8th Conviction in Muni-Bond Scandal

And the hits just keep on coming:

Nov 30 (Reuters) - A former JPMorgan Chase & Co. (JPM.N) vice president, James Hertz, has pleaded guilty to bid rigging and fraud in investment contracts for municipal monies.

The Justice Department said that Hertz pleaded guilty to one count of wire fraud, and agreed to cooperate with its investigation into accusations that companies decided in advance which investment house would win the auctions of guaranteed investment contracts, which cities and counties buy with the proceeds from municipal bond sales.

Often, there is a delay between when bonds are floated and when the money is actually paid out, allowing some time to invest it.

Considering the key role Chase played in the whole muni-bond scandal this isn't much of a surprise.

Will Spain be Bailed Out?

With Ireland the latest to fall victim to its own excesses all eyes now turn to the Iberian penisulla as Portugal and especially Spain begin to face the music:

If the markets are neither persuaded by the Irish bail-out nor reassured that Dublin will push through its budget, they seem almost as fretful about the Iberian countries. After Greece in May and Ireland this month, Portugal is clearly next in line. This week a general strike was called against budget austerity. Yet the Socialist-led government of José Sócrates has no alternative. Portugal’s banks may be healthier than Ireland’s, but the country is mired in slow growth and a large budget deficit. In the markets’ current mood, a bail-out similar to Ireland’s seems almost inevitable.

The real concern now is not Portugal but Spain. The Spanish economy is much bigger than those of Greece, Ireland and Portugal combined. The government’s financing requirement next year, though comparable as a share of GDP, similarly dwarfs those of Greece, Ireland and Portugal taken together (see chart 2). It is a Spanish mantra, requiring a mere change of name of euro-area countries, to insist that Spain is different. “We’re not Greece!” has become “We’re not Ireland!”, and will shortly become “We’re not Portugal!”

In all three cases the Spanish are correct, though that is not always a comfort. To start with, a bail-out of Spain would be on a different scale. When the €750 billion European Financial Stability Facility was designed in May, few people thought that it would be needed to cope with Spain as well as the other three weak euro-area countries. And there seemed little likelihood that it would have to.

On the bright side Spain has a debt of 53% of its GDP which puts its relative fiscal shape better then many others.

Happy Thanksgiving!

Carrier Heads to Korea

In response to yesterdays deadly attack the USA has decided to strengthen our position in the region and bolster our South Korean allies:

WASHINGTON — President Obama and South Korea’s president agreed Tuesday night to hold joint military exercises as a first response to North Korea’s deadly shelling of a South Korean military installation, as both countries struggled for the second time this year to keep a North Korean provocation from escalating into war. The exercise will include sending the aircraft carrier George Washington and a number of accompanying ships into the region, both to deter further attacks by the North and to signal to China that unless it reins in its unruly ally it will see an even larger American presence in the vicinity.

Considering Korea is a peninsula, this is probably the best option for now.

Images of the Washington:



This is an old news clip!

Korean Conflict Brewing

Just freaking great, this would be the second time in a year that North Korea launched attacks that killed people, add that to the unveiling of a massive nuclear complex and we have the makings of a full scale clusterfark:

SEOUL, South Korea — North and South Korea exchanged artillery fire on Tuesday after dozens of shells fired from the North struck a South Korean island near the countries’ disputed maritime border, South Korean military officials said. South Korean artillery batteries returned fire with about 80 rounds, the military went to “crisis status,” and fighter planes were put on alert.

Two South Korean soldiers were killed and 14 were injured, four of them seriously, said Kiyheon Kwon, an official at the Defense Ministry in Seoul. He said military personnel were checking on civilian casualties as night was falling.News reports said dozens of houses were on fire, and TV footage showed large plumes of black smoke spiraling from the island.

South Korean artillery units returned fire after the North’s shells struck South Korea’s Yeonpyeong Island at 2:34 p.m., said Mr. Kwon, an official at the Defense Ministry. The North also fired numerous rounds into the Yellow Sea, he said.

A spokesman for President Lee Myung-bak said Mr. Lee gathered his security-related ministers and senior aides at a crisis meeting in the underground situation room at the Blue House, the presidential office and residence.

“We will not in any way tolerate this,” Mr. Lee’s chief spokesman, Hong Sang-pyo, said after the meeting. “Any further provocation will get an immediate and strong response and the South Korean military will strongly retaliate if there is anything further.”

Of course North Korea is simply going from bad to worse.

CDR Hit to be Hit With Further Charges

And the hits just keep on coming!

The U.S. Justice Department’s antitrust division plans to file more charges next month against a Los Angeles-based financial adviser accused of rigging bids on municipal-bond investment contracts, a government lawyer said.

The federal government expects to charge CDR Financial Products with depriving states and local governments of its so- called honest services and with defrauding the U.S. Internal Revenue Service, Rebecca Meiklejohn, a Justice Department antitrust lawyer, said today during a hearing in a Manhattan federal court. The government may bring the fresh indictment as soon as Dec. 10, she said.

Last year, prosecutors charged CDR, its founder and two other executives with conspiring to rig bidding on contracts with local governments to invest the proceeds of bond issues. The indictment claimed that CDR and its employees, who handled the bidding, chose winners in exchange for kickbacks. Taxpayers lost because the money was invested at below-market rates, the government says. The company and the three executives deny the charges.The U.S. Supreme Court this year narrowed the honest services fraud statute to cover only bribery and kickbacks.

Defense lawyers said that the Justice Department informed them before the first indictments that it didn’t plan to file honest-services charges.

Michael McGovern, the attorney for CDR has complained that throwing on even more charges after the first batch was "inexplicable". More likely the case is so vast and involves so many deals that the initial batch was just the tip of the ice berg.

Muni-Debt Roils Market

Considering how much debt is out there and the warning signs that have risen to the surface, is this a surprise? Muni-Debt Roils Market

Has the reckoning arrived for municipal bonds? That is the question investors are asking after munis — those old faithfuls of investing — took their biggest hit since the financial collapse of 2008.

Concern over the increasingly strained finances of states and cities and a growing backlog of new bonds for sale overwhelmed the market last week. After performing so well for so long, munis and funds that invest in them fell hard. One big muni fund, the Pimco Municipal Income Fund II, for instance, lost 7.5 percent. The fund is still up 6.75 percent so far this year.

While the declines were relatively small given the remarkable gains in these bonds over the last two years, the slump was swift enough to leave investors wondering if this was a brief setback or the start of something worse. For months, some on Wall Street have warned that indebted states and cities might face a crisis akin to the one that brought Greece to its knees.

“I think it’s too early to say that it’s more than a correction,” said Richard A. Ciccarone, the chief research officer of McDonnell Investment Management.“The facts just don’t support a serious conclusion that the whole market’s going downhill,” he said. “They could. We’ve got some serious liabilities out there.”

Historically speaking Munis were safe and boring providing a safe haven for investors. Today so many cities and states are in such dire fiscal shape that bankruptcy is an actual possibility. Take California, next years debt is expected at 25 billion and with no more bailout money coming where in Gods name are they going to come up with the money. Tax increases will be squeezing water from a stone and the Democrat machine that propelled Brown to victory will not countenance serious cuts. Of course there are the other basket cases such as Jefferson county where corruption led them to the cusp of bankruptcy last year and is struggling to get by.

One Veteran Story

Abu

I did a tour there, (my only one) in 2005. One of the issues that truly infuriates me is the media and the left's love affair with the abuse scandal. Understand I am glad the soldiers who committed the abuse were jailed, I read the Taguba report the and the breakdown from top to bottom with this missions was a disgrace. But this is what it was like when I was there:

• Detainees received health care including free glasses and dental work.
• They received three meals a day, cooked and with plenty to spare.
• They were able to have family visitation while in the prison.
• They were able to lodge formal complaints.
• The Tents were air conditioned and heated to deal with the weather.
• For all intensive purposes they were left alone. People do not understand that in the big camps the detainees essentially loved among themselves with only marginal dealings with US Soldiers.
• On election day in regards to ratifying their new Constitution they were all entitled to vote.
• Phones were being installed when I left so detainees could call home.
• They were provided with radios so they could listen to talk shows and music. The talk shows often included "shout outs" from their families who would call in.
• When released they were given fresh cloths and some petty cash as well as a free ride back to what part of the country they were from.
• Absolute religious freedom to the point that we would lend our Bull Horns to the detainees so they could do the call to prayer for the whole camp to see.

Should all of this been done in the first place? Absolutely, my complaint is the failure to underplay the reforms and success that occurred in detainee operations after the initial failure. By the way after the scandal the prison inside the compound was turned over to Iraqi control, we called this the "hard site". For us the prison was built on whole compound and was comprised of tents, towers, fences, concertina wire, and blast walls. All of this surrounded by Massive wall to keep detainees in and insurgents out.

By SAM DAGHER

Published: February 20, 2009

BAGHDAD — The Iraqi government has renamed and partly renovated the infamous Abu Ghraib prison on the outskirts of Baghdad, and it plans to transfer about 3,000 convicts there shortly, the first to occupy the facility in any numbers since it was handed over by the Americans in 2006.

The government says it sorely needs Abu Ghraib — now Baghdad Central Prison — and other detention centers around the country being refurbished with American money because of overcrowding at prisons and continued threats to security, said Safaa el-Deen al-Safi, who was the acting justice minister for almost two years, until Thursday.

And why are they keeping it open:

But the Iraqi government is determined to operate it as a prison. “It’s not so easy for us to waste a state resource,” said Mr. Safi, who is also minister of state for parliamentary affairs and a confidant of Prime Minister Nuri Kamal al-Maliki. “Yes, this prison has a bad reputation, but this is not an excuse in itself to demolish this prison, given that we need it.”

Mr. Safi said that renaming Abu Ghraib as the Baghdad Central Prison and changing its mission to rehabilitation would help remove some of the stigma.

Mr. Safi said that he personally oversaw the renovation of the cellblocks where the worst of the abuses were committed by American soldiers and contractors, and that the prison now had classrooms, a library, plots of land for gardening and hothouse farming, and workshops where inmates would be taught sewing, hairdressing and computer skills.

On one issue I agree, justice delayed is justice denied and a speedier justice system and quicker transfer of detainees to Iraqi jurisdiction or release should be a must.

BOA Facing Significant Financial Issues

Dangerous news and considering their role in the muni-bond scandal investigation a potentially complicating factor: BOA Facing Significant Financial Issues

Now the bank may be on the verge of trouble again. Its stock has fallen 41 percent since April 15. Mortgage-bond investors are demanding untold billions of dollars in refunds. The foreclosure fiasco is metastasizing. A member of the Troubled Asset Relief Program’s oversight panel, AFL-CIO attorney Damon Silvers, openly worried at a hearing last week about the risk that Bank of America might need another bailout.

A few more months like the last one, and we may be wishing Bank of America had never returned its $45 billion of TARP money.You wouldn’t know there’s anything wrong with Bank of America by an initial look at its balance sheet. The company showed common shareholder equity, or book value, of $212.4 billion as of Sept. 30. And its regulatory capital ratios have risen steadily throughout the year.

Tipping Point

Judging by its shrinking stock price, though, investors are acting as if Bank of America is near a tipping point. Its market capitalization stands at $115.6 billion, or 54 percent of book value. That’s the second-lowest price-to-book ratio among the 24 companies in the KBW Bank Index, and well below the 76 percent ratio the company was at in October 2008 when it landed its first round of TARP dough. Put another way, the market is saying there’s a $96.8 billion hole in Bank of America’s balance sheet.

Will this ever end?

Helping Children in Iraq

U.S. Army Sgt. Jonathan Wilhite, an infantryman with Company A, 3rd Battalion, 69th Armor Regiment, 1st Advise and Assist Brigade, 3rd Infantry Division, United States Division – Center, and a Tupelo, Miss., native, jokes with Iraqi children during a medical engagement hosted by the Iraqi Army with the support of his unit at the North Halabsah School northwest of Baghdad, Oct. 10, 2010. (Photo by Sgt. M. Katzenberger).

And they just keep on trucking:

BAGHDAD (Nov. 2, 2010) —School is out for the day at the North Halabsah School northwest of the Iraqi capital. On a typical day, when let out of school, the students wander off to their homes—scattered throughout endless acres of farmland miles from city centers and marketplaces—but Oct. 10, the students instead joined their parents at the school, along with other adults from the community, to receive basic medical examinations, medicine and school supplies from Iraqi Army Soldiers with 2nd Battalion, 37th Brigade, 9th IA Division.

The combined medical engagement, conducted in collaboration with Company A, 3rd Battalion, 69th Armor Regiment, 1st Advise and Assist Brigade, 3rd Infantry Division, United States Division – Center, was organized by the IA to support its continuing efforts to build trust with the Iraqi people in the North Halabsah area—people who, due to the rural location in which they live and work, have very little regular interaction with the Iraqi Security Forces.

One of four medics and two doctors to provide care to the people was Cpl. Ahmed Ayad, a medic with 2nd Bn., 37th Bde, 9th IA Div.Ayad said participating in the humanitarian aid mission—which provided medical assistance to more than 70 men, women and children—made him feel good, and that the mission was beneficial to his unit.

“I’m trying to help the population [and] that gives them a good impression about the military, especially for the kids,” he said. “Giving them [school supplies] and medical supplies reflects [well] on the military.”

The medical engagement at the North Halabsah School was different from similar missions that had been previously conducted, in that the IA assumed full responsibility for the operation. The location was secured by the IA and the mission was facilitated solely by IA Soldiers and leaders, with the exception of the U.S. Army providing the services of a female physician assistant, Capt. Anna Chavez, and two female medics, Spc. Rebecca Nadine Slagle and Spc. Jessica Chandler, all with 3rd Brigade Support Battalion, 1st AAB, 3rd Inf. Div.

Good Work.

Flights From Paris to Baghdad Resume

Little things can signify big shifts:

French carrier Aigle Azur says it will begin flying between Paris and Baghdad this fall, The Associated Press reports. The airline says the flights will mark the first regularly scheduled commercial service between the cities in nearly 20 years.

A spokeswoman for the airline tells AFP that Aigle Azul's inaugural flight -- set for Oct. 30 -- will cater to business leaders. Then, the spokeswoman says, "in a few weeks, the regular program will be launched." The carrier plans two flights a week out of Paris' Charles de Gaulle Airport.

Bloomberg News says Aigle Azur is "the oldest private airline in France," flying "to about 30 destination" in France, Algeria, Madeira, Mali, Morocco, Portugal and Tunisia. Bloomberg adds Aigle Azur "has a fleet of 11 Airbus A319, A320 and A321 aircraft."AFP writes "Aigle Azur said it was negotiating a deal to take Air France passengers arriving in Paris on to Baghdad, allowing Air France to sell indirect flights to Iraq for the first time since 1990" when flights ended at the start of the Gulf War.

Good.

Altschuler Takes Lead in NY-1

Good news, and lets hope this is an add to the win column:

(Politico)I'll post more on this when I have it, but two sources who are familiar with the recanvassing of the voting machines in NY-1 tell me that GOPer Randy Altschuler, who'd been down several thousand votes to Democratic Rep. Tim Bishop is now up between 300 and 400 with the recanvass completed.There's over 9,000 absentee ballots to be counted starting next week, but the Republican had been down by 3,400.

UPDATE: Altschuler spokesman Rob Ryan says the number is 392 and that it was the number their campaign lawyer received from the Board of Elections.I haven't heard back yet from the BoE or Bishop's camp.

*CORRECTED from earlier. Thanks.

A bit more: Apparently Altschuler's team asked to have the machine votes impounded this morning. One veteran Long Island watcher writes in that the machines weren't expected to be recanvassed until next week.

UPDATEx2: Reid Epstein reached former Bishop aide and Brookhaven Democratic committee member Jon Schneider, who's still close to the congressman, who confirmed the incumbent is now down 392 votes.

By the way the Democrat (Tim Bishop) is complaining about the voting machines, always a good sign.

Tight House Race Looks Like it Will End in GOP Win

7 votes, whoa!

SAN ANTONIO (AP) — Longtime Democratic U.S. Rep. Solomon Ortiz picked up seven votes after a bag of previously uncounted ballots was found in his South Texas district, but still trails Republican Blake Farenthold by 792.The 73-year-old Ortiz has refused to concede a House seat he's held for nearly three decades. He's mulling a recount.

Seven ballots, all marked for Ortiz, were found in Nueces County and certified at the county courthouse in Corpus Christi. Ortiz says the new votes Thursday are proof the race remains too close to call.

Smells like desperation, I don't believe he will pull this one out.

Nuff Said

Go Vote.

Tomorrow

I know I have been a bit slow on the posting, but its busy busy busy in the Verdi home. Anyway tomorrow is the day and barring some really crazy development (Remember Clinton in New Hampshire, 2008 version that is ) the GOP should make major gains. If you are interested in a truly in depth analysis of the day, go to Nate Silver's post about tomorrow, its quite in depth. As for me I am going to vote and thats that. I might stay up till 10 to check results but I am certainly not staying up to late. The dust will not be settled till the next day and in numerous cases not even the. Just go vote.