High Court Ruling Will Provoke States to Nullify ObamaCare

High Court Ruling Will Provoke States to Nullify ObamaCare

Written by  Raven Clabough

Despite Thursday’s controversial Supreme Court ruling on ObamaCare, states retain the right and authority to nullify the healthcare law, and the state of Missouri, among many others, is undertaking efforts to do just that. According to Missouri legislators, regardless of the High Court's ruling, Missouri voters will maintain the opportunity to vote for or against the so-called Affordable Healthcare Act in November. And Missouri is not the only state seeking to circumvent ObamaCare.



November’s vote will be the second time in two years that Missourians have voted regarding Obama's signature legislation. CBS News explains:

In August 2010, Missouri became the first state to officially snub the new federal law through a referendum when 71 percent of voters approved a proposition barring the government from requiring people to have health insurance. The Missouri law set up a direct conflict with a federal provision requiring most people to have health insurance by 2014 or face penalties.

November’s vote would focus on the healthcare law provision that requires states to create a health insurance exchange by 2014. The ballot measure would prohibit Missouri’s governor or any other official from taking steps to establish the exchange without the expressed consent of the people through vote or through a state law.
In a similar expression of opposition, Louisiana Governor Bobby Jindal has already declared that he will not establish a healthcare exchange in his state.
"We're not going to start implementing Obamacare," Jindal said during a conference call with Virginia Gov. Bob McDonnell. "We're committed to working to elect Governor Romney to repeal Obamacare."
Yahoo News reports, “Several Republican governors, including both Jindal and McDonnell, have put off setting up the exchanges in the hope that the law will be repealed or struck down by the Court.” Now that the court has issued a ruling in favor of the healthcare law, however, Jindal continues to contend that he will not be complying with the law.
"Here in Louisiana we have not applied for the grants, we have not accepted many of these dollars, we're not implementing the exchanges," Jindal said. "We don't think it makes any sense to implement Obamacare in Louisiana. We're going to do what we can to fight it."
McDonnell was not quite as adamant on the conference call, asserting that his administration will have to determine the approach that would be best for Virginians. He did add, however, “But I agree absolutely that the priority right now is to elect a new president and a new Senate so this law can be repealed."
Options remain for Republican lawmakers following the Supreme Court ruling. In his opinion for the majority, Chief Justice Roberts wrote:

The Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command. The Federal Government does have the power to impose a tax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax.

Since Chief Justice John Roberts called the individual mandate that is so integral to the healthcare law a “tax,” Republicans are now afforded the option of using a procedure known as “budget reconciliation” to formulate a repeal bill that requires just a simple majority to pass.
States may also fall in line with Louisiana and Missouri and nullify ObamaCare. In the 1798 Kentucky Resolutions, Thomas Jefferson wrote, “Whensoever the general government assumes undelegated powers … a nullification of the act is the rightful remedy.”
The Tenth Amendment Center indicates that the states have a number of methods by which they may nullify a law, including through state law, a statement amendment, or a voters' referendum.
The Nullification Project notes:
After today’s Supreme Court ruling on "Obamacare," it remains clear that the people cannot rely on the high court to uphold the principles enshrined in the Constitution. In such cases, the Founders, particularly Thomas Jefferson, have provided We the People and the States, a final check on the power of the three branches of the federal government: Nullification.”
A growing number of Americans have become aware of this option and are coordinating efforts to encourage their state officials to nullify ObamaCare. The Nullification Project is in fact intended to raise funds to deliver a copy of the book Nullification: How to Resist Federal Tyranny in the 21st Century, written by Thomas E. Woods, Jr.,  to each of the 50 governors. Project officials say, “It is our hope that the book will inspire them to continue the fight against government overreach — from every branch.”
Likewise, Senator Jim DeMint (R-S.C.) is encouraging states to nullify the healthcare law by refusing to implement it. He stated in a press release,

This government takeover of health care remains as destructive, unsustainable, and unconstitutional as it was the day it was passed, unread, by a since-fired congressional majority. Now as then, our first step toward real health care reform and economic renewal remains Obamacare’s full repeal, down to the last letter and punctuation mark.

I urge every governor to stop implementing the health care exchanges that would help implement the harmful effects of this misguided law. Americans have loudly rejected this federal takeover of health care, and governors should join with the people and reject its implementation.

State nullification proved successful in defeating the Real ID legislation passed under George W. Bush. Led by Maine in 2007, half the states in the country passed resolutions and laws refusing to implement Real IDs, citing funding and privacy concerns.
And states should not fear the consequences of nullification. As per Thursday’s Supreme Court ruling, Congress is not permitted to penalize states that refuse to implement ObamaCare. In the majority decision, Chief Justice Roberts stated, “What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding."
However, he added, “Nothing in our opinion precludes Congress from offering funds under the [law] to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use.”
Meanwhile, Tenth Amendment Center communications director Mike Maharrey contends that states that utilize nullification to reject ObamaCare are simply responding to a rebellious federal government that refuses to act within its constitutional limits:

Who is really behaving lawlessly here? A federal government that refuses to operate within its delegated powers, and rips authority away from the states and the people? Or the states, working through legitimate democratic processes, saying, "No! We don’t accept this"? I would argue it’s the federal government that’s in rebellion, and it’s time for the states to put a check on illegitimate federal power.

Lawmakers Compromise Over Transportation, Student Loans Bill

Lawmakers Compromise Over Transportation, Student Loans Bill

Written by  Brian Koenig

Battling over a transportation bill that now also addresses student-loan interest rates, congressional lawmakers are scrambling to appease their constituents in a legislative boondoggle littered with election-year politics. Aimed for final passage this week, the legislation would — among a slew of other provisions — extend federal highway funding, prevent new student-loan interest rates from doubling, and renew and revise federal flood insurance.



If Congress does not reach a decision by Saturday, the federal government’s ability to administer road, mass transit, and other transportation-related programs will be vanquished, along with its authority to impose the gasoline taxes that subsidize most of those programs.
Congressional leaders in both the House and Senate reached a deal Wednesday on the transportation and student loan provisions of the legislation, deciding that combining them into one bill will help expedite the legislative process. In terms of the highway portion of the bill, Republicans folded on a provision that would force federal approval of the Keystone XL oil pipeline, and another that would prohibit the government from imposing regulations on toxic ash emitted by coal-fired power plants.
Meanwhile, Democrats offered a compromise that would grant states the authority to opt out of spending funds on nonroad-related projects, such as bike and pedestrian paths. House Speaker John Boehner (R-Ohio) said Wednesday morning that “it is clear that there are significant reforms in this bill, which will reduce the number of programs funded out of the highway bill, streamline the regulatory process and allow us to focus our highway dollars on fixing America’s highways, not planting more flowers around the country.”
Naturally, the sensitive subject of government-subsidized student loans — an especially tense discussion during a down economy — has prompted lawmakers on both sides of the aisle to advocate a measure to prevent interest on Stafford loans from doubling to 6.8 percent. To curtail rising government costs, the increase was approved five years ago, but few lawmakers are willing to risk losing November votes from the 7.4 million students — along with their parents — who are projected to receive loans during the next 12 months.
To pay for the $6-billion price tag, lawmakers are proposing a raise in premiums for federal pension insurance and a six-year cap for loans on part-time students attending four-year schools. “Sen. [Harry] Reid and I have an understanding that we think will be acceptable to the House. That may or may not be coupled with the highway proposal over in the House,” said Senate Republican Leader Mitch McConnell (R-Ky.).
The student-loan interest debacle has even lured in President Obama and presidential candidate Mitt Romney. The President has been canvassing across states accusing Republicans of stalling the vote. However, while some GOP lawmakers have rejected the rate freeze, Romney and many GOP congressional leaders have hailed it.
"We’re pleased that the Senate has reached a deal to keep rates low and continue offering hard-working students a fair shot at an affordable education," the White House affirmed in a statement this week. "We hope that Congress will complete the legislative process and send a bill to the president as soon as possible."
In the end, though, the question lies with the efficacy of federal-subsidized student loans and whether the federal government even has the constitutional authority to grant them. The fact is government subsidization in education wasn’t always the norm, and according to many economists, Stafford loans have only exacerbated the progressive rise in higher-education costs, as they curb the pricing power of consumerism.
"Just think of all this willingness to want to help every student get a college education," asserts Rep. Ron Paul (R-Texas), who graduated from Gettysburg College in Pennsylvania, a school with an annual tuition cost now exceeding $42,000 a year. "I went to school when we had none of those. I could work my way through college and medical school because it wasn't so expensive."
Economist Thomas Woods, a senior fellow of the Ludwig von Mises Institute, explains in his book Rollback that such government interference is unconstitutional, and that the root of the problem lies with student loans subsidized by the federal government:

Of course, it is the subsidies themselves that push tuition costs ever higher. Here’s the obvious point everyone pretends not to realize: colleges know the students have access to low-interest loans courtesy of government. Aware that prospective students enjoy artificially increased purchasing power, college administrations raise tuition (and cut back their own aid programs) accordingly. When tuition thus continues to rise, as any fool could predict, we hear huzzahs for the government — for however could students pay this high tuition without government assistance? It is the classic case, as Harry Browne said, of the government breaking your leg, handing you a crutch, and saying, “See?  Without me you couldn’t walk.”

Of course, considering the November elections are only months away, the big picture is not readily acknowledged by most lawmakers, including the two presidential candidates. As usual, political expediency triumphs over statesmanship. Consequently, the legislation now toiling in Congress is being propagated as a bill that will safeguard public-sector jobs and keep interest rates low for students pursuing higher education.
In effect, both parties have compromised on the bill, and neither side is fully content with the result. But election-year politics have seemingly trumped any motivation to remain poised on some of the more polarizing issues of the day.

 ^{Photo: Capitol Building in Washington DC via Shutterstock}

Supreme Court Ruling on ObamaCare to Boost Insurance Premiums

Supreme Court Ruling on ObamaCare to Boost Insurance Premiums

Written by  Brian Koenig

Now that the Supreme Court has delivered its final verdict on ObamaCare, which upheld the law’s contentious individual mandate, insurance providers and industry groups are warning of even greater premium increases on Americans’ health plans. While President Obama touted the law as a cost-savior for the healthcare industry — going so far as to call it the “Affordable Care Act” — insurance premiums have consistently risen ever since the law was enacted.



America’s Health Insurance Plans (AHIP), the industry’s chief lobbying group, issued a statement following the ruling, stressing the importance of “secure, affordable coverage choices,” but saying that “major provisions, such as the premium tax, will have unintended consequences of raising costs and disrupting coverage unless they are addressed.” AHIP CEO Karen Ignagni suggested that due to the inflated costs, “it’s time for people to roll up their sleeves and look very carefully at those provisions.”
Proponents of the law claim ObamaCare will eventually lead to a sharp reduction in insurance premiums because there will be an overall larger pool of insured Americans. FamiliesUSA, an advocacy group for the healthcare industry, called the Supreme Court’s ruling a “clear, unambiguous and complete victory for long-overdue health care reform.”
The group added that the law’s new regulations on insurance providers will also help consumers. "No one will be denied health coverage or charged a discriminatory premium due to a pre-existing condition, such as children with asthma or diabetes,” it said in a press release. “People with major health problems, like those in car accidents, will be protected against arbitrary lifetime or annual limits in how much insurance companies will pay for needed care.”
"The premiums paid for family health care rise by more than a thousand dollars simply to pay for the costs that have not been paid by the uninsured," FamilyUSA’s executive director Ron Pollack echoed in an interview with Fox News. "So as those people get coverage, our premiums will go down."
AHIP counters those claims, citing a study by the Urban Institute that shows premiums for single policy holders, aged 18 to 34, will boost by $1,400, from $3,600 to $5,000 a year.
According to a September 2011 study by the Kaiser Family Foundation, a nonprofit research group, annual premiums for employer-sponsored family health coverage spiked to more than $15,000 last year, up a sizable nine percent from the previous year. The premium increase inflated much more quickly than employee wages (2.1 percent) and general inflation (3.2 percent).
Commenting on the analysis, president of the Health Research & Education Trust — which helped administer the study — Maulik Joshi said provisions in the law that will be implemented in the future could add to these costs, as he averred, "survey findings related to the impact of early provisions in health reform provide valuable insight for employers, providers, consumers, and policymakers as they prepare for additional provisions to take effect by 2014."
Further, AETNA, the country’s fourth largest insurance provider, disclosed that its health plans increased from one to two percent. “While rate increases are never easy, our rates are based on actuarially sound data and reasonable projection of future cost, which will impact approximately 16,000 customers,” the company affirmed in a recent statement. “Our Medical Loss Ratio is at 86.7%, which is higher than any of the filed rates by our competitors. Medical loss ratio is the percentage of health insurance premiums that insurers use to provide health care to their customers.”
Also disconcerting is the potential for Americans to drop or lose benefits through their employer-sponsored health plans. Fox Business explains why:

An estimated 134 million Americans with full-time employment have health coverage through their companies. But about two-thirds of those firms could decide that, under Obamacare, their premiums are too expensive, according to a study by insurance broker Willis Group. Kevin McCarty, Florida insurance commissioner and president of the National Association of Insurance Commissioners, is among those who are "concerned about the potential for increased health insurance premiums and continued disruption to the stability of the marketplace" as a result of the ACA.

For companies that want to drop their own health insurance plans, the ACA offers an easy out: Pay a $2,000 penalty per employee. That's far less than the $10,000 average cost of a health care plan. And that's particularly true if you are a low-income or part-time worker at a company like McDonald's or Walmart that doesn't need to offer a Cadillac health plan to keep employees.

Reporting on the Kaiser study back in September, The New American explained that many employers are transitioning their workers to less comprehensive plans with higher out-of-pocket costs (higher co-pays, deductibles, and co-insurance) to curb rising premiums. As a result, 31 percent of insured employees in 2011 had at least a $1,000 deductible, up from 27 percent in 2010 — which many critics are attributing to the president’s healthcare overhaul.
"Without any real national discussion or debate, there’s a quiet revolution going on in what we call health insurance in this country," says Drew Altman, president and CEO of the Kaiser Foundation. "Health insurance is becoming less and less comprehensive … And we expect that trend to continue."
^{Photo: Senior couple shocked by the high cost of their medical bills via Shutterstock}

Wealthy Conservatives Working to Unseat Obama, Take Back Senate

Wealthy Conservatives Working to Unseat Obama, Take Back Senate

Written by  Bob Adelmann

Las Vegas casino magnate Sheldon Adelson announced his intention on Friday to give $10 million to political action committees controlled by Charles and David Koch who in turn are themselves giving substantial sums to unseat President Obama and turn control of the Senate back to the Republican Party.
Earlier this year, Adelson, the CEO of the Las Vegas Sands Corporation which owns and operates the Venetian Resort Hotel Casino and the Sands Expo and Convention Center, and who is reputedly worth $25 billion, attended a Koch brothers-sponsored gathering of super-wealthy conservatives in Palm Springs, and after listening to the action plans and strategies to influence the November elections, decided to support their

efforts.
Adelson’s intentions are to give upwards of $100 million in support of conservative causes. He explained:

What scares me is the continuation of the socialist-style economy we’ve been experiencing for almost four years. That scares me because the redistribution of wealth is the path to more socialism, and to more of the government controlling people’s lives. What scares me is the lack of accountability that people would prefer to experience, just let the government take care of everything.

This is music to the ears of the Koch brothers, who have been providing support for conservative causes for years, starting with their father’s establishment of the Fred C. and Mary R. Koch Foundation in 1953. The senior Koch was an early member of The John Birch Society and noted in a speech in 1963 his concern about “a takeover” of the United States government by communists who would “infiltrate the highest offices of government in the U.S. until the president is a Communist, unknown to the rest of us.”
In a lengthy and controversial “exposé” of the Koch brothers in a New Yorker magazine article entitled “Covert Operations” in 2010, Jane Mayer interviewed Rob Stein, a Democrat party political operative who has studied the conservative movement’s finances for years. Said Stein, the Kochs:

are at the epicenter of the anti-Obama movement. But it’s not just about Obama. They would have done the same to Hillary Clinton [if she were president]. They did the same with Bill Clinton. They are out to destroy progressivism.

The Kochs’ conservative causes are spread across a large number of activist organizations and think-tanks, including support for the Cato Institute (initial contributors) and Americans for Prosperity (AFP). They also support the Federalist Society, the Mercatus Center, the Institute for Humane Studies, the Institute for Justice, the Heritage Foundation, the Manhattan Institute, the Reason Foundation, and the American Enterprise Institute, among others.
In addition to their stated intent to provide $400 million in support to conservative causes during this election cycle, the Kochs are also considering providing financial support for a voter database project called Themis which played a major role in the recent Wisconsin recall efforts.
In addition to contributions by Adelson and the Kochs, organizations founded by GOP operatives Karl Rove and Ed Gillespie are raising another $300 million, while the Republican Party and the Romney campaign are planning on raising $800 million. That puts the amount Republicans expect to spend at more than $1 billion, and it could be significantly more as the election heats up. As Mike Allen noted in Politico:

The Republican financial plans are unlike anything seen before in American politics. If the GOP groups hit their targets, they likely could outspend their liberal adversaries by at least two-to-one… 

 ^{Photos: David Koch (left) executive vice president of Koch Industries: AP Images; Sheldon Adelson, CEO of the Las Vegas Sands Corporation}

Government Won't Divulge Details of Drone Program

Government Won't Divulge Details of Drone Program

Written by  Joe Wolverton, II

Although the Obama administration has been a bit more forthcoming lately in its admission of its policy of using drones to kill enemies by remote control, there is still an official reluctance to let too much information reach the public.

I
n the last year or so, the American Civil Liberties Union (ACLU) and a group of reporters have filed Freedom of Information Act (FOIA) petitions requesting that the federal government provide greater access to operational details of the drone program and the legal arguments forwarded by the Obama administration in justifying not only the use of the drones, but their use in the killing of thousands in Pakistan alone.

The first round of these FOIA requests was answered with a Glomar response. As I have written previously, in such a maneuver, the agency that is the subject of the FOIA inquiry “neither confirms nor denies” the existence of the material requested.

Named for a ship built by the Central Intelligence Agency (CIA) to covertly recover a sunken Soviet submarine, a Glomar response typically is given in two scenarios.

First, where a refusal to forward the documents would have the effect of admitting that they actually exist, thus compromising national security.

Second, law enforcement agencies will give a Glomar response when producing the requested information would stigmatize a person named in the documents being sought.

After being rebuffed in this way by the government, the ACLU (and the New York Times) filed suit claiming that the requirements that justify a Glomar response were not met, as the Obama administration had already admitted to using the drones and to the deaths caused by them, including the “inadvertent” deaths of many civilians.

Last week, lawyers for the President and the Justice Department filed a motion for summary judgment arguing that the suits were barred by exemptions to the Freedom of Information Act which protected certain types of information that pertained to national security.

The government argues:

The Executive Branch has determined that, while the government can acknowledge the existence of some documents responsive to the FOIA requests that form the basis of this lawsuit, for the most part it cannot provide public details regarding the classified documents that are withheld; even to describe the numbers and details of most of the documents would reveal information that could damage the government’s counterterrorism efforts.

This reasoning amounts to little more than a restatement of its earlier Glomar response and demonstrates once again this administration’s rock-ribbed determination to act in secret and to defend that secrecy from anyone who would dare attempt to reveal the scope and severity of the acts being carried out in the name of the United States.

As readers are aware, the use of these drones has become a hot political issue among constitutionalists and other friends of liberty.

Furthermore, in recent weeks the use of the drones to hunt and kill suspected terrorists believed to be hiding in the mountainous region of the Pakistan-Afghanistan border has caused tension in the relationship between the United States and Pakistan — its erstwhile ally in the “War on Terror.”

It seems that not a day passes without reports of “militants” being killed by remote control. Drones patrol Pakistan using high-powered optics to find and fire on those considered enemies by the men with the joysticks.

A couple of weeks ago, for example, an American drone attack killed at least three of these suspected belligerents in northwest Pakistan, a region described by American intelligence and military officers as a “hotbed” of Taliban and al-Qaeda operatives.

Hissing through the pre-dawn silence, two missiles were fired from the drone into a market in Miranshah, the administrative headquarters of the North Waziristan agency of the tribal region of Pakistan. Miranshah is located along the banks of the Tochi River in a wide valley between the foothills of the Hindu Kush mountains. It is just a few miles from the border with Afghanistan.

In an article chronicling the bombing, AFP quoted a local official of the Pakistani government: "A US drone fired two missiles on the first floor of a shop in the main market and at least three militants were killed.”

That same week, sources in Peshawar confirmed the death of four “insurgents” within the Federally Administered Tribal Areas of Pakistan (FATA) bringing the two-day total of known dead by drone in Pakistan to seven.

As The New American has reported, the number of American drone strikes in Pakistan has increased significantly in the last 30 days and is likely to continue that crescendo in light of the failure of the two allies to reach an agreement on the end to Islamabad’s blockade of crucial mountain passes that could choke the removal of NATO forces and materiel from Afghanistan scheduled to be completed by December 2014.

Readers may recall a similar fatal drone attack earlier this month when Hellfire missiles fired from American drones killed over a dozen people at a “militant hideout” in Hesokhel, a village located in the North Waziristan region near Miranshah.

South Waziristan was abuzz with the unmanned aerial vehicles earlier this month, as well, as U.S.-controlled Predator drones launched four Hellfire missiles that killed nine men branded as militants living in a village near Wacha Dana. A statement made to CNN by a local government official confirmed the body count.

That brings the total number of suspected terrorists confirmed killed by American drones in June to about 30.

Of course, these numbers of dead by drone, as harrowing to the conscience and humiliating to the Constitution as they are, likely do not include the women, children, or other non-militants, as President Obama is known to prefer disregarding such collateral murders when counting up the bodies left behind by his beloved drone program.

Although Pakistan has demanded that the United States cease the drone attacks within its sovereign borders, the Obama administration has ignored this request; in fact the number of drones in the air, missiles fired by them, and the body count all continue increasing exponentially under orders issued by Barack Obama.

Recently, in response to the United States’ refusal to apologize for the death of 24 Pakistani soldiers who were killed last November in an American drone airstrike, Pakistan has shut down the well-worn NATO supply trail that runs through some of the roughest terrain in the country, as well as booting the U.S. and its Predator drones off an airbase in the southwest region of the country.

According to a report published by The New America Foundation, American drones have killed nearly 3,000 people in Pakistan since 2004.

Finally, there is word out of Turkey that drone fever may be catching as Ankara has requested that the Obama administration sell it a few Predator drones for use in its war against the Kurdistan Workers’ Party (PKK).

Reports originating in Turkey indicate that the Turkish government’s use of the drones to search for and destroy “militants” is following the path laid out by Washington. Unfortunately, that includes the realization that the drone airstrikes will cause “collateral damage” and that civilian deaths are not as easily accepted by the people.

Last December, for example, the armed forces of Turkey killed 35 Kurdish villagers mistakenly identified as PKK militants. The attack that resulted in the murder of those villagers was approved by Ankara after intelligence data gathered by an American drone on loan to Turkey reported the convoy of vehicles.

For now, to the chagrin of Turkey and other nations, the Obama administration has adhered to its own unofficial policy of refusing to approve any sale of arms that includes a request for armed drones.

^{Photo: An MQ-9 Reaper drone aircraft}

Court: Egyptian Military May Not Make Arrests

Court: Egyptian Military May Not Make Arrests

With the choice of Mohamed Morsi as Egypt’s first freely elected president since the birth of the Egyptian Republic in 1953, the Islamist Muslim Brotherhood is moving to consolidate its control of the country. The presidential election came down to a choice between the militant Islamist ideology of Morsi and Ahmed Shafik, the man perceived to represent the interests of the military forces that have ruled the republic since it was first declared. 

Egypt has been undergoing a transition since the “Arab Spring” uprising in early 2011 toppled the government of President Hosni Mubarak. The events in Egypt, in turn, led to a wave of uprisings that have still not come to a conclusion; for example, Syria continues to suffer from the ongoing battle between the army of President Bashar al-Assad and rebel forces.

Throughout the 16 months that have passed since the downfall of the Mubarak government, the Egyptian military has overseen a process of "democratization" that has included free elections for the parliament and the presidency. Despite widespread rumors that the military was planning to renege on its promises, the process has continued. In the words of one anonymous official who spoke to Reuters:

"The military council has done its duty in keeping the election process free and fair, a true example of democracy, to the world," said the official, who asked not to be named.

"The onus now is on the new president to unite the nation and create a true coalition of political and revolutionary forces to rebuild the country economically and politically."

However, rebuilding a nation could easily prove to be vastly more difficult than tearing down the military government. As reported previously for The New American, even as the elections committee was preparing to declare Morsi the winner of the elections, thousands of his followers returned to Tahrir Square, denouncing "military rule."

An Egyptian court has further limited the power of the military in the new government by determining that military forces may not arrest civilians. As Yasmine Saleh wrote for Reuters, the military had sought the power to make such arrests in the days leading up to the final vote in the presidential elections because supporters of Morsi were threatening to take to the streets if their candidate was not declared victor. However, the courts have overturned that military decision:

But rights groups and politicians challenged the decision, accusing the military of reviving emergency powers that stymied opposition to Hosni Mubarak until a popular uprising ended his three-decade rule in February last year.

On Tuesday, a court agreed with them.

"The court declares in its ruling that the Minister of Justice raped the authority bestowed by the constitution by issuing a decision to give members of the military police and military intelligence powers of arrest," a document from the Cairo court explaining Judge Ali Fikry's ruling read.

The Justice Ministry has the right to appeal the administrative court's ruling, which is effective immediately.

The original decree restored the military's mandate to enforce law and order before a new constitution is written — a process expected to last well beyond the July 1 date by which the ruling military council is due to hand power to president-elect Mohamed Mursi of the Muslim Brotherhood.… 

"This ruling not only adheres to the constitution," said Gamal Eid, a lawyer and rights activist. "It chimes with the current political climate because many people feel the military council is trying to suppress the civil direction in which the state is supposed to be heading."

While Western governments may take such limitations on the intervention of the armed forced into domestic politics for granted, such has obviously not been the case in Egypt. The military sought the power to make arrests only days after a Mubarak-era emergency law expired —  perhaps they imagined that the reassertion of such powers could pass unnoticed, or at least without such definitive opposition. In either case, the move was a serious miscalculation. As the Washington Post reported, human rights activists in Egypt recognize that the court action was a significant affirmation of basic liberty:

Heba Morayef, a Cairo-based researcher with Human Rights Watch, said Tuesday’s ruling might discourage the security forces from seeking to restore the type of vast, unchecked authority inherent in the old emergency law.

“This is a victory of a civilian court versus the kind of arbitrary expansion of military powers that would be a recipe for further abuses,” she said.

However, critics of Morsi’s Muslim Brotherhood raise questions about the commitment of the Brotherhood’s Freedom and Justice Party to such high ideals: Only days before the runoff election, Islamists in the parliament sought to remove Shafik from the ballot — an action that would have  preempted the election and almost certainly would have automatically made Morsi president of Egypt. Only an action of Egypt’s Supreme Constitutional Court was able to block the action of the parliament.

Now, with the election of Morsi, it appears that the Muslim Brotherhood will not be content merely to have beaten Shafik: The former candidate may have fled Egypt for fear of corruption charges. As reported by Ahram online, the charges followed in the immediate aftermath of the elections:

Less than 24 hours after Ahmed Shafiq lost the presidential contest to Mohamed Morsi, several lawyers have filed complaints with the office of the prosecutor against  Mubarak's last prime minister charging him with corruption.

A high-level judicial source said that councillor Osama El-Seidi, a Justice Ministry investigator, will receive this week the report prepared by experts in the Illicit Profiteering and Real Estate Agency who have examined procedures for the allocation of land sold by the Cooperative for Construction and Housing for Pilots, which was headed by Ahmed Shafiq in the 1990's.

Former MP Essam Sultan of Al-Wasat Party issued a complaint against Shafiq as the former head of the cooperative, accusing him of selling a piece of land in the area of 40,238 square metres to Alaa and Gamal Mubarak in 1993, at an extremely low price of only 75 piasters per square metre.

Given that the alleged cases of corruption date back nearly 20 years, and that the charges came within hours of Shafik’s opponent attaining the presidency, critics could say that the Muslim Brotherhood is not even trying to give the appearance that the charges are anything other than political "payback." When an organization that spent over 80 years as a “secret society” suddenly achieves political power, such tactics can hardly be surprising. As Frida Ghitis wrote for CNN.com:

For many years the Brotherhood was banned in Egypt, so it operated underground. Since the revolution, Egyptians have had a chance to see it in action. What they have seen so far is an organization impressively capable of modulating its message to suit specific audiences to achieve political gain.

More importantly, the Brotherhood has revealed a troublesome habit of breaking its word. 

When Hosni Mubarak fell, they pledged they would not try to control Egyptian politics. But they promptly changed their minds.

The Muslim Brotherhood leaders promised to contest only a minority of seats in the legislature, rather than trying to win a majority. They broke that promise. They promised, through Morsi himself, "We will not have a presidential candidate. We are not seeking power."

They broke that promise. They vowed to run a thoroughly inclusive process for developing a new Egyptian Constitution. They broke that promise, too.

Clearly, the Brotherhood, and the soon-to-be Egyptian president, have developed something of a credibility problem.

Since the Brotherhood has established such a track record in a mere 16 months, critics cannot help but ask how much time will transpire before those very powers that the military has been denied will be brought into the service of the reigning Islamists.

^{Photo: In this photo released by Middle East News Agency, the Egyptian official news agency, President-elect Mohammed Morsi shakes hands with an Egyptian police general in Cairo, Egypt, June 26, 2012. : AP Images}

JP Morgan Trading Loss Balloons to $9 Billion

JP Morgan Trading Loss Balloons to $9 Billion

Written by  Bob Adelmann

When the New York Times reported that the losses resulting from the failed trade made by JP Morgan Chase (JPM) earlier this year could reach $9 billion instead of the $2 billion initially reported, some said it didn’t matter, while others called for more regulations. Few considered that such trades, and consequent losses, were inevitable and would likely continue because of the implied taxpayer backstop.



First, it should be noted that, contrary to JPM CEO Jamie Dimon’s statement that the trade was due to “errors, sloppiness and bad judgment,” and was “flawed, complex, poorly reviewed, poorly executed and poorly monitored,” the people in JPM’s London office knew exactly what they were doing. Furthermore, Dimon was aware of what they were doing, was warned in advance of potential losses, and did nothing about it.
The people in the London office of JPM that executed the series of trades were the best and the brightest in the business. Ina Drew, the chief investment officer for JPM, was considered “one of the best managers of balance-sheet risks” and was applauded by an outside money manager, who called her “an amazing investor [who has] done a really good job over a lot of years.” She reported directly to Dimon who often flew to London in order to stay current on her office’s trades. When she resigned she took with her a $14-million paycheck.
The other key player in the London office, Bruno Iksil, was known in the trading community as the “London Whale” for his outsized and bold bets with company money. In 2011 his aggressive trades, approaching $1 billion, earned JPM $450 million.
But when he began putting on trades late last year, using margin and derivatives to multiply his leverage, he got the attention of senior management. One senior manager looked into what the “whale” was doing and recommended that the firm create a separate reserve account to offset any losses he might incur if one of his bets went south. His recommendation was ignored, and soon after that the “whale’s” trades went south.
The trades were complicated, involving bond index funds, but in essence Iksil bet the farm on the idea that bond prices would move in a certain direction. He took so many trades, using so much leverage, that when his bets started going against him, other traders piled on, taking positions against him. As Felix Salmon wrote in Reuters:

Whenever a trader has a large and known position, the market is almost certain to move violently against that trader — and that seems to be exactly what happened here…

Once your positions become public knowledge, the market will smell blood.

Some tried to put the losses into perspective. After all, JP Morgan has total assets of $2.3 trillion, a net worth of $190 billion, and earned $25 billion last year. What’s $2 billion — or $9 billion for that matter — compared to that? In any event, as Chief Executive magazine put it: “The loss will be borne by JPMorganChase’s shareholders, not by depositors, creditors, customers or more to the point, and most important — not by taxpayers.”  In fact, a number of chief executive officers meeting at a recent Yale CEO Summit asked: Why all the fuss over such a trivial matter? Specifically,

Why is public attention focused on a $2 billion nominal loss when both the government and media are stone silent over the $4 trillion loss represented by Fannie Mae and Freddie Mac, the twin darlings that precipitated the financial collapse in the first place?

To date there have been no hearings and no one at either institution has been indicted…

There is at least one good reason. JPMorgan sucked up nearly $390 billion from the Fed as the financial collapse occurred. And the reason for that was that JPM was “too big to fail” thus creating the moral hazard that Dimon and his “whale” were manipulating for the bank’s benefit. After all, if there is no real “downside” risk, why not pile on? The fact that JPM could eat this trade is beside the point.
In reviewing the matter, two highly regarded commentators came up with the same solution: Put the risk back into the game and let the participants enjoy the rewards and suffer the losses and leave the taxpayers and their guarantees — real or implied — out of the equation altogether. Gerald O’Driscoll, writing for The Freeman, said:

Large financial institutions will continue taking on excessive risks so long as they now they can offload the losses onto the taxpayers, if needed…

Until that discipline is reintroduced, there will be more financial bets going bad at these banks.

It’s the deadly combination of high risk and no punishment that leads to trouble. If that trouble is large enough to threaten the existence of a bank as large as JP Morgan, then the taxpayer will ever be holding the bag. But if the gambling division is separated from the banking division, then losses will be limited, and such highly risky trades are less likely to occur. As O’Driscoll noted:

In the past I have dubbed today’s banking practice of placing dangerous financial bets “casino banking.” It differs little from the activities conducted at gaming tables in Las Vegas and has little or no reference to the fundamentally healthy activity of matching viable businesses with capital and credit.

Lew Rockwell agrees. Every bank that has depositors’ money should tend to its knitting: securing those deposits, investing them conservatively, and concentrating on serving their customers. Banks that want to invest their own funds — not customers’ money — should be free to do so, but separately and without taxpayer backup. That way, says Rockwell, “The end result is that banks would be banks…” and casinos would be casinos, and never the twain would meet.