Hello, Brazil?

“If al-Qaeda is calling you, we want to know why.”

That, and I apologize if I am paraphrasing, was a previous president’s defense of the NSA spying program. I don’t know how many people believed that the NSA was actually focused on al-Qaeda when they heard that line, but if it strained credulity then, it becomes exceedingly unlikely with the revelation that after China, the NSA’s top overseas target has been Brazil.

China and Brazil are many things, but al-Qaeda bases? The emphasis on Brazil especially suggests that the NSA’s intentions have little to do with security, and are more commercial in nature. The scale of the NSA’s reported Brazil efforts implies that the NSA’s business there is not so much industrial espionage — you can steal business secrets by intercepting mere hundreds of telephone calls or email messages — but what might better be characterized as consumer research.

What else would you assume if you hear that an organization has been looking at messages among millions of Brazilians?

The one thing that is especially notable about Brazil is its limited dependence on international corporations, when compared to the other large economies of the world. Partly this is an accident of location, but partly too it is the result of political philosophies of past decades, as leaders looked for ways to make the country more self-sufficient.

Brazil has the potential to be economically more self-sufficient than most of the countries of the world. So is it this independent streak and can-do spirit that scares the NSA? Is a secret U.S. government program looking for avenues by which it might make Brazil more dependent on products the United States might sell?

It sounds far-fetched, I know. But compare it to the official story, that the NSA is looking for international terrorists on the back streets of Brasilia and the beaches of Rio, and it starts to sound possible. I suppose there are other possible explanations for the NSA’s special interest in Brazil, but the search for al-Qaeda is not one of them.

This Week in Bank Failures

A preliminary EU report says 13 banks and others colluded to prevent Deutsche Börse and Chicago Mercantile Exchange from participating in credit derivatives markets between 2006 and 2009. A trade organization, effectively controlled by the banks, refused to license exchanges for derivatives trading because of worries that the new competition would erode the banks’ profits. Under monopoly laws, trade organizations cannot legally act to squelch competition the same way an individual business can, so the banks could face fines in the matter. European law allows for fines of up to 10 percent of revenue from monopolistic activities, which in theory could amount to trillions of euros in this case.

Spain’s banks do not need any new European capital at this point according to a leaked EU document.

Big changes are underway at the Vatican Bank, with a caretaker executive in charge and two senior executives dismissed this week. The Vatican is trying to get out ahead of a web of money laundering and corruption scandals surrounding the bank.

Faced with the prospect of its banks being indicted in U.S. courts for tax evasion, Switzerland says it has come up with a plan that will allow the IRS to collect information on possible tax evaders, but not the identities of account holders. There are holes in the plan, however, so it will surely have to be revisited. Switzerland has been wrestling with this problem for three years, and during the delay, a criminal tax evasion probe led to one of its banks, Wegelin, being shut down. Even if banks avoid indictments with the limited data releases that the new law authorizes, individual bankers’ careers could be ruined and some could face criminal indictments in Switzerland depending on the tale the data tells.

JPMorgan has settled with the trustee of MF Global, with the settlement getting final court approval on Wednesday. The bank had seized more than half a billion dollars in MF Global accounts when the brokerage went bankrupt, but it ultimately determined it wasn’t entitled to the money and turned it over to the bankruptcy court. With this settlement approved, more settlements by the bankruptcy trustee are on the way, which could lead to all of the brokerage customer money being returned to customers. About 90 percent of customer money has already been paid out, and the remaining 10 percent may be on its way by next year.

U.S. students are now paying higher interest rates than homeowners after Congress doubled student loan interest rates effective July 1. The action from Congress was intended to send a message, but it’s a heavily garbled message that comes across as, “Don’t think we haven’t noticed the way you students have been ripping us off all these years.” The U.S. Treasury was already making a respectable profit on student loans and now stands to make billions of dollars in windfall profits with the higher “subsidized” interest rates.

The NCUA liquidated one credit union last weekend and another this week. Last Friday, it closed Ochsner Clinic Federal Credit Union, which served 3,000 members, particularly medical workers and their families, in New Orleans. It had only $9 million in assets and its finances were not improving. Member accounts and loans were transferred to ASI Federal Credit Union. On Monday, the NCUA liquidated Ohio-based PEF Federal Credit Union, which had been in conservatorship for two weeks. It had 3,000 members. Many of its member accounts were transferred to Best Reward Credit Union. The NCUA will make payments to other account holders for their insured deposits.

Political Turmoil and Timing

The level of political turmoil in the world has shot up, not just in Egypt, but also in places like Turkey, Brazil, Portugal, France, and less obviously, the United States, United Kingdom, and Russia. Some of the greatest controversies center around questions of timing. It is the foot-dragging and obstruction of the president of Egypt that has people worried there that their country is turning into a totalitarian state, but timing is equally at fault in Portugal and Brazil where capricious timing turned consensus policy moves into political insults.

The political theories we work under were created in a period when timing was less critical. The year-long presidential campaign process in the United States might have been the appropriately cautious approach two centuries ago when it took a month for a letter to be delivered. Now the lags involved are a barrier to democracy.

Constitutions in particular are subject to problems of timing. A constitution throws together an operational system that can be agreed upon quickly with more abstract principles or problematic details that really ought to be agreed on multiple times over decades before they become permanent policy. This is especially evident in Egypt currently but is true everywhere. Consider the European Union as another example. The system in the EU has inadequate oversight for all decisions, but tries to make up for it by doing everything at a snail’s pace. It doesn’t quite work — many decisions are still badly taken, and when a crisis requires quick decisions, the careful decision-making framework must be bypassed entirely, allowing decisions that aren’t based on any semblance of democracy.

Largest Demonstration Ever

I have to write about Egypt, even though the political situation and the way forward are far from clear. The most important thing to note is the largest political demonstrations in human history. An estimated 15 million people participated. To put that number in perspective, Egypt did not even have 15 million people until 80 years ago.

The Muslim Brotherhood may have helped to organize the early demonstrations in Egypt two years ago, but it now has become the demonstrators’ target. It cannot escape their attention that the number of people demonstrating against them is larger than their entire membership — that indeed, some of their own members must be among the demonstrators objecting to their attempt to set up a totalitarian state. I wonder if this could be the fate of religious extremists in other places in the world, as they seize power in various ways and set themselves up as obstacles to freedom, prosperity, and democracy.

Why Climate Change Is Invisible

It rained every day last week. The forecast page was a parade of lightning bolts, and every afternoon rush hour brought a new severe thunderstorm. By Friday I was asking, “This weather isn’t normal, is it?”

It was not even a reasonable question. By then (I found out when I looked it up) we had already seen a summer’s worth of rain, and most of the region had reached new records for June precipitation. I had asked the question only because I had gotten used to the severe weather pattern.

George Will made this mistake when he famously dismissed a Chicago heat wave that had already set new records for weather and deaths. Will was not being malevolent in his comments. He had just made the mistake of using his expectations as a barometer. His expectations were not as fixed as he had imagined, but had already adapted to the changing patterns.

Expectations adapt to changes faster than we could ever imagine. I made this same mistake myself as I lived through an extreme, record-setting weather pattern while imagining it to be an approximation of normal.

We cannot expect our casual observation to inform us of a global average temperature increase of 4 or 5 kelvins over a span of three lifetimes when the temperature increases that much during the course of a normal morning. It will take careful record keeping and observation of physical changes, such as the disappearance of permafrost and flooding on coastlines, to tell us of the extent of the change. It is the physical changes in particular that will tell the story. The melted shoes and canceled flights during the current heat wave in the opposite corner of the country are somehow more persuasive than the numbers are.