US Person on the Road Again

US Person will be on safari next week and during the month of June. So come back later this summer to check out the high impact blog at Persona Non Grata.




Jackal pup, Namibia

'Toontime: With a Side of Tar Balls

[credit: Clay Bennett, Chattanooga Free Press]


"Twenty-four miles of Plaquemines Parish is destroyed. Everything in it is dead," head of the parish in southern Louisiana, told US cable news station MSNBC Thursday.

Louisiana state officials are reported to be furious with BP's lackadaisical response to the disaster. The company seems satisfied to sit back and wait for the relief well to be drilled while disputing independent accounts about the actual size of the spill. Only two undisputed facts are important right now: 1)the spill is huge, and it is headed inland to contaminate fragile and productive wetlands because the company did not take immediate, effective action to contain the flow during the first days of the catastrophe; 2) the government is partly at fault for engendering an attitude within the industry that it is immune from regulation and public accountability.

Environmental groups like the World Wildlife Fund are calling for a new drilling moratorium until the Deepwater Horizon disaster has been studied by an independent commission.  Shell Oil is preparing to drill exploratory wells up to 140 miles from shore in the Arctic Ocean, known for its extreme weather conditions.  The same amount and variety of resources in the Gulf of Mexico to contain and clean up a major oil spill are not available in the Arctic.  There is considerable doubt even if conventional equipment were available, that it could be effective in the harsh conditions. The Minerals Management Service said in a 2009 paper, "field deployment of booms and skimmers in broken ice conditions in the Beaufort Sea highlighted the severe limitations of conventional equipment in even trace concentrations of broken ice." Detection of oil slicks under ice is also a technical challenge. Ground penetrating radar can be used to locate slicks of oil 1" thick or more in ideal conditions. It cannot detect oil slicks when the ice is thicker than 7", or 3" when the radar is used from the air. There is only one GPS unit in the Alaskan Arctic at present. Burning can an effective way to eliminate thick oil slicks on the surface, but a subsurface blowout like the Deepwater Horizon well will produce emulsified oil (oil-seawater mix) that is very difficult to burn. Chemical dispersants are toxic and spread an already toxic substance throughout the water. Clearly, given the present state of spill prevention and clean up technology, offshore drilling in the Arctic is not a reasonable course when the adverse impact of a major spill on wildlife and native peoples is considered.

'Toontime': We Don't Need Regulation!

Update Day 30: The slow motion disaster [satellite photo], thanks to the befuddled dithering of the so-called oil experts, has reached the wetlands of Louisiana, and is entering the Loop Current. Louisiana officials want temporary sand berms erected around 80 miles of critical wetlands and coasts. The request should be granted immediately instead of "studied" to death by the Army Corps of Pencil Twirlers. The Secretary of Interior is rearranging bureaucrats, but he might as well be playing checkers.  It is the big one folks*, so stop staring at it like a deer in the headlights, if you want to save the state of Louisiana. The latest estimate from scientists examining undersea video and the surface extent of the slick is between 76,000 and 104,000 barrels of oil a day.

British Petroleum skipped the most effective test for the soundness of the well lining according to the New Orleans Times-Picayune.  The "cement bond log" which uses an acoustical device to test for voids and weak spots was never requested by BP despite the contractor Schlumberger being on board the platform and ready to perform the test. It is considered the gold standard for testing the soundness of well linings, but the government does not require it unless pressure tests indicate a problem.  The status of pressure tests on the well is unclear at this time.  A graphic with the linked article shows an annulus above the well bottom left unplugged with mud. Experts think this is the gap by which natural gas shot to the surface, exploded, and destroyed the Deepwater Horizon platform.  For more about BP's past alleged criminality read this article because you will not find the information in the corporate owned media (COM). BP, with the help of the government, is strictly controlling information and access to the site of the disaster.  Paging Benito!

*senior administration official to Politico: “I don’t think any of the [worst case] predictions are crazy anymore,” the adviser continued. “That’s why you’ve seen that nobody is making predictions anymore. Nobody wants to be wrong anymore. They have to be demonstrating forceful leadership in throwing everything they have at the problem.”  US Person suggests they are not succeeding in the demonstration.

[credit: Jim Morin, Miami Herald]

{5.14.10}The Minerals Management Agency, reduced to party-time redundancy under the Regime regularly issued offshore drilling authorizations without first obtaining permits under the Endangered Species Act and the Marine Mammal Protection Act. The Center for Biological Diversity has notified the agency and the Department of Interior of its intent to sue for non-compliance with the two important environmental protection laws. The notice says the agency authorized over 300 drilling permits including the one for the Deepwater Horizon, three large lease sales, and over 100 seismic surveys without the reviews required when oil exploration could harm endangered species or marine mammals. The practice of ignoring the laws intended to protect ocean life has continued under Forty-four's administration. A federal appeals panel approved Shell's plans to drill exploratory wells in the Chukchi and Beaufort Seas on Thursday.

The retired chairman of an energy investment banking firm told the National Geographic magazine that the subsea gusher could spew oil into the Gulf for years. He said the company's engineers nor military engineers have any idea how to contain the well. Conventional attempts to plug it will be prone to failure because of the high pressures at 5,000 feet down. The size of the reservoir feeding the well is huge, and it could take years to deplete it. National Public Radio said that the outflow based on subsea videos of the broken riser (particle image velocimetry±20%) is now estimated to be 70,000 barrels a day, or one Exxon Valdez every four days. The Coast Guard is still operating under the assumption that a puny 210,000 gallons of crude a day is entering the water.

It is no joke Stephen; the Russians claim to have successfully buried five runaway wells using nuclear blasts of about 20-30 kilotons or the size of the Hiroshima and Nagasaki bombs. If Americans have run out of ideas, Russian engineers should be consulted about the use of a subsea nuclear device to seal the well. A nuclear denotation forty miles offshore and 5,000 below the surface may still cause fallout to reach shore. Certainly there will be massive destruction of sea life. The alternative is an entire sea and the surrounding coastline transformed into a toxic "national sacrifice" zone. As Ed Markey (D-MA) pointed out, "If you do not understand the scope of the problem the capacity to find the answer is severely compromised." He will hold hearings to determine the actual size of the spill.

Goldman's Virtual CDO

More: Today, Scott Brown (R-MA), the former male model who took Ted Kennedy's seat voted for cloture (ending debate) with Olympia Snow and Susan Collins (ME-R). So the 'reform' package moves to the House without the real changes wanted by Cantwell and Feingold. There are simply not enough progressive Democrats to make a difference in the Senate.  Progressives should now concentrate on passing the "Volker Rule" which bars banks from proprietary trading or playing the market with their own capital.   Positive development: Arlen Specter, the Repugnant turned faux Democrat, lost his Senate seat in the Democratic primary. Arlen's claim to fame will forever be the "magic bullet" theory he peddled to the Warren Commission.

Update: Two progressive senators, Russ Feingold (D-WI) and Maria Cantwell (D-WA) voted against the proposed package of legislation intended to rein in the irresponsible financial gambling by banks on Wall Street. Both senators voted with Repugnants to block the legislation because they believe it is not tough enough. Ms. Cantwell took the floor to say she wanted tighter rules on the trading of derivates. Her proposal would require derivates to be traded thorough an exchange and empower regulators to stop a deal if banks knowingly violated trading requirements. Ms. Cantwell also wants a vote on re-establishing the Glass-Stegall Act prohibition against co-mingling commercial and investment banking activity. Mr. Feingold also wants the Depression era reform law restored.

{5.10.10} US Person wrote some a while back {4.18.10} about Goldman creating a synthetic collateralized debt obligation (CDO) with the help of John Paulson who then shorted the security and made a bundle.  Goldman also made a bundle selling the long position mainly to European banks.  At the time the post was written, he did not do a good job explaining what a synthetic CDO really is.  The deal was complex enough without throwing another level of complexity on top of it.  A real CDO bundles real mortgages together into a security that can be traded like a bond.  There are real home owners provide the income stream upon which the security is built. That is until they stop paying.  A synthetic CDO has no actual mortgages involved.  It is a totally created security--a fiction if you will--based on computer models.  Sounds fantastic?  It is, but the big boys were trading the blue sky because there were not enough real mortgages to bundle and securitize.  John Mauldin explains the situation better than I can:

Let me see if I can simplify this. It [a synthetic index] exists only as a spreadsheet and performs in conjunction with the components it's modeled upon.  Numerous hedge funds did not think the rating agencies knew what they were talking about when it came to the mortgage ratings. They also believed we were in a housing bubble. So they went to a number of investment banks and asked them to construct synthetic (derivative) CDOs [based on BBB mortgage tranches] that they could short. And there were buyers on the other side who wanted the yield, who trusted the agencies, and who believed that housing could only go up. As to the Goldman deal, the buyers had to know there was someone short on the other side. By definition there was a short. The hedge funds that shorted the synthetic CDOs took real risk. [but Paulson had a hand in creating the synthetic and knew what components were being modeled] They had to pay the interest on the underlying tranches to the investors who were long. And if the housing market continued to rise, and the bubble did not burst, they could easily lose a lot, if not all, of their money....Let's be very clear. This was purely gambling. No money was invested in mortgages or any productive enterprise. This was one group betting against another, and a LOT of these deals were done all over New York and London.

Paulson & Co. had a hand in creating the synthetic and therefore knew what components were being modeled.  Perhaps not the same as dealing poker with a stacked deck because the banks could have checked the deck themselves. But as Mauldin points out, they wanted the yield. Who was underwriting this fanciful gambling between card sharks? Answer: US taxpayers. When the housing market did collapse, Goldman and other Wall Street firms "too big to fail" were hauled out of the mess they created with taxpayer funds doled out by the Treasury Department and the Federal Reserve. The underlying investments that failed served absolutely no useful public service.  Heads I win, tails you loose, and a textbook case of why we need derivative trading in a regulated market and the re-establishment of the Glass-Steagall Act prohibition against banks owning other financial institutions.

"La Plus Entente De Conservation Dans Le Monde"

Peut-être.  Certainement la entente couvre une grande region-- 72 millions de hectares de la forêt boréal canadienne.  Cette entente a annoncé hier par vingt-une membres de L'Association des produits forestiers du Canada et neuf organismes environnementaux.  La assurera la conservation de la vaste espèce boréale canadienne et la protection du caribou des bois [photo], une espèce menacée. Ce rapprochement d'adversaires traditionnels reflète un nouvel engagement a l'égard d'un objective commun: protéger de façon permanente de vastes entendues de forêt et mettre place des pratiques forestières durables.

L'entente établit des engagements concrets pour les deux parties ainsi fait un plan pour l'action:

• l'élaboration et l'application des meilleures pratiques d'aménagement forestier;
• la formulation de propositions communes por des réseaux d'aires protégées et le rétablissement d'espèces en péril; 
• une approche qui tient compte de tout cycle de vie pour la gestion du carbone;
• suporter pour l'avenir économique des collectives forestières.

Les signataires doivent obtenir la coopération des gouvernements provinciaux, des Premières Nations et des collectivités locales pour exécuter l'entente.  Les participants reconnaissent que c'est aux gouvernements, y compris aux gouvernements autochtones que reviennent les décisions dans leurs territoires de compétence respectifs.

Ignoring the Lessons of History

Reporting at Counterpunch suggests that the Pentagon is resigned to the failure of the much touted offensive in Helmand Province earlier this year{"Afghanistan"}. Dubbed "Obama's surge" by the media, the offensive code named Moshtarak (Together), was intended to dislodge the Taliban and retake the province's infrastructure and population. Based upon General Stanley McCrystal's assurances of success, the President secured funding for a 30,000 man increase in force. The dislodging was achieved, but after the area was turned over to Afghanistan security forces the Taliban returned. Just three months later, villagers say the Taliban control the market town of Marjah at night. Shops are still closed and schools have not reopened. Central government workers have fled. The Taliban is replacing IEDs removed by US troops, and executing collaborationists. Local people also believe that the Taliban are stronger than ever in Kandahar, the latest target of western forces. Winning the hearts and minds of the Pashtun, a tribal people infamous for their xenophobia, will be next to impossible as US and NATO forces disrupt everyday life in their preparations for battle against the Taliban. The work of US assassinations teams has also raised the ire of the population. The quick turn around in the war General McChrystal envisioned has not appeared.

The conditions in southern Afghanistan are nothing new. Alexander faced them in the fourth century BC. After two years of fighting the region became the Greek province of Bactria, but the great Macedonian general did not succeed in subduing the tribes south of the Oxus. The Soviets had a similar experience during their ten year occupation beginning in December, 1979. McChrystal planned to form
an arc of control in the densely populated south (green shaded area) fixed on Marjah in the west and Kandahar in the east. Once Marjah was secure, he would expand the security footprint eastward to Kandahar, the city founded by Alexander in 330 BC. The maps shows this strategy is a familiar one following both the routes of Alexander (blue line) and the Soviet armies (red line). But the failure of the extraordinarily weak Kabaul government to hold Marjah once it was returned to it, puts the entire strategy in question. If western troops are redeployed to hold Marjah, they will be unavailable to takeover and hold Kandahar, the home base of the Taliban--a situation not anticipated by McChrystal's planning. Warnings from US ambassador Karl Eikenberry about government ineptitude and corruption were ignored[1]. One positive development in the war is the recapture of the Pakistani tribal areas on the northeast border that serve as safe havens for Taliban fighters. That gain is offset by the failure of the secure and hold strategy in the south. Once again the US seems to be stalemated in a far-off civil war, this one between the predominately Pashtun Taliban, and the Tajik, Uzbek and Hazara opponents in the central government.

The House will take up the $58.8b war supplemental spending bill this week.  American deaths in the war have passed 1000, as the rate accelerates dramatically in the face of a newly resurgent enemy.

[1] at a White House briefing last week the Ambassador refused to directly endorse Karzai as an "adequate strategic partner" saying only that he was the elected president of Afghanistan. The election is widely considered to have been tainted by vote fraud. Hamid Karsai's brother, Ahmed Wali, is the strong man of Khandahar. He is reputed to be deeply involved in the opium trade with contacts to both the Taliban and the CIA. President Karsai told an audience member during a recent Washington visit that he "could not fire his brother". Secretary Clinton, sharing the forum with him, was silent.

[images: counterpunch.org/spinney05132010.html]

Transocean Hires More Flacks

Part of the drilling company's response to mishandling  operations on the Deepwater Horizon is to hire more lobbyists.  The Hill reports that Transocean, Ltd. recently hired Capitol Hill Consulting Group, a lobbying firm that includes a former Democratic congressman and an advisor to former Majority Leader Tom Delay (R-TX). It also hired FD Public Affairs to manage the media. That firm's energy and environment business is run by a former aide to House Minority Leader John Boehner (R-OH). British Petroleum has hired the public relations firm of Brunswick Group.  Prior to the catastrophe, Transocean had a limited political profile in Washington. The "ridiculous spectacle" of American government dysfunction and cronyism continues as the oil spill is now positioned to enter the loop current of the Gulf of Mexico according to a NOAA marine ecologist. The current circles the Gulf in a counterclockwise fashion before flowing into the Gulf Stream through the Florida Straits. The current could carry the oil to the Florida Keys. NOAA is closing 19% of the Gulf of Mexico to fishing in response to the spreading slick.