The Compulsive Explainer

Cold, Cold Heart

From the New York Review: From Amerigo Vespucci to Darryl Zanuck

Hank Williams:

I try so hard my dear to say
That you're my every dream.
Yet you're afraid each thing I do
Is just some evil scheme
Some mem'ry from your lonesome past
Keeps us so far apart.
Why can't I free your doubtful mind
And melt your cold, cold heart.

Abdolkarim Soroush

From the New York Review

Grave, soft-spoken, the exiled Iranian religious scholar Abdolkarim Soroush is a living record of the Iranian revolution. As a fanatical young supporter of Ayatollah Khomeini, he helped purge Iran's universities of leftists and secularists in the early 1980s. Later, as a founder and editor of Kiyan, a monthly journal of religion and philosophy, he upset his orthodox revolutionary colleagues by arguing that Islamic law should be viewed as a product of its time, subject to alteration as society evolves. Soroush has since denounced Iran's system of government, what he calls its "republic of faith," as harmful both to Islam and to politics, an argument that led to his expulsion from Iranian academic life in 2000 and, more recently, an extended sojourn in Europe and the United States. Until this year, driving troublemakers abroad has been a useful and politically inexpensive way for the Islamic Republic to deal with dissent. Iranian history is full of people who lost their relevance after leaving Iran. But this, so far, has not happened to Soroush.
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Soroush's open letter was addressed to the Supreme Leader, Ayatollah Khamenei, and it conveyed an ironic awareness of their respective standing as religious authorities. Although Khamenei's supporters refer to him as a grand ayatollah, the highest rank in Shiism's clerical hierarchy, he is known among leading Shia religious scholars to be an indifferent theologian. Since he became Supreme Leader on Khomeini's death in 1989, Khamenei has favored a dry, severe interpretation of Islam—the interpretation favored by the conservative constituency he has courted, and which is rejected by Soroush, who is an authority on the thirteenth-century mystic poetry of Jalaluddin Rumi.

Obama is in Bed with the Bankers

From the New York Review: They Didn't Regulate Enough and Still Don't

Practically everyone now agrees that the steep recession of the last two years was caused, at least in part, by lack of government oversight of the financial industry. The half-dozen or so federal agencies that are responsible for regulating the financial community ignored the dangerously risky activities of bankers and traders; so did the Federal Reserve and the US Treasury.
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President Obama promised soon after taking office to reregulate the financial markets in a comprehensive regulatory bill. The administration released its proposals on June 14 in "Financial Regulatory Reform: A New Foundation," a lengthy white paper—not extensively covered by the press—that was overseen by Treasury Secretary Timothy Geithner and Lawrence Summers, the director of the National Economic Council, who served as Treasury secretary during the Clinton administration.^[2] Rarely has an administration had a better opportunity to explore deeply how modern financial markets work and have evolved, and how readily they can be abused.

On balance, the white paper, though it contains several worthy ideas, was disappointing. Offering little more than a wide-ranging summary of existing regulatory proposals, it did not attempt to analyze why the crisis occurred or was so intense; nor did it identify in any detail the rules or regulations that were lacking that might have prevented the crisis. The President, in a mid-September speech on Wall Street, exhorted the financial community to support reform, but essentially reiterated last June's proposals.
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Banks and mortgage brokers that issued mortgages to home buyers were able to sell them immediately to investment banks and thus were less concerned about the creditworthiness of the borrowers than they traditionally had been. They profited from the mortgages regardless of whether they later went into default. This was possible because the investment banks then packaged these mortgages into complex securities with differing interest rates to make them highly attractive investments to a variety of pension funds, mutual funds, international investors, and even subsidiaries of their own banks. Money market funds, which promised almost riskless investments and catered especially to small investors, lent money to these investment banks and others at low rates, locking themselves into loans that were riskier than they realized. Low interest rates promulgated by the Federal Reserve in the early 2000s to stave off a recession also encouraged more lending.
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What is clear, however, is that the Obama administration has lost leadership of the issue of reforming Wall Street.

In fact, much of Wall Street has already returned to the aggressive practices that were widespread before the crisis, including high levels of compensation and the creation and trading of risky derivative contracts. And profits of financial firms, such as Goldman Sachs and JPMorgan Chase, often based on the same sorts of trading as in the past, are for the moment rebounding.
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This entire article is interesting reading, and educational too. We had hoped Obama would save America - the whole world hoped that - but this is not to be.

The NSA Boondoggle

New York Review: Who's in Big Brother's Database?

I worked for a big boondoggle myself for 15 years: the Federal Aviation Agency, back in the Sixties and Seventies. The last time I visited DC, I saw the huge FAA offices just south of the Smithsonian. I looked at them and said to myself "I know what is going on there: nothing!" But the FAA was a paragon of efficiency compared to the National Security Agency (NSA).

NSA has had some outstanding successes:

Unfortunately for General Douglas MacArthur, the codebreakers were able to read the communications of Spain's ambassador to Tokyo and other diplomats, who noted that in their discussions with the general, he made clear his secret hope for all-out war with China and Russia, including the use of nuclear weapons if necessary. In a rare instance of secret NSA intercepts playing a major part in US politics, once the messages were shown to President Truman, MacArthur's career abruptly ended.

But it also deceived the rest of the government on several occasions. For example, in Vietnam:

The most troubling pattern, however, is that the NSA, through gross incompetence, bad intelligence, or deliberate deception through the selective release of information, has helped to push the US into tragic wars. A prime example took place in 1964 when the Johnson administration claimed that two US Navy destroyers in the Gulf of Tonkin, one on an eavesdropping mission for the NSA, were twice attacked by North Vietnamese torpedo boats. Those attacks were then used to justify the escalation of American involvement in the Vietnam War. But Aid cites a top-secret NSA analysis of the incident, completed in 2000, which concluded that the second attack, the one used to justify the war, never took place. Instead, NSA officials deliberately withheld 90 percent of the intelligence on the attacks and told the White House only what it wanted to hear. According to the analysis, only intelligence "that supported the claim that the communists had attacked the two destroyers was given to administration officials."

And in Iraq:

Not having learned its lesson, in the lead-up to the war in Iraq the NSA again told the administration only what it wanted to hear, despite the clearly ambiguous nature of the evidence. For years beforehand, the agency's coverage of Iraq was disastrous. In the late 1990s, the Iraqis began shifting much of their high-level military communications from radio to buried fiber optic networks, and at the same time, Saddam Hussein banned the use of cell phones. That left only occasional low-level troop communications. According to a later review, Aid writes, NSA had "virtually no useful signals intelligence on a target that was one of the United States' top intelligence priorities." And the little intelligence it did have pointed away from Iraq possessing weapons of mass destruction. "We looked long and hard for any signs," said one retired NSA official. "We just never found a 'smoking gun' that Saddam was trying to build nukes or anything else." That, however, did not prevent the NSA director, Lieutenant Gen. Michael V. Hayden, from stamping his approval on the CIA's 2002 National Intelligence Estimate arguing that Iraq's WMDs posed a grave danger, which helped prepare the way for the devastating war.

And in 9/11:

Based on the NSA's history of often being on the wrong end of a surprise and a tendency to mistakenly get the country into, rather than out of, wars, it seems to have a rather disastrous cost-benefit ratio. Were it a corporation, it would likely have gone belly-up years ago. The September 11 attacks are a case in point. For more than a year and a half the NSA was eavesdropping on two of the lead hijackers, knowing they had been sent by bin Laden, while they were in the US preparing for the attacks. The terrorists even chose as their command center a motel in Laurel, Maryland, almost within eyesight of the director's office. Yet the agency never once sought an easy-to-obtain FISA warrant to pinpoint their locations, or even informed the CIA or FBI of their presence.

But worst of all, because of widespread use of advanced encryption by the major powers, NSA has switched to spying on us:

On a remote edge of Utah's dry and arid high desert, where temperatures often zoom past 100 degrees, hard-hatted construction workers with top-secret clearances are preparing to build what may become America's equivalent of Jorge Luis Borges's "Library of Babel," a place where the collection of information is both infinite and at the same time monstrous, where the entire world's knowledge is stored, but not a single word is understood. At a million square feet, the mammoth $2 billion structure will be one-third larger than the US Capitol and will use the same amount of energy as every house in Salt Lake City combined.