Blogs

Salazar Revamps Royalty In Kind

| Thu Sep. 17, 2009 10:29 AM EDT

On Wednesday, Interior Secretary Ken Salazar announced the end of the Interior Department’s oil and gas royalty collection program. Salazar made his announcement at part one of a two-part testimony before the House Natural Resources Committee. Last week Rep. Nick J. Rahall (D-WV), the chairman of that committee, introduced legislation that would overhaul the existing federal royalty system and create an Interior agency to regulate oil and gas leasing.

Currently, rather than paying in cash for resources extracted from government lands, companies pay federal royalties in comparably valued oil and gas, which the government then sells on the open market. This system, known as Royalty in Kind, is administered by the Minerals Management Service (MMS). Last year, a report compiled by the Interior Department's inspector general found that MMS collections fell far short of their estimated potential revenue and discovered corruption within the agency.

Back in September 2008, Mother Jones’ Josh Harkinson wrote:

So far the grand prize for depravity goes to former RIK manager Gregory Smith, who pitched the oil companies he regulated to do business with his outside consulting firm, slept with two subordinates, and bought cocaine from another RIK employee while on the job (DOJ, where are you?). Of course, last time I checked, there was also an ongoing GAO investigation, four False Claims Act cases pending against MMS in Oklahoma City, and a DOJ investigation of a Virginia-based MMS employee who allegedly traveled to Atlanta to have sex with someone he'd met in a teen online chat room who he thought was a 13-year-old girl.

Salazar’s announcement to overhaul the collection program is no great surprise given MMS’ sex, drug, and bribe-related scandal last year. At the present moment, US drilling regulations consist of a gap-filled web of EPA, BLM, and MMS legislation. The second part of Rahall’s hearing on his proposal is happening now.

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The White House's Weak Response to the Climate Bill Delay

| Thu Sep. 17, 2009 10:25 AM EDT

Yesterday Senate Majority Leader Harry Reid told reporters that the climate bill may have to wait till next year—which in Senate-speak means it's basically dead till 2010. What did the White House have to say about this? After all, a congressionally approved plan to cut US emissions is key to the success of international climate talks in Copenhagen this December. David Corn asked White House press secretary Robert Gibbs about the delay yesterday at the daily press briefing. And Gibbs couldn't come up with much of a response:

 

Eco-News Roundup: Thursday September 17

| Thu Sep. 17, 2009 7:28 AM EDT

News on health, the environment, and climate you may have missed.

Killing Healthcare: You don't need Republicans when Kent Conrad is around.

Lady Justice: Halliburton rape victim will get a day in court, not arbitration.

Bio-fails: The interest in wonder-weed jatropha as biofuel waning, research needed. [Nature]

Private Option: Rep. Tom Price says the public option would cheat private companies.

Peanut Gallery: Energy lobbyists are chuckling as senators try to weaken cap-and-trade.

Pushing Back: Sen. Reid says healthcare bill should come first, climate bill may be pushed to 2010.

Going Broke: Operation Rescue is in fiscal trouble, may shut down. [Feministing]

Price of H2O: What would you do if your water bill went from $13 to $185?

Bored of Baucus: Kevin Drum is getting sick of Baucus posts, but blogs about it briefly.

 

We're Still at War: Photo of the Day for September 17, 2009

Thu Sep. 17, 2009 6:00 AM EDT

U.S. Army Pfc. Nicholas Weeks plays an Afghan checkers-style game with Nas Nahs, an interpreter, in the Kohi Safi district, Afghanistan, Sept. 6, 2009. Weeks is assigned to the 82nd Airborne Division's Company B, Special Troops Battalion. (U.S. Army photo by Sgt. Teddy Wade.)

Need To Read: September 17, 2009

Thu Sep. 17, 2009 5:59 AM EDT

Today's must-reads:

  • Five ways to improve the Baucus bill (Ezra Klein)
  • The proponent of one of those five ways talks it up (Sen. Ron Wyden/NYT)
  • The worst policy in the Baucus bill, and possibly in the world (Ezra Klein)
  • Chart comparing Baucus bill's affordability with Massachusetts' plan (Nicholas Beaudrot)
  • Retailers battle credit card fees (WaPo)
  • Court okays Haliburton rape case involving Iraq contractor--which had been blocked partly due to Dick Cheney. (MoJo)
  • Real-life "Norma Rae" dies after battle with insurance company (MoJo
  • "Obama refuses to be their n*****. And it's driving them crazy." (Ta-Nehisi Coates)
  • Are Obama's judges really liberal? (The New Yorker)

I post items like these throughout the day on twitter. You should follow me, of course. David Corn, Mother Jones' DC bureau chief, also tweets. So do my colleagues Daniel Schulman and Rachel Morris and our editors-in-chief, Clara Jeffery and Monika Bauerlein. Follow them, too! (The magazine's main account is @motherjones.)

Downsizing Missile Defense

| Thu Sep. 17, 2009 12:37 AM EDT

Interesting news on the missile defense front:

The White House will shelve Bush administration plans to build a missile-defense system in Poland and the Czech Republic, according to people familiar with the matter, a move likely to cheer Moscow and roil the security debate in Europe.

....The Obama administration's assessment concludes that U.S. allies in Europe, including members of the North Atlantic Treaty Organization, face a more immediate threat from Iran's short- and medium-range missiles and will order a shift towards the development of regional missile defenses for the Continent, according to people familiar with the matter. Such systems would be far less controversial.

Will this buy us some goodwill from Russia?  Will it send the Bill Kristol wing of the conservative movement into Munich/striped pants/appeasement hysterics?  I'd say maybe to the first but definitely yes to the second, which all by itself probably makes it worth doing.

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Letting Banks Be Banks

| Wed Sep. 16, 2009 9:33 PM EDT

Back in the dim past, investment banks were mostly in the business of providing advice and underwriting services to their clients.  Oh, they traded a bit on the side with their own money too, but not a lot.  That was sort of risky, after all.  Better to focus on giving other people advice about what to buy and sell rather than doing it themselves.

But times changed, fixed commissions went away as a guaranteed source of easy income, and proprietary trading started to grow more important.  And why not?  Since investment banks were also market makers, their prop desks had privileged access to streams of information that most investors could only dream of.  Why not use that information instead of letting it go to waste?

So use it they did.  In fact, they used it so voraciously that eventually trading became by far their biggest profit centers.  Basically, investment banks became gigantic hedge funds with a bit of investment banking tacked on to the side.  And that's not all.  By the year 2000, two more things had happened.  First, the Glass-Steagall Act was repealed in 1999, which allowed investment banks to merge with commercial banks.  Second, investment banks had all become public companies, which meant they not only had enormous amounts of capital to invest, but none of their traditionally risk-averse partners were personally liable if they lost it all.

I think you know how this all turned out.  Long story short, they lost it all.  What's more, their losses would have taken down the entire banking system if they hadn't been rescued via massive government intervention.  Along the way, the last of the investment banks technically disappeared, when Morgan Stanley and Goldman Sachs got Fed permission to convert themselves into ordinary bank holding companies.

Given all this, you might wonder if it was such a good idea to let banks engage in proprietary trading in the first place.  Instead, why not limit them to taking deposits, making loans, underwriting stock and bond offerings, giving M&A advice, and so forth?  That's what banks do, after all.

Well, it turns out that Paul Volcker is wondering the same thing:

"Extensive participation in the impersonal, transaction-oriented capital market does not seem to me an intrinsic part of commercial banking," he said in a speech to the Association for Corporate Growth in Los Angeles.

....Mr. Volcker said banks should be banned from "sponsoring and capitalizing" hedge funds and private-equity firms, and said "particularly strict supervision, with strong capital and collateral requirements, should be directed toward limiting proprietary securities and derivatives trading."

He also said collateral and leverage restrictions against the largest non-banking institutions "may be needed."

I like the way this Volcker fellow thinks.  Let banks do banking, protected by federal guarantees, while securities trading is firewalled safely away from the plumbing of the financial system.  And even at that, if your hedge fund or private-equity firm is big enough that it might destroy the world too — think LTCM — it gets regulated as well.

Anybody got a problem with that?

More Teen Births in Religious States

| Wed Sep. 16, 2009 9:14 PM EDT

Whis is this not a surprise? The states with the strongest conservative religious beliefs also tend to have the highest rates of teen pregnancies and births. This according to a new paper forthcoming in Reproductive Health.

I posted a blog on a similar story a while back about religious teens having more abortions.

Live Science reports that this little piece of paradox is likely due to the fact that communities with high religiosity frown upon contraception as well as sex education. The combination is as good as a euphemism for pregnancy.

The top 10 states for conservative religious beliefs:

  1. Mississippi
  2. Alabama
  3. South Carolina
  4. Tennessee
  5. Louisiana
  6. Utah
  7. Arkansas
  8. North Carolina
  9. Kentucky
  10. Oklahoma

The top 10 states for teen births:

  1. Mississippi
  2. New Mexico
  3. Texas
  4. Arkansas
  5. Arizona
  6. Oklahoma
  7. Nevada
  8. Tennessee
  9. Kentucky
  10. Georgia

Researcher Joseph Strayhorn of Drexel University College of Medicine and University of Pittsburgh speculates: "We conjecture that religious communities in the U.S. are more successful in discouraging the use of contraception among their teenagers than they are in discouraging sexual intercourse itself."

'Cause nobody can do that. Ask Bristol Palin.

 

Pinky the Cat Goes to Hawaii

| Wed Sep. 16, 2009 8:34 PM EDT

I've been a fan of the Pinky Show since there's been a Pinky Show. The latest episode is one of my favorites at doing what Pinky does best: cute, subtle, and subversive. It's all about Pinky the cat's visit to Kaho'olawe, a tiny Hawaiian island once bombed to smithereens, now being lovingly restored to life.

Riding the 'Ladies Specials' Train

| Wed Sep. 16, 2009 7:53 PM EDT

In India, women-only train cars have proved so popular that today eight more were added into service. Currently, there are female-only train cars in Chennai, Mumbai, Calcutta, and New Delhi in India, as well as in Cairo and at least a dozen other cities worldwide. In Japan, female-only cars have been running since 1912. Predictably, while women have had very positive reviews of the Ladies Special train cars, as they're known in India, some men are not happy. “Even on this train,” one female commuter told the New York Times, “men sometimes board and try to harass the women. Sometimes they openly say, Please close the Ladies Special."

While backlash is not surprising (especially considering the Ladies Specials are newer and cleaner and smell better than the other cars) it is problematic. The entire reason there are women-only cars are so that women can avoid being groped, propositioned, stared at, or sexually assaulted while in transit. The female-only trains do not educate potential gropers: it just separates them from a few of their potential victims, putting the responsibility on women not to get groped rather than on men not to do it in the first place. It reminds me of this excellent blog post on "Sexual Assault Prevention Tips Guaranteed to Work": namely, don't do it.