Tuesday, September 30, 2008

Congress Confronts Its Contradictions

They baled out of the bail-out, but the money will still have to come from us. It always has.

According to Senator Jim Bunning, the proposal to purchase $700bn of dodgy debt by the US government "is financial socialism, it is un-American"(1). The economics professor Nouriel Roubini calls George Bush, Henry Paulson and Ben Bernanke "a troika of Bolsheviks who turned the USA into the United Socialist State Republic of America"(2). Bill Perkins, the venture capitalist who took out an advertisement in the New York Times attacking the deal, calls it "trickle-down communism"(3).

They are wrong. The banking subsidies Congress rejected last night are as American as apple pie and obesity. The sums demanded by Bush and Paulson might be unprecedented, but there is nothing new about the principle: corporate welfare is a consistent feature of advanced capitalism. Only one thing has changed: Congress has been forced to confront its contradictions.

One of the best studies of corporate welfare in the United States is published by my old enemies at the Cato Institute. Its report, by Stephen Slivinski, estimates that in 2006 the federal government spent $92bn subsidising business(4). Much of it went to major corporations like Boeing, IBM and General Electric.

The biggest money crop - $21bn - is harvested by Big Farmer. Slivinski shows that the richest 10% of subsidised farmers took 66% of the pay-outs. Every few years Congress or the administration promises to stop this swindle, then hands even more state money to agribusiness. The Farm Bill passed by Congress in May guarantees farmers a minimum of 90% of the income they've received over the past two years, which happen to be among the most profitable they've ever had(5). The middlemen do even better, especially the companies spreading starvation by turning maize into ethanol, which are guzzling billions of dollars' worth of tax credits.

Slivinski shows how the federal government's Advanced Technology Program, which was supposed to support the development of technologies that are "pre-competitive" or "high risk" has instead been captured by big businesses flogging proven products. Since 1991, companies like IBM, General Electric, Dow Chemical, Caterpillar, Ford, DuPont, General Motors, Chevron and Monsanto have extracted hundreds of millions from this programme. Big business is also underwritten by the Export-Import Bank: in 2006, for example, Boeing alone received four and half billion in loan guarantees(6).

The government runs something called the "Foreign Military Financing Program" which gives money to other countries to purchase weaponry from US corporations. It doles out grants to airports for building new runways and to fishing companies to help them wipe out endangered stocks.

But the Cato Institute's report has exposed only part of the corporate welfare scandal. A new paper by the US Institute for Policy Studies shows that, through a series of cunning tax and accounting loopholes, the US spends $20bn a year subsidising executive pay(7). By disguising their professional fees as capital gains rather than income, for example, the managers of hedge funds and private equity companies pay lower rates of tax than the people who clean their offices. A year ago, the House of Representatives tried to close this loophole, but the bill was blocked in the Senate after a lobbying campaign by some of the richest men in America.

Another report, by a group called Good Jobs First, reveals that Wal-Mart has received at least $1bn of public money(8). Over 90% of its distribution centres and many of its retail outlets have been subsidised by county and local governments. They give the chain free land, they pay for the roads, water and sewerage required to make that land usable, and they grant it property tax breaks and subsidies (called tax increment financing) originally intended to regenerate depressed communities. Sometimes state governments give the firm straight cash as well: in Virginia, for example, Wal-Mart's distribution centres receive handouts from the Governor's Opportunity Fund.

Corporate welfare is arguably the core business of some government departments. Many of the Pentagon's programmes deliver benefits only to its contractors. Ballistic missile defence, for example, which has no obvious strategic purpose and which is unlikely ever to work, has already cost the US between $120bn and $150bn. The Department of Defense wants another $62bn for the next five years(9). The US is unique among major donors in insisting that the food it offers in aid is produced on its own soil, rather than in the regions it is meant to be helping. USAID used to boast on its website that "the principal beneficiary of America's foreign assistance programs has always been the United States. Close to 80 percent of the US Agency for International Development's contracts and grants go directly to American firms."(10) There is not and has never been a free market in the United States.

Why not? Because the Congressmen and women now railing against financial socialism depend for their re-election on the companies they subsidise. The legal bribes paid by these businesses deliver two short-term benefits. The first is that they prevent proper regulation, which allows them to make spectacular profits and to generate disasters of the kind that Congress is now confronting. The second is that public money which should be used to help the poorest and weakest is instead diverted into the pockets of the rich.

A report published last week by the advocacy group Common Cause shows how bankers and brokers stopped legislators from banning unsustainable lending(11). Over the past financial year, the big banks spent $49m on lobbying and $7m in direct campaign contributions. Fannie Mae and Freddie Mac have spent $180m in lobbying and campaign finance over the past eight years. Much of this money was thrown at members of the House Financial Services Committee and the Senate Banking Committee.

Whenever congressmen tried to rein in the banks and mortgage lenders they were blocked by the banks' money. Dick Durbin's 2005 amendment seeking to stop predatory mortgage lending, for example, was defeated in the Senate by 58 to 40. The former representative Jim Leach proposed re-regulating Fannie Mae and Freddie Mac. Their lobbyists, he recalls, managed in "less than 48 hours to orchestrate both parties' leadership" to crush his amendments(12).

The money these firms spend buys the socialisation of financial risk. The $700bn the government was looking for is just one of the public costs of its repeated failure to regulate. Even now the lobbying power of the banks is making itself felt: on Saturday the Democrats watered down their demand that the money earned by executives of the companies the government is rescuing be capped(13). Campaign finance is the best investment a corporation can make. You give a million dollars to the right man and reap a billion dollars' worth of state protection, tax breaks and subsidies. When the same thing happens in Africa we call it corruption.

European governments are no better. The free market economics they proclaim are a con: they intervene repeatedly on behalf of the rich, while leaving everyone else to fend for themselves. Just as in the United States, the bosses of farm companies, oil drillers, supermarkets and banks capture the funds extracted by government from the pockets of people much poorer than themselves. Taxpayers everywhere should be asking the same question: why the hell should we be supporting them?



1. Jim Bunning, quoted by James Politi and Daniel Dombey, 24th September 2008. Republican anger at 'financial socialism'. Financial Times.

2. Nouriel Roubini, 18th September 2008. Public losses for private gain. The Guardian.

3. Andrew Clark, 24th September 2008. US trader attacks 'trickle-down communism' of markets bail-out. The Guardian.

4. Stephen Slivinski, 14th May 2007. The Corporate Welfare State: How the Federal Government Subsidizes US Businesses. Policy Analysis no. 592.

5. Subsidy Watch, June 2008. Ignoring WTO implications and a presidential veto, US Congress passes the new Farm Bill. Global Subsidies Initiative.

6. Stephen Slivinski, ibid.

7. Sarah Anderson et al, 25th August 2008. Executive Excess 2008
How Average Taxpayers Subsidize Runaway Pay. Institute for Policy Studies.

8. Philip Mattera et al, May 2004. Shopping for Subsidies:
How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth. Good Jobs First.

9. I explain why it won't work and costs so much at http://www.monbiot.com/archives/2008/08/19/the-magic-pudding/

10. USAID. Creating Opportunities for U.S. Small Business, viewed 5th January 2004. http://www.usaid.gov/procurement_bus_opp/osdbu/book-information.htm

11. Common Cause, 24th September 2008. Ask Yourself Why... They Didn't See This Coming. http://www.commoncause.org/site/pp.asp?c=dkLNK1MQIwG&b=4542875

12. James A. Leach, 16th July 2008. Fixing Fannie and Freddie. Institute of Politics,
John F. Kennedy School Of Government, Harvard University.

13. James Politi and Daniel Dombey, 28th September 2008. Long and exhausting road to compromise. Financial Times.

Published in the Guardian 30th September 2008

From: Z Space - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/zspace/commentaries/3635

McCain Aides Complain that Palin Is 'Clueless'

By Rachel Weiner, Huffington Post


Radio talk show host Ed Schultz reports:

Capitol Hill sources are telling me that senior McCain people are more than concerned about Palin. The campaign has held a mock debate and a mock press conference; both are being described as "disastrous." One senior McCain aide was quoted as saying, "What are we going to do?" The McCain people want to move this first debate to some later, undetermined date, possibly never. People on the inside are saying the Alaska Governor is "clueless."

On Friday, conservative columnist Kathleen Parker said that after seeing Palin in interviews, she thinks the vice presidential nominee should drop out.

Palin Claimed Dinosaurs and People Coexisted!!

By Rachel Weiner, Huffington Post


The LA Times reports:

Soon after Sarah Palin was elected mayor of the foothill town of Wasilla, Alaska, she startled a local music teacher by insisting in casual conversation that men and dinosaurs coexisted on an Earth created 6,000 years ago -- about 65 million years after scientists say most dinosaurs became extinct -- the teacher said.
After conducting a college band and watching Palin deliver a commencement address to a small group of home-schooled students in June 1997, Wasilla resident Philip Munger said, he asked the young mayor about her religious beliefs.
Palin told him that "dinosaurs and humans walked the Earth at the same time," Munger said. When he asked her about prehistoric fossils and tracks dating back millions of years, Palin said "she had seen pictures of human footprints inside the tracks," recalled Munger, who teaches music at the University of Alaska in Anchorage and has regularly criticized Palin in recent years on his liberal political blog, called Progressive Alaska.
The idea of a "young Earth" -- that God created the Earth about 6,000 years ago, and dinosaurs and humans coexisted early on -- is a popular strain of creationism.

In a widely-circulated interview, Matt Damon said of Palin, "I need to know if she really think that dinosaurs were here 4000 years ago. I want to know that, I really do. Because she's gonna have the nuclear codes."

McCain’s Economic Plan For Nation: 'Everyone Marry A Beer Heiress'

McCain�s Economic Plan For Nation: 'Everyone Marry A Beer Heiress'

Tina and Amy as Sarah and Katie

Friday, September 26, 2008

Crash Talk

Forbes - Some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy. "It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Letterman Brutally Mocks McCain for Late Show Cancellation

Dave Letterman justs rips into Johnny Mac. Good god, it's funny!

Posted by ZP Heller, Brave New Films

Bailout Protest, NYC!

Updated: These photos were taken by Jeremy Scahill who attended the protests against Bush's bailout in New York City. I especially like the sign that says "Jump! You Fuckers".

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Protesters confront corporate execs staring out the windows at the streets:

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"Greed Kills" ... "Paulson, Rescue My Two Kids From Their College Loans" ... "Bush & Co., Bailout the Real People, Not Your Rich Pals":

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"4.0 GPA, $90,000 in Debt, No Job ... Where's My Bailout?":

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Thursday, September 25, 2008

While you were away...

Here it comes campers. In case you were too baffled by the complexities of the coming merger between the state and the financial sector, we have some more old-fashioned, Bush administration saber-rattling for those of you so inclined. Please pay no attention to the woman behind the curtain.

While I have been referring to the nationalization of the lending industry as socialism for the wealthy, which to some extent it is, the strict definition of a state-corporate nexus is fascism. Many have a hard time with the word because of its association with The National Socialist Party of Germany - The Nazis. It has more connotations than the references to the Third Reich or Mussolini's National Fascist Party, since Il Duce initially coined the word to describe the cooperation of industry and state codified into law.

What we are witnessing now in the meeting rooms of DC and Wall Street is, in fact, the final stage of incorporating a fascist state, a project that has been ongoing for decades. Those for whom this is the fruition of their wettest dreams dance in their closets for the total elimination of any regulation whatsoever. Government oversight will be touted in the corporate media as quaint and unnecessary, when those of us paying attention have seen that the exact opposite is true time after time after time. It will be interesting to watch the weak and futile protests of the Democratic Party before they allow and even expedite this plan into law. Just try to find any mention of the many thousands of homeowners and other debtors who are literally dying on the vine. Their concerns are less than secondary to those of the suddenly endangered wealthy. Who cares about those irresponsible defaulters, anyway?

In the midst of all this, however, we have the Secretary of State, Condoleeza Rice, giving it her all to distract us from the historic devastation of the US - and by extension - global economies. In a speech touted by the State Department as an important statement on relations with Russia, she rattles BushCo's saber toward Moscow, saying that its objectives have put it on a path to "self-imposed isolation and international irrelevance" - a daring move that must have taken quite a bit of practice to pull off convincingly, since it is in fact the US that totters down this very path.

For those who've been watching, this is in reference to what the entire corporate media calls "Russia's bloody invasion of Georgia". While Moscow did indeed invade Georgia and continues its occupation of it, the initial "attack" was a response to Georgia's feeble but equally bloody attacks on South Ossetia and Abkhazia, Russian protectorates now recognized as independent nations. Georgia's plan to re-annex the territories, once integral parts of Georgia before the dissolution of the USSR, originated within the CIA and Israel in cooperation with the US-puppet government of Georgia. The plan to provoke Moscow to protect its sovereign states seems to have worked perfectly and now the illegitimate Bush administration, along with its corporate media mouthpieces, get to scold Russia for its murderous "aggression", while never once mentioning the acts of aggression that originally provoked the response. The more things change...

It now seems that BushCo wants to ramp up old enmities between our respective nations. Ms. Rice actually had the audacity to say that the emerging picture "is that of a Russia increasingly authoritarian and aggressive abroad". Damn, that took cojones, huh? Didn't even look at the floor or flinch once! Quite impressive.

No telling where all this casting of aspersions will lead just yet, since the Russian media simply laughs at the utter hypocrisy of Washington's positions. Doubt they're going to find it funny for long, though. Can't say that I blame them.

Monday, September 22, 2008

Nationalization of the lending industry

After we socialize the banks, can we please work on healthcare? I mean, AIG is now 80% owned by the citizens of the US, we're working nationalizing on the entirety of mortgage lending institutions, so why not the one the people want and need? Single-payer healthcare now!

By the way, does this mean the housing industry is also socialized? Just asking because it seems like lately banks are giving homes away like account-opening incentives. They seem to have so many!--Pete.
Here's an article from today's Counterpunch:

The Paulson-Bernanke Bailout Plan
Will the cure be worse than the crisis?
By Michael Hudson

Saturday’s $700 billion junk mortgage bailout is the largest and worst giveaway since a corrupt Congress gave land grants to the railroad barons a century and a half ago. If it goes through, it will shape the coming century by giving finance unprecedented power over debtors – homebuyers, industry, state and local government, and the federal government as well.

But what threatens to be even worse is the government’s move to let the financial sector make even higher, unprecedented gains by working its way out of negative equity to “make taxpayers whole” by repaying the government’s bailout by bleeding the economy at large. nticipating congressional capitulation in this license to engage in predatory credit, the latest Sunday evening surprise is that Treasury Secretary Henry Paulson’s own firm, Goldman Sachs, is to become bank holding company picking up the financial wreckage now that the government is covering the bad loans and investment gambles Wall Street has made.

What Mr. Paulson did not say in his weekend TV interviews, organized as what he hoped would be a series of victory laps. Neither he nor Fed Chairman Ben Bernanke nor any other Wall Street spokesman has acknowledged that the government has helped promote today’s $46 trillion debt bomb. This enormous overhead consists of the product that banks are selling – interest-bearing debt that is being added to real estate, corporate industry and personal income to price the U.S. economy out of world markets.

We have heard nothing about how Wall Street lobbyists have succeeded in killing the financial cops on Wall Street – and done the same with the consumer cops on Main Street. There is no public recognition of the fact that more money in tax cuts went to the top 1% than the bottom 80% combined.

So how much credence should we give the newest proposals for the United States to commit economic suicide by turning over the powers of government in effect to Wall Street? When they talk about “making taxpayers whole,” what really is their game?

Read the rest (it's really good!)

Surprisingly, we couldn't agree more

"Congress has an obligation to protect the taxpayer.

"Congress has an obligation to limit the executive branch to the rule of law.

"Congress has an obligation to perform oversight.

"Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess."

--Newt Gingrich, in a post to the American Enterprise Institute's web site, regarding the rush to fund a private-sector bailout with 700 billion in public money.

Saturday, September 20, 2008

The NY Yankees and the U.S. Economy

Bill Moyers and Michael Winship

From our offices in Manhattan, we look out on the tall, gleaming skyscrapers that are cathedrals of wealth and power – the Olympus ruled by the gods of finance, the temples of the mighty, the holy of holies, whose priests guard the sacred texts of salvation – the ones containing the secrets of subprime lending and derivatives as mysterious and elusive as the Grail itself.

This last couple of weeks, ordinary mortals below could almost hear the ripcords of golden parachutes being pulled as the divinities on high prepared for soft, safe landings – all this while tossing their workers like sacrificial lambs into the purgatory of unemployment.

During the last five years of his tenure as CEO of now-bankrupt Lehman Brothers, Richard Fuld’s total take was $354 million. John Thain, the current chairman of Merrill Lynch, taken over this week by Bank of America, has been on the job for just nine months. He pocketed a $15 million signing bonus. His predecessor, Stan O’Neal, retired with a package valued at $161 million, after the company reported an eight billion dollar loss in a single quarter. And remember Bear Stearns Chairman James Cayne? After the company collapsed earlier this year and was up for sale at bargain basement prices, he sold his stake for more than $60 million.

Daniel Mudd and Richard Syron, the former heads of Fannie Mae and Freddie Mac – aka the gods who failed – are fighting to keep severance packages of close to $24 million combined – on top of the millions in salary each earned last year while slaughtering the golden calf. As it is written in the Gospel According to Me, when the going gets tough, the tough get going.

But let’s change the metaphor for a moment and go to our sports desk, because if religion is no longer the soul of capitalism, as Max Weber once taught us it was, we have to venture somewhere else to try to understand the continuing follies of the new gilded age. And so we travel just a few miles north of Wall Street to the House that Ruth Built. Babe Ruth – the Sultan of Swat – who ruled Yankee Stadium and sired generations of princes after him: DiMaggio and Gehrig, Mantle, Maris, Berra and Jackson. Yankee Stadium, as fabled a place to Americans as Ilium was to the ancient Greeks, about to be demolished and replaced next year by a brand new stadium.

On Opening Day in 1923, New York Governor Al Smith threw out the first ball and John Philip Sousa led a big brass band playing his famous marches. It was the Roaring Twenties, when the money flowed liked bootleg whiskey, the pride before the fall. In 1930, the year after the market crashed, as the Great Depression began, Babe Ruth was taking home $80,000 a year, more than the President of the United States, Herbert Hoover. “Why not?” Ruth asked. “I had a better year than he did.”

Yankee star Alex Rodriguez had a better year than both of them. This season, A-Rod is making $28 million, just part of an annual Yankee payroll of $209 million, the richest in baseball. Their owner, George Steinbrenner, is among the Forbes 400, one of the country’s richest tycoons.

But when it came to paying for the new, $1.3 billion pleasure dome, the millionaires on the field and King Midas in his skybox came up with some razzle-dazzle plays to finance their new wealth machine – tax-free bonds, requiring ordinary citizens to subsidize the construction, and hundreds of millions more for new parking garages, a train station and parks that supposedly will replace the ones seized by the city to make room for the new stadium. The Little League games that used to flourish on sandlots just outside the old ballpark have been moved miles away, sent down to the minors on a long road trip.

That’s okay, you may think, there will be plenty of room in the new stadium for the tax-paying public to come root, root, root for the home team – even the Coliseum in ancient Rome had bleachers for the commoners. But, in fact, there will be 5,000 fewer seats in the stands. And while the Yankees reportedly promise that half of what’s left will cost $45 or less, those seats that used to cost $250, right behind the dugout, will now cost you $850. And if you want to be near home plate, you’ll have to cough up $2500 – per game.

Meanwhile there will be more luxury suites and party rooms where fat cats can gather, safely removed from the sweaty masses. Corporations and wealthy individuals will be able to rent the luxury suites for anywhere from $600,000-$850,000 a year – tax deductible – assuming they haven’t filed for bankruptcy this week.

Why aren’t the fans and taxpayers giving the Yankees a Bronx cheer? They did, but city officials rolled over them while making sure local politicians stay in the lineup. The pols are getting their own luxury suite at the new stadium for free – and first shot at buying the best available seats.

The new colossus will cast its majestic shadow across the South Bronx, one of the nation’s poorest neighborhoods. The residents will watch from the outside as suburban drivers avail themselves of 9,000 new or refurbished parking spaces. Never mind all the exhaust, even though in this part of New York City, respiratory disease is already so high they call it “Asthma Alley.”

Not that the well to do in the infield seats will have to hear the wheezing. They’ll have exclusive access to a private club, a private entrance and a private elevator, totems of this gilded age. Let the games begin.

Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers.

Friday, September 19, 2008

It's official! Markets no longer "free". More socialism for the endangered wealthy.

One bailout begets another
Vancouver Sun

Media gather outside the offices of of troubled insurer AIG.
CREDIT: Stan Honda, Agence France-Presse; Getty Images
Media gather outside the offices of of troubled insurer AIG.

No doubt some bookie on Wall Street is taking bets on which institution will be the next beneficiary of a government bailout.

Perhaps next up is Washington Mutual, America's biggest savings and loan company, which may need $24 billion in mortgage guarantees to survive long enough to find a buyer -- if it can. Maybe it will be Morgan Stanley or Goldman Sachs, both venerable Wall Street investment dealers investors appear to have lost faith in. Or it could be one of the hundreds of regional banks that are likely to join IndyMac Bancorp of California and Columbian Bank & Trust Co. of Kansas on the scrap heap of financial institutions mauled by the subprime mortgage monster.

With its "tough love" rescue of American International Group this week, Washington has clearly committed itself to further interventions. The $85-billion aid package, which will give the U.S. government an 80 per cent stake in the ailing insurance giant, was defended on grounds that a disorderly failure would further destabilize markets, result in higher borrowing costs, reduce household wealth and weaken economic performance. A similar rationale was used to save investment dealer Bear Stearns by engineering its takeover by JP Morgan in a deal that leaves U.S. taxpayers on the hook for up to $29 billion of the defunct firm's bad investments.

It seems like only yesterday that the government, after assuring the world they were adequately capitalized, took over Fannie Mae and Freddie Mac, which hold about half the mortgage debt in the U.S., an amount estimated at more than $5 trillion. That risk will now be borne by American taxpayers.

That bailout was easy for bureaucrats to justify. After all, the two mortgage companies were created by the U.S. Congress with a mandate to make it easier to realize the dream of home ownership for Americans. The notion that they were ever private entities was largely illusory. What's more, China's central bank holds more than $340 billion of Fannie and Freddie securities so a collapse of the institutions was unthinkable from a foreign policy perspective.

Lehman Brothers Holdings, which was pushed into Chapter 11, was the odd man out. U.S. Treasury Secretary Henry Paulson's "adamant" refusal to use government money to save Lehman was a one-off. Although Lehman's derivative entanglements are spread far and wide, the government's assessment was that it could be allowed to fail without jeopardizing international relationships -- and without triggering systemic economic collapse. This was political expediency more than fiscal pragmatism.

But as more institutions line up for government aid, determining which deserve a handout -- and which can be allowed to fail -- is bound to become increasingly arbitrary and problematic. Why, for instance, should financial services companies receive government assistance while manufacturing firms are ignored (notwithstanding the $25 billion in loan guarantees the big three U.S. automakers are lobbying for)?

By offering bailouts, governments invite moral hazard by freeing financial institutions from any consequences of their reckless behaviour, failures of due diligence and greed.

Some argue that more regulation is required to prevent a repeat of today's credit crisis; that it would never have happened had rules been in place to restrict mortgage-backed securities and their offspring.

But it is difficult to see how any regulatory regime could have contained the global market for financial derivatives.

The fact is that capitalist economies produce winners and losers. Every few years, the weak are weeded out in a stock market crash, a commodities bust, a technology meltdown, a credit crunch, a banking crisis or some other episode of financial distress. Economist Hyman Minsky argued that persistent financial and economic instability is normal in a capitalist economy. Financial systems, he said, are inherently susceptible to bouts of speculation that, if they last long enough, end in crises. His view, considered heretical by a majority of economists in the past, has gained legitimacy through the last few decades of upheaval.

Government intervention only delays the inevitable shakeout -- a cleansing process economist Joseph Schumpeter dubbed creative destruction -- and squanders tax dollars to prop up companies that have made the wrong bet at the wrong time and deserve their fate.

It should be made clear to private companies that they are entitled to reap the rewards of success but must suffer the consequences of failure.


Do you think governments should bail out private firms in financial distress?

Go to vancouversun.com/editorial to answer Yes or No.

© The Vancouver Sun 2008

Wednesday, September 17, 2008

Ten-year-old potential terrorist stopped before he can kill!

Island Packet, NC - A 10-year-old Hilton Head Island boy has been suspended from school for having something most students carry in their supply boxes: a pencil sharpener. The problem was his sharpener had broken, but he decided to use it anyway. A teacher at Hilton Head Island International Baccalaureate Elementary School noticed the boy had what appeared to be a small razor blade during class on Tuesday, according to a Beaufort County sheriff's report. It was obvious that the blade was the metal insert commonly found in a child's small, plastic pencil sharpener, the deputy noted. The boy -- a fourth-grader described as a well-behaved and good student -- cried during the meeting with his mom, the deputy and the school's assistant principal. He had no criminal intent in having the blade at school, the sheriff's report stated, but was suspended for at least two days and could face further disciplinary action.

What it would cost to look like Laura Bush and Cindy McCain at GOP convention

Vanity Fair

Laura Bush:
Oscar de la Renta suit: $2,500
Stuart Weitzman heels: $325
Pearl stud earrings: $600-$1,500*
Total: Between $3,425 and $4,325

Cindy McCain:
Oscar de la Renta dress: $3,000
Chanel J12 White Ceramic Watch: $4,500*
Three-carat diamond earrings: $280,000*
Four-strand pearl necklace: $11,000-$25,000*
Shoes, designer unknown: $600
Total: Between $299,100 and $313,100

*assuming jewelry is real

Well, Halle-fucking-lujah!

Candidate Obama uses the C-word!

"This crisis serves as a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary. It's a philosophy that lets Washington lobbyists shred consumer protections and distort our economy so it works for the special interests ( I fucking hate this phrase - I am a special interest! I am a citizen!--Pete) instead of working people; a philosophy that says we should give more and more to those with the most and hope that prosperity trickles down to the rest."--B. Obama

Everything you always wanted to know about Fannie Mae and Freddie Mac

Adhip Chaudhuri, Al Jazeera - Both Fannie Mae and Freddie Mac are US government "sponsored" home loan banks. Each of them have formal names, but are primarily known by their nicknames. In fact, both these institutions prefer to go by their nicknames rather than their official names. That's like the US government going by "Uncle Sam" all the time.

Fannie Mae was created by the government in 1938 to guarantee mortgage loans made by private banks.
After the Great Depression, which was characterised by bank failures on the one hand, and substantial losses of income on the part of large number of households on the other, the private mortgage market was providing mortgage loans to too few households.

The objective of the Roosevelt Administration was to restore widespread homeownership, which had become almost an ideology in the United States from early on in the twentieth century.

Thirty years later, in 1968, the government freed Fannie Mae from its control and privatized it with a Congressional charter. It became just like any other bank, except that it still did not make mortgage loans directly to the public. Instead, it bought up what is called the "secondary" market - the mortgages which had already been made by the private banks.

Two years later, in 1970, the US government created Freddie Mac, an exact duplicate of Fannie Mae. The reason behind a second institution was that high economic growth of the 1960s had led to rising incomes and the resulting widespread homeownership made just one government sponsored mortgage institution, namely Fannie Mae, unappealingly, if not scarily, large.

Both Fannie Mae and Freddie Mac have been private enterprises since then, up until September 7, 2008.
They have stockholders who provide the equity capital, they both sell bonds to raise funds, and they both pay for their operations out of their profits. There has been no money paid by the American taxpayers to these two institutions.

The two were "sponsored" banks, meaning that there was an implicit guarantee from the US government that it would not allow these two institutions to fail.

The principal act that Fannie Mae and Freddie Mac are mandated to do is to buy mortgages from private banks. The private banks, meanwhile, make mortgage loans with the comfort of knowing that they will be able turn around and sell those loans to Fannie Mae and Freddie Mac.

This comfort has two aspects. First, the banks which make the initial loans in the primary market get their liquidity back when they sell off their mortgages in the secondary market to Fannie Mae and Freddie Mac.

They can, therefore, make fresh mortgages to new customers with the funds they received from selling the previous mortgages, thereby making it possible for greater homeownership.

The second benefit that private banks get from the existence of Fannie Mae and Freddie Mac is that they can offer mortgages to middle class and low income households at affordable interest rates with the sure knowledge that Fannie Mae and Freddie Mac will take those mortgages over.

Where do Fannie Mae and Freddie Mac . . . raise funds first by issuing bonds on Wall Street just like any private company.

Then, in addition, they sell some of their mortgage holdings in the tertiary markets. They pool together a lot of mortgages and create a marketable security. These are called mortgage backed securities. If any household, whose mortgage is part of a MBS, fails to pay its mortgage obligation for, say, a month, then Fannie Mae or Freddie Mac, whoever is the relevant party, will make good the payment to the MBS holder.

Similarly, if there is a foreclosure and the sale price of the distress sale ends up being less than the value of the mortgage, then Fannie Mae and Freddie Mac will make up the difference.

A lot of these MBS are sold in foreign markets, especially to central banks with large US dollar holdings. The central bank of China is reputed to be holding $340 billion worth of MBS. . .

The overly aggressive primary mortgage lenders knew full well that Fannie Mae and Freddie Mac would have to buy up all the mortgages below the congressional cap of $417,000.

The primary mortgage companies get their profits from commissions and fees per mortgage that they make, and not from the repayments of principal plus interest from the mortgage borrowers, that is, the homeowner. That is why they were so reckless in their lending - it is a classic case of "moral hazard".

As the housing prices have plummeted, there have been two problems that have hurt Fannie Mae and Freddie Mac very badly. First, they have had to make increasing payments to cover the defaults in the MBS which the two institutions have sold.

Second, they have had to set aside reserves for those mortgages in their own portfolios which are "non-performing", meaning that the borrower cannot keep up with their payments. These set-aside reserves do not earn any income for the two mortgage institutions and hence, contribute to losses.

As the profitability of Fannie Mae and Freddie Mac decreased, their borrowing costs went up, squeezing the interest rate differential between what they earn from the mortgages they hold and the rate they have to pay on the bonds that they issue.

Fannie Mae and Freddie Mac did not help themselves during the crisis much either. They did not implement the guidelines they normally impose on the primary mortgage lenders, but instead they accepted many bad mortgages including "sub-prime" mortgages.

"Sub-prime" mortgages refer to those loans which were made without the necessary information on the borrowers. For example, a "sub-prime" mortgage may not require borrowers to disclose their incomes.

In addition the two institutions followed highly spurious accounting concepts to overstate their capital base. And lastly, they continued paying their top executives obscenely high salaries, even when their stock values fell by 80 per cent.

Legally speaking, the US government has put the two institutions under its "conservatorship". It's not clear what exactly does that mean.

The following is what we know now: The US government will immediately take hold of $1 billion worth of equity in each of the institutions. These will be in the form of preferred stocks with a guaranteed 10 per cent rate of return. These $1 billion infusions are however, not real cash infusions but rather, just compensation for the privilege of being expropriated by the US government.

The government has allowed itself to infuse as much as $100 billion to each of the institutions, and thus the American tax payers could be out $200 billion by the time the housing crisis plays itself out. The savings and loan crisis cost the tax payers $120 billion. Presumably, this bail-out will be less expensive.

In addition, all cash infusions by the US government will be more like an investment because they will receive a 10 per cent return. . .

Government steps in again, bails out AIG with $85B

Socialism, or state capitalism, is getting very, very popular in these dark economic times. The people, for their part, are very proud to help out these grand and noble institutions of American magnanimity. During times of abject poverty among the dispossessed, these beneficent money changers have always stepped in and provided whatever was needed without asking for a return, knowing that their very existence - their charters - were held in trust by the people of this nation.


Oh no, I think that was a dream I had. There was also something about a fish and a bicycle as well as a pig's eye. Sorry, carry on. Just the private sector gladly robbing us yet again with the help of their friends in government. See, socialism works - for the wealthy, anyway.--Pete

By Jeannine Aversa, Ieva M. Augstums and Stephen Bernard, AP Business Writers

Government saves AIG with $85 billion loan, takes 80 percent stake in battered insurance giant WASHINGTON (AP) -- Another day, but not just another bailout. This one's a stunning government takeover.

In the most far-reaching intervention into the private sector ever for the Federal Reserve, the government stepped in Tuesday to rescue American International Group Inc. with an $85 billion injection of taxpayer money. Under the deal, the government will get a 79.9 percent stake in one of the world's largest insurers and the right to remove senior management.

AIG's chief executive, Robert Willumstad, is expected to be replaced by Edward Liddy, the former head of insurer Allstate Corp., according to The Wall Street Journal, citing a person it did not name. Willumstad had been at the helm of AIG since June.

A call to AIG to confirm the executive change was not immediately returned.

It was the second time this month the feds put taxpayer money on the hook to rescue a private financial company, saying its failure would further disrupt markets and threaten the already fragile economy.

AIG said it will repay the money in full with proceeds from the sales of some of its assets. It will be up to the company to decide which assets to sell and the timing. The government does, however, have veto power.

Under the deal, the Federal Reserve will provide a two-year $85 billion emergency loan at an interest rate of about 11.5 percent to AIG, which teetered on the edge of failure because of stresses caused by the collapse of the subprime mortgage market and the credit crunch that ensued. In return, the government will get a 79.9 percent stake in AIG and the right to remove senior management.

AIG shares sank $1.34, or 36 percent, to $2.41 in morning trading Wednesday. They traded as high as $70.13 in the past year.

The government's move was similar to its bailout of Sept. 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke.

The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.

The decision to help AIG marked a reversal for the government from the weekend, when it refused to use taxpayer money to bail out Lehman Brothers Holdings Inc. Lehman, which filed for bankruptcy protection Monday, collapsed under the weight of mounting losses related to its real estate holdings.

The White House said it backed the Fed's decision Tuesday.

"These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy, " White House spokesman Tony Fratto said.

After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.

"The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times. Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse," said Sen. Charles Schumer, D-N.Y.

In a statement late Tuesday, AIG's board of directors said the loan will protect all AIG policy holders, address concerns of rating agencies and buy the company time to sell off assets.

"We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets," the statement said. "In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG."

New York officials said the deal helps stave off a fiscal crisis for the state. AIG is based in New York.

"Policy holders will be protected, jobs will be saved," New York Gov. David Paterson said Tuesday night.

In an interview on ABC's "Good Morning America" program Wednesday, former longtime AIG CEO Maurice "Hank" Greenberg was asked whether critics are being fair who say the situation at AIG and the financial markets generally happened because of greed, bad business practices and corruption.

"No, I think it's an unfair appraisal," said Greenberg, who was replaced as CEO three years ago as part of an accounting probe. "You know, there are many things that contributed to this unfortunate episode. after I left the company, all the risk management procedures that we had in place were obviously dismantled. I can't explain that. There's a new board of directors. One should be asking that board of directors what they did and why."

Greenberg said he has lost "my entire net worth. Literally, my entire net worth.'

"Worked 40 years building the greatest insurance company in history, one that everyone in the world envied who was in this industry. I'll get by, but my heart goes out for the thousands and thousands of employees and their families who shareholders and not only in the united states but worldwide. That is a tragedy," he said.

The Fed's move was part of a concerted push to help calm jittery markets and investors around the world.

On Tuesday, the Fed decided to keep its key interest rate steady at 2 percent, but acknowledged stresses in financial markets have grown and hinted it stood ready to lower rates if needed.

The central bank also pumped $70 billion into the nation's financial system to help ease credit stresses. In emergency sessions over the weekend, the Fed expanded its loan programs to Wall Street firms, part of an ongoing effort to get credit flowing more freely.

The stock market, which Monday posted its largest point loss session since the Sept. 11 attacks, recovered Tuesday after the Fed's decision on interest rates. The Dow Jones industrials rose 141 points after losing 500 points on Monday.

AIG's shares swung violently, though, as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent -- and another 45 percent after hours.

The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.

The worries were heightened Monday after Moody's Investor Service, Standard and Poor's and Fitch Ratings lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance -- such as banks and other financial companies -- would have found themselves without protection against losses on the debt they hold.

Monday, September 15, 2008

Has American Society Gone Insane?

By Bruce E. Levine, AlterNet

For many Americans who gain their information solely from television, all critics of psychiatry are Scientologists, exemplified by Tom Cruise spewing at Matt Lauer, "You don't know the history of psychiatry. ... Matt, you're so glib." The mass media has been highly successful in convincing Americans to associate criticism of psychiatry with anti-drug zealots from the Church of Scientology, the lucrative invention of science fiction writer L. Ron Hubbard.

However, Americans who gain their information outside of television and beyond the mass media may be aware of a secular, progressive tradition that is critical of how psychiatry has diverted us from examining societal sources of our malaise. This secular, humanistic concern was articulated, perhaps most famously, by the psychoanalyst Erich Fromm (1900-1980).

In The Sane Society (1955), Fromm wrote, "Yet many psychiatrists and psychologists refuse to entertain the idea that society as a whole may be lacking in sanity. They hold that the problem of mental health in a society is only that of the number of 'unadjusted' individuals, and not of a possible unadjustment of the culture itself."

Is American society a healthy one, and are those having difficulties adjusting to it mentally ill? Or is American society an unhealthy one, and are many Americans with emotional difficulties simply alienated rather than ill? For Fromm, "An unhealthy society is one which creates mutual hostility (and) distrust, which transforms man into an instrument of use and exploitation for others, which deprives him of a sense of self, except inasmuch as he submits to others or becomes an automaton." Fromm viewed American society as an increasingly unhealthy one, in which people routinely experience painful alienation that fuels emotional and behavioral difficulties.

Unlike Tom Cruise, Fromm would not have been terribly upset that actress Brooke Shields found happiness in antidepressants. No genuinely humanistic critic of psychiatry believes that adults who choose prescription psychotropic drugs should be mocked or shamed, or prohibited from using them. Rather, humanist critics of establishment psychiatry advocate for informed choice about all treatments.

The essential confrontation for Fromm is not about psychiatric drugs per se (though he would be sad that so many Americans nowadays, especially children, are prescribed psychotropic drugs in order to fit into inhospitable environments). His essential confrontation was directed at all mental health professionals -- including non-prescribers such as psychologists, social workers and counselors -- who merely assist their patients to adjust but neglect to validate their patients' alienation from society.

Those comfortably atop societal hierarchies have difficulty recognizing that many American institutions promote helplessness, passivity, boredom, fear, isolation, alienation and dehumanization for those not at the top. One-size-fits-all schools, the corporate workplace, government bureaucracies and other giant, impersonal institutions routinely promote manipulative relationships rather than respectful ones, machine efficiency rather than human pride, authoritarian hierarchies rather than participatory democracy, disconnectedness rather than community, and helplessness rather than empowerment.

In The Sane Society, Fromm warned, "Today the function of psychiatry, psychology and psychoanalysis threatens to become the tool in the manipulation of man. The specialists in this field tell you what the 'normal' person is, and, correspondingly, what is wrong with you; they devise the methods to help you adjust, be happy, be normal."

In the "adjust and be happy" sense, there is commonality between establishment mental health professionals and Scientologists. Neither Dr. Phil nor Tom Cruise are exactly rebels against the economic status quo; and their competing self-help programs, though different, are similar in that they instruct people on how to adjust, be happy and be normal within our economic system.

The source of the mutual hostility between psychiatry and the Church of Scientology, as depicted by the mass media, centers around psychotropic drug use; but my sense is that the root cause of their feud is a fierce competition between them. Both establishment psychiatry and Scientology are competing for the same people -- those more comfortable with authority, dogma and insider jargon than with critical thinking.

Both the teachings of L. Ron Hubbard and psychiatry's DSM (the official diagnostic manual in which mental illnesses are voted in and out by elite psychiatrists) have much more to do with dogma than science. Both Scientology and psychiatry embrace science fiction technobabble that poses as scientific fact. In Scientology's "auditing," the claim is that the Hubbard Electropsychometer (E-Meter) can assess the reactive mind of the "preclear" by passing a small amount of voltage through a pair of tin-plated tubes that look like empty soup cans wired to the E-Meter and held by the preclear. But psychiatry is no more scientifically relevant, as its trendy chemical-imbalance theories of mental illness have shelf-lives of about a decade, with establishment psychiatry most recently having retreated from both its serotonin-deficiency theory of depression and the excessive-dopamine theory of schizophrenia.

While Scientology can claim auditing adherents, and psychiatry can claim even more antidepressant advocates, neither treatment has been shown to be consistently superior to a placebo. And rather than validating their treatments with legitimate science performed by independent, financially unbiased scientists, both Scientology and psychiatry rely on what amounts to a well-funded public relations apparatus.

Scientology and establishment psychiatry have something else in common. They are both orthodoxies that deal harshly with their ex-insiders who have come to reject them. Currently, psychiatry is the more prevailing orthodoxy, and, as George Orwell explained, the mainstream press does not challenge a prevailing orthodoxy. Orwell wrote, "At any given moment there is an orthodoxy, a body of ideas which it is assumed that all right-thinking people will accept without question. ... Anyone who challenges the prevailing orthodoxy finds himself silenced with surprising effectiveness. A genuinely unfashionable opinion is almost never given a fair hearing, either in the popular press or in the highbrow periodicals."

It is my experience that psychiatry, Scientology and fundamentalist religions are turnoffs for genuinely critical thinkers. Critical thinkers are not so desperate to adjust and be happy that they ignore adverse affects -- be they physical, psychological, spiritual or societal. Critical thinkers listen to what others have to say while considering their motives, especially financial ones; and they discern how one's motivation may distort one's assumptions.

A critical thinker would certainly not merely accept without analysis Fromm's and my conclusion that American society is insane in terms of healthy human development. Perhaps a society should not be labeled insane just because it is replete with schools that turn kids off to reading, for-profit prisons that need increasingly more inmates for economic growth, a mass media that is dishonest about threats to national security, trumped-up wars that so indebt a society that it cannot provide basic health care, a for-profit health care system that exploits illness rather than promoting health, et cetera.

A critical thinker would most certainly point out that there have been societies far less sane than the United States -- and Erich Fromm made himself absolutely clear on this point. In the barbaric German society that Fromm fled, disruptive children who couldn't fit into one-size-fits-all schools were not forced to take Adderall and other amphetamines, but instead their parents handed them over to psychiatrists to be euthanized. Fromm, however, knew that just because one could point to societies less sane than the United States, this did not make the United States a sane, humanistic society.

Bruce E. Levine, Ph.D., is a clinical psychologist and author of Surviving America's Depression Epidemic: How to Find Morale, Energy, and Community in a World Gone Crazy (Chelsea Green, 2007).

Remembering Peter Camejo

By Ralph Nader, Counterpunch

Peter Miguel Camejo, a civil rights leader, socially responsible investment pioneer, and magnanimo caballero for third party politics in the US, peacefully passed away early Saturday morning at his home in Folsom, CA with his wife Morella at his side -- only days after completing his autobiography.

The 68-year-old justice fighter had been battling a reoccurrence of lymphoma cancer, and his condition had rapidly deteriorated over the past few days.

Peter was a student leader, civil rights advocate, leader in the socially responsible investment industry with his own investment firm, Progressive Asset Management, Inc., and author of books on investment and history including Racism, Revolution, Reaction, 1861-1877, The Rise and Fall of Radical Reconstruction, California Under Corporate Rule, and his recent book, The SRI Advantage: Why Socially Responsible Investing Has Outperformed Financially.

Peter used his eloquence, sharp wit, and barnstorming bravado to blaze a trail for 21st century third party politics in the US. He was a third party candidate for state and national office, making three gubernatorial runs in California as a Green, including one in the 2002 election when he earned 5.3 percent of the vote. In the 2003 recall election, he debated Arnold Schwarzenegger and Gray Davis, and in the 2004 Presidential election, he was my running mate on our Independent Ticket.

Among the many causes Peter forcefully championed were a living wage, healthcare for all, and making the US the world leader in renewable energy. He was also a passionate advocate for electoral reform, pressing for proportional representation and internal run-off voting (allows voters to rank their top choices) in an effort to overturn the "200-year-old dysfunctional money-dominated winner take-all system that disrespects the will of the people."

Peter was a friend, colleague and politically courageous champion of the downtrodden and mistreated of the entire Western Hemisphere. Everyone who met Peter, talked with Peter, worked with Peter, or argued with Peter, will miss the passing of a great American.

Peter Camejo is survived by his wife Morella, his father Daniel, his daughter Alexandra, his son Victor, three brothers Antonio, Daniel, and Danny, and three grandchildren Andrew, Daniel, and Oliver.

When his autobiography (with the working title Northstar) is published, we will all be able to get a vivid sense of the great measure of Peter Camejo as a sentinel force for civil rights and civil liberties, and expander of democracy. His lifework will inspire the political and economic future for a long time.

PS-- As Vijay Prashad notes, Camejo was a member of the 1960 Venezuelan Olympics team for yachting.

Ralph Nader is running for president as an independent.

Saturday, September 13, 2008

Open letter to Barack Obama

Symbolism alone will not bring change

I have watched with keen interest and renewed hope as your campaign has mobilized millions of Americans behind your message of changing a political system that serves a small economic elite at the expense of the peoples of the United States and the world. Your election as president of the United States, where slaves and Indians were long considered less than human under the law, will undoubtedly constitute a historic moment in race relations in the United States.

Yet symbolism alone will not bring about change. Our young people, Black and Native alike, suffer from police brutality and racial profiling, underfunded schools, and discrimination in employment and housing. I sincerely hope your campaign will inspire some hope among our youth to struggle for a better future. I am, however, concerned that your recent statement on the Sean Bell verdict, in which the New York police officers who fired 50 shots at a young man on the eve of his wedding were acquitted of criminal charges, displays a rather myopic view of the law. Until the law is harnessed to protect the victims of state violence and racism, it will serve as an instrument of repression, just as the slave codes functioned to sustain and legitimize an inhuman institution.

As I can testify from experience, the legal institutions of this nation are far from racial and political neutrality. When judges align with the repressive actions and policies of the executive branch, injustice is rationalized and cloaked in judicial platitudes.

As you may know, I have now served more than three decades of my life as a political prisoner of the federal government for a crime I did not commit. I have served more time than the maximum sentence under the guidelines under which I was sentenced, yet my parole is continually denied (on the rare occasions when I am afforded a hearing) because I refuse to falsely confess.

Amnesty International, South African Bishop Desmond Tutu, the Dalai Lama of Tibet, my Guatemalan sister Rigoberta Menchu, and many of your friends and supporters have recognized me as a political prisoner and called for my immediate release. Millions of people around the world view me as a symbol of injustice against the Indigenous peoples of this land, and I have no doubt that I will go down in history as one of a long line of victims of U.S. government repression, along with Sacco and Vanzetti, the Haymarket Square martyrs, Eugene Debs, Bill Haywood, and others targeted for their political beliefs. But neither I nor my people can afford to wait for history to rectify the crimes of the past.

As a member of the American Indian Movement, I came to the Pine Ridge Oglala reservation to defend the traditional people there from human rights violations carried out by tribal police and goon squads backed by the FBI and the highest offices of the federal government. Our symbolic occupation of Wounded Knee in 1973 inspired Indians across the Americas to struggle for their freedom and treaty rights, but it was also met by a fierce federal siege and a wave of violent repression on Pine Ridge.

In 1974, AIM leader Russell Means campaigned for tribal chairman while being tried by the federal government for his role at Wounded Knee. Although Means was barred from the reservation by decree of the U.S.-client regime of Richard Wilson, he won the popular vote, only to be denied office by extensive vote fraud and control of the electoral mechanisms. Wilson’s goons proceeded to shoot up pro-Means villages such as Wanblee and terrorize traditional supporters throughout the reservation, killing at least 60 people between 1973 and 1975.

It is long past time for a congressional investigation to examine the degree of federal complicity in the violent counterinsurgency that followed the occupation of Wounded Knee. The tragic shootout that led to the deaths of two FBI agents and one Native man also led not only to my false conviction, but also the termination of the Church Committee, which was investigating abuses by federal intelligence and law enforcement agents, before it could hold hearings on FBI infiltration of AIM. Despite decades of attempts by my attorneys to obtain government documents related to my case, the FBI continues to withhold thousands of documents that might tend to exonerate me or reveal compromising evidence of judicial collusion with the prosecution.

I truly believe the truth will set me free, but it will also signify a symbolic break from America’s undeclared war on Indigenous peoples. I hope and pray that you possess the courage and integrity to seek out the truth and the wisdom to recognize the inherent right of all peoples to self-determination, as acknowledged by the United Nations Declaration on the Rights of Indigenous Peoples. While your statements on federal Indian policy sound promising, your vision of “one America” has an ominous ring for Native peoples struggling to define their own national visions. If freed from colonial constraints and external intervention, Indigenous nations might well serve as functioning models of the freedom and democracy to which the United States aspires.

Yours in the struggle.

Until freedom is won,

Leonard Peltier
# 89637-132 U.S.P. Lewisburg, P.O. Box 1000, Lewisburg, PA USA 17837

Cheney Scales New Heights of Hypocrisy

I am aware of the campaign to mislead the citizenry regarding Georgia's attempt to "reclaim" South Ossetia and Azkhaban. Rest assured that this campaign originates from within the illegitimate Bush administration and is carried out by its misinformation dissemination branch - the corporate media.

I listen to my friends and co-workers referring daily to the new Russian "aggression" and what will happen if this continues. There is usually no mention of the US aggression in Afghanistan and Iraq, not to mention the saber-rattling toward Iran, and if there is, it is usually to parrot some GWOT bullshit. Like lemmings to the sea...

No one seems to step back and examine the scenario, since the media does our thinking for us now, and we need not question its beneficence. No one else seems to believe that the situation suspiciously favors the warrior candidate, Johnny Mac Cain, and any mention of this possibility is usually met with doubt and sometimes utter derision. Such is the lot of the free-thinker.

Georgia is the US's bitch, campers. The history is clear - read up, babies! The only pipeline to the Caspian not under Russian control runs through South Ossetia. Bill Clinton, in the early nineties, said that it is the most important line in the region. Let's meditate on that, shall we?

But when Vice Resident "Big" Dick Cheney starts pontificating about Russian aggression and breaches of sovereignty (!!!!), you know something about the situation is seriously fucked. This is a signal to look deeper than the corporate media, plaything of the wealthy and powerful.--Pete


While Alaska Governor and Republican vice-presidential nominee Sarah Palin is getting all the attention, the current vice president, Dick Cheney, was able to pontificate about Russia and Georgia with barely any notice from the media. However, while hardly anyone was watching, Mr. Cheney echoed the hypocrisy of his boss, President George Bush. While traveling in Italy, Mr. Cheney decided to become the moral arbiter of Russia’s foreign policies. His incredible remarks are worth studying.

“Recent occurrences in Georgia, beginning with the military invasion by Russia, have been flatly contrary to some of our most deeply held beliefs. Russian forces crossed an internationally recognized border into a sovereign state; fueled and fomented an internal conflict; conducted acts of war without regard for innocent life, killing civilians and causing the displacement of tens of thousands.”

If anyone doubted the vice president’s disdain for those who elected him and kept him in power, this speech should have been an eye-opener. How he could make that statement with a straight face is beyond comprehension. Was he not a major force in the U.S. military invasion of Iraq? Mr. Bush may not have needed much encouragement to embark on this deadly oil grab, but whatever encouragement he may have needed was gladly provided by the vice president.

Did not U.S. forces cross an internationally recognized border into a sovereign state? At least Russia’s incursion was to a country it bordered; the U.S. sent 130,000 soldiers halfway across the world to invade and occupy sovereign Iraq.

Russia, says Mr. Cheney, ‘fueled and fomented an internal conflict.’ It has been some time since people have been talking about civil war in Iraq, possibly because with the increase of 30,000 soldiers, Iraq may have finally, after five bloody, terrifying years, been cowed into submission. The U.S. overthrew the government with nothing to put in its place, disbanded the police, and turned a once peaceful nation into an inferno of deadly, daily violence.

He goes on to decry the idea that Russia ‘conducted acts of war without regard for innocent life, killing civilians.’ When Mr. Bush’s horrific and unspeakable ‘Shock and Awe’ campaign began, residential areas were targeted. The president said he was invading Iraq because it had weapons of mass destruction aimed at the U.S., but since he didn’t know exactly where they were, he would simple practice genocide on the Iraqi people and hope the weapons of mass destruction would turn up eventually (they didn’t). At the time his bombers were dropping death from the air over Baghdad, over half the population of that city was under the age of 15.

As far as conducting acts of war is concerned, could someone point out to Mr. Cheney that the invasion of a sovereign nation is probably the ultimate act of war? Occupying it for years, killing a million of its citizens and terrorizing much of the population for over five years may be business as usual for U.S. foreign policy, but that does not make those actions any less acts of war.

One could also point out that torturing political prisoners, some as young as 15, is an horrific act of war. The torture chamber that the U.S. operates at Guantanamo Bay is only the most famous; the U.S. uses ‘rendition’ sites around the world to torture those it considers dangerous. The supposedly cherished rights, such as due process, that the U.S. is said to stand for are meaningless to those who get in the way of Mr. Bush and Mr. Cheney’s imperial designs.

The Russian incursion, said Mr. Cheney, caused ‘the displacement of tens of thousands.’ That number pales in comparison to the millions who have been displaced in Iraq due to the U.S. invasion and occupation. At least a million Iraqis are in crowded refugee camps, forgotten by the media and certainly ignored by that master terrorist, Dick Cheney. Perhaps two million more have had to leave their homes, although they remain in Iraq.

“The United States and many in Europe have made clear that Russia's actions are an affront to civilized standards and are completely unacceptable.” Mr. Cheney did not bother to explain why these behaviors exhibited by Russia are ‘an affront to civilized standards,’ and why they are ‘completely unacceptable,’ but when the exact same acts are perpetrated by the U.S., although on a far larger scale, they are, apparently, just fine.

“For its part, Russia has offered no satisfactory justification for the invasion -- nor could it do so.” In over five years since the U.S. invaded Iraq, it has offered ‘no satisfactory justification’ for doing so. All the original lies, including the falsehoods that Iraq had weapons of mass destruction, was close to developing nuclear weapons, etc., have faded into oblivion, like the blood of millions of Iraqis on the desert sands. Mr. Bush also stated the need for ‘regime change;’ why he and his neocon cohorts felt this was their right has also never been explained.

“Differing views on the status of these two areas, within the sovereign borders of the Georgian democracy, cannot justify a sudden and violent incursion by Russia. This much, at a minimum, should be understood by all people of good will in the year 2008.”

Yet apparently the belief that Iraq posed an imminent threat to the U.S., despite the fact that United Nations weapons inspectors were combing Iraq and finding nothing, could justify a sudden and violent incursion by the U.S. People of good will in the year 2008 understand that that is simply wrong, as they did in 2003.

“This chain of aggressive moves and diplomatic reversals has only intensified the concern that many have about Russia's larger objectives.” The U.S. invasion and occupation of Iraq, continued threats against Iran and Cuba, and the fact that the U.S. has enough weapons of mass destruction to destroy the entire planet several times over have certainly intensified concern about the U.S.’s larger objectives.

Eight long years ago, Mr. Bush promised to bring dignity back to the White House. In his war-mongering mind the fact that President Bill Clinton had had an extra-marital affair was so disgraceful that the reputation of the U.S. was in tatters as a result. Today, following the Iraqi invasion and occupation that most of the world, including most of the U.S.’s allies, opposed from the start, the U.S. is the most hated and feared nation on the planet. With Mr. Bush and Mr. Cheney now prancing around the world, criticizing Russia for actions that parallel in action but not in scope, the exact behaviors they have practiced and continue to practice, another mark of hypocrisy has been struck against the U.S.

As the U.S. plods towards the conclusion of its every-four-year election farce, the race for president is said to be too close to call. The Republican presidential candidate, the elderly Arizona Senator John McCain, the man who is so wealthy he does not even know how many houses he owns (or perhaps it is simply senility), calls for change by offering more of the same. This is the model his idol, Mr. Bush, used following the 2006 Congressional elections. After the war-mongering Republicans were thrown out of Congress, replaced by the spineless but equally war-mongering Democrats, Mr. Bush led the country on a ‘new way forward,’ by escalating the war. Mr. McCain has consistently supported Mr. Bush’s worst policies.

Mr. McCain’s Democratic challenger, Illinois Senator Barack Obama, has inspired many with his call for ‘change we can believe in.’ Whether or not we can actually believe in his idea of change, at the very least he offers a glimmer of the hope that U.S. citizens and the world have lived without for eight long years. He selected as his running mate Senator Joe Biden, a distinguished senator with a thorough knowledge of foreign policy, having served for many years on the senate Foreign Relations Committee, which he currently chairs. Mr. McCain selected Mrs. Palin, an (almost) one-term governor of a state with a population of less than 1,000,000. Her previous political experience was as mayor of an Alaskan town with a population of less than 7,000. She opposes every progressive movement known to man, encourages the shooting of wolves from airplanes, and believes that global warming is a natural occurrence, and not a man-made threat.

One wonders how more of the same will help to rebuild the reputation of the U.S. throughout the world, especially when it is ushered in by a cowgirl brandishing a gun and a chastity belt. Yet that is what change means to Mr. McCain.

The world is watching to see if the U.S. voters will make the same disastrous mistake in 2008 that they made in 2004. There was no excuse for it then, and there will be even less so if they do it again. The consequences of those mistakes grow with each one. It will not be long before those consequences are irreversible, to the detriment of the entire world population.

Robert Fantina is author of 'Desertion and the American Soldier: 1776--2006.

Thursday, September 11, 2008

Sunday, September 07, 2008

Socialism for the wealthy, capitalism for the poor

It's been readily apparent to anyone with an education that socialism is alive and well and entrenched deeply wthin the private sector, which admittedly sounds like an oxymoron.

Major corporate loss is always socialized and the citizenry is always penalized for the obscene excesses and the attendant economic disasters of the wealthy classes.

It is only profit that is privatized.--Pete


Under the plan, engineered by Treasury Secretary Henry Paulson, the government would place the two companies under "conservatorship," a legal status akin to Chapter 11 bankruptcy. Their boards and chief executives would be fired and a government agency, the Federal Housing Finance Agency, would appoint new chief executives.

The action, which would be one of the most sweeping government interventions in private financial markets in decades, is planned for today, according to several sources.

Authorities see Fannie Mae and Freddie Mac as crucial to the recovery of the housing market. They have funded 70 percent of home loans in recent months. A reduction in their activities could send mortgage rates that ordinary home buyers pay soaring and result in a new, deeper crisis for the already reeling housing market.

Moreover, regulators are trying to prevent Fannie Mae and Freddie Mac's problems from triggering a new wave of failures among banks, which hold vast reserves of bonds and preferred shares issued by the two firms.

The administration is not expected to say how much the bailout ultimately will cost, in part because it does not know how much the Treasury will be able to ultimately sell the assets for. It could be politically uncomfortable to put a price tag on a huge bailout, only two months before the presidential election. The Congressional Budget Office said two months ago that it was impossible to say how much a bailout would cost, but estimated $25 billion based on the companies' projected losses at the time.

Thursday, September 04, 2008

The Real McCain

Jeffrey St. Clair, Counterpunch

It's November 19, 2004, a mere two weeks after the election that returned George W. Bush to power, and Senator John McCain has traipsed off to New Hampshire to give a speech calling for 50,000 more troops to be sent into the quagmire of Iraq, press flesh and raise money for an expected run at the presidency in 2008. John Sununu, former New Hampshire governor and Bush family consigliere, wryly quipped about McCain's junket to the Granite State, "What took him so long?"

The press corps, already bored with Bush and election post-mortems, tags along. McCain's the darling of the moment, the opinion press's favorite senator, a media-made maverick, who was sedulously courted by both John Kerry and George Bush. McCain, true to form, flirted with them both and sniped at them both, but in the end remained wedded to the GOP, even as the party fell further under the sway of neo-cons and Christian fundamentalists that McCain publicly claims to abhor.

But that's all part of the McCain profile. He is the senator of the hollow protest. McCain is nothing if not a political stunt man. His chief stunt is the evocation of political piety. From his pulpit in the well of the senate, McCain gestures and fumes about the evils of Pentagon porkbarrel. He rails about useless and expensive weapons systems, contractor malfeasance, and bloated R&B budgets.

But he does nothing about them. McCain pontificates, but never obstructs. Few senators have his political capital. But he does nothing with it. Under the arcane rules of the senate, one senator can gum up the works, derail a bad (or good, though those are increasingly rare in this environment) bill, dislodge non-germane riders, usually loaded with pork, from big appropriations bills. McCain is never that senator. He is content to let ride that which he claims to detest in press releases and senate speeches.

A recent example. In late October, McCain went on 60 Minutes to decry a footnote in the Defense Appropriations Bill of 2004 that transferred billions of dollars from so-called Operations and Maintenance accounts for US troops in Iraq to porkbarrel projects, such as gold mines and museums, in the states of powerful senators. In his stern voice before the cameras, McCain made congressional looting sound like a treasonable offense. But what he failed to disclose is the fact that he actually voted for the bill. Not only that, he was personally approached by each senator who wanted just such a transfer of funds and gave it his seal of approval.

McCain the Maverick is a merely a fine-honed act, underscored by these kinds of casual hypocrisies.

* * *

In the past few years, McCain has been portrayed as one of the doves the senate. It's a stunning transformation and a phony one. Instead, throughout his career in Congress McCain has often been one of the hottest hawks around. During the war on Serbia in 1999, in one rhetorical bombing run after another, McCain bellowed for "lights out in Belgrade" and for NATO to "cream" the Serbs. At the start of May of that year he began declaiming in the US senate for NATO forces to use "any means necessary" to destroy Serbia.

McCain is often called a "war hero", a title adorning an unlovely resume starting with a father who was an admiral and graduation fifth from the bottom at the US Naval Academy, where he earned the nickname "McNasty". McCain flew 23 bombing missions over North Vietnam, each averaging about half an hour, total time ten hours and thirty minutes. For these brief excursions the admiral's son was awarded two Silver Stars, two Legions of Merit, two Distinguished Flying Crosses, three Bronze Stars, the Vietnamese Legion of Honor and three Purple Hearts. US Veteran Dispatch calculates our hero earned a medal an hour, which is pretty good going. McCain was shot down over Hanoi on October 26, 1967 and parachuted into Truc Boch Lake, whence he was hauled by Vietnamese, and put in prison.

A couple of years later he was interviewed in prison camp by Fernando Barral, a Spanish psychiatrist living in Cuba. The interview appeared in Granma on January 24, 1970.

McCain's fragile psyche runs on what Barral described "the personality of the prisoner who is responsible for many criminal bombings of the people." Barral went on, "He (McCain) showed himself to be intellectually alert during the interview. From a morale point of view he is not in traumatic shock. He was able to be sarcastic, and even humorous, indicative of psychic equilibrium. From the moral and ideological point of view he showed us he is an insensitive individual without human depth, who does not show the slightest concern, who does not appear to have thought about the criminal acts he committed against a population from the absolute impunity of his airplane, and that nevertheless those people saved his life, fed him, and looked after his health and he is now healthy and strong. I believe that he has bombed densely populated places for sport. I noted that he was hardened, that he spoke of banal things as if her were at a cocktail party.

McCain is deeply loved by the liberal press. As Amy Silverman, a reporter at the Phoenix weekly New Times who has followed the senator for years, puts it, "As long as he's the noble outsider, McCain can get away with anything it seems -- the Keating Five, a drug stealing wife, nasty jokes about Chelsea Clinton -- and the pundits will gurgle and coo."

Indeed they will. William Safire, Maureen Down, Russell Baker, the New Yorker, the New York Times Magazine, Vanity Fair, have all slobbered over McCain in empurpled prose. The culmination was a love poem from Mike Wallace in 60 Minutes, who managed to avoid any inconvenient mention of McCain's close relationship with S & L fraudster Charles Keating, with whom the indulgent senator romped on Bahamian beaches. McCain was similarly spared scrutiny for his astonishing claim that he knew nothing of his wife's scandalous dealings.

McCain's escape from the Keating debacle is nothing short of miraculous and it's probably the activity for which he most deserves a medal. After all, he took more than $100,000 in campaign contributions from the swindler Keating between 1982 and 1988, while simultaneously logrolling for Keating on Capitol Hill. In the same period McCain took nine trips to Keating's place in the Bahamas.

When the muck began to rise, McCain threw Keating over the side, hastily reimbursed Keating for the trips and suddenly developed a profound interest in campaign finance and reform.

Yet McCain is legendary among those who have worked with him for a pathologically vicious temper, also for his skill in adopting apparently principled stands which are never exposed to any rigorous test.

The pundits love McCain because of his grandstanding on soft money's baneful role in politics, thus garnering for himself a reputation for willingness to court the enmity of his colleagues.

In fact, colleagues in the Senate accurately regard McCain as a mere grandstander. They know that he already has a big war chest left over from the corporations that crave his indulgence, as chairman of the Senate Commerce Committee. Communications companies (US West, Bell South, ATT, Bell Atlantic have been particularly effusive in McCain's treasury, as have banks, military contractors and UPS. They also know he has a rich wife and the certain knowledge that his supposed hopes for an end to soft money spending will never receive any practical legislative application.

* * *

John McCain says he models himself after TR. "I'm a Teddy Roosevelt kind of Republican", McCain told a crowd of about 1,000 people in East Lansing, Michigan. "I believe America needs a strong leader. And most Republicans take in pride in identifying with TR, who believed that second only to the national defense, one of our most important public duties is to wisely husband the country's natural resources. Like TR I'll be the kind of president who will have the courage stand up to the special interests and no. There are some things they just can't have." The crowd of students plus those elusive Reagan Democrats cheered lustily as McCain raised his arms in his now customary crimped victory salute.

Two days later McCain was in Spokane, capital of Washington's Inland Empire, where the Republican Party is dominated by big timber, big agriculture and the hydro-power conglomerate that includes the aluminum factories, the barge fleets and the pulp mills. Over his 18-year career in the House and Senate John McCain has rarely let them down. He has supported property rights legislation, backed the salvage logging rider, fought measures for stricter control over pesticides and harshly denounced proposals to breach dams on the Columbia and Snake Rivers to save endangered salmon.

Even in that crowd, McCain claimed to be a conservationist: "It's possible for a conservative president to be an environmentalist." So the question is what kind of environmentalist is John McCain?

McCain has confused many observers. Even staunchly Democratic organizations such as the League of Conservation Voters, can't seem to find it in themselves to pin him down on the environment. The League's profile of McCain notes that "on most issues dealing with Arizona, National Park protection and auto-efficiency standards, his record ranges from good to excellent". But the group's own annual ranking (heavily prejudiced against Republicans, it must be admitted) gives the Arizona senator a lifetime rating of only 20 per cent. Several years he rated a zero.

When he's out West, McCain is fond of saying that his political mentor was Barry Goldwater. But McCain is no Goldwater. And that's not a compliment. Goldwater was, essentially, a western populist, a Libertarian version of Mike Mansfield, Lee Metcalf and Frank Church. Goldwater always had a passion for the outdoors and in the end singled out as his greatest political regret his vote to authorize the construction of Glen Canyon dam. McCain is not one for searing self-scrutiny. As with the rest of his political agenda, McCain's environmentalism has always been pointedly opportunistic. Voting for a popular Arizona wilderness bill when he faced a tough election. Introducing legislation at the behest of local businesses to limit overflights of planes and helicopters at Grand Canyon National Park. Perhaps, this is a sign for optimism. After all, he isn't a Wise-Use ideologue.

McCain tends to analyze the polls with an obsessiveness comparable to the Clintons. Of particular interest has been Republican pollster Frank Luntz's work, which shows that upwards of 70 per cent of Republicans favor strong environmental laws and increased funding for national parks. The environment, in other words, might be a wedge issue, one that can win over independents, Reagan Democrats, Republican moderates and women. Hence, a recent McCain speech on the environment in San Diego, where he thundered, "Republicans have to do a lot more than they are doing today on the environment." Aside from generic calls to fully fund the Land and Water Conservation Fund (which gets its money from royalties from offshore oil drilling), McCain tends to leave the particulars fuzzy.

Of course, McCain is hardly alone in this regard, of course. Indeed, on a bad day he can even sound a bit like Hillary Clinton. "One area I believe we must focus upon is to ensure that our laws and rules are more performance-based and that we focus better on outcomes rather than means," McCain writes on his webpage. "To that end we should work to instill greater flexibility to employ new approaches to meeting our standards and environmental goals."

His votes in the Senate have gone somewhat beyond "greater flexibility", embracing takings legislation, opening of the Alaskan National Wildlife Refuge to oil drilling, and Bob Dole's regulatory reform bill.

When the interests of the military and the environment come into conflict, as often happens in the Western states, there's no question where John McCain stands. In 1993, McCain placed a hold on the nomination of Mollie Beatie, Clinton's choice to head the Fish and Wildlife Service. McCain had been told by his buddies in the Marine Air Corps that the Fish and Wildlife Service planned to halt low-level flights above the Cabeza Prieta National Wildlife Reserve, near Yuma, Arizona. McCain's strong-arm tactics worked. Bruce Babbitt sent the senator a letter pledging that the military fly-bys would not be impeded. With this easy victory conquest of Babbitt under his belt, McCain struck again the following year, when he placed a rider onto the California Desert Preservation Act, allowing military flights over the wilderness areas and national preserves created by the act. Now, McCain shouldn't be forced to shoulder all the blame for that one. His amendment was fondly received by the bill's author, Senator Dianne Feinstein, who had already perverted the bill by permitting mining claims inside in the so-called national preserve.

In 1999 McCain attached a rider to the Defense Appropriations bill that would have permanently transferred to the Pentagon 7.2 million acres of federal wildlife refuge land managed by the BLM and the Fish and Wildlife Service, where they would become used as a bombing range and a testing ground for a new generation of missiles. McCain's rider exempted the military from conducting any environmental review of its programs.

One of the issues that divides the often united Western delegation is the Department of Energy's plan to bury the nation's commercial nuclear waste inside Yucca Mountain, an earthquake prone region on Shoshone lands in western Nevada. The plan, dubbed "mobile Chernobyl", sets up an MX missile system for nuclear waste, with trains shipping the radioactive materials from across the country on a maze of rail routes. McCain, happy to keep the waste out of Arizona, enthusiastically supports the scheme. And he backs the creation of even more nuclear waste by standing forth as one of the nuclear power industry's most reliable allies. "While waste and proliferation issues present unique challenges, nuclear energy can play a key role in reducing pollution emissions and controlling releases of carbon dioxide."

"If there's one thing we know about McCain, it's that he can't be trusted", says Roger Featherstone, director of the GREEN, an Albuqueque, New Mexico environmental group. "Anybody who promotes McCain is environmentalist is either an idiot or a liar." Much of the blame for McCain's reputation can be laid to our gullible press. Living on Earth, the NPR environmental show, recently produced a puff piece touting McCain as the Senate's most environmentally conscious Republican. Of course, most of McCain's act is scripted for the photo op. When the chips are on the table, McCain can be counted on to do the bidding of industry. Take the issue of subsidies. In 1996, McCain introduced a bill that would have slashed corporate welfare, including millions in subsidies to big timber in form of federally funded logging roads. The measure was enthusiastically received by liberals and the Washington press corps, which wasted no time hailing McCain as a "maverick" and a "renegade Republican". But a few months later McCain had the opportunity to make part of his plan reality, but he defected, voting against a measure offered by then-Senator Richard Bryant, the Nevada Democrat, that would have eliminated the very same timber road subsidies. McCain didn't explain his flip-flop.

McCain played a malign role in one of Arizona's most controversial issues, the mad scheme by the University of Arizona to erect seven deep space telescopes on national forest lands at the summit of Mt. Graham. Mt. Graham is known as a sky island, a lush montane oasis rising out of the Sonoran desert. In its upper reaches, Mt. Graham is cloaked in a dense alpine spruce-fir forest unique in the world. It is home to more than 18 endangered plants and animals, the most famous of which is the Mt. Graham red squirrel, found nowhere else. Mt. Graham is not only an ecological marvel, it is also a sacred mountain to the San Carlos Apache.

Neither of these factors carried weight with McCain, who was hell-bent on doing favors for the University. He duly introduced legislation exempting the $520 million project from compliance with the Endangered Species Act, Antiquities Act and the Native American Religious Freedom Act.

In the spring of 1989, the Forest Service began to raise questions about the project. Worried about the impacts on the endangered Mt. Graham red squirrel, Jim Abbott, the supervisor of the Coronado National Forest, ordered a halt to road construction at the site. The delay infuriated McCain. On May 17, 1989, Abbott got a call from Mike Jimenez, McCain's chief of staff. Jimenez told Abbot that McCain was angry and wanted to meet with him the next day. He told Abbott to expect "some ass-chewing". At the meeting, McCain raged, threatening Abbott that "if you do not cooperate on this project [bypassing the Endangered Species Act], you'll be the shortest tenured forest supervisor in the history of the Forest Service." Unfortunately for McCain, there was a witness to this encounter, a ranking Forest Service employee named Richard Flannelly, who recorded the encounter in his notebook. This notebook was later turned over to investigators at the GAO.

A few days later, McCain called Abbott to apologize. But the call sounded more like an attempt to bribe the Forest Supervisor to go along with the project. According to a 1990 GAO report on the affair, McCain "held out a carrot that with better cooperation, he would see about getting funding for Mr. Abbott's desired recreation projects". Environmentalists attempted to bring an ethics complaint against McCain, citing a federal law that prohibits anyone (including members of Congress) from browbeating federal agency personnel. The Senate ethics committee never pursued the matter. When the GAO report, condemning McCain, surfaced publicly, McCain lied about the encounter, calling the allegations "groundless" and "silly"

In 1992, Robin Silver and Bob Witzeman went to meet with McCain at his office in Phoenix to discuss Mt. Graham. Silver and Witzeman are both physicians. Witzeman is now retired and Silver works in the emergency room at Phoenix hospital. The doctors say that at the mention of the words Mount Graham McCain erupted into a violent fit. "He slammed his fists on his desk, scattering papers across the room", Silver tells us. "He jumped up and down, screaming obscenities at us for at least 10 minutes. He shook his fists as if he was going to slug us. It was as violent as almost any domestic abuse altercation."

Witzeman left the meeting stunned: "I'm a lifelong environmentalist, but what really scares me about McCain is not his environmental policies, which are horrid, but his violent, irrational temper. I think McCain is so unbalanced that if Vladimir Putin told him something he didn't like he'd lose it, start beating his chest about having his finger on the nuclear trigger. Who knows where it would stop. To my mind, McCain's the most likely senator to start a nuclear war."

This article is adapted from Jeffrey St. Clair's book, Grand Theft Pentagon.

Jeffrey St. Clair is the author of Been Brown So Long It Looked Like Green to Me: the Politics of Nature and Grand Theft Pentagon. His newest books, Born Under a Bad Sky and Red State Rebels: Tales of Grassroots Resistance in the Heartland (co-edited with Joshua Frank) are just out from AK Press. He can be reached at: sitka@comcast.net.