Why Conservatives Led the Fight Against the Bailout Deal

By Joshua Holland, AlterNet
http://www.alternet.org/story/100857/

On Monday, the Bush administration's massive Wall Street bailout went down to a narrow defeat in the House. After the 228-205 vote, markets crashed, and the usual partisan finger-pointing followed. According to the Washington Post, Speaker Nancy Pelosi "maintained that Democrats 'delivered on our side of the bargain' by getting 60 percent of House Democrats to support a bill that was built around the Bush administration's proposal, whereas 67 percent of House Republicans voted against it."

At first glance, it may appear that the 133 House Republicans who broke with their party's leadership did so out of principle -- that they bravely stood up against a massive cash transfer to those most responsible for precipitating the financial crisis in the first place. They appeared to be gambling a lot in taking that principled position, despite the fact that the bailout had drawn fire from across the political spectrum. The conventional wisdom, after all, has gelled around the idea that only an unprecedented cash infusion into the ailing banking system will stave off a potential Next Great Depression. The message many rebellious conservatives sent was that it takes courage to roll the dice with the world's economy six weeks before an election, even if the public was deeply skeptical of the measure (the reality is that almost none of the lawmakers who face tight races this fall voted for the bailout, fearing a backlash from voters; Congress is not known for courage or principle on the eve of an election).

And there's no question that the bill they and 95 of their Democratic colleagues killed was an extremely bad one, even if some token nods to "Main Street" had been added to help it go down lawmakers' throats more smoothly. Democrats abandoned a key provision -- one vehemently opposed by lenders -- to allow bankruptcy judges to modify mortgages that are in the process of foreclosure, and they accepted only token limits on executive compensation for companies that would be rescued under the plan (PDF). Worst of all was a vaguely worded provision that might have allowed the Treasury to buy up bad paper at the price at which it was originally booked, rather than at those securities' largely unknowable but deeply diminished current value. That would have essentially given a small investor class an opportunity to recover its losses at the expense of the American taxpayer (and future taxpayers, as the bailout would be financed through debt).

But a deeper look reveals another picture of the legislative fight that has occupied Washington since George W. Bush first proposed the bailout. Unlike most House Democrats, who voted against the bill in an attempt to send the plan back to the drawing board to get a deal that might better protect taxpayers and homeowners, House conservatives torpedoed the measure in order to advance their own alternative "bailout," one that's an ideologically motivated back door to bailing out Wall Street without doing anything for Main Street.

The plan is notably light on detail, even for campaign season, when politicians are loath to discuss the fine points of any proposal. But based on what can be gleaned from media reports, the heart of the "alternative" scheme is for the government to sell insurance for securities based on bad loans, rather than buy up the paper directly. Supposedly, the premiums would be high enough to assure that Joe and Jane taxpayer don't get fleeced.

On its face, that idea seems both fiscally sound and decidedly conservative, in the traditional sense of the word.

But remember what the immediate problem we face is all about. The financial industry is weighed down by an enormous "shit pile" of bad paper -- mortgage-backed securities, complex derivatives and insurance-like instruments that were supposed to make all these "creative" investment vehicles somewhat sound. That shit pile, impossible to value accurately, is threatening the whole economy, as lenders hunker down and hold onto their cash reserves in an attempt to ride out the storm of foreclosures, and that's making it tough for businesses and consumers to get credit they need to expand their operations or buy new gizmos.

That's not a situation that lends itself to a government-backed insurance policy. If the premiums aren't deeply subsidized by the American public, they'll be out of reach of troubled banks by definition -- after all, if they had enough cash to cover their bad debts, which will ultimately be the job of the insurer (that's you, me and the people we know), then they wouldn't find themselves on the brink of collapse to begin with. That means the government would still end up effectively buying up the banks' worthless paper piece by piece as the underlying assets on which that paper is written go belly-up. Think of it as the government selling fire insurance for houses that are already ablaze.

So the point was not to spare the taxpayer the expense of Wall Street's shit pile. By offering an alternative plan, House conservatives abandoned a negotiating process that was, at heart, about trying to modify the disastrous Bush-Paulson plan so that it didn't just bail out the financial sector's movers and shakers without getting some concessions for working America.

The other two tenets of the alternative plan are worse still.

In keeping with the tradition of a party that has one policy solution to all economic ills -- cutting taxes on the wealthy -- the conservatives who bucked their leaders also suggested cutting capital gains taxes, even if only on a temporary basis. It's a triumph of ideology over common sense. We've seen stock markets tanking, as investors flee like rats from a sinking ship, seeking safer ground in commodities, which have gone through the roof (oil prices have been moderated somewhat by expectations of a long slowdown that would cut demand). A tax holiday on capital gains would only encourage those investors with steely nerves (and gains) who are staying in the market to join the herd, getting out while it's tax-free to do so. That can only send the already sky-high prices for food, energy and everything else even higher into the stratosphere. Ordinary working people would end up paying on both sides of the deal -- getting soaked for Wall Street's Reckless Lending Insurance and then paying through the nose to put food on the table.

Adding insult to injury is the third leg of the "alternative" bailout plan: more deregulation of the financial sector.

That's nothing short of breathtaking in its audacity. It was a lax regulatory environment that brought us to the verge of collapse in the first place. Exotic security-backed loans -- loans that didn't conform to the standards in place for banks that held deposits, including subprime loans, mortgages given to people who misstated their income and loans with heavy prepayment penalties and huge balloon payments -- are, as one would expect, faring far worse than the kinds of traditional loans that are regulated by the Federal Housing Authority or backed by Fannie Mae. Regulations passed by Congress only three months ago, as the depth of the meltdown had become clear, made "coercing a real estate appraiser to misstate a home's value" and "making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value" a no-no; if similar commonsense regulations had been in place over the past decade, the run-up of the real estate market wouldn't have been as frenzied, and we wouldn't see the skyrocketing number of foreclosures we're witnessing today.

Again, none of this is to suggest that Americans should shed a tear for the demise of the compromise deal struck between Treasury Secretary Paulson and the Bush administration -- it was a bad deal that deserved to go down in flames. But it's also becoming increasingly evident that some sort of intervention is necessary to prevent the crisis from spreading through the entire global economy. Rather than pugnaciously cling to a failed ideology by heaping lucre on the wealthiest in the hope that it trickles down to the rest of us, Congress should be going back to the drawing board and coming up with a bailout plan rooted in a modicum of economic justice.

The House conservatives who have proven to be such a fly in the ointment are trying to go the other way -- cooking up a plan that will only deepen Main Street's pain in the name of saving it from Wall Street's predations.

Joshua Holland is an AlterNet staff writer.

© 2008 Independent Media Institute. All rights reserved.

Tina Fey returns again to SNL to skewer Sarah Palin

Invasion of the Sea-Smurfs

http://www.truthdig.com/report/item/20081001_invasion_of_the_sea_smurfs/

By Amy Goodman

A little-noticed story surfaced a couple of weeks ago in the Army Times newspaper about the 3rd Infantry Division’s 1st Brigade Combat Team. “Beginning Oct. 1 for 12 months,” reported Army Times staff writer Gina Cavallaro, “the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.” Disturbingly, she writes that “they may be called upon to help with civil unrest and crowd control” as well.

The force will be called the chemical, biological, radiological, nuclear or high-yield explosive Consequence Management Response Force. Its acronym, CCMRF, is pronounced “sea-smurf.” These “sea-smurfs,” Cavallaro reports, have “spent 35 of the last 60 months in Iraq patrolling in full battle rattle,” in a combat zone, and now will spend their 20-month “dwell time”—time troops are required to spend to “reset and regenerate after a deployment”—armed and ready to hit the U.S. streets.

The Army Times piece includes a correction stating that the forces would not use nonlethal weaponry domestically. I called Air Force Lt. Col. Jamie Goodpaster, a public-affairs officer for Northern Command. She told me that the overall mission was humanitarian, to save lives and help communities recover from catastrophic events. Nevertheless, the military forces would have weapons on-site, “containerized,” she said—that is, stored in containers—including both lethal and so-called nonlethal weapons. They would have mostly wheeled vehicles, but would also, she said, have access to tanks. She said that any decision to use weapons would be made at a higher level, perhaps at the secretary-of-defense level.

Talk of trouble on U.S. streets is omnipresent now, with the juxtaposition of Wall Street and Main Street. The financial crisis we face remains obscure to most people; titans of business and government officials assure us that the financial system is “on the brink,” that a massive bailout is necessary, immediately, to prevent a disaster. Conservative and progressive members of Congress, at the insistence of constituents, blocked the initial plan. If the economy does collapse, if people can’t go down to the bank to withdraw their savings, or get cash from an ATM, there may be serious “civil unrest,” and the “sea-smurfs” may be called upon sooner than we imagine to assist with “crowd control.”

The political and financial establishments seem completely galled that people would actually oppose their massive bailout, which rewards financiers for gambling. Normal people worry about paying their bills, buying groceries and gas, and paying rent or a mortgage in increasingly uncertain times. No one ever offers to bail them out. Wall Street’s house of cards has collapsed, and the rich bankers are getting little sympathy from working people.

That’s where the sea-smurfs come in. Officially formed to respond to major disasters, like a nuclear or biological attack, this combat brigade falls under the U.S. Northern Command, a military structure formed on Oct, 1, 2002, to “provide command and control of Department of Defense homeland defense efforts.” Military participation in domestic operations was originally outlawed with the Posse Comitatus Act in 1878. The John Warner National Defense Authorization Act for Fiscal Year 2007, however, included a section that allowed the president to deploy the armed forces to “restore public order” or to suppress “any insurrection.” While a later bill repealed this, President Bush attached a signing statement that he did not feel bound by the repeal.

We are in a time of increasing economic disparity, with the largest gap between rich and poor of any wealthy industrialized country. We are witnessing a crackdown on dissent, most recently with $100 million spent on “security” at the Democratic and Republican national conventions. The massive paramilitary police forces deployed at the RNC in St. Paul, Minn., were complete overkill, discouraging protests and conducting mass arrests (National Guard troops just back from Fallujah were there). The arrest there of almost 50 journalists (myself included) showed a clear escalation in attempting to control the message (akin to the ban on photos of flag-draped coffins of soldiers). There are two ongoing, unpopular wars that are costing lives and hundreds of billions of dollars. Nobel-winning economist Joe Stiglitz estimates that Iraq alone will cost more than $3 trillion.

In December 2001, in the midst of restricted access to bank accounts due to a financial crisis, respectable, middle-class Argentines rose up, took to the streets, smashed bank windows and ultimately forced the government out of power, despite a massive police crackdown and a failed attempt to control the media. Here in the U.S., with the prospect of a complete failure of our financial system, the people have spoken and do not want an unprecedented act of corporate welfare. We don’t know how close the system is to collapse, nor do we know how close the people are to taking to the streets. The creation of an active-duty military force, the sea-smurfs, that could be used to suppress public protest here at home is a very bad sign.

Denis Moynihan contributed to this column.

Amy Goodman is the host of “Democracy Now!” a daily international TV/radio news hour airing on more than 700 stations in North America.

© 2008 Amy Goodman

Distributed by King Features Syndicate

Will Wall Street's Meltdown Turn America Into a Police State?

This is one of the articles that actually tells it true. The illegitimate Bush administration has engineered the largest transfer of public wealth into private hands in history. It would seem the rogue government has plans for quelling citizen uprisings as well.--Pete

By Scott Thill, AlterNet
http://www.alternet.org/story/100689/

"Raw capitalism is dead." -- Henry Paulson, U.S. Treasury secretary

"Can't we just all go out and say things are OK?" -- President Bush, to congressional leaders during bailout negotiations

I'm not much of an Army Times reader, but after reading that a brigade was shipping from Iraq in October to serve as "an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks" in the homeland right before the election, my antennae perked up. Same as they did when I read that an electoral college doomsday scenario exists in which Dick Cheney casts the deciding vote that gives McCain-Palin the White House.

That is, if Cheney and Bush don't take it for themselves. That may sound like fantasy, but don't kill the messenger. They are all strands of the Gordian knot the Bush administration has tied around the neck of the American people for the last two presidential terms, best represented today by the failed bailout of banks, brokers and other complicit parties that have since jacked the American people out of trillions. And while the Army Times revelation or election doomsday may turn out to be paranoia rather than prescience, the evidence just isn't there.

Like I said: antennae.

They've come in handy as bullshit detectors since Bush stole the election from a flat-footed Al Gore and set about engineering the greatest transfer of public wealth into private hands in American history. If you factor in Monday's failed takeover, as well as the $5 trillion the American people now owe thanks to the "bailout" of Fannie Mae and Freddie Mac, not to mention the continuing hyper-expensive occupation of Iraq and so on, our citizenry is now so far in the hole that it's pointless griping about numbers. If you want one, use the figure put forth by Dennis Kucinich: half a quadrillion dollars. We have evolved past the point of economic or geopolitical reality and entered a phase of pure concept.

And all vectors of that phase point toward the conclusion that the proverbial shit has totally hit the fan -- head on, and all over again.

Meet the New Rome, Same as the Old Rome

"Franklin Roosevelt had to save capitalism from itself," Los Angeles Times business editor Tom Petruno told me as Washington Mutual and Wachovia became the latest banking dominoes to fall. "Is history repeating?"

Indeed, it is, as one could tell from the repetitive usage of loaded terms and phrases like "Great Depression," "meltdown," "apocalypse," "Armageddon" and more to describe the just-on-time cratering of the American economy. After the strange bedfellows in both parties torpedoed Bush, Bernanke and Paulson's so-called bailout, more than $1 trillion of market value in American equities disappeared in a single day. The Dow Jones average set a record for quickest suicide dive in a single day. Other indexes sunk to multiyear lows, wiping out years of value, and stocks across the board went negative like Ann Coulter. In fact, the only major stock that actually advanced on Monday was Campbell Soup.

Can there be a more fitting metaphor for the American economy stuck beneath the Bush administration's thumb?

But the reruns, and their loaded terminology, are merging: Bush himself is just another iteration of the infamous "New World Order" instituted by his father while trying to, what else, convince the American public that it needed to go to war against Saddam Hussein. The revisionism is transparent, befitting a government that cares nothing of what its people actually think. Jon Stewart of "The Daily Show" recently juxtaposed Bush's address on the financial cataclysm with his pre-invasion speech in 2003 and found -- surprise! -- they were exactly the same.

This is a long way of saying that this particularly frightening crux of historical geopolitics, fascism and environmental calamity has been a long time coming. Failing banks? Deregulation. Endless war? Homeland security. Total information awareness? Transparent government. Bankrupt economy? The fundamentals are strong.

"Here's my question," Petruno adds. "If this is remembered as Black September, will that end up being too gentle a reference to what actually happened to the American financial system this month? It is beyond comprehension for people who have been on Wall Street their entire lives. I can only imagine how absolutely stunned the American public must be. Stunned, and very afraid."

It should be. From a military brigade armed for action in the homeland in blatant transgression of Posse Comitatus to what ex-hedge funder and financial personality Jim Cramer recently called "financial terrorism," the United States is pushing forward back.

To start with, the bailout was obvious theft, but our situation is more precarious than you think. The hyperreal credit default swap market, which few understand although it is estimated to involve tens if not hundreds of global trillions, is faltering under the weight of its own Ponzi origins. The scenario significantly worsens once you factor in the given that countries like China and others who have denominated their loans in dollars are shouldering our exploding debt, along with oil-soaked sovereign wealth funds from nations whose civil liberties records suck ass. As I wrote last year on this clusterfuck, if the Chinese call in our debts and oil-producing countries decide to peg their petrodollars to the euro, you can more or less kiss the dollar goodbye. Which means the last thing you'll need to worry about is your stocks, retirement or credit cards. You will instead worry whether or not the cash you have on hand will be worth anything at all. That is the loaded gun that bankers, brokers and the White House is holding to the public's head, as I write. That trillion erased on Monday, as well as the trillions that have been lost and will be lost in the coming months, was nothing more than a hostage situation engineered by the Bush administration, the Federal Reserve and their partners in crime in finance, insurance and real estate business.

They don't call that sector FIRE for nothing. Fire destroys everything and leaves little in its catastrophic wake. Which raises the question: What's left to burn?

"I think our economic situation can get much worse," argues Danny Schechter, the veteran producer and author whose 2006 indie documentary "In Debt We Trust" covered this volatile territory long before CNN would. "Jobless claims are already at a seven-year high, but the government is worried about the reaction from Asia. We are living on other countries' money, and when that spigot gets cut off, we will be in deeper doo-doo. Part of the reason for the scale of the bailout is to show Asia and sovereign wealth funds that we will protect their interests."

But for how long? The Bush administration and Congress' disdain for the American people has been painfully obvious, so it's hard to believe they will call from sky-high Dubai to see how we are doing after making off with almost all of our money.

"It's a high-stakes gamble, which is why Paulson tried to do it quickly in a climate of shock and crisis," Shechter says. "He knew that the longer it takes, the more opposition it will attract. This plan, if eventually passed, will pre-empt the next president from doing anything about it, because there will be no money. They are wrecking the government by wrecking the economy first."

That shock doctrine, as Naomi Klein explained in her brilliant book of the same name, has foisted this same kind of disaster capitalism on country after country over the last century. Klein's book is littered with democracies that slept their way through coups and takeovers, entranced by one simulation or another. The United States was plugged into a matrix that onetime White House press secretary Ari Fleischer described as "an American way of life," adding without deceit that "it should be the goal of policy makers to protect the American way of life."

By destroying it? Mission accomplished.

"This is the September of surprise," Schechter concluded, "not a war on Iran but on America."

Civil War, the Rerun?

So, what's the next step for the shoe yet to drop? Perhaps the Army Times has the clues:

(The brigade) may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack. ... The 1st BCT's soldiers also will learn how to use "the first ever nonlethal package that the Army has fielded," 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

Like every move the Bush administration has ever made, from the Patriot Act to the occupation of Iraq and down to bankrupting the American economy, this maneuver is a solution in search of a problem that it seems destined to create. Look around you. Housing is over. Stocks are nosediving. The banks are gone. War is ceaseless. Civil liberties are disappearing. Nerds at the Federal Reserve and the Treasury are taking hostages. It is madness.

And mad people have a tendency to infect everyone around them. The difference is that when you go mad ... well, that's the question mark: What will happen?

Ask the late Iman Morales, who went crazy in Brooklyn on a ledge 10 feet above ground and was illegally tasered by New York police officers, eventually falling to his death, immobilized. A perfect metaphor for our economy, sure, but it's also the type of literal shock we might be awaiting, as the November election creeps nearer and shit begins to hit the fan with ferocity. Many of us so-called alternative journos are not conspiracy nuts, but realists. We look at galvanizing leaders like Barack Obama, America's next president, and compare his impact to that of Lincoln, Kennedy or King -- without forgetting that all three were eventually assassinated. We are the type of realists who live through two Bush presidents, both of whom configured a New World Order, with and without the approval of the American people and the world at large. The type of realists that notice that after 9/11, we couldn't fly to Vegas, but Osama bin Laden's family was flown out of the country on government charter.

And here is what we see today: Crowds protesting in the streets, the people's money wiped out thanks to the Bush administration's latest economic shock and awe. An army brigade matter-of-factly betraying Posse Comitatus for the purpose of crowd control. The public trust and wealth almost robbed cleanly with congressional approval.

In other words, we see another unfolding coup, which is to say, a rerun. And there is no telling what the future may hold, or whether or not we are connecting vectors that should remain solitary. But our math has worked just fine in the past -- better than Ben Bernanke and Henry Paulson's math, that's for sure.

And we'd love to be wrong about what's coming. But unfortunately that isn't up to us, and it never has been: It's up to the Bush administration. And it has never failed to let us down.

Scott Thill runs the online mag Morphizm.com. His writing has appeared on Salon, XLR8R, All Music Guide, Wired and others.
© 2008 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/100689/

From Empire to Democracy

October, 03 2008By Howard Zinn
Howard Zinn's ZSpace Page
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Let's not waste $700bn on a bail-out, but use 'big government' for what it's best at - shaping a society that is fair and peaceable.

This current financial crisis is a major way-station on the way to the collapse of the American empire. The first important sign was 9/11, with the most heavily-armed nation in the world shown to be vulnerable to a handful of hijackers.

And now, another sign: both major parties rushing to get an agreement to spend $700bn of taxpayers' money to pour down the drain of huge financial institutions which are notable for two characteristics: incompetence and greed.

There is a much better solution to the current financial crisis. But it requires discarding what has been conventional "wisdom" for too long: that government intervention in the economy ("big government") must be avoided like the plague, because the "free market" will guide the economy towards growth and justice.

Let's face a historical truth: we have never had a "free market", we have always had government intervention in the economy, and indeed that intervention has been welcomed by the captains of finance and industry. They had no quarrel with "big government" when it served their needs.

It started way back, when the founding fathers met in Philadelphia in 1787 to draft the constitution. The first big bail-out was the decision of the new government to redeem for full value the almost worthless bonds held by speculators. And this role of big government, supporting the interests of the business classes, continued all through the nation's history.

The rationale for taking $700bn from the taxpayers to subsidise huge financial institutions is that somehow that wealth will trickle down to the people who need it. This has never worked.

The alternative is simple and powerful. Take that huge sum of money and give it directly to the people who need it. Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages. Create a federal jobs programme to guarantee work to people who want and need jobs and for whom "the free market" has not come through.

We have a historic and successful precedent. Roosevelt's New Deal put millions of people to work, rebuilding the nation's infrastructure, and, defying the cries of "socialism", established social security. That can be carried further, with "health security" - free health care - for all.

All that will take more than $700bn. But the money is there. In the $600bn for the military budget, once we decide we will no longer be a war-making nation. And in the swollen bank accounts of the super-rich, by taxing vigorously both their income and their wealth.

When the cry goes up, whether from Republicans or Democrats, that this must not be done because it is "big government", the citizenry should just laugh. And then agitate and organise on behalf of what the Declaration of Independence promised: that it is the responsibility of government to ensure the equal right of all to "life, liberty, and the pursuit of happiness".

Only such a bold approach can save the nation - not as an empire, but as a democracy.

###

Howard Zinn is a historian, playwright, and social activist. He is author of many books, including A POWER GOVERNMENTS CANNOT SUPPRESS, published by City Lights Books.

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From:	Z Space - The Spirit Of Resistance Lives
URL:	http://www.zcommunications.org/zspace/commentaries/3637

Russia and Georgia: International Law and Norm Considerations

October, 02 2008By David Barouski
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Many insightful analyses have been written on the recent Russia-Georgia war. Some writers looked at what the war means in the context of the "great game." Others examined what might have motivated Georgia to instigate such a seemingly impossible fight with Russia. Another approach was to analyze the United States' influence on the conflict. This particular composition will utilize a few basic applications of international law to briefly analyze the war.

On July 31st, Russian railroad troops finished work repairing a strategic railroad in Georgia's semi-autonomous region of Abkhazia. Its completion would allow Russia to deploy military equipment and reinforcements directly in the region to a position located just outside Georgian artillery's reach. Georgian President Mikheil Saakashvili and his advisors knew that if he was going to ratchet up the pressure on the country's separatist regions to bring them more under Georgian control, he would have to do so soon before Russian reinforcements and equipment had the opportunity to arrive. On the night of August 1st, Georgian soldiers attacked the north end of Tskhinvali, the capital of another semi-autonomous region of Georgia called South Ossetia.1 They exchanged gunfire with Ossetian militia forces and following a two hour firefight, the Georgian Army shelled the area and withdrew. Over the next few days, Georgian forces deployed to the South Ossetian border for a more definitive strike. Georgian and North Atlantic Treaty Organization (NATO) officials both denied any military buildup was occurring.2 On August 6th, another battle occurred in South Ossetia and the Russian barracks were targeted. After a night of gunfire that claimed several lives, the Georgian Army resumed artillery fire at daybreak on August 7th. On the evening of August 7th, after an all-day battle between the Georgian Army and Ossetian fighters, President Saakashvili declared a unilateral ceasefire.3 He publicly announced on television that the Georgian Army had been ordered to cease all hostilities. In addition, President Saakashvili offered South Ossetia unlimited autonomy within Georgia and stated that Russia would be allowed to enforce the agreement.4

However, while talking peace, President Saakashvili prepared for war. Tanks and heavy weapons were moved to the South Ossetia border.5 On the night of August 8th, President Saakashvili violated his own ceasefire as the Georgian Army unilaterally attacked fellow Georgian citizens in Tskhinvali. The attack was coordinated to coincide with the opening ceremony of the 2008 Summer Olympics in Beijing because the eyes of the international press would be focused there, and by the time they were completely aware of the full-scale war in Georgia, Russian tanks were already rolling in and their air strikes were underway. President Saakashvili reinforced this myopic version of events to the public by focusing on the Russian forces that crossed into Georgia during his press conferences and interviews. In addition, China's preoccupation with the Olympic Games prevented them from responding to the crisis by backing Russia either politically and/or militarily. Russia's Prime Minister, Vladimir Putin, and several other high-ranking Russian statesmen were also in Beijing for the opening festivities to meet with other world leaders, including United States President George W. Bush. Their preoccupation allowed Georgia to publicly respond to the crisis first and disseminate their version of events.

Also apparently lost on the western press was the fact that the Georgian Army committed war crimes and crimes against humanity by targeting civilian structures in Tskhinvali. Initially, they targeted schools, hospitals, housing complexes, and the city's university with BM-21, 122mm, and 152mm mortar shells. When the attack was initiated, artillery shells began raining down while the town's residents were sleeping in their homes. Rockets were launched on the town shortly after. Then, Georgian tanks rolled in along with ground forces and encircled the town while the Georgian Air Force took flight. The area quickly fell under siege. Ossetian militias and Russian peacekeepers engaged the Georgians. The Georgian Army also advanced on Abkhazia, which has a mutual defense pact with South Ossetia. Abkhazian militias pushed Georgia out of the Kodori Gorge. By the end of August 8th, Russia responded by commencing airstrikes on Gori and other military targets while sending in thousands of soldiers along with tanks, transport vehicles, and heavy weaponry. Based on the speed and size of the response, it is clear that Russia had pre-planned for this scenario and was militarily ready and able to deploy before August 8th. Georgian officials admitted to dropping Israeli-made M-85 cluster bombs at the Roki Tunnel, where the Russian infantry, tanks, and vehicles crossed into Georgia.6 Russian warships were sent to the Black Sea, where at least one Georgian ship was sunk. The Georgian armed forces, though trained by the United States and Israel, did not really stand a chance against the large-scale Russian deployment and their air superiority. After the Russian Army pushed the Georgian Army out of South Ossetia and moved into Georgia Proper, Ossetian militias looted and burned Georgian homes in Tamarasheni, Kekhvi, Kvemo Achabeti (Nizhnie Achaveti), Zemo Achabeti (Verkhnie Achaveti), and Kurta.7

Georgia defended its attack on South Ossetia by invoking the sacrosanct principle of sovereignty. Indeed, South Ossetia is still a legal part of the sovereign state of Georgia because it has not received diplomatic recognition from other sovereign states or international organizations like the United Nations (UN). Georgian officials stated that it is their right to use force against separatist militias that threaten the sovereignty of the Georgian state, which is defined here as a monopoly of force and legal authority over an internationally-recognized geographic territory.8 Initial armed intervention to legitimately protect the peace of a sovereign nation is an internationally accepted legal norm articulated in Article 51 of the UN Charter. Their other argument is essentially that the Russian Army, by crossing into Georgian territory and attacking Georgian state forces, committed an Act of Aggression as defined by United Nations (UN) General Assembly Resolution 3314 (1974) and also violated Article 2.4 in Chapter 1 of the UN Charter.9 President Saakashvili tried to reinforce these arguments to the international community by repeatedly claiming that Russia's ultimate goal was to overthrow his government, not protect the Ossetians.10 Russia's advance into Georgia Proper, as opposed to simply securing South Ossetia, was used as evidence for his claim. President Saakashvili also accused Russia (without providing evidence) of committing acts of ethnic cleansing, a war crime and crime against humanity.11 Finally, one can argue that Russia's political influence within South Ossetia undermines Georgia's legal authority (a part of sovereignty) over the region.12

Russia had its own justifications and precedent to attempt to explain their intervention. One argument is that they were coming to the aid of Russian citizens who were being unilaterally attacked by the Georgians.13 Most South Ossetians have Russian passports and are afforded all the benefits of a native-born Russian passport holder. As such, South Ossetians are considered de facto Russian citizens by Moscow. In addition, Georgia attacked the Russian soldiers that were legally deployed in South Ossetia as a part of the peacekeeping force set up in the 1992 ceasefire agreement between South Ossetia and Georgia. These soldiers are native Russian citizens and by August 8th, several Russian peacekeepers were killed in the attacks by Georgian forces.14 Russia invoked the inherent right of self-defense to defend these Russian citizens, and Article 51 of the UN Charter allows the use of force for self-defense from an armed attack until the Security Council undertakes measures against the aggression. However, Matthew Bryza, the United States Assistant Secretary of State for European and Eurasian Affairs and a National Security Council (NSC) member, attempted to counter this argument by stating that although Georgia attacked on August 7th, in his view the conflict began much earlier and was originally provoked by South Ossetian militias.15

Russia also infers reference to the "Just War" principle, which sets out ethical guidelines for using force other than for self-defense purposes. This concept, the cornerstone of the "Responsibility to Protect" doctrine, is defined by: Right intention, last resort, proportional means, reasonable prospects for success, right authority, just cause, reasonable withdrawal of forces. As their argument goes, just cause was provided when the Georgian offensive targeted Ossetian civilians, causing large-scale loss of life. Russian officials sought to reinforce this justification by accusing Georgian forces of committing genocide; however no evidence for this accusation has yet to be presented. Their authority (or perception thereof) would be derived from Russia's role as a state authority protecting their citizens from harm. The right intention was the Russians' stated intention of protecting their citizens who were under siege. Russia's superior air power allowed for an almost certain chance of "success" (i.e. defeating the Georgian forces). Russian officials likely believed they had fulfilled the "last resort" measure because several diplomatic initiatives went unheeded. NATO Secretary General Jaap de Hoop Scheffer called for a ceasefire on August 8th that was ignored by both sides.16 An emergency UN Security Council meeting on the night of August 7-8th to create a Russian-sponsored ceasefire resolution ended in failure when the Security Council members could not come to an agreement.17 Additionally, preplanned talks between South Ossetian and Georgian ceasefire negotiators were scheduled to be held on August 8th.18 The Georgian attack on that day ended this initiative. The United States seeks to nullify the "just war" argument by stating that Russia used "disproportionate force."19 China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, all members of the Shanghai Cooperation Organization (SCO), voiced their consent for Russia's "active role" in Georgia as an attempt to counter the United States' statement.20

Perhaps Russia's strongest defense for their actions is the precedent set by NATO in Kosovo. In 1999, NATO violated Serbia's sovereignty in an aerial bombing campaign. Prior to the bombing campaign, the UN Security Council did not pass a resolution mandating a collective intervention under Chapter 7. NATO itself could not attack under Article 5 of the North Atlantic Treaty because Serbia had not attacked a member of NATO, which would have allowed them to invoke the collective security agreement. As a result, in order to justify their actions, NATO claimed the bombing campaign was to prevent Serbians from committing ethnic cleansing against Albanians living in Kosovo, then a province of Serbia. Thus, officials claimed that the bombing campaign was really a "humanitarian intervention" conducted in order to save the Albanians. In the end, NATO officials and pilots were never sanctioned for their actions. This precedent is important because the same basic reasoning was used by Russia to justify its intervention and violation of Georgia's sovereignty. Sir Michael Jackson, Deputy Commander to General Wesley Clark in NATO's Kosovo Force (KFOR) from June to October 1999, admitted that Russia had a valid point by stating they were intervening to protect their de facto and de jure citizens.21

I suspect the debate on who was "right" or "wrong" in this war will go on for quite some time. I also doubt that international law will hold anyone accountable for what happened. Regardless of what subjective or collective conclusions are drawn from further studies of the war, I only hope that it does not start up again and/or lead to a new "Cold War" with an accompanying arms race.

1 On 9 April, 1991, shortly before the official collapse of the Soviet Union (USSR), Georgia opted to withdraw and declare its independence as a republic. Abkhazia declared de facto independence as a nation-state from Georgia in 1992, but failed to receive any international recognition. The Abkhazians defeated Georgia in a civil war that lasted from 1992-1993 and led to the ethnic cleansing of Georgians from the territory and the installation of a UN-monitored mission (UNOMIG).

South Ossetia became an autonomous oblast (equivalent to a province) in the Georgia Soviet Republic beginning in 1922. The Soviet Constitution of 1936 confirmed South Ossetia's autonomy within the newly formed Soviet Socialist Republic. In November 1989, the South Ossetian regional council asked the Georgia Supreme Soviet for independence. Their request was denied and Georgia banned all regional parties. South Ossetia turned to Moscow for help but they were turned away because Moscow was mired in its own serious problems. The Ossetians responded by declaring themselves a Soviet Democratic Republic within the Soviet Union and even held elections. In December of 1990, the Georgian Government revoked South Ossetia's autonomous status. War broke out with Georgia Proper in 1991. When Georgia became independent, South Ossetia failed to receive any diplomatic or international recognition. As a result, South Ossetia retained its de facto independent status. A European-monitored referendum in 2006 resoundingly reaffirmed the Ossetians' desire for full independence, but the international community, including Russia, again refused to recognize the referendum. They stated the reason was because the collective population of Georgia did not participate in the voting and the central Georgian Government of President Saakashvili did not recognize the results.

2 "NATO 'Not Aware' of Any Georgia Buildup, Urges Calm," Reuters. 5 August 2008.

3 "Saakashvili Appeals for Peace in Televised Address," Civil Georgia. 7 August 2008. http://www.civil.ge/eng/article.php?id=18931. Accessed 28 August 2008.

4 "South Ossetia: An Avoidable Catastrophe," Thomas De Waal. Institute for War and Peace Reporting. 11 August 2008.

5 "Georgian Tanks Head for South Ossetia," Russia Today. 7 August 2008. http://www.russiatoday.com/news/news/28601. Accessed 3 September 2008.

6 "Group: Georgia Admits to Dropping Cluster Bombs," Associated Press. 1 September 2008.

Note: M-85s, manufactured by Israeli Military Industries, were also found in Shindisi, a town located north of Gori. Russia is not known to possess M-85s. ("MoD Says it Used Cluster Bombs, But Not in Populated Areas," Civil Georgia. 1 September 2008.)

7 "South Ossetia: Tskhinvali's Apocalypse," Tanya Lokshina. Opendemocracy.net. 1 September 2008. http://www.opendemocracy.net/Russia/article/South-Ossetia-Tskhinvali-Apocalypse. Accessed 4 September 2008.

8 Note: Another definition often used is the traditional "Westphalian Sovereignty," which includes nation-state sovereignty through self-determination, legal equality between states, and the principle of non-intervention in other states' affairs, which is also a foundational tenet of the UN Charter. This original definition's modern relevance is under continuing debate in wake of post-Cold War issues arising from supranational institutions/bodies, international terrorism, the proliferation of non-state actors, unilateral military interventions, assertive multilateralism, and globalization to name but a few. All of these encroach, and/or have the potential to encroach on one or more aspects of sovereignty. They are also part of, or directly influence, the modern international system.

9 Note: There is debate in regards to the interpretation of Article 2.4. In this example, a very literal and strict interpretation is used. However, the UN Charter itself does not define or distinguish the terms "aggression" or "war," though it makes use of the terms. For this reason, some argue Article 2.4 is not precise enough to constitute a legal norm. Both Russia and Georgia formally declared war after their initial respective attacks began.

10 "Saakashvili Offers 'Patriot Act'," Civil Georgia. 29 August 2008.

11 "Saakashvili Calls on World not to Accept Ethnic Cleansing," Civil Georgia. 4 September 2008.

12 Note: A former part of Russia, South Ossetia still retains close ties to Moscow. Not only do South Ossetians carry Russian passports, they also use the Russian Ruble as currency.

13 "Medvedev: Russia Will Protect its Citizens in S. Ossetia," Civil Georgia. 8 August 2008.

14 "Russian Peacekeepers Confirmed Killed in Georgia," Russia Today. 8 August 2008.

15 "U.S. Official: Tbilisi Attacked Tskhinvali on August 7, But War Started Earlier," Civil Georgia. 4 September 2008.

Note: It is noteworthy that Undersecretary Bryza is an energy policy coordinator for Eurasia and was a special advisor to the President and Secretary of State on Caspian Basin energy diplomacy from July 1998 to March 2001. Pipeline transportation corridors that circumvent Russia are the West's primary strategic interest in Georgia. These corridors currently include the Baku-Tbilisi-Ceyhan (BTC) pipeline and the Baku-Supsa pipeline. However, a complete analysis of this topic is far beyond the scope of this composition.

16 "NATO Calls for Ceasefire, Direct Talks," Civil Georgia. 8 August 2008.

17 "UN Council Split on South Ossetia, Russia Angry," Civil Georgia. 8 August 2008.

18 "Talks Planned for August 8 - Russian Negotiator," Civil Georgia. 7 August 2008.

19 "U.S. Says Russia Used 'Disproportionate' Force," Sue Plemming. Reuters. 14 August 2008.

20 "Russia Wins Backing from China, Central Asia Over Georgia," Agence France Presse. 28 August 2008.

21 "Georgia: Let's Not Start World War III," Mike Jackson. The Independent. 17 August 2008.

From:	Z Space - The Spirit Of Resistance Lives
URL:	http://www.zcommunications.org/zspace/commentaries/3636

Re: Irresponsibility and morality regarding the bail-out

We are so fucking conditioned to the dictates of corporate capitalism. Whenever I talk about this scam of a bail-out - this Robin Hood in reverse - I tend to get the same vague commentary: The first thing said is usually in regard to the moral hazard of bailing out homeowners who over-leveraged themselves.

Bad consumers! Shame, shame on you! Look at this mess!

Ask yourself: How does it differ from the moral hazard of bailing out the financial institutions that securitized questionable loans, insured them, and sold them as investment grade securities? This is not about irresponsible homeowners, campers. It's about an economic system that is inherently immoral from jump street; a system that encourages corruption (just "business as usual", right?); a system that seems to be in permanent crisis mode.

This is about restructuring a proven failure.

Again.

The New New Deal

Congress Confronts Its Contradictions

October, 01 2008By George Monbiot
George Monbiot's ZSpace Page
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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?

www.monbiot.com

References:

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.
http://www.cato.org/pubs/pas/pa592.pdf

5. Subsidy Watch, June 2008. Ignoring WTO implications and a presidential veto, US Congress passes the new Farm Bill. Global Subsidies Initiative.
http://www.globalsubsidies.org/en/subsidy-watch/news/ignoring-wto-implications-and-a-presidential-veto-us-congress-passes-new-farm-

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. http://www.ips-dc.org/reports/#623

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. http://www.goodjobsfirst.org/pdf/wmtstudy.pdf

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. http://www.iop.harvard.edu/var/ezp_site/storage/fckeditor/file/Fannie%20and%20Freddie.pdf

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

Published in the Guardian 30th September 2008

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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

http://www.alternet.org/blogs/election08/100802/

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

http://www.alternet.org/blogs/peek/100822/

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

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".

Click for larger version.

Click for larger version.

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

Click for larger version.

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

Click for larger version.

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

Click for larger version.

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.

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.

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.

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

One bailout begets another
Vancouver Sun

Thursday, September 18, 2008

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.

online

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

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. . .