still subjects them to arbitrary arrest, humiliation, and life-threatening violence.

They are poor, poorer than anything I have ever seen in India; what they have are their sheep and goats and a few sun-baked fields where they grow a low-grade variety of wheat and barley that serve as fodder. Because they have been robbed of their wells, they have to buy water from the nearby city of Yatta, which is delivered in small tankers.

The third expulsion took place in July 2001, when civilians—undoubtedly settlers—worked side by side with Israeli soldiers to destroy the tattered tents and shacks and drive the Palestinians out, apparently in response to the murder of a well-known settler, Yair Har Sinai (the Susyans had nothing to do with this). Again they came back and rebuilt. But Israeli Susya has continued to expand, spawning a series of so-called “illegal outposts,” all of them on Palestinian land, even as the Palestinian shepherds and farmers have been hemmed into a continually shrinking space. The coup de grâce may be delivered in the next few days—unless we manage to forestall it.

Earlier this year, in February, a settlers’ NGO called “Regavim” (literally “clods of soil”--the name aptly represents the romantic fantasy of belonging that settlers typically cultivate), petitioned the Israeli Supreme Court, demanding that demolition orders issued years ago by the Civil Administration for Palestinian Susya be carried out immediately. The petitioners, many of whom live on stolen land, had the temerity to refer to Palestinian Susya, the last remnant of the ancient village, as an “illegal outpost.”

The court held a hearing on June 6 and issued an order prohibiting all further building in Palestinian Susya. In itself, this makes little difference; it is anyway next to impossible for Palestinians living in Area C of the West Bank, under direct Israeli control, to get a permit to build from the committee, largely composed of settlers, that oversees such requests. But the Court’s preliminary ruling seems to be linked to the new demolition orders, for reasons not yet clear.

Perhaps the Civil Administration sees the court order as an opportunity to act with impunity against Palestinian Susya. Perhaps the Court itself is trying to restore a balance after having ruled recently against the settlers in Beit Ulpana, a suburb of the huge central West Bank settlement of Beit El. (The Beit Ulpana houses, all illegally built, will apparently be sawed off their foundations and moved a few hundred meters to another piece of appropriated Palestinian land.)

Israeli soldiers in a vehicle with an anti-riot "Skunk" gun, Susya, June 22, 2012

Susya is a microcosm of the Israeli occupation, a lucid embodiment of its norms and habits. Only the scale of the planned expulsion is a little unusual; normally the process, though relentless, proceeds in smaller steps. Note that the legal aspect of the situation, which I’ve only outlined, is little more than a superstructure, one might even say a distant theory; on the ground what one sees is a refined form of human malevolence, incapable of justification in rational terms.

The Israeli army, the police, the bureaucrats of the Civil Administration, the government, the cabinet, the Knesset, the military and civilian courts, and large parts of the Israeli press—all are deeply implicated in an act, or a series of acts, of gratuitous violence inflicted on innocent human beings, in broad daylight. No one should pretend that any of this is anything but a crime.

Perhaps the sheer magnitude of the impending injustice, and the particular resilience and courage shown by the Susya Palestinians over the years, can explain the impressive response to the call for a major protest at Susya on June 22. I’ve rarely seen so large, so disciplined, and so clearly focused a peace demonstration. Over 500 people came from Jerusalem (including a large Palestinian contingent from East Jerusalem), Tel Aviv, Beer Sheva, and various sites in the occupied West Bank.

For once, there were no rambling speeches rehearsing the terrible tale. Within minutes of arrival, we were marching under a scorching sun toward Susya al-Qadima, the original site of the village, now off limits to Palestinians. The Susya people were going home. It was a moving sight, and a certain solemnity, even serenity, accompanied us as we walked through the thorns and rocks. There was not the least hint of violence; no stone was thrown.

Of course, the army was waiting for us, and the soldiers, too, lost no time in doing what soldiers do. There were stun grenades, which can make you deaf for a few days if they go off close to you, and tear gas, and the usual threats and shouts and orders barked at us by senior officers. None of this stopped us. Much more ominous was the Israeli army’s Doomsday Weapon, the Bo’esh or Skunk, which sprays a liquid of overpowering stench that sinks into your pores and clothes and stays there for days; it causes severe vomiting and very effectively stops a crowd of marchers. I’ve never experienced it, but there are activists who describe it as worse than the rubber-coated bullets the army likes to shoot at Palestinian demonstrators.

The Skunk sits atop a long, ugly military vehicle, and it has a turret that swivels back and forth, taking aim at whoever it wants to attack. It’s a little unnerving when the turret targets you. But even the threat of the Bo’esh didn’t deter the demonstrators, who faced a line of heavily armed soldiers, guns loaded.

“Let them spray me,” said one of the Palestinians to me, smiling; “I don’t care; anyway it’s a stinking occupation.”

As in other Palestinian villages I’ve seen in this mode of non-violent protest, at Susya the women had a leading part, fearlessly engaging the soldiers, taunting them, dancing and singing before them, insouciant. Alongside these women was a troupe of five brightly costumed clowns, no less daring and inventive. Imagine a soldier, laden down with helmet and cartridges and grenades and boots and all the other foolish bits of metal and plastic, pouring sweat in the midday sun. What, exactly, is this soldier to do when a clown with a bright red nose, cackling and giggling, sticks a peacock’s feather down the muzzle of his sub-machine gun and then proceeds to tickle his nose?

Protesters in clown suits confronting Israeli soldiers, Susya, June 22, 2012

I wondered, as I often do at such moments, if any of the soldiers standing there in the Palestinian fields felt as ridiculous as they looked to us. And why were they there? Maybe to make sure we didn’t march on the Israeli settlement of Susya, just over the hill? Was this what really terrified them? But we had no intention of trying this. Still, I said to my friend Danny, maybe one day this will happen, and everything will change. I’d told him just moments before that I had good news; last night just after midnight a granddaughter was born.

He laughed: “Your granddaughter will live to see that day.”

But I don’t think it will take that long.

Meanwhile, what will happen in Susya next week, and the week after that? The protest is spreading, no doubt about that, but the danger of expulsion remains very real. Here is Nasser Nawaja’, 28 years old, one of the leading activists in Susya and a close friend, speaking to the Hebrew press:

They’re calling our village an illegal outpost. These lands are ours from before there was a State of Israel. My father is older than your state—and I am an illegal alien on my own land. I ask where is justice? Your courts distinguish between the settler and the Palestinian…We’re surrounded by illegal outposts [built by settlers] that have everything—infrastructures of water and electricity— despite the fact that these settlements are illegal even under Israeli law. And now you want to expel this old man from his home once again? To expel all of us who own these lands, who have lived on them for generations in this space that is ours, which is all we know?

June 28, 2012, 5 p.m.

DEAR FRIENDS,

Read this and enjoy a long awaited bit of intellectual and common sense fresh air:

“The other reality is that the caricature of high-living American expats makes them an inviting target. Not only are they small in number, their political representation is thinned by being spread over 50 states. That makes them vulnerable to the operating assumption we now have with Fatca: If you are working abroad, you must be a tax cheat.

“A better way to think about these men and women would be as America's international sales force. With only 4% of the world's population, America has to look abroad for most of its new customers.

“President Obama recognized this reality in his State of the Union in 2010. There he talked about the importance of being competitive, and he announced an initiative to double exports as a way of creating two million American jobs. Alas, it's hard to see how you increase American exports to markets overseas when you make it more costly and difficult for Americans to be in those markets.

“Whatever the ills of ObamaCare, we are at least now having a debate on the merits. How much better we'd all be if we could say the same about the Foreign Account Tax Compliance Act. “

Amen!!

OBAMA'S IRS SNOOPS ABROAD

Who wants American partners when that means opening up the books to U.S. bureaucrats?

By William McGurn, WSJ, 16 July 2012.

Within the United States, almost no American has heard of it. Save for the occasional article, it's gone largely uncovered. And just like ObamaCare, the nastiest, job-killing aspects will not hit until after this November's election.

It's called the Foreign Account Tax Compliance Act, and it's a doozy. With little debate, Fatca was tucked into the Hiring Incentives to Restore Employment Act of 2010—a jobs bill dominated by tax breaks designed to get businesses to hire unemployed Americans.

Fatca was the revenue side of that bill. The theory was that we would pay for the tax breaks by making fat cats hiding money in their overseas accounts pay their "fair share." The reality is that the tax breaks did little to dent unemployment, and the legislation's penalties may end up killing more U.S. jobs than all the call centers in India combined. Delayed once already, Fatca is set to take effect in January 2013.

Strictly speaking, Fatca isn't a new tax—it's a new requirement for reporting overseas financial accounts, backed up by heavy fines. It requires foreign financial banks, investment houses, insurance companies, etc. to identify any Americans among their customers and turn over information about their accounts to the IRS (or to the local government, if that country has a sharing agreement with Uncle Sam).

At the individual level, Americans are now required to report foreign accounts at thresholds beginning at $50,000. Failure to file, or filing incorrectly, means a heavy fine. Among the most wicked aspects of this legislation is that a taxpayer can rack up tens of thousands of dollars in fines even if he or she doesn't owe the IRS a dime in actual taxes.

Right now, Fatca is bearing out Nancy Pelosi's prediction about the health-care bill: that we had to pass it to find out what was in it.

So far, that's translated into 388 pages of rules, released earlier this year. This weekend, Obama campaign adviser David Axelrod invoked the holy grail behind the Fatca-led, global IRS expansion. "We lose $100 billion a year to offshore tax shelters," Mr. Axelrod told CNN.

To put this in perspective, the Joint Committee on Taxation estimates that Fatca will bring in less than a billion dollars annually for the next decade. That suggests that Fatca is only the first step toward an IRS that will be far more expansive, aggressive and intrusive than most Americans can imagine.

Indeed, in a paper called "Leveling the Playing Field," (see attached) the White House says "the IRS will hire nearly 800 new employees devoted to international enforcement." It's safe to say that while we will see only a fraction of that $100 billion in revenue, we will bear the full price that a globally empowered IRS can inflict.

Already, honest citizens are taking the hit. A woman emailing this reporter from Sweden says she's been shut out of a promising Information Technology partnership since the chief investor learned that having an American on board would mean opening the partnership's books to the IRS.

On this side of the Atlantic, Joe Green, chairman of Canada's Democrats Abroad, announces a website (ExpatStory.us) where Americans can post their horror stories anonymously. In testimony at IRS hearings on Fatca in April, Mr. Green cited another example of the price U.S. expats are paying: American executives with foreign companies who "are being refused a promotion because it puts the company in a vulnerable position."

Thus far, these and similar anecdotes have gained little public attention. Partly this is because the affected group—the roughly six million Americans living overseas—is much smaller than those who are directly affected by, say, the president's Affordable Care Act. For most Americans, the negative consequences of Fatca are highly abstract.

The other reality is that the caricature of high-living American expats makes them an inviting target. Not only are they small in number, their political representation is thinned by being spread over 50 states. That makes them vulnerable to the operating assumption we now have with Fatca: If you are working abroad, you must be a tax cheat.

A better way to think about these men and women would be as America's international sales force. With only 4% of the world's population, America has to look abroad for most of its new customers.

President Obama recognized this reality in his State of the Union in 2010. There he talked about the importance of being competitive, and he announced an initiative to double exports as a way of creating two million American jobs. Alas, it's hard to see how you increase American exports to markets overseas when you make it more costly and difficult for Americans to be in those markets.

Whatever the ills of ObamaCare, we are at least now having a debate on the merits. How much better we'd all be if we could say the same about the Foreign Account Tax Compliance Act.

Write to [email protected]

Dear Sisyphus Team Mates,

As we keep pushing that anti-overseas American discriminatory rock up the endless hill, here is a very useful list of 200 Congressional liaison offices of U.S. Government agencies. Although these are intended to be useful for Congressional offices, we can discreetly use them to make our own contacts with these agencies too.

Enjoy and take care,

Andy

CONGRESSIONAL LIAISON OFFICES OF SELECTED FEDERAL AGENCIES

Summary

This list of about 200 congressional liaison offices is intended to help congressional offices in placing telephone calls and addressing correspondence to government agencies. In each case, the information was supplied by the agency itself and is current as of the date of publication. Entries are arranged alphabetically in four sections: legislative branch; judicial branch; executive branch; and agencies, boards, and commissions.

Specific telephone numbers for correspondence, publications, and fax transmissions have been provided for each applicable agency. When using fax, it is important to include the entire mailing address on a cover sheet, as many of the listed fax machines are not directly located in the liaison offices.

A number of agency listings include an e-mail address. When e-mailing agencies please remember to include your name, affiliation, phone number, and return address, to ensure a speedy response. Users should be aware that e-mail is not a confidential means of transmission. This report was produced for congressional offices only. It will be updated frequently.

DEAR BUBBAS AND BUBBETTES,

More on capitalism, 21st Century style.

Banksters have long been among the brightest and most avaricious omnimoneymores, and they get away with this stuff for a very simple reason.  Our political leaders are desperate for ever large amounts of money to keep running and trying to stay in office.  And if you pony up to the lolly buckets big time you can cheat the system in myriad ways.

Strange evolution for what was once allegedly a moral liberal democratic republican political experiment. Many saw this disease coming, alas, and no one has yet found a reliable cure.

Any ideas of your own on how to turn this around??

Enjoy and take care,  Andy

HOW BIG BANKS ARE STILL LYING, CHEATING AND RIPPING US OFF

By Joshua Holland, AlterNet, 17 July 2012.

Joshua Holland is an editor and senior writer at AlterNet. He is the author of The 15 Biggest Lies About the Economy: And Everything else the Right Doesn't Want You to Know About Taxes, Jobs and Corporate America. Drop him an email:  [email protected]

Earlier this year, researchers at the university of Southern California published the results of a study examining whether the wealthy – the mythical “engines of our economy” – display a better character than the rest of us.

As it turned out, after conducting seven experiments they found that the narrow pursuit of self-interest at the top of the economic heap leads our elites to behave like complete dirtbags. As Bloomberg summarized, the researchers found that the richest among us “were more likely to break the law while driving, take candy from children, lie in negotiation, cheat to raise their odds of winning a prize and endorse unethical behavior at work.”

“It’s not that the rich are innately bad, but as you rise in the ranks -- whether as a person or a nonhuman primate -- you become more self-focused,” Paul Piff, the lead author of the study, told Bloomberg.

It is their lust for wealth, paired with a lack of empathy for others – their disregard for the consequences of their actions on the “little people” – that makes them, at times, appear to simply be evil.

That research may help us understand why high-flying traders at Barclays Bank – and those at an as yet unknown number of other financial institutions – were willing to risk the credibility of the entire financial sector, as well as their cushy jobs, to rig interest rates in order to squeeze out more profits. And it certainly helps explain why they didn't think twice about the individual and institutional investors they ripped off: millions of ordinary people with credit cards, auto and home loans and other lines of credit.

That is what the budding scandal over banks lying in order to manipulate key lending benchmarks is all about. It's a story that doesn't lend itself to flashy headlines, and hasn't been getting the media attention it deserves in this country, so we asked David Dayen of Firedoglake to help break it down for us on this week's AlterNet Radio Hour. Below, is a lightly edited transcript of the discussion.

Joshua Holland: David, I want to talk about this LIBOR scandal. You’re a wonky guy and I wanted to get the story in a way, I hope, that my grandmother Ethel can understand.

I think it’s important to point out that this isn’t a story about boring interest rates. It’s about high-level banking executives lying and manipulating the system in order to make a bigger profit, and in doing so ripping off millions of people around the world. First, what is the London Interbank Offered Rate or LIBOR?

David Dayen: The London Interbank Offered Rate is sort of the rate that banks charge amongst themselves for lending. More important than that, it’s used as a benchmark rate for pretty much all loans. We’re talking student loans, car loans, adjustable rate mortgages, and all sorts of structured finance deals. There almost isn’t a lending product that isn’t affected by the LIBOR in some way or another. It’s a benchmark which is used to set those other rates.

JH: So this is what a bank lending rate in London has to do with you folks out there. If you have a home loan, if you have a credit card, if you have an auto loan, if you’re living in, say, Nebraska, this London bank rate affects your pocketbook. This is really the nub of it. So what happened, David?

DD: It’s almost a bit unfair to single out Barclays Bank. Let me go through that, and then get into what happened with the LIBOR.

Barclays agreed to a settlement with the Justice Department over allegations that it rigged, or tried to manipulate, the LIBOR. It did that in a number of ways. In some cases their traders were asking for the LIBOR to be set up or down based on how they could make money off of derivatives trading. The spread in the rate would give them a leg up on the competition and improve their profits.

In a second deal, especially during the financial crisis, it was found that Barclays was submitting their rate for the LIBOR at the high end. Obviously if you’re a bank and you’re submitting an interest rate that’s higher than everybody else’s you’re asserting, in a way, that your bank is in more trouble than some of these other banks because you’re having to pay a higher interest rate. They were asked to submit a lower interest rate by their executives so that it didn’t look like Barclays was doing as badly during the financial crisis. So there are a number of different ways that Barclays was manipulating the rates.

The reason I say that it’s almost unfair to single them out is that they’re the one bank that has agreed to a settlement -- that has agreed to play ball here with the Justice Department. The LIBOR is set by a number of different banks submitting an overnight lending rate, and then the top and bottom are sort of thrown out, and the range is set that way.

There are plenty of allegations that every bank pretty much that was involved in creating the LIBOR was gaming the system in very similar ways to what has been alleged to have happened at Barclays. We only know about Barclays because they’ve come clean. We don’t know about all of these other banks that are under investigation. That includes banks in the United States like JP Morgan Chase, Bank of America, and on and on.

JH: The Wall Street Journal reports that a number of banks are being investigated for similar fraud. It also appears that Barclays may have colluded with other banks in this scam. We should also point out that it’s not just LIBOR. There’s another major benchmark rate called the EURIBOR. It also has been subjected to some manipulation.

The way this works is again -- let’s step back for a moment – is that the British Bankers Association publishes this LIBOR. What they do is get reports from major banks and they use those reports to come up with the rate. So when the banks had it in their interest to push those rates up or down they basically lied. They lied about what they were reporting.

DD: That’s why it’s called “Lie-bor.” That’s generally the idea. Because they sometimes pushed it up and sometimes they pushed it down it’s kind of harder to say exactly how people were affected in terms of their interest rates on their student loans or what have you.

I’ll tell you a way people were definitely affected whether it went up or down. That was in terms of local government. There are all these interest rate swap deals where local governments can lock in an interest rate at a certain level, and they do these deals with large, major banks. Banks are gaming the rate down – the locked-in rate makes them more money over time. When you’re talking about local governments you’re talking about local tax dollars. That really affects everybody. There are local governments across the country who engage in these local rate swap deals, who have been just completely ripped off, and the LIBOR gaming had something to do with it.

JH: Thomas Ferguson wrote recently about these interest rate swaps and how devastating they are on local and state budgets.

So, anyway, at times they lied in order to move the rate up and at other times they lied to move the rate down. Am I right in the belief that in doing so they managed to screw over both their own investors and consumers whose interest rates were tied to the benchmark?

DD: Absolutely. It’s a little hard to pinpoint because there are so many banks who deal with creating the LIBOR by handing in their rates to the British Bankers Association. There’s no question if you have banks that are manipulating this rate for the purpose of making more and bigger profits, or in protecting their bank and giving a false impression that the bank is doing better than it is, that money has to come from somewhere. In most cases it’s coming from the pockets of ordinary people.

JH: So they ripped off everybody in sight and they were fined. Do you know how big those fines are?

DD: The Justice Department fines are in the range of $450 million, which is really trivial comparatively. This scandal from the perspective of Barclays has already metastasized in Britain. The CEO Bob Diamond has had to resign. The chairman of Barclays Bank has had to resign. Parliament just launched an official inquiry into the scandal. The Serious Fraud office in Britain has opened a criminal investigation. So I think the odds are pretty high that we’re actually going to see prosecutions out of this.

Unlike in the United States, the British press has been going crazy about this scandal, particularly tying it to a larger question about the culture of banking in the City of London, which is the financial center of England. Much like we see here, it has favored greed and profit taking over ethics. I think the Barclays scandal is really coming to a head in Britain. Because it’s just the beginning, there’s no reason that might not happen over here.

JH: Just to put those fines in context Barclays profits last year were around $9 billion. While Barclays CEO Bob Diamond (who is a Yank by the way) apologized and stepped down, nonetheless, according to NPR, he is keeping a $48 million golden parachute.

DD: He was asked about that in a Parliamentary session last week. I think his answer was he’s worked 16 years for this company.

JH: Forty-eight million for having screwed things totally. Diamond said in that same inquiry that he knew nothing about this, and it was all the work of a few bad apples. He called them rogue traders.

You talked about the US Commodity Future’s Trading Commission. They found, and I want to quote from their report, that Barclays manipulated these rates, “on numerous occasions, and sometimes on a daily basis over a four-year period.” And they also said that “this conduct occurred regularly and was pervasive.”

DD: And yet he didn’t know about it.

JH: Right, how could he have possibly known?

DD: What’s really funny about Diamond is he simultaneously said he didn’t know about it and also that the Bank of England instructed him that it would be okay if they lowered their rate to help the bank. I don’t know how it squares -- that he could have known nothing about it but also was told directly by the Bank of England that it would be okay to manipulate the rate.

JH: Now let me ask you for a prediction. Is this story going to get a lot of play in the American media? I had Jeff Thigen, who is Register of Deeds in Guilford County, North Carolina, on the show talking about massive foreclosure fraud perpetuated by the big banks right here at home in the robo-signing scandal. He told me how it affected his office. He basically doesn’t have any paperwork he can trust in his Register of Deeds. He’s suing a number of banks to try and get them to clean up the mess they made.

This whole thing, I think, was kind of dismissed by many in the mainstream media. It was all mere “paperwork issues,” never mind that it showed this remarkable sense of entitlement. They didn’t like the way we registered deeds so they decided they’re going to set up a corporation called MERS and they’ll just skip that -- screwing over country registrars all across the country and utterly confusing the chain of title on millions of mortgages, and nobody seems to be upset about this.

DD: Yeah. I’ve of course been following that story for upwards of two years now. It is hard to get traction on it. Certainly you look at the track record, and it seems that the LIBOR scandal will play out in the financial press, not on the front page, and it will only be a blip. You can sort of look at the difference between the furor in Britain over the Barclays portion of the LIBOR scandal, and what we saw here when Jamie Dimon was brought in to testify before the Senate and the House over what I call the “fail whale” trades -- these trades, also in London, that lost $9 billion -- and those hearings were a farce. To suggest that the US press and US policymakers are going to wake up and recognize the enormity of this scandal and take appropriate action is kind of wishful thinking.

JH: I struggle to figure out why that is. Part of me says that it’s because the political press likes to have a he-said/she-said kind of tension -- a partisan tension. What you’re seeing is that nobody is really calling for heads to roll in the financial sector. We heard very big talk from New York’s Attorney General Eric Schneiderman and his new commission that was going to study foreclosure fraud. They didn’t even get office space. They have no resources whatsoever. There’s just nobody, it seems, who's terribly concerned about any of this. I wonder if that leads to a kind of scandal fatigue?

DD: I think in a sense it does. When you see these things raised over and over again and there’s no appropriate accountability as a result, you tend to lose interest. Keep in mind the Justice Department settled with Barclays and forestalled any criminal investigation into the specific vendors. There are going to be civil lawsuits that play out -- I think there’s one with the city of Baltimore as one of the plaintiffs -- but the Justice Department said we got our $450 million and we’re done for the day. There’s still investigations underway. There are still other banks that are implicated in the scandal, but if you just look at the track record you cannot be optimistic in any way.

JH: I come to this from an ideological perspective. Let me ask you a question from a banker’s perspective. What is the potential harm from this massive loss of faith and trust in these institutions?

DD: There’s a serious reputational risk. If I’m an investor, I don’t know why I would ever come within 50 feet of an investment bank or anything of that nature, given how they have just abused me over the last several years. Whether it’s with mortgage-backed securities that they didn’t tell me were based on fictions and bad loans, or this particular scandal where all the interest rates were actually falsified. It’s very hard to have continued faith in these institutions.

But of course if you’re a major investor, there aren’t that many institutions that have the economy of scale to be able to handle you. As we know, after the financial crisis the too-big-to-fail banks just got bigger. There are less of them, and they hold more assets now. It’s kind of a catch-22.

DEAR BUBBAS AND BUBBETTES,

Here are a few interesting questions to contemplate:

“What would western capitalism be like without seemingly incurable greed?”

“What other avaricious fuel could feed these insatiable fires?”

“And how can it really be that today so many ripoffsters are so profoundly indifferent to the misery they are bringing to so many of the untermenchen of the world?”

“Finally, Is there a possible cure?”

What do you think???

IS IT REALLY MORE COMPLEX THAN GREED?

By Sreven J. Harper, Esq, TheBellyoftheBeast, 10 July 2012.

Revisionism is already obfuscating the story of Dewey & LeBoeuf’s demise. If facts get lost, the profession’s leaders will learn precious little from an important tragedy.

For example, the day after Dewey & LeBoeuf filed its bankruptcy petition, Clifford Winston and Robert W. Crandall, two non-lawyer fellows at the Brookings Institution, wrote an op-ed piece for The Wall Street Journal offering this analysis:

“Dewey’s collapse has been attributed to the firm being highly leveraged and unable to attract investment from businesses outside the legal profession.” (see below).

Attributed by whom? They don’t say. Anyone paying attention knows that outside investors bought $150 million in Dewey bonds. But apparently for commentators whose agenda includes proving that overregulation is the cause of everyone’s problems — including the legal profession’s — there’s no reason to let facts get in the way.

Another miss

On the same day that the Winston & Crandall article appeared, a less egregious but equally mistaken assessment came from Indiana University Maurer School of Law Professor William Henderson in the Am Law Daily: “More Complex than Greed.” Bill and I agree on many things. I consider him a friend and an important voice in a troubled profession. But I think his analysis of Dewey & LeBoeuf’s failure misses the mark.

Henderson suggests,

“One storyline that will attract many followers is that large law firm lawyers, long viewed as the profession’s elite class, have lost their way, betraying their professional ideals in the pursuit of money and glory. This narrative reinforces that lawyer-joke mentality that lawyers just need to become better people. That narrative is wrong.”

What’s wrong with it? In my view, not much, as “House of Cards” in the July/August issue of The American Lawyer now makes painfully clear.

What happened?

Rather than the greed that pervades “House of Cards,” Henderson suggests that Dewey & LeBoeuf reveals the failure of law firms to innovate in response to growing threats from new business models, such as Axiom and Novus Law. Innovation is an important issue and Henderson is right to push it. But as the story of Dewey’s failure unfolds, the inability to innovate in the ways that Henderson suggests — using technology and cheaper labor to achieve efficiencies and cost savings — won’t emerge as the leading culprit.

Rather, greed and the betrayal of professional ideals lie at the heart of what is destabilizing many big law firms. In that respect, most current leaders have changed the model from what it was 25 years ago. Am Law 100 firms’ average partner profits soared from $325,000 in 1987 to $1.4 million in 2011. Behind that stunning increase are leadership choices, some of which eroded partnership values. As a result, many big firms have become more fragile. If greed doesn’t explain the following pervasive trends, what does?

– Short-term metrics — billings, billlable hours, leverage — drive partner compensation decisions in most big firms. Values that can’t be measured — collegiality, community, sense of shared purpose — get ignored. When a K-1 becomes the glue that holds partnerships together, disintegration comes rapidly with a financial setback.

– Yawning gaps in the highest-to-lowest equity partner compensation. Twenty-five years ago at non-lockstep firms, the typical spread was 4-to-1 or 5-to-1; now it often exceeds 10-to-1 and is growing. That happens because people at the top decide that “more” is better (for them). Among other things, the concomitant loss of the equity partner “middle class” reduces the accountability of senior leaders.

– Leverage has more than doubled since 1985 and the ranks of non-equity partners have swelled. That happens when people in charge pull up the ladder.

– Lateral hiring and merger frenzy is rampant. One reason is that many law firm leaders have decided that bigger is better. The fact that “everybody else is doing it” reinforces errant behavior. Growth also allows managers to rationalize their bigger paychecks on the grounds that they’re presiding over larger institutions.

Throughout it all, associate satisfaction languishes at historic lows. No one surveys partners systematically, but plenty of them are unhappy, too. Unfortunately, such metrics that don’t connect directly to the short-term bottom line often get ignored.

Innovation won’t solve the problem

A few successful, stable law firms have shunned the now prevailing big law model. They innovate as needed, but far more important has been their ability to create a culture in which some short-term profit gives way to the profession’s long-term values. What is now missing from most big law firms was once pervasive: a long-run institutional vision and the willingness to implement it. Too often, greed gets in the way.

With all due respect to Messrs. Winston, Crandall and Henderson, sometimes the simplest explanation may also be the correct one.

WINSTON AND CRANDALL: THE LAW FIRM BUSINESS MODEL IS DYING

Rules that were adopted to protect the legal profession from outside competition are actually stifling it.

By Clifford Winston and Robert W. Crandall, WSJ, 29 May 2012.

Mr. Winston is a senior fellow and Mr. Crandall is a nonresident senior fellow at the Brookings Institution. They are co-authors, with Vikram Mahesri, of "First Thing We Do, Let's Deregulate All The Lawyers" (Brookings, 2011).

On Monday night the century-old law firm of Dewey & LeBoeuf filed for bankruptcy—following in the footsteps of other venerable firms such as Howrey & Simon, Heller Ehrman, Coudert Brothers, and Brobeck, Phelger and Harrison. It is easy to think that greedy lawyers are getting their just deserts. But this should not blind us from seeing that there is a better way for America's law firms to do business.

The problems these firms face today are twofold: Large clients are increasingly using in-house counsel to reduce costs, and the public is increasingly taking the do-it-yourself route given the growing access to a variety of legal services and documents on the Internet. The rational response would be for new, low-cost legal firms to start up, and for incumbents to reduce costs and attract new clients by providing innovative services.

But that is happening only to a limited extent because of state licensing requirements and American Bar Association (ABA) rules. Deregulation could open the market and transform the legal industry for the better.

Regulatory barriers have hamstrung other sectors of the economy in the past until the arrival of deregulation. For example, Interstate Commerce Commission (ICC) regulations raised railroad rates for decades after its inception in 1887. But with the proliferation of motor vehicles, trucks began to capture a large share of rail freight traffic.

Then trucks were included under the ICC's regulatory umbrella in 1935, to prevent railroads' freight market share from continuing to erode. But by raising trucking rates, the ICC induced some shippers to buy and operate their own trucks, exacerbating rail's woes. Similarly, Civil Aeronautics Board regulations elevated airline fares, and by the late 1950s—when interstate highway travel was possible—the high fares limited the percentage of seats filled with paying passengers.

The deregulation of transportation that began during the late 1970s enabled motor, air and rail carriers to reduce costs and, particularly in the case of railroads and airlines, to regain market share by offering consumers lower prices and better service.

How have regulations caused the demise of long-established "white-shoe" law firms? Much legal work is performed by associates, who in most states must graduate from a law school accredited by the ABA and pass a state bar examination. This form of licensing significantly limits the flow of new legal practitioners. It also means would-be lawyers must make a substantial upfront educational investment in money and time that must be recouped in high salaries later.

Such salaries can be and are paid because licensing limits competition in the legal profession, and because partners derive much of their own inflated earnings from associates' work.

But when law firms are under pressure to reduce costs, it is difficult for the partners to significantly reduce their reliance on associates without severely affecting their ability to serve clients. Efforts to outsource some tasks have met with only limited success.

While law firms can and do get bank loans, ABA regulations prohibit banks, private-equity firms or other corporations from owning or having an ownership stake in a law firm. This limits a law firm's financing options and raises its capital costs. Dewey's collapse has been attributed to the firm being highly leveraged and unable to attract investment from businesses outside the legal profession.

Law firms are aware of the value that professional business managers can add to their operations. But regulations that prohibit the ownership of law firms by nonlawyers prevent those firms from fully realizing the value of managerial skills and oversight that professional management could bring.

Finally, because regulations prevent corporations from providing legal services other than their own legal counsel, a law firm today cannot realize efficiencies or make more money by merging with a firm outside the legal profession to provide financial and accounting services, for example, along with legal services.

Eliminating regulations on who may provide legal services and who may own and operate a law firm could result in substantial efficiencies. Deregulated firms and new legal entities could reduce costs by hiring a variety of people to provide legal services—some who have completed three years of law school and some who have not.

Such firms would be better positioned to explore the substitution of capital for labor—for example, by accelerating the use of sophisticated Web searches as a substitute for manual document searches, and by using other information technology to ensure that corporate clients comply with government regulations.

New firms not necessarily owned by lawyers would bring new ideas, new technologies, new talents, and new operating procedures into the practice of law. This process has certainly happened elsewhere, the way Freddie Laker and Southwest Airlines brought new operating efficiencies to the airline industry, or the way satellite and cable brought a multitude of new programming to a once-stagnant television industry controlled by three broadcast networks.

As legal fees fell and services improved and expanded, many corporate clients would begin to downsize their internal legal departments. They would go back to relying principally on outside legal help, much as shippers have returned to deregulated for-hire trucking companies and less-regulated railroads. American businesses would reap the economies of specialization and technical progress that a rejuvenated legal-services industry could provide.

MORE FOR THE DYSTOPIAN GREED FILES IN THE CITY UPON A HILL

In case you had a few more questions about how the system still works today, and why those so deep into the mire seem to come out unscathed.

Enjoy.

NEW YORK FED TO BARCLAYS: 'MM HMM'

If Libor-fixing is such a great scandal,

why did Geithner and other regulators do so little?

Wall Street Journal Review and Outlook, 16 July 2012.

The Federal Reserve Bank of New York released a trove of documents on the Libor scandal Friday, and the official Fed spin is that they show that regulators were "highlight[ing] problems" with Libor in 2007-2008, and "press[ing] for reform."

Well, let's see. In June 2008, Timothy Geithner, then head of the New York Fed, sent Bank of England Governor Mervyn King two pages of recommendations for "Enhancing the Credibility of LIBOR" and wrote that he would be "grateful if you would give us some sense of what changes are possible."

This is not exactly the language of a regulator who has just uncovered what we're now told is the financial crime of the century.

 

In the wake of Barclays's $450 million settlement with U.S. and U.K. regulators over attempted Libor-fixing, the political and media worlds are aflame with indignation that some banks misreported their borrowing costs during the financial panic of 2008. The U.S. Department of Justice let it out over the weekend that it is preparing criminal cases against individuals and banks in connection with the scandal. However, the evidence and testimony coming from regulators show they were well aware of price-fixing behavior at the time, but were not all that alarmed by it.

That's especially clear from the New York Fed's document dump, if not from its spin. In August 2007, for example, one unidentified Barclays employee wrote to a Fed official, Fabiola Ravazzolo, to say, "Today's USD libors have come out and they look too low to me. Lloyds for instance has printed 5.48% for 3 months. Probably the lowest rate you coud [sic] attract liquidity in threes would be 5.55% and I am not too sure how much you would get at that level." It doesn't appear that anyone called the cops.

 

Nine months later, Ms. Ravazzolo discussed Libor bidding on the phone with someone on Barclays's money-market desk. The transcript compiled by Barclays and released by the New York Fed reads like a David Mamet play without the obscenities—or any air of criminality.

At one point, the unnamed Barclays trader tells Ms. Ravazzolo:

 

"We strongly feel it's true to say that . . . dollar LIBORs do not reflect where the market is trading which is you know the same as a lot of other people have said." Ms. Ravazzolo's shocked response, as recorded in the transcript? "Mm hmm."

When the Fed official asks her interlocutor why Libor is lower than the banks' actual borrowing costs, he says he's "gonna be really frank and honest." For the sake of clarity, we'll omit most of the "Mm hmms" interjected by Ms. Ravazzolo as she's informed of Barclays's heinous crime:

Barclays executive: "[Y]ou know we, we went through a period where we were putting in where we really thought we would be able to borrow cash in the interbank market and it was above where everyone else was publishing rates. And the next thing we knew, there was, um, an article in the Financial Times, charting our Libor contributions and comparing it with other banks and inferring that this meant that we had a problem raising cash in the interbank market."

Ms. Ravazzolo: "Yeah."

"And, um, our share price went down."

"Yes."

"So it's never supposed to be the prerogative of a money market dealer to affect their company share value."

"Okay."

"And so we just fit in with the rest of the crowd, if you like."

"Okay."

"So, we know that we're not posting, um, an honest Libor."

"Okay."

"And yet—and yet—we are doing it, because, um, if we didn't do it . . . it draws, um, unwanted attention on ourselves."

"Okay, I got you then."

The conversation proceeds for perhaps another 10 minutes before Ms. Ravazzolo signs off with "Have a great weekend. Bye."

 

The New York Fed says that Ms. Ravazzolo was merely gathering market intelligence as part of the Fed's crisis response and not engaging in a criminal investigation. Which is precisely the point. It would be a strange, not to say incompetent, criminal conspiracy if traders were openly discussing it with government officials.

Another phone-call snippet, from October 2008, at the peak of the panic, with another Fed official went similarly:

 

Barclays trader: "[T]hree month Libor is going to come in at 3.53 . . . . It's a touch lower than yesterday's but please don't believe it. It's absolute rubbish. . . . [R]ecently you've had certain banks who I know have been paying 25 basis points over where they've set their Libors . . . "

[Unscandalized Fed official] Tania: "All right, well thank you very much for your time. I appreciate it." Which is exactly how you'd expect a federal official to respond upon being informed of the existence of a multibillion-dollar bank heist.

And lest there be any doubt, the New York Fed's own "explanatory note" makes clear that in the spring of 2008 briefing notes covering the underreporting of Libor were

"circulated to senior officials at the New York Fed, the Federal Reserve Board of Governors, other Federal Reserve Banks, and the U.S. Department of Treasury."

The Fed also briefed the President's Working Group on Financial Markets, the so-called committee to save the world, that June.

 

Fed officials might argue that the middle of a financial crisis was no time to shout from the rooftops about bank borrowing costs. But the documents released Friday suggest that even in private, in his emails with fellow central bankers in the U.K., Mr. Geithner was not exactly calling in the shock troops over Libor. Instead, he was suggesting ways to "eliminate [the] incentive to misreport" Libor rates.

In other words, the question is not what did regulators know, and when did they know it. They knew it all along. The real question is when did a Libor rate that the New York Fed itself calls "increasingly hypothetical" during the panic switch from being a sign of distress to a criminal conspiracy?

After he decamped to Treasury from the Fed, did Mr. Geithner merely drop the subject? And what was Bill Dudley, his successor atop the New York Fed, doing about it for the last three and a half years? The Commodity Futures Trading Commission says it started investigating in 2008. But somehow it took until 2012 for Libor misreporting to become a great financial scandal.

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The regulators and their media cheerleaders can't have it both ways. If the problem with Libor bidding was merely an "incentive to misreport" and thus nothing for regulators to get too worked up about, then let's fix the way banks report the rates, or find some other way to determine such a rate, and move on.

But if this is really the epic deceit and crime we are now reading about, then either new evidence needs to come to light, or the regulators who smiled and nodded and "Okayed" and "Mm hmmed" through the panic years are complicit with the banks now in the dock. They had ample opportunity to shut down this behavior, but nothing released by the New York Fed or the Bank of England suggests much more than a raised eyebrow at the time.

If heads are going to continue to roll over Libor, they should also include those of Mr. Geithner and the rest of the regulators who let this slide.