Search Results for: ’

Click for Part 3

Recently, Afghan President Hamid Karzai asked “This war has gone on for seven years, the Afghans don’t understand anymore, how come a little force like the Taliban can continue to exist, can continue to flourish, can continue to launch attacks?” What sounds like an innocent query by someone truly bewildered by the strength of his political opponents is more of a rhetorical question than anything else. Karzai knows exactly how and why the Taliban are flourishing. He’s hoping that Americans, and the incoming Obama Administration, will finally start to ask themselves this question as well.

The answer lies primarily in the opium fields that yield over 90% of the world’s supply of heroin. Just as Mexican cartels have made themselves untouchable throughout much of their own country on drug profits, the Taliban are funding their massive resurgence through the same means. Unlike the Mexican cartels, however, they have a much more nationalist and anti-Western outlook, making this drug war failure potentially far more disastrous to our national security than anything encountered before it.

[Read more…]

Click for Part 2

If there was one success that South American anti-drug efforts had in the past two decades, it was to dismantle some of the larger drug trafficking networks that were operating there. Since the death of Pablo Escobar in 1993, there have been no comparable figures in Colombian society in terms of wealth, influence, and criminality. But the drug trafficking organizations that supplied American drug users didn’t disappear. They moved to Mexico, demonstrating one fundamental rule about the drug war – as long as demand exists, you can never end the trade, you can only hope to relocate it.

Before the 1980s, Mexican drug gangs were little more than nuisances in Mexican society. They’d profit from smuggling marijuana into the United States, and could sometimes subvert institutions through corruption or violence. But today, Mexican drug gangs control much of northern Mexico and, according to Stratfor, an organization of current and retired intelligence officials, they now pose a significant threat to the federal government in Mexico City.

[Read more…]

Click for Part 1

Cocaine was first discovered in 1860 by Albert Niemann, a German chemist who identified it as the active chemical compound in the coca leaf. Before 1914, when cocaine was still legal in the United States, it was consumed primarily as an ingredient in tonics, ointments, wines, and other products. It was the original “Coca” in Coca-Cola. Vin Mariani, a well-known coca wine, had the face of Pope Leo XIII on its label. Leo and his successor, Pope Pius X, were both fans of the drink. During the temperance movement, however, cocaine was banned along with other drugs in the Harrison Narcotics Act of 1914. Over the next few decades, its use dropped significantly in America as amphetamines started to become more popular.

In the late 1970s, however, the use of cocaine began to rise again. Instead of being an ingredient in various products, though, people were ingesting the drug straight up their noses as a powder, a method that had far more intense effects for the user. Just as alcohol prohibition led to the consumption of alcohol in more dangerous ways, the prohibition of coca eventually led to a trend of ingesting the drug in ways that were baffling to South Americans, where chewing on coca leaves or brewing them in tea has been commonplace for many generations.

[Read more…]

Olympia – Senate Democratic leaders held a press conference today, joined by a few of their House colleagues, to announce their intention, as Josh mentioned earlier, to tighten the belt that holds up our state government’s proverbial pants.

Another way to describe the event would be to pose it as follows:

Q: How many times can a group of lawmakers use some variance of the phrase “belt-tightening” in a thirty minute press conference?

A: Considerably more than you would think.

Senate Majority Leader Lisa Brown (D-Spokane), acting somewhat gubernatorial in her initiation of hard budget cuts, kicked off the afternoon presser by announcing the news that, in light of recent gloomy budget news, the state Senate would begin cutting operations in order to save money even before final cuts are made later on in the session.

Those cuts include reducing administrative budgets and freezing salaries, hiring, travel and major spending.

Brown emphasized repeatedly that the actions Democrats were taking had bipartisan support across the board, though Republicans used their position to talk some too-little-too-late smack, with state Sen. Joe Zarelli telling the Tacoma News-Tribune’s Joe Turner that “we moved from a 52-inch waist to a 51-inch waist and we desperately need to get down to a 32-inch waist.”

Zarelli also told Turner that the Senate’s plan to wait until late February or early March would further hurt the state’s ability to maximize budget savings. Brown, however, reiterated during the press conference that cuts for the sake of cuts were unwise, and that her caucus would be “deliberative as well as urgent.”

Sen. Rodney Tom (D-Mercer Island), who himself may seek greener pastures in the future, added that this move was more than just financially important, it was necessary to show the public that their elected officials have a real “sense of urgency” and that through across the board cuts the message they hoped to put across was that “we are all in this together.”

Tom also added, on multiple occasions, that the Senate plan goes above and beyond the governor’s call, citing a $78 million figure from the governor’s office compared with the $105 million that the state Senate aimed to cut.

House Democrats are also hoping to instigate some budget cuts, though they are taking the more traditional approach of calling for an early action budget bill.

“We appreciate what the Senate did in dropping an early action bill,” said House Ways & Means chair Rep. Kelli Linville (D-Bellingham), and added that the House was taking the more traditional route of creating a fast-tracked budget bill, evoking President Obama’s call for a line-by-line budget review.

“Everybody is going to share the pain,” she added.

Linville appeared tempted, but ultimately refused to give any examples of specific budget cuts prior to caucus meetings, which were set to take place after the conference. She did, however, say that they were hoping to save about $300 million from this budget, which would carry forward into $600 million during the next biennium.

Still, in spite of all the gloomy news for those on the wrong end of the budget machete, the day was not totally without cheer.

When the press conference opened up to questions from the gathered hacks, the politicians responded with the kind of comedy gold that tends to be glaringly absent from the political trail that we have been following for the last year and a half.

A couple of examples:

Asked who would be the watchdog for the coming budget cuts, Brown jokingly responded that it would have to be the seven or eight gathered journos, before immediately amending her answer to say that it would instead be the doomed P-I, which was greeted with equal amount of groans and chuckles.

Sen. Jim Hargrove (D-Hoquiam), meanwhile, did his best Dark Helmet impression when he stated that the Senate Dems would be working at, I kid you not, “ludicrous speed” in order to get the budget cuts rolling.

I suggest they go on a comedy tour with proceeds going toward paying down the budget deficit. Watch out, Paul Blart, Washington State Senate Democrats are gunning for you.

Some really outstanding reporting by Columbian reporter Courtney Sherwood about the failure of Bank of Clark County, the first Washington bank seized by the state since 1993. Well worth a full read if you are trying to understand how a smaller bank got into such serious trouble. For starters, the bank began making riskier loans starting in 2005, according to The Columbian.

Another factor that seems to be worth focusing on is the issue of brokered deposits, which are (of all things) deposits made by brokers on behalf of clients, usually those seeking a higher rate of return. As Sherwood notes in her article, the FDIC has rules about this sort of thing.

With its core deposits falling, the Bank of Clark County appears to have sought out even more of the risky brokered deposits it had come to depend on. Over three months, it brought in $28.7 million this way, and brokered deposits climbed to 35.7 percent of all deposits.

Mounting loan troubles may have triggered an FDIC rule that forbids banks with lower capital ratios from taking on any more brokered deposits, though there’s not yet enough public data about the bank’s finances to be certain.

If I understand correctly, one reason brokered deposits can be risky is that large dollar amounts can quickly be pulled out of a bank when, for example, brokered CD’s expire and investors chase higher returns elsewhere. In other words, the use of brokered deposits is part of the mix, but too heavy a reliance can be dangerous.

The underlying cause of the failure, of course, was a collapse in real estate values. While it wasn’t a Southern California scale bubble, it was still a speculative bubble fueled by lax lending standards in the house buying, selling and financing industry. As we move forward, state and federal regulators (not to mention lawmakers) are going to have to come to grips with what worked and what didn’t work in terms of oversight.

More details are emerging about the failure of Bank of Clark County. In an interesting development, it appears that the total dollar amount of uninsured accounts will be substantially less than the approximately $39 million that was widely report initially. Reported figures are now more in the $10 million range.

Most press accounts describe Bank of Clark County as a “community bank,” which is accurate enough, but it’s important to understand that this bank was essentially set up by and for real estate developers and builders. The bank’s web site disappeared Friday night, but thanks to the Google cache you can peruse the backgrounds of its board of directors.

News accounts tonight suggest the bank was heavily exposed to a collapsing construction and real estate sector, while at the same time it was reluctant to deal with problem properties. A substantial amount of money was withdrawn in the last four days of operation, according to published accounts.

[Read more…]

Lots of government people in suits showed up after the Bank of Clark County closed for business this evening. It’s not good.

The Bank of Clark County became the first locally based bank to fail in recent memory, following a ruling by state regulators on Friday that the Vancouver financial institution did not have adequate cash to stay in business. Its two branches will open Tuesday under the control of Umpqua Bank, which has assumed all of its roughly $209 million in insured deposits.

Sounds pretty serious. According to the Columbian, the state closed the bank and FDIC took receivership. The newspaper reports that there is over $39 million in uninsured deposits.

Several top Bank of Clark County executives, including President Mike Worthy, were relieved of their positions on Friday.

The rest of the bank’s 91 employees, based at two branches, will continue to work for Umpqua Bank, which still plans to open a branch next to Esther Short Park this summer.

“Employees heard the news that their bank has inadequate capital and their bank was declared closed, and we walked in the room five minutes later to tell them were taking over,” said Sullivan.

He entered with a phalanx of bankers and regulators in suits and ties that converged on 1400 Washington St. just after the 6 p.m. close of business on Friday.

Bank of Clark County was basically a local bidness guys and gals bank, started by some local movers and shakers in the late 1990’s.

The bank grew quickly as it aggressively courted business borrowers and developers during Clark County’s building boom. But when the housing market soured, so did its finances, as did the finances of most other banks in the region.

Until recently, it was clear that the Bank of Clark County had lost money on construction and development loans, but not how bad things had become.

“The last number of months they saw tremendous decreases in some of the values in their loan portfolio,” said Brad Williamson, director of the state Department of Financial Institutions banking division. “That requires a bank to make tremendous loan loss provisions. If the bank does not have enough in earnings, it comes out of its capital.”

This is quite the blow to certain aspects of the Clark County economy. The credit crunch and housing bubble deflation were already putting a severe strain on developers, and now their main local bank had to be seized by regulators.

It’ll be interesting to see what details emerge.

I’ve been neck deep in tech stuff recently, preparing for some cool new stuff in the HA universe, so I haven’t been writing much recently.  But I will again.  And soon.

So please be patient.

This is bad any way you slice it:

Retail sales plunged far more than expected in December, a record sixth straight monthly decline as consumers were battered by a recession, a severe credit crisis and soaring job losses, none of which are likely to ease anytime soon.

The Commerce Department reported Wednesday that retail sales dropped 2.7 percent last month, more than double the 1.2 percent decline that Wall Street expected.

And it’s especially bad for a border county.

Retail sales in Clark County experienced a sharp decline in last year’s third quarter as the effect of the housing slowdown continued to seep into the local economy.

According to a report Tuesday from the Washington Department of Revenue, the county’s store-only sales totalled $499.9 million in the three months ending in September. That was down 7.9 percent from $542.6 million spent at retail stores in the third quarter in 2007, and weaker than statewide trend.

Store-only taxable retail sales throughout Washington declined by 6.2 percent to $12.4 billion.

State lawmakers and local governments are chasing a constantly moving revenue target, and the target is going down, down, down.

That’s what happens when your system of taxation relies far too heavily on a regressive sales tax. By the time new revenue estimates are available, they’re most likely already outdated.

People are understandably worried about their own personal pocketbooks. I’m not so sure the wider public truly understands the huge impact on things we all take for granted, like schools, roads, police, parks and other basic services.

Our system of taxation never made much sense, and now it is just going to make things worse. And down here where a short drive over the river takes one to sales tax free Oregon, the trend is likely to accelerate.

Deep thought: usually recessions are relatively short and the state’s coffers are replenished. Is anyone talking much about what will happen in an extended downturn of say, two to four years?

The Seattle Times editorial board has published a correction today regarding a school scheduled for closure:  “It is the Old Hay building, not John Hay Elementary.”

That’s okay.  Mistakes happen, and it’s always good form to correct them. No biggie.

But as long as the Times’ editorialists are admitting their factual errors, it sure would be refreshing to see them admit their editorial errors as well.  You know… those times when their opinions were just plain wrong.

For example, take this bit of oh-so-conventional wisdom from a February 13, 2008 editorial:

The transit-only folks delude themselves if they believe voters killed last fall’s “Roads and Transit” ballot measure because they didn’t want the roads. They do want the roads. And the idea of combining transit and roads was right. Both are needed. The ballot measure failed because the light-rail part was too expensive and created a tax that was too high.

Uh-huh.

In hindsight, with the subsequent passage of the transit portion of the measure, and by a comfortable margin, the opinion leaders at the Times look pretty damn out of touch.  But it didn’t take much hindsight to pick apart the Times’ analysis, for as I wrote at the time:

Um… when the Times says voters “do want roads,” and the “measure failed because the light-rail part was too expensive and created a tax that was too high,” they’re basing those assertions on what? Polls? Intuition? Gentle assurances from John Stanton over foie gras and Chateau Lynch-Bages at the Rainier Club? A public opinion fairy they plucked out of their ass?

Yeah, that’s right, Prop 1 failed solely because of the rail portion of the package. All those polls that showed RTID dragging the measure down, and all that opposition from anti-roads advocates like the Sierra Club — that had absolutely nothing to do with Prop 1’s failure. Jesus… talk about deluded.

Of course, nobody’s perfect, and even I got it wrong on this issue, insisting during the months leading up to the 2007 measure that the powers that be would never allow a transit only measure on the ballot in 2008.  My bad.  But at least I admitted it.

Vancouver City Council member Tim Leavitt, who has announced he will challenge long-serving Mayor Royce Pollard for the city’s top spot, complains about Department of Ecology stormwater regulations:

Leavitt, an engineer by profession, doesn’t believe that is a reasonable rule to follow.

“Where do I find a map of pre-European development?” he asked during a Monday city council work session. “Did Lewis and Clark produce a map when they came out this way?”

Um, yes.

Seattle area house prices continued to fall:

House prices in King, Pierce and Snohomish counties dropped 1.4 percent from September and 10.2 percent from October 2007, according to Standard & Poor’s S&P/Case-Shiller Home Price Indices. Area prices now have fallen 11.4 percent from the July 2007 peak and are back to where they were in the spring of 2006.

The year-over-year decline was the first double-digit annual drop for S&P’s Seattle index, which goes back to the start of 1990, and put Seattle eighth among the 20 areas S&P tracks. The monthly drop was unchanged from September’s and good for fifth place.

The Portland area seems about the same:

The Portland-Vancouver area saw housing prices decline an average of 10.1 percent in the 12 months ending in October, according to the S&P/Case-Shiller Home Price Index report Tuesday.

The region’s price decline was not as bad as many other parts of the U.S. with urban areas such as Phoenix, Detroit and Las Vegas down more than 20 percent. Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006.

It’s good that our region might not be facing the kind of insane declines in value as some other places, but high inventory and economic uncertainty means more bumpy sledding lies ahead. It may be a “great time to buy a house,” as industry advertising suggests, but only for those with stellar credit. Not sure there are enough of those folks left to really stabilize things right now.