Saturday, March 24, 2012

Some Antioxidants Can Damage DNA, but May Treat Cancer | ScienceDaily

ScienceDaily (Mar. 22, 2012) — Antioxidants have long been thought to have anti-aging properties, primarily by protecting a person's genetic material from damaging chemicals. The story, however, now appears to be much more complicated.

National Institutes of Health researchers from two institutes and one center have demonstrated that some antioxidants damage DNA and kill cells instead of protecting them. The findings, published in the Proceedings of the National Academy of Sciences on March 19, 2012, also suggest that this surprising capability may be good for treating cancer, but may prove cautionary when using antioxidant-based medicines to treat other disorders, such as diabetes.

It's an unexpected discovery, says Kyungjae Myung, Ph.D., a senior investigator in the Genetics and Molecular Biology Branch of the National Human Genome Research Institute (NHGRI), and the senior author on the report. It may have important clinical applications in treating people with cancer, especially if they have failed previous treatments.

Many people attempt to boost their levels of antioxidants by eating fruits and vegetables, nuts and grains, or by taking vitamins such as A, C, E and beta-carotene, among others. Some research suggests that antioxidants soak up compounds called free radicals produced by burning oxygen during normal respiration. Free radicals cause random chemical reactions that can damage cellular components, including DNA, leading to disease. By adding antioxidants to the diet, many people hope to slow down the process that some believe contributes to the normal process of aging.

Dr. Myung did not set out to challenge this anti-aging strategy, and the new findings may not fundamentally alter the approach; much more study will be needed. Instead, his lab studies DNA repair, the enzyme systems within a cell that fix mistakes and other damage that routinely accumulate in DNA as cells simply live and divide to make daughter cells. Researchers know that naturally occurring defects in DNA repair can lead to a number of disorders, including cancer.

To study DNA repair, Dr. Myung's group sought a new way to easily identify chemicals that damage DNA and then use those chemicals to study cellular repair mechanisms, a basic research question. Using a laboratory grown cell line from human kidneys, the NHGRI team, which included Jennifer Fox, Ph.D., lead author and post-doctoral fellow, developed a novel laboratory test, or assay, that readily shows when a chemical exposure damages DNA.

With the test developed, Dr. Myung's team formed collaborations with two other NIH research groups: The first was with what is now the NIH National Center for Advancing Translational Sciences (NCATS). Over the last several years, a team led by Christopher Austin, M.D., head of the NCATS laboratories, has developed high-throughput chemical screening systems using robotics. Dr. Austin agreed to use Dr. Myung's assay to rapidly test thousands of chemicals for their ability to damage DNA. But what chemicals should they test?

In 2008, the NIH Chemical Genomics Center, then part of NHGRI and now at NCATS, the National Institute of Environmental Health Sciences (NIEHS) and the U.S. Environmental Protection Agency (EPA) formed an initiative called Tox21 to develop high-throughput screening tests that measure cellular harm caused by environmental chemicals. The Tox21 team created a library of some 2,000 compounds and agreed to test them against Dr. Myung's assay. The NHGRI researchers also added a commercially available chemical collection to the screening runs for a total of some 4,000 chemicals.

The screening runs produced surprises, identifying 22 antioxidants that damaged DNA. Three of the antioxidants --resveratrol, genistein and baicalein -- are currently used -- or being studied -- to treat several disorders, including heart disease, type 2 diabetes, osteopenia and osteoporosis and chronic hepatitis, as well as serving as an anti-aging treatment.

Not only did the antioxidants damage the DNA, the researchers found, but also, in dividing cells (such as in tumors), the antioxidants can be lethal, killing the disease-causing cells. This is what's cool about biology, Dr. Austin said. Just when we think we understand something, it turns out to be more complex than we thought. Not only did the NHGRI team produce a novel way to measure DNA damage, but their test has given us insights into the effects of chemical compounds that were not seen in more conventional strategies.

The discovery opens up several new lines of research. As a first step, the collaborators are dramatically expanding the number of compounds -- more than 300,000 -- that will be tested with the new assay. The Tox21 team also has decided to include the NHGRI test in its standard screen for biological harm produced by environmental chemicals.

The clinical implications for these findings are more complicated. This initial discovery is only in lab-grown cell lines, not even in intact organisms. The relevance for humans has yet to be demonstrated.

Still, there is plenty of work already underway. Other researcher teams had launched various studies of these DNA-damaging antioxidants in various diseases. For example, 44 studies are currently listed in for resveratrol, which is found in many foods, including red grapes and wine, peanuts and chocolate. The studies focus on treating Alzheimer's disease, type 2 diabetes, obesity, inflammation, colon cancer, multiple myeloma, and testing other anti-aging strategies, among others. The newly reported study does not suggest that resveratrol in red wine is harmful; the dose is probably too low to be significant, Dr. Myung said.

Researchers also have launched 43 studies on genistein, including trials to treat cancers of the prostate, pancreas, bladder, breast, kidney and skin (metastatic melanoma) and as adjunct treatments for rare diseases such as cystic fibrosis.

Even though the antioxidants damaged the DNA, the researchers reported that the chemicals did not cause genetic mutations, another surprise. Because they don't cause genetic mutations, antioxidants may be useful for treating cancer, Dr. Myung said. Standard chemotherapy mutates the tumor's DNA, speeding its evolution and sometimes allowing it to escape the toxic treatment intended to kill it. This leads to multi-drug resistance in some cancer patient's disease.

To test whether the antioxidants might help, the NHGRI team borrowed some multi-drug resistant cancer cells from Dr. Michael Gottesman, a National Cancer Institute researcher and NIH Deputy Director for Intramural Research. Although these cells are very resistant to anti-cancer drugs, treatment with resveratrol appeared to sensitize the cancer cells, leading to their death. Resveratrol, Dr. Myung said, could prove useful in treating multi-drug resistant cancers.
The findings do raise concerns about using antioxidants to treat disorders, as treatment with high doses may cause unexpected DNA damage that leads to other problems. Clearly, Dr. Myung said, much more study will be needed.

Story Source:

The above story is reprinted from materials provided by NIH/National Human Genome Research Institute. The original article was written by Larry Thompson, Chief, NHGRI Communications and Public Liaison Branch. Note: Materials may be edited for content and length. For further information, please contact the source cited above.

Journal Reference: 1. J. T. Fox, S. Sakamuru, R. Huang, N. Teneva, S. O. Simmons, M. Xia, R. R. Tice, C. P. Austin, K. Myung. High-throughput genotoxicity assay identifies antioxidants as inducers of DNA damage response and cell death. Proceedings of the National Academy of Sciences, 2012; DOI: 10.1073/pnas.1114278109

Need to cite this story in your essay, paper, or report? Use one of the following formats: NIH/National Human Genome Research


Institute (2012, March 22). High-throughput screening finds surprising properties for antioxidants: Some compounds can damage


DNA, but may treat cancer. ScienceDaily. Retrieved March 24, 2012, from Note: If no author is given, the source is cited instead.

Disclaimer: This article is not intended to provide medical advice, diagnosis or treatment. Views expressed here do not necessarily reflect those of ScienceDaily or its staff.

Sunday, March 18, 2012

Bank of America: Too Crooked to Fail | MATT TAIBBI | Rolling Stone

MARCH 14, 2012 | 10:55AM

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, robo-signed evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.

All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure –and now that catastrophe might finally be at hand. Bank of America's share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.

They're in deep trouble, but they won't die, because our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured, putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices to the fraud.

Anyone who wants to know what the Occupy Wall Street protests are all about need only look at the way Bank of America does business. It comes down to this: These guys are some of the very biggest assholes on Earth. They lie, cheat and steal as reflexively as addicts, they laugh at people who are suffering and don't have money, they pay themselves huge salaries with money stolen from old people and taxpayers – and on top of it all, they completely suck at banking. And yet the state won't let them go out of business, no matter how much they deserve it, and it won't slap them in jail, no matter what crimes they commit. That makes them not bankers or capitalists, but a class of person that was never supposed to exist in America: royalty.

Self-appointed royalty, it's true – but just as dumb and inbred as the real thing, and every bit as expensive to support. Like all royals, they reached their position in society by being relentlessly dedicated to the cause of Bigness, Unaccountability and the Worthlessness of Others. And just like royals, they spend most of their lives getting deeper in debt, and laughing every year when our taxes go to covering their whist markers. Two and a half centuries after we kicked out the British, it's really come to this?

Bank of America started out in San Francisco in 1904 as an emblem of American capitalism. Founded by a first-generation Italian-American named Amadeo Giannini – it was even originally called the Bank of Italy – the bank set out to serve immigrants denied credit by other banks, and it was instrumental in helping to rebuild the city after the devastating earthquake of 1906.

But like many of the truly bad ideas in history, the present-day version of Bank of America was the product of a testosterone overdose. The concept of an overmassive, acquiring-everything-in-sight, bicoastal megabank was hatched in the terminal inferiority complex of a greed-sick asshole – actually two greed-sick assholes, both of them CEOs of Southern regional banks, who launched a cartoonish arms race of bank acquisitions that would ultimately turn the American business world upside down.

The antagonists were Hugh McColl Jr. and Ed Crutchfield, the respective leaders of North Carolina National Bank (which would take over Bank of America) and First Union (which turned into Wachovia), both based in Charlotte, North Carolina. Obsessed with each other, these two men transformed their personal competition into one of the most ridiculous and elaborate penis-measuring contests in the history of American business – even engaging in the garish Freudian spectacle of vying to see who would have the tallest skyscraper in Charlotte. First Union kicked things off in 1971 by erecting the 32-story Jefferson First Union Tower, then the biggest building in town – until McColl's bank built the 40-story NCNB Plaza in 1974. Then, in the late Eighties, Crutchfield topped McColl with the city's first post-modern high-rise, One First Union Center, at 42 stories. That held the prize until 1992, when McColl went haywire and put up the hideous 60-story Bank of America Corporate Center, a giant slab of gray metal affectionately known around Charlotte as the Taj McColl. When asked by reporters if he was pleased that his 60-story monster overwhelmed his rival's 42-story weenie, McColl didn't hesitate. Do I prefer having the tall one? he said. Yes.

For a time, this ridiculous rivalry between two strutting Southern peacocks was restrained by the law – specifically, the McFadden-Pepper Act of 1927 and the Douglas Amendment to the Bank Holding Company Act of 1956. These two federal statutes, which made it illegal for a bank holding company to own and operate banks in more than one state, were effectively designed to prevent exactly the Too Big to Fail problem we now find ourselves faced with. The goal, as Sen. Paul Douglas explained at the time, was to prevent an undue concentration of banking and financial power, and instead keep the private control of credit diffused as much as possible.

But these laws didn't sit well with Hugh McColl. To him, size was everything. We realized that if we didn't leave North Carolina, he explained later in his career, we would never amount to anything – that we would not be important. Note that he didn't say the ban on expansion prevented him from turning a profit or earning good returns for his shareholders – only that it put a limit on his sense of self-importance. So McColl and his banking minions set out to break down the interstate banking laws. First, in 1981, they used a legal loophole in Florida law to buy a bank branch there – evading the federal ban on out-of-state owners. Then, following a Supreme Court decision in 1985 that allowed banks to cross state lines within a designated region, he and Crutchfield went on a conquering spree worthy of a Mongol horde, buying up a host of banks in other Southern states. McColl, a silver-haired ex-Marine who would eventually be celebrated for bringing a military approach to his business, went to ridiculous lengths to play up the manly conquest aspect of his bank's merger frenzy, rewarding key employees with crystal hand grenades. By 1995, McColl had acquired more than 200 banks and thrifts across the South, while Crutchfield had snapped up 50.

A few years later, after Congress repealed most of the barriers to interstate banking, McColl took over Bank of America, realizing his dream of creating what one trade publication called the first ocean-to-ocean bank in the nation's history. Later, after McColl retired, his successors kept up his acquisitive legacy, buying notorious mortgage lender Countrywide Financial in 2008, and using some of the $25 billion in federal bailout funds they received to acquire dying investment bank Merrill Lynch. Both firms were infamous for their exotic gambles and their systematic cutting of regulatory corners – meaning that the shopping spree had burdened Bank of America with a huge portfolio of doomed trades and criminal conspiracies.

But to McColl, it was all worth it – because he would never have been important if he hadn't also been big. I have no regrets about building it large, he said in 2010, when asked if he considered all the monster consolidations a mistake in light of the crash of 2008. I may have some regrets about not building it larger.

This deeply American terror of not always having the absolutely hugest dick in the room is what put us in the inescapable box called Too Big to Fail. When the bailouts were dreamed up to save Bank of America, the government was essentially committing public resources to preserve this lunatic spending spree – which means two successive presidential administrations have now spent nearly half a decade and hundreds of billions of tax dollars defending the premise that Hugh McColl should always be allowed to have the taller one.

And why? The rationale for allowing that merger spree in the first place was based on a phony assumption: that big banks would somehow be more efficient and more profitable than small ones. The whole premise of a Citibank or a Chase or a Bank of America is wrongheaded, says Susan Webber, an analyst who writes one of the most popular and respected financial blogs under the pseudo-nym Yves Smith. Studies consistently show that after a certain size threshold, bank efficiency taps out. In fact, it turns out that all those cost savings the banks were supposed to enjoy from being bigger were actually based on cutting corners and fraud.

And man, what a lot of fraud!

In the end, it all comes back to mortgages. Though Bank of America would ultimately be charged with committing a dizzyingly diverse variety of corporate misdeeds, the bulk of the trouble the bank is in today arises from the Great Mortgage Scam of the mid-2000s, which caused the biggest financial bubble in history.

The shorthand version of the scam is by now familiar: Banks and mortgage lenders conspired to create a gigantic volume of very risky home loans, delivering outsize mortgages to dubious borrowers like immigrants without identification, the unemployed and people with poor credit histories. Then the banks took those dicey home loans and sprinkled them with bogus math, using inscrutable financial gizmos like collateralized mortgage obligations to rechristen the risky home loans as high-grade, AAA-rated securities that could be sold off to unions, pensioners, foreign banks, retirement funds and any other suckers the banks could find. In essence, America's financial institutions grew vast fields of cheap oregano, and then went around the world marketing their product as high-grade weed.

The holy trinity of Bank of America, Countrywide and Merrill Lynch represented the worst conceivable team of financial powers to get hold of this scam. It was a little like the Wall Street version of Michael Bay's nonclassic Con Air, in which the world's creepiest serial killer, most demented terrorist and most depraved redneck are all thrown together on the same plane. In this case, it was the most careless mortgage lender (the spray-tanned huckster Angelo Mozilo from Countrywide, who was named the second-worst CEO of all time by Portfolio magazine), the most dangerous mortgage gambler (Merrill, whose CEO was the self-worshipping jerkwad John Thain, the ex-Goldman banker who bought himself an $87,000 area rug as his company was cratering in 2008) and the most relentless packager of mortgage pools (Bank of America), all put together under one roof and let loose on the world. These guys were so corrupt, they even shocked one another: According to a federal lawsuit, top executives at Countrywide complained privately that Bank of America's appetite for risky products was greater than that of Countrywide.

The three lenders also pioneered ways to sell their toxic pools of mortgages to suckers. Bank of America's typical marketing pitch to a union or a state pension fund involved a double or even triple guarantee. First, it promised, in writing, that all its loans had passed due diligence tests and met its high internal standards. Next, it promised that if any of the loans in the mortgage pool turned out to be defective or in default, it would buy them back. And finally, it assured customers that if all else failed, the pools of mortgages were all insured, or wrapped, by bond insurers like AMBAC and MBIA.

It sounded like a can't-lose deal. Not only did the bank offer a written guarantee of the high quality of the loans it was selling, it also promised to buy back any bad loans, which were often insured to boot. What could go wrong?

As it turned out, everything. From tits to toes, the mortgage pools created, packaged and sold by Countrywide, Merrill Lynch and Bank of America were a complete sham: worthless and often falling apart virtually from the day they were delivered.

First of all, despite the fact that the banks had promised that all the loans in their pools met their internal lending standards, that turned out to be completely untrue. An SEC- investigation later found out, for instance, that Countrywide essentially had no standards for whom to lend to. As a federal judge put it, Countrywide routinely ignored its official underwriting guidelines to such an extent that Countrywide would underwrite any loan it could sell. Translation: Countrywide gave home loans to anything with a pulse, provided they had a sucker lined up to buy the loan.

How did they make these loans in the first place? By committing every kind of lending fraud imaginable –particularly by entering fake data on home loan applications, magically turning minimum-wage janitors into creditworthy wage earners. In 2006, according to a report by Credit Suisse, a whopping 49 percent of the nation's subprime loans were liar's loans, meaning that lenders could state the incomes of borrowers without requiring any proof of employment. And no one lied more than Countrywide and Bank of America. In an internal e-mail distributed in June 2006, Countrywide's executives worried that 40 percent of the firm's reduced documentation loans potentially had income overstated by more than 10 percent... and a significant percent of those loans would have income overstated by 50 percent or more.

What large numbers of Countrywide employees did every day was commit fraud by knowingly making and approving loans they knew borrowers couldn't repay, says William Black, a former federal banking regulator. To do so, it was essential that the loans be made to appear to be relatively less risky. This required pervasive documentation fraud.

So what happened when institutional investors realized that the loans they had bought from Countrywide were nothing but shams? Instead of buying back the bad loans as promised, and as required by its own contracts, the bank simply refused to answer its phone. A typical transaction involved U.S. Bancorp, which in 2005 served as a trustee for a group of investors that bought 4,484 Countrywide mortgages for $1.75 billion – only to discover their shiny new investment vehicle started throwing rods before they could even drive it off the lot. Soon after being sold to the Trust, U.S. Bancorp later observed in a lawsuit, Countrywide's loans began to become delinquent and default at a startling rate. The trustees hired a consultant to examine 786 loans in the pool, and found that an astonishing two-thirds of them were defective in some way. Yet, confronted with the fraud, Countrywide failed to repurchase a single loan, offering no basis for its refusal.

And what about that ostensible insurance that Bank of America sold with its bundles of mortgages? Well, those policies turned out not to be worth very much, since so many of the loans defaulted that they blew the insurers out of business. If you went bust buying bad mortgages from Bank of America, chances are, so did your insurer. At best, you two could now share a blanket in the poorhouse.

Many of the nation's largest insurers, in fact, are now suing the pants off Bank of America, claiming they were fraudulently induced to insure the bank's high lending standards. AMBAC, the second-largest bond insurer in America, went bankrupt in 2010 after paying out some $466 million in claims over 35,000 Countrywide home loans. After analyzing a dozen of the mortgage pools, AMBAC found that a staggering 97 percent of the loans didn't meet the stated underwriting standards. That same year, the Association of Financial Guaranty Insurers, a trade group representing firms like AMBAC, told Bank of America that it should be repurchasing as much as $20 billion in defective mortgages.

Some of these institutional investors were at least partial accomplices to their own downfall. In the boom era of easy money, financial professionals everywhere were chasing the lusciously high yields offered by these bundles of subprime mortgages, and everyone knew the deals weren't exactly risk-free. But ultimately, Bank of America was knowingly selling a defective product – and down the road, that product was bound to blow up on somebody innocent. A teacher or a fireman goes to work and saves money for their retirement via their pensions, says Manal Mehta, a partner at the hedge fund Branch Hill Capital who spent two years researching Bank of America. That pension fund buys toxic securities put together by Wall Street that were designed to fail. So when that security blows up, wealth flows directly from that pension fund into the hands of a select few.

This is the crossroads where Bank of America now lives – trying to convince the government to allow it to remain in business, perhaps even asking for another bailout or two, while it avoids paying back untold billions to all of the institutional customers it screwed, the list of which has grown so long as to almost be comical. Last year, the bank settled with a group of pension and retirement funds, including public employees from Mississippi to Los Angeles, that charged Bank of America and Merrill with misrepresenting the value of more than $16 billion in mortgage-backed securities. In the end, the bank paid only $315 million.

In the first half of last year, Bank of America paid $12.7 billion to settle claims brought by defrauded customers. But countless other investors are still howling for Bank of America to take back its counterfeit product. Allstate, the maker of those reassuring Dennis Haysbert-narrated commercials, claims it got stuck with $700 million in defective mortgages from Countrywide. The states of Iowa, Oregon and Maine, as well as the United Methodist Church, are suing Bank of America over fraudulent deals, claiming hundreds of billions in collective losses. And there are similar lawsuits for nonmortgage-related securities, like a revolting sale of doomed municipal securities to the state of Hawaii and Maui County. In that case, Merrill Lynch brokers allegedly dumped $944 million in auction-rate securities on the Hawaiians, even though the brokers knew that the auction-rate market was already going bust. Market is collapsing, a Merrill executive named John Price admitted in an internal e-mail, before joking about having to give up pricey dinners at a fancy Manhattan restaurant. No more $2K dinners at CRU!!

In the end, says Mehta, Bank of America's fraud resulted in one of the biggest reverse transfers of wealth in history – from pensioners to financiers. What the 99 percent should understand is that Wall Street knowingly inflated the bubble by engaging in rampant mortgage fraud – and then profited from the collapse of their own exuberance by devising a way to shift the losses to countless pension funds, endowments and other innocent investors. The assembled worldwide collection of swindled pensioners and unions and investors is a little like the crowd that storms the basketball court in the Will Ferrell movie Semi-Pro when the home team's owner welshes on his promise to hand out free corn dogs if the score tops 125 points. Corn dogs, Bank of America! Where are the freaking corn dogs!

Incredible as it sounds, owing practically everyone in the world billions of dollars apiece is only half of Bank of America's problem. The bank didn't just flee the scene of its various securities rip-offs. It also made a habit out of breaking the law and engaging in ethical lapses on a grand scale, all over the globe. Once your money ends up in their pockets, they just slither off into the night, no matter their legal or professional obligations.

Case in point: With all those hundreds of thousands of mortgages the bank bought, it simply stopped filing basic paperwork – even the stuff required by law, like keeping chains of title. A blizzard of subsequent lawsuits from pissed-off localities reveals that the bank used this systematic scam to avoid paying local fees. Last year, a single county – Dallas County in Texas – sued Bank of America for ducking fees since 1997. Our research shows it could be more than $100 million, Craig Watkins, the county's district attorney, told reporters. Think of that next time your county leaves a road unpaved, or is forced to raise property taxes to keep the schools open.

But the lack of paperwork also presented a problem for the bank: When it needed to foreclose on someone, it had no evidence to take to court. So Bank of America unleashed a practice called robo-signing, which essentially involved drawing up fake documents for court procedures. Two years ago, a Bank of America robo-signer named Renee Hertzler gave a deposition in which she admitted not only to creating as many as 8,000 legal affidavits a month, but also to signing documents with a fake title.

Yet here's how seriously fucked the financial markets are: Even the most vocal critics of Bank of America consider the mass, factory-style production of tens of thousands of fake legal documents per month not that big a deal. Robo-signing is like focusing on Bernie Madoff's accountant, quips April Charney, a well-known foreclosure lawyer who has spent large chunks of the past two decades in battle with Bank of America.

Robo-signing is not the disease – it's a symptom of Bank of America's entire attitude toward the law. A bank that's willing to commit whole departments to inventing legal affidavits might also, for instance, intentionally ding depositors with bogus overdraft fees. (A class action suit accused Bank of America of heisting some $4.5 billion from its customers this way; the bank settled the suit for a mere 10 cents on the dollar.)

Or it might give up trying to win government contracts honestly and get involved with rigging municipal bids – a mobster's crime, for which the accused used to do serious time, back when the bids were for construction and garbage instead of municipal bonds, and the defendants were Eye-talians in gold chains instead of Ivy Leaguers in ties and Chanel glasses. We now know that Bank of America routinely conspired with other banks to make sure it paid low prices for the privilege of managing the moneys of various cities and towns. If the city of Baltimore or the University of Mississippi or the Guam Power Authority issued bonds to raise money, the bank would huddle up with the likes of Bear Stearns and Morgan Stanley and decide whose turn it was to win the bid. Bank of America paid a $137 million fine for its sabotage of the government-contracting process – and in an attempt to avoid prosecution, it applied to the Justice Department's corporate leniency program, essentially confessing its criminal status: As plaintiff attorneys noted, the application means that Bank of America is an admitted felon. Think about that when you hear about all the bailouts the bank has gotten in the past four years. A street felon who gets out of jail can't even vote in some states – and yet Bank of America is allowed to receive billions in federal aid and dominate the electoral process with campaign contributions?

Some of the bank's other collusive schemes are even more ambitious. Last year, the bank was sued, alongside some of its competitors, for conspiring to rig the London Interbank Offered Rate. Many adjustable-rate financial products are based on LIBOR – so if the big banks could get together and artificially lower the rate, they would pay out less to customers who bought those products. About $350 trillion worth of financial products globally reference LIBOR, says one antitrust lawyer familiar with the case. Which means, she adds in a striking understatement, that the scale of this conspiracy is extremely large.

What's most striking in all of these scams is the corporate culture of Bank of America: These guys are just dicks. Time and again, they go out of their way to fleece their own customers, without a trace of remorse. In classic con-artist behavior, Bank of America even tried to rip off homeowners a second time by gaming President Obama's HAMP program, which was designed to aid families who had already been victimized by the banks. In a lawsuit filed last year, homeowners claim they were asked to submit a mountain of paperwork before receiving a modified loan – only to have the bank misplace the documents when it was time to pay up. The vast majority tell us the same thing, says Steve Berman, an attorney for the plaintiffs. Bank of America claims to have lost their paperwork, failed to return phone calls, made false claims about the status of their loans and even took actions toward foreclosure without informing homeowners of their options. The scheme allowed the bank to bleed struggling homeowners for a few last desperate months by holding out the carrot of federal aid they would never receive.

Even when caught red-handed and nailed by courts for behavior like this, Bank of America has remained smugly unrepentant. As part of an $8.4 billion settlement it entered into with multiple states over predatory lending practices, the bank agreed to provide homeowners with modified loans and promised not to raise rates on borrowers. But no sooner was the deal signed than the bank materially and almost immediately violated the terms, according to Nevada Attorney General Catherine Cortez Masto. It not only jacked up rates on homeowners, it even instituted a policy punishing any bank employee who spent more than 10 minutes helping a victim get a loan modification.

The bank's list of victims goes on and on. The disabled? Just a few weeks ago, the government charged Bank of America with violating the Fair Housing Act by illegally requiring proof of disability from people who rely on disability income to make their mortgage payments. Minorities? Last December, the bank settled with the Justice Department for $335 million over Countrywide's practice of dumping risky subprime loans on qualified black and Hispanic borrowers. The poor? In South Carolina, Bank of America won a contract to distribute unemployment benefits through prepaid debit cards – and then charged multiple fees to jobless folk who had the gall to withdraw their money from anywhere other than a Bank of America ATM. Seriously, who hasn't this bank conspired to defraud? Puppies? One-eyed Sri Lankans?

Bank of America likes to boast that it has changed its ways, replacing many of the top executives who helped create the mortgage bubble. But the man promoted from within to lead the new team, CEO Brian Moynihan, is just as loathsome and tone-deaf as his previous bosses. As befits a new royal, Moynihan defended a plan to gouge all debit-card users with $5 fees by citing his divine privilege: We have a right to make a profit. And despite the bank's litany of crimes, Moynihan seems to think we're just overreacting. After all, he gives to charities! I get a little incensed when you think about how much good all of you do, whether it's volunteer hours, charitable giving we do, serving clients and customers well, he told employees last October. Then, addressing would-be protesters: You ought to think a little about that before you start yelling at us.

In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court orders to stop its illegal robo-signing, and exploited President Obama's signature mortgage-relief program. The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to try to game the game itself – by fixing global interest rates!

So what does the government do about a rogue firm like this, one that inflates market-wrecking bubbles, commits mass fraud and generally treats the law like its own personal urinal cake? Well, it goes without saying that you rescue that admitted felon at all costs – even if you have to spend billions in taxpayer money to do it.

Bank of America should have gone out of business back in 2008. Just as the mortgage market was crashing, it made an inconceivably stupid investment in subprime mortgages, acquiring Countrywide and the billions in potential lawsuits that came with it. They tried to catch a falling knife and lost their hand and foot in the process, says Joshua Rosner, a noted financial analyst. It then spent $50 billion buying a firm, Merrill Lynch, that was rife with billions in debts. With those two anchors on its balance sheet, Hugh McColl's bicoastal dream bank should have gone the way of the dinosaur.

But it didn't. Instead, in the midst of the crash, the government forked over $45 billion in aid to Bank of America –$20 billion as an incentive to bring its cross-eyed bride Merrill Lynch to the altar, and another $25 billion as part of the overall TARP bailout. In addition, the government agreed to guarantee $118 billion in Bank of America debt.

So what did the bank do with that money? First, it sat by while lame-duck executives at Merrill paid themselves $3.6 billion in bonuses – even though Merrill lost more than $27 billion that year. In all, 696 executives received more than $1 million each for helping to crash the storied firm. (The bank wound up hit with a $150 million fine for its failure to inform shareholders about the Merrill losses and bonuses.) Bank of America, meanwhile, paid out more than $3.3 billion in bonuses to itself, including more than $1 million each to 172 executives.

In fact, the real bailouts of Bank of America didn't even begin until well after TARP. In the years since the crash, the bank has issued more than $44 billion in FDIC-insured debt through a little-known Federal Reserve plan called the Temporary Liquidity Guarantee Program. The plan essentially allows companies whose credit ratings are fucked to borrow against the government's good name – and if the loans aren't paid back, the government is on the hook for all of it. Bank of America has also stayed afloat by constantly borrowing billions in low--interest emergency loans from the Fed – part of $7.7 trillion in secret loans that were not disclosed by the central bank until last year. When the data was finally released, we found out that, on just one day in 2008, Bank of America owed the Fed a staggering $86 billion.

That means that when you take out a credit card or a mortgage or a refinancing from Bank of America, you're essentially borrowing from the state; the private bank is simply taking a cut as a middleman. For banks, the cost of capital is the key to success, says former New York governor Eliot Spitzer. So by lowering their cost of capital to almost zero, the Fed has almost guaranteed that the banks will make big profits.

Another public lifeline is Fannie Mae and Freddie Mac, the giant, nationalized mortgage lenders. Need to make some cash? Toss a bunch of home loan applications onto a city street, then sell the resulting mortgages to Fannie and Freddie, which are basically a gigantic pile of public money guarded by second-rate managers. Just like the state pensions in Iowa and Maine and Missis-sippi, Fannie and Freddie were targeted for sales of toxic mortgages, and just like those entities, they have sued Bank of America, claiming they were suckered into buying more than $30 billion in shitty securities. But unlike those other suckers, Fannie and Freddie continued to buy crap loans from Bank of America even after it was clear they'd been hoodwinked. Last year, the bank created more than $156 billion in mortgages – nearly $38 billion of which were bought by Fannie. Having the government as an ever-ready customer, standing by to buy mortgages at full retail prices, has always been an ongoing hidden bailout to the banks.

But even the government has its limits. In February, Fannie announced it would no longer keep blindly buying mortgages from Bank of America. Why? Because the bank, already slow to buy back its defective mortgages, had gotten even slower. By the end of last year, the government reported, more than half of all the crappy loans that Fannie wanted to return came from a single bad bank – Bank of America.

But if you think that Fannie cutting off the bank is good news, think again. If it can't get the money it's owed from Bank of America, it'll just go begging to the Treasury. Fannie has already asked for $4.5 billion to cover losses this year – and if Bank of America doesn't pony up, it'll have to reach even deeper into our pockets, making for yet another shadow bailout to the firm.

It gets worse. Last fall, some of the bank's biggest creditors and counterparties started to get nervous about the mountain of toxic bets still sitting on Merrill Lynch's books – a generation of ill-considered, complex, exotic derivative trades, bets on bets on bets on shaky subprime mortgages, sitting there on the company balance sheet, waiting to explode. Nobody felt good lending Bank of America money with that dangerous shitpile lying there. So they asked the bank to move a chunk of that mess from Merrill Lynch onto Bank of America's own balance sheet. Why? Because Bank of America is a federally insured depository institution. Which means that the FDIC, and by extension you and me, is now on the hook for as much as $55 trillion in potential losses. Black, the former regulator, calls the transfer an obscenity. As a regulator, I would have never allowed it. Transferring risk to the insured institution crosses the reddest of red lines.

But by far the biggest bailout to Bank of America has come via the sweetheart deals it cut to settle the massive lawsuits filed against it. Some of the deals, which were brokered by the Justice Department and state attorneys general, allowed the bank to get away with paying pennies on the dollar on its mountains of debt. Worst of all was the recent $26 billion foreclosure settlement involving Bank of America and four other major firms. The deal, in which the banks agreed to pay cash to screwed-over homeowners in exchange for immunity from federal prosecution on robo-signing issues, was hailed as a big multibillion-dollar bite out of the banks. President Obama was all but strutting over his beatdown of Wall Street. We are Americans, and we look out for one another; we get each other's backs, he declared. We're going to make sure that banks live up to their end of the bargain.

In fact, the government has a lousy track record when it comes to enforcing settlements. The foreclosure deal arrives on the heels of an $8.4 billion investor settlement, whose provisions Bank of America had already been accused of violating, raising rates and abusing homeowners as soon as the deal was struck. The bank also violated a previous settlement with the Federal Trade Commission, illegally slapping $36 million in fees on struggling homeowners after specifically agreeing not to do so. So Bank of America's reward for blowing off its previous settlements for mistreating homeowners was to get another soft-touch deal from the government, which they will presumably be just as free to ignore. Why? Because while state officials have ultimate enforcement authority over the foreclosure settlement, the early enforcement reviews will be handled by internal quality control groups. In other words, Bank of America itself will be grading its own compliance!

Even if Bank of America coughs up its share of the $26 billion settlement, the deal is woefully inadequate to address the wider fraud that went on in creating and pooling mortgages. It's like handing a box of tissues to someone whose immune system has been destroyed by AIDS, says Rosner. It doesn't come close to addressing the scale of the problem. Many Wall Street observers think that without the waiver from federal prosecution provided by the settlement, Bank of America would have faced billions in lawsuits for robo-signing offenses alone.

Oh, and one more thing, since we're talking about avoiding bills: Bank of America didn't pay a dime in federal taxes last year. Or the year before. In fact, they got a $1 billion refund last year. They claimed it was because they had pretax losses of $5.4 billion in 2010. They paid out $35 billion in bonuses and compensation that year. You do the math.

And here's the biggest scam of all: After all that help – all the billions in bailouts, the tens of billions in Fed loans, the hundreds of billions in legal damages made to disappear, the untold billions more of unpaid bills and buybacks – Bank of America is still failing. In December, the bank's share price dipped below $5, and after being cut off by Fannie in February, the bank announced a truly shameless plan to jack up fees for depositors by as much as $25 a month – what one market analyst called a measure of last resort.

The company reported positive earnings last year, with net income of $84 million, but analysts aren't convinced. David Trainer, a MarketWatch commentator, switched his rating of Bank of America to very dangerous in part because its accounting is wildly optimistic. Among other things, the bank's projections assume a growth rate of 20 percent every year for the next 18 years. What's more, the bank has set aside only $8.5 billion for buybacks of those crap corn-dog loans from enraged customers – even though some analysts think the number should be much higher, perhaps as high as $27 billion. Because more lawsuits are so likely, says Mehta, it's virtually impossible to decipher if Bank of America requires more equity, or even another tax-payer bailout.

But the only number that really matters is this one: $37 billion. That's the total bonus and compensation pool this broke-ass, state-dependent, owing-everybody-in-sight bank paid out to its employees last year. This, in essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives. Then, with the company on the verge of collapse, the inevitable state rescue. In this whole picture, the only money that's ever real is the fat bonuses the executives cash out of the bank at the end of each year. Fraud is a sure thing, says Black. The firm fails, unless it is bailed out, but the controlling officers walk away wealthy.

The Dodd-Frank financial reform approved by Congress last year was supposed to fix the problem of Too Big to Fail, giving the government the power to take over and disband troubled megafirms instead of bailing them out. The way to cut our Gordian financial knot is simple, MIT economist Simon Johnson wrote in The New York Times. Force the big banks to become smaller. But few in the financial community believe that will ever happen. If Bank of America crashes, the first thing that would happen is Dodd-Frank would be revealed as a fraud, says Rosner. The Fed and the Treasury would ask Congress for a bailout to 'save the economy.' It's the worst-kept secret on Wall Street.

In a pure capitalist system, an institution as moronic and corrupt as Bank of America would be swiftly punished by the market – the executives would get to loot their own firms once, then they'd be looking for jobs again. But with the limitless government support of Too Big to Fail, these failing financial giants get to stay undead forever, continually looting the taxpayer, their depositors, their shareholders and anyone else they can get their hands on. The threat posed by Bank of America isn't just financial – it's a full-blown assault on the American dream. Where's the incentive to play fair and do well, when what we see rewarded at the highest levels of society is failure, stupidity, incompetence and meanness? If this is what winning in our system looks like, who doesn't want to be a loser? Throughout history, it's precisely this kind of corrupt perversion that has given birth to countercultural revolutions. If failure can't fail, the rest of us can never succeed.

Related J.P. Morgan Chase's Ugly Family Secrets Revealed

This story is from the March 29th, 2012 issue of Rolling Stone.


Saturday, March 10, 2012

Unscientific America -- Denying Science at Our Peril | David Brin

March 10th 2012 01:59 PM |

Increasingly, science is failing to influence public policy. Facts, statistics and data appear insufficient to change highly politicized minds... and science has started scrutinizing why.

Chris Mooney, author of Unscientific America: How Scientific Illiteracy Threatens our Future, has a new book, The Republican Brain: The Science of Why They Don't Believe in Science, in which he describes how firmly some of our neighbors - even moderately well-educated ones - (and not just Republicans) - now cling to aphorisms, assertions and just-so stories in order to clutch a politically motivated view - or mis-view - of scientific data. Misinformation persists – and propagates – about the dangers of vaccinations, the hazards of nuclear energy, the credibility of creation vs. evolution, and the preponderance of data supporting global warming. In case after politically-redolent case, we find that evidence has a limited power to persuade on hot button issues where deep emotions are involved.

Misinformation persists – and propagates – about the dangers of vaccinations, the hazards of nuclear energy, the credibility of creation vs. evolution, and the preponderance of data supporting global warming. In case after politically-redolent case, we find that evidence has a limited power to persuade on hot button issues where deep emotions are involved.

I agree with Mooney that this delusion-conviction effect has done grievous harm to our once-scientific and rational nation. Still, I have some interesting quibbles that we'll get to in a bit.

Mooney describes in detail how bad it is - that millions of our neighbors deem facts to be malleably ignorable. For example, though soundly refuted by scientific studies, angry parents continue to believe their children acquired autism through vaccinations: Where do they get their 'science' from? From the Internet, celebrities, other frantic-angry parents, and a few non-mainstream researchers and doctors who continue to challenge the scientific consensus, all of which forms a self-reinforcing echo chamber of misinformation, writes Mooney, noting that for every five hours of cable news, just one minute is devoted to science. In 2009, 15 year old U.S. students ranked 17th out of 34 developed countries in science. A firm foundation in science is fundamental to modern citizenship as well as our ability to innovate and succeed in a global economy.

In fact, the “war on science” has ballooned long past any mere attack upon the credibility of researchers and professors. It now manifests as a general “war on all knowledge castes” -- including teachers, economists, journalists, civil servants, medical doctors, skilled labor, judges, diplomats... everyone (in other words) who actually knows a lot. All kinds of well-educated smartypants-types are routinely attacked on certain news -networks. (Go ahead and name an exception; there are two, but can you think of them?)

Science itself is turning attention to this problem and things are not looking good. According to one study (via Mooney): “The result was stunning and alarming. The standard view that knowing more science, or being better at mathematical reasoning, ought to make you more accepting of mainstream climate science simply crashed and burned.” It was found that conservatives who knew more tended to dig in their heels against new facts or budging their views, using what they already knew as bulwarks against changing their minds.

This did not hold for the other side. Educated liberals who were pre-disposed to be suspicious toward nuclear power nevertheless were adaptable when shown clear scientific data assuaging their fears.

(While it is true that liberals pas this test re nuclear power and several other issues. Still,I would love to see this experiment done on liberals re: nature-vs-nurture issues! See below.)

Mooney concludes that even education fails to serve as “antidote to politically biased reasoning.”

Take a look at this excerpt ( ) of Mooney's latest book, The Republican Brain: The Science of Why They Deny Science—and Reality (due out in April). It shows that our current Culture War is not about left vs right at all. It is about two very different sets of personalities and worldviews.

== The tricky Nostrums ==

Naturally, the War on Science is not something that even Fox admits to be waging. Indeed, the claim has long been made - by among others the late sci fi author Michael Crichton - that it is scientists themselves who are betraying the fundamental ethos and principles of their calling, For example, Crichton... and later many other apologists of the far right... denounced the very notion of scientific consensus, claiming that the term represents a foul practice - scientists voting on what is true, or meekly accepting a single paradigm in any field, harrying and persecuting any who question or dissent against the standard theory. This has proved a powerful polemical tool, because modern citizens know that this would be wrong - a travestry-treason against science itself. That is, if scientists were doing that.

Indeed, there have been cases where it happened. These examples of group-think compliance or bullying by tenured savants are taught to young scientists - as examples of how it should not be done.

And that's the point! Scientific consensus is used as a convenient button-phrase, a nostrum to attack scientists by proclaiming that they aren't objective, but lemming-like creatures, clustering around chanted litanies while conniving together in search of measly $50,000 grants. How ironic an example of the mirror effect, in which partisans making an accusation perceives their enemies as having their own primary traits.

In fact, scientists are the most competitive and creative our species ever produced. They go at each other like fierce predators and gladiators, constantly sniffing for the slightest weakness. There are no more dangerous minds than recently tenured professors whose main branch of research is going well, with steady funding. These young guns are constantly on the look out for some gap or flaw in the standard model, or some venerable giant to slay, using a corner of their lab to pursue some side matter that could topple the paradigm and make their reputation.

I have known many of these young guns... and their counterparts, the elderly scientists who consider their proper emeritus role to be that of shit-disturber! No matter where they live and work, they are the most American types alive today and that aspect of personality is one that should be emphasized, as we who want a future for our children push back against the War on Science.

== Then does scientific consensus have any meaning? ==

In fact, it does, though not not in the way the Michael Crichton meant.

Where consensus applies in science is not in the determination of absolute, unassailable truth, but in rank-ordering models of the world. These models compete and destroy each other, a process in which truth retains fuzzy boundaries, even while it continually grows. No scientist expects the current model or paradigm in his or her field to last forever... or even beyond the next conference. Ninety-five percent of the time, the next model will be an iteration of the current one...though sometimes the iteration is a big one, as Einsteinian gravity added whole layers to Newton's mechanistic models, without removing a scintilla of their earlier and ongoing usefulness.

Above all, this kind of consensus does not suppress competitive accountability and reasonable dissent. At least, it doesn't very much. Most of the time.

But even this tentative and contingent kind of consensus -- a rank ordering of models -- is viewed as dangerous to the interests of powerful men, when it threatens to influence public policy. As it should. Might I ask - what other source of input should be more directly valid in affecting policy than the recommendations of 95% of the experts who actually know a lot about the topic in question? People who do not have billions riding on the matter?

Can you see why undermining the credibility of science itself became a paramount matter, in certain quarters? Why, for example, the GOP under Newt Gingrich dissolved every in-house scientific and technical advisory group when they took over Congress in 1995 and virtually banished expert testimony? Or why there is more than enough blame to heap onto the laps of Nancy Pelosi and her fellow Democrats, for failing to correct this, when the had the chance?

== Testimony from Seven Planets ==

Scientific Consensus represents our best stab at modeling what at any given moment appears to be true. It is not some quasi religious cult thing but the best practical advice, gathered by the people who know the most. Earnest, skilled men and women who have (for example) studied the atmospheres and climates of SEVEN PLANETS and who have transformed the Weather Report from a four hour joke into a mostly reliable ten day forecast that folks at Fox rely upon to plan their own vacations, a miracle, using the same formulae and mathematics that apply to climate change. Imperfectly! Still, the credibility that they have earned... earned far more thoroughly than any politician, CEO or oligarch... ought to be a major influence on public policy -

- especially when 99% of the experts in a scientific field warn of great danger. And when the folks agreeing with them include the US Navy and the Russian military, busy planning hard for an ice-free Arctic.

Climate scientists aren't saying this is god-level truth. They are saying, let's take prudent measures to prepare in case the best and top models of the world turn out to be right. Especially since most of the measures are TWODA - Things We Ought to be Doing Anyway.

That's not dogmatism. The people who claim that it is are viewing us through their own mirror

James Dyson reinvented the vacuum. Now he wants to remake the economy | Doug Saunders | The Globe and Mail

James Dyson reinvented the vacuum. Now he wants to remake the economy

DOUG SAUNDERS TETBURY HILL, ENGLAND— From Saturday's Globe and Mail Published Friday, Mar. 09, 2012 6:39PM EST Last updated Saturday, Mar. 10, 2012 10:35AM EST

You have to drive far out into the West Country, through forested hills and ancient villages, if you want to find the last of the mad British inventors. His wide glass desk perches amid a clutter of aluminum tubes, DC-pulse motors, lithium-polymer batteries and whirring prototypes in a distant corner of a sleek, silver building that contains 1,450 engineers, accountants, marketing people, managers and lawyers, and not a single labourer.

A furtive industrial evolution gives Britain hope for economic recovery

Behind that desk sits the silver-haired man who has become the only living British inventor every school kid here can name, a guy known for building actual things. Five years ago, that status would have been almost quaint. Today, it puts him in the political vanguard, both at home and, increasingly, across the Atlantic.

James Dyson's surname adorns an expanding array of bag-less vacuum cleaners, blade-less fans and washroom hand dryers that actually dry your hands. His private company claimed more than a billion pounds in worldwide sales last year, growing right through the recession.

Now, though, Mr. Dyson, 64, is even better known as the leading proponent of the suddenly popular idea that Western nations ought to return to manufacturing and exporting physical goods, after decades of shifting the roots of their economies to services, property and finance.

His call for an assembly line renaissance has echoed far beyond Britain, where he was appointed a senior adviser to Prime Minister David Cameron's coalition government and has spawned a raft of policies.

In the United States, his argument has become a key front in the current electoral battle: Reindustrialization is a byword in many Republican primaries, such as this week's showdown in the Rust Belt state of Ohio. Meanwhile, President Barack Obama's lines on “green” manufacturing, innovation and education closely track with those of Mr. Dyson, who took to the U.S. airwaves last month, arguing that the school system should be far more oriented to science and engineering, especially in poor neighbourhoods.

The problem, he explains in his crisp middle-class English, is that countries such as Britain, which was known two generations ago as “the workshop of the world,” have had the factory stripped from their DNA.

“We're traders and exploiters, we're the City of London, that's our culture,” he says. “So you have a greater status if you go into banking than you do if you go to a manufacturing firm in Birmingham and make something real and export it, and create wealth that way. That's the problem – it's historical. It's in our schools, it's in our culture and it's in our government.”

In fact, Mr. Dyson, Britain's most famous manufacturer, doesn't actually manufacture anything in Britain. He hasn't done so for 10 years, since he was refused local permission to expand his Wiltshire factory and came to the realization, as thousands of other manufacturers have, that hardly any of the components of his machines were made in Britain any more. So why not move everything to Asia, where it's simply easier to build things?

“There ought to be huge advantages to manufacturing in England,” he says with an indignation that hasn't dulled over the decade. “This is where our headquarters are, it's where our managers are, our engineers. We've got two bigger offices in Singapore and Malaysia, and we don't want to do that – it's a logistical nightmare – but we're forced to do it.”

It's not the labour, he says. Few companies shift their manufacturing overseas because of lower wages; in fact, many of the factory jobs for companies like his require some postsecondary education.

“Wages are a tiny percentage of our manufacturing cost,” he says. “We'd happily pay British labour costs rather than Southeast Asian labour costs and not have to manufacture 8,000 miles away. The reason we went there is that we weren't allowed to expand, and all of our suppliers were in the Far East. Why buy a British plug cable made in Taiwan, ship that all the way back to England to install it, then ship that all over the world? The problem we face now is that China and the Far East are manufacturing economies, and shortly probably India and South America. And we can't compete with that. … It's the cost of our whole infrastructure, our employment laws and our skills … the management skills in particular. And we're a very expensive place to make things.”

Before 2008, this was simply the complaint of one businessman, railing against an economic system that was designed around services, software and real estate, and seemed to be running very smoothly indeed. But the global economic downturn has given his message a new universality. After all, it was the financial-services and property sectors that collapsed; industry-driven economies such as Germany and Singapore experienced record-breaking export booms and avoided the crisis.

Countries such as Canada and Britain have a weakness: Having abandoned manufacturing almost completely, they are vulnerable to the uncontrollable destinies of natural resources and the financial industry. But Mr. Dyson describes it as only one symptom of a larger problem: a Western world, especially the former branches of the British Empire such as Britain and Canada, that has lost its will to invent and make things.

“The trouble with Britain is that it built its success on the riches of its empire, rather than building its success on a manufacturing economy – we went out to the empire and flogged them what products we had, and took their resources, and made money off it. There was no need to be the best.”

Canada followed a similar path, shifting its economy away from manufacturing and into a greater reliance on natural resources and financial services (although not as much as Britain – Canada still maintains some export leaders, such as Bombardier and Research in Motion). This, Mr. Dyson says, is a recipe for vulnerability, as it has made his country, and ours, dependent on the shifting fates of resource pricing and market activity. The solid employment and export earnings of an industrial would provide more stability, he says.

Can we compete with Asia and South America?

But he fears it may be too late. “The problem now is that China is rising rapidly, the Southeast Asian countries, the United States is very strong on technology, Japan, Korea and now South America – so what on Earth is [Britain's] future going to be? No empire any longer, the North Sea oil drying up and we're not a cheap manufacturing nation; we've even lost our ability to manufacture.”

The Dyson solution involves shifting the education system, the tax system and the government's priorities to making industrial manufacturing something that is once again desired, supported and rewarded.

For example, Mr. Obama, buoyed by the success of George W. Bush's Detroit auto-industry bailout and the strong uptick in exports with the cheaper dollar, is pushing for a U.S. industrial policy designed to make goods exports easier. As he points out, manufacturing made up 25 per cent of the U.S. economy in 1980; it has now fallen to less than 10 per cent. A study last month by the Washington-based Brookings Institution makes the case for a reindustrialization of America, finding that manufacturing jobs boost average salaries and productivity, provides the research and development investments that are the main source of innovation for the service industry and, perhaps most importantly, provides a large-scale rise in foreign-exchange earnings that would reduce the U.S. balance-of-payments deficit – the fundamental cause of the economic crisis.

“Economists agree that the United States must rebalance growth, away from consumption and imports financed by foreign borrowing, toward exports,” says Laura D'Andrea Tyson, the economist who chaired Bill Clinton's Council of Economic Advisers. “The only way the United States can … make a significant dent in its trade deficit for the foreseeable future is by increasing exports of manufactured goods.”

In a tip of the hat to Mr. Dyson, George Osborne, Britain's Chancellor of the Exchequer, tabled “a budget for making things” last year and loaded it with tax relief for small business, laws to reduce planning and bureaucratic barriers, grants to entrepreneurs and plans to double the number of technical colleges and apprenticeship programs.

Indeed, Mr. Dyson played a large part in the election of Mr. Cameron's government: He wrote a report, “Innovative Britain,” calling for tax and education systems designed to move people into design and manufacturing; it was a major subject of the 2010 election, and almost all of its recommendations have been implemented.

Now, he is pushing particularly hard to reinvigorate the inventing trades in Britain: He points out that only 6 per cent of British graduates study engineering, compared with 13 per cent in Germany and 40 per cent in Singapore.

It could be a good moment to bring manufacturing back home: Overseas wages and employment costs are rising, as are long-distance shipping costs, and political instability and natural disasters have shown the weaknesses in long, complex, multinational supply chains. Perhaps it is easier, some companies now say, to have all your suppliers within driving distance, even if that costs more. That's what auto manufacturers have long done.

What is a job? What's a factory?

But this is not a simple or uncontroversial matter.

A big reason why manufacturing jobs and factories moved to the Far East was because Asia and the rest of the developing world have a very different definition of “job” and “factory.” Western manufacturing, by the end of the Second World War, had come to be based around what some economists called a Fordist model: After the innovations of Henry Ford and his industrial comrades, factory jobs became lifelong, secure relationships between employer and employee, and factories permanent features on the landscape.

When Mr. Dyson complains about the 25-year leases he is expected to sign on British factory land, or the employment laws that make it a big burden to hire an additional worker (in large part because it's so expensive to fire them), he is complaining about the legacies of Fordism.

Asian manufacturers work in a “post-Fordist” economy in which labour and capital are flexible and fast-moving. If he sets up a vacuum-cleaner factory in Malaysia, he can ask his aluminium-tube supplier to set up a parts factory down the road, and within a year it can be built, staffed and operational. If his sales fall, he can cut staffing levels quickly.

Millions of Westerners, perhaps the majority, live the post-Fordist life: the call-centre workers, the piecework food processors. But our governments and unions have spent generations making full-time industrial jobs secure and permanent. Changing that will be controversial and jarring. It's what the Detroit auto workers effectively did: In exchange for the Washington bailout, they and their unions agreed to sharp reductions in job security and benefits.

Some labour and political leaders argue that the sort of policies proposed by the Dysons of the world amount to the beginning of a levelling-down of Western standards to developing-world levels, when the opposite should be occurring.

Other economists argue that it isn't really about manufacturing: There is no reason, on paper, why a good is more valuable to the economy, more export-worthy or more productivity-enhancing than a service. Most employment takes place in services, and in many countries the lion's share of exports are services such as software, banking, consulting and things like waste collection. And the barrier between the two is breaking down: Is Amazon's Kindle operation really retailing goods, or are the readers themselves merely the physical front end for the much larger downloading service?

When people talk about using government to boost manufacturing, what exactly are they talking about subsidizing, and to what end? As Jared Bernstein, a former economic adviser to U.S. Vice-President Joe Biden, told a reporter after Mr. Obama proposed his industrial policy: “Every barbershop is now going to claim that they manufacture haircuts.”

Mr. Dyson and his allies dismiss such arguments. “It's a false view that services are just as good,” he says. “Services are very hard to export, and even if you do export them, they're very easy to copy. And manufacturing does provide a better living. The average salary at Rolls-Royce is £41,000 [$65,000] per year; the average salary at Lloyds Bank [Britain's largest service employer] is £17,500 [$28,000] per year. There's a very high standard of living in Switzerland and Singapore, and they're both manufacturing economies – the average salary in Singapore is $57,000 a year.”

He sees the source of salvation in Britain, Canada and similar countries in their universities – “our last remaining source of innovation and industrial leadership,” he says.

“It's always said about the British,” this quintessential Englishman says, “that we invent things and everybody else exploits them. And it's true. But I don't think it has to be that way, and now we have a grand opportunity to change it.”

It is perhaps fitting that this idea is being promoted by the man best known for reinventing the vacuum cleaner. This time, after all, what he is trying to fix is nothing less than a political and economic vacuum.

Doug Saunders is a member of The Globe and Mail's European bureau.

Saturday, March 03, 2012

Cory Doctorow: What’s Inside the Box | Locus Online Magazine

—posted Friday 2March2012@10:10am PST

Computer science has long wrestled with the question of how anyone can know what a computer or the programs running on it are doing. The Halting Problem described by Alan Turing in 1936 tells us that in complex cases, it’s impossible to predict what a computer program will do without actually running it. A related problem is knowing whether any defects or errors exist in a computer program. This is Gödel’s territory: his ‘‘incompleteness’’ tells us that it’s hard-to-impossible to prove that a program is free from bugs.

These sound like abstract problems, but they are vital to every computer user’s life. Without knowing what a computer might do in some circumstance, it’s hard to predict whether two programs will collide and cause unpredictable things to happen, like crashes, data-loss, or data-corruption. The inability to prove that programs are bug-free means that clever or lucky adversaries might find new bugs and use them to take over a computer’s functionality, which is how we get spyware and all its related infections.

After a bunch of ineffective answers (read: anti-virus programs), the solution that nearly everyone has converged on is curation. Rather than demanding that users evaluate every program to make sure that it is neither incompetent nor malicious, we delegate our trust to certifying authorities who examine software and give the competent and beneficial programs their seal of approval.

But ‘‘curation’’ covers a broad spectrum of activities and practices. At one end, you have Ubuntu, a flavor of GNU/Linux that offers ‘‘repositories’’ of programs that are understood to be well-made and trustworthy. Ubuntu updates its repositories regularly with new versions of programs that correct defects as they are discovered. Theoretically, an Ubuntu repository could remove a program that has been found to be malicious, and while this hasn’t happened to date, a recent controversy on the proposed removal of a program due to a patent claim confirmed the possibility. Ubuntu builds its repositories by drawing on still other repositories from other GNU/Linux flavors, making it a curator of other curators, and it doesn’t pretend that it’s the only game in town. A few seconds’ easy work is all it takes to enable other repositories of software maintained by other curators, or to install software directly, without a repository. Ubuntu warns you when you do this that you’d better be sure you can trust the people whose software you’re installing, because they could be assuming total control over your system.

At the other end of the scale, you have devices whose manufacturers have a commercial stake in curation, such as Apple and Nintendo. Apple gets 30% of all the sales from the App stores, and then a further 30% of all the transactions taking place within those apps. Naturally, Apple goes to great lengths to ensure that you can’t install ‘‘third party’’ apps on your device and deprive Apple of its cut. They use cryptographic signatures to endorse official apps, and design their devices to reject unsigned apps or apps with a non-matching signature. Nintendo has a similar business model: they charge money for the signature that informs a 3DS that a given program is authorized to run. Nintendo goes further than Apple with the 3DS, which automatically fetches and installs OS updates, and if it detects any tampering with the existing OS, it permanently disables the device.

Both Apple and Nintendo argue that their curatorial process also intercepts low-quality and malicious software, preventing it from entering the platform. I don’t doubt their sincerity. But their curatorial model treats owners as adversaries and executes countermeasures to prevent people from knowing what the programs on their devices are doing. It has to, because a user who can fully inspect the operating system and its processes, and terminate or modify processes at will, can subvert the curation and undermine the manufacturer’s profits by choosing to buy software elsewhere.

This means that when bad things do slip through the curatorial process, the owner of the device has a harder time discovering it. A recent example of this was the scandal of CarrierIQ, a company that makes spyware for mobile phones. CarrierIQ’s software can capture information from the phone’s GPS, look at its files, inspect your text messages and e-mails, and watch you enter your passwords. Carriers had been knowingly and covertly installing this software, shipping an estimated 150,000,000 infected handsets.

The carriers are cagey about why they did this. CarrierIQ characterizes its software as a quality assurance tool that helped carriers gather aggregate statistics useful for planning and tuning their infrastructure. Some industry insiders speculate that CarrierIQ was also used to prevent ‘‘tethering’’ (using your mobile phone as a data modem for your laptop or other device). CarrierIQ ran covertly on both iPhones and Android phones, but CarrierIQ was discovered on Android first.

Android is closer to Ubuntu in its curatorial model than it is to Apple’s iOS. Out of the box, Android devices trust software from Google’s Marketplace, but a checkbox lets users choose to trust other marketplaces, too (Amazon operates an alternative Android marketplace). As a result, Android’s design doesn’t include the same anti-user countermeasures that are needed to defend a kind of curation that treats users adversarially. Trevor Eckhart, the researcher who discovered CarrierIQ in the wild, was able to hunt for suspicious activity in Android because Android doesn’t depend on keeping its workings a secret. A widely distributed, free, and diverse set of tools exist for inspecting and modifying Android devices. Armed with the knowledge of CarrierIQ’s existence, researchers were able to go on to discover it on Apple’s devices, too.

It all comes down to whom users can trust and how they verify the ongoing trustworthiness of those parties, and what they trust them to do. You might trust Apple to ensure high quality, but do you trust them to police carriers to prevent the insertion of CarrierIQ before the phone gets to you? You might trust Nintendo to make a great 3DS, but do you trust them to ensure the integrity of their updating mechanism? After all, a system that updates itself without user permission is a particularly tasty target: if you can trick the device into thinking that it has received an official update, it will install it and nothing the user can do will prevent that.

Let’s get a sense of what trust means in these contexts. In 2010, a scandal erupted in Lower Merion PA, an affluent Philadelphia suburb. The Lower Merion School District had instituted a mandatory laptop program that required students to use school-supplied laptops for all their schoolwork. These computers came loaded with secret software that could covertly operate the laptops’ cameras (when the software ran, the cameras’ green activity lights stayed dark), as well as capturing screengrabs and reading the files on the computers’ drives. This software was nominally in place to track down stolen laptops.

But a student discovered the software’s existence when he was called into his principal’s office and accused of taking narcotics. He denied the charge and was presented with a photo taken the night before in his bedroom, showing him taking what appeared to be pills. The student explained that these were Mike & Ike’s candies, and asked how the hell the principal had taken a picture of him in his bedroom at night? It emerged that this student had been photographed thousands of times by his laptop’s camera without his knowledge: awake and asleep, clothed and undressed.

Lower Merion was just the first salvo. Today, a thriving ‘‘lawful interception’’ industry manufactures ‘‘network appliances’’ for subverting devices for the purposes of government and law-enforcement surveillance. In 2011, Wikileaks activist Jacob Applebaum attended the ‘‘wiretapper’s ball,’’ a lawful interception tradeshow in Washington DC. He left with an armload of product literature from unwitting vendors, and a disturbing account of how lawful interception had become a hotbed of subverting users’ devices to spy on them. For example, one program sent fake (but authenticated) iTunes updates to target computers, and then took over the PCs and gave control of their cameras, microphones, keyboard, screens, and drives to the program’s operators. Other versions disguised themselves as updates to Android or iPhone apps. The mobile versions could also access GPSes, record SMS conversations, and listen in on phone calls.

Around the same time, a scandal broke out in Germany over the ‘‘Staatstrojaner’’ (‘‘state-Trojan’’), a family of lawful interception programs discovered on citizens’ computers, placed there by German government agencies. These programs gathered enormous amounts of data from the computers they infected, and they were themselves very insecure. Technology activists in the Chaos Computer Club showed that it was trivial to assume control over Staatstrojaner-infected machines. Once the government infected you, they left you vulnerable to additional opportunistic infections from criminals and freelance snoops.

This is an important point: a facility that relies on a vulnerability in your computer is equally available to law enforcement and to criminals. A computer that is easy to wiretap is easy to wiretap by everyone, not just cops with wiretapping warrants (assuming you live in a country that still requires warrants for wiretapping).

2011 was also the year that widespread attention came to UEFI, the Unified Extensible Firmware Interface. UEFI is a hardware component that will be included in future PCs that checks operating systems to see if they have valid curatorial signatures before they are allowed to run. In theory, this can be used to ensure that only uninfected operating systems run (an infected system will no longer match the signature).

UEFI has additional potential, though. Depending on whether users are allowed to override UEFI’s judgment, this could also be used to prevent users from running operating systems that they trust more than the signed ones. For example, you might live in Iran, and believe that the Iranian police use UEFI to ensure that only versions of Windows with a built-in wiretapping facility can run on officially imported PCs. Why not? If Germany’s government can justify installing Staatstrojaners on suspects’ PCs, would Iran really hesitate to ensure that they could conduct Staatstrojaner-grade surveillance on anyone without the inconvenience of installing the Staatstrojaner in the first place? German Staatstrojaner investigators believe the software was installed during customs inspections, while computers were out of their owners’ sight. Much easier to just ban the sale of computers that don’t allow surveillance out of the box.

At the same time, a UEFI-like facility in computers would be a tremendous boon to anyone who wants to stay safe. If you get to decide which signatures your UEFI trusts, then you can, at least, know that your Ubuntu computer is running software that matches the signatures from the official Ubuntu repositories, know that your iTunes update was a real iTunes update, and that your Android phone was installing a real security patch. Provided you trust the vendors not to give in to law enforcement pressure (the Iran problem), or lose control of their own updating process (the CarrierIQ problem), you can be sure that you’re only getting software from curators you trust.

As an aside, other mechanisms might be used to detect subversion or loss of control or pressure – you might use a verification process that periodically checks whether your software matches the software that your friends and random strangers also use, which raises the bar on subversion. Now a government or crook has to get a majority of the people you compare notes with to install subverted software, too.

All this is pretty noncontroversial in security circles. Some may quibble about whether Apple or Nintendo would ever be subverted, but no one would say that no company will ever be subverted. So if we’re to use curation as part of a security strategy, it’s important to consider a corrupt vendor as a potential threat.

The answer to this that most of the experts I speak to come up with is this:

The owner (or user) of a device should be able to know (or control) which software is running on her devices.

This is really four answers, and I’ll go over them in turn, using three different scenarios: a computer in an Internet cafe, a car, and a cochlear implant. That is, a computer you sit in front of, a computer you put your body into, and a computer you put in your body.

1. Users know.

The user of a device should be able to know which software is running on her devices.

You can’t choose which programs are running on your device, but every device is designed to faithfully report which programs are running on it.

If you walk into an Internet cafe and sit down at a computer, you can’t install a keylogger on it (to capture the passwords of the next customer), but you can also trust that there are no keyloggers in place on the computer.

If you get behind the wheel of a car, you can’t install a hands-free phone app, but you also know whether its GPS is sending your location to law enforcement or carjackers.

If you have a cochlear implant, you can’t buy a competitor’s superior, patented signal processing software (so you’ll have inferior hearing forever, unless you let a surgeon cut you open again and put in a different implant). But you know that griefers or spies aren’t running covert apps that can literally put voices in your head or eavesdrop on every sound that reaches your ear.

2. Owners know.

The owner of a device should be able to know which software in running on her devices.

The owner of an Internet cafe can install keyloggers on his computers, but users can’t. Law enforcement can order that surveillance software be installed on Internet cafe computers, but users can’t tell if it’s running. If you trust that the manufacturer would never authorize wiretapping software (even if tricked by criminals or strong-armed by governments), then you know that the PC is surveillance-free.

Car leasing agencies or companies that provide company cars can secretly listen in on drivers, secretly record GPS data, and remotely shut down cars. Police (or criminals who can take control of police facilities) can turn off your engine while you’re driving. Again, if you trust that your car’s manufacturer can’t be coerced or tricked into making technology that betrays drivers to the advantage of owners, you’re safe from these attacks.

If you lease your cochlear implant, or if you’re a minor or legally incompetent, your guardians or the leasing company can interfere with your hearing, making you hear things that aren’t there or switching off your hearing in some or all instances. Legislative proposals (like the ones that emanated from the Motion Picture Association of America’s Analog Reconversion Working Group) might have the side-effect of causing you to go deaf in the presence of copyrighted music or movie soundtracks.

3. Owners control.

The owner of a device should be able to control which software in running on her devices.

The owner of an Internet cafe can spy on her customers, even if the original PC vendor doesn’t make an app for this, and can be forced to do so by law enforcement. Users can’t install keyloggers.

Car leasing agencies and companies with company cars can spy on and disable cars, even if the manufacturers don’t support this. Drivers can’t know what locks, spyware, and kill-switches are in the cars they drive.

You can choose to run competitors’ software on your cochlear implant, no matter who made it, without additional surgery. If you’re a minor, your parents can still put voices in your head. If you don’t trust your cochlear implant vendor to resist law-enforcement or keep out criminals, you can choose one you do trust.

4. Users control.

The user of a device should be able to control which software in running on her devices.

An Internet cafe’s owner can’t spy on his customers, and customers can’t spy on each other.

Car leasing agencies and employers can’t spy on drivers. Drivers don’t have to trust that manufacturers will resist government or crooks. Government can’t rely on regulation to ensure emissions, braking characteristics, or speed-governors.

Everyone gets to choose which vendors supply software for their implants. Kids can override parents’ choices about what they can and can’t hear (and so can crazy people or people who lease their implants).

Of these four scenarios, I favor the last one: ‘‘The user of a device should be able to control which software in running on her devices.’’ It presents some regulatory challenges, but I suspect that these will be present no matter what, because crooks and tinkerers will always subvert locks on their devices. That is, if you believe that your self-driving cars are safe because no one will ever figure out how to install crashware on them, you’re going to have problems. Security that tries to control what people do with technology while it is in their possession, and that fails catastrophically if even a few people break it, is doomed to fail.

However, the majority of experts favor three, ‘‘The owner of a device should be able to control which software in running on her devices.’’ I think the explanation for this is the totalizing nature of property rights in our society. At a fundamental level, we have absorbed Lord Blackstone’s notion of property as ‘‘that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe.’’

Especially when it comes to corporate equipment. It’s a hard-to-impossible sell to convince people that employees, not employers, should be able to decide what software runs on their computers and other devices. In their hearts, most employers are Taylorists, devotees of 19th century theories of ‘‘Scientific Management’’ that holds that a corporation’s constituent human parts should have their jobs defined by experts who determine the empirical, purely best way to do something, and the employees should just do it that way.

There’s a lot of lip-service paid to the idea that businesses should ‘‘hire smart people and let them solve problems intelligently.’’ Silicon Valley offices are famed for their commitment to freewheeling, autonomy-friendly workplaces, but IT departments have always been hives of Taylorism.

The mainframe era was dominated by IT workers who got to choose exactly which screens employees were allowed to see. If your boss thought you should only be able to compare column x against column y, that was it. Employees who literally smuggled in Apple ][+s running Lotus 1-2-3 to give them the freedom to compute in other ways were summarily fired.

Until they weren’t. Until the PC guerrillas were recognized by their employers as having personal expertise that was squandered through overtight strictures on how they did their jobs – the IT equivalent of the auto-plants that deployed Japanese-style management where teams were told to get the job done and were left alone.

But guerrillas have a way of winning and becoming the secret police. The PC-dominated workplace has a new IT priesthood that yearns to use UEFI as the ultimate weapon in their war against fellow employees who think they can do their jobs better with software of their own choosing.

But scenario four (users control) offers a different, more flexible, more nuanced approach to solving problems collaboratively with employees. A world in which employees can choose their tools, but know absolutely what those tools are doing (within the limits of computer science) is one where users can be told what they must not do (‘‘don’t run a program that opens holes in the corporate firewall or gets access to your whole drive’’) and where they can know if they’re doing what they’re told.

That only works if you trust your employees, which is a difficult bar for many corporate cultures to hurdle. Some dark part of every corporate id yearns to reduce every process to a pictographic McDonald’s cash register that can be operated by interchangeable commodity laborers who can be moved around, fired, and hired with impunity. The mature and humane face of management will always tell you that ‘‘human resources are our greatest asset’’ but it’s an imperfect veneer over the overwhelming urge to control.

How To Make Cold-Brew Coffee | Dan Souza ATK Feed

Caffeine nerds can rest (or wake) easy with a foolproof method for incredible iced coffee.

By Dan Souza | August 17, 2011

As a young student of the culinary arts, there were a handful of “commandments”—central tenets of good cooking—that each of my mentors persistently reinforced (read: screamed). One such precept, which has been indelibly seared into my cortex, is that heat equals flavor. Heat browns meat, caramelizes sugar, and extracts body-giving gelatin from bones. Heat also creates aroma, concentrates flavor compounds, and melts unctuous fats. If heat is so great (which it is), why on Earth am I promoting the practice of combining ground coffee with room-temperature water and letting it infuse slowly for hours? The answer lies in the fact that heat is indiscriminate.

It’s true that coffee brewed at 210 degrees will contain more aroma compounds, dissolved solids, and flavor than coffee brewed at 72 degrees. But this is one case where more isn’t necessarily better. Along with the good stuff, heat also extracts the majority of bitterness and astringency found in hot-brewed coffee. Exposed to far less heat, cold-brew is significantly less acerbic than its sweltering sibling. Less bitterness means that the subtler flavors found in coffee beans are more perceptible. For me, good cold-brew balances hints of dark chocolate, caramel, ripe black fruits, and vanilla with a pleasant viscosity, mild acidity, and pitch perfect bitterness. If my description sounds florid to you, it’s probably because you didn’t have cold-brew this morning. In all honesty, it’s lush, nuanced, and incredibly smooth.

Still, cold-brew does have its critics (myself at one time included). Naysayers complain that cold-brew lacks the body and complexity of flavor of a heat-extracted brew. Over the years I’ve tried to extract more richness and complexity from cold-brew coffee, in the hope of achieving the best of both worlds. I’ve tried a number of out-there techniques including an initial hot water bloom (there’s that heat again); pressurized brewing in a cream whipping canister; near-continuous agitation; and five-day-long extractions in the fridge. But none of these techniques improved my cup of cold-brew. What they did was turn a simple, satisfying process into a chore.

After reconciling my love of cold-brew with years of heat-focused culinary indoctrination I am now ready to pass along my own commandments on how to make good cold-brew coffee. I promise not to yell.

I use medium roast beans (left), which have been heated to a lower temperature than dark roast beans (right). Medium roast tastes more like coffee beans and less like the roasting process.

I grind my beans fine. Most cold-brew recipes call for medium-coarse or coarse ground beans, but that’s a mistake. The factors with the biggest impact on coffee extraction are water temperature, grind size, extraction time, and finally, agitation—in that order. Since I use room-temperature water I can scratch temperature off the list of variables and grind size becomes most important. Finer particles will release more flavor compounds than larger ones.

I combine room-temperature water (usually filtered, as my tap water doesn’t taste great) and freshly ground coffee in a large French press. The press makes it’s a snap to separate the concentrate from the grinds after brewing.

After about 10 minutes, a solid raft of coffee grinds will form on the surface. I find it important to stir this raft into the water to maximize contact with the ground coffee.

This is the one and only time I stir the cold-brew. As I mentioned before, agitation is last on the list of factors affecting extraction. I find it a nuisance to stir a batch of cold-brew multiple times over the course of a day; the good news is I don’t have to.

Next, I cover the French press with plastic wrap and let it sit at room temperature for 24 hours (give or take an hour in either direction). I’ve done room-temperature brews as short as 12 hours and as long as 72 hours. Twenty-four hours is consistently the sweet spot.

After 24 hours, I remove the plastic wrap and press the grinds to separate the concentrate.

Then I pour the concentrate into a coffee filter-lined fine-mesh strainer set over a large measuring cup or pitcher. Some would say that this filtering step is optional, but I don’t like silt and grit in my cup. Most of the concentrate will filter through unaided, but I find it helpful to gently clear the sediment with a rubber spatula to let the last few drops through.

Finally, I dilute the concentrate one-to-one with cold water and pour it into a glass with plenty of ice.

Now, instead of reaching for the sugar (which is unnecessary with super-smooth cold-brew) I stir in a pinch of Kosher salt. Just trust me on this one.