Friday, January 30, 2009
Every Military Net Accessed at Once, Thanks to 'OB1'
Buzz grows for modernizing energy grid
Judge rejects Obama bid to stall Gitmo trial
Homeland Secretary Wants Criminal Aliens Out of U.S.
If you're a criminal and you're not entitled to be in the USA, Homeland Security Secretary Janet Napolitano wants you out of the country.
Roubini Sees Global Gloom After Davos Vindication
Jan. 30 (Bloomberg) -- At the World Economic Forum two years ago, Nouriel Roubini warned that record profits and bonuses were obscuring a “hard landing” to come. “I really disagree,” countered Jacob Frenkel, the American International Group Inc. vice chairman and former Israeli central banker.
No more. “Roubini was intellectually courageous, and he called the shots correctly,” says Frenkel, whose AIG survives only on the basis of more than $100 billion of government loans. “He gained credibility, and he deserves it.”
This week, New York University’s Roubini returned to the WEF and the Swiss ski resort of Davos as the prophet of the worst economic and financial crisis since the Great Depression - - joining the ranks of previous “Dr. Dooms” who made their names through contrarian calls that proved correct.
Even as he wins plaudits for his prescience, Roubini, 50, says worse lies ahead. Banks face bigger credit losses than they realize, more financial companies will require state takeovers and the world economy will keep shrinking throughout 2009, he says.
“The consensus is catching up with me, but it’s still behind,” Roubini said in an interview in Davos. “I don’t know what some people are smoking.”
‘Catastrophic’
As long ago as February 2007, Roubini was writing on his blog that “the party will soon be over,” and warning of “painful consequences for the U.S. and the global economy.” By last February, his tone had become apocalyptic, raising the specter of a “catastrophic” meltdown that central banks would fail to prevent, triggering the bankruptcy of large banks with mortgage holdings and a “sharp drop” in equities.
The next month, Bear Stearns Cos. failed, to be taken over by JPMorgan Chase & Co. in a government-backed deal. Then, in September, Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital. The U.S. took over AIG, Fannie Mae and Freddie Mac, and the Standard & Poor’s 500 Index suffered its worst year since 1937.
“I was intellectually vindicated,” Roubini says. “But I was vindicated by having an economic disaster which has political and social consequences.”
Predecessors
Roubini’s predecessors in the role of economic nay-sayer include some well-known names: Joseph Granville, publisher of the Granville Market Letter, who forecast the stock-market declines of 1976 and 2000; Henry Kaufman, who as a managing director at Salomon Brothers projected rising interest rates that led to a U.S. recession in the early 1980s; Marc Faber, publisher of the Gloom, Boom & Doom Report, who predicted the 1987 stock crash; and Yale University’s Robert Shiller, a former colleague of Roubini’s, who forecast the end of the dot-com bubble in his 2000 book “Irrational Exuberance” and said in a second edition in 2005 that the U.S. housing market had undergone the biggest speculative boom in U.S. history.
Granville, 85, says the key to being an outlier is not to doubt your analysis.
“I don’t have anything to do with emotion,” says Granville, who’s based in Kansas City. “Keep your head, follow the numbers and ignore the rest.”
Roubini was born in Istanbul, the son of an importer- exporter of carpets, and spent his childhood in Israel, Iran and Italy. It was while living in Milan from 1962 to 1982, he says, that he became attracted to economics: “Economics had the tools to understand the world, and not just understand it but also change it for the better.”
International Economics
After a year at the Hebrew University of Jerusalem, he earned an economics degree at Milan’s Universita’ L. Bocconi and then his Ph.D. at Harvard University in 1988, where he specialized in international economics.
Jeffrey Sachs, he says, became his “role model” at Harvard by demonstrating that economists could shape public policy -- as Sachs did by lobbying for poor countries to have their debts relieved by richer governments. Sachs is now a professor at Columbia University.
“You sensed there was something beyond academia, that you have to figure out the big issues of the global economy,” says Roubini. “You have to be engaged, and can’t just be in an ivory tower.”
For much of the 1990s, Roubini combined academic research and policy-making by teaching at Yale and then in New York, while also spending time at the International Monetary Fund, the Federal Reserve, World Bank and Bank of Israel.
Joining Clinton
By 1998 he had attracted the attention of President Bill Clinton’s administration, joining it first as a senior economist in the White House Council of Economic Advisers and then moving to the Treasury department as a senior adviser to Timothy Geithner, then the undersecretary for international affairs and now Treasury secretary in the Obama administration.
Roubini returned to the IMF in 2001 as a visiting scholar while it battled a financial meltdown in Argentina. He co-wrote a book on saving bankrupt economies entitled “Bailouts or Bail- ins?” and opened his own global consulting firm, which now employs two dozen economists and publishes a popular Web site and blog.
“Nouriel has a rare combination of economics and the real world, and so has great insight because of that,” says Shiller. “He looks into the details and rolls up his sleeves.”
Roubini says working on emerging-market blowouts in Asia and Latin America allowed him to spot the looming disaster in the U.S. “I’ve been studying emerging markets for 20 years, and saw the same signs in the U.S. that I saw in them, which was that we were in a massive credit bubble,” he says.
Still a Pessimist
With that bubble now popped, Roubini remains more pessimistic than economists elsewhere. The IMF forecasts global growth of 0.5 percent this year and bank losses from toxic U.S.- originated assets of $2.2 trillion. By contrast, Roubini sees the global economy shrinking this year, and banks writing down at least $3.6 trillion -- compared to the $1.1 trillion disclosed so far.
While the U.S. government is resisting nationalizing its biggest banks, Roubini says it will have no choice because they are now “effectively insolvent.” And the outcome may be even worse than even he anticipates if governments fail to take aggressive steps to recapitalize banks and revive their economies, he says: “The risk of a near-depression shouldn’t be underestimated.”
Roubini, who’s now working on a book about the crisis, says he takes no particular pleasure in his role as Dr. Doom or the attention it brings him.
“I’m not a permanent bear,” he says. “I’ll be the first to call a recovery, but I just don’t see it yet, and it’s getting uglier.”
Feds allege plot to destroy Fannie Mae data
The U.S. Attorney's Office says 35-year-old Rajendrasinh Makwana, of Glen Allen, Va., is scheduled for arraignment Friday in U.S. District Court in Baltimore on one count of computer intrusion.....
FBI: Burgeoning gangs behind up to 80% of U.S. crime
The major findings in a report by the Justice Department's National Gang Intelligence Center, which has not been publicly released, conclude gangs are the "primary retail-level distributors of most illicit drugs" and several are "capable" of competing with major U.S.-based Mexican drug-trafficking organizations.
"A rising number of U.S.-based gangs are seemingly intent on developing working relationships" with U.S. and foreign drug-trafficking organizations and other criminal groups to "gain direct access to foreign sources of illicit drugs," the report concludes.
The gang population estimate is up 200,000 since 2005.
Bruce Ferrell, chairman of the Midwest Gang Investigators Association, whose group monitors gang activity in 10 states, says the number of gang members may be even higher than the report's estimate.
"We've seen an expansion for the last 10 years," says Ferrell, who has reviewed the report. "Each year, the numbers are moving forward."
'Growing threat' on the move
The report says about 900,000 gang members live "within local communities across the country," and about 147,000 are in U.S. prisons or jails.
"Most regions in the United States will experience increased gang membership … and increased gang-related criminal activity," the report concludes, citing a recent rise in gangs on the campuses of suburban and rural schools.
Among the report's other findings:
•Last year, 58% of state and local law enforcement agencies reported that criminal gangs were active in their jurisdictions, up from 45% in 2004.
•More gangs use the Internet, including encrypted e-mail, to recruit and to communicate with associates throughout the U.S. and other countries.
•Gangs, including outlaw motorcycle groups, "pose a growing threat" to law enforcement authorities along the U.S.-Canadian border. The U.S. groups are cooperating with Canadian gangs in various criminal enterprises, including drug smuggling.
Assistant FBI Director Kenneth Kaiser, the bureau's criminal division chief, says gangs have largely followed the migration paths of immigrant laborers.
He says the groups are moving to avoid the scrutiny of larger metropolitan police agencies in places such as Los Angeles. "These groups were hit hard in L.A." by law enforcement crackdowns, "but they are learning from it," Kaiser says.
MS-13 far-flung from L.A. incubator
One group that continues to spread despite law enforcement efforts is the violent Salvadoran gang known as MS-13.
Michael Sullivan, the departing director of the Bureau of Alcohol, Tobacco, Firearms and Explosives, says the gang's dependence on shocking violence to advance extortion, prostitution and other criminal enterprises has frustrated attempts to infiltrate and disrupt the insular group's activities.
"MS-13's foothold in the U.S. is expanding," Sullivan says.
Kaiser says the street gang is in 42 states, up from 33 in 2005. "Enforcement efforts have been effective to a certain extent, but they (gang members) keep moving," he says.
MS-13 is the abbreviation for the gang also known as Mara Salvatrucha. The group gained national prominence in the 1980s in Los Angeles, where members were linked to incidents involving unusual brutality.
Since then, it has formed cells or "cliques" across the U.S., says Aaron Escorza, chief of the FBI's MS-13 National Gang Task Force.
The task force was launched in 2004 amid concerns about the gang's rapid spread. Gang members were targeted in broad investigations similar to those used to bust organized crime groups from Russia and Italy.
Among law enforcement efforts:
•Omaha: The last of 24 MS-13 members swept up on federal firearms charges and conspiracy to distribute methamphetamine were sentenced last year in the largest bust since the group emerged there in 2004.
The gang's strength dimmed as a result, but the nine-month probe did not eradicate the group, says Ferrell, who assisted in the investigation.
•Nashville: During the last two years, 14 MS-13 members pleaded guilty on charges ranging from murder to obstruction of justice.
Davidson County, Tenn., Sheriff Daron Hall, whose jurisdiction includes Nashville, says MS-13 started growing there about five years ago, corresponding with an influx of immigrant labor.
Last April, county officials began checking the immigration status of all arrestees. "We know we have removed about 100 gang members, including MS-13," to U.S. authorities for deportation, Hall says.
•Maryland: Earlier this month, federal authorities said they had convicted 42 MS-13 members since 2005. More than half were charged in a "racketeering conspiracy" in which members participated in robberies and beatings and arranged the murders of other gang members, according to Justice Department documents.
In one case, Maryland gang members allegedly discussed killing rivals with an MS-13 leader calling on a cellphone from a Salvadoran jail, the documents say.
Escorza says a "revolving door" on the border has kept the gang's numbers steady — about 10,000 in the U.S. — even as many illegal immigrant members are deported.
The FBI, which has two agents in El Salvador to help identify and track members in Central America and the United States, plans to dispatch four more agents to Guatemala and Honduras, Escorza says.
"They evolve and adapt," he says. "They know what law enforcement is doing. Word of mouth spreads quickly."