Showing posts with label transnationalist. Show all posts
Showing posts with label transnationalist. Show all posts

Thursday, May 21, 2009

Obama May Grab for Guns

Gun President Obama voiced his support for an anti-gun treaty with such wide ranging implications that it could ban everything from assembling guns in kits to repackaging spent shells.

Click here for video.

The treaty was signed by former President Clinton, but never approved by Congress. It has gained approval in 29 other countries. Obama put his weight behind it during his whirlwind tour abroad late last month.

Yesterday’s passage of legislation that revoked the longstanding ban on guns in national parks proved that this treaty would probably fall by the wayside once more, said Larry Pratt, President of Gun Owners of America. But the fact that Obama voiced his support for it speaks volumes about the President’s view of the Second Amendment, after his famous claim to not “take away guns” from law-abiding Americans.

The treaty would “pretty clearly would require, without a whole lot of extrapolation, a regulation of all firearms in the United States,” said Pratt.

Called the “Inter-American Convention Against the Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives and Other Related Materials,” the legislation’s bans are multitudinous:

The manufacture or assembly of firearms, ammunition, explosives, and other related materials: a. from components or parts illicitly trafficked; or b. without a license from a competent governmental authority of the State Party where the manufacture or assembly takes place: or c. without marking the firearms that require marking at the time of manufacture.

These sweeping regulations could affect everything from BB guns to toy guns, and could even prevent the individual re-loading of guns by the owners themselves. It could potentially require matching insignia on bullets and shells, meaning that re-use of cases would be illegal – a practice that is more common during a recession.

The regulations could also affect gun clubs, by banning “association or conspiracy” with illegal gun activities. So if an NRA member commits an offense, clubs or advocacy groups could be liable.

The treaty could even call for action against the dealer who sold an offender a weapon. If Mexico calls for the extradition of a gun dealers, the U.S. would be obligated to resolve it by “other means of peaceful settlement” that are yet undefined.

In addition to a Presidential signature, sixty-eight out of 100 Senate members are needed in order for an international treaty to be approved in the United States. But the move to overturn the National Parks gun ban gained 67 signatures, meaning passing further gun restrictions is unlikely, said Provost.

“You have [Senators] who you’re just really surprised are voting pro-gun,” he said.

Jillian Bandes :: Townhall.com Columnist by Jillian Bandes

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Senate Approves Coburn Gun Amendment…in Credit Card Bill

The Senate on Tuesday night easily passed an amendment to credit card reform legislation that would allow concealed weapons in national parks. The vote was 67 to 29.

The question now is this: Will a controversial gun proposal attached to popular underlying legislation be the poison pill that sinks that larger bill? That’s been the case with legislation allowing the District of Columbia a voting representative in Congress, to which the Senate attached language scrapping many of Washington’s strict gun control laws. As a result of that gun amendment, the DC-vote bill remains stalled in the House months after it passed the upper chamber.

Now, Sen. Chris Dodd (D-Conn.), the chief sponsor of the credit card reform bill, is wondering whether the same might be the fate of his credit card proposal. “My concern is about what the underlying bill — what happens to it,” Dodd said on the chamber floor just before the vote. “I hate to see us lose this opportunity to make a difference with credit card reform.”

Sen. Tom Coburn (R-Okla.), who sponsored the concealed weapons bill, said he supports many of Dodd’s credit card provisions, and didn’t have in mind to offer his amendment just for the purpose of killing the larger bill. “I don’t want to see it fail on this,” Coburn said. “But nor do I want to see the Second Amendment trampled on.”

So much for an easy, clean, must-pass credit card reform bill.

By MIKE LILLIS 5/12/09 6:44 PM – The Washington Independent

 

------

Bill allowing loaded weapons in national parks sent to Obama

 

WASHINGTON -- Here's a list of stuff the typical American family can legally carry into national parks this summer: sleeping bag, toothbrush, change of underwear ... loaded guns.

Thanks to a 279-147 vote Wednesday in the House of Representatives, visitors to the nation's parks and wildlife refuges will be able to carry weapons there if they abide by state weapons laws.

The bill is on its way to President Barack Obama, who faces a dilemma: Gun rights advocates attached the provision to a sweeping overhaul of the credit card industry, an initiative Obama strongly supports, so he has little choice but to let the gun section become law.

White House spokesman Robert Gibbs said only that Obama "looks forward" to signing the bill "as quickly as possible," and didn't mention the gun provision.

Gun control advocates howled Wednesday, but to little effect. Rep. Carolyn McCarthy, D-N.Y., protested that "the bill has been hijacked," and Rep. Maxine Waters, D-Calif., maintained, "American taxpayers ought to be incensed."

Scot McElveen, president of the Association of National Park Rangers, predicted that the measure would provoke problems at the parks.

"Members of the ANPR respect the will of Congress and their authority to pass laws, but we believe this is a fundamental reversal from what preceding Congresses created the National Park System for. Park wildlife, including some rare or endangered species, will face increased threats by visitors with firearms who engage in impulse or opportunistic shooting."

Nonetheless, the gun measure, which passed the Senate overwhelmingly earlier this month, had strong bipartisan support. In the House, 105 Democrats, most from Southern, Western and rural states, joined 174 Republicans in backing the measure.

Two Republicans, Reps. Michael Castle of Delaware and Mark Kirk of Illinois, and 145 Democrats voted no.

"This is one of those issues that breaks down regionally," explained Rep. Chris Van Hollen, D-Md., assistant to House Speaker Nancy Pelosi, D-Calif.

President Ronald Reagan first required guns to be stored or inoperable in national parks 25 years ago, but last December, just before leaving office, the Bush administration overturned that rule.

That began a game of legal Ping-Pong. In March, U.S. District Judge Colleen Kollar-Kotelly overturned the Bush rule, and the Obama administration said it wouldn't appeal.

That action spurred Sen. Tom Coburn, R-Okla., to include the gun rule in the credit card bill. It wound up winning by an unexpectedly lopsided vote.

Coburn and his backers said that they didn't want, nor did they expect, people to be in danger of random shooters in national parks.

"It's really common sense," he said. "This is not about guns. What I want is gun rights. I want our constitutional rights to be protected."

Rep. Rob Bishop, R-Utah, said the measure was also a matter of self-defense.

"The real issue is that law-abiding Americans will no longer be treated as criminals" when they carry weapons, he said.

National Rifle Association officials argued that weapons are needed for protection in parks that are becoming increasingly dangerous. Asked why police couldn't handle criminal activity, Andrew Arulanandam, the NRA's director of public affairs, said, "At that moment when you're confronted by a criminal, it's between you and the criminal. Law enforcement cannot be there in position at any time."

Gun control groups said a new kind of danger would be lurking once the ban was overturned.

"Families should not have to stare down loaded AK-47's on nature hikes," said Paul Helmke, the president of the Brady Campaign to Prevent Gun Violence. He added that Obama "should not remain silent while Congress inserts reckless gun policies that he strongly opposes into a bill that has nothing whatsoever to do with guns."

Brady group spokesman David Vice suggested that Democrats were overreacting to gun rights advocates. Democrats still have bitter memories of losing congressional races in more conservative areas in the 1990s after being tagged as soft on guns.

Vice suggested that last year's results, in which Democrats won their biggest congressional majorities since the early 1990s, are evidence that those districts recognize the need for some limits on guns.

"We're trying to change that perception," he said, "but it's been difficult."

BY DAVID LIGHTMAN - MCCLATCHY NEWSPAPERS

(McClatchy Newspapers correspondent Margaret Talev contributed to this report.)

Coburn who introduced this provision says it is more an issue of State’s Rights and Individual Freedom than a gun issue…

 

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Posted:  Daily Thought Pad

Tuesday, May 12, 2009

U.S. Will Pay $2.6 Million to Train Chinese Prostitutes to Drink Responsibly on the Job

(CNSNews.com) -- The National Institute of Alcohol Abuse and Alcoholism (NIAA), a part of the National Institutes of Health (NIH), will pay $2.6 million in U.S. tax dollars to train Chinese prostitutes to drink responsibly on the job.

Dr. Xiaoming Li, the researcher conducting the program, is director of the Prevention Research Center at Wayne State University School of Medicine in Detroit.

The grant, made last November, refers to prostitutes as "female sex workers"--or FSW--and their handlers as "gatekeepers."

"Previous studies in Asia and Africa and our own data from FSWs [female sex workers] in China suggest that the social norms and institutional policy within commercial sex venues as well as agents overseeing the FSWs (i.e., the 'gatekeepers', defined as persons who manage the establishments and/or sex workers) are potentially of great importance in influencing alcohol use and sexual behavior among establishment-based FSWs," says the NIH grant abstract submitted by Dr. Li.

"Therefore, in this application, we propose to develop, implement, and evaluate a venue-based alcohol use and HIV risk reduction intervention focusing on both environmental and individual factors among venue-based FSWs in China," says the abstract.

The research will take place in the southern Chinese province of Guangxi.
Guangxi is ranked third in HIV rate among Chna's provinces--and is a place where the sex business is pervasive, Li said.

“The purpose of the project is to try and develop an intervention program targeting HIV risk and alcohol use,” Li told CNSNews.com. “So basically, it’s an alcohol and HIV risk reduction intervention project."

The researcher outlined three components of the intervention program in the abstract for the project:

“(1) gatekeeper training with a focus on changing or enhancing the protective social norms and policy/practice at the establishment level; (2) FSW (female sex workers) training with a focus on the acquisition of communication skills (negotiating, limit setting) and behavioral skills (e.g., condom use skills, consistent condom use); and (3) semi-annual boosters to reinforce both social norms within establishments and individual skills,” wrote Li.

The doctor said the heart of the study involves “a community-based cluster randomized controlled trial among 100 commercial sex venues in Beihai, a costal tourist city in Guangxi.”

"We anticipate that the venue-based intervention program will be culturally appropriate, feasible, effective and sustainable in alcohol use and sexual risk reduction among FSWs," says the NIH grant abstract.
Li said his study is being done in China rather than the U.S. because prostitution occurs with alcohol use in the United States like it does in China, Americans will be able to benefit from the project’s findings.

“We want to get some understanding of the fundamental role of alcohol use and HIV risk,” he said. “We use the population in China as our targeted population to look at the basic issues. I think the findings will benefit the American people, too.”
Li said minimal research has been conducted on the link between alcohol use and prostitution as it relates to HIV.

“Alcohol has been a part of the commerce of sex for many, many years. Unfortunately, both global-wise (and) in the United States, very few researchers are looking at the complex issue of the inter play between alcohol and the commerce of sex,” he told CNSNews.com.

The grant is one of several “international initiatives” sponsored by the National Institutes of Health.

Ralph Hingson, director of epidemiology and prevention research at NIAA, told CNSNews.com, “There are many Americans who travel to China each year and they should be made aware of the HIV problem.”
Hingson said that Americans will be able to apply the studies findings to the American situation because 1.2 million Americans are currently living with HIV.
Li’s research includes exploration, development, implementation and evaluation. Currently, the project stands at the exploration stage, which the doctor expects to last 18 months.

“The first phase is kind of an exploratory study just trying to get a good understanding of the phenomena in the population of female sex workers in China. The second phase is the program development,” the professor told CNSNews.com.
Phase two will be based on the first year of the study and on “field observations,” he added. The third phase will be the implementation and evaluation of the program.
“Prostitution is illegal in China but it exists in China," Li told CNSNews.com, “but the Chinese government and the society’s attitude towards prostitution is complicated.”

According to Li, there may be as many as 10 million female prostitutes in China with the majority raging from teenagers to those in their 20s.
“We see a lot of governmental initiatives in China, like 100 percent condom distribution promotion programs, so they deliver condoms in those (prostitution) venues," he added.

“The global literature indicates an important role of alcohol use in facilitating HIV/AIDS transmission risk in commercial sex venues where elevated alcohol use/abuse and sexual risk behaviors frequently co-occur,” Li wrote when introducing the project last November.

"We expect that the intervention will improve protective normative beliefs and institutional support regarding alcohol use and HIV protection,” he added.
The NIH proposal hypothesizes that the program will decrease "problem drinking and alcohol-related sexual risk" among prostitutes that participate.

"We hypothesize that the venue-based intervention will change and enhance the protective social norms and institutional policies at the establishment level and such enhancement, accompanied by individual skill training among FSWs, will demonstrate a sustainable effect within commercial sex establishments in decreasing problem drinking and alcohol-related sexual risk, increasing consistent and correct condom use, and reducing rates of HIV/STD infection among FSWs," says the NIH abstract.

Tuesday, May 12, 2009
By Edwin Mora

Posted:  Daily Thought Pad

Sunday, April 26, 2009

Michael Farris - United Nation’s Convention on Rights of a Child Material

Parentalrights press conference

This is important!!

Ten things you need to know about the structure of the CRC.

1. It is a treaty which creates binding rules of law. It is no mere statement of altruism.
2. Its effect would be binding on American families, courts, and policy-makers.
3. Children of other nations would not be impacted in any direct way by our ratification.
4. The CRC would automatically override almost all American laws on children and families because of our Supremacy Clause.
5. The CRC has some elements that are self-executing, while others would require implementing legislation. Federal courts would have the power to determine which provisions were self-executing.
6. The Courts would have the power to directly enforce the provisions that are self-executing.
7. Congress would have the power to directly legislate on all subjects necessary to comply with the treaty. This would constitute the most massive shift of power from the states to the federal government in American history.
8. A committee of 18 experts from other nations, sitting in Geneva, has the authority to issue official interpretations of the treaty which are entitled to binding weight in A merican courts and legislatures. This effectively transfers ultimate authority for all policies in this area to this foreign committee.
9. Under international law, the treaty overrides even our Constitution.
10. Reservations, declarations, or understandings intended to modify our duty to comply with this treaty will be void if they are determined to be inconsistent with the object and purpose of the treaty.

Ten things you need to know about the substance of the CRC.

1. Parents would no longer be able to administer reasonable spankings to their children.
2. A murderer aged 17 years, 11 months and 29 days at the time of his crime could no longer be sentenced to life in prison.
3. Children would have the ability to choose their own religion while parents would only have the authority to give their children advice about religion.
4. The best interest of the child principle would give the government the ability to override every decision made by every parent if a government worker disagreed with the parent's decision.
5. A child's "right to be heard" would allow him (or her) to seek governmental review of every parental decision with which the child disagreed.
6. According to existing interpretation, it would be illegal for a nation to spend more on national defense than it does on children's welfare.
7. Children would acquire a legally enforceable right to leisure.
8. Christian schools that refuse to teach "alternative worldviews" and teach that Christianity is the only true religion "fly in the face of article 29" of the treaty.
9. Allowing parents to opt their children out of sex education has been held to be out of compliance with the CRC.
10. Children would have the right to reproductive health information and services, including abortions, without parental knowledge or consent.

To learn more visit www.parentalrights.org.

Source:  http://www.mikehuckabee.com/

Posted:  Daily Thought Pad

March 31, 2009 -- Parental Rights Amendment Introduced to the 111th Congrgress

The Parental Rights Amendment was introduced to the 111th Congress yesterday, March 31. A press conference announcing the event was held at Upper Senate Park at 3 pm, featuring Representatives Pete Hoekstra (MI-2) and Frank Wolf (VA-10), along with Senator Jim DeMint (SC) and parentalrights.org president Michael Farris.

Senate introduction of the Amendment has been delayed for strategic reasons.

Once the Amendment was introduced, it was assigned a house bill number: H.J.Res. 42 (House Joint Resolution 42). Now supporters are encouraged to refer to it by this number when corresponding with representatives and senators.

By procedure, the bill will go to the House Judiciary Committee, which will then assign it to the Subcommittee on the Constitution, Civil Rights and Civil Liberties. ParentalRights.org will keep volunteers and subscribers posted on the Amendment's progress, and any time your help is needed to push the Amendment past a "bump" in the procedural "road". In the meantime, it is imperative that we grow our grassroots support for the major push we anticipate later this year. You can help with this now by joining our 10-and-2 grassroots campaign!

To learn more visit www.parentalrights.org.

Source:  http://www.mikehuckabee.com/

Posted:  Knowledge Creates Power

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VOLUNTEER OPPORTUNITY

We need 10-and 2 volunteers who can enlist 10 people to do the following: sign the petition for the Amendment, sign 3 postcards to their Representative and Senators, and donate $1. 
Then, we need those volunteers to recruit 2 more people to do the same thing.

CLICK HERE FOR MORE ON THE 10-AND-2 CAMPAIGN

http://www.parentalrights.org/index.asp?Type=B_BASIC&SEC={E1213433-960D-4C17-BBD5-DDDA332C991B}


ParentalRights.org exists to protect children by empowering parents through the passage of the Parental Rights Amendment to the U.S. Constitution, and by defeating U.S. ratification of the U.N. Convention on the Rights of the Child.

Monday, April 20, 2009

Glenn Beck: Obama used as propaganda tool


GLENN: So Hugo Chavez and Barack Obama, they're pals, and President Obama's given a book in Spanish which Barack Obama doesn't speak, which is kind of like the, you know, the gift the President Obama gave to Gordon Brown, DVDs that he couldn't use. Some would say that this was just propaganda because here's a book about how bad America has been as a partner for Latin America, how horrible we have been, the destruction that we and the Europeans have brought onto Latin America. Got it? Some would say this was just a propaganda piece, seeing that Chavez walked right over to him in these meetings with no preconditions and just walked over it with all the press and just handed him a book, holding it so you could see the cover of the book and then Obama just takes it and holds the book cover up like, "This is what he gave me." Some would say that our president has been used for anti American propaganda purposes, but I'm not saying that. Who is? Listen to this. 

HILLARY CLINTON: Well, I will not promise to meet with the leaders of these countries during my first year. I will promise a very vigorous diplomatic effort because I think that it is not that you promise a meeting with that high a level before you know what the intentions are. I don't want to be used for propaganda purposes. I don't want to make a situation even worse, but I certainly agree that we need to get back to diplomacy, which has been turned into a bad word by this administration, and I will pursue very vigorous diplomacy and I will use a lot of high level presidential envoys to test the waters, to feel the way. But certainly we're not going to just have our president meet with Fidel Castro and Hugo Chavez and, you know, the president of North Korea, Iran and Syria until we know better what the way forward would be. 

GLENN: Yeah. Well, hang on just a second, will you? It's 4:20. So I was just going to help me understand the world a little bit better, you know? So anyway, we were talking about oh, yeah. Hillary Clinton said that she certainly doesn't think that we should be, you know, used for propaganda. What was I saying? Do we have anything from Joe Biden on this one because I'm sure Joe Biden has a statement here. 

SENATOR McCAIN: I'm John McCain and I approved this message. 

GLENN: No, not John McCain. Are you smoking something here, Dan? 

VOICE: What does Barack Obama's running mate say about Barack Obama? 

BIDEN: You asked is he ready? You said, I think he can be ready but right now I don't believe he is. The presidency is not something that lends itself to on the job training. I think that I stand by the statement. 

VOICE: And what does he say about John McCain? 

BIDEN: I would be honored to run with or against John McCain. I think the country would be better off.

Quote: I am so glad you weren't trying to blame me for things that happened when I was a child... said Obama when the U.S. was attacked at the latest conference where our President worried about being liked instead of defending his Country... our Country... 

Debate: Would You Meet with Iran/Syria/North Korea?

GLENN: Stop just a second. I'm just looking at a picture of Los Amigos, our president Barack Obama holding that book with Hugo Chavez and Hugo Chavez knows exactly what he's doing. So, so sweet. How did we get in this situation again? I'm trying to remember. What did 


VOICE: In 1982 Anwar Sadat traveled to Israel, a trip that resulted in a peace agreement that has lasted ever since. In the spirit of that type of bold leadership, would you be willing to meet separately without precondition during the first year of your administration in Washington or anywhere else with the leaders of Iran, Syria, Venezuela, Cuba, and North Korea in order to bridge the gap that divides our countries? 

VOICE: I should also point out that Steven is in the crowd tonight, Senator Obama. 

PRESIDENT OBAMA: I want and the reason is this: That the notion of somehow not talking to countries is punishment to them which has been the guiding diplomatic principle of this administration is ridiculous. 

GLENN: Hang on. Just a second. Wow. Wow. I mean, why punish these people, you know? Sure, they are going to use you for propaganda purposes, which literally just happened. Okay, so what? I mean, who's reading it. You know what I mean? Okay, it's number 2 on Amazon.com right now but who cares? I mean, it's not like we're punishing him, you know? Why punish him, you know? Okay, sure, you might have your standards or whatever but I mean, why hang on just a second. Sorry, man, I just I mean, what difference does it make, you know? I mean, okay, so we meet with him. We're having some cocktails or talking about stuff, you know? Getting stuff done. That's what it's all about. 

By the way, did you read, did you read the Times today? You know, I was reading you know, because I'm thinking we should totally toke up with Hugo, maybe play some Wii, and I'm reading the Times about that and stuff and I'm like, it's 4:20. I got to smoke some dope.

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Friday, April 10, 2009

The Elephant in the Room: Obama vs. United States

The president is contemptuous of American values. And one key nominee prefers the judgment of other countries and global elites.

Watching President Obama apologize last week for America's arrogance - before a French audience that owes its freedom to the sacrifices of Americans - helped convince me that he has a deep-seated antipathy toward American values and traditions. His nomination of former Yale Law School Dean Harold Koh to be the State Department's top lawyer constitutes further evidence of his disdain for American values.

This seemingly obscure position in Foggy Bottom's bureaucratic maze is one of the most important in any administration, shaping foreign policy in the courts and playing a critical role in international negotiations and treaties.

Let's set aside Koh's disputed comments about the possible application of Sharia law in American jurisprudence. The pick is alarming for more fundamental reasons having to do with national sovereignty and constitutional self-governance.

What is indisputable is that Koh calls himself a "transnationalist." He believes U.S. courts "must look beyond national interest to the mutual interests of all nations in a smoothly functioning international legal regime. ..." He thinks the courts have "a central role to play in domesticating international law into U.S. law" and should "use their interpretive powers to promote the development of a global legal system."

Koh's "transnationalism" stands in contrast to good, old-fashioned notions of national sovereignty, in which our Constitution is the highest law of the land. In the traditional view, controversial matters, whatever they may be, are subject to democratic debate here. They should be resolved by the American people and their representatives, not "internationalized." What Holland or Belgium or Kenya or any other nation or coalition of nations thinks has no bearing on our exercise of executive, legislative, or judicial power.

Koh disagrees. He would decide such matters based on the views of other countries or transnational organizations - or, rather, those entities' elites.

Unsurprisingly, Koh is a strong supporter of the International Criminal Court, which could subject U.S. soldiers and officials to foreign criminal trials for their actions while fighting for our security. He has recommended that American lawyers work to "undermine" official American opposition to the court.

If only Koh's transnationalism ended there. Our Eighth Amendment's prohibition on cruel and unusual punishment? Koh believes it should be reinterpreted in light of foreign and international law to pay "decent respect to the opinions of humankind."

Old fogies like me believe we ought to pay more attention to the opinions of the Founders who wrote the Constitution and the people who have lived under it. If Americans want to end the death penalty, they can do so through their elected state representatives.

If foreign opinions trump those of Pennsylvanians on capital punishment, why not on other issues? Why not, indeed: Koh thinks "international comity" trumps American sovereignty. He believes that, since certain nations recognize a right to same-sex marriage, our courts should, too. He wrote that "the principles of human dignity and autonomy that are the essence of the modern right-protecting democracy demand that civil marriage be available to all couples and that the equality of all citizens triumph over historical attitudes."

What's beneath this legal jargon? Simply this: Even if marriage in Pennsylvania has always been understood as involving one man and one woman - even if Pennsylvanians, through referendum or constitutional amendment, decide it should remain so - none of that should count. What should count are the views of courts in other nations or international bodies.

"I'd rather have [Supreme Court Justice Harry] Blackmun, who used the wrong reasoning in Roe to get the right results," Koh wrote of the landmark abortion case, "and let other people figure out the right reasoning."

Stunning and revealing: Koh tells us it doesn't matter if the right to abortion can be found in the Constitution. In fact, he concedes that Blackmun's reasoning was wrong. But it is up to others to get it right. How? By finding out what the United Nations, European Union, or particular European nations think.

Koh tops the list of Obama's potential Supreme Court nominees. Is this what Sen. John Kerry meant when he once suggested that American policy must pass a "global test"? Or what Barack Obama meant when he said last week that we have failed to "appreciate Europe's leading role in the world"? Or when he spoke of "change we can believe in"? And just who are "we"?

Posted:  Daily Thought Pad

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Monday, March 23, 2009

The Case for Letting AIG Fail

insurance bailout

AIG offices in New York City - Photo by Mario Tama/Getty

There's an uproar about whether the government should let AIG fail, a debate re-energized by the latest revelation of bonus payments going to AIG's executives. In fact, there's a good case to be made that AIG should fail, and it has nothing to do with bonuses.

More Related

The rescue of AIG is warping the banking system and unnecessarily extending the credit crisis. This misguided effort stems from a lack of transparency and some basic misconceptions about AIG's business. (Read "Obama's Challenge: Containing the AIG Bonus Outrage.")

Let's take a moment to review how AIG made money and why it's now losing so much. Most of AIG's losses have been attributed to its failing positions in credit-default swaps (CDSs). Essentially, AIG is swapping cash flows with other institutions: those banks pay AIG a small sum on a regular basis, and then under certain conditions — like mass foreclosure or corporations' defaulting on their loans — AIG pays out a large sum. In other words, AIG sold insurance; its problem is that it is paying out too much.

Of course, it's a bit more complicated than that because of the funky nature of AIG's insurance. Other types of insurance do not carry the same risks because when one claim pays out, it does not snowball. AIG's insurance on foreclosures and other defaults is not like insurance for accidents and disasters; while earthquakes in California are not correlated with earthquakes in New York, foreclosures are spiraling out of control together, fueled by a widespread recession.

Moreover, investors and banks that hold credit-default swaps do not necessarily own the tranches of mortgages and bonds that the CDSs insure. AIG may have even written multiple swaps over the same mortgages and bonds. It would be as if an insurance company had sold earthquake insurance on one house to multiple investors. When the house falls, so does AIG.

But there's a true insight into this mess if you just step back and consider the bigger picture, not just AIG. Regardless of the details of the various swap contracts, they all represent potential transfers of wealth between financial institutions. If we consolidated the entire financial sector, all these debts would effectively vanish.

Think again of the insured house. Many institutions hold insurance on the house; on the other side are insurance companies and the like making an opposite bet. If the house is destroyed, one group of institutions wins and the other group loses. Considering all institutions together, no money was truly lost — it's what economists call a zero-sum game. In good times, risk-hungry banks loved this game, but now they have become risk-averse, and the game seems to have changed. So how can many of the banks simultaneously claim enormous swap losses without a single bank claiming significant profit?

Here are two possibilities: either the vast majority of all swaps — not just AIG's — are held by investment banks, or a significant portion is held by other financial institutions like hedge funds. Suppose all swaps are held by banks. Since swaps are a zero-sum game, the banking industry as a whole cannot lose money on swaps. Then there is no need for a bailout. (See 25 people to blame for the financial crisis.)

Alternatively, if hedge funds hold significant positions, then it is possible for the banking industry as a whole to net a loss on swaps. That loss would be the hedge funds' gain. This means the bailout is ultimately saving the hedge funds.

Whichever it is, if the number of institutions involved in swap-trading were limited to those trading with AIG, then AIG is probably not too big to fail. We have to worry about chains of claims. Just because AIG dealt only with banks does not mean those banks did not rewrite similar contracts with hedge funds.

The most direct solution for the swap problem is to settle all such agreements and eliminate their uncertainty from the equation. If the payments are reversed, or the payments are stopped, or they are settled once and for all, the uncertainty will vanish.

The problem with keeping the swaps on the banks' books is that their potential payoff or loss is random, depending on the particular details of the contract and various outcomes in the world. Moreover, banks today are risk-averse and often factor worst-case scenarios into current pricing. Thus, they are far more likely to claim losses than profits on such instruments.

At the very least, there should be full transparency. Any institution receiving money from the government — and ultimately from American taxpayers — should reveal its holdings. Even institutions that do not require a bailout should be more closely tracked by regulators. The government can and should monitor all transactions, even those over-the-counter.

We have focused too much on each individual bank and its possibility for failure. The economy does not need every bank to survive; it needs most. Right now, we need to know which ones. By propping up financial institutions that are subject to unknown potential losses, the government is prolonging the uncertainty about whether they will fail. This perpetuates the crisis of confidence in which banks do not trust one another enough to loan mo

By ARI J. OFFICER - Time Magazine

And then there is the whole subject of multi-national corporations that put business before Country, ideology, people or much of anything else.  AIG is the embodiment of the multi-national corporation gone wrong and all that goes with it.  The AIG fiasco should be our warning of what is wrong with companies that get to big.  AIG operates in 135 countries and insures everything from banks to movie stars... too big, too impersonal, too dangerous!  But this is a subject for another day!!!