2010 - %3, June

RNC Official Threatens To Sink Gay Candidate

| Tue Jun. 1, 2010 11:23 AM EDT

Former GOP political consultant Fred Karger has been giving gay marriage foes fits for the past couple of years, outing donors to their campaigns and organizing boycotts against them. Now, the openly gay California resident has decided to try a run for president, and already he's got his party in a tizzy over how to deal with him. So far, the party isn't exactly proving its "big tent" bona fides. Last week, one of the two Iowa members of the Republican National Committee, Steve Scheffler, sent Karger an email threatening to make sure his campaign goes nowhere. He wrote:

"you and the radical homosexual community want to harass supporters of REAL marriage. I am the Republican National Committeeman for Iowa. As a private citizen and knowing literally thousands of caucus goers, I will work overtime to help ensure that your political aspirations are aborted right here in Iowa. Have you studied our past caucuses–you have NO chance here in Iowa!"

Naturally, Karger immediately tipped off the Des Moines Register, which confirmed that Scheffler did indeed send the email and posted a blog item about it, which Karger circulated far and wide, along with his calls for Scheffler to apologize. But Scheffler, the head of the Iowa Christian Alliance and the go-to guy for any candidate hoping to woo Iowa's social conservatives, was doing no such thing. He told the Register, "I'm going to call a spade a spade."

Perhaps Karger should consider himself in good company. Scheffler also told potential candidate Mississippi Governor Haley Barbour, that he, too, was "toast" in Iowa because of his leadership of the Republican Governor's Association and distaste for ideological purity. Last month, Barbour went so far as to suggest that the GOP should even support pro-choice candidates who were "good Republicans" because that's what party-building is all about. Clearly Barbour's chances of winning the GOP primary are about as good as Karger's at this point. Perhaps they should join forces to push a big tent platform. Potential running mates?

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Turkey and the Flotilla

| Tue Jun. 1, 2010 10:46 AM EDT

Here's a couple of paragraphs from a New York Times story about the Turkish reaction to Israel's raid yesterday on the flotilla attempting to run its blockade on Gaza:

A senior Israeli official said that Israel had tried for two weeks to persuade Turkey to stop the flotilla’s voyage, but that Turkey said it was a nongovernmental action that it was powerless to stop. Israel’s ambassador in Turkey, Gabi Levy, did not return a call for comment.

One wild card is Mr. Erdogan, a strong-willed former Islamist who is the driving force behind Turkey’s criticism of Israel and its policy toward the Palestinians. He has pushed a foreign policy that has taken a more active role in the region, serving as mediator between Israel and Syria. But the United States has not appreciated all his efforts, like his recent attempt with Brazil to broker a nuclear deal with Iran.

....Asli Aydintasbas, a columnist at the Turkish daily Milliyet, argues that the episode was a striking failure in diplomacy, for both the United States and Turkey. The new foreign policy pursued by Turkey’s government has given it a confidence that sometimes results in overreaching. For example, Turkey believed it could change Israeli policies toward Gaza.

More here. I haven't seen very much that tries to dive deeper into this part of the story, but at first glance it almost seems as if Turkey was deliberately trying to provoke an incident that would justify cutting off relations with Israel. After all, the Israeli commando raid may have turned out more deadly than anyone expected, but something like it was always probable and the Turkish government surely knew it. Alternatively, maybe Aydintasbas is right: it was just a massive miscalculation by Erdogan, who quixotically thought that Israel would soften the blockade if it knew that Turkey stood behind the blockade runners. Or maybe Turkey really was powerless to do anything about the flotilla.

I'm sure there are a thousand layers upon layers that could be said about this, and I can't even comment sensibly on the top one. But if anyone can point to some really knowledgable commentary on this particular aspect of yesterday's incident, let us know in comments.

Former TNR Editor Slams Israel on Flotilla

| Tue Jun. 1, 2010 10:27 AM EDT

I wonder if Peter Beinart could have—and would have—written this, were he still editor of The New Republic:

The [Israeli] embargo [against Gaza] was designed to weaken [Hamas], and bolster Palestinian Authority President Mahmoud Abbas. But, in fact, Abbas himself is reportedly considering a visit to Gaza in an effort to bring Hamas into a national unity government. Besides the ordinary men, women, and children of Gaza, in fact, the entity that the embargo has most weakened is Israel. It threatens to rupture the Jewish State’s vital alliance with Turkey, whose government was furious about the embargo even before yesterday’s attack killed several of its nationals. It has wrecked Israel’s relations with Qatar, which offered to re-establish trade ties if Israel allowed the Gulf State to send supplies to Gaza. And now it has produced a public-relations disaster that will further destroy Israel’s reputation around the world.

The Gaza embargo—as currently constituted—is indefensible, which is why Israel’s American supporters have not so much defended it as pretended it was something other than what it really is. In the name of solidarity, we have practiced denial. In the name of anti-terrorism, we have justified the brutalization of innocents. Now all of us who enabled Israel’s callous, reckless policy are reaping what we sowed. Don’t blame the Israeli commandos for what happened yesterday on the high seas; blame us.

Please alert the self-hating Jews police.

 

Can the Spies Ever Get It Right?

| Tue Jun. 1, 2010 10:17 AM EDT

After 9/11, Washington—predictably—underwent a spasm of intelligence reform and reorganized what's called the "intelligence community." The big change came with 2004 legislation that created a director of national intelligence, who was supposed to supplant the director of central intelligence (aka the CIA head) as the top-dog chief of the sprawling intelligence establishment, which includes 13 agencies, including several within the military. Dennis Blair's recent departure as DNI and the subsequent difficulty in replacing him are reminders that the the 2004 reform has not gone so well. Now Secrecy News reports:

The development of the 2004 intelligence reform legislation that created the Director of National Intelligence and attempted to modernize and integrate the U.S. intelligence community was examined in detail last year in an unreleased report (large pdf) from the Office of the DNI.

The 2004 Intelligence Reform and Terrorism Prevention Act was supposed to "address institutional obstacles that had complicated the IC's struggle to adapt to new technologies and a changing national security environment. The new act would redraw boundaries between foreign and domestic intelligence, set new rules for intelligence and law enforcement, enhance the interplay between civilian and military intelligence, correct the shortfall in information sharing, and meet the needs of traditional and emergent intelligence functions."

But five years later, many of those original obstacles remain in place.

"The IC continues its struggle to keep up with technological innovations in collection. Other challenges include transforming analysis, anticipating future threats, increasing critical language capabilities, and improving hiring and security clearance processing."

The report itself ironically exemplifies at least two of the enduring defects afflicting U.S. intelligence, namely pointless secrecy and a surprising backwardness in communications and information sharing.

For unknown reasons, the unclassified report has not been publicly released and made available online by ODNI....Limiting distribution in this way tends to diminish whatever value and utility the document might have.

Moreover, the report itself is so extravagantly overproduced that it requires a gargantuan 18 Megabytes to present a mere 25 pages of text.  (A word-searchable version of the document is 25 Megabytes.)  In such an unwieldy format, the report is the opposite of user-friendly.  It is unlikely to be emailed, downloaded--- or read.

Meanwhile, the big problem seems to be that six years after this law was passed, there's no agreement on what the DNI should do. CNN reports:

That might be the crux of the problem. The law that created the position of DNI after the 9/11 terrorist attacks is too "ambiguous," said one of the key people who pushed Congress for intelligence reform. Lee Hamilton, the co-chairman of the 9/11 Commission, told a congressional hearing last week that "the role of the DNI is not clear ... and as long as you have the ambiguity, you're going to have these agencies fighting for jurisdiction and power."

The DNI needs to be empowered with the budget and personnel authorities to lead the community, otherwise, the director is merely a coordinator, Hamilton said.

And the White House does not appear eager to do that—for good or bad. The intelligence community will continue to stumble and ad hoc its way through the 2004 reforms—until there's another terrorist attack and another round of reform.

BP Security Block Boat Ramps, Order US Troops Around

| Tue Jun. 1, 2010 9:59 AM EDT
New Orleans, LA. So who's running the Gulf coast of the United States? Or BP security forces? I spent all day yesterday looking for available boat ramps so I could go look at the devastation of the spill first hand. Almost all have been commandeered by the spill police.
 
 
 
 
 
 
 
 
 
 
 
 
 
At one checkpoint a young US Army soldier chated with us in a friendly way. The old dudes in hardhats growled at him that he's not supposed to talk to media. He looked at them like WTF?
 
I went over to the old dudes and asked them who they work for. They wouldn't say. I asked them why not. They wouldn't say. One got a pained look in his eyes and said he works for his family. I hear what he's trying to say.
 
I'm hearing reports: huge spike in domestic violence in the spill zone. The men are getting fracked by BP. They come home and take out their frustration, helplessness, and anger in the bottle, and then on their wives and kids.
 
The effects are rippling far beyond the water.

 

Party with Wall St. on Finance Reform!

| Tue Jun. 1, 2010 9:07 AM EDT

The battle to re-regulate Wall Street is in the late rounds, as the House and Senate try to merge their two bills via the "conference" process beginning as early as next week. That isn't stopping banks and their lobbyists from wooing top lawmakers with a say on the final bill.

Case in point: According to an invitation obtained by Brian Beutler at Talking Points Memo, a Wall Street securities firm and a Washington lobbying shop are scheming to bring together top lawmakers crafting Congress' reform legislation, financial lobbyists, and banking officials for a day-long event in mid June. "Speakers will include the KEY House and Senate Conferees and majority and minority Committee staff," the invitation reads, "as well as leading financial lobbyists covering interchange, banks and major non-banks affected by so-called Wall Street Reform bill." (The securities firm is JNK Securities Corp., and the lobbying outfit Federal Advisory LLC.)

According to the invitation, the June 15 event is slated to last from 10 am to 7 pm—which could fall in the middle of the financial reform conference negotiations between House and Senate leaders. When Beutler called Tim Rupli, Federal Advisory's registered lobbyist, Rupli said the event wasn't a sure thing yet, and all 12 of the Senate conferees, as they're called, either hadn't heard of the event or weren't planning on attending. Nonetheless, the event, whether it comes off or not, is evidence that banks, their lobbyists, and their trade groups will continue fighting and plying and cajoling until President Obama puts pen to paper on the final bill.

For your reading pleasure, here's the invitation in full, per TPM:

From: "Bill Williams" ********** Date: May 26, 2010 4:46:44 PM EDT Subject: (BAC, V, WFC, MA, GS, JPM) ** Confirmed ** Tuesday June 15th in Washington DC w/ KEY House & Senae Conferees

*Timely* Financial Reform Event on TUES June 15th in Washington DC

JNK will be hosting a financial reform event with Federal Advisory, LLC on Tuesday June 15th in Washington DC from 10am - 7pm on Capitol Hill. Speakers will include the KEY House and Senate Conferees and majority and minority Committee staff, as well as leading financial lobbyists covering interchange, banks and major non-banks affected by so-called Wall Street Reform bill. This event will comply with Congressional ethics and gift ban rules. JNK Securities Corp does not participate in any lobbying or fundraising events.

Attendance will be limited, Please indicate your interest.

Federal Advisory: Industry sources suggest the following is proposed conference schedule:

Tuesday, June 8 th-conferees appointed

Wednesday, June 9th-first open meeting of the conference; organizational matters and opening statements only

Tuesday, June 15th, Wednesday, June 16th, Thursday, June 17th-conference meets on substantive issues

Tuesday, June 22nd, Wednesday, June 23rd-conference meets on substantive issues

Thursday, June 24th-conference concludes with formal signing ceremony; conference report filed shortly thereafter

Monday, June 28th-Rules Committee meets to grant rule

Tuesday, June 29th-House passes conference report; this gives the Senate three days to pass it before the beginning of the July 4th recess.

Bill Williams | Director of JNK 3rd Party Research and Sales

JNK Securities Corp | Customized Research Solutions + Trade Execution

******

Semiconductors - Semiconductor Equipment - EMS/Hardware Supply Chain - U.S. Wireless/Mobile Devices - Global Telecom & Data Centers - Security Software - Retail - Gaming & Lodging - U.S. Government Strategy

JNK works with a select group of 3rd Party Consultants. Their work is exclusive to JNK Securities. We do our best to ensure that you are receiving the most up to date, accurate and actionable information on the Street. In an effort to maintain that value, it is important that our clients, keep our proprietary information to themselves. Please do not distribute our work to any outside party including (but not limited to) other Funds, friends, IR departments from mentioned companies etc.

If you have any further questions, please feel free to contact myself, Bill Williams, our Head of 3rd Party Research or Jodi Heitner, our Chief Compliance Officer.

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California Propositions

| Tue Jun. 1, 2010 9:00 AM EDT

[Update: Looking for a guide to the California Propositions on November's ballot? Click the link!]

This is a special post for California readers. The rest of you may safely ignore it.

There are five initiatives on the California ballot next Tuesday. As longtime readers know, my default position is to very strongly oppose all initiatives (reasons here), so keep this bias in mind as you read this. For what it's worth, though, the only ballot measure this bias might affect even slightly this year is Prop 14. The other two NO votes are completely solid regardless of what you think about initiatives in general.

  1. Seismic retrofits: YES. The original Proposition 13, passed in 1978, froze annual property reassessments for existing buildings. New construction was supposed to be assessed at the time it was finished, but in 1984 Proposition 23 created a 15-year exemption for seismic retrofits of "unreinforced masonry buildings." In 1990, Proposition 127 exempted seismic retrofits entirely but didn't remove the 15-year limit for unreinforced masonry buildings. I have no idea why, and the five minutes of googling I was willing to apply to this question didn't provide an answer.

    This year's Proposition 13 (it's just a coincidence that it has the same number as the original) would exempt all seismic retrofits completely. It was approved unanimously by one of the most famously partisan legislatures in the country and the voter guide doesn't even have an argument against it — which is pretty remarkable given that even the most innocuous initiatives usually prompt an argument from at least one wingnut group or another. So go ahead and vote for this. It seems harmless.

  2. Open Primaries: NO. This initiative would create an open primary system: instead of separate primaries for Republicans and Democrats, there would be only a single comprehensive primary and the top two vote getters would proceed to the general election even if they're from the same party. Supposedly this would produce more moderate candidates — though the evidence for this is pretty slim — but even if it did, I've always been pretty uneasy about open primaries. If political parties are to have any meaning at all, they have to be allowed to pick their own candidates and they have to be allowed to contest general elections. This is especially true for third parties, which would be shut out of general elections almost entirely by Prop 14. It should also be clear at all times which party a candidate belongs to, something Prop 14 obscures by allowing candidates not to declare a party. For all its flaws, the current system strikes me as fairer and more transparent than Prop 14's pseudo-runoff system.

  3. Fair Elections Act: YES. This is sort of an interesting little initiative. Basically it's an experiment in public financing of political campaigns: it applies only to one office — Secretary of State — and only to the elections in 2014 and 2018. On January 1st of the following year it automatically disappears for good unless voters decide they like it and want to extend it. It's funded by a tax on lobbyists and requires candidates to raise $5 from 7,500 registered voters in order to qualify for public funding. This might or might not be a good idea, but Prop 15 is the kind of thing we should do more often: experiment. If Prop 15 fails, not much harm is done. If it works, it will have proven itself in the toughest arena of all: real life. It’s a small bore way of allowing voters to find out if they like the idea before committing themselves to a sweeping and permanent change. We could use more initiatives like this.

  4. Municipal Power: NO. This is one of the sleaziest initiatives I've seen in a long time. Here it is in a nutshell: PG&E doesn't like having to compete against municipal power companies, so they're sponsoring an initiative that would prohibit the creation or expansion of any municipal power system without a two-thirds approval from voters. Which, of course, is essentially impossible. And the best part? Municipal agencies aren't allowed to spend public money on political campaigns, so PG&E, which has spent nearly $50 million so far promoting Prop 16, is basically running unopposed.

    Prop 16 is a poster child for everything that's wrong with the initiative process in California, and it's as pure an example as you'll ever find of a big corporation using the ballot box to cynically undercut its competition. Even if there's nothing else on the June ballot you care about, you should make sure to get to your polling place just to vote against Prop 16. Ditto for your family and friends. Your enemies too. Liberals, conservatives, Democrats, Republicans, it doesn't matter: everyone should vote against Prop 16.

  5. Auto Insurance: NO. Most auto insurance companies give you a loyalty discount if you stick with them for several years in a row. Proposition 17 is framed as fixing a "flaw" in California law that prevents you from taking this discount with you when you switch insurers, but that masks the real issue at stake here: should insurance companies be allowed to give you a discount merely for being insured continuously? Or, put another way: Should insurance companies be allowed to penalize you if you drop your insurance for a period of time (perhaps because you sell your car, or sign up for hitch in the Army, for example) and then later re-apply?

    Proposition 103, passed in 1988, was designed to stop insurers from basing their rates on factors unrelated to the likelihood of filing a claim (where you live, for example, or your income). To accomplish this, Prop 103 mandates that insurers consider only three factors: your driving record, the number of miles you drive, and the number of years of driving experience you have. The insurance commissioner can approve other factors as well, but only if they bear a substantial relationship to the risk of loss.

    Continuous coverage doesn't qualify on that score. This isn't a flaw in the law, it's the whole point of the law. (Loyalty discounts are a little questionable on this score too, but it turns out that they do correlate with driving safety, so they're allowed.) Mercury Insurance, which has been fighting this battle for years, is pretty much the sole sponsor of Proposition 17, and their motivation is simple: they think it would help them poach more business from other insurers. And it might! But it would do so by lowering rates for some and raising them for others based on a factor that has nothing to do with the likelihood of filing a claim. We decided to put a stop to that two decades ago, and I don't see any reason to change it now.

Building the Neighborhoods of the Future

| Tue Jun. 1, 2010 8:28 AM EDT

A quick look at the aftermath of the housing bust reveals a clear lesson for real estate developers: Property values in outlying suburbs have been ravaged, but closer to downtown, not so much. On the fringes of the District of Columbia, for instance, suburban homes are now worth half their peak values, yet in DC's walkable inner suburbs and densely built urban neighborhoods, prices are off just 20 percent. Most housing experts now agree that the outer suburbs have been overbuilt and that it's redevelopment in older urban neighborhoods, places not long ago out of favor, that will lead the eventual housing recovery.

The reason for this is primarily demographic. Between now and 2025, Baby Boomers whose kids have moved out will be looking to move into smaller homes at the same time that their kids, members of Gen Y, the huge "Echo Boom," start renting their first apartments. As a result, households without children are expected to account for 90 percent of new housing demand. "Our consumer research shows that all of these consumers want to be in a higher density environment than they currently live in," Shyam Kannan, a real estate consultant with Robert Charles Lesser & Co, told me. "There is a huge pent-up demand for walkable environments."

This is good news for the environment, of course, but it also raises some interesting new challenges that environmentalists should care about. As Christopher Leinberger points out in Atlantic Monthly's new Future of the City issue, we'll need to find creative new ways to fund the kind of public transportation that dense cities require. He proposes bringing back a model, common before WWII, in which developers and governments partner to fund rail lines that then boost private property values. But that's not the only kind of partnership that we'll need. It's also time for environmentalists to set aside their old animosities towards developers and help them win local approval for denser housing, housing that is often fiercely opposed by NIMBYs. I make this case in detail in "Tall is Beautiful," an article in the May/June issue which is now online.

The GOP's Crowdsourcing Genius

| Tue Jun. 1, 2010 7:30 AM EDT

When House Republicans unveiled their new crowd-sourcing project to solicit ideas for a new political agenda, it was met with a fair amount of derision from reporters and bloggers (including our own Adam Weinstein, who dubbed it an “epic web fail”). Folks like the Washington Post’s Dana Milbank were quick to point out that the America Speaking Out site had become a magnet for liberal trolls. But with all their focus on the trolls, critics have utterly missed the genius behind the project that has tremendous implications for the upcoming midterm elections. Here’s why:

To submit or vote on an idea on the GOP site, visitors are required to set up an account and provide a valid email address and zip code. And in doing so, participants must agree to give America Speaking Out and their local congressmen permission to contact them by email. This small requirement turns America Speaking Out into a list harvester’s dream, and a powerful tool for Republicans looking to engage and mobilize voters.

Just in its first three days America Speaking Out had a quarter-million unique visitors, and of those, more than 20,000 had submit an email address to log in and submit ideas or vote. By the end of the summer, and after House members promote the site through a series of town hall meetings starting this week, those email lists could potentially include tens of thousands of people. And, they’re doing it all at a fraction of the cost of the old direct mail methods once standard fare for political campaigns.
 

We're Still at War: Photo of the Day for June 1, 2010

Tue Jun. 1, 2010 6:14 AM EDT

 

Marines from a ceremonial unit march up the stairs at the Tomb of the Unknowns partaking in the wreath laying ceremony during Memorial Day, on Monday, May 31, 2010, at Arlington National Cemetery. Photo via the US Army by Public Affairs Specialist Jacqueline Leeker.