Friday, April 26, 2013

I Love Grimm, the NBC Show

I watch Grimm, the NBC show, and I just love it. It has a 'je ne sais quois' that makes me daydream and fantasize of what I really am.

All of a sudden, my friends, co-workers, and neighbors seem like they could be characters in the show. The show is international, it is creative, and it is at the border between believability and incredibility.

It merges old Europe and present day, and it makes us feel like we are in the Wizard of Oz. Everyone of us are not at all what we think we are. Awesome show!

Monday, April 22, 2013

Boston Pipe Bombings, the FBI, and Our Constitution

It was absolutely awful  and painful to see how 2 young immigrant brothers (Tamerlan  and Dzhokhar Tsarnaev)  from Chechnya managed to create and effectively deploy 2 pipe bombs at the finish line of the 2013 Boston Marathon. This has caused absolute mayhem for about 5 days in one of most influential large American cities.

3 people were killed and over 180 were injured. Only by a miracle there were just 3 deaths, given the middle-of-the-crowd placement of the home-made bombs.

The older brother was killed a few days after the attacks and the younger one was taken into custody, but not before being severely injured during apprehension.

Recent reports show that the older -Tamerlan - of the 2 brothers -who was 26- had been interviewed by the FBI a few years ago with the suspicion that he had been radicalized by Islamist groups from Russia. In spite of theses fears, the FBI apparently did nothing after the initial investigation.

We cannot rule out that the FBI bears at least some -non zero- responsibility for these actions, given that the agency knew at least about the possibility that the older brother was a potential terrorist. The FBI cannot blame budget cuts as it has received all the money they have asked for during the last 11 years (since 2011). No question about that. If it is not about the budget then it must be about their competence (or lack of it).

The younger of the 2, who is 19 -Dzhokhar-, is a naturalized American citizen.

I have heard and read comments that he should not be read his Miranda rights and I believe that this would be a grave mistake.

When he became an American citizen 'he swore allegiance to the flag and the republic for which it stands'. Meanwhile, during the naturalization ceremony, the US has also granted him rights that are bestowed on all Americans, rights that are spelled out in the Bill of Rights. The social contract we share as Americans cannot be ignored willy-nilly by the government as they see fit.

The beauty of the balance of powers in our country is that the government cannot acquire more powers from the individuals without preserving the individuals ability to defend fairly against such actions.

Even in cases such as the Boston bombings, the US government should ensure first that they have done EVERYTHING THEY COULD to avoid similar tragedies BEFORE showing to us that they have the power and the will to restrict our freedoms. Otherwise we will have a government that will show that they can react very well after the fact but this might be too late for us to obtain personal and collective security.

After all, what is the point of the government if it cannot defend us before an attack that could have been foretold?

Monday, April 1, 2013

The Stockton Bankruptcy Effect

Today, a judge declared that Stockton can file for bankruptcy protection, in spite of creditors' vehement protests.

This case brings to the forefront the fact that bankers are fiduciary and equally responsible for the borrowers' ability to pay back the borrowed money. When I owe money to a financial institution it needs to factually endorse my ability to pay the loan -they granted- back.

In Stockton's case -and over many years- bond holders have agreed to provide loans -by buying the bonds the City issued- to the City of Stockton either 1) because they were lied to about Stockton's financial state or 2) because they were expecting to get a good return, regardless of Stockton's ability to pay the money back (they thought that Stockton could just increase local taxes at will).

Certainly, creditors cannot claim reason #1 above as they would look totally incompetent. As far as for reason #2 the City has the right 'to penalize' its creditors by, perhaps, not paying them back fully.

Cities should not be able to easily have access to credit unless they develop certain/new revenue streams able to pay for the loans at the time of loan engagement. 

Creditors should not buy any municipal bonds until cities show clear ability to pay the loans back.

The Stockton bankruptcy effect dictates that the municipal interest rates will go up rather quickly, unless the Fed or Congress intervene. When municipal bond rates go up cities will first need to slow down their increasing costs (a majority of increases are retirement costs associated with their current and former employees) and the sooner that happens the less pressure we will see on new taxes.

Hopefully, the Stockton effect will encourage both creditors and cities to be more realistic in terms of expectations during the engagement and execution of financial transactions.

There is absolutely nothing wrong with some large municipal bankruptcies and we need to see a few more of these before the municipal bond rates reflect the true difficult financial realities many cities, counties, and municipalities are facing.

Markets do reign supreme, after all, and creditors cannot be kept far away from their own mistakes.

Denver (MI), Jefferson County (AL), and San Bernardino (CA) are all coming up next.