Day: July 15, 2008

A Soldier’s Electrocution

The parents of a U.S. soldier who was fatally electrocuted in the shower in his Baghdad quarters has sued the contractor KBR Inc. (NYSE:KBR)In court papers filed in Pittsburgh, Cheryl Harris, Sgt. Ryan Maseth’s mother, claims KBR knew of problems with the electrical system at the Radwaniyah Palace and failed to repair them. The lawsuit says Maseth received the fatal jolt of electricity because a pump on the roof was not properly grounded.

“Ryan was highly trained,” Harris told the Pittsburgh Post-Gazette. “He was a Ranger. He was a Green Beret. He was a weapons master. He was in the military for six years, so I can understand the risks. I can’t get my mind around something as senseless as stepping into a shower and being electrocuted.”

The U.S. House Committee on Oversight and Government Reform has begun an investigation into the electrocution deaths of 12 soldiers, including Maseth.

Harris, who has two other sons in the Army, including one in Iraq, said she decided to sue after failing to get answers from the military about what caused her son’s death.

Veto Would Protect Loopholes

President Bush, though, has pledged to veto a bill passed by the House, HR 6275, that would pay for new middle-class tax relief by closing a loophole that allows buyout managers to pay a 15 percent tax rate on much of their income — lower than that paid by many nurses, firefighters and middle managers.

As our elected officials and regulatory agencies navigate their way through one of the worst financial crises since the Great Depression, most analysts have focused on reforming the subprime mortgage market. But private equity is another massive, secret and largely unregulated force operating beneath the radar screen of disclosure and regulation — and with the potential to derail our economy.

While the favorable treatment of carried interest — the percentage of profits that buyout executives keep for themselves as a performance fee — has received most of the attention, it’s just one of the strategies that buyout firms employ to game the tax system and fatten their paychecks. Buyout firms rake in big dollars by loading up the companies they buy with debt, then deducting the interest payments. All businesses deduct their interest payments as a business expense, but leveraged buyouts typically have two or three times as much debt as equity. When the interest payments on that debt are subtracted from a company’s earnings, there’s often little or no taxable income left. That means fewer tax dollars for already-strapped state and federal treasuries.

Bring this up to the buyout industry, and they’ll claim that if lawmakers do anything to change the way they make their money, they’ll just go overseas. It’s a good line, but it’s not clear where they’d go. Denmark, Germany, England, Australia and the European Union are all considering legislation to cap interest deductions for debt used to finance leveraged buyouts.

When buyout firms depend on unfair tax advantages to prosper, it’s bad news for the economy as a whole. That’s why this coming Thursday, July 17, we are calling attention to the bad behavior of the private equity industry — and to the lax laws and regulations that have rewarded that behavior — with demonstrations in 100 cities worldwide. It’s a call from Main Street that change is needed, and the buyout industry and its tax dodges are a good place to start.

Good News For Labor?

The U.S. House approved the bill in March by a 241-185 vote. The Senate passed the measure by a 51-48 vote in late June, but supporters needed 60 votes to force a quick end to debate.

The bill is unlikely to proceed in the current legislative session, but the upcoming election could strengthen the Democrats’ Senate majority. Business leaders also worry if Barack Obama wins the presidency, the bill’s chances will increase in the near future. Obama has pledged to sign the bill if it passes.

The law would also stiffen penalties for employers who commit unfair labor practices during an organizing drive and impose arbitration in bargaining cases when sides cannot agree.

A card check provision would allow unions to circumvent secret-ballot elections now supervised by the National Labor Relations Board. Unions would need only to collect signed cards from a majority of employees over a period of time.

Observers say the law could fundamentally alter modern labor law and spur the largest unionization movement since the National Labor Relations Act in 1935.

U.S. Sen. Elizabeth Dole is one of five politicians expected to attend the chamber rally, along with U.S. Reps. Patrick McHenry, Sue Myrick, Virginia Fox and Robin Hayes.

“By denying workers their basic right to a secret ballot, a right that has been enshrined in federal labor laws for over 60 years, this bill trades fair, democratic elections for intimidation and coercion,” Dole said in a news release.

Looks like some are worried about the possibility of a new round of unionization……would not be too good for the corporate suits to have more union workers.

Could Lasers Be The Answer?

Laser beam technology is being rushed into service to combat the threat of insurgent missiles and mortars raining down on British and American military bases in Iraq and Afghanistan.

After decades of delay and billions of pounds spent, it will be simple commercial lasers rather than the hugely expensive US Department of Defence technology that could be used to save hundreds of troops’ lives.

In just 18 months the American defence firm Raytheon has turned a laser used in the car manufacturing industry into a weapon that can hit incoming rounds at the speed of light, melting the outer casing and detonating the explosive inside.

A laser has already been used in a test to destroy a 60mm mortar round and in September the company plans its first “shoot down” of a shell in flight in a test to be conducted with the US military. If successful it could be used on battlefields as early as next year.

Energy beams have also been developed that can fire a laser with pinpoint accuracy to drive away potential suicide bombers, rioters or hostage takers.

The Silent Guardian system fires millimetre wave beam at individuals that cause an excruciating burning sensation without causing any damage.

The beam travels at the speed of light, penetrating the skin and causing an intolerable burning sensation causing suspects to flee.

With dozens of helicopters being destroyed by Taliban and Iraqi insurgent missiles, technology advances have seen a device that has been shrunk from the size of a football to a tennis ball that will fire lasers to confuse infra-red guidance inside a missile.

Off Shore Drilling: Is It Good For You?

Putting pressure on congressional Democrats to back more exploration for oil, President Bush on Monday lifted an executive ban on offshore drilling that has stood since his father was president.

But the move, by itself, will do nothing unless Congress acts, too, to revoke its prohibition on offshore drilling.

“The only thing standing between the American people and these vast oil resources is action from the U.S. Congress,” Bush said in a statement in the Rose Garden. “Now the ball is squarely in Congress’ court.”

A look at the issue:

Federal opposition

Congressional Democrats, joined by some GOP lawmakers from coastal states, have opposed lifting the prohibition that has barred energy companies from waters along the East and West coasts and in the eastern Gulf of Mexico. Presidents, from Bush’s father — George H.W. Bush — in 1990 to Bill Clinton have sided against drilling in these waters, as has Congress each year for 27 years. Their goal has to been to protect beaches and coastal states’ tourism economies.

History of the issue

On Jan. 28, 1969, a blowout on a Unocal rig six miles off the coast of California spilled 3 million gallons of oil into the waters off Santa Barbara. The blackened beaches and oil-soaked birds and seals became icons for the environmental movement. Two years ago, a congressional compromise opened an additional 8.3 million acres in the Gulf of Mexico.

Where candidates stand

Sen. John McCain, R-Ariz. , reversed his position last month and endorsed expanded offshore drilling.

Sen. Barack Obama, D-Ill. , wants to maintain the moratorium on offshore drilling.

How Americans feel

In a May Gallup poll, 57 percent of people surveyed were willing to allow drilling in coastal and wilderness areas that are off limits, if it had the potential to reduce high gas prices.

How much oil is out there, will it affect prices?

The U.S. Geological Survey estimates that there is the possibility of 17.8 billion barrels, but that’s unproven. That amount would equal about 60 percent of proven U.S. reserves.

The Energy Department doesn’t see a significant impact on domestic production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017.

As reported in the Detroit News and Pres Bush who is just playing politics.

How The Mighty Have Fallen

I am sure that everyone that can read has heard about the financial problems of banks and other institutions.  But the BS is not over yet and may be more devastating than we can imagine.

The NY Times is reporting.  The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.

But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.

“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard X. Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?”

Now, as the Bush administration grapples with the crisis at the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, a rush of earnings reports in the coming days and weeks from some of the nation’s largest financial companies are likely to provide more gloomy reminders about the sorry state of the industry.

The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.

The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.

The large institutions set to report results this week, including Citigroup and Merrill Lynch, are in no danger of failing, but some are expected to report more multibillion-dollar write-offs.

But time may be running out for some small and midsize lenders. They vary in size and location, but their common woe is the collapsed real estate market and souring mortgage loans. Most of these banks are far smaller than the industry giants that have drawn so much scrutiny from regulators and investors.

Still, only six lenders have failed so far this year, including IndyMac. In 1994, the Federal Deposit Insurance Corporation listed 575 banks that it considered to be troubled. As of this spring, the agency was worried about just 90 banks. That number may go up in August, when the government releases an updated list.

Once again it looks like mismanagement and greed have caused a financial crisis….but will this one be the last one?