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"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith

Article: Bubble trouble

Written by Lawsmith | Friday 15 February 2013

Last week, Standard & Poor's, the rating agency, was sued by the U.S. Department of Justice (USDoJ) in a Los Angeles federal court for “knowingly and with intent to defraud, devis(ing), particpat(ing) in, and execut(ing) a scheme to defraud investors in (residential property securitisations) and CDOs, including federally insured financial institutions... and to obtain money from these investors by means of material false and fraudulent pretenses, representations, and promises and the concealment of material facts.”

Even to persons legally trained, this is weighty stuff. One of the most amusing ways I know to frighten an unschooled junior lawyer is to sit him or her down in front of a structure diagram of a securitisation, a jumbled mess of agreements, parties, cashflows, security arrangements, and hedging – and then change slides to display a CDO, a securitisation of securitisations, a stacked jumble of jumbles. (Instant fun.) Despite the visuals, however, such transactions are conceptually very simple: one takes assets that throw off a steady stream of income (such as residential mortgages), models the cashflows arising from them, and creates debt instruments which match the payments from the assets with the payments on the notes. Those notes or bonds are then sold, with the seller recouping the capital value of the assets in the present in exchange for investors' acquiring the future flows of income.

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All cats go to heaven

Written by Lawsmith | Monday 17 September 2012

YouTube is an incredibly easy way for ordinary people to communicate with one another and the world. It is therefore open to abuse, the consequence being that much of its content is not to be taken seriously: extraterrestrial Freemasons, Leonid Brezhnev rap videos, and amateur films mocking religion and religious figures -- any religion you can think of, from Scientology to the Church of Raptor Jesus -- abound. Yet last week Google took the unprecedented step of banning one single YouTube video in three countries (Egypt, Libya and India) in order to protect the sensibilities of the peoples who populate those lands.

Amid all of the stupidity one can find on YouTube, it is difficult to understand why this is necessary. In individual life, one would only expend such an effort on behalf of a truly delicate little snowflake, someone for whom the facts are simply unbearable. One does not tell one's three-year-old that the cat, Fluffy, has died; Fluffy goes "to Cat Heaven". One does not, in a group, call out a compulsive liar mid-flow; one "smiles and nods" and pretends to be amused, and then slowly backs away. One does these things of one's own free will, to protect an interlocutor from shock or humiliation, and for the sake of convenience, because causing a scene would result in the expenditure of far more effort than it is worth.

To try this trick with nations of men is another matter, and one with civil liberties implications. Steve Henn, writing for National Public Radio, points out that in the present context, Google's censorship is "an example of the challenges of balancing U.S. free speech concerns and of something known as the 'heckler's veto'" -- the problem faced when one person or a group of people resort to extreme means (e.g. threats of violence) in order to silence public discourse. This has happened several times in the past several years (think Terry Jones and Jyllands-Posten). And on each occasion, the riots failed utterly in their aims: as even the most cursory search on Google will reveal (find it yourself - I will not provide a hyperlink for reasons which will become readily apparent in the following paragraph), the liberal peoples of the West have responded to extremist tantrums by producing mountains of blasphemy and ridicule, the most recent iteration being the film implicated in last week's unrest.

But before we congratulate ourselves for our tolerance and humanity, we should take a hard look in the mirror. Last week, in Leeds, on 14 September (3 days after the attacks which destroyed the U.S. consulate in Benghazi), Azhar Ahmed, a 19-year-old from West Yorkshire, was convicted of making "derogatory, disrespectful and inflammatory" remarks under the Malicious Communications Act. His crime? Writing a Facebook post which stated, shortly after the funeral of a number of British soldiers from the area, that "all soldiers should go to hell". In the United Kingdom, such a communication falls foul of a provision of the Act which states that "a person who sends to another person a(n)... electronic communication... of any description which conveys a message which is indecent or grossly offensive... is guilty of an offence if his purpose [or one of them] in sending it is that it should... cause distress or anxiety to the recipient". He made the post; distress was intended and caused; judicial sanction followed.

At this point I would say, being a lawyer, that he made the crucial mistake of putting it in writing. But if he'd yelled the same thing at a funeral (or even a parade), that would have been of no assistance to the free exercise of his rights: a case on nearly identical material facts, but relating to spoken expression (R v Abdul, 2008) resulted in a half-dozen convictions under Section 5 of the Public Order Act. And this is far from the only case of its kind - there are dozens of reported cases showing that all manner of political speech, religious speech, and even the casual F-word can, under the right circumstances, fall foul of the legislation. The man on the Clapham omnibus has as much of a heckler's veto as the Salafist on a Cairo street; furthermore, the man on the Clapham omnibus is state-backed.

David Cameron described the attacks on the Libyan embassy as "senseless". I totally agree. In a free society the expression of a controversial opinion by an individual should not, under any circumstances, justify the threat or application of violence by other men in order to silence that opinion.

But Azhar Ahmed has been so silenced. Until we end the criminalisation of those opinions which offend us, we cannot justifiably claim that we are any different from the mob.

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A gradual tightening

Written by Lawsmith | Monday 10 September 2012

Ayn Rand’s Howard Roark succinctly summarises the only real obstacle to individual achievement in a single line: “the question isn’t who is going to let me; it’s who is going to stop me.”

Fans of Rand (and private sector workers) know that few forces in the world have more stopping power than a government. With its monopoly on violence and its ability to rewrite the rules, government possesses the power to interfere with the private lives of those who live under it even when these persons are willing to abide with the multitude of other laws, regulations and taxes, not all of them fair, to which they are subject. And in the exercise of this power it can be unfair and arbitrary; democracies and tyrannies alike have the power to reduce the efforts of a single person to nothing, to crush him utterly for any reason such a government might choose. Last month brought the news that, as has happened many times in many nations, our government has done exactly that.

By revoking the “very highly trusted” status of London Metropolitan university without providing for any transitional arrangements, the Home Office gives that institution’s current and future students a mere 60 days to either find an alternative sponsor or to self-deport. These are not very good options.

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New at These Olympic Games are nothing to be proud of

Written by Lawsmith | Friday 27 July 2012

The London 2012 Olympic Games have been a triumph of wastefulness, nannying government, corporatism, deceit and incompetence. Our writer Lawsmith asks, how could our political class have gotten it so wrong?

The first and only time I've met Boris Johnson was when we were on our bicycles at the traffic light at the bottom of King William Street in the City. I stammered: "Uh, good morning, Mr. Mayor." Play it cool. After a brief (and awkward) exchange, he pushed off, away from my sight and into eternity.

Months later, as the tangible effects of the Olympic Movement's month-long occupation of central London started to make themselves felt, my thoughts once again turned to my cycling buddy. After reminding yourself for a moment that Boris once gave some constructive criticism to the city of Portsmouth by saying it was "too full of drugs, obesity, underachievement and Labour MPs," and that barely two months ago he referred to the BBC – which, like that brainchild of the Blairite Labour Party, the 2012 Olympics, is state-run – as “corporatist, defeatist, anti-business, Europhile and… overwhelmingly biased to the Left”, I take the view that BoJo -- currently the Games' biggest cheerleader -- would be doing one thing, and one thing only if he were in opposition (if he were so inclined).

He would tear the government, the media, and anyone even remotely associated with bringing the Olympics here to shreds.

In his absence, others have tried. Most have failed to make a dent. Dominic Lawson, writing for the Independent, fired the opening salvo of reason against Olympics fever last month — writing a fairly broad-brush piece which covered most of the general criticisms of this circus (cost, inconvenience, armed police), he scored his best points at the ‘leftist’ BBC's expense: "[news coverage of the Games] really does make one feel as if this is North Korea,” he wrote, “rather than a country supposedly characterised by individualism and nonconformity."

Read this article.

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The ballad of Theresa May

Written by Lawsmith | Monday 02 April 2012

By all accounts, this was a crappy week
for Mr Cameron and his Tories.
After taxing granny, pasties and the meek,
and seeing George Galloway crowned in glory,
the Home Office creates a scheme so fearful,
antithetical to liberal thought,
I'd pay a lot to give a great big earful
to a minister (shame they can't be bought-
that is, unless it's Dave that you'd like to see.
I wonder if George charges VAT).

The plan, we're told, is the implementation
(necessary for survival of the State)
of a GCHQ listening station
to stop these pesky terrorists of late.
We need this new system here and now!
But passage of the bill can wait till post-
the Games, as "Parliamentary time allows",
just exactly when we will need it most
"to obtain effective, real-time, viewing stats"
of web use (this includes photos of cats).

Never mind all the current legislation,
extensive in consequence and scope,
now laws that govern the British nation.
(They should not instil you with too much hope.)
I shall provide an example here for you:
see "section 58"! Ten years, for taking
picture of a building in full view.
And if they can't prove you're below the board, Her
Maj can slap you with a Control Order.

They say stop-and-search mitigates the risks,
which as of the year two thousand and nine
meant none were arrested, six figures frisked
(the perps got away in the nick of time).
And remember that Libyan revolution
and how you took to Twitter fervently?
That's speech unsafe under our constitution
(you'll be needed at Belmarsh, urgently).
Want to tear down a foreign state? Well, this here's
unlawful, and will get you seven years.

When a book can be illegal and jail needs no charge,
the state has the tools it needs to play rough.
It's time to push back on Big Brother writ large:
we must say, and loudly, "enough is enough."
But I've now said plenty. Enough out of me:
time to get on the horn and call your MP.

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The perfectly ordinary case of Ryan Lavery

Written by Lawsmith | Tuesday 31 January 2012

In Northern Ireland, there is a man named Ryan Lavery, who used to live next to the Ballykinler military installation in County Down. Lavery, whose solicitor describes him as a "trainspotter, an anorak, a nerd with no friends" and who would, if "put beside an airport... take pictures of planes," used to be in the habit of taking photographs of cars entering and leaving the nearby base from his home. From time to time, he would write down a list of registration numbers of cars he observed in this way, and it is on account of this unusual hobby that, last Friday, Mr Lavery found himself standing before a Northern Irish magistrate, deprived -- at least for the moment -- of his liberty.

Information on his case is scant, and media coverage light. What I have been able to glean from open-source media reports is that Mr. Lavery is accused "of collecting information likely to be useful to a person committing or preparing an act of terrorism," namely the photographs, and of "having a document likely to be of use to terrorists", i.e., the list of registration numbers. While my familiarity with the Lavery case goes no further than that which has been reported by the media, I am going to venture a guess that he has been charged under the Terrorism Act 2000, s. 58 - which proscribes "possessing or making a record of information of a kind likely to be useful to a person committing or preparing an act of terrorism, or possessing a document or record containing information of that kind." While it is a defence to this charge for the accused to demonstrate that he had a reasonable excuse for making the images and possessing the list of registration numbers, whether Mr. Lavery's brand of budget, home-bound trainspotting will hold water with a judge is another question entirely. If it does not, the allegedly friendless Mr Lavery has a potentially very serious problem on his hands: the maximum penalty for contravening s. 58 is ten years imprisonment.

It would, of course, be wildly inappropriate to speculate as to Lavery's guilt or innocence at such an early stage, and from such a great distance, physical and factual, as I do from my perch in London. Yes, taking photographs of car number plates is something that someone with sinister intentions might do, but it is no more unusual than trainspotting or planespotting (though as far as hobbies go, I can think of better ones). However, given the legislation currently on the books, we should not find the fact of his arrest unusual in the least.

Even before the September 2001 attacks against the United States, terrorism has presented a vexing problem for liberal democracies: on the one hand, while Western democracies exist largely free of separatist or revolutionary civil conflicts (changing governments through a polling booth is much more straightforward, and allows the majority of the population to do their bit and get home in time for TV Burp or Dancing on Ice), those who really wish to engage in political violence have historically not had a great deal of trouble doing so: wrote Paul Wilkinson in 2000, "The intrinsic freedoms of the democratic society make the tasks of terrorist propaganda, recruitment, organisation and the mounting of operations, a relatively easy matter. There is ease of movement in and out of the country... Rights of free speech and a free media can be used as shields for terrorist defamation of democratic leaders and institutions and terrorist incitement to violence." Of course, when our governments address the threat and are "provoked into introducing emergency powers... (they confront) the paradox of suspending democracy in order to defend it." Unquestionably, Britain was so provoked (in 2005), and liberal democracy was suspended in due course.

Using the excuse that terrorism poses a greater existential threat to the state than other forms of extreme violence (e.g. GBH, youth rioting, or non-political murder), the government enacted legislation to curtail and restrain terrorist activity, all of which is drafted very broadly when viewed through the lens of traditional criminal law. Writing in 2008, Sally Ramage points out that this approach is deliberate: the point of such legislation is to "allow the state to intervene at earlier stages of a criminal enterprise", and, according to Clive Walker, serve as a "platform for investigative police powers where there must be some margin of error." As a result, the British people have been made to endure sweeping new powers of arrest and detention, the criminalisation of many forms of free speech (see the ongoing debate over s. 1(3), and ss. 1-3 generally, of the Terrorism Act 2006), and the banning of information which might be of use to terrorists -- even if it isn't going to be used by terrorists. All of this has created a "climate of panic" where anything that has even the remotest connection to terrorism, whether it be a young girl's poetry, an opera, or a PhD thesis is treated as suspect by the nation's police forces, a broad range of culturally acceptable or benign expression is suppressed through fear of judicial sanction, and "prosecutorial discretion" is more determinative than the express intention of Parliament in deciding what is legal and what is not.*

Practically, this means police arrest far more citizens on suspicion of terrorism than are actually charged with any crime,** and we must keep in mind that this is the climate in which Ryan Lavery has been arrested. For that reason alone, his is a case worth following.

If the charges stick and there is in fact some sinister ulterior motive to Lavery's actions, then the local constabulary deserves a pat on the back and congratulations on a job well done. If, however, it becomes clear that there is nothing to this story and the charges are dropped -- which is my hunch, as I suspect the Co Down constabulary would have been rather more vocal with the press over the weekend if they had uncovered anything resembling a serious plot -- then the state, through the application of a widely criticised and overly broad act of Parliament, will have instantaneously blown apart the very private life of an eccentric, but nonetheless quiet, lonely, and reclusive man in front of the entire world. I can think of nothing more terrifying.

*Writing in 2007, Clive Walker pointed out that, "at the moment, too much depends on prosecutorial discretion as to who is treated as friend or foe. Plots against the Libyan regime of Ghaddafi were possibly encouraged years ago, but now there is rapprochement. Conversely, plots against Syria are openly tolerated." Expressing hopes for the violent overthrow of an Arab government is virtually certain to fall within the meaning of "encouraging terrorism" under s. 1(3) of the Terrorism Act 2006. Yet, while the Ghaddafi regime was still the competent legal authority running Libya, where were the arrests of supportive Tweeters, bloggers and journalists? A law which cannot be consistently applied without utterly crushing freedom of speech is not one which should be in force to begin with.

** ibid. at 331, referencing Hansard, HC Vol. 431, Col. 1621w (March 7, 2005) (Hazel Blears).

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