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How Prosecutors Think

The Gilmer Free Press

Those in our lives whom we consider to be most objective, who in many ways are paid to be objective, have repeatedly been shown to be anything but objective. Rather, they make decisions that are consistently influenced by unconscious (implicit) bias. White NBA referees call more fouls against black players than against white; MLB umpires are more likely to erroneously call a ball a strike if an all-star pitcher is on the mound; Israeli judges are more likely to grant parole at the beginning of the day than before lunch; doctors are less likely to provide adequate pain medication to patients of color and, because of bias, are prone to predictable errors in diagnostic reasoning.

Doctors’ cognitive errors and biases have been well studied and chronicled, most notably by Jerome Groopman in his book “How Doctors Think.” These include premature closure- latching on to a diagnosis too quickly; attributional bias- being unduly swayed toward a particular diagnosis because of a single patient attribute (age, race, gender) and ignoring evidence that points to alternative diagnoses; and confirmation bias- (often accompanying premature closure) accepting evidence that supports one’s diagnosis and discounting evidence that goes against it. This topic is, or at least should be, a critical component of every medical student’s education. I teach about it each year to medical students and a central theme that I emphasize is the need to recognize that unconscious biases are universal: that no one is immune; and that one needs to accept their existence, be aware of, rather than blind to, them. Deny them, ignore them, pretend they don’t exist and the risk of errors in diagnostic reasoning is certain to rise. As I followed the actions of the prosecuting attorney and the proceedings of the grand jury in the People of Missouri versus Darren Wilson case, I felt an eerie sense of familiarity with the risks, potential pitfalls, and resulting negative clinical outcomes that I teach about in class– I was watching a possible misdiagnosis unfold.

Soon after Michael Brown was killed, St. Louis County Prosecutor Robert McCulloch stated that he was not biased and if anything, he would be biased in favor of the victim. This, despite being the son of a police officer killed in the line of duty by an African American; this, despite more than 20 years working intimately with a mostly white police force; this, despite working during those same years to put mostly African American defendants behind bars. This despite having said about two unarmed black men killed in 2001 by DEA agents, “These guys were bums.”

McCulloch took a tack early on in the proceedings, however, that could shield him from charges of bias. He wouldn’t cherry-pick the evidence; he would show it all to the grand jury. How could that be biased? What McCulloch appears to have failed to recognize is that the way that evidence is put forward is susceptible to bias. One could argue that simply putting forward all of the witnesses (in this case 45) produced a situation in which greater inconsistencies between witnesses was virtually assured and the element of doubt, which would support a ruling of no true bill, would be raised.

McCulloch may have been swayed early in the case by attributional bias. Who was he to believe? Darren Wilson- a white police officer or Dorian Johnson- a dreadlocked African American who was with Michael Brown during a “strong-armed robbery” earlier that day, who had a criminal record and a history of lying to police? But McCulloch took another step to try to assure objectivity: he would place the foundation of his case on the “physical and scientific evidence.” In his announcement of the grand jury decision, McCulloch asserted that “Physical evidence does not change because of public pressure or personal agendas, physical evidence does not look away when events unfold, nor does it block out or add to memory. Physical evidence remains constant and as such is a solid foundation on which cases are made.” What McCulloch failed to recognize is that interpretation of physical evidence is not completely objective. Several interpretations of the autopsy advanced in the media are completely false. The autopsy did not prove that there was a struggle for the gun, rather it simply showed that Michael Brown’s hand was near the gun when he sustained the wound to his thumb. The autopsy did not prove, as some believe, that Brown could not have had his hands up with his palms facing Wilson. About the only thing that the autopsy could prove is that Wilson did not come up and shoot Brown in the back as he lay on the ground as a few witnesses asserted.

So how does it appear that McCulloch used his false interpretation of the evidence? In his announcement of the decision, he stated, “witnesses were confronted with the inconsistencies and conflicts between their statements and the physical evidence. Some witnesses admitted they didn’t see the shooting or only saw part of the shooting or only were repeating what they heard on the street. Some others adjusted parts of their statements to fit the facts. Others stood by their statements even though their statements were completely discredited by the physical evidence.” Sadly, the interpretation of key components of the physical evidence, the science that McCulloch stated was the foundation of his case was terribly flawed and was not actual fact.

Once McCulloch had the evidence he thought he needed to support Darren Wilson’s narrative, it appears that confirmatory bias came into play. Witness 10, who was one of the few witnesses to claim that Michael Brown charged the officer, was subject to virtually no cross-examination even though he initially stated that he was 100 yards away from the shooting. For that matter, Darren Wilson himself received gentle treatment from the prosecutors. Other witnesses whose narratives contradicted Wilson’s were often subject to aggressive questioning. Witness 14, an apparent senior citizen who was concerned about those in the neighborhood “embellishing” and who stood within feet of the incident, provided detailed and compelling testimony that Brown had his hands up at his shoulders as he turned to face Wilson; that he was staggering, not charging; and was falling to the ground, clearly disabled, as Wilson unleashed the final fatal series of shots. This witness was repeatedly grilled about the details of his recollection. A detective was even brought in to question the conclusions that this witness had made.

McCulloch and his colleagues put together a case, a narrative, that appears to have been built on an illusory foundation. They appear to have been blind to the implicit bias that may have contributed to this. In medicine, this would have led to a misdiagnosis; in this case, it may have led to a miscarriage of justice.

~~  Stuart Slavin, MD, MEd - Associate Dean for Curriculum, Saint Louis University School of Medicine ~~

Our Christmas Schizophrenia

The Gilmer Free Press

On Christmas Eve 1914, German and British soldiers crept out of their trenches, played soccer together, exchanged gifts of food, and joined in singing carols. Alarmed, commanders on both sides warned of the crime of “fraternizing with the enemy” and the war ground on for an additional four years, not only killing millions but setting the stage for the next world war two decades later.

From the safe perspective of a new century, those soldiers who tried to reach out peacefully to one another seem sane and realistic, while hindsight shows their generals to have suffered from a kind of mental illness based in rigid over-adherence to abstractions like flag, country and total victory.

A hundred years later it seems we would prefer to sentimentalize the story of Christmas in the trenches rather than using it as a measure of our own mental health. In the way we think about war, most of us suffer equally from group schizophrenia, made infinitely more dangerous by the presence of nuclear weapons combined with antique delusions of victory.

Progressives like to excoriate the obvious war lovers among us, politicians who are lost without enemies to blame or pundits who traffic in crude polarizing stereotypes. But we need to acknowledge the beam in our own eye even as we point out the mote in theirs. Tragically, those who try too hard to make sense of the insanity of war can slip into participation in war. Commentators, even liberal ones, wanting to appear sensible and realistic by displaying their comprehensive knowledge of all the parties in complex fights such as the one grinding on right now in Syria and Iraq, drift away from the essential truth that the civil war there is just as senseless as the trench warfare between the British and the Germans a hundred years ago. Calmly accepting least bad options, we choose from a safe distance whom to bomb and to whom to sell weapons, only fanning the flames of chaos.

Mentally healthy discourse about any war on the planet requires a context based in values both spelled out and lived out by pillars of sanity like Jesus, Gandhi, and Martin Luther King Jr. These leaders knew that killing solves nothing and that the spirit of vengeance initiates a cycle that leads only to further killing.

“Realists” will reply that the idealism of Jesus and friends is all very well but when we are pushed we must shove back. This fundamental assumption, apparently impossible to refute and always referring back to the uber-case of Hitler, becomes more questionable when looking at the insane karma of America’s response to 9-11-01. Our leaders unleashed a stream of squid-ink that tried to blur Saddam with al-Qaeda when most of the perpetrators were inconveniently Saudi and none Iraqi. Much of the ensuing chaos in Iraq and Syria, along with our horrific descent into the insanity of torture, flowed out of this initial, still unpunished lie.

The light of history reveals that wars often exhibit a causation that implicates all parties—as we know from examining how the Hitler phenomenon was a direct result of the allied powers failing to exhibit a spirit of magnanimity toward a defeated Germany when World War 1 ended in 1918. The Marshall plan demonstrated allied determination not to repeat the same mistake in 1945, and the result was a stability in Europe that endures to this day.

There are practical reasons we set aside holidays to honor Jesus and King, because we know these men taught the only possible way beyond the plague of war—an understanding that we are one human family. Those long ago soldiers in the trenches had the courage to awaken from the insanity of “my country right or wrong” and tried to connect spontaneously with each other on the heart level. If journalists and interpreters could remain with the values context that asserts that all killing is insane, that arms sales that exacerbate such killing are universally shameful, that war is always the failure of all parties to conflict to avoid slipping into the insanity of enemy stereotyping, perhaps a new climate would be created—a positive form of global warming.

~~  Winslow Myers ~~

Russian Roulette: Taxpayers Could Be on the Hook for Trillions in Oil Derivatives

The Gilmer Free Press

The sudden dramatic collapse in the price of oil appears
to be an act of geopolitical warfare against Russia.
The result could be trillions of dollars in oil derivative losses; and the FDIC could be liable,
following repeal of key portions of the Dodd-Frank Act.

Senator Elizabeth Warren charged Citigroup last week with “holding government funding hostage to ram through its government bailout provision.” At issue was a section in the omnibus budget bill repealing the Lincoln Amendment to the Dodd-Frank Act, which protected depositor funds by requiring the largest banks to push out a portion of their derivatives business into non-FDIC-insured subsidiaries.

Warren and Representative Maxine Waters came close to killing the spending bill because of this provision. But the tide turned, according to Waters, when not only Jamie Dimon, CEO of JPMorgan Chase, but President Obama himself lobbied lawmakers to vote for the bill.

It was not only a notable about-face for the president but represented an apparent shift in position for the banks. Before Jamie Dimon intervened, it had been reported that the bailout provision was not a big deal for the banks and that they were not lobbying heavily for it, because it covered only a small portion of their derivatives. As explained in Time:

The best argument for not freaking out about the repeal of the Lincoln Amendment is that it wasn’t nearly as strong as its drafters intended it to be. . . . [W]hile the Lincoln Amendment was intended to lasso all risky instruments, by the time all was said and done, it really only applied to about 5% of the derivatives activity of banks like Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, according to a 2012 Fitch report.

Quibbling over a mere 5% of the derivatives business sounds like much ado about nothing, but Jamie Dimon and the president evidently didn’t think so. Why?


A Closer Look at the Lincoln Amendment

The preamble to the Dodd-Frank Act claims “to protect the American taxpayer by ending bailouts.” But it does this through “bail-in”: authorizing “systemically important” too-big-to-fail banks to expropriate the assets of their creditors, including depositors. Under the Lincoln Amendment, however, FDIC-insured banks were not allowed to put depositor funds at risk for their bets on derivatives, with certain broad exceptions.

In an article posted on December 10th titled “Banks Get To Use Taxpayer Money For Derivative Speculation,” Chriss W. Street explained the amendment like this:

Starting in 2013, federally insured banks would be prohibited from directly engaging in derivative transactions not specifically hedging (1) lending risks, (2) interest rate volatility, and (3) cushion against credit defaults. The “push-out rule” sought to force banks to move their speculative trading into non-federally insured subsidiaries.

The Federal Reserve and Office of the Comptroller of the Currency in 2013 allowed a two-year delay on the condition that banks take steps to move swaps to subsidiaries that don’t benefit from federal deposit insurance or borrowing directly from the Fed.

The rule would have impacted the $280 trillion in derivatives primarily held by the “too-big-to-fail (TBTF) banks that include JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. Although 95% of TBTF derivative holdings are exempt as legitimate lending hedges, leveraging cheap money from the U.S. Federal Reserve into $10 trillion of derivative speculation is one of the TBTF banks’ most profitable business activities.

What was and was not included in the exemption was explained by Steve Shaefer in a June 2012 article in Forbes. According to Fitch Ratings, interest rate, currency, gold/silver, credit derivatives referencing investment-grade securities, and hedges were permissible activities within an insured depositary institution. Those not permitted included “equity, some credit and most commodity derivatives.” Schaefer wrote:

For Goldman Sachs and Morgan Stanley, the rule is almost a non-event, as they already conduct derivatives activity outside of their bank subsidiaries. (Which makes sense, since neither actually had commercial banking operations of any significant substance until converting into bank holding companies during the 2008 crisis).

The impact on Bank of America, Citigroup, JPMorgan Chase, and to a lesser extent, Wells Fargo, would be greater, but still rather middling, as the size and scope of the restricted activities is but a fraction of these firms’ overall derivative operations.

A fraction, but a critical fraction, as it included the banks’ bets on commodities. 5% of $280 trillion is $14 trillion in derivatives exposure – close to the size of the existing federal debt. And as financial blogger Michael Snyder points out, $3.9 trillion of this speculation is on the price of commodities.

Among the banks’ most important commodities bets are oil derivatives. An oil derivative typically involves an oil producer who wants to lock in the price at a future date, and a counterparty – typically a bank – willing to pay that price in exchange for the opportunity to earn additional profits if the price goes above the contract rate. The downside is that the bank has to make up the loss if the price drops.

As Snyder observes, the recent drop in the price of oil by over $50 a barrel – a drop of nearly 50% since June – was completely unanticipated and outside the predictions covered by the banks’ computer models. The drop could cost the big banks trillions of dollars in losses. And with the repeal of the Lincoln Amendment, taxpayers could be picking up the bill.


When Markets Cannot Be Manipulated

Interest rate swaps compose 82% of the derivatives market. Interest rates are predictable and can be controlled, since the Federal Reserve sets the prime rate. The Fed’s mandate includes maintaining the stability of the banking system, which means protecting the interests of the largest banks. The Fed obliged after the 2008 credit crisis by dropping the prime rate nearly to zero, a major windfall for the derivatives banks – and a major loss for their counterparties, including state and local governments.

Manipulating markets anywhere is illegal – unless you are a central bank or a federal government, in which case you can apparently do it with impunity.

In this case, the shocking $50 drop in the price of oil was not due merely to the forces of supply and demand, which are predictable and can be hedged against. According to an article by Larry Elliott in the UK Guardian titled “Stakes Are High as U.S. Plays the Oil Card Against Iran and Russia,” the unanticipated drop was an act of geopolitical warfare administered by the Saudis. History, he says, is repeating itself:

The fourfold increase in oil prices triggered by the embargo on exports organised by Saudi Arabia in response to the Yom Kippur war in 1973 showed how crude could be used as a diplomatic and economic weapon.

Now, says Elliott, the oil card is being played to force prices lower:

John Kerry, the U.S. secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.

. . . [A]ccording to Middle East specialists, the Saudis want to put pressure on Iran and to force Moscow to weaken its support for the Assad regime in Syria.


War on the Ruble

If the plan was to break the ruble, it worked. The ruble has dropped by more than 60%against the dollar since January.

On December 16th, the Russian central bank counterattacked by raising interest rates to 17% in order to stem “capital flight” – the dumping of rubles on the currency markets. Deposits are less likely to be withdrawn and exchanged for dollars if they are earning a high rate of return.

The move was also a short squeeze on the short sellers attempting to crash the ruble. Short sellers sell currency they don’t have, forcing down the price; then cover by buying at the lower price, pocketing the difference. But the short squeeze worked only briefly, as trading in the ruble was quickly suspended, allowing short sellers to cover their bets. Who has the power to shut down a currency exchange? One suspects that more than mere speculation was at work.


Protecting Our Money from Wall Street Gambling

The short sellers were saved, but the derivatives banks will still get killed if oil prices don’t go back up soon. At least they would have been killed before the bailout ban was lifted. Now, it seems, that burden could fall on depositors and taxpayers. Did the Obama administration make a deal with the big derivatives banks to save them from Kerry’s clandestine economic warfare at taxpayer expense?

Whatever happened behind closed doors, we the people could again be stuck with the tab. We will continue to be at the mercy of the biggest banks until depository banking is separated from speculative investment banking. Reinstating the Glass-Steagall Act is supported not only by Elizabeth Warren and others on the left but by prominent voices such as David Stockman’s on the right.

Another alternative for protecting our funds from Wall Street gambling can be done at the local level. Our state and local governments can establish publicly-owned banks; and our monies, public and private, can be moved into them.

~~  Ellen Brown -  An attorney, founder of the Public Banking Institute ~~

The Real Meaning of the 1914 Christmas Truce

The Gilmer Free Press

One hundred years ago last week, on Christmas Eve, 1914, German and British soldiers emerged from the horrors of World War One trench warfare to greet each other, exchange food and gifts, and to wish each other a Merry Christmas. What we remember now as the “Christmas Truce” began with soldiers singing Christmas carols together from in the trenches. Eventually the two sides climbed out of the trenches and met in person. In the course of this two day truce, which lasted until December 26, 1914, the two sides also exchanged prisoners, buried their dead, and even played soccer with each other.

How amazing to think that the celebration of the birth of the Prince of Peace could bring a brief pause in one of the most destructive wars in history. How sad that it was not to last.

The Christmas Truce showed that given the choice, people do not want to be out fighting and killing each other. It is incredibly damaging to most participants in war to face the task of killing their fellow man. That is one reason we see today an epidemic of PTSD and suicides among U.S. soldiers sent overseas on multiple deployments.

The Christmas Truce in 1914 was joyous for the soldiers, but it was dangerous for the political leadership on both sides. Such fraternization with the “enemy” could not be tolerated by the war-makers. Never again was the Christmas Truce repeated on such a scale, as the governments of both sides explicitly prohibited any repeat of such a meeting. Those who had been greeting each other had to go back to killing each other on orders from those well out of harm’s way.

As much as governments would like to stamp out such humanization of the “enemy,” it is still the case today that soldiers on the ground will meet and share thoughts with those they are meant to be killing. Earlier this month, soldiers from opposing sides of the Ukraine civil war met in eastern Ukraine to facilitate the transfer of supplies and the rotation of troops. They shook hands and wished that the war would be over. One army battalion commander was quoted as saying at the meeting, “I think it’s a war between brothers that nobody wants. The top brass should sort things out. And us? We are soldiers, we do what we’re told.”

I am sure these same sentiments exist in many of the ongoing conflicts that are pushed by the governments involved—and in many cases by third party governments seeking to benefit from the conflict.

The encouraging message we should take from the Christmas Truce of 100 years ago is that given the opportunity, most humans do not wish to kill each other. As Nazi leader Hermann Goring said during the Nuremberg war crimes trials, “naturally, the common people don’t want war; neither in Russia nor in England nor in America, nor for that matter in Germany.” But, as he added, “the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”

This is where our efforts must be focused. To oppose all war propaganda perpetrated by governments against the will of the people.

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