By Emily Kaiser and Nancy Waitz - Analysis

WASHINGTON (Reuters) - The U.S. government is having a tough time guesstimating how many small businesses failed in this recession, casting doubt on the reliability of vital data on employment and economic growth.

The formula the U.S. Labor Department designed to help it deliver timely, thorough monthly employment reports broke down in the heat of the financial crisis, miscounting the number of jobs by an estimated 824,000 in the year through March.

The most likely culprit is the so-called "birth-death" model, which the Labor Department uses to estimate how many companies were created or destroyed.

By now most people who follow Goldman Sachs in the news know that it received $13 billion from the Federal Reserve to liquidate its portfolio of derivatives with AIG. Because the Fed was willing to pay Goldman par value on these derivatives, even though the market valued them at about 48 cents on the dollar, Goldman walked away with no loss whatever from the AIG collapse. This has been described as a great gift for Goldman and all the other banks who dealt with AIG and who were treated the same way. Many others have described this as a colossal rip-off of the taxpayers.

How did this come about? We know a lot more this week about these transactions because of a report that has been issued by Neil Barofsky, the Special Inspector General for the bank bailout programs. The press has described this report as particularly damning of the NY Federal Reserve which negotiated these deals with the banks, and which was led at the time by Timothy Geithner, the current Treasury Secretary. These press reports, however, have mischaracterized what happened and what went wrong. The NY Fed acted properly and entirely as one would expect under the circumstances when they negotiated these contract abrogations. To see what really went wrong, follow along on the details below.

I'm going to say right up front that I don't come to any conclusions in this post. I was simply struck the contrasting outcomes in these otherwise very similar stories.

First there is the news that the pseudonymous call-girl and author "Belle Du Jour" has revealed her true identity, as a PhD level cancer researcher named Brooke Magnanti. Check out how her illicit activities have paid off for Dr. Magnanti:

The Belle du Jour blog became a hot media property, spurring speculation about the true author, a lucrative book deal. The book was serialized on UK prime time television in 2007’s “Secret Diary of a Call Girl,” starring actress of Billie Piper, and eventually played on pay cable in the US.

When I read this story, I couldn't help but recall the sad story of Brandy Britton, an American college professor who similarly dabbled in prostitution, but with a very different outcome:

More after the jump.

Rachel Maddow had Frank Schaeffer on again. The rhetoric from the far right has become more "incite"-full.

Video after the jump.

Strange days up here in Minnesota. A guy by the pseudonym Robert Erickson spoke to an anti-immigrant Tea Party rally at the State Capitol on Saturday. Turns out he punk'd them and demanded "Columbus Go Home" and the deportation of all these European immigrants. The videos were hits on YouTube. I got the reverse angle of the crowd in HD, now we've got a bit of a viral event unfolding!

November 16, 2009 | John Chuckman

Aung San Suu Kyi, Omar Khadr, and Barack Obama: A Dreadful Tale Of What America Has Become

During his trip to Asia, President Obama called for the government of Burma to release Aung San Suu Kyi, a noted dissident who has spent years under house arrest.

It made headlines, a fact which tells us more about the role of media as an outlet for government press releases than in communicating genuine news.

Obama’s was hardly a brave or innovative act when you consider that it is a universally-condemned military junta keeping Aung San Suu Kyi penned up.

Asia Times, By Andrei Lankov, November 12

SEOUL - In the past few weeks, North Korean watchers have been confronted with a sight they do not see frequently: Americans outsmarting North Koreans.

Usually, the opposite is the case. North Korea might be a failing state, balancing on the verge of famine, but when it comes to diplomatic games, North Korean politicians are second to none.

They have studied the dangerous art of manipulating great powers since the 1960s, when they played Russians and Chinese against one another. They perfected their skills in the 1990s, when they managed to manipulate the US, South Korea and China into providing large amounts of food and energy aid while giving essentially nothing in return.

I've spent a good part of the last week re-reading Neil Sheehan's book, A Bright Shining Lie: John Paul Vann and America in Vietnam. Partly, this is just happenstance; I found a nicely annotated hardback copy in a local used book store. But it's also because I wanted to look again at the 1962-64 period of the Vietnam War to see how much it resembles our current situation in Afghanistan. I don't have good news to report.

Starting in earnest in 1962, the U.S. began arming the Viet Cong inadvertently through the strategic hamlet and strategic outpost programs. The communist side in the South was not relying on Chinese or Soviet supplies, except for heavy weapons that could not easily be captured. They got all the guns and ammo they needed simply by taking them from the people the U.S. handed them out to. The strategic hamlet program turned the peasants against the Saigon regime for good. Indiscriminate bombing of villages turned the rural populace into mortal foes of the United States. The cities were lost because the Catholic regime was brutal, corrupt, and attempted to crush the power of the Buddhist leadership.

American cowboy capitalism at its finest is on display today as Kohlberg, Kravis & Roberts (KKR), one of the country’s largest leveraged buy-out firms, is proposing to bring the Dollar General company back on to the public market. You – yes you, oh innocent investor – can buy a piece of this company for just $22 a share! Any why not? Dollar General is one of those stores where everything is on sale for $1, and cash-poor, recession plagued Americans have been flocking to stores just like these.

This is the only part of the retail sector that has been doing well. Wal-Mart, Dollar General and similar low cost vendors have been holding their heads above water while everyone else has been sinking. But before you plunk down your $22/share, come along with me on a ride through the fine print of the prospectus, to learn just what is going on here. You’ll understand better that the role the Wall Street boys want you to play is that of the sucker – the person who gets them out of a tight jam for a mistake they made.

Michael Collins

U.S. Afghan Envoy Urges Caution on Troop Increase

"WASHINGTON -- The United States ambassador to Afghanistan, who once served as the top American military commander there, has expressed in writing his reservations about deploying additional troops to the country, three senior American officials said Wednesday.

THE DEPROLIFERATOR -- Nuclear disarmament is usually approached from three directions. They who pursue the middle way might, by definition, be capable of appreciating the charms of those following the two paths which diverge from it. But chances are that each of those parties -- one of which is an outlier; the other an in-lier -- views the other with a jaundiced eye.

An example of a group that approaches disarmament head-on is the Nuclear Age Peace Foundation. In his most recent letter, its worthy president David Krieger writes:

The starting point for ending the omnicidal threat of nuclear weapons is the recognition that the threat is real and pervasive, and requires action. … We are called upon to end our complacency and respond to this threat by demanding that our leaders develop a clear pathway to the total elimination of nuclear weapons.

This straightforward faction seems to predicate its actions on the notion that not only is it speaking truth to power but on behalf of a sizeable segment of the public. As for the other two, the inlying group comprises realists, who, because many have worked in the government, military, or nuclear labs, operate on the assumption that they're capable of influencing policy. Before we examine its m.o., let's first review that of its opposite -- activists such as the Berrigan brothers, who in 1980 penetrated a nuclear weapons base and damaged warheads as well as pouring blood on documents and files.

New York Times, By Benedict Carey, November 9

It’s snowing heavily, and everyone in the backyard is in a swimsuit, at some kind of party: Mom, Dad, the high school principal, there’s even an ex-girlfriend. And is that Elvis, over by the piñata?

Uh-oh.

I've written this in reference to Michael Collins's diary post One More Reason to Kill this Bill and some of the confusion over sections and what is in the bill as far as coverage requirements and penalties.

I'm looking here (.pdf file) for the new Health bill and somewhere around here for the IRS Tax Code. Will post more precise links (possibly to other sources) as needed.

1) HR3962 Sec. 501 (p. 297) If you fail to purchase insurance you will pay 2.5% of (modified adjusted gross income - gross income) but, if that value is higher than the “average premium for self-only coverage under a basic plan which is offered in a Health Insurance Exchange…” you will pay that average premium instead. So, there is a cap on the 2.5%, set at the average premium of a plan on the exchange. Not sure how high that average will be. HR3962 Sec. 501 (p.298) This amount is pro-rated based upon the fraction of the year that you go without coverage.

Note that a “basic plan” is outlined in HR3962 Section 303(c) on page 168.

Modified Adjusted Gross Income is defined as adjusted gross income increased by (A) any amount excluded from gross income under section 911 of IRS Code (see the link below) and (B) any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax.

2) HR3962 Sec 501 (p.299). For Americans living overseas, you are exempt from paying this tax if you have been living abroad and are a resident of a foreign country for at least one taxable year. Relevant IRS code is here (scroll down a bit to sec. 911(d)(1)). I assume the prorating would apply if you’ve only been living overseas for less than a year.

3) You can apparently file an exemption from the requirement to purchase insurance based upon religious beliefs, though you must document your adherence to a faith that would want this. There’s a bit more in there, starting on HR3962 Sec. 501, pages 299-300.

4) HR3962 Sec 501, p. 304. Seems to state that small lapses in coverage are not going to result in taxes. I would assume this means a few days, but I don’t see any specific numbers. The bill just calls them “de minimis lapses of acceptable coverage.”

Now, if you don’t pay the tax in point (1) above then you will be subject to normal IRS rules and regulations. I would assume this is where IRS Code sections 7201 and 7203(see links below) come in. They feature up to $25,000 in fines and no more than 1 or 5 years in jail (depending on which is applicable). I’m not sure how these are applied in practice.

So, it looks like no specific penalties are outlined in the bill, but the 2.5% is designed as a tax and so would fall under IRS rules for non-compliance.

IRS Code Section 7201
IRS Code Section 7203

THE DEPROLIFERATOR -- Recent statements by its chief representative to the International Atomic Energy Agency suggest that Iran may be backing away from an agreement to ship its low-enriched nuclear fuel to Russia for further enriching. Even, though, after agreeing to the deal, President Ahmadinejad, ever the master of the sweeping gesture, said the West had "moved from confrontation to cooperation."

Among reasons to hope that Iran relents is a fact of which many who proclaim Iran has a right to a nuclear program seem ignorant. Turns out that transubstantiating the fuel used for nuclear energy into nuclear-weapon fuel, far from a miracle, is all too commonplace.

From the Guardian

"The dimensions of the unfolding disaster in Afghanistan are becoming bigger and more daunting by the day. Once-staunch defenders of the "good war" are starting to break ranks. "

"Flanked by two vice-presidents, including a notorious warlord that Mr Karzai accepted as a running mate, Mr Karzai vowed yesterday to tackle corruption. This was rather like a cat promising abstinence on the subject of mice."

http://www.guardian.co.uk/commentisfree/2009/nov/04/afghanistan-political-failure-kim-howells

Emprire building and occupation are such messy tasks. If Gibbon were alive he could have writted the Decline and Fall of the British, French, Portugese, and American Empires in my lifetime.

The Supreme Court of the United States will soon announce a major decision on our lightly controlled system of campaign funding. Will it retain some limitations on corporate influence or will the court blow the lid off and cause a perpetual flood of unrestricted corporate contributions?

An additional outcome may surprise and shock the public.

If the Supreme Court overturns the lower court's decision, foreign nationals, corporations, and governments with partial ownership of U.S. corporations will, in effect, end up contributing to and influencing U.S. candidates in federal elections.

First off, Mauricio Fernandez, the mayor of San Pedro Garza Garcia, an exclusive community near Monterrey, announced as he was being sworn in for a new term that a feared drug cartel capo who had been threatening him had been found dead in Mexico City. Only one problem, the body hadn't been found yet. That would take another 3 1/2 hours. And it wouldn't be identified for two more days.

The mayor's explanation once the story erupted as a scandal in normally blase Mexico -- the DEA tipped him off:

When pressed, Fernandez said U.S. authorities tipped him off that somebody intercepted cartel communications and learned Saldana was planning to kill him, and he said unspecified intelligence sources told him Saldana was dead. Paul Knierim, a U.S. Drug Enforcement Administration spokesman, said Tuesday he couldn't comment on Fernandez's situation, but said American agents routinely coordinate with Mexican investigators trying to crack down on cartels.

The leaders of Argentina's horrible junta from the 1970s and 80s are finally facing trial:

The trial has begun of Argentina's last military ruler, Reynaldo Bignone, and five other retired generals.

The men are charged in connection with the alleged kidnapping, torture and disappearance of 56 opponents of the military government in the late 1970s.
...
Mr Bignone, 81, appeared frail and rocked back and forth in his chair as the charges were read out, correspondents said.

I hope Dick Cheney's heart holds out long enough to answer before a court of law for atrocities like this.

Last week the Washington Post printed two letters from different sources who had spent time on the ground in Afghanistan that came to very different conclusions about the American presence there.

First, there is the letter from Matthew Hoh, the former Marine captain who had fought in Iraq and had recently taken a temporary foreign service assignment in Zabul province. One State department official referred to this area as, “one of the five or six provinces always vying for the most difficult and neglected.” Hoh had developed great misgivings about the war and had become so disillusioned that he chose to resign. Hoh wote in his resignation letter,

THE DEPROLIFERATOR -- Recent statements by its chief representative to the International Atomic Energy Agency suggest that Iran may be backing away from an agreement to ships it low-enriched nuclear fuel to Russia for further enriching. Even, though, after agreeing to the deal, President Ahmadinejad, ever the master of the sweeping gesture, said the West had "moved from confrontation to cooperation."

Among reasons to hope that Iran relents is a fact of which many who proclaim Iran has a right to a nuclear program seem ignorant. Turns out that transubstantiating the fuel used for nuclear energy into nuclear-weapon fuel, far from a miracle, is all too commonplace.

Amid the ongoing debate on escalating the war in Afghanistan come warnings of what will happen should the US not wage the war successfully.  Among these warnings are: the Taliban will re-conquer the country; al Qaeda will regain the freedom of movement and training camps it had prior to 2001; and terrorism will spread more rapidly throughout the world.  None of this is likely and that must be made clear to policy makers and the American public.   

Insurgent Forces in Crisis

Many if not most of the fighters operating against US and NATO forces are not motivated by lofty ideals, religious fervor, or geopolitics.  They are not seeking to reestablish a caliphate or even to establish an Islamist heartland in Central Asia.  They seek, paradoxically enough to westerners who see themselves as avatars of impartial development, to oust foreign forces from their country whom they believe to be trying to dominate it in alliance with northern, non-Pashtun people.  

Earlier this week, President Obama signed into law the $680 billion FY 2010 Defense Authorization Bill, the largest such budget since the end of World War II. If you missed that aspect of the story, you weren’t alone. Many news stories chose instead to focus on the hate crime provisions tacked onto the bill.

I’ve often quarreled with the inclusion of superfluous legislative riders, and the hate crime provision is more superfluous than most. (Indeed, as my Cato colleague David Rittgers has pointed out, it might be worse than superfluous.)

THE DEPROLIFERATOR -- Sometimes it seems as if neither the United States nor Russia got the message that the Cold War ended almost two decades ago. Last week I wrote about the Dooomsday Device, a back-up defense system that Russia developed in the 80s. In the aftermath of a nuclear attack, it ensures that, even if no civilian and military leaders are still around to issue the command, a retaliatory nuclear attack will still be launched. Depending on your point of view, it's either the ultimate in deterrence or the most senseless act of revenge ever.

From a MyDD diary by Joe Trippi:

What voters are ready to tell anyone who will listen is that they would like to reject both parties right now if they could. They are trying to find a way to say to both parties, "We want you to change or get out of the way." Both party establishments are in denial. Both party establishments are hard of hearing. And, both party establishments are likely to see the results on Tuesday as Karl Rove sees them - a victory of one party over another. That is the real danger in 2010 and beyond for both parties.

I've heard again and again from Democrats here in D.C. that the Republicans are too damaged by the Bush hangover to really be a threat in 2010 or 2012.

That's really the best we've got, the cold comfort of knowing no matter how shitty a job our party is doing in office, no matter how little we are delivering on our promises that the other party is even less popular and therefore our nominal power will be safe in the coming elections.

Joe Bageant has written something relevant that really pains me as a card carrying Deaniac whose movement ultimately kick-started total regime change in the U.S. only to end up with more of the same weak tea middle-of-the-road corporatist bullshit:

That's what I find disheartening about the so-called grassroots initiatives for change. They are well meaning, but nobody seems to understand that the grass is growing on the turf of a totalist corporate state, with its roots dependent upon the corporate hegemony for nourishment. If the big dogs don't continue to shit on them daily, they whither and die. The big dogs know that, and they know that the grassroots-ers are moreover powerless, and that only the local pups need worry about them at all...

Read the rest at Joe's site.

New York Times, By Tara Parker-Pope, October 26

Does running a marathon push the body further than it is meant to go?

The conventional wisdom is that distance running leads to debilitating wear and tear, especially on the joints. But that hasn’t stopped runners from flocking to starting lines in record numbers.

Last year in the United States, 425,000 marathoners crossed the finish line, an increase of 20 percent from the beginning of the decade, Running USA says. Next week about 40,000 people will take part in the New York City Marathon. Injury rates have also climbed, with some studies reporting that 90 percent of those who train for the 26.2-mile race sustain injuries in the process.