| Army Will Not Suspend Contracts with Al Qaeda-Tied Companies, Citing "Due Process Rights" Posted: 06 Aug 2013 09:40 AM PDT As amazing at it may seem, the US army will not suspend contracts with Al Qaeda-Tied Companies if the ties are based on classified information. Here are the key paragraphs straight from the SIGAR Special Inspector General Afghanistan Reconstruction Report for July 2013. A continuing problem is the Army's refusal to act on SIGAR's recommendations to suspend or debar individuals who are supporters of the insurgency, including the Taliban, the Haqqani Network, and al-Qaeda. The Army suspension and debarment official has taken the position that suspension or debarment of such individuals and entities would be a violation of their due process rights if based on classified information or if based on findings by the Department of Commerce which placed them on the Entities List.
SIGAR has referred 43 such cases to the Army, and all have been rejected, despite detailed supporting information demonstrating that these individuals and entities are providing material support to the insurgency in Afghanistan. In other words, they may be enemies of the United States, but that is not enough to keep them from getting government contracts. The above link is from the Fox News story Army won't suspend contracts with Al Qaeda-tied companies, citing 'due process rights' In a scathing passage of his latest report to Congress, Special Inspector General John Sopko said his office has urged the Army to suspend or debar 43 contractors over concerns about ties to the Afghanistan insurgency, "including supporters of the Taliban, the Haqqani network and al Qaeda."
Sopko wrote that the Army "rejected" every single case.
Sopko pointed out the apparent disconnect between one part of the Army that is killing insurgents and the other part that allegedly is doing business with them.
"I am deeply troubled that the U.S. military can pursue, attack, and even kill terrorists and their supporters, but that some in the U.S. government believe we cannot prevent these same people from receiving a government contract," he wrote in a letter attached to the report.
In the wake of the report, a bipartisan group of lawmakers introduced a bill aimed at restricting U.S. agencies from awarding contracts to supporters of extremist groups in Afghanistan. The bill would give the inspector general's office the authority to suspend Afghanistan contractors when agencies fail to review companies the office has flagged. Pressure Cooker Threats I invite the reader to compare what the US Army can or cannot do regarding military contracts with the targeting of journalists, and how an innocuous online search for a pressure cooker can lead to a knock on the door from the terrorism police. In case you missed the above story, please consider NSA tool collects "Nearly Everything You Do On the Internet"; Targeting Journalists; What Google Knows About You; Warrantless Cellphone Tracking Upheld . Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Reader Question: Does the Fed Balance Sheet Properly Reflect QE Announcements? Posted: 06 Aug 2013 08:19 AM PDT Reader Richard writes ... "Hi Mish I hope you can explain something. Everyone talks about QE of $85 billion per month, but where does the alleged money go? The fed's balance sheet doesn't reflect it. The balance sheet was up $720 billion from Aug 1, 2012 to Aug 1, 2013 ($309B in treasuries and $393B in MBS) but that is only $60B per month. Where is the other $25B per month everyone talks about. And from Aug 1, 2011 to Aug 1, 2012 (give or take a day or so), the Fed balance sheet only went up $9.997B in treasuries and went down $43.862B in MBS. So if QE is $85B a month, where is it and why doesn't it show up in the Fed's balance sheet." Fed's Balance Sheet  QE History Here is a bit of QE History from Wikipedia. Quantitative Easing 1 (QE1, December 2008 to March 2010)
"On November 25, 2008, the Federal Reserve announced that it would purchase up to $600 billion in agency mortgage-backed securities (MBS) and agency debt. On December 1, Chairman Bernanke provided further details in a speech. On December 16, the program was formally launched by the FOMC. On March 18, 2009, the FOMC announced that the program would be expanded by an additional $750 billion in purchases of agency MBS and agency debt and $300 billion in purchases of Treasury securities.
Quantitative Easing 2 (QE2, November 2010 to June 2011 )
On November 3, 2010, the Fed announced that it would purchase $600 billion of longer dated treasuries, at a rate of $75 billion per month. That program, popularly known as "QE2", concluded in June 2011.
Operation Twist (2011)
The Federal Open Market Committee concluded its September 21, 2011 Meeting at about 2:15 p.m. EDT by announcing the implementation of Operation Twist. This is a plan to purchase $400 billion of bonds with maturities of 6 to 30 years and to sell bonds with maturities less than 3 years, thereby extending the average maturity of the Fed's own portfolio. This is an attempt to do what Quantitative Easing (QE) tries to do, without printing more money and without expanding the Fed's balance sheet, therefore hopefully avoiding the inflationary pressure associated with QE. This announcement brought a bout of risk aversion in the equity markets and strengthened the US Dollar, whereas QE I had weakened the USD and supported the equity markets. Further, on June 20, 2012 the Federal Open Market Committee announced an extension to the Twist programme by adding additionally $267 billion thereby extending it throughout 2012.
Quantitative easing 3 (QE3)
On September 13, 2012, the Federal Reserve announced a third round of quantitative easing (QE3). This new round of quantitative easing provided for an open-ended commitment to purchase $40 billion agency mortgage-backed securities per month until the labor market improves "substantially".
The Federal Open Market Committee voted to expand its quantitative easing program further on December 12, 2012. This round continued to authorize up to $40 billion worth of agency mortgage-backed securities per month and added $45 billion worth of longer-term Treasury securities. The outright Treasury purchases as part of the augmented program continued at a pace comparable to that under "Operation Twist"; however, the Federal Reserve could no longer sell short-dated Treasury securities to buy longer-dated ones since they had insufficient holdings of short-dated Treasuries. Timing Issues It appears most of the discrepancy is a timing issue. It was not until December of 2012 that the Fed authorized up to $85 billion in asset purchases per month, adding an additional allocation of $45 billion per month of long-term treasuries. Other Issues Nonetheless, I bounced the question off Pater Tenebrarum at the Acting Man blog and he cited some additional factors that may cause discrepancies in Fed Balance Sheet reporting. - Delayed settlement of MBS buys (i.e. the payments and balance sheet increases tied to mortgage backed securities occur with a delay)
- Balance sheets adjustments due to unamortized discounts on securities held
- Fluctuations in repo balances
- Shrinkage in outstanding currency swaps
- Fluctuations in the treasury's cash balances with the Fed
- Declining balances of the Maiden Lane portfolio
- Changes in non-reserve bank deposits with FR banks
- Valuation changes in foreign currency assets
- Declining face value of mortgage backed securities as underlying mortgages are paid back
In essence, the Fed's balance sheet does reflect announcements (and of course the absurdity of those announcements). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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