Derivatives Have Become the World’s Biggest Black Market
March 11th, 2008Via: Marketwatch:
The fact is, derivatives have become the world’s biggest “black market,” exceeding the illicit traffic in stuff like arms, drugs, alcohol, gambling, cigarettes, stolen art and pirated movies. Why? Because like all black markets, derivatives are a perfect way of getting rich while avoiding taxes and government regulations. And in today’s slowdown, plus a volatile global market, Wall Street knows derivatives remain a lucrative business.
Recently Pimco’s bond fund king Bill Gross said “What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August.” In short, not only Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America’s leaders can’t “figure out” the world’s $516 trillion derivatives.
Why? Gross says we are creating a new “shadow banking system.” Derivatives are now not just risk management tools. As Gross and others see it, the real problem is that derivatives are now a new way of creating money outside the normal central bank liquidity rules. How? Because they’re private contracts between two companies or institutions.
BIS is primarily a records-keeper, a toothless tiger that merely collects data giving a legitimacy and false sense of security to this chaotic “shadow banking system” that has become the world’s biggest “black market.”
That’s crucial, folks. Why? Because central banks require reserves like stock brokers require margins, something backing up the transaction. Derivatives don’t. They’re not “real money.” They’re paper promises closer to “Monopoly” money than real U.S. dollars. [SIC]
And it takes place outside normal business channels, out there in the “free market.” That’s the wonderful world of derivatives, and it’s creating a massive bubble that could soon implode.
BMW Outsourcing Production to the U.S.
March 11th, 2008I wonder… Is the U.S. plan to pay back the trillions of dollars it owes to creditors with dollars that are worth, say, several cents on the original value of the dollars borrowed?
Via: BBC:
The luxury carmaker BMW has announced it will invest $750m (£373m) as part of plans to increase production in the US.
The investment at the Spartanburg plant, South Carolina, is aimed at increasing capacity from 160,000 to 240,000 units by 2012.
The move is set to create 500 new jobs and comes after the firm recently said it would cut 7.5% of its German workforce in 2008.
The firm is facing both rising costs in Europe as well as slowing US demand.
Since last September, the dollar has tumbled against the euro, hurting firms that pay their costs in euros but receive payment in dollars.
The euro touched an all-time high of $1.546 last week after punching through the $1.50 level at the end of February.
BMW is not the only European firm affected by the swings in exchange rates.
In December last year, the head of the European aerospace and defence company EADS, Louis Gallois, gave a strong indication that if the situation persisted, some of the manufacturing of the Airbus passenger jet would have to be moved outside Europe.
Changing gear
“The boost in production capacity will positively impact the logistics, suppliers, and distribution networks that support the manufacturing process,” said Josef Kerscher, president of BMW Manufacturing.
The firm said the plant would produce the BMW X3, X5 and X6 models for international markets.
Analysts say that by building more vehicles in its South Carolina plants, Munich-based BMW can pay less wages in euros and will also save money by sourcing locally for parts used by its US factories.
This shift in production has resulted in planned cuts of 8,100 positions in Germany.
“This is completely driven by the plunge in the dollar,” said Oliver Wyman, publisher of the Harbour Report on automotive manufacturing activity.
“Conceivably, as the volume increases and the manufacturing system at the Spartanburg, South Carolina, plant improves, costs may come down enough to cut prices of their cars.”
New York Governor Eliot Spitzer: Client-9
March 11th, 2008UPDATE #2: Spitzer Working Municipal Bond Rescue Plan at Time of Revelation
Woh. I guess I’ll throw a check mark in the Coincidence box as well. What else? This one seems to have it all!
Why do we know that Spitzer is Client-9? Who are clients X, Y and Z?
Via: Financial Times:
One investment banker thought it was a joke and carried on with his meeting.
Others sat speechless, unable to avert their eyes from the television screens broadcasting the end of the career of one of Wall Street’s most feared foes.
News of Eliot Spitzer’s alleged involvement in a prostitution ring, and his possible resignation as governor of the state of New York, were met with stunned disbelief in the wood-pannelled offices and trading floors of downtown and midtown Manhattan.
Some could not resist taking a swipe at a man who, as New York’s attorney general, had castigated Wall Street for its ethical shortcomings.
“It’s a complete shocker,” a senior banker said. “Everyone is gossiping about it. And plenty of people on Wall Street are saying he deserved it.”
But others stressed that Mr Spitzer’s alleged personal shortcomings ought not to tarnish his legacy as a regulator.
“This is stunning. This is like finding out that Mother Teresa had been taking kick-backs,” said Henry Hu, a law professor at the University of Texas. “But I don’t think this undermines his achievements. This behaviour has got nothing to do with what motivated him to go after Wall Street”.
Some bankers noted that Mr Spitzer’s downfall had come at time when he had been co-operating with some of his former enemies on Wall Street to try to bring atability to the troubled municipal bond sector.
Harnessing his widespread contacts from his time as attorney-general, he had been making numerous phone calls to chief executives of top banks such as Citigroup, Credit Suisse and UBS in behind-the-scenes efforts to secure fresh capital to bail out bond insurer Ambac.
Eric Dinallo, the New York insurance regulator who was appointed by Mr Spitzer and who has been working extremely closely with him on the Ambac rescue, did not know about the allegations until he saw the news coverage on Monday, people working with Mr Dinallo said.
The many executives felled by Mr Spitzer’s investigations – from Hank Greenberg, former chief executive of the insurer AIG, to Richard Grasso, former chairman of the New York Stock Exchange – remained tightlipped on Monday.
— End Update —
UPDATE #1: Ringleader Carrying U.S. and Two Israeli Passports
I’m going to add this post to the Covert Operations and COINTEL categories as well. On the face of it, I thought, “Obvious honeypot, intelligence agency compromise operation,” but I had absolutely nothing to even point at to make that case.
Now we learn that the the ringleader had two Israeli passports and a U.S. passport!
— End Update —
Via: New York Post:
Four people were charged with prostitution and tax crimes for allegedly raking in more than $1 million with a stable of 50 girls that serviced clients in New York, Washington, LA, San Francisco, Chicago, Miami, Las Vegas, London, Paris and Vienna.
Mark Brener, the 62-year-old alleged ring leader from Monmouth Junction, NJ, along with his girlfriend and alleged top madam, 23-year-old Cecil “Katie” Suwal, , from Cliffside Park, NJ, both face up to five years in prison on prostitution charges and 20 years behind bars for money laundering.
Authorities raided Brener’s home early yesterday and found $600,000 in cash and 19,000 in Euros in various safes, prosecutors said.
Brener, they said, had two Israeli passports in addition to his US passport.
Two other women, Tanya Hollander, 36, a nutritionist from upstate Rhineback, and Temeka Rachelle Lewis, 32, of Brooklyn, face similar charges for handling the day-to-day business.
— End Update —
Elite deviance is par for the course in these circles. The remarkable thing here is that the activity involved an adult woman.
We should note that Eliot Spitzer made some VERY serious enemies on Wall Street during his tenure as New York Attorney General, and earlier, in the Manhattan DA’s office, when he took on the Gambino organization. The Eliot Spitzer Wikipedia page has a summary of the bigger cases.
Via: The Smoking Gun:
With the bombshell news today that New York Governor Eliot Spitzer has been implicated in a prostitution ring, the Democratic politician will now always be known as “Client-9,” one of the johns described in a recently unsealed FBI affidavit detailing the operation of the Emperors Club, an international call girl ring. That document, an excerpt of which you’ll find below, describes hooker interactions with 10 johns, including one client who paid cash for a February 13 rendezvous at a Washington, D.C. hotel. The New York Times, which broke the Spitzer story, has identified the 48-year-old politician as Client-9. As described in the FBI document, Client-9 (clearly a repeat customer) apparently went to great lengths to arrange the illicit Washington encounter, choosing to mail money in advance to the ring, instead of using a credit card. Client-9, whose conversations were recorded by an FBI wiretap, would not do “traditional wire transferring,” the affidavit quotes one Emperors Club employee remarking. Additionally, the affidavit notes that after her appointment with Client-9 ended, “Kristen” spoke with a Emperors Club booker, who said that she had been told that Client-9 “would ask you to do things that, like, you might not think were safe…” “Kristen” responded by saying, essentially, that she could handle guys like that.
NSA’s Domestic Spying Grows As Agency Sweeps Up Data
March 10th, 2008Is it tinfoil if it’s on the front page of the Wall Street Journal?
Via: Wall Street Journal:
NSA’s Domestic Spying Grows As Agency Sweeps Up Data
Terror Fight Blurs Line Over Domain;Tracking Email
By SIOBHAN GORMAN
March 10, 2008; Page A1
WASHINGTON, D.C. — Five years ago, Congress killed an experimental Pentagon antiterrorism program meant to vacuum up electronic data about people in the U.S. to search for suspicious patterns. Opponents called it too broad an intrusion on Americans’ privacy, even after the Sept. 11 terrorist attacks.
But the data-sifting effort didn’t disappear. The National Security Agency, once confined to foreign surveillance, has been building essentially the same system.
The central role the NSA has come to occupy in domestic intelligence gathering has never been publicly disclosed. But an inquiry reveals that its efforts have evolved to reach more broadly into data about people’s communications, travel and finances in the U.S. than the domestic surveillance programs brought to light since the 2001 terrorist attacks.
Congress now is hotly debating domestic spying powers under the main law governing U.S. surveillance aimed at foreign threats. An expansion of those powers expired last month and awaits renewal, which could be voted on in the House of Representatives this week. The biggest point of contention over the law, the Foreign Intelligence Surveillance Act, is whether telecommunications and other companies should be made immune from liability for assisting government surveillance.
Largely missing from the public discussion is the role of the highly secretive NSA in analyzing that data, collected through little-known arrangements that can blur the lines between domestic and foreign intelligence gathering. Supporters say the NSA is serving as a key bulwark against foreign terrorists and that it would be reckless to constrain the agency’s mission. The NSA says it is scrupulously following all applicable laws and that it keeps Congress fully informed of its activities.
According to current and former intelligence officials, the spy agency now monitors huge volumes of records of domestic emails and Internet searches as well as bank transfers, credit-card transactions, travel and telephone records. The NSA receives this so-called “transactional” data from other agencies or private companies, and its sophisticated software programs analyze the various transactions for suspicious patterns. Then they spit out leads to be explored by counterterrorism programs across the U.S. government, such as the NSA’s own Terrorist Surveillance Program, formed to intercept phone calls and emails between the U.S. and overseas without a judge’s approval when a link to al Qaeda is suspected.
The NSA’s enterprise involves a cluster of powerful intelligence-gathering programs, all of which sparked civil-liberties complaints when they came to light. They include a Federal Bureau of Investigation program to track telecommunications data once known as Carnivore, now called the Digital Collection System, and a U.S. arrangement with the world’s main international banking clearinghouse to track money movements.
The effort also ties into data from an ad-hoc collection of so-called “black programs” whose existence is undisclosed, the current and former officials say. Many of the programs in various agencies began years before the 9/11 attacks but have since been given greater reach. Among them, current and former intelligence officials say, is a longstanding Treasury Department program to collect individual financial data including wire transfers and credit-card transactions.
It isn’t clear how many of the different kinds of data are combined and analyzed together in one database by the NSA. An intelligence official said the agency’s work links to about a dozen antiterror programs in all.
A number of NSA employees have expressed concerns that the agency may be overstepping its authority by veering into domestic surveillance. And the constitutional question of whether the government can examine such a large array of information without violating an individual’s reasonable expectation of privacy “has never really been resolved,” said Suzanne Spaulding, a national-security lawyer who has worked for both parties on Capitol Hill.
NSA officials say the agency’s own investigations remain focused only on foreign threats, but it’s increasingly difficult to distinguish between domestic and international communications in a digital era, so they need to sweep up more information.
The Fourth Amendment
In response to the Sept. 11 attacks, then NSA-chief Gen. Michael Hayden has said he used his authority to expand the NSA’s capabilities under a 1981 executive order governing the agency. Another presidential order issued shortly after the attacks, the text of which is classified, opened the door for the NSA to incorporate more domestic data in its searches, one senior intelligence official said.
The NSA “strictly follows laws and regulations designed to preserve every American’s privacy rights under the Fourth Amendment to the U.S. Constitution,” agency spokeswoman Judith Emmel said in a statement, referring to the protection against unreasonable searches and seizures. The Office of the Director of National Intelligence, which oversees the NSA in conjunction with the Pentagon, added in a statement that intelligence agencies operate “within an extensive legal and policy framework” and inform Congress of their activities “as required by the law.” It pointed out that the 9/11 Commission recommended in 2004 that intelligence agencies analyze “all relevant sources of information” and share their databases.
Two former officials familiar with the data-sifting efforts said they work by starting with some sort of lead, like a phone number or Internet address. In partnership with the FBI, the systems then can track all domestic and foreign transactions of people associated with that item — and then the people who associated with them, and so on, casting a gradually wider net. An intelligence official described more of a rapid-response effect: If a person suspected of terrorist connections is believed to be in a U.S. city — for instance, Detroit, a community with a high concentration of Muslim Americans — the government’s spy systems may be directed to collect and analyze all electronic communications into and out of the city.
The haul can include records of phone calls, email headers and destinations, data on financial transactions and records of Internet browsing. The system also would collect information about other people, including those in the U.S., who communicated with people in Detroit.
The information doesn’t generally include the contents of conversations or emails. But it can give such transactional information as a cellphone’s location, whom a person is calling, and what Web sites he or she is visiting. For an email, the data haul can include the identities of the sender and recipient and the subject line, but not the content of the message.
Intelligence agencies have used administrative subpoenas issued by the FBI — which don’t need a judge’s signature — to collect and analyze such data, current and former intelligence officials said. If that data provided “reasonable suspicion” that a person, whether foreign or from the U.S., was linked to al Qaeda, intelligence officers could eavesdrop under the NSA’s Terrorist Surveillance Program.
The White House wants to give companies that assist government surveillance immunity from lawsuits alleging an invasion of privacy, but Democrats in Congress have been blocking it. The Terrorist Surveillance Program has spurred 38 lawsuits against companies. Current and former intelligence officials say telecom companies’ concern comes chiefly because they are giving the government unlimited access to a copy of the flow of communications, through a network of switches at U.S. telecommunications hubs that duplicate all the data running through it. It isn’t clear whether the government or telecom companies control the switches, but companies process some of the data for the NSA, the current and former officials say.
On Friday, the House Energy and Commerce Committee released a letter warning colleagues to look more deeply into how telecommunications data are being accessed, citing an allegation by the head of a New York-based computer security firm that a wireless carrier that hired him was giving unfettered access to data to an entity called “Quantico Circuit.” Quantico is a Marine base that houses the FBI Academy; senior FBI official Anthony DiClemente said the bureau “does not have ‘unfettered access’ to any communication provider’s network.”
The political debate over the telecom information comes as intelligence agencies seek to change traditional definitions of how to balance privacy rights against investigative needs. Donald Kerr, the deputy director of national intelligence, told a conference of intelligence officials in October that the government needs new rules. Since many people routinely post details of their lives on social-networking sites such as MySpace, he said, their identity shouldn’t need the same protection as in the past. Instead, only their “essential privacy,” or “what they would wish to protect about their lives and affairs,” should be veiled, he said, without providing examples.
Social-Network Analysis
The NSA uses its own high-powered version of social-network analysis to search for possible new patterns and links to terrorism. The Pentagon’s experimental Total Information Awareness program, later renamed Terrorism Information Awareness, was an early research effort on the same concept, designed to bring together and analyze as much and as many varied kinds of data as possible. Congress eliminated funding for the program in 2003 before it began operating. But it permitted some of the research to continue and TIA technology to be used for foreign surveillance.
Some of it was shifted to the NSA — which also is funded by the Pentagon — and put in the so-called black budget, where it would receive less scrutiny and bolster other data-sifting efforts, current and former intelligence officials said. “When it got taken apart, it didn’t get thrown away,” says a former top government official familiar with the TIA program.
Two current officials also said the NSA’s current combination of programs now largely mirrors the former TIA project. But the NSA offers less privacy protection. TIA developers researched ways to limit the use of the system for broad searches of individuals’ data, such as requiring intelligence officers to get leads from other sources first. The NSA effort lacks those controls, as well as controls that it developed in the 1990s for an earlier data-sweeping attempt.
Sen. Ron Wyden, an Oregon Democrat and member of the Senate Intelligence Committee who led the charge to kill TIA, says “the administration is trying to bring as much of the philosophy of operation Total Information Awareness as it can into the programs they’re using today.” The issue has been overshadowed by the fight over telecoms’ immunity, he said. “There’s not been as much discussion in the Congress as there ought to be.”
Opportunity for Debate
But Sen. Kit Bond of Missouri, the ranking Republican on the committee, said by email his committee colleagues have had “ample opportunity for debate” behind closed doors and that each intelligence program has specific legal authorization and oversight. He cautioned against seeing a group of intelligence programs as “a mythical ‘big brother’ program,” adding, “that’s not what is happening today.”
The legality of data-sweeping relies largely on the government’s interpretation of a 1979 Supreme Court ruling allowing records of phone calls — but not actual conversations — to be collected without a judge issuing a warrant. Multiple laws require a court order for so-called “transactional'” records of electronic communications, but the 2001 Patriot Act lowered the standard for such an order in some cases, and in others made records accessible using FBI administrative subpoenas called “national security letters.” (Read the ruling.2)
A debate is brewing among legal and technology scholars over whether there should be privacy protections when a wide variety of transactional data are brought together to paint what is essentially a profile of an individual’s behavior. “You know everything I’m doing, you know what happened, and you haven’t listened to any of the contents” of the communications, said Susan Landau, co-author of a book on electronic privacy and a senior engineer at Sun Microsystems Laboratories. “Transactional information is remarkably revelatory.”
Ms. Spaulding, the national-security lawyer, said it’s “extremely questionable” to assume Americans don’t have a reasonable expectation of privacy for data such as the subject-header of an email or a Web address from an Internet search, because those are more like the content of a communication than a phone number. “These are questions that require discussion and debate,” she said. “This is one of the problems with doing it all in secret.”
Gen. Hayden, the former NSA chief and now Central Intelligence Agency director, in January 2006 publicly defended the activities of the Terrorist Surveillance Program after it was disclosed by the New York Times. He said it was “not a driftnet over Lackawanna or Fremont or Dearborn, grabbing all communications and then sifting them out.” Rather, he said, it was carefully targeted at terrorists. However, some intelligence officials now say the broader NSA effort amounts to a driftnet. A portion of the activity, the NSA’s access to domestic phone records, was disclosed by a USA Today article in 2006.
The NSA, which President Truman created in 1952 through a classified presidential order to be America’s ears abroad, has for decades been the country’s largest and most secretive intelligence agency. The order confined NSA spying to “foreign governments,” and during the Cold War the NSA developed a reputation as the world’s premier code-breaking operation. But in the 1970s, the NSA and other intelligence agencies were found to be using their spy tools to monitor Americans for political purposes. That led to the original FISA legislation in 1978, which included an explicit ban on the NSA eavesdropping in the U.S. without a warrant.
Big advances in telecommunications and database technology led to unprecedented data-collection efforts in the 1990s. One was the FBI’s Carnivore program, which raised fears when it was in disclosed in 2000 that it might collect telecommunications information about law-abiding individuals. But the ground shifted after 9/11. Requests for analysis of any data that might hint at terrorist activity flooded from the White House and other agencies into NSA’s Fort Meade, Md., headquarters outside Washington, D.C., one former NSA official recalls. At the time, “We’re scrambling, trying to find any piece of data we can to find the answers,” the official said.
The 2002 congressional inquiry into the 9/11 attacks criticized the NSA for holding back information, which NSA officials said they were doing to protect the privacy of U.S. citizens. “NSA did not want to be perceived as targeting individuals in the United States” and considered such surveillance the FBI’s job, the inquiry concluded.
FBI-NSA Projects
The NSA quietly redefined its role. Joint FBI-NSA projects “expanded exponentially,” said Jack Cloonan, a longtime FBI veteran who investigated al Qaeda. He pointed to national-security letter requests: They rose from 8,500 in 2000 to 47,000 in 2005, according to a Justice Department inspector general’s report last year. It also said the letters permitted the potentially illegal collection of thousands of records of people in the U.S. from 2003-05. Last Wednesday, FBI Director Robert Mueller said the bureau had found additional instances in 2006.
It isn’t known how many Americans’ data have been swept into the NSA’s systems. The Treasury, for instance, built its database “to look at all the world’s financial transactions” and gave the NSA access to it about 15 years ago, said a former NSA official. The data include domestic and international money flows between bank accounts and credit-card information, according to current and former intelligence officials.
The NSA receives from Treasury weekly batches of this data and adds it to a database at its headquarters. Prior to 9/11, the database was used to pursue specific leads, but afterward, the effort was expanded to hunt for suspicious patterns.
Through the Treasury, the NSA also can access the database of the Society for Worldwide Interbank Financial Telecommunication, or Swift, the Belgium-based clearinghouse for records of international transactions between financial institutions, current and former officials said. The U.S. acknowledged in 2006 that the CIA and Treasury had access to Swift’s database, but said the NSA’s Terrorism Surveillance Program was separate and that the NSA provided only “technical assistance.” A Treasury spokesman said the agency had no comment.
Through the Department of Homeland Security, airline passenger data also are accessed and analyzed for suspicious patterns, such as five unrelated people who repeatedly fly together, current and former intelligence officials said. Homeland Security shares information with other agencies only “on a limited basis,” spokesman Russ Knocke said.
NSA gets access to the flow of data from telecommunications switches through the FBI, according to current and former officials. It also has a partnership with FBI’s Digital Collection system, providing access to Internet providers and other companies. The existence of a shadow hub to copy information about AT&T Corp. telecommunications in San Francisco is alleged in a lawsuit against AT&T filed by the civil-liberties group Electronic Frontier Foundation, based on documents provided by a former AT&T official. In that lawsuit, a former technology adviser to the Federal Communications Commission says in a sworn declaration that there could be 15 to 20 such operations around the country. Current and former intelligence officials confirmed a domestic network of hubs, but didn’t know the number. “As a matter of policy and law, we can not discuss matters that are classified,” said FBI spokesman John Miller.
The budget for the NSA’s data-sifting effort is classified, but one official estimated it surpasses $1 billion. The FBI is requesting to nearly double the budget for the Digital Collection System in 2009, compared with last year, requesting $42 million. “Not only do demands for information continue to increase, but also the requirement to facilitate information sharing does,” says a budget justification document, noting an “expansion of electronic surveillance activity in frequency, sophistication, and linguistic needs.”
Britain: New Surveillance Camera “Sees” Under Clothes
March 10th, 2008Via: Reuters:
A British company has developed a camera that can detect weapons, drugs or explosives hidden under people’s clothes from up to 25 meters away in what could be a breakthrough for the security industry.
The T5000 camera, created by a company called ThruVision, uses what it calls “passive imaging technology” to identify objects by the natural electromagnetic rays — known as Terahertz or T-rays — that they emit.
The high-powered camera can detect hidden objects from up to 80 feet away and is effective even when people are moving. It does not reveal physical body details and the screening is harmless, the company says.
The technology, which has military and civilian applications and could be used in crowded airports, shopping malls or sporting events, will be unveiled at a scientific development exhibition sponsored by Britain’s Home Office on March 12-13.
“Acts of terrorism have shaken the world in recent years and security precautions have been tightened globally,” said Clive Beattie, the chief executive of ThruVision.
“The ability to see both metallic and non-metallic items on people out to 25 meters is certainly a key capability that will enhance any comprehensive security system.”
While the technology may enhance detection, it may also increase concerns that Britain is becoming a surveillance society, with hundreds of thousands of closed-circuit television cameras already monitoring people countrywide every day.
ThruVision came up with the technology for the T5000 in collaboration with the European Space Agency and from studying research by astronomers into dying stars.
The technology works on the basis that all people and objects emit low levels of electromagnetic radiation. Terahertz rays lie somewhere between infrared and microwaves on the electromagnetic spectrum and travel through clouds and walls.
Canadian Law May Prohibit Fuel from Oil Sands from Being Sold to U.S.
March 10th, 2008Woh. Keep an eye on this one.
Via: Financial Times:
Canada has warned the US government that a narrow interpretation of new energy legislation would prohibit its neighbour buying fuel from Alberta’s vast oil sands, with “unintended consequences for both countries”.
In a letter to Robert Gates, US defence secretary, Canada said that it “would not want to see an expansive interpretation” of the Energy Independence and Security Act 2007. A copy of the letter, from Michael Wilson, Canadian ambassador, and copied to Condoleezza Rice, US secretary of state, and Samuel Bodman, US energy secretary, has been obtained by the Financial Times.
Section 526 of the law limits US government procurement of alternative fuels to those from which the lifecycle greenhouse gas emissions are equal to or less than those from conventional fuel from conventional petroleum sources. Canada’s oil sands are considered unconventional fuels, and producing them emits more greenhouse gas than conventional production.
The Bush administration has, nonetheless, encouraged developing oil sands, given the US’s favourable relationship with Canada and that it would reduce reliance on Middle East imports.
Amy Myers Jaffe, energy expert at Rice University, said cutting out the oil sands as a source of fuel would also limit global supplies further, forcing up the price of oil: “$106 a barrel is going to look cheap.”
The three presidential candidates hoping to replace President George W. Bush are proponents of strong US policy to counter greenhouse gas emissions, which could lead to a narrow interpretation of the law. That could be why Canada wants the law interpreted now.
“The Canadians do, in fact, have something to worry about, particularly from a Democratic administration,” Ms Jaffe said.
Environmentalists say extracting a barrel of crude from oil sands results in five times the amount of greenhouse gas emissions than extracting conventional crude – a figure some energy companies dispute.
Tristan Landry, spokesperson at the Canadian embassy in Washington, said: “Classifying fuel from the oil sands as non-conventional fuel … would unnecessarily complicate the integrated?Canada-US energy relationship.”
The energy department said the US was “assessing any implication to the US federal fuel procurement practices arising from the bill and will work co-operatively with Canada”.
Research Credit: Scott
Drugs in Drinking Water
March 10th, 2008Via: AP:
A vast array of pharmaceuticals — including antibiotics, anti-convulsants, mood stabilizers and sex hormones — have been found in the drinking water supplies of at least 41 million Americans, an Associated Press investigation shows.
To be sure, the concentrations of these pharmaceuticals are tiny, measured in quantities of parts per billion or trillion, far below the levels of a medical dose. Also, utilities insist their water is safe.
But the presence of so many prescription drugs — and over-the-counter medicines like acetaminophen and ibuprofen — in so much of our drinking water is heightening worries among scientists of long-term consequences to human health.
In the course of a five-month inquiry, the AP discovered that drugs have been detected in the drinking water supplies of 24 major metropolitan areas — from Southern California to Northern New Jersey, from Detroit to Louisville, Ky.
Water providers rarely disclose results of pharmaceutical screenings, unless pressed, the AP found. For example, the head of a group representing major California suppliers said the public “doesn’t know how to interpret the information” and might be unduly alarmed.
How do the drugs get into the water?
People take pills. Their bodies absorb some of the medication, but the rest of it passes through and is flushed down the toilet. The wastewater is treated before it is discharged into reservoirs, rivers or lakes. Then, some of the water is cleansed again at drinking water treatment plants and piped to consumers. But most treatments do not remove all drug residue.
And while researchers do not yet understand the exact risks from decades of persistent exposure to random combinations of low levels of pharmaceuticals, recent studies — which have gone virtually unnoticed by the general public — have found alarming effects on human cells and wildlife.
Florida: People Squatting in Multi Million Dollar Seaside Mansions
March 9th, 2008“Owner occupied defaults.” What a country!
Via: Big Picture:
“There is a very important phenomena that is occurring that has only been covered in an only “glancing” manner. Beyond the concept of “jingle mail” — which suggests that folks who can pay their mortgages may just choose to walk away given the dramatic loss of equity due to housing’s collapse — consider the following: As a developer, I had stepped to the sidelines and rented beginning in 2005, because I was sure that housing was unsustainable and was bound to collapse; it took 2 more years for it occur.
Nonetheless, as I have followed several of the homes that my wife and I were interested in a few years back, they are all on the market now. What is shocking, that in each and every case, I have been told by brokers and banks that the owners, have ceased paying their mortgages in some cases for nearly 2 years and have continued to occupy these homes. Now, these are homes in excess of $2,000,000 in the very best neighborhoods in South Florida. Brokers have added that these buyers further complicated things by putting huge home equity lines on top of their mortgages and now have no possibility of selling their homes for amounts needed to cover their accumulated debt.
This may not seem like news, but understand what this means: There is currently an 8-10 month wait to get a court date to have a foreclosure filing heard in Dade and Broward counties. The bankers have non-performing loans on their books to the best heeled borrowers in multi-million dollar amounts with no immediate means for recovery; with a non-secured second mortgage in place, there is no possibility for a “short sale” that will satisfy all of the borrower’s debt. They are reluctant to take a haircut knowing that they have the home equity debt still around their neck and are likely to frustrate any near-term sale.
There is no clean way to sell the home that would guarantee “clean title” hence a foreclosure is the only means to separate the property from the dead-beat speculator/squattor. Banks do not want to spend the $50,000 required to take a home through a foreclosure and clear the title — only to put the house back on the market for a deeper loss afterwards. Most likely, they have not revealed these owner occupied defaults to their shareholders, thanks to the sheer numbers of non-performing loans on their balance sheets, and the daunting task of foreclosing on all of them. This is the ultimate seizure and full stop of the market whereby everyone is standing in a stalemate. As one broker said to me, “these bums sitting in $3,000,000 homes overlooking the water are likely to be left alone by the banks for 2 years before the banks even get serious about foreclosure.”
So here is the difference between “walking away,” these folks are doing anything but walking away, they are sitting on lounge chairs sipping martinis living cost free! (not to mention that they have ceased paying property taxes and insurance). I can only imagine what this market will look like in the coming years . . .”
Research Credit: Scott
Britain: Domestic Air Travelers to Be Photographed and Fingerprinted
March 9th, 2008Via: Telegraph:
Millions of British airline passengers face mandatory fingerprinting before being allowed to board flights when Heathrow’s Terminal 5 opens later this month.
For the first time at any airport, the biometric checks will apply to all domestic passengers leaving the terminal, which will handle all British Airways flights to and from Heathrow.
The controversial security measure is also set to be introduced at Gatwick, Manchester and Heathrow’s Terminal 1, and many airline industry insiders believe fingerprinting could become universal at all UK airports within a few years.
All four million domestic passengers who will pass through Terminal 5 annually after it opens on March 27 will have four fingerprints taken, as well as being photographed, when they check in.
To ensure the passenger boarding the aircraft is the same person, the fingerprinting process will be repeated just before they board the aircraft and the photograph will be compared with their face.
BAA, the company which owns Heathrow, insists the biometric information will be destroyed after 24 hours and will not be passed on to the police.
It says the move is necessary to prevent criminals, terrorists and illegal immigrants trying to bypass border controls.
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Although fingerprinting is carried out at some foreign airports – most notably in the US – as part of immigration checks for international arrivals, Heathrow will be the first to fingerprint domestic passengers before they board their flights.
Even if domestic passengers have a passport with them, they will still have to go through the biometric checks.
Dr Gus Hosein, of the London School of Economics, an expert on the impact on technology on civil liberties, is one of the scheme’s strongest critics.
He said: “There is no other country in the world that requires passengers travelling on internal flights to be fingerprinted. BAA says the fingerprint data will be destroyed, but the records of who has travelled within the country will not be, and it will provide a rich source of data for the police and intelligence agencies.
“I grew up in a society where you only fingerprinted people if you suspected them of being criminals. By doing this they will make innocent people feel like criminals.
“There will also be a suspicion that this is the thin end of the wedge, that we are being softened up by making fingerprinting seem normal in the run-up to things like ID cards.”
Mr Hosein claimed automatic fingerprint technology is only 90 per cent accurate at best, and clear fingerprints can be difficult to obtain.
Simon Davies, of campaign group Privacy International, suggested a photograph alone would be a perfectly adequate – and much cheaper – way of identifying passengers.
…the fingerprinting of domestic passengers is expected to be the first step in the increasing use of the technology for people coming to and from Britain.
Within the next few weeks BAA will announce plans for voluntary fingerprinting under a so-called “trusted traveller” scheme.
Those willing to have their fingerprints and passport information stored would be able to bypass immigration queues by placing their finger on a scanner instead of waiting to have their passport checked.
The move follows a trial of the technology, known as “miSense”, at Heathrow last year.
In the long term, fingerprinting could become even more widespread when the Government introduces tighter embarkation controls next year, which have not yet been specified but could range from having to show passports more often before boarding or using biometric checks.
Steam Powered Battery Charger
March 9th, 2008These guys repurposed an old steam engine to serve as a backup generator. This is the most incredible application of crust that I have ever seen.
Via: Other Power:
This page is a diary about our effort to build a steam powered ‘backup generator’ to charge our batteries. For the most part we have all the power we could ever need from our small 600 Watt solar array and our 20′ diameter wind turbine, but on occasion I do need to run a generator and I always figured that a steam engine would be the most fun, plus… I don’t need to rely on petroleum – I have lots of wood all around me!


