Give me Liberty or give me…a National Security Letter? F#$% that!

Bear Arms while You Still have the Chance

What happened to the rebellious Patriot spirit that preferred death to government intrusion into one’s personal liberties? The US Founding Fathers would roll over in their graves if they could see what we’ve so easily given up post 9/11. This is a serious situation that, if not corrected, will lay waste to the founding principles we all hold dear.

The FBI admits that it used ‘national security letters’ to improperly obtain “telephone logs, banking records and other personal records on thousands of Americans from 2003 to 2005.”[1] Actually, the FBI issued over 150,000 national security letters from 2003 to 2005. Alarmingly, these incidents are not the only violation of our liberties. The government maintains secret courts that issue orders without proper oversight from people who value citizens’ liberties.

I liken this to the story about the frog and boiling water. If you drop a frog into a boiling pot of water, it will immediately recognize the threat and jump out. If you place a frog into a cool pot and slowly heat it to a rolling boil, the frog will sit unaware until it is fully cooked. As a generation that witnessed 9/11, we did not imagine the lasting repercussions of the Patriot Act when it was quickly passed to protect American citizens. One could easily argue that drastic measures were necessary at the time, and as someone that watched two towers fall in my City, I can honestly say the situation demanded an equivocally deliberate response. I argue now that, like the frog, we did not notice the fire someone turned on below us.

Now that the dust has settled and we have had a chance to read and measure the full impact of the Patriot Act, it is obvious that it is simply un-American document. It contradicts everything we value as a country. What rights do we have left now that they have taken away our privacy? Can we still bear arms? I’d recommend stocking up because many government agencies can now walk into your home at any time without reason under the guise of ‘national security’.

I urge you to contact your Senator and/or Congressperson and demand they fix our system to protect your privacy.

[1] http://www.washingtonpost.com/wp-dyn/content/article/2008/03/05/AR2008030500463.html

SocGen the latest Casualty of One Nightmare Employee?

Jerome Kerviel socked it to SocGen with a whopping $7.16 billion loss. The biggest loss incurred by a rogue employee to date, which has rocked the foundation of a bank recently considered a pillar of the French and global economies. Now there is a good chance the bank will cease to exist in its current structure. The bank’s planned $8 billion stock offering may buy some time, but it may be too little too late as BNP Paribas and Credit Agricole circle an institution already dazed by a wallop of US sub-prime debt.

The shear size of positions and trading losses by Kerviel shocks and surprises the general public, but there are those that can remember similar situations not too long ago. Rogue employees bring down companies every single day. Brian Hunter lost $6.6 billion at Amaranth in 2006, collapsing the hedge fund. Nick Leeson brought down Barings in 1995 after losing $1.3 billion in improper trades. Kidder Peabody crashed and burnt after bond trader Orlando Joseph Jett racked up $330 million in losses.

What do these stories have in common? Poor risk management. In every single case, employees gambled firm assets against unmeasured risk…and lost. We learn time and again that without the proper controls, employees will burn you. The Association of Certified Fraud Examiners (ACFE) estimates that US organizations lose 5 percent of annual revenue to fraud. With a U.S. Gross Domestic Product for 2006 of $13.037 trillion, this suggests losses around $638 billion among all US organizations, despite existing anti-fraud controls.

The very technology put in place to improve trader productivity and to execute on more and more complicated transactions of more and more complex securities is sometimes blamed for rogue employee behavior. The availability of technology makes it easier in some cases to hide suspicious transactions. From the criminal’s perspective, the anonymity of bits and bytes make executing fraud a faceless victimless crime.

Don’t expect the SocGen story to be the last of its type. Companies need to take note of the techniques used by Kerviel and fight technology with technology. Without proper risk management and internal controls, we’ll see more banks losing firm and customer assets.

A vote for George W. Bush is a vote for…Change and Diversity?

Something about that doesn’t quite make sense, but in a sense it is true.

Think about this – if George W. Bush hadn’t been such a horrible President on so many fronts, the likelihood of another old, white, Protestant, Republican male being elected to the Whitehouse this November would be pretty high.

Thanks to W’s incompetent performance as President, he has insured that a vote for anyone is a vote for ‘change’. Beyond that, his performance will probably push a democratic minority or woman into the top seat for the first time ever. Who would have guessed that W would be the biggest catalyst for promoting diversity in the world’s most powerful leadership role? -Not him!

Birth, Death and Taxes…Well At Least if You’re Poor in the U.S.

I am pleasantly surprised to see one of the top earners in the US take on an unpopular topic for the rich and powerful – tax rates for the wealthy. Warren Buffet claims that he pays 17.7 percent in payroll taxes on income of $66 million, while his receptionist pays 30 percent on $60 thousand.

When asked why there is this disparity, he responded: “…all the rich in one way or another - have lobbyists, you know, coming out of their ears. And are down there whenever something threatens their favored status, they are in Washington en mass. And who is there representing the person that pays the payroll tax? I don't know of any group that is going around saying, ‘It's too tough for these people who - barely eke out a living to be paying 15 percent on payroll taxes.’”

That is a simple enough explanation. If our political system is driven by big business, the politicians will look out for the interests of big business. At some point the wealthy minority hijacked the U.S. government, or maybe it was always set up to protect them solely. One could certainly argue that.

One thing is for sure – the tax system in the U.S. needs to be fixed.

For more on this read this article in the Times or this CNBC interview.

Homeland Security Says Al-Qaida "Most Serious" Threat to US

Like we didn't already know Al-Qaida hates us in the US. A recent Homeland Security report outlines the threat and explains that Bush's 'take the war to them' theory didn't quite smoke 'em out of their holes. As a matter of fact, Al-Qaida leadership has remained almost entirely intact and they have more global support now than ever!

"Today, our nation is safer, but we are not yet safe," said Bush in an accompanying letter with the White House report. -Bullshit. What he should have said was "I screwed the pooch and now generations of American citizens here after will have to pay the price."

Even more disturbing, as reported by MSNBC and Reuters, the report says the Lebanese militant group Hezbollah might consider attacking the US if the US becomes "a direct threat to the group or Iran, its principal sponsor."

So if Bush continues to have his way, he could have everyone in the Middle East against the US by the end of his second term. ...Well everyone except for his Oil buddies in Saudi Arabia. I think they are quite happy with what he has accomplished with the price of crude.