Hearing on Forged Letters to Congress Delayed

The Select Committee for Energy Independence and Global Warming hearing investigating the role of Bonner & Associates and the American Coalition for Clean Coal Electricity in forged anti-climate bill letters sent to members of Congress was postponed on Thursday. The delay came after Ranking Minority Member Jim Sensenbrenner (R-Wisc.) raised concerns that the committee had not been provided with witness testimony 48-hours in advance, as required by House rules.

Sensenbrenner was heard very loudly questioning committee staff about the issue before a full hearing room. Chairman Ed Markey (D-Mass.) called off the hearing shortly thereafter, saying that there had been "a procedural mistake." "In order to be fair to all members in terms of their ability to examine everyone's testimony ... I think the correct decision is that we will postpone this hearing until next week," said Markey.

The delay comes as other media are picking up on some of the more scandalous aspects of the story. I reported back in August that both Bonner & Associates and ACCCE know about the forgeries well before the House vote on the climate bill, but did nothing to inform the members of Congress who had received the fraudulent letters. In a written statement I obtained at the time, ACCCE said it was made aware of the forged letters on June 24, 2009—a full two days before the House narrowly passed the climate bill.

 

Revenge of the Nerds

This is so far over my head that it might as well be written in Martian, but it's still fascinating in its own geeky way.  A new paper by a group of Princeton computer scientists and economists uses Intractability Theory to demonstrate that a smart underwriter can deliberately construct a derivative that will implode and the buyer can never prove it.  Not even in theory:

The paper shows the example of a high-volume seller who builds 1000 CDOs from 1000 asset-classes of home mortages. Suppose the seller knows that a few of those asset classes are "lemons" that won't pay off. The seller is supposed to randomly distribute the asset classes into the CDOs; this minimizes the risk for the buyer, because there's only a small chance that any one CDO has more than a few lemons. But the seller can "tamper" with the CDOs by putting most of the lemons in just a few of the CDOs. This has an enormous effect on the senior tranches of those tampered CDOs.

In principle, an alert buyer can detect tampering even if he doesn't know which asset classes are the lemons: he simply examines all 1000 CDOs and looks for a suspicious overrepresentation of some of the asset classes in some of the CDOs. What Arora et al. show is that is an NP-complete problem ("densest subgraph"). This problem is believed to be computationally intractable; thus, even the most alert buyer can't have enough computational power to do the analysis.

Arora et al. show it's even worse than that: even after the buyer has lost a lot of money (because enough mortgages defaulted to devalue his "senior tranche"), he can't prove that that tampering occurred: he can't prove that the distribution of lemons wasn't random. This makes it hard to get recourse in court; it also makes it hard to regulate CDOs.

This gives caveat emptor a whole new meaning.  As if we didn't already know.

America's Imminent Electrical Gridlock

America's electricial consumption has skyrocked in the past decade, but the country's electrical grid is struggling to keep up with demand. Summertime blackouts are just one sign that the system is being pushed beyond its means. Former Energy Secretary and New Mexico Governor Bill Richardson sums up the crisis this way: "We’re a major superpower with a third-world electricity grid."

In fact, it's even worse than that—Richardson should perhaps have said "three completely unconnected third-world electricity grids." The US has independent systems that seperately charge the West, the East and Midwest. It is not possible for electricity generated in New Mexico to reach East Coast consumers. But on Tuesday, officials in New Mexico finally unveiled plans to build a superconductor in Clovis, New Mexico to allow energy to flow between the three systems. On Wednesday the AP reported on the proposed project, the Tres Amigas SuperStation:

Carville vs. the Teabaggers

Commentator/consultant/celebrity James Carville and Democratic pollster Stan Greenberg are going after the Teabaggers. Tomorrow the two are releasing a report based on focus groups that apparently will show that portions of the GOP base have moved into a conspiratorial, far-right alternative universe. A press release issued by the pair on Thursday morning previewed the findings: "The study explored the relevance of the 'race issue' among these voters and revealed they're not just critical of President Obama, but worried he is deliberately trying to deceive the American public in order to advance a secret socialist agenda." This sounds like a polite way of saying that the conservative Republican base contains a significant number of whacked-out Obama-haters whose views are shaped by racial bias. Cue Glenn Beck.

Quote of the Day

From John Shadegg (R–Ariz.), searching for just the right words to describe Democratic efforts to make sure everyone has access to decent healthcare:

You know, it occurs to me, and I’ll go through these other scandals very quickly, but what we’re really getting here is we’re not just getting single-payer care. We’re getting full on Russian gulag, Soviet-style gulag health care [...] It appeared in last Friday’s Wall Street Journal. You can Google it. You can pick up the phone and call Kim Strassel. You can ask her about Soviet-style gulag health care in America, where powerful politicians protect their constituents.

OK, OK, this was really a quote from yesterday.  Sue me.  But it's a good example of what I mean when I suggest that today's right-wing lunacy is different from left-wing lunacy of the Bush years.  Sure, there were lefty bloggers who went over the top about Amerika and how the NSA was bringing 1984 to life and so forth, but for the most part you didn't have members of Congress taking to the House floor and joining in.  They largely managed to keep a slightly more even keel.  But on the Republican side, after a mere few months of Obama, this kind of stuff has become routine.  They've joined the Caps Lock crowd feet first.

In other words, they're nuts.  A Soviet gulag?  Does this clown even know what a gulag is?

Goldman and the Economy

Do rising profits on Wall Street mean that the economy is finally starting to pick up?  Not quite.  Here's how Goldman Sachs' soaring third-quarter revenue breaks down:

Goldman's business from fixed income, currency and commodities trading again bolstered its bottom line, with revenue more than tripling. Revenue from its principal investments soared 55% from second quarter after losing money a year earlier.

Investment-banking revenue fell 31% and financial advisory revenue dropped 47%.

In other words, even more than usual, Goldman is a hedge fund with a smallish investment bank tacked onto the side.  They made better bets than the other guys, but the kind of business that would indicate a recovering economy is still very much in the tank.

Investors are now jumping into the battle against the Chamber of Commerce's climate change denial, asking the heads of major businesses to distance themselves from the Chamber and the National Association of Manufacturers, which has also opposed climate legislation.

On Wednesday, a group of of 43 institutional investors and related organizations submitted a statement to the CEOs of 14 companies. Walden Asset Management and Green Century Capital Management are leading the group of investors.

The notice asks companies "to address their disagreement with the chamber and NAM on climate change policy by withdrawing membership, publicly disclosing their disagreement, or asking the associations to refund the portion of their dues used to lobby on the issue."

"While some companies, including [yours], have articulated a business rationale for a national policy that reduces greenhouse gas emissions, … membership in NAM/Chamber sends a starkly contradictory message," they wrote.

The group is targeting Air Products & Chemicals, Alcoa, American Electric Power, Boeing Co., Caterpillar, Cummins, Deere & Co., DTE Energy, Entergy, Ford Motor Co., General Motors Corp., Lockheed Martin, Whirlpool, and Xerox Corp.

The investors, which collectively represent $16 billion in assets, include: Boston Common Asset Management, Catholic Health East, Catholic Healthcare West, Clean Yield Asset Management, Domini Social Investments, Green Century Capital Management, MMA Praxis Mutual Funds, Pax World Management Corp., The Russell Family Foundation, Trillium Asset Management and Walden Asset Management.

U.S Army Soldiers cross the Arghandad River to assist Afghanistan police on a humanitarian mission in Kashani village in Zabul province, Afghanistan, Oct. 9, 2009. The Soldiers are assigned to Company A, 1st Battalion, 4th Infantry Regiment. (U.S. Army photo by Specialist Tia P. Sokimson.)

Need To Read: October 15, 2009

Today's must-reads:

Get more stuff like this: Follow me on twitter! David Corn, Mother Jones' DC bureau chief, also tweets, as does MoJo blogger Kate Sheppard. 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.)

News From TreeHugger: Thursday, October 15

A weekly roundup from our friends over at TreeHugger. Enjoy!

Canada's First Grain CSA Transports Via Sailboat & Triples Demand Within One Year

CSAs aren't exactly new on the green scene, but one that deals exclusively in grains is. And one that ships only via sailboat in British Columbia is doubly unique.

From Smart Grid to Big Brother?

Smart grids may be the wave of the future when it comes to managing the electric grid so that we can truly take advantage of renewable energy, not to mention save a lot of power in the process. But, are we ignoring the ability of utilities to gather information about you and undermine your privacy?

US Coal Plants Pump Thousands of Gallons of Waste Into Drinking Water Supplies a Day

As if the greenhouse gas emissions weren't bad enough, a new investigation reveals that hundreds of coal power plants across the country are routinely dumping waste into rivers and streams...ones that millions of people get their water from.

California Now First State to Charge Polluters for Greenhouse Gas Emissions

How will California raise $63 million dollars in three years with CO2? By charging the most polluting companies 15¢ per ton they emit, starting in 2012.

World's Airlines Pledge to Cut Emissions 50% by 2050

Emissions from air travel may be only a small percentage of the world's total greenhouse gas output, but much of those emissions have even greater warming potential than ones emitted on terra firma...and they are growing. However, ahead of COP15, the IATA has announced new plans to address their contribution to global warming.

One Trick Pony Saudi Demands Compensation for Support of Climate Action

Is Saudi Arabia blackmailing the rest of the world for climate change support? Citing that they will suffer under a global climate agreement due to declining oil revenues, they are demanding compensation for climate cooperation.