So when's that stimulus gonna stimulate, huh?

CounterPunch Diary
America Enters a New Time 

By ALEXANDER COCKBURN
http://www.counterpunch.org/cockburn08132010.html

I went to get my hair cut the other day in the town of Fortuna and waited ten minutes when the elderly barber finished buzz-cutting a young Mexican American. After the young man had exited under his thin skullcap of black stubble, Don the barber sighed and said, “That’s the third boy I’ve cut today who’s headed into the Marines. They all say the same thing. “There’s no work around here and I’ve got a family to support.” When I tell them to hold off, they say the same thing: “Too late. I’ve signed up.”

This is Humboldt county, northern California, where the marijuana boom is in its final paroxysms, with people flocking from around the world to get a piece of the action, just like they did in the Gold Rush. One of the many places selling bags of good soil to marijuana growers ($10 a bag, 8 bags to each marijuana plant, grown in a 100 foot x 30 foot plastic greenhouse, $25,000 or so) had a $300,000 day lately. So there’s more money here than most places across America, where the situation is truly desperate.

Profits are up 41 percent since Obama’s election; yet half of American workers have suffered a job loss or a cut in hours or wages over the past 30 months. They’re saying around 28 million people either have no job or one that doesn’t yield them enough money to get through the week. On Friday, August 13, the Bureau of Labor Statistic noted on its home page that “Employers initiated 1,851 mass layoff events in the second quarter of 2010 that resulted in the separation of 338,064 workers from their jobs for at least 31 days.”

Millions are plummeting into total destitution, having reached the end of their 99-weeks of unemployment benefits. Their only option then is the soup line at a church and getting on he waiting list for a shelter. The nearest big city north of me is Portland, Oregon, adjacent to the CounterPunch co-editor bunker in Oregon City of Jeffrey St Clair. The downtown area in Portland is filled with homeless people, napping on steps, bedding down on cardboard in doorways. Jeffrey kayaks frequently down the Willamette and can see colonies of the destitute all along the river bank, from the shipyards to Willamette Falls, sleeping under thin plastic and grey skies.

California agriculture and much of the construction industry depends on undocumented workers coming across the border from Mexico – minimum cost $1000 – for an 8-day walk through the Arizona desert. Since building is in a terminal slump, many Mexicans would like to head back home till times improve, but nowadays it’s so tough to come back across, that they daren’t risk it. Hence the paradox: trying to lock “illegals” out means locking them in. Frank Bardacke who lives in the farm town of Watsonville, a couple of hours south of San Francisco, recently described amid an important piece in our newsletter a bank robbery by one young, desperate immigrant.

“Several months ago," Frank writes, “Jario took his father’s pickup truck, drove 20 miles to the upscale tourist playpen Carmel By the Sea, and walked into the local branch of the Bank of America. He waited in line to see a teller, and, when his turn came, he pretended to have a gun under his shirt and quietly demanded that the teller give him her cash. As she was passing out the money, he apologized for frightening her; meanwhile, she was hiding a GPS device among the bills.

“He left the bank, his crime apparently unnoticed, and returned to the truck for the drive home. On the way, he got confused and took a wrong turn through Monterey before he got back on the right road home. Twenty police cars from four different police jurisdictions followed the GPS signal and stopped him 45 minutes after he left the bank. He immediately confessed, explaining that he needed the money to help his dad pay the family mortgage. When his case came to trial, the DA pressed for two years in State Prison. The judge decided that six months in the county jail and five years probation would be enough.”

In Texas or anywhere in the South the fellow would probably have got 25 years. But in desperate times one can expect people to do desperate, stupid things, and this decent judge showed compassion and understanding. One can’t say the same for many Americans, starting with the Republicans in Congress who’ve been happily voting for a cut-off in benefits for the jobless, while simultaneously engaging in the politically insane enterprise of repealing the 14th Amendment, no longer making it a constitutional provision that those “born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States.” Do the Republicans want to cede Texas and Florida permanently to the Democrats?

Conspicuous good works are always a feature of Depression, the rich zealous to purchase moral insurance. Some billionaires, led by Warren Buffett and Bill Gates, have been pledging that they will earmark not less than 50 per cent of their personal wealth for charity. But since whatever they give away is tax deductible, so revenues to Uncle Sam will drop.

The rich don’t get to be rich by being the nicest guys in the shark tank. As Carl Ginsburg recently remarked in a fine piece on this site, “In its fledgling years, profits on Bill Gates’ software were reportedly 70 per cent annually. Another way to gauge Gates’s billions is by catching a glimpse of the multitudes of students priced out of the computer market – thanks in part to that Great Giver’s expensive software – lined up daily at community college libraries for some free access to computers, each machine an expression of Gates’ creative commitment to profit in the +40 percent range – a gift Gates gave himself that keeps on giving. As Gates told Fortune: ‘The diversity of American giving is part of its beauty.’”

We can probably expect more laid-off workers going postal, as David Rosen discussed here on our site last week On August 3, at seven am, Omar Thornton showed up for a disciplinary hearing at the Hartford Distributors, a Budweiser distribution warehouse in Manchester, Connecticut. Thornton had been caught on video pinching some beer. They asked him whether he wanted to be fired, or just quit. Thornton pulled out a handgun and killed seven fellow employees before shooting himself dead. Before he loosed off his last shot into his head, Thornton, a black man, called a friend on his cellphone and said he’s taken care of some racists who’d been giving him a hard time. Unemployment means fear and fear nourishes racism, all the more because we have a black president. Racism is drifting across America like mustard gas in the trenches in World War One.

And, final token of hard times, we have Bonnie and Clyde on the run. In their latest guise the duo consists of John McCluskey and his cousin and fiancee, Casslyn Welch, who’s no Faye Dunaway. She threw some wire cutters over the fence of her man’s Arizona prison. Cops suspect them of killing a couple of retirees, then stealing their truck and heading north up to the Canadian line through Glacier National Park. That’s the last sanctuary in America of Ursus horribilis, the American grizzly. Behind them the cops, ahead the bears. It could be the first movie of a new time.

Jail time for video-taping police

by Michael Billy, Helium

On May 24 Brian D. Kelly of Carlisle, Pennsylvania was arrested for violating a state wiretapping law. Kelly, 18, videotaped police officers during a routine traffic stop. His camera was immediately confiscated and he was taken to jail. He spent 26 hours in county prison until his mother posted her house as collateral for his $2,500 bail.

What act was Mr. Kelly perpetrating which the great state of Pennsylvania saw as wiretapping?

Well, it turns out that there is an obscure state law that bars the intentional interception or recording of anyone's oral conversation without their consent. The arrest apparently relates to the sound that Kelly's camera picked up, not the video.

Some people would claim that ignorance of the law is no excuse', but I would have to whole-heartedly disagree. How could someone possibly know that it is illegal to record an on-duty officer while on public property? It is not a law that one would assume exists based on common sense, such as murder or theft.

The only way that Kelly could have possibly known about this law would be if he actually read it. But lets be realistic, it could not honestly be expected that every citizen reads the tomes of laws that are passed, on state, local, and federal levels, every year, a process which would likely take an entire lifetime.

Kelly said that if he knew about this law before the incident occurred he would not have recorded the officers. What he does not seem to understand is that this is a law that does not make any sense and is blatantly unconstitutional. And bad laws, quite frankly, are meant to be broken.

Let me remind you of the text of the fourth amendment. It reads, "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated" The word unreasonable allows for some gray area, but I am sure that most people (a jury of our peers, perhaps) would agree that it was unreasonable for the police to take his camera.

The only crime' Kelly is guilty of is recording the officers doing their jobs, an act that should never be illegal in a free society. Is it not our duty as citizens to make sure that the police and all other government employees for that matter are doing their jobs properly? If not, then whose responsibility is it? And who watches them?

This law is an enemy of Liberty and needs to be repealed. It may have been passed with good intentions, i.e. prevention of blackmail, but we all know how to pave the road to hell. Only Police Officers and others who seek to abuse their powers truly benefit from laws like this one.

Realize this: Any protest that ever takes place in Pennsylvania can not legally be recorded by bystanders. This allows the police, who can potentially abuse their power, to confiscate the cameras of anyone who records them, essentially eliminating evidence of any possible wrong doing.

We are losing civil liberties in this country everyday and I don't know about you but I'm getting sick and tired of it.

If you still do not believe that the country we live in resembles a police state, I have a simple question for you: What will it take for you to open your eyes?

Yesterday they stole away habeas corpus. Today we can not record the police. Tomorrow they remove our right to a trial by jury. Then they take away our guns. What will we have then? Only a hollow shell of the republic that our Founders once envisioned.

Racism Implodes Tea Party

Can the NAACP Rise to the Challenge?
By GREG MOSES, COUNTERPUNCH

Man what a short weekend.  On Thursday the Tea Party was setting up a bigger tent.  By Sunday their center pole was cracked in half.  Suddenly we live in a country where the NAACP is on the rise, again.

Naturally the racist framing of the past month was drawn and squared by Rush Limbaugh who charged that the President had only his race to offer as the reason for his political success.  Limbaugh forgets how much the Obama factor was empowered by a widespread social yearning to get out of the frame that Limbaugh, Fox News, and Bush had locked us into.  Perhaps Obama's Black heritage lent some credibility to the hope that he could lead us out of that cave instead of right back into its depths.

Limbaugh's ability to profit commercially from racism as "entertainment value" probably had some mentoring influence upon Mark Williams.  When NAACP President Benjamin Jealous dared the Tea Party to repudiate its racism, Williams decided to try a little minstrel style mockery which, come to think of it, pretty much connects Williams to the commercial history of American radio as well.  The main mistake Williams made according to the culture code of contemporary social reality is that he forgot to go into show biz before he acted out.

Williams is guilty of what up North people call "stupid" racism, because right up until he put on his blackface the Tea Party had been playing its racism "smart".  Of course, nobody should be taken in by the Tea Party's rehab.  Their economic model is practically racist as was the Reaganomics upon which it is built.

Now is the time for the NAACP to step into the opportunity that it created and offer some workable disaster relief plan that even the President can't evade.  It's been at least a decade since we've seen any real vision with half a chance of winning anything but a ballot count on election day.  And of course odds could be better this time around.

Progressives have pretty much stranded themselves in the shallow waters of the Democratic Party, exactly where the ballast of the NAACP is lodged.  Just as we can't afford to be fooled by the Tea Party's vapid denials of racism, neither can we afford to believe that the NAACP has this week made a significant dent in the racist structure of the economic crisis or the racist paralysis that prevents all progressive advance.

Whether or how much progressives can afford to waste on another round of Congressional balloteering is a dandy question.  But it would be too cynical to bet the movement on the iron weight of the system's internal contradictions crashing.

Yes, that crash is upon us.  And as it continues to thunder down, the NAACP could stake ground for that other tent city, the one where those of us who have never trusted the Tea Party can gather for some badly needed refreshment.

Greg Moses is editor of TexasWorker.org and author of Revolution of Conscience: Martin Luther King, Jr. and the Philosophy of Nonviolence.  He can be reached at gmosesx@gmail.com.

The Fall of Obama...

Alexander Cockburn, Counterpunch

It is not Obama's fault that for 30 years America's policy – under Reagan,
both Bushes and Bill Clinton – has been to export jobs permanently to the
Third World. The jobs that Americans now desperately seek are no longer
here, in the homeland, and never will be. They're in China, Taiwan,
Vietnam, India, Indonesia.

No stimulus program, giving money to cement contractors to fix potholes
along the federal interstate highway system, is going to bring those jobs
back. Highly trained tool and die workers, the aristocrats of the
manufacturing sector, are flipping hamburgers – at best – for $7.50 an
hour because U.S. corporations sent their jobs to Guangzhou, with the
approval of politicians flush with the money of the "free trade" lobby.

It is not Obama's fault that across 30 years more and more money has
floated up to the apex of the social pyramid till America is heading back
to where it was in the 1880s, a nation of tramps and millionaires. It's
not his fault that every tax break, every regulation, every judicial
decision tilts toward business and the rich. That was the neoliberal
America conjured into malign vitality back in the mid 1970s.

But it is Obama's fault that he did not understand this, that always, from
the getgo, he flattered Americans with paeans to their greatness, without
adequate warning of the political and corporate corruption destroying
America and the resistance he would face if he really fought against the
prevailing arrangements that were destroying America. He offered them a
free and easy pass to a better future, and now they see that the promise
was empty.

It's Obama's fault, too, that, as a communicator, he cannot rally and
inspire the nation from its fears. From his earliest years he has schooled
himself not to be excitable, not to be an angry black man who would be
alarming to his white friends at Harvard and his later corporate patrons.
Self-control was his passport to the guardians of the system, who were
desperate to find a symbolic leader to restore America's credibility in
the world after the disasters of the Bush era. He is too cool.

So, now Americans in increasing numbers have lost confidence in him. For
the first time in the polls negative assessments outnumber the positive.
He no longer commands trust. His support is drifting down to 40 per cent.
The straddle that allowed him to flatter corporate chieftains at the same
time as blue-collar workers now seems like the most vapid opportunism. The
casual campaign pledge to wipe out al-Quaida in Afghanistan is now being
cashed out in a disastrous campaign viewed with dismay by a majority of
Americans.
--

A POLITICAL WARNING FOR OBAMA

As we have noted, Barack Obama is part of the first generation of black
ivies, black politicians who got elected thanks to passing white exams
rather than crossing white police lines. Others include Corey Booker,
Deval Patrick and DC mayor Adrian Fenty. The first two are doing well
politically, but Fenty, who won every precinct in his first mayoral
election and exudes, even more than Obama, an unappealing narcissism, is
suffering one of the great political come-downs of recent history, as this
story describes. Remember: a high percentage of the boos are coming from
black voters.

Nikita Stewart Washington Post - Adrian M. Fenty wasn't even at the
Academies at Anacostia graduation ceremony in the District on Friday, but
when the mayor's name was mentioned, an unmistakable chorus arose: "Boo!"
many in the crowd shouted. This Story

Almost simultaneously, across town, where Fenty was attending a funeral
for go-go great Anthony "Little Benny" Harley, his attempts to deliver
condolences were nearly drowned out by a similar din. The taunts were so
thunderous that Pastor Deron Cloud had to grab the microphone to calm the
crowd at the Walter E. Washington Convention Center.

"This is not the place," Cloud said, to no avail.

The chorus heard 'round some parts of the District is one of vocal
dissatisfaction for the 39-year-old Fenty. It's a far cry from the summer
of 2006, when drivers honked excitedly whenever they saw him campaigning
for mayor. Then, residents were as tickled to see the young candidate come
to their doors as if a celebrity had dropped by with a sweepstakes prize.

Now, Fenty is in a contentious battle with D.C. Council Chairman Vincent
C. Gray, his chief rival for mayor, in the Sept. 14 Democratic primary.
Supporters say that the criticism and boos are unfair, particularly
because city services get high marks, students' test scores are rising,
and new libraries, schools and recreation centers have opened citywide. . .

Outside the gathering at the law school, Ivan Lee Robinson, 66, sat in the
shade with a group of friends. But he was alone with his Fenty sticker and
Fenty sign.

"I'm the only one voting for him," the LeDroit Park resident said in jest
but in a serious tone. "The man is good. . . . He did a pretty good job
with the snow."

A friend asked: "Did you see him get out and shovel anything?"

In the citywide Democratic straw poll taken at the event, Gray garnered
703 votes to Fenty's 190 votes. Former television reporter Leo Alexander,
also a candidate for mayor, received 75 votes.

In the past year and a half, Fenty has developed a reputation for
arrogance, a lack of transparency, and a failure to work with council
members and constituencies. He delayed giving council members tickets to
suites at Verizon Center and Nationals Park. He would not disclose his
whereabouts when he went out of town, drawing criticism when he missed
several memorial services and funerals for victims of last year's Metro
Red Line crash.

There has also been unrest in some parts of the District about Schools
Chancellor Michelle A. Rhee, whose blunt style has rubbed many the wrong
way.

A week ago, some Dunbar High School graduates and their parents booed
Fenty, who was the main speaker at the school's graduation. They wanted
Gray, a Dunbar alumnus who offered remarks to the graduating class, to
deliver the keynote address.

--
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The People's Party?

Sam Smith - The present and former Democratic presidents of the United
States actively challenged the major labor union-backed candidate for US
Senator from Arkansas. And then they bragged about it when their own
candidate won. A senior White House official told Politico's Ben Smith,
"Organized labor just flushed $10 million of their members' money down the
toilet on a pointless exercise,"

Not too long ago, this would have been - for a Democratic official - a
criminal offense. But the contemporary Democratic Party's list of periodic
targets includes not only labor unions but school teachers (Race to the
Top), seniors (the assault on Medicare and Social Security), the middle
class (saving banks but not soon-to be-foreclosed homes), the young
(jailed for minor drug offenses and sent, sometimes repeatedly, to fight
in useless wars) and civil liberties (wiretapping and other constitutional
attacks).

In short, it is fair to say that the Democratic Party now treats as foes,
or with contempt, many of the very constituencies that led to its periods
of greatness.

What goes around comes around

Via Counterpunch

One of the greatest bailouts in history came in 1953, when the Eisenhower
administration authorized a CIA-backed coup in Iran. The Anglo-Iranian Oil
Company, owned by the British government, had been expropriated and
nationalized in 1951 by unanimous vote of Iran's parliament. The '53
coup evicted prime minister Mohammed Mossadeq and installed Shah Reza
Pahlevi, the creature of the West's oil companies , with full tyrannical
powers. The AIOC got back 40 per cent of its old concession and became an
internationally owned consortium, renamed… British Petroleum.

There are plenty of American ingredients in the company, with such BP
acquisitions and mergers down the years as Standard Oil of Ohio, Amoco and
Arco,. No matter, it's "British Petroleum" now in the minds of Americans
and the company is the designated fall guy – a role it richly deserves
since, as Jeanne Pascal, a former lawyer for the US Environmental
Protection Agency, recently put it, "They are a recurring environmental
criminal and they do not follow US health, safety and environmental
policy."

No mercy.

Footnote: A CounterPuncher writes to me: "BP is indeed a conscience-less
company, possibly even more so than the rest. My father who was an
eye-surgeon was appointed by the Shah government and A.I.O.C.
(Anglo-Iranian Oil Co, later renamed BP) to teach Persian doctors to
battle trachoma in South Persia (Abadan). I remember the many instances of
utterly callous behavior from A.I.O.C. officials towards heavy accidents
in the huge refinery there affecting Persian workers, the neglect of
normal safety procedures and even the disgust about A.O.I.C.'s working
methods expressed by the Dutch director of Shell at whose house we were
staying for some time on Mount Demawand near Teheran."

Cop Busts into Hospital ICU Unit Pretending to be a Terrorist

This post originally appeared on Hullabaloo.

What is going on in this country? Do people think we are living in a
damned movie?

How's this for an ill-conceived emergency preparedness drill? An off-duty
cop pretending to be a terrorist stormed into a hospital intensive care
unit brandishing a handgun, which he pointed at nurses while herding them
down a corridor and into a room.

There, after harrowing moments, he explained that the whole caper was a
training exercise.

The staff at St. Rose Dominican Hospitals-Siena Campus, where the incident
took place Monday morning, found the exercise more traumatizing than
instructive.

Hospital employees would have been justified in fearing for their lives.

Just last year, Henderson police shot and killed an armed, hostile man in
the emergency room. So it would make sense that security and emergency
preparedness have been a focus at the hospital.

But in Monday's incident, which occurred in a unit that houses the
hospital's sickest patients, nurses, patients and their families did not
know it was a drill, said Renee Ruiz, organizer of the California Nurses
Association, which represents staff at the hospital.

I guess it's a good thing Glenn Reynolds and the boyz haven't had their
way or all the armed nurses and critically ill patients would have opened
fire on this off duty cop. Isn't that how it's supposed to work?

I just don't get this mentality. Yes, there are dangers in this world. And
we all need to be vigilant against crazy people armed with easy-to-obtain
guns. But somehow or another with this puerile Jack Bauer obsession,
common sense about violence has gone out the window and everybody's acting
like we're living in the wild west — except that even the wild west wasn't
this kind of stupid free-for-all. (Wyatt Earp was first made famous as a
lawman who confiscated cowboys' guns on their way into town.)

Sadly, I'm beginning to think all this craziness is the natural result of
emotionally stunted conservatives having a mid-life crisis. They pretended
to be adults their whole lives, but never actually grew up. So now we have
a whole bunch of frustrated, middle aged adolescents running things with
no sense of morality or limits.
--
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Why a Criminal Case Against Goldman Sachs Matters and Why Charges Could Stick

What Was Fab's Job Description

By PAM MARTENS

Goldman Sachs used to be the firm that pursued top government posts; now
government is in hot pursuit of it, and not in a good way. The SEC has
charged the firm and an employee, Fabrice Tourre, with securities fraud
and the Justice Department has commenced a criminal investigation,
according to news reports.

Change appears to be swallowing Goldman Sachs. It began quietly moving
out of its storied and staid headquarters at 85 Broad last Fall to flashy
new multi-billion dollar digs at 200 West Street, including a 54,000
square foot gym (roughly the size of 20 homes for average Americans; those
who can still afford one after the Wall Street pillage). And after the
release of internal emails by the SEC and Senate, Goldman looks more like
a sleazy boiler room pump and dump operation in drag than an investment
bank (in drag as a bank holding company). Comedy talk show hosts are
having a field day (Jon Stewart calls them "those f*!*!ing guys") and
Goldmanfreude (pleasure in watching Goldman shamed for the pain it
inflicted on others) is in full swing.

It all sounds eerily familiar to the wealth transfer maneuver by Goldman
Sachs Trading Company in the asset bubble of 1928. The Trading Company
was a closed end fund (called a trust in those days) that Goldman Sachs
created and offered to the public at $104 a share, stuffed with conflicted
investments while paying Goldman a hefty management fee, only to end up a
few years after the 1929 crash trading at a buck and change. On May 20,
1932, Walter Sachs, President of the Goldman Sachs Trading Company, was
grilled by the Senate Committee on Banking and Currency. The implication
was the same as the current round of Senate hearings: Goldman royally
fleeced its customers to line its own pockets.

Security lawyers who watched the Senate Permanent Subcommittee on
Investigations grill Goldman Sachs employees on April 27, 2010 hopefully
were more eagle-eyed than investment guru Warren Buffet, who is now
echoing the same refrain as Goldman CEO Lloyd Blankfein, that the firm has
done nothing wrong and is being unfairly pummeled. Never mind that Mr.
Buffet has $5 bilsky invested in Goldman on which he is earning 10
percent. (Goldman employees like to refer to $1 billion in their emails as
a bilsky when bored of characterizing what they're selling to clients as
crap or sh---y deals.)

The first Goldman Sachs panel to line up before Senator Carl Levin's
subcommittee on April 27 consisted of Daniel Sparks, Joshua Birnbaum,
Michael Swenson and Fabrice Tourre. Mr. Sparks headed the Mortgage
Department and supervised the other three who worked in the Structured
Product Group at the time the SEC has alleged the securities fraud
occurred.

To hear these four tell it, their jobs included trading for Goldman's
benefit (proprietary trading), originating investment products, selling
the products to customers once they were created (distribution), and, in
Mr. Tourre's case, even speaking with the rating agency that would
transform these subprime bets into AAA derivatives. And how did they sum
up all of this as a job description? They testified, under oath I might
add, that they were "market-makers." In a sane world, a market maker is
an entity that matches buyers with sellers and profits from capturing a
portion of the spread (bid and ask) on the buy and sell price of
securities.

To a lay jury, this might fly as legitimate conduct; something akin to a
short order cook who shops for the groceries, whips up the omelets, throws
a little parsley garnish on the plates, serves the diners, and tallies up
his P&L at the end of the day. If he overbought on ground beef, he might
have to have three days of specials like Shepherd's Pie, Hungarian
Goulash, and Spaghetti with Meat Sauce to "flatten" his position and "get
closer to home." Nothing criminal going on here; just good ole American
know-how and innovative workouts.

The major problem with this analogy, and most others in defense of
Goldman, is that the short order cook wasn't trying to pass off E. coli
beef for prime rib. Another problem for Goldman is that embedded in the
heart of every securities law is the principle that the customer must be
treated honestly and fairly and any mechanism or device to deceive,
manipulate or defraud is patently illegal. Remember, securities laws grew
out of the ingrained Wall Street corruption exposed in two years of Senate
hearings in 1932 and 1933.

It is difficult to see how one can be engaging in proprietary trading for
the benefit of the firm at one moment, acting in an agent capacity for the
benefit of the customer the next moment, and creating investment products
designed to fail on a latte break. Sparks, Birnbaum and Swenson all had
principal licenses to engage in investment banking activities like
underwriting as well as the Series 7 license to trade securities. Mr.
Tourre had only the Series 7 and Series 63 licenses to trade securities.
He had no principal license according to his regulatory file available
online. That could be a big legal issue for Goldman as a firm, for Mr.
Sparks who supervised him, and for the controlled-demolition investment
product he assisted in creating without a principal license. Failure to
supervise is one of the first areas security lawyers review in assessing a
firm's liability.

According to the SEC complaint, Mr. Tourre knowingly assisted in creating
and then peddled an investment product designed to fail that had been
handpicked for that purpose by a hedge fund manager to facilitate his
profiting from a short position. (John Paulson, the hedge fund manager,
made approximately $1 billion while those on the other side of the trade
lost about $1 billion while never being advised of the hedge fund
manager's role.) According to the Senate, Goldman was itself shorting
(betting on subprime derivative products to fail) while actively promoting
these products to clients. The Senate hearings raised a practice and
pattern of deceit by Goldman against its own clients. And let's not
forget that the approximately $12.9 billion of taxpayer bailout funds that
went in the front door of AIG and came out the backdoor into Goldman's
coffers was a result of Goldman's well-placed subprime bets offloaded onto
AIG.

Clearly, Goldman's defense is being structured around the idea that
anything goes if you call yourself a market maker. That seems like a
fairly lame defense when your shareholders have lost $20 billion in market
cap despite your top tier law firms playing hardball and the Oracle of
Omaha waving pompoms. (This Buffet gesture is reminiscent of Prince
Alwaleed bin Talal cheering on Citigroup as its share price plummeted to
earth along with tens of billions of off balance sheet debt derivatives.
He also owned a boatload of the stock.)

My advice to Goldman is to throw yourself on your sword. Come clean on
everything and clean house. Put a modest gym in the basement of your new
digs and donate the 54,000 square foot space to charities for the
struggling folks you ripped off in their pensions and 401(k)s. And maybe
it's time to apologize for what you did in 1928 and 1929 as well.

Then have a sit down with Warren Buffett and start co-authoring OpEds on
why the Glass-Steagall Act separating investment banks from insured mom
and pop funds at commercial banks must be restored. If you have any
trouble finding an argument for this, just lay all those recently
disclosed internal emails end to end and observe the narcissistic,
sociopathic culture you've created out of the uber-testosterone Wharton
School boys.

Pam Martens worked on Wall Street for 21 years; she has no security
position, long or short, in any company mentioned in this article. She
writes on public interest issues from New Hampshire. She can be reached
at pamk741@aol.com

The Subprime Conspiracy

Was There a Plan to Blow Up the Economy?

By MIKE WHITNEY
Many people now believe that the financial crisis was not an accident.
They think that the Bush administration and the Fed knew what Wall Street
was up to and provided their support. This isn't as far fetched as it
sounds. As we will show, it's clear that Bush, Greenspan and many other
high-ranking officials understood the problem with subprime mortgages and
knew that a huge asset bubble was emerging that threatened the economy.
But while the housing bubble was more than just an innocent mistake, it
doesn't rise to the level of "conspiracy" which Webster defines as "a
secret agreement between two or more people to perform an unlawful act."
It's actually worse than that, because bubblemaking is the dominant
policy, and it's used to overcome structural problems in capitalism
itself, mainly stagnation.

The whole idea of a conspiracy diverts attention from what really
happened. It conjures up a comical vision of top-hat business tycoons
gathered in a smoke-filled room stealthily mapping out the country's
future. It ignores the fact, that the main stakeholders don't need to
convene a meeting to know what they want. They already know what they
want; they want a process that helps them to maintain profitability even
while the "real" economy remains stuck in the mud. Historian Robert
Brenner has written extensively on this topic and dispels the mistaken
view that the economy is "fundamentally strong". (in the words of former
 Treasury secretary Henry Paulson) Here's Brenner :

"The current crisis is more serious than the worst previous recession of
the postwar period, between 1979 and 1982, and could conceivably come to
rival the Great Depression, though there is no way of really knowing.
Economic forecasters have underestimated how bad it is because they have
over-estimated the strength of the real economy and failed to take into
account the extent of its dependence upon a buildup of debt that relied on
asset price bubbles.
"In the U.S., during the recent business cycle of the years 2001-2007, GDP
growth was by far the slowest of the postwar epoch. There was no increase
in private sector employment. The increase in plants and equipment was
about a third of the previous, a postwar low. Real wages were basically
flat. There was no increase in median family income for the first time
since World War II. Economic growth was driven entirely by personal
consumption and residential investment, made possible by easy credit and
rising house prices. Economic performance was weak, even despite the
enormous stimulus from the housing bubble and the Bush administration's
huge federal deficits. Housing by itself accounted for almost one-third of
the growth of GDP and close to half of the increase in employment in the
years 2001-2005. It was, therefore, to be expected that when the housing
bubble burst, consumption and residential investment would fall, and the
economy would plunge. " ("Overproduction not Financial Collapse is the
Heart of the Crisis", Robert P. Brenner speaks with Jeong Seong-jin, Asia
Pacific Journal)

What Brenner describes is an economy \that--despite unfunded tax cuts,
massive military spending and gigantic asset bubbles--can barely produce
positive growth. The pervasive lethargy of mature capitalist economies
poses huge challenges for industry bosses who are judged solely on their
ability to boost quarterly profits. Goldman's Lloyd Blankfein and JPM's
Jamie Dimon could care less about economic theory, what they're interested
in is making money; how to deploy their capital in a way that maximizes
return on investment. "Profits", that's it. And that's much more
difficult in a world that's beset by overcapacity and flagging demand.

The world doesn't need more widgets or widget-makers. The only way to
ensure profitability is to invent an alternate system altogether, a new
universe of financial exotica (CDOs, MBSs, CDSs) that operates independent
of the sluggish real economy. Financialization provides that opportunity.
It allows the main players to pump-up the leverage, minimize
capital-outlay, inflate asset prices, and skim off record profits even
while the real economy endures severe stagnation.

Financialization provides a path to wealth creation, which is why the
sector's portion of total corporate profits is now nearly 40 per cent.
It's a way to bypass the pervasive inertia of the production-oriented
economy. The Fed's role in this new paradigm is to create a hospitable
environment (low interest rates) for bubble-making so the upward transfer
of wealth can continue without interruption. Bubblemaking is policy.
As we've pointed out in earlier articles, scores of people knew what was
going on during the subprime fiasco. But it's worth a quick review,
because Robert Rubin, Alan Greenspan, Timothy Geithner, and others have
been defending themselves saying, "Who could have known?".

The FBI knew ("In September 2004, the FBI began publicly warning that
there was an "epidemic" of mortgage fraud, and it predicted that it would
produce an economic crisis, if it were not dealt with.") The FDIC knew. (
In testimony before the Financial Crisis Inquiry Commission, FDIC chairman
Sheila Bair confirmed that she not only warned the Fed of what was going
on in 2001, but cited particular regulations (HOEPA) under which the Fed
could stop the "unfair, abusive and deceptive practices" by the banks.)
Also Fitch ratings knew, and even Alan Greenspan's good friend and former
Fed governor Ed Gramlich knew. (Gramlich personally warned Greenspan of
the surge in predatory lending that was apparent as early as 2000. Here's
a bit of what Gramlich said in the Wall Street Journal:

"I would have liked the Fed to be a leader" in cracking down on predatory
lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an
interview this past week. Knowing it would be controversial with Mr.
Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich
broached it to him personally rather than take it to the full board. "He
was opposed to it, so I didn't really pursue it," says Mr. Gramlich. (Wall
Street Journal)

So, Greenspan knew, too. And, according to Elizabeth MacDonald in an
article titled "Housing Red flags Ignored":

"One of the nation's biggest mortgage industry players repeatedly warned
the Federal Reserve, the Federal Deposit Insurance Corp. and other bank
regulators during the housing bubble that the U.S. faced an imminent
housing crash....But bank regulators not only ignored the group's
warnings, top Fed officials also went on the airwaves to say the economy
was "building on a sturdy foundation" and a housing crash was "unlikely."

So, the Mortgage Insurance Companies of America [MICA] also knew. And,
here's a clip from the Washington Post by former New York governor Eliot
Spitzer who accused Bush of being a 'partner in crime' in the subprime
fiasco. Spitzer says that the OCC launched "an unprecedented assault on
state legislatures, as well as on state attorneys general just to make
sure the looting would continue without interruption. Here's an except
from Spitzer's article:

"In 2003, during the height of the predatory lending crisis....the OCC
promulgated new rules that prevented states from enforcing any of their
own consumer protection laws against national banks. The federal
government's actions were so egregious and so unprecedented that all 50
state attorneys general, and all 50 state banking superintendents,
actively fought the new rules. (Washington Post)

So, the Fed knew, the Treasury knew, the FBI knew, the OCC knew, the FDIC
knew, Bush knew, the Mortgage Insurance Companies of America knew, Fitch
ratings knew, all the states Attorneys General knew, and thousands, of
traders, lenders, ratings agency executives, bankers, hedge fund managers,
private equity bosses, regulators knew. Everyone knew, except the unlucky
people who were victimized in the biggest looting operation of all time.
Once again, looking for conspiracy, just diverts attention from the nature
of the crime itself. Here's a statement from former regulator and white
collar criminologist William K. Black which helps to clarify the point:

"Fraudulent lenders produce exceptional short-term 'profits' through a
four-part strategy: extreme growth (Ponzi), lending to uncreditworthy
borrowers, extreme leverage, and minimal loss reserves. These exceptional
'profits' defeat regulatory restrictions and turn private market
discipline perverse. The profits also allow the CEO to convert firm assets
for personal benefit through seemingly normal compensation mechanisms. The
short-term profits cause stock options to appreciate. Fraudulent CEOs
following this strategy are guaranteed extraordinary income while
minimizing risks of detection and prosecution." (William K. Black,
"Epidemics of'Control Fraud' Lead to Recurrent, Intensifying Bubbles
 andCrises", University of Missouri at Kansas City - School of Law).

Black's definition of "control fraud" comes very close to describing what
really took place during the subprime mortgage frenzy. The investment
banks and other financial institutions bulked up on garbage loans and
complex securities backed by dodgy mortgages so they could increase
leverage and rake off large bonuses for themselves. Clearly, they knew the
underlying collateral was junk, just as they knew that eventually the
market would crash and millions of people would suffer.

But, while it's true that Greenspan and Wall Street knew how the
bubble-game was played; they had no intention of blowing up the whole
system. They simply wanted to inflate the bubble, make their profits, and
get out before the inevitable crash. But, then something went wrong. When
Lehman collapsed, the entire financial system suffered a major heart
attack. All of the so-called "experts" models turned out to be wrong.
Here's what happened: Before to the meltdown, the depository "regulated"
banks got their funding through the repo market by exchanging collateral
(mainly mortgage-backed securities) for short-term loans with the
so-called "shadow banks" (investment banks, hedge funds, insurers) But
after Lehman defaulted, the funding stream was severely impaired because
the prices on mortgage-backed securities kept falling. When the
bank-funding system went on the fritz, stocks went into a nosedive
sending panicky investors fleeing for the exits. As unbelievable as it
sounds, no one saw this coming.

The reason that no one anticipated a run on the shadow banking system is
because the basic architecture of the financial markets has changed
dramatically in the last decade due to deregulation. The fundamental
structure is different and the traditional stopgaps have been removed.
That's why no one knew what to do during the panic. The general assumption
was that there would be a one-to-one relationship between defaulting
subprime mortgages and defaulting mortgage-backed securities (MBS). That
turned out to be a grave miscalculation. The subprimes were only failing
at roughly 8 percent rate when the whole secondary market collapsed.
Former Treasury Secretary Paul O'Neill explained it best using a clever
analogy. He said, "It's like you have 8 bottles of water and just one of
them has arsenic in it. It becomes impossible to sell any of the other
bottles because no one knows which one contains the poison."

And that's exactly what happened. The market for structured debt crashed,
stocks began to plummet, and the Fed had to step in to save the system.
Unfortunately, that same deeply-flawed system is being rebuilt brick by
brick without any substantive changes.. The Fed and Treasury support this
effort, because--as agents of the banks--they are willing to sacrifice
their own credibility to defend the primary profit-generating instruments
of the industry leaders. (Goldman, JPM, etc) That means that Bernanke and
Geithner will go to the mat to oppose any additional regulation on
derivatives, securitization and off-balance sheet operations, the same
lethal devices that triggered the financial crisis.

So, there was no conspiracy to blow up the financial system, but there is
an implicit understanding that the Fed will serve the interests of Wall
Street by facilitating asset bubbles through "accommodative" monetary
policy and by opposing regulation. It's just "business as usual", but it's
far more damaging than any conspiracy, because it ensures that the economy
will continue to stagnate, that inequality will continue to grow, and that
the gigantic upward transfer of wealth will continue without pause.

Mike Whitney lives in Washington state. He can be reached at
fergiewhitney@msn.com
--

$18,000 per arrestee won in historic lawsuit--filing info

About the IAC  |  Donate  |  IAC Books & Resources  |  Contact Us

Were you arrested at IAC demonstration on April 15, 2000 in Washington, D.C.?

$14 Million Suit Won against Illegal Arrests

$18,000 to each arrestee – IF you file before May 17, 2010!

Spread the Word!

Ten years ago this month, the International Action Center initiated a major demonstration focused on the Prison Industrial Complex. It was held on in front of the U.S. Department of Justice in Washington , D.C. The march was called to take place on April 15, the day before militant actions to oppose the criminal policies of the International Monetary Fund and the World Bank, which were meeting in that city; thousands of youth took part in those protests. 

The IAC rally demanded freedom for all political prisoners, including Mumia Abu-Jamal and Leonard Peltier. It sought to draw the attention of the international media -- which was gathering to hear the bankers and financiers at the IMF/World Bank meeting -- to the millions of prisoners held captive in U.S. dungeons. 

The IAC aimed to deepen class consciousness and to link a militant current of new activists to solidarity with the most oppressed African-American, Latino/a and Native American prisoners. Although the demonstration was a legally permitted protest, the public focus on the institutionalized racism of the prison system itself presented a major and intolerable challenge to the state's repressive apparatus. 

After the rally ended at the Department of (In)justice, the march proceeded to the IMF building. Suddenly, and without warning or an order to disperse, the Washington , D.C. , police closed the streets and arrested 700 protesters, along with some members of the media and passersby. Many arrestees were held for 18 to 24 hours in police buses and holding cells, painfully handcuffed wrist-to-ankle in cramped positions. 

There was widespread media coverage of the police sweep and massive arrests of demonstrators as they marched to the IMF building.  

The IAC was determined to expose the pre-emptive and disruptive attacks on a legal demonstration and to publicize the massive illegal arrests. The organization was not going to allow the flagrant violation of the rights of freedom of speech and assembly to go unchallenged. 

IAC activists painstakingly gathered the names and detailed depositions of many of the arrestees. They provided this information, along with extensive video footage, and hundreds of photographs, to Mara Verheyden-Hilliard and Carl Messineo, Partnership for Civil Justice Fund attorneys, who filed a class-action lawsuit on behalf of those arrested.

The Partnership for Civil Justice Fund diligently persevered and successfully sued the District of Columbia and won the largest class-action settlement of protester claims in U.S. history, totaling nearly $14 million. It insures that each class member can file a claim to receive $18,000 in financial compensation, that the arrests will be expunged, and that all arrestees who join in the settlement will receive a court order declaring their arrest null and void.  

Several lead plaintiffs in this case have already pledged to donate their funds from the settlement to the IAC to continue its 19-year legacy of organizing against war, racism and corporate bailouts, and for jobs and human needs. 

How to file a claim

Those who can file a claim are "all persons who were detained and arrested on April 15, 2000 near the area of 20th Street, NW and I and K Streets, Washington D.C. , in connection with the protest against the Prison Industrial Complex during the IMF/World Bank demonstrations."  

The funds will be distributed through a Class Administrator; the toll-free number is 1-877-567-4780. Claim forms can be downloaded at www.BeckerSettlement.com. Mail them to: Becker v. District of Columbia Administrator, c/o Gilardi & Co. LLC, P.O. Box 8060 , San Rafael , CA 94912-8060 . The deadline for filing all claims for financial compensation is May 17. 

Those who filed forms to be included in the lawsuit filed by the Partnership for Civil Justice Fund are not automatically included in this settlement. Each individual arrested must file a new Proof of Claim Form and mail it to the Class Administrator at the above address before May 17. This is the only way to receive the $18,000 settlement. Otherwise, unclaimed funds will revert to the government. 

The IAC wants to help insure that all individuals who were arrested on April 15, 2000, in Washington , D.C. , receive their fair share of the settlement. The IAC has set up a special phone number -- 347-828-3430 -- and email address -- April2000arrest@iacenter.org -- to directly answer your questions and to help you file your claim form.  The IAC encourages calls and emails concerning this urgent matter.

Also, contact information, comments and questions for the IAC about the lawsuit or how to file a claim can also be posted at www.iacenter.org/iacsuit

The IAC wants to help confirm that everyone who is entitled to a financial settlement receives the allocated funds over the next two years. So, please keep the IAC informed about the status of your claim.

Even for those who have filed their claim forms and are confident that they are part of the settlement, let the IAC know. IAC organizers will return all calls and emails inquiring about the lawsuit settlement. Please forward this email to your friends, other activists or anyone who could be a claimant.

About the IAC  |  Donate  |  IAC Books & Resources  |  Contact Us

Thinking 'Bout Boycotting the "Xenophobe State"?

HERE ARE SOME MAJOR Arizona corporations if you have an inclination to do
a little boycotting:

Apollo Group (University of Phoenix). Headquarters: Phoenix, Arizona

Cold Stone Creamery. Headquarters: Scottsdale, Arizona

Discount Tire Company. Headquarters: Scottsdale, Arizona

Go Daddy. Headquarters: Scottsdale, Arizona

Mesa Air Group (Mesa Airlines, Go!, Freedom Airlines). Headquarters:
Phoenix, Arizona

P. F. Chang's China Bistro. Headquarters: Phoenix, Arizona

Pet Smart. Headquarters: Phoenix, Arizona

U-Haul. Headquarters: Phoenix, Arizona

US Airways. Headquarters: Tempe, Arizona

Head of Goldman Sachs claims "Social Purpose"

http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6907681.ece
JOHN ARLIDGE, TIMES, UK - Number 85 Broad Street, a dull, rust-coloured
office block in lower Manhattan, doesn't look like a place to stop and
stare, and that's just the way the people who work there like it. The men
and women who arrive in the watery dawn sunshine, dressed in Wall Street
black, clutching black briefcases and BlackBerrys, are very, very private.
They walk quickly from their black Lincoln town cars to the lobby, past,
well, nothing, really. There's no name plate on the building, no sign on
the front desk and the armed policeman stationed outside isn't saying who
works there. There's a good reason for the secrecy. Number 85 Broad
Street, New York, NY 10004, is where the money is. All of it. . .

Number 85 Broad Street is the home of Goldman Sachs. . . . . Here,
politicians and commentators compete to denounce Goldman in ever more
robust terms - "robber barons", "economic vandals", "vulture capitalists".
. . . It's even worse in the US. There, Rolling Stone magazine ran a story
that described Goldman as "a great vampire squid wrapped around the face
of humanity, relentlessly jamming its blood funnel into anything that
smells like money. . .

Being the prime target for popular and political outrage could put Goldman
first in line for draconian new regulation. So it has, reluctantly,
decided that the time has come to speak out, to fight its corner. That's
how, on one of those bright autumnal New York mornings when anything seems
possible - even an invitation to break bread with the masters of the
universe - I find myself walking past the security guard who held up
Michael Moore and into the building with no name.

"Aha! You catch us plotting in real time," says Lloyd Blankfein, breaking
away from a cabal of senior executives discussing his trip to Washington
the previous day. Blankfein, 55, Goldman's chairman and chief executive,
is wearing a grey suit with a jaunty Hermes tie with little red bicycles
on it. In his hand, he's carrying one of those cups of coffee that look
bigger than the human stomach. . .

He starts with a little humility. He understands that "people are pissed
off, mad, and bent out of shape" at bankers' actions. Goldman played its
part in the meltdown that almost destroyed the global financial system.
It, like most other banks, lent too much money, made its first quarterly
loss for more than a decade last year and ended up taking bail-out cash
from Washington. "I know I could slit my wrists and people would cheer,"
he says. But then, he slowly begins to argue the case for modern banking.
"We're very important," he says, abandoning self-flagellation. "We help
companies to grow by helping them to raise capital. Companies that grow
create wealth. This, in turn, allows people to have jobs that create more
growth and more wealth. It's a virtuous cycle." To drive home his point,
he makes a remarkably bold claim. "We have a social purpose.". . .

THE MOST DANGEROUS MEMBER OF THE WALL STREET MOB: PETER PETERSON

Sam Smith, Progressive Review

Greed, theft, fraud, lies and fiscal manipulation are par for the course
for today's Wall Street mobsters, but Peter G. Peterson does them one
better: he has used his excessive financial gains to try to ruin the lives
of millions of American through the imposition of rightwing theories of
budgeting and slashing Social Security. It's not just that his ideas are
bad, it's that much of the media - such as the Washington Post and Charlie
Rose - regularly suck up to him and that his capos have infiltrated the
top levels of the Obama administration. So don't be too distracted by the
more colorful scoundrels, it's the respeciable looking ones like Peterson
who may really do you in.

DEAN BAKER, GUARDIAN - The latest round of attacks on Social Security and
Medicare are especially pernicious because they come at a time when the
baby boom cohorts have just seen much of their wealth disappear due to the
collapse of the housing bubble and the stock market plunge. Tens of
millions of baby boomers who thought they were well-prepared for
retirement two years ago, now find themselves with little or no home
equity and very little left in their retirement funds. As a result, they
will be almost totally dependent on Social Security and Medicare.

The attacks are made even worse by the fact that the attackers, people
like Robert Rubin and Peter Peterson, promoted policies that led to this
collapse and personally profited to the tune of tens or even hundreds of
millions of dollars. In other words, after pushing the economy into a
severe recession and destroying the life's savings of tens of millions of
working families, the Wall Street crew now wants to take away their Social
Security and Medicare. This can almost make killing your parents look like
a petty offence.

ROBERT KUTTNER, PROSPECT - Fiscal conservatives in Congress hope to hold
recovery spending hostage for long-term caps on social outlay, and they
have some company in the White House. Groups like the billion-dollar Peter
G. Peterson Foundation are leading the charge.

For a quarter-century, Peterson has been exaggerating long-term costs of
Social Security and Medicare. In truth, Social Security is close to
balance -- its 75-year projected deficit is just one-half of 1 percent of
gross domestic product. Medicare is seriously in deficit, but reform of
Medicare consistent with high-quality health care depends on tackling the
deeper drivers of medical inflation.

WILLIAM GREIDER, THE NATION - He's baaack -- the Wall Street billionaire
who wants to loot Social Security. This time, Pete Peterson has invented
his own "news network" to promote his right-wing rants about shrinking the
only retirement security system available to millions of working people.
Peterson styles himself as a patriot saving the nation from fiscal
insolvency and has committed $1 billion to that cause (a chunk of the
wealth he accumulated at Blackstone Group, the notorious
corporate-takeover firm). His efforts might be dismissed as ludicrous --
except money does talk in Washington, and Peterson is now buying
Washington reporters to spread his dire warnings.

The retired mogul has created a digital news agency he dubs "The Fiscal
Times" and hired eight seasoned reporters to do the work there. "An
impressive group of veteran journalists," Peterson calls them. . .

With his great wealth, Peterson could have also bought a newspaper to
publish his dispatches, but he did better than that. He hooked up with the
Washington Post, which has agreed to "jointly produce content focusing on
the budget and fiscal issues." The newspaper is thus compromising its own
integrity. It's like buying political propaganda from a Washington
lobbyist, then printing it in the news columns as if it was just another
news story.

The first TFT "dispatch" to appear in the Post -- "Support grows for
tackling nation's debt" -- made no mention of Peterson's crusade. But it
featured the same devious gimmick the financier has been peddling around
Washington. Congress should create a special commission of eighteen
senators and representatives empowered to make the "tough" budget
decisions politicians are loathe to face -- slashing benefits, raising
payroll taxes or both. Other members of Congress would be prohibited from
changing any of the particular measures, and would cast only an up-or-down
vote on the entire package, no amendments allowed. . .

So why do the TFT reporters (Elaine Povich and Eric Pianin) zero in on old
folks and Social Security or entitlements like Medicare and Medicaid?
Because those are Pete Peterson's favorite targets. He has flogged Social
Security as a blight on our future for at least twenty years. He is a nut
on the subject. His "facts" are wildly distorted or simply not true. Never
mind, the establishment press portrays him as a disinterested statesman.

This crusade is dangerous for the people because the "respectables" in
governing circles and both parties embrace the same reactionary logic.
Does government have money problems? Don't restore the progressive income
tax on the wealthy or capital, don't cut away some of the corporate boodle
in the federal budget -- that politics is too difficult. Instead, let's
whack Social Security while folks aren't watching.

ROBERT KUTTNER, WASHINGTON POST - With the enactment of a large economic
stimulus package, fiscal conservatives are using the temporary deficit
increase to attack a perennial target -- Social Security and Medicare. . .

The Peterson Foundation is joined by leading "blue dog" (anti-deficit)
Democrats such as House Budget Committee Chairman John Spratt of South
Carolina and his counterpart in the Senate, Kent Conrad of North Dakota.
The deficit hawks are promoting a "grand bargain" in which a bipartisan
commission enacts spending caps on social insurance as the offset for
current deficits. . .

NY TIMES - President-elect Barack Obama said that overhauling Social
Security and Medicare would be "a central part" of his administration's
efforts to contain federal spending, signaling for the first time that he
would wade into the thorny politics of entitlement programs. . .

DEAN BAKER - If Obama is successful he will have damaged two of the most
successful programs ever devised by the Democratic Party. He will receive
plaudits from the corporate media such as the NY Times, Washington Post
and Wall Street Journal and from his major backers on Wall Street. But for
other Americans it will be a continuation of the decay of social democracy
that flourished under FDR and LBJ and has been collapsing (along with our
economy and world standing) under Reagan, the Bushes and Clinton.

On the other hand, the game is a little different than when the Pete
Petersons and others started their war on Social Security. Then it was
possible to play the young against the old, blaming the latter for the
former's difficulties. But the fiscal collapse has changed all that, and
many more younger Americans may realize that its not senior citizens who
are the problem, but senior officials and their campaign contributors.

SAM SMITH, PROGRESSIVE REVIEW - If Obama is successful he will have
damaged two of the most successful programs ever devised by the Democratic
Party. He will receive plaudits from the corporate media such as the NY
Times, Washington Post and Wall Street Journal and from his major backers
on Wall Street. But for other Americans it will be a continuation of the
decay of social democracy that flourished under FDR and LBJ and has been
collapsing (along with our economy and world standing) under Reagan, the
Bushes and Clinton.

On the other hand, the game is a little different than when the Pete
Petersons and others started their war on Social Security. Then it was
possible to play the young against the old, blaming the latter for the
former's difficulties. But the fiscal collapse has changed all that, and
many more younger Americans may realize that its not senior citizens who
are the problem, but senior officials and their campaign contributors.

DEAN BAKER - The deficit hawks, led by Wall Street investment banker Peter
Peterson, either did not see the bubble or chose to ignore it. They ran
around the country in the peak years of the housing bubble yelling about
"fiscal irresponsibility" even as the housing bubble was growing to ever
more dangerous level. They used their money and their political standing
to dominate public debate and crowd out those of us who were trying to
warn about the bubble. There were numerous television shows, radio shows
and news stories devoted to their dire warnings about the deficit. . .

If the Wall Street deficit hawk crew hadn't dominated public debate on
economic issues as the bubble was building, perhaps those of us warning of
the bubble could have been heard. Maybe momentum would have grown to burst
the bubble before it reached such dangerous levels.

Ironically, the collapse of the bubble was even a disaster from the
standpoint of the issue that concerns the deficit hawks most: the deficit.
The deficits that the nation is incurring as a result of the collapse of
the housing bubble are projected to have added more than $4 trillion to
the national debt by the end of this decade.

The people who allowed for this bubble to grow unchecked should be
incredibly embarrassed and certainly should be apologetic about laying the
basis for this wreckage. It is difficult to envision a more serious policy
failure.

But no, the deficit hawks are as sanctimonious as ever. They are running
around as though nothing happened. They are still preaching the exact same
lines to the public that they did before the collapse of the bubble, but
now with greater urgency due to the damage to the government's balance
sheet caused by the downturn.

The media should be jumping on deficit hawks like Peterson, asking him why
anyone should take him seriously now when he was so incredibly and
disastrously wrong about the economy just a few years ago. Unfortunately,
Peterson doesn't get questions like that; he just gets praise for his
willingness to try to take Social Security and Medicare away from retired
workers.

The problem is that Peterson has billions of dollars. To the national
media and other actors in national policy debates, Peterson's wealth
matters much more than whether or not what he is saying makes sense. That
is good news for Peterson, but really bad news for the rest of us.

DEAN BAKER - It is worth noting that Peterson has a long history of being
wrong in a big way about major economic issues. For example, in the 90s he
argued for partially privatizing Social Security as a way to increase
benefits. If Congress had taken his advice, beneficiaries today would be
receiving much lower benefits.

Peterson also argued that the consumer price index, the main measure of
inflation, substantially overstates inflation. Based on this claim,
Peterson wanted to reduce the size of the annual cost of living adjustment
to Social Security. Peterson's proposed cut would reduce benefits for
older retirees by more than 20 percent. This is a major cut for the
two-thirds of seniors who rely on Social Security for more than half of
their income.

While Peterson used the claim that the CPI overstates inflation as a basis
for cutting Social Security benefits, he never bothered to consider that
this claim implies that incomes are rising much more rapidly than current
data show. In other words, if Peterson had been right in his claim that
the CPI overstated inflation, then our children (the supposed
beneficiaries) would be far richer than we ever imagined possible because
their incomes would be growing so rapidly. However, Peterson was so
anxious to cut Social Security he never bothered thinking through the
implication of his claim.

Now Peterson wants to use the bailout as a pretext for gutting Social
Security and Medicare. There are two important ways in which the Peterson
crew is trying to mislead the public on this issue.

First, the impact of the bailout on the debt is not as large as claimed.
While the government is likely to lose money on these bailouts, it
certainly will not lose everything invested. On the $700 bank bailout, it
is unlikely to lose more than $200 billion to $300 billion. While this is
not trivial, it is less than 2 percent of current GDP. The debt to GDP
fluctuates by this amount all the time without even attracting any
attention. It makes no sense to charge that we have to rethink our core
social insurance programs because the debt to GDP ratio rose by 2
percentage points.

The other point on which the Peterson gang is misleading is the impact of
deficit spending in an economic downturn. Such spending will not make our
children poorer; in fact it is likely to make them wealthier by creating
jobs and boosting the economy.

This point should be easy to see. If the government has a $300 billion
stimulus (raising the debt by $300 billion), then the immediate effect on
the economy will be to increase GDP by around $400 billion (assuming a
well designed stimulus) and give jobs to approximately 4 million workers.
The additional growth will lead to more tax revenues, so that the increase
in the public debt will likely be closer to $240 billion rather than $300
billion.

But, even this is not a net loss to our children. While the country will
owe $240 billion more than it would in the absence of stimulus, our
children and grandchildren will also be the beneficiaries of the interest
payments on this debt. (The fact that the money may be paid to foreigners
who own the debt is immaterial, as I'll explain in future writings on this
topic.) In short, there is no good reason not to try to use the government
as a source of demand for the economy during an economic slump like the
one we currently face.
Unfortunately, Mr. Peterson either knows little economics or opts not to
be honest with the public. In this respect it is noteworthy that he
somehow managed to miss the housing bubble and the fact that its collapse
would create the largest financial crisis since World War II. But, Peter
Peterson is not interested in warning the country about the real crises it
faces. He is interested in cutting Social Security and Medicare.

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CounterPunch Diary

T'was a Famous Victory

By ALEXANDER COCKBURN

"Cleopatra's nose, had it been shorter, the whole face of the world would have been changed.” So wrote Pascal, remembering how Caesar and Mark Anthony, those mighty generals of the Roman Empire, were captivated by Cleo’s commanding schnozz. This time Cleopatra’s nose took the form of Ted Kennedy’s brain tumor.

If the tumor hadn’t finally done in Massachusett’s senior senator last August, then there wouldn’t have been a special race for his seat. A former Cosmo nude pinup called Scott Brown wouldn’t have stunned the Democrats by capturing the seat for the Republicans this past January.

Obama wouldn’t have been hauled rudely from the supposed security of a filibuster-proof majority in the U.S. senate and, instead, faced with the prospect that the health insurance bill on which he’d squandered more than half his first year in office was about to go down to defeat, leaving the victorious Republicans to trample him and his party to death in the fall elections this year.

It was a very, very close thing.

Why did Obama blow his first year? Politicians have a touching trait of often coming to believe their own campaign rhetoric, even when it’s being greeted with cynical guffaws by the cognoscenti. Having made his name and won his votes by pledging to rise above faction and draw the American people together, Obama extended the hand of bipartisanship to the Republicans and spent the following months seemingly fuddled as the Republicans chewed off his arm, inch by inch.

The whacking they gave his stimulus package in February of 2009, cutting it in half, unnerved the White House. Just when they should have been drawing lines in the sand, they opted for pliancy. It’s debatable whether they should have touched health reform at all in 2009, but suppose Obama and House Democrats had put forward a tough, progressive plan, centered on a government-underwritten “single payer” model and then challenged the Republicans to come at them, forcing them to go through the arduous exercise of actual filibusters, item by item. The whole terms of the debate would have been different.

Instead of which, Obama handed off reform to Congressional Democrats who came up with five plans. The Republicans wheeled their artillery into position and opened up with heavy salvoes about “death panels.” John McCain and other Republicans like Senator Chuck Grassley started denouncing as “Obamian socialism” the very provisions they themselves had advanced a year earlier. The left, furious at the dumping of single-payer, or even a vestigial public option, was deeply demoralized.

Then, as the year turned, came three strokes of immense good fortune. The first was Republican Scott Brown’s defeat of Democratic favorite Martha Coakley in Massachusetts, leading to the blare of panic klaxons in the White House. Next came a February announcement by Anthem, California’s largest for-profit insurer, to hike individual rates by as much as 39 per cent, vividly dramatizing the extortions of the present system and giving the Obama administration the cue to call on Anthem to justify the hikes. Finally, Jim Bunning, a Republican senator from Kentucky and former Major League baseball pitcher heading into retirement, single-handedly blocked for five days a measure to extend eligibility for enhanced unemployment benefits for laid-off workers. “Tough shit” was Bunning’s retort to complaints that his unfeeling obstinacy would plunge hundreds of thousands into truly desperate straits. Finally, amid a firestorm of public rebukes, the Republican leadership forced Bunning to back down.

It was a reprise of the face-off that gave Bill Clinton his great victory against Newt Gingrich and the Republicans in November of 1995. Gingrich, Republican speaker of the House, said he’d shut down the government unless Clinton agreed to budget cuts in social services. Clinton refused. Without necessary funds voted by Congress, federal workers started to get laid off. Then Gingrich destroyed himself and Bob Dole’s chances in 1996 to be president. He told reporters that he forced the shutdown because Clinton had made him and Bob Dole sit at the back of Air Force One House. A stand on principle shriveled into pettiness, as with Bunning.

By early March of this year, the Republicans were looking not only mean-spirited – the Party of No – but also the Party of Nutsos, hooked to the Tea Baggers who themselves have been getting crazier by the hour.

The tide turned. At last the Democrats played hardball. Nancy Pelosi, Speaker of the House, twisted arms, stacked up votes. The long-brandished, never used filibustering weapon stayed in the armory as Democrats rediscovered procedural weapons to push the bill forward. The Tea Baggers spat on a black Missouri congressman,the Rev Emanuel Cleaver II, and taunted Barney Frank, the House's only openly gay member. On Thursday night, they threw in the towel.

The struggle commenced last June has produced, by way of health insurance reform, a Republican bill – mostly bad, with a couple of positive features. It’s certainly not reform of health care. Its decent provisions could have been passed easily early last year. It could all have been different.

But now Obama and the Democrats have put a big one up on the board. It’s still a long way to the fall elections, but Obama may last have learned the benefits of partisanship – even populist partisanship. Next comes financial reform, which is what Obama should have started with last year. But at least he has a win. As Southey’s poem “The Battle of Blenheim” put it:

“It was the English.” Kaspar cried
Who put the French to rout;
But what they fought each other for
I could not well make out.
But everybody said,” quoth he,
“That t’was a famous victory.”

Closing Time

A Historic Confirmation of Corporate Power

By CHRIS FLOYD

It looks like heaven but it feels like death;
It's something in between, I guess:
It's closing time.
-- Leonard Cohen

Official transcript of remarks by President Barack Obama after the March
21 vote in the House of Representatives on H.R.3590: Motion to Concur in
Senate Amendments to Patient Protection and Affordable Care Act:

My fellow Americans. As many of our more serious commentators have noted,
Democrats and progressives have sought genuine reform of our broken,
bloated, unjust health care system for almost a hundred years. Today, I am
proud to say that we have brought that century-long struggle to a close.
Together with our visionary partners in the House and the Senate, we have
finally killed genuine health care reform for many years to come --
perhaps even for another century!

The struggle is over, the deal is done, the fix is in, and corporate power
-- unbridled, unchallenged, coddled, protected, and larded with the
endless pork of government-guaranteed profit -- has triumphed at last.
This is an historic achievement. This is a mighty legacy we will bequeath
to future generations.

This, my friends, is what change looks like.

Now, you know and I know that such change never comes easily. It never
comes without opposition. It never comes without controversy. Even in this
hour of victory, we know that the doom-sayers will be out in force.

And I'm not speaking here of the Republicans, whose opposition has simply
been a lurid, baseless "Red Dawn" fantasy about "communism" coming to
America. "Communism" -- in a bill that has been written by our visionary
partners in the corporate community, by our hyper-capitalist friends and
patrons on Wall Street, by the lobbyists and bagmen of Big Money! It's
true there is a tinge of socialism in the bill, but it is, of course, the
only kind of socialism that is tolerated in America: socialism for the
rich, where the masses shoulder the risks -- and the costs -- while the
wealthy reap the profits for themselves. The health-care barons, the
bailed-out banks, the farm-devouring agriconglomerates, the war profiteers
... we've got plenty of boardroom bolsheviki out there -- but it sure
ain't "communism" like Castro used to make! So let them hoot and holler
down this false trail all they like; for as I learned back in my Senate
days, when I was considered part of the "anti-war" faction, opposition
without substance only entrenches the status quo.

No, what we must look out for are all those -- or rather, those very few
-- nattering nabobs of negativism who have opposed our historic corporate
empowerment bill out of -- get this -- principle. Like barnacles hanging
onto the butt of the Titanic, they have clung to the idea of truly
universal, equal, single-payer health care, a system that is less
expensive, more efficient, more secure, more democratic, more popular and
more effective than the heroic measure we have passed here today.

These poor wretches -- who now must face the wrath of Kos and the wroth of
Rahm for their tragic apostasy -- are simply not savvy enough to see that
our 2,000-page boondogglepalooza, riddled with fine-print exceptions,
toothless regulations (which we will 'enforce' every bit as rigorously as
Wall Street has been regulated all these years), impenetrable phase-in and
phase-out schedules, and mild benefits that won't even begin kicking in
for years -- and that even after a decade will still leave millions of
people uncovered -- is much better than a simple, streamlined system that
could be implemented by the end of this year, bringing genuine relief from
intolerable, life-degrading financial burdens and medical problems to
millions and millions of people in dire need right away.

Or as that avatar of negativity, Ralph Nader put it:

"The health insurance legislation is a major political symbol wrapped

around a shredded substance. It does not provide coverage that is

universal, comprehensive or affordable. It is a remnant even of its own

initially compromised self — bereft of any public option, any safeguard

for states desiring a single payer approach, any adequate antitrust

protections, any shift of power toward consumers to defend themselves, any

regulation of insurance prices, any authority for Uncle Sam to bargain

 with drug companies, and any reimportation of lower-priced drugs." 

Hey, Ralph, thanks for reciting my credits! All those "berefts" you cited
were the result of my own super- savvy negotiations! It's 11-dimensional
chess, man, a really heavy-duty Matrix Zen Jedi Master use-the-Force kind
of thing, where you win the game by giving away everything you have in the
opening move! But you're too much a dinosaur to understand. 'Anti-trust
protections!' Hey, Teddy Roosevelt -- your horse-and-buggy is waiting!
Just listen to this guy:

"Most of the health insurance coverage mandated by this legislation does

not come into effect until 2014, by which time 180,000 Americans will die

because they were unable to afford health insurance to cover treatment and

diagnosis, according to Harvard Medical School researchers."

Well, what can I say? 180,000 is a lot of dead people. This is a very hard
choice, but the price — we think the price is worth it.

Then there's this Chris Hedges guy. He used to be a "serious" journalist,
reporting on the imperial wars for our corporate partners in the
stovepiping community -- what old-timers and barnacles still like to call
the "news media." But he went off the rails a long time ago and joined the
carpers and cranks on the sidelines, those malcontents who, unlike so many
of our progressive partners today, have never imbibed the timeless wisdom
of Warren G. Harding: "Don't knock, boost!"

Just get a load of Hedges here, making the big-whoop observation that our
 historic bill is just a bloated version of the already-failed,
Republican-created Massachusetts plan:

"Take a look at the health care debacle in Massachusetts, a model for what

we will get nationwide. One in six people there who have the mandated

insurance say they cannot afford care, and tens of thousands of people

have been evicted from the state program because of budget cuts. The

45,000 Americans who die each year because they cannot afford coverage

will not be saved under the federal legislation. Half of all personal

bankruptcies will still be caused by an inability to pay astronomical

medical bills. The only good news is that health care stocks and bonuses

for the heads of these corporations are shooting upward. ..."

Again with the credits! Stocks going up, corporate heads filling their
pockets, pols gorging on backroom baksheesh, Big Money controlling the
debate ... Earth to Hedges: That's what we're here for! That's the whole
point! You're an old Seventies guy, aren't you, Chris? You remember ZZ
Top? "Jesus Just Left Chicago"? (If you'll pardon the immodesty.) What do
they say? "Taking care of business is his name." They got that right.

So who cares if the plan "fails"? Who cares, if, as you say,

"[the plan] will not expand coverage to 30 million uninsured, especially

since government subsidies will not take effect until 2014. Families who

cannot pay the high premiums, deductibles and co-payments, estimated to be

between 15 and 18 percent of most family incomes, will have to default,

increasing the number of uninsured. Insurance companies can unilaterally

raise prices without ceilings or caps and monopolize local markets to shut

out competitors."

Listen, Hedgie: If the plan was to reform the health care system for the
benefit of the people, then we would have, like, reformed the health care
system for the benefit of the people. You follow? The plan was, is, and
will always be to appear to be reforming the system -- to make the rubes
believe that something is being done to alleviate their pain -- precisely
to avoid really reforming the system, which is just too good and greasy
for too many of us at the top of the imperial pyramid.

And when this plan fails -- as it will, as it will -- then you rig up
another boondoggle, another "great debate" full of sound and fury,
signifying zilch, to keep the rubes at bay. Meanwhile, we can get on to
the real job our corporate colleagues and patrons want us to do --
bringing that other old dream of social amelioration for the common folk
to an end at last: Social Security. Scalpel, Nurse! The doctor is in!

Chris Floyd is an American writer and a frequent contributor to
CounterPunch. His blog, Empire Burlesque, can be found at
www.chris-floyd.com.

What I Learned From the Health Care Debate

Making them want to...

By LAURA FLANDERS

So this is what I learned from the last weekend of the health care reform
debate.

First, lay a coffin at a White House fence and you're subject to arrest.

Spit and yell abuse at members of the Black Caucus as they enter the
Capitol and you'll be left in peace. The same goes for screaming epithets
at Barney Frank.

If you're going to mass half a million strong for immigration reform,
don't expect coverage on CSPAN when they're covering live events in and
around Capitol Hill -- not if there are hundreds of epithet throwers
somewhere close to cover.

And I learned that after all, it has to be said, some Democrats do have
spine. Unfortunately the rest could take some lessons in how to negotiate
from the teeny weeny criminalize-abortion caucus and Rep. Bart Stupak.

Finally I learned that Nancy Pelosi is one hell of a house leader. She
really can corral a majority when she wants. In fact, she and President
Barack Obama can be really persuasive, when they want to be.

So let's not hear any more bunk about the impossibility of the
aforementioned immigration reform, or repealing Don't Ask Don't Tell, or
actually coming up with some real financial regulation.

They can do it when they want to.

The one thing that remains a mystery is how to make them want to. If you
don't have a mountain of cash, that is.

Laura Flanders is the host of GRITtv, which broadcasts weekdays on
satellite TV (Dish Network Ch. More...9415 Free Speech TV) on cable,
public television and online at GRITtv.org and TheNation.com. Follow
GRITtv or GritLaura on Twitter.com.

Where the TeaPartyFoxPublicans Went To Connect With The People...

This is too funny! Enlightenment through satire!

http://www.thedailyshow.com/watch/tue-february-9-2010/rnc-meeting-in-hawaii

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