Quotations Between October 16-26, 2009
To Accompany the October 26, 2009 edition of Tidbits
Bob Jensen at Trinity University
U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/
Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm
Bias of the Media
On October 19 I watched Charlie Gibson proclaim that the latest ABC Poll shows only 20% if the U.S. voters claim to be Republican. He covered up the fact that in that same poll only 33% claimed to be Democratic. ABC News would rather have us believe the other 80% are all Democrats. Charlie, and his friend George, failed to mention that nearly have the people in the U.S. are fed up with both parties ---
Polling Polls: Americans Independent and Irate
The danger for the Obama administration and the Democrat Party is the independent voters' shift away from Democrat policies. “Independents have flipped negative,” warns Bevan, who mans the polls for a living. “That’s not a good thing for any party.”
Selena Zito, "Polling Polls: Americans Independent and Irate," Townhall, October 25, 2009 ---
President Obama's promises as a candidate that were reneged upon in office
Video: Seven Lies in Two Minutes --- http://www.theospark.net/2009/09/video-7-lies-in-under-2-minutes.html
"How SuperFreakonomics Gets Climate Engineering Wrong: The new book
Superfreakonomics neglects the real dangers of geoengineering," by Kevin Bullis,
MIT's Technology Review, October 20, 2009 ---
"Follow the Money," by Ben Shapiro, Townhall, October 21, 2009 ---
"The Volunteerism Scandals Hollywood Won’t Be Broadcasting," by Michelle
Malkin, Townhall, October 21, 2009 ---
"A Nobel Prize for Showing That Freedom Works," by John Stossel, Townhall,
October 21. 2009 ---
"Will Obama Finally Pay Attention to Sudan? The Darfur genocide continues.
After months of ambivalence, the administration says it will pressure Khartoum,"
by John Pendergast, The Wall Street Journal, October 21, 2009 ---
Weather Channel founder wants to sue Al Gore for fraud (and CNN, MSNBC, and
the other Obama media outlets) ---
Video: South Park spoofs Acorn fraud --- http://www.realclearpolitics.com/video/2009/10/15/south_park_spoofs_acorn_video_scandal.html
Independence Day Quiz --- http://games.toast.net/independence/
Americans are harder workers,
more philanthropic, individualistic, self-reliant, anti-government than people
in most other countries. We've turned what was an 18th-century Third World
nation into the freest and most prosperous nation in mankind's entire history.
Throughout our history, the United States has been a magnet for immigrants
around the world. What
what some have called American exceptionalism?
Walter E. Williams, "Why America is exceptional," WorldNetDaily, October 21, 2009 ---
Research finds lower testosterone levels in McCain voters after Obama's win
was announced. The same thing happens to male moose and buck losers in the
rutting season up here in the White Mountains.
"Erectile Dysfunction," by Don Troop, Chronicle of Higher Education, October 24, 2009 ---
The researchers analyzed spit samples from 183 men and women in Durham, N.C., and Ann Arbor, Mich., at 8 p.m., on November 4, 2008, and again at 11:30 p.m. when Barack Obama was declared the winner. Two more samples were collected after that, at 20-minute intervals.
Neither women nor male Obama voters showed significant changes in testosterone levels after the outcome was announced. But male supporters of John McCain and the Libertarian candidate, Bob Barr, posted lower levels of the steroid hormone (see graph above, by Steven Stanton, Duke University).
One of the co-authors, the Duke neuroscientist Kevin LaBar, says the study will be replicated this winter on fans at the Duke-North Carolina basketball
Meghan McCain is obviously not the brightest bulb in
the chandelier. This is a woman who, while appearing on Bill Maher's show,
explained that she knew nothing about Ronald Reagan because "I wasn't born yet."
(Paul Begala, no intellectual titan himself, quickly responded that though he
hadn't been around during the French Revolution, he knew something about it.)
She thinks she's being deep when she states, "I am a woman who despises labels
and boxes and stereotypes." We in the real world call that a cop-out.
Ben Shapiro, "Meghan McCain's Big Bust," Townhall, October 189, 2009 ---
An anti-earmark group Tuesday named Texas Senator
and Republican gubernatorial candidate Kay Bailey Hutchison as October's “
Porker of the Month .” The group gives out the title to lawmakers, government
officials and political candidates it thinks “have shown a blatant disregard for
the interests of taxpayers,” according to its website. The group said Hutchison
has requested 149 earmarks worth $1.6 billion for fiscal year 2010. The Dallas
Morning News reports that, by Hutcison’s own accounting, she has steered $8.7
billion to Texas in the past five years.
Shane Allen, "Hutchison named 'Porker of the Month'," Wayne.com, October 10, 2009 --- Click Here
Hutchison is a Republican Senator from Texas who is now a candidate for Governor of Texas.
"Hezbollah Gets SCUDS," Strategy Page, October 19, 2009 ---
Arab media in the Persian Gulf have been reporting that Syria, apparently on the orders of Iran, has turned over about 300 long range ballistic missiles to Hezbollah control. The missiles have apparently not left Syria (they would be hard to miss, being driven around southern Lebanon). The reports add that Hezbollah personnel are being trained to operate the missiles.
Syria has underground storage and launch facilities for its arsenal of over a thousand SCUD missiles. Armed with half ton high explosive and cluster bomb warheads, the missiles have ranges of 500-700 kilometers. Syria also has some 90 older Russian Frog-7 missiles (70 kilometer range, half ton warhead) and 210 more modern Russian SS-21 missiles (120 kilometer range, half ton warhead) operating with mobile launchers. There are also 60 mobile SCUD launchers. The Syrians have a large network of camouflaged launching sites for the mobile launchers. Iran and North Korea have helped Syria build underground SCUD manufacturing and maintenance facilities. The Syrian missiles are meant to hit Israeli airfields, missile launching sites and nuclear weapons sites, as well as population centers. Syria hopes to do enough damage with a missile strike to cripple Israeli combat capability. Hezbollah is more interested in killing civilians, and would aim their missiles at Israeli cities.
Israel has long been aware of the Syrian missile capabilities and any war with Syria would probably result in some interesting attacks on the Syrian missile network. The SCUD is a liquid fuel missile and takes half an hour or more to fuel and ready for launch. So underground facilities are a major defensive measure against an alert and astute opponent like Israel. In the past, Israel has threatened to use nukes against anyone who fired chemical weapons at Israel (which does not have any chemical weapons).
Over the last year or so, the Israeli government has been passing around, to local governments, a war planning document. This study assumes a future war with Syria, and gives the local officials an idea of what to expect. Currently, the Israelis estimate that there would be as many as 3,300 Israeli casualties (including up to 200 dead) is Syria tried to use its long range missiles against Israel. If the Syrians used chemical warheads, Israeli casualties could be as high as 16,000. Over 200,000 Israelis would be left homeless, and it's believed about a 100,000 would seek to leave the country. Hezbollah apparently wants to be part of this, or maybe Iran just ordered the whole thing.
"Toronto 18 videos show group's deadly plan," Canada's National Post, by Ron Nursisah, Canada's National Post, October 20, 2009 --- Click Here
A four-member police tactical team dressed all in black descends, laying them spread-eagled on the floor of the warehouse and cuffing their hands behind their backs before one of the officers raises his thumb to say mission accomplished.
The dramatic arrests of Saad Khalid and Saad Gaya, members of the "Toronto 18" terrorist group that was planning to detonate truck bombs in downtown Toronto, was captured on a video released on Tuesday by the court. (see above)
The video is among dozens of Crown exhibits that form the case against Zakaria Amara, who admitted on Oct. 8 he was the leader of the bomb plot. An Ontario judge approved their release, allowing Canadians to view them for the first time.
Continued in article
Betting Big on America's New Find in Natural Gas
The U.S. natural gas industry hopes that as Lloyd Yates goes, so goes the country. In summer 2008 the U.S. and much of the rest of the world were consumed by talk of peak oil and natural gas and fears that high fuel prices would persist forever. Today analysts still worry about the oil supply but far less about natural gas. U.S. gas producers, capitalizing on a technological breakthrough, have in recent years unlocked an enormous volume of natural gas in the shale rock under Colorado, Oklahoma, Pennsylvania, Texas, and other states. According to a July report by the Colorado School of Mines, the U.S. now holds 1,800 trillion cubic feet of natural gas, one third of it in shale, the equivalent of some 320 billion barrels of oil. That's more than Saudi Arabia's 264 billion barrels.
Steve LeVine and Adam Aston, "Betting Big on a Boom in Natural Gas: With prices low and the promise of vast new supplies, businesses are making the switch from oil-based fuels and coal," Business Week, October 8, 2009 ---
Experts now believe that the country has far more
natural gas at its disposal than anyone thought three or four years ago. The
revised estimates are largely due to advanced drilling techniques that make it
economically feasible to extract the fuel from shale. And while the Marcellus is
the most recently discovered and possibly the largest shale-gas deposit, others
are scattered throughout the country. The U.S. consumes about 23 trillion cubic
feet (TCF) of natural gas a year, according to the Department of Energy's Energy
Information Agency (EIA). The Potential Gas Committee (PGC), an organization
headquartered at the Colorado School of Mines, put the country's potential
natural-gas resources at 1,836 TCF in a biennial assessment released in June.
That's 39 percent higher than its estimate of two years earlier. Add to that the
238 TCF that the EIA has calculated in "proved reserves" (the gas that can be
produced given existing economic conditions) and the PGC pegs the future supply
at 2,074 TCF. In other words, there is enough natural gas to supply the country
for 90 years at current consumption rates. Even if we used natural gas to
totally replace coal in generating electricity, domestic supplies would last for
David Rotman, "Natural Gas Changes the Energy Map," MIT's Technology Review, November/December 2009 ---
Unfortunately coal miners and greedy green capitalists like Al Gore may join forces to resist this most economic and sensible solution to our energy crisis.
"ISLAMIC PEDOPHILIA NOW RAMPANT IN THE NETHERLANDS," The Last Crusade,
October 15, 2009 ---
The number of Muslim “import brides” – - almost all of whom are poorly educated school-age children – - is increasing at such a rate in the Netherlands that it is causing “the destabilization of society.”
So says Eberhard van der Laan, the Dutch government’s Minister of Housing, Communities, and Integration.
“We can’t cope with it anymore,” Mr. van der Laan says.
The Dutch minister maintains that the problem has given rise to “crime, fraud, domestic violence, polygamy, and slavery.”
Almost all of the import brides are under 18 – - some are children who have not entered puberty.
How many mature Muslim men in the Netherlands have child brides?
Mr. van der Laan places the number at 15,000.
Continued in article
Democrats running for cover
"The Vote Democrats Don't Want Whatever you do, don't mention Countrywide," by James Freeman, The Wall Street Journal, October 16, 2009 ---
If you think moderate Democrats are afraid of voting for ObamaCare, you should see how they react to a potential vote on the Countrywide Financial loan scandal.
The House oversight committee was scheduled to meet on Thursday afternoon to mark up several minor pieces of legislation. Days before the meeting, California Republican Darrell Issa notified committee Chairman Edolphus Towns that Mr. Issa would call for a vote to subpoena Countrywide documents from Bank of America, which bought the failed subprime lender last year. Recall that, under the "Friends of Angelo" program, named for former Countrywide CEO Angelo Mozilo, Democratic Senators Chris Dodd and Kent Conrad received sweetheart deals on home mortgages. Mr. Issa wants to uncover the full story on Countrywide's effort to influence Washington policy makers.
Mr. Towns, a New York Democrat who also received mortgages from the unit that processed the VIP loans but claims he received no favors, has opposed such a subpoena. But can he count on his Democratic colleagues to vote it down? Perhaps Mr. Towns would rather not find out. Mr. Issa showed up for the scheduled 2 p.m. markup on Thursday hoping that a few Democrats would vote his way and allow the investigation to proceed. Then a strange thing happened: As Mr. Issa and the GOP members of the committee sat waiting for the meeting to begin, Democrats huddled in a back room without explanation. Thirty-five minutes later, the committee announced that the meeting had been postponed indefinitely.
A committee press release later claimed the postponement was "due to conflicts" with a markup occurring at the same time in the financial services committee. But Mr. Issa's staff videotaped several financial services members leaving the back-room gathering with Mr. Towns at the conclusion of the meeting. If members were there to confab with Chairman Towns, obviously they weren't at any finance committee markup -- suggesting the real "conflict" was between Democrats over whether to keep stonewalling the Countrywide matter.
"The Countrywide Vote The backroom battle over a subpoena on VIP mortgages," The Wall Street Journal, October 17, 2009 --- http://online.wsj.com/article/SB10001424052748704322004574477711907000406.html?mod=djemEditorialPage
Senators Chris Dodd and Kent Conrad lawyered up when the Senate ethics committee asked about their VIP loans from Countrywide Financial. But the sweetheart Senators may not be able to stop another look at their dealings with the subprime mortgage factory. A Democrat on the House oversight committee, Illinois freshman Mike Quigley, tells us that he supports a subpoena to obtain documents on the "Friends of Angelo" loan program.
Named for former Countrywide CEO Angelo Mozilo, the program was used to curry influence with government officials. Bank of America, which bought the failed lender last year, has said it's ready to turn over the files as soon as it receives a subpoena.
We're told that, at a closed Thursday meeting of Democrats on the House oversight committee, several Members urged Chairman Edolphus Towns (D., N.Y.) to allow a vote on California Republican Darrell Issa's proposal to issue the subpoena. Mr. Towns received two mortgage loans from the Countrywide unit that processed VIP loans but claims he received no special favors.
How long can Mr. Towns bottle up the subpoena vote? Mr. Quigley is urging Democrats to remember that ethical lapses helped end the GOP majority. "The right thing to do is also the smart thing to do," says Mr. Quigley. "Both parties must decide that they can't protect their members, no matter how powerful they are." Countrywide's efforts to obtain influence were not limited to one party, nor is there any guarantee that only Democrats like Messrs. Dodd and Conrad succumbed to Angelo's charms. As Mr. Quigley says, "Stupidity wears both hats."
Still, Mr. Issa tells us that he has all Republican members of the committee ready to vote for a subpoena. The aim is to find out the extent and impact of Countrywide's efforts to influence federal housing policy. This goes to the heart of the financial crisis. Countrywide was the largest originator of subprime loans and provided billions of dollars of mortgages to Fannie Mae and Freddie Mac, at huge cost to taxpayers.
Mr. Issa has even offered to redact the names of individuals. This would allow the committee to study Countrywide's activities without revealing individual recipients of VIP mortgage terms. Replies Mr. Quigley: "Forget redacting names." He believes the oversight committee should forward to the House ethics committee all the "names on Angelo's list."
To find out what role cut-rate mortgages might have played in encouraging politicians to allow Fan, Fred, Angelo and others to create the mortgage debacle, taxpayers will need four more Democrats to vote for a subpoena. Among potential swing votes, New Hampshire's Paul Hodes doesn't seem eager to have to vote on the issue. "The Congressman will make an independent judgment on this issue when it is brought up before the committee," says his spokesman. No response yet from Virginia Congressman Gerry Connolly, another oversight member.
Mr. Quigley, for his part, favors a broad investigation of "predatory lending." But he should understand that a party-line vote to redirect the inquiry away from evidence of wrongdoing will not instill public confidence. As he told us on Friday, "No one's going to believe you if you do this on a partisan basis." It's good advice for oversight committee Democrats, and a hopeful message for taxpayers.
I might begin this tidbit by declaring that I'm not a defender of Rush
I am a defender of accuracy in quoted remarks, which is why I often paste them rather than retype them.
And it's much, much easier to paste than to type.
I never said I supported slavery and I never praised
James Earl Ray. How sick would that be? Just as sick as those who would use such
outrageous slanders against me or anyone else who never even thought such
things. Mr. Wilbon refuses to take responsibility for his poison pen, writing
instead that he will take my word that I did not make these statements; others,
like Rick Sanchez of CNN, essentially used the same sleight-of-hand.
Rush Limbaugh, "The Race Card, Football and Me," The Wall Street Journal, October 16, 2009 ---
Slander: MSNBC and CNN Fabricated Quotations That They Falsely
Attribute to Rush Limbaugh
From Best of the Web Wall Street Journal Newsletter on October 15, 2009 ---
WSJ.com Editors [email@example.com]
But there is a genuine outrage in the use of phony quotes to accuse Limbaugh of racism. NewsBusters.org notes that CNN and MSNBC have both attributed the following fabricated quote to Limbaugh: "I mean, let's face it, we didn't have slavery in this country for over 100 years because it was a bad thing. Quite the opposite: Slavery built the South. I'm not saying we should bring it back; I'm just saying it had its merits. For one thing, the streets were safer after dark."
Another NewsBusters item quotes MSNBC's Rachel Maddow citing this phony quote: "You know who deserves a posthumous Medal of Honor? James Earl Ray. We miss you, James. Godspeed." Ray assassinated Martin Luther King.
According to the second NewsBusters item linked above, these quotes appear in "101 People Who Are Really Screwing America," a 2006 book by Jack Huberman. (Disclosure: Huberman also quotes this columnist--accurately, as far as we can tell--in explaining why "The Wall Street Journal editors" are one of the "people who are really screwing America.") A blogger who goes by the handle "Mike Smash!" tracks the James Earl Ray quote further back, to a September 2005 blog posting by one "zedlappy," who seems to have found it on a since-edited Wikipedia page.
So what we have here is simply a slander that has become an urban legend--and one that reporters and commentators don't bother to check because it fits their preconception of Limbaugh.
Also see "Can't they demonize Limbaugh without making stuff up?" The Wall Street Journal, October 15, 2009
"To Sue or Not," by Thomas Sowell, Townhall, October 20, 2009 ---
To sue or not to sue? That is the question.
After racist statements were made up out of thin air and then attributed to Rush Limbaugh, these were the options he had.
It is easy for me to understand that these are not simple choices because I have faced those options as well. Recently there have been a number of columns made up by others and put on the Internet with my name on them. The things said in those bogus columns have nothing in common with anything that I have said, in my columns, in my books or anywhere else.
Years ago, CBS reporter Lem Tucker said in a broadcast on October 13, 1981 that my views "seem to place him in the school that believes that maybe most blacks are genetically inferior to white people."
Anyone interested in the facts could have discovered that I had argued directly against this idea in a number of writings, including a feature article in the New York Times Magazine on March 27, 1977.
An attorney I did not know, but who had read my writings and knew that what was insinuated in that broadcast was totally false, offered to represent me in a lawsuit against CBS. That was when I faced the kind of dilemma that Rush Limbaugh faces now.
When someone is considered to be a "public figure"-- and Rush Limbaugh is certainly that-- the Supreme Court has narrowed the grounds on which that public figure can sue for libel, to the point where even the most blatant lie can often go unpunished.
Worse yet, there may be millions of people who never heard the original lie but who will hear it repeated in the media as a result of news stories about the lawsuit. And when those who committed character assassination are let off the hook on a technicality, they can claim "vindication," as if what they said was true.
The question facing any public figure who has been the target of character assassination in the media is: Is it worth investing a large amount of time in a process that can make you worse off by spreading the very lie that you are suing to stop?
The down side of not suing is that it allows the lie to continue to be repeated in the media, with later repetitions being justified in terms of "just reporting" what someone else said.
No one can resolve this dilemma for someone else. My decision in 1981 was that I had too many other things to do for me to go into the exhausting and time-consuming process of suing CBS, with such dicey odds in the courts.
Every situation is different, so whether Rush Limbaugh should sue is a question that only he can answer.
The question for the media to answer is: Are lies to go unchallenged when they are lies against someone you disagree with? Worse yet, are they to be excused, rationalized or even repeated?
Already there are people on television saying that, although Rush didn't actually say the things that have been attributed to him, he has said other things that they choose to call "racist."
If those other things really are racist, why don't they quote them, instead of something that was made up out of whole cloth?
The Rush Limbaugh show has, after all, been broadcast for many years, three hours a day. There are thousands of hours of those broadcasts that people can go back through to look for things to quote.
If critics can't find anything racist in all that material, why should an outright lie about what the man said be given a pass?
As the late Senator Daniel Patrick Moynihan said, you are entitled to your own opinion but not to your own facts.
Ultimately, this is not about Rush Limbaugh or anybody else who is smeared with impunity. It is about the whole climate in which issues are discussed.
Without a range of opposing opinions being available to the public, the basic concept of a self-governing democracy is a mockery. If views that some people don't like can be silenced or discredited by character assassination, the whole country loses.
The courts should not be the only line of defense. Common decency should be the first line of defense, so that people who smear others will pay a price in the outrage that their lies should provoke, even among decent people who do not agree with the target of their smears.
If Fox News attributed false quotations to a leading liberal, MSNBC would register a 10 on the Rhictor Scale. The real test for me will be whether Shultz, Matthews, Olbermann, or some other MSNBC will show a vestige of news integrity by protesting the principle of truth in quotations. Hell will probably freeze over before MSNBC shows this kind of integrity.
"'Radio Free America'," by Cal Thomas, Townhall, October 22,
While the Obama administration is the product of an election, its approach to Fox News Channel, conservative talk radio and possibly the Internet appears similar to dictators who desire control over the flow of information in order to enhance their power.
The administration's primary beef appears to be that Fox is doing the job the broadcast networks and big newspapers should be doing were they not still deeply in the tank for this president and his policies.
Like those Cold War truth-tellers, Fox is simply delivering information to a rapidly growing audience (partly due to criticism from the White House) that wants to see and hear what the other media are not telling them. Fox -- and talk radio -- are reporting on the backgrounds and statements of Obama administration officials. Fox didn't create the statements and actions of Van Jones, the now former "energy czar," who signed a petition questioning whether Bush administration officials allowed 9/11 to happen as a possible pretext for going to war. Fox didn't force Jones to advocate for cop-killer Mumia Abu-Jamal, or associate himself with Standing Together to Organize a Revolutionary Movement (STORM), a left-wing radical group with Marxist roots.
No Fox News employee wrote the speeches and comments of White House Communications Director Anita Dunn, who told graduating high school seniors that one of her "favorite philosophers" is the mass murderer Mao Zedong. Neither did they compose her boast during the campaign that the Obama people "controlled" the news media.
ACORN might never have been exposed for its possibly illegal activities had not an enterprising young duo gone to their offices with a hidden camera and recorded some ACORN workers who were happy to assist them in breaking the law.
As one who appears on Fox as a contributor, I have seen the network grow from its beginning more than a decade ago to its current position of holding accountable those in power. That was once the calling of all journalists until the Kennedy years when reporters started cheerleading and socializing with the people they were empowered to question and cover. This shift in responsibility has greatly enhanced the status and income of too many journalists and commentators. It has also shortchanged the profession and the public it is supposed to serve.
It is no mystery why the White House has made Fox News a target. If its reporting and commentating were not effective in exposing things the administration does not want the public to know, Fox would be ignored. But it is increasingly effective because the public is sensing that the administration has a lot to hide about its personnel, ideology and objectives.
Rather than boycott Fox -- if the administration were smart -- it would flood the network with its spokespeople. The administration apparently believes it needs an enemy to avert scrutiny from its socialist agenda, the undermining of free speech and the corruption of the U.S. Constitution. Because Republicans have no credible national leader, the administration has settled on Fox News.
Political leaders, going back to our founding, have criticized the press. It never works, because after the politicians leave office, the press remains. If the administration is seeking approval for its policies, it should go on the only channel that will confront, examine and question those policies. If the policies are valid, they will stand; if not, they won't and they shouldn't. But perhaps, like those dictators, the administration would rather jam Fox's "signal" because they don't want the public to know the truth about what they are doing.
During the Cold War, the Voice of America and Radio Free Europe were among the broadcast entities that effectively penetrated the Iron Curtain to deliver truth to the "captive nations" that were being fed a steady dose of propaganda by their communist rulers. Those dictators did everything they could to "jam" the signals so that their people would only hear what their unelected overseers wanted them to hear. Contemporary versions of jamming and other forms of censorship occur today in Venezuela, Cuba and many other places where dictators believe public ignorance is essential to their unchallenged rule.
Rahm Emanuel once sent a dead fish to a live
pollster. Now he's put a horse's head in Roger Ailes' bed.
Charles Krauthammer,"Fox Wars," Townhall, October 23, 2009 ---
"The Chicago Way: The Chamber of Commerce is only the latest target of the Chicago," The Wall Street Journal, October 22, 2009 --- Click Here
They pull a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue. That's the Chicago way.
Jim Malone, "The Untouchables"
When Barack Obama promised to deliver "a new kind of politics" to Washington, most folk didn't picture Rahm Emanuel with a baseball bat. These days, the capital would make David Mamet, who wrote Malone's memorable movie dialogue, proud.
A White House set on kneecapping its opponents isn't, of course, entirely new. (See: Nixon) What is a little novel is the public and bare-knuckle way in which the Obama team is waging these campaigns against the other side.
In recent weeks the Windy City gang added a new name to their list of societal offenders: the Chamber of Commerce. For the cheek of disagreeing with Democrats on climate and financial regulation, it was reported the Oval Office will neuter the business lobby. Obama adviser Valerie Jarrett slammed the outfit as "old school," and warned CEOs they'd be wise to seek better protection.
That was after the president accused the business lobby of false advertising. And that recent black eye for the Chamber (when several companies, all with Democratic ties, quit in a huff)—think that happened on its own? ("Somebody messes with me, I'm gonna mess with him! Somebody steals from me, I'm gonna say you stole. Not talk to him for spitting on the sidewalk. Understand!?")
The Chamber can at least take comfort in crowds. Who isn't on the business end of the White House's sawed-off shotgun? First up were Chrysler bondholders who—upon balking at a White House deal that rewarded only unions—were privately threatened and then publicly excoriated by the president.
Next, every pharmaceutical, hospital and insurance executive in the nation was held out as a prime obstacle to health-care nirvana. And that was their reward for cooperating. When Humana warned customers about cuts to Medicare under "reform," the White House didn't bother to complain. They went straight for the gag order. When the insurance industry criticized the Baucus health bill, the response was this week's bill to strip them of their federal antitrust immunity. ("I want you to find this nancy-boy . . . I want him dead! I want his family dead! I want his house burned to the ground!")
Continued in article
Don't fault President Obama for reconsidering his
strategy in Afghanistan. Fault him for reconsidering his strategy only in
Afghanistan. Nearing the end of his first year in office, his administration has
not yet developed a coherent and comprehensive plan to defend Americans from the
movements, groups and regimes that declare themselves our enemies, explicitly
state their intentions - e.g. "A world without America" - and, unless we take
steps to prevent it, will soon have nuclear capabilities to help them accomplish
Cliff May, "Disconnecting the Dots," Townhall, October 23, 2009 ---
October 20, 2009 message from firstname.lastname@example.org
An unbelievable pro-Israel piece in the very anti-Israel Guardian. Among other things, it quotes Colonel Richard Kemp, a British commander in Bosnia and Afghanistan, who stated: "The Israeli Defence Forces did more to safeguard the rights of civilians in a combat zone than any other army in the history of warfare." The "collateral damage" was less than the Nato allies inflicted on the Bosnians in the conflict with Yugoslavia.
Evans condemns Britain, and Goldstone, for their hypocrisy. Hear, hear!
A moral atrocity
Judge Goldstone has been suckered into letting war criminals use his name to pillory Israel
The Guardian, Tuesday 20 October 2009
Aren't the British sickened by the moral confusions of their government?
First, we have the weasel words to justify the unjustifiable release of the Lockerbie bomber. Now we have the sickening spectacle of Britain failing to stand by Israel, the only democracy with an independent judiciary in the entire region.
It was to be expected that the usual suspects of the risible UN human rights council would be eager to condemn Israel for war crimes in defending itself against Hamas. If you treat people as the Chinese do the Tibetans or Uighurs ("Off with their heads!"); or as the Russians eliminate Chechen dissidents; or as the Nigerians tolerate extrajudicial killings, the evictions of 800,000, rape and cruel treatment of prisoners; or as the Egyptians get prisoners to talk (torture) and the Saudis suppress half their population … well, go through the practices of all 25 states voting to refer Israel to the security council for the Gaza war, and you have to acknowledge they know a lot about the abuse of humans. Anything to divert attention from their own atrocities.
Only six refused to join the farce – Hungary, Italy, Netherlands, Slovakia, Ukraine and the US. Britain didn't just abstain. It shirked voting at all (along with those beacons of civilisation Angola, Kyrgyzstan, Madagascar, and surprisingly, France).
Of course, here the fig leaf for being scared of dictators, especially oil-rich abusers, is the report by the South African judge Richard Goldstone. Poor Judge Goldstone now regrets how his good name has been used to single out Israel. The Swiss paper Le Temps reports him complaining that "This draft [UN human rights council] resolution saddens me … there is not a single phrase condemning Hamas as we have done in the report. I hope the council can modify the text." Fat hope.
The truth is he was suckered into lending his good name to a half-baked report – read its 575 pages and see. He said that, as a Jew himself, he was surprised to be invited. He shouldn't have been, and should never have accepted leadership of a commission whose terms of reference were designed to excuse the aggressor, Hamas, and punish the defender, Israel. The council's decision was to "dispatch an urgent, independent, international fact-finding mission … to investigate all violations of international human rights law and international humanitarian law by the occupying power, Israel, against the Palestinian people throughout the Occupied Palestinian Territory, particularly in the occupied Gaza Strip, due to the current aggression, and [it] calls upon Israel not to obstruct the process of investigation and to fully co-operate with the mission".
Israel is not an "occupying power" in Gaza in either fact or international law. Four years ago it voluntarily pulled out all its soldiers and uprooted all its settlers. Here was a wonderful chance for Gaza to be the building block of a Palestinian state, and for Hamas to do what the Israelis did – take a piece of land and build a model state. They didn't. Instead of helping the desperate Palestinians, they conducted a religious war.
In signing on for the UN mission – with others who had already condemned Israel – it seems to have escaped the judge that Hamas is committed not just to fight Israeli soldiers; it is a terrorist organisation hellbent on the destruction of the state of Israel. The terms of reference he accepted validate the torment of Israeli civilians. Hamas launched 7,000 rockets – every one intended to kill as many people as possible – then contemptuously dismissed repeated warnings from Israel to stop or face the consequences.
The rockets were war crimes and ought to have been universally condemned as such. While new rockets hit Israel over many months there was no rush by the world's moralisers – including Britain – to censure Hamas, no urgency as there was in "world opinion" when Israel finally responded. Then Israel was immediately accused of a "disproportionate" response without anyone
thinking: "What is a 'proportionate' attack against an enemy dedicated to exterminating your people?" A dedication to exterminating all of his?
Israel risked its own forces by imposing unprecedented restraint. In testimony volunteered to the human rights council (and ignored), Colonel Richard Kemp, a British commander in Bosnia and Afghanistan, stated: "The Israeli Defence Forces did more to safeguard the rights of civilians in a combat zone than any other army in the history of warfare." The "collateral damage" was less than the Nato allies inflicted on the Bosnians in the conflict with Yugoslavia.
No doubt there were blunders. A defensive war is still a war with all its suffering and destruction. But Hamas compounded its original war crime with another. It held its own people hostage. It used them as human shields. It regarded every (accidental) death as another bullet in the propaganda war.
The Goldstone report won the gold standard of moral equivalence between the killer and the victim. Now Britain wins the silver. Who's cheering?
"Human Rights Watch's Just Deserts on Human Rights Failures," by Jillian
Bandes, Townhall, October 21, 2009 ---
Aesop: We hang the petty thieves and appoint the great ones to public office.
Bankers bet with their bank's capital, not
their own. If the bet goes right, they get a huge bonus; if it
misfires, that's the shareholders' problem.
Sebastian Mallaby. Council on Foreign Relations, as quoted by Avital Louria Hahn, "Missing: How Poor Risk-Management Techniques Contributed to the Subprime Mess," CFO Magazine, March 2008, Page 53 --- http://www.cfo.com/article.cfm/10755469/c_10788146?f=magazine_featured
Now that the Fed is going to bail out these crooks with taxpayer funds makes it all the worse.
The bourgeoisie can
be termed as any group of people who are discontented with what they
have, but satisfied with what they are
That some bankers have ended up in prison is not a
matter of scandal, but what is outrageous is the fact that all the others are
Honoré de Balzac
In the Opinion of Economics Professor Meltzer from Carnegie-Mellon University
"Preventing the Next Financial Crisis: Don't be fooled by the bond market. Banks are holding prices down because they can buy Treasurys with free money from the Fed," The Wall Street Journal, by Alan H. Meltzer, October 22, 2009 ---
The United States is headed toward a new financial crisis. History gives many examples of countries with high actual and expected money growth, unsustainable budget deficits, and a currency expected to depreciate. Unless these countries made massive policy changes, they ended in crisis. We will escape only if we act forcefully and soon.
As long ago as the 1960s, then French President Charles de Gaulle complained that the U.S. had the "exorbitant privilege" of financing its budget deficit by issuing more dollars. Massive purchases of dollar debt by foreigners can of course delay the crisis, but today most countries have their own deficits to finance. It is unwise to expect them, mainly China, to continue financing up to half of ours for the next 10 or more years. Our current and projected deficits are too large relative to current and prospective world saving to rely on that outcome.
Worse, banks' idle reserves that are available for lending reached $1 trillion last week. Federal Reserve Chairman Ben Bernanke said repeatedly in the past that excess reserves would run down when banks and other financial companies repaid their heavy short-term borrowing to the Fed. The borrowing has been repaid but idle reserves have increased. Once banks begin to expand loans or finance even more of the massive deficits, money growth will rise rapidly and the dollar will sink to new lows. Do we have to wait for a crisis before we replace promises with effective restraint?
Many market participants reassure themselves that inflation won't come by noting the decline in yields on longer-term Treasury bonds and the spread between nominal Treasury yields and index-linked TIPS that protect against inflation. They measure expectations of higher inflation by the difference between these two rates, and imply long-term investors aren't demanding higher interest rates to protect themselves against it. But those traditional inflation-warning indicators are distorted because the Fed lends money at about a zero rate and the banks buy Treasury securities, reducing their yield and thus the size of the inflation premium.
Further, the Fed is buying massive amounts of mortgages to depress and distort the mortgage rate. This way of subsidizing bank profits and increasing their capital bails out these institutions but avoids going to Congress for more money to do so. It follows the Fed's usual practice of protecting big banks instead of the public.
The administration admits to about $1 trillion budget deficits per year, on average, for the next 10 years. That's clearly an underestimate, because it counts on the projected $200 billion to $300 billion of projected reductions in Medicare spending that will not be realized. And who can believe that the projected increase in state spending for Medicaid can be paid by the states, or that payments to doctors will be reduced by about 25%?
While Chinese government purchases of our debt may delay a dollar and debt crisis, they also delay any effective program to reduce the size of that crisis. It is far better to begin containing the problem before we blow a hole in the dollar and start another downturn.
A weak economy is a poor time to reduce current government spending or raise tax rates, but we don't require draconian immediate changes. We do need a fully specified, multi-year program to restore fiscal probity by reducing spending, and a budget rule that limits the size and frequency of deficits. The plan should be announced in a rousing speech by the president. The emphasis should be on reducing government spending.
The Obama administration chooses to blame outsize deficits on its predecessor. That's a mistake, because it hides a structural flaw: We no longer have any way of imposing fiscal restraint and financial prudence. Federal, state and local governments understate future spending and run budget deficits in good times and bad. Budgets do not report these future obligations.
Except for a few years in the 1990s, both parties have been at fault for decades, and the Obama administration is one of the worst offenders. Its $780 billion stimulus bill, enacted earlier this year, has been wasteful and ineffective. The Council of Economic Advisers was so pressed to justify the spending spree that it shamefully invented a number called "jobs saved" that has never been seen before, has no agreed meaning, and no academic standing.
One reason for the great inflation of the 1970s was that the Federal Reserve gave primacy to reducing unemployment. But attempts to tame inflation later didn't last, and the result was a decade of high and rising unemployment and prices. It did not end until the public accepted temporarily higher unemployment—more than 10.5% in the fall of 1982—to reduce inflation.
Another error of the 1970s was the assumption there was a necessary trade-off along a stable Phillips Curve between unemployment and inflation—in other words, that more inflation was supposed to lower unemployment. Instead, both rose. The Fed under Paul Volcker stopped making those errors, and inflation fell permanently for the first time since the 1950s.
Both errors are back. The Fed and most others do not see inflation in the near term. Neither do I. High inflation is unlikely in 2010. That's why a program beginning now should start to lower excess reserves gradually so that the Fed will not have to make its usual big shift from excessive ease to severe contraction that causes a major downturn in the economy.
A steady, committed policy to reduce future inflation and lower future budget deficits will avoid the crisis that current policies will surely bring. Low inflation and fiscal prudence is the right way to strengthen the dollar and increase economic well being.
Dr. Meltzer is professor of political economy at Carnegie Mellon University and the author of the multi-volume "A History of the Federal Reserve" (University of Chicago, 2004 and 2010).
Bob Jensen's threads on the economic crisis are at
Bob Jensen's Rotten to the Core Threads ---
The pending collapse of the United States
"Is stock market still a chump's game? Small
investors won't have a fair shot until a presumption of integrity is restored.
It's not clear that Obama's proposed remedy will resolve the conflicts," by
Eliot Spitzer, Microsoft News, August 19, 2009 ---
Link forwarded by Steve Markoff [smarkoff@KIMSTARR.ORG]
One of America's great accomplishments in the last half-century was the so-called "democratization" of the financial markets.
No longer just for the upper crust, investing became a way for the burgeoning middle class to accumulate wealth. Mutual funds exploded in size and number, 401k plans made savings and investing easy, and the excitement of participating in the growth of our economy gripped an ever larger percentage of the population.
Despite a backdrop of doubters -- those who knowingly asserted that outperforming the average was an impossibility for the small investor -- there was a growing consensus that the rules were sufficient to protect the mom-and-pop investor from the sharks that swam in the water.
That sense of fair play in the market has been virtually destroyed by the bubble burstings and market drops of the past few years.
Recent rebounds notwithstanding, most people now are asking whether the system is fundamentally rigged. It's not just that they have an understandable aversion to losing their life savings when the market crashes; it's that each of the scandals and crises has a common pattern: The small investor was taken advantage of by the piranhas that hide in the rapidly moving currents.And underlying this pattern is a simple theme: conflicts of interest that violated the duty the market players had to their supposed clients.
It is no wonder that cynicism and anger have replaced what had been the joy of participation in the capital markets.
Take a quick run through a few of the scandals:
- Analysts at major investment banks promote stocks they know to be worthless, misleading the investors who rely on their advice yet helping their investment-banking colleagues generate fees and woo clients.
- Ratings agencies slap AAA ratings on debt they know to be dicey in order to appease the issuers -- who happen to pay the fees of the agencies, violating the rating agency's duty to provide the marketplace with honest evaluations.
- Executives receive outsized and grotesque compensation packages -- the result of the perverted recommendations of compensation consultants whose other business depends upon the goodwill of the very CEOs whose pay they are opining upon, thus violating the consultants' duty to the shareholders of the companies for whom they are supposedly working.
- Mutual funds charge exorbitant fees that investors have to absorb -- fees that dramatically reduce any possibility of outperforming the market and that are set by captive boards of captive management companies, not one of which has been replaced for inadequate performance, violating their duty to guard the interests of the fund investors for whom they supposedly work.
- "High-speed trading" produces not only the reality of a two-tiered market but also the probability of front-running -- that is, illegally trading on information not yet widely known -- that eats into the possible profits of the retail clients supposedly being served by these very same market players, violating the obligation of the banks to get their clients "best execution" without stepping between their customers and the best available price.
- is bailed out, costing taxpayers tens of billions of dollars, even though (as we later learned) the big guys knew that AIG was going down and were able to hedge and cover their positions. Smaller investors are left holding the stock, and all of us are left picking up the tab.
The unifying theme is apparent: Access to information and advice, the very lifeblood of a level playing field, is not where it needs to be. The small investor still doesn't have a fair shot.
While there have been case-specific remedies, the aggregate effect of all the scandals is still to deny the market the most essential of ingredients: the presumption of integrity.
The issue confronting those who wish to solve this problem is that there really is no simple fix.
Bob Jensen's threads on the economic crisis
"JPMorgan (read that Chase Bank) faces SEC lawsuit," by Aline van Duyn and Francesco Guerrera, Financial Times, May 8, 2009 ---
JPMorgan Chase may be sued by US regulators for violating securities laws and market rules related to the sale of bonds and interest-rate swaps to Jefferson County, Alabama.
The potential Securities and Exchange Commission action is the latest twist in a complex debt financing saga which has already led to charges against Jefferson County officials and which has left the municipality struggling to avoid default on over $3bn of debt, much of it taken on to improve its sewage system.
JPMorgan said in a regulatory filing, made late on Thursday just as the results of bank stress tests were being released, that it had been told about the SEC action on April 21. It said it “has been engaged in discussions with the SEC staff in an attempt to resolve the matter prior to litigation”. The bank had no further comment on Friday.
Jefferson County is one of the most indebted municipalities in the US due to its expensive overhaul of its sewage system. JPMorgan is one of the lenders which has repeatedly extended the deadline on payments due by Jefferson County on its debt and derivatives.
A law is currently being considered that would create a new tax which would provide revenues to pay the sewer debt. If Jefferson County defaults, it would be the biggest by a US municipality, dwarfing the problems faced by California’s Orange County in the 1990s.
The mayor of Birmingham, Alabama, and two of his friends were last year charged by US regulators in connection with an undisclosed payment scheme related to municipal bond and swap deals.
The SEC alleged that Larry Langford, the mayor, received more than $156,000 in cash and benefits from a broker hired to arrange bond offerings and swap agreements on behalf of Jefferson County, where Birmingham is located.
Although the details of the SEC investigation are not known, it is likely to be related to the payment scheme through which banks like JPMorgan paid fees to local brokers at the request of Jefferson County.
The credit crisis has brought to light numerous problems in the municipal bond markets. Many borrowers relied on bond insurance to sell their deals, and the collapse in the credit ratings of bond insurers has made it difficult for many to raise funds or to do so at low interest rates.
The Greatest Swindle in the History of the World
"The Greatest Swindle Ever Sold," by Andy Kroll, The Nation, May 26, 2009 ---
The legislation's guidelines for crafting the rescue plan were clear: the TARP should protect home values and consumer savings, help citizens keep their homes and create jobs. Above all, with the government poised to invest hundreds of billions of taxpayer dollars in various financial institutions, the legislation urged the bailout's architects to maximize returns to the American people.
That $700 billion bailout has since grown into a more than $12 trillion commitment by the US government and the Federal Reserve. About $1.1 trillion of that is taxpayer money--the TARP money and an additional $400 billion rescue of mortgage companies Fannie Mae and Freddie Mac. The TARP now includes twelve separate programs, and recipients range from megabanks like Citigroup and JPMorgan Chase to automakers Chrysler and General Motors.
Seven months in, the bailout's impact is unclear. The Treasury Department has used the recent "stress test" results it applied to nineteen of the nation's largest banks to suggest that the worst might be over; yet the International Monetary Fund, as well as economists like New York University professor and economist Nouriel Roubini and New York Times columnist Paul Krugman predict greater losses in US markets, rising unemployment and generally tougher economic times ahead.
What cannot be disputed, however, is the financial bailout's biggest loser: the American taxpayer. The US government, led by the Treasury Department, has done little, if anything, to maximize returns on its trillion-dollar, taxpayer-funded investment. So far, the bailout has favored rescued financial institutions by subsidizing their losses to the tune of $356 billion, shying away from much-needed management changes and--with the exception of the automakers--letting companies take taxpayer money without a coherent plan for how they might return to viability.
The bailout's perks have been no less favorable for private investors who are now picking over the economy's still-smoking rubble at the taxpayers' expense. The newer bailout programs rolled out by Treasury Secretary Timothy Geithner give private equity firms, hedge funds and other private investors significant leverage to buy "toxic" or distressed assets, while leaving taxpayers stuck with the lion's share of the risk and potential losses.
Given the lack of transparency and accountability, don't expect taxpayers to be able to object too much. After all, remarkably little is known about how TARP recipients have used the government aid received. Nonetheless, recent government reports, Congressional testimony and commentaries offer those patient enough to pore over hundreds of pages of material glimpses of just how Wall Street friendly the bailout actually is. Here, then, based on the most definitive data and analyses available, are six of the most blatant and alarming ways taxpayers have been scammed by the government's $1.1-trillion, publicly funded bailout.
1. By overpaying for its TARP investments, the Treasury Department provided bailout recipients with generous subsidies at the taxpayer's expense.
When the Treasury Department ditched its initial plan to buy up "toxic" assets and instead invest directly in financial institutions, then-Treasury Secretary Henry Paulson Jr. assured Americans that they'd get a fair deal. "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything," he said in October 2008.
Yet the Congressional Oversight Panel (COP), a five-person group tasked with ensuring that the Treasury Department acts in the public's best interest, concluded in its monthly report for February that the department had significantly overpaid by tens of billions of dollars for its investments. For the ten largest TARP investments made in 2008, totaling $184.2 billion, Treasury received on average only $66 worth of assets for every $100 invested. Based on that shortfall, the panel calculated that Treasury had received only $176 billion in assets for its $254 billion investment, leaving a $78 billion hole in taxpayer pockets.
Not all investors subsidized the struggling banks so heavily while investing in them. The COP report notes that private investors received much closer to fair market value in investments made at the time of the early TARP transactions. When, for instance, Berkshire Hathaway invested $5 billion in Goldman Sachs in September, the Omaha-based company received securities worth $110 for each $100 invested. And when Mitsubishi invested in Morgan Stanley that same month, it received securities worth $91 for every $100 invested.
As of May 15, according to the Ethisphere TARP Index, which tracks the government's bailout investments, its various investments had depreciated in value by almost $147.7 billion. In other words, TARP's losses come out to almost $1,300 per American taxpaying household.
2. As the government has no real oversight over bailout funds, taxpayers remain in the dark about how their money has been used and if it has made any difference.
While the Treasury Department can make TARP recipients report on just how they spend their government bailout funds, it has chosen not to do so. As a result, it's unclear whether institutions receiving such funds are using that money to increase lending--which would, in turn, boost the economy--or merely to fill in holes in their balance sheets.
Neil M. Barofsky, the special inspector general for TARP, summed the situation up this way in his office's April quarterly report to Congress: "The American people have a right to know how their tax dollars are being used, particularly as billions of dollars are going to institutions for which banking is certainly not part of the institution's core business and may be little more than a way to gain access to the low-cost capital provided under TARP."
This lack of transparency makes the bailout process highly susceptible to fraud and corruption. Barofsky's report stated that twenty separate criminal investigations were already underway involving corporate fraud, insider trading and public corruption. He also told the Financial Times that his office was investigating whether banks manipulated their books to secure bailout funds. "I hope we don't find a single bank that's cooked its books to try to get money, but I don't think that's going to be the case."
Economist Dean Baker, co-director of the Center for Economic and Policy Research in Washington, suggested to TomDispatch in an interview that the opaque and complicated nature of the bailout may not be entirely unintentional, given the difficulties it raises for anyone wanting to follow the trail of taxpayer dollars from the government to the banks. "[Government officials] see this all as a Three Card Monte, moving everything around really quickly so the public won't understand that this really is an elaborate way to subsidize the banks," Baker says, adding that the public "won't realize we gave money away to some of the richest people."
3. The bailout's newer programs heavily favor the private sector, giving investors an opportunity to earn lucrative profits and leaving taxpayers with most of the risk.
Under Treasury Secretary Geithner, the Treasury Department has greatly expanded the financial bailout to troubling new programs like the Public-Private Investment Program (PPIP) and the Term Asset-Backed-Securities Loan Facility (TALF). The PPIP, for example, encourages private investors to buy "toxic" or risky assets on the books of struggling banks. Doing so, we're told, will get banks lending again because the burdensome assets won't weigh them down. Unfortunately, the incentives the Treasury Department is offering to get private investors to participate are so generous that the government--and, by extension, American taxpayers--are left with all the downside.
Joseph Stiglitz, the Nobel-prize winning economist, described the PPIP program in a New York Times op-ed this way:
Consider an asset that has a 50-50 chance of being worth either zero or $200 in a year's time. The average "value" of the asset is $100. Ignoring interest, this is what the asset would sell for in a competitive market. It is what the asset is 'worth.' Under the plan by Treasury Secretary Timothy Geithner, the government would provide about 92 percent of the money to buy the asset but would stand to receive only 50 percent of any gains, and would absorb almost all of the losses. Some partnership!
Assume that one of the public-private partnerships the Treasury has promised to create is willing to pay $150 for the asset. That's 50 percent more than its true value, and the bank is more than happy to sell. So the private partner puts up $12, and the government supplies the rest--$12 in "equity" plus $126 in the form of a guaranteed loan.
If, in a year's time, it turns out that the true value of the asset is zero, the private partner loses the $12, and the government loses $138. If the true value is $200, the government and the private partner split the $74 that's left over after paying back the $126 loan. In that rosy scenario, the private partner more than triples his $12 investment. But the taxpayer, having risked $138, gains a mere $37."
Worse still, the PPIP can be easily manipulated for private gain. As economist Jeffrey Sachs has described it, a bank with worthless toxic assets on its books could actually set up its own public-private fund to bid on those assets. Since no true bidder would pay for a worthless asset, the bank's public-private fund would win the bid, essentially using government money for the purchase. All the public-private fund would then have to do is quietly declare bankruptcy and disappear, leaving the bank to make off with the government money it received. With the PPIP deals set to begin in the coming months, time will tell whether private investors actually take advantage of the program's flaws in this fashion.
The Treasury Department's TALF program offers equally enticing possibilities for potential bailout profiteers, providing investors with a chance to double, triple or even quadruple their investments. And like the PPIP, if the deal goes bad, taxpayers absorb most of the losses. "It beats any financing that the private sector could ever come up with," a Wall Street trader commented in a recent Fortune magazine story. "I almost want to say it is irresponsible."
4. The government has no coherent plan for returning failing financial institutions to profitability and maximizing returns on taxpayers' investments.
Compare the treatment of the auto industry and the financial sector, and a troubling double standard emerges. As a condition for taking bailout aid, the government required Chrysler and General Motors to present detailed plans on how the companies would return to profitability. Yet the Treasury Department attached minimal conditions to the billions injected into the largest bailed-out financial institutions. Moreover, neither Geithner nor Lawrence Summers, one of President Barack Obama's top economic advisors, nor the president himself has articulated any substantive plan or vision for how the bailout will help these institutions recover and, hopefully, maximize taxpayers' investment returns.
The Congressional Oversight Panel highlighted the absence of such a comprehensive plan in its January report. Three months into the bailout, the Treasury Department "has not yet explained its strategy," the report stated. "Treasury has identified its goals and announced its programs, but it has not yet explained how the programs chosen constitute a coherent plan to achieve those goals."
Today, the department's endgame for the bailout still remains vague. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, wrote in the Financial Times in May that the government's response to the financial meltdown has been "ad hoc, resulting in inequitable outcomes among firms, creditors, and investors." Rather than perpetually prop up banks with endless taxpayer funds, Hoenig suggests, the government should allow banks to fail. Only then, he believes, can crippled financial institutions and systems be fixed. "Because we still have far to go in this crisis, there remains time to define a clear process for resolving large institutional failure. Without one, the consequences will involve a series of short-term events and far more uncertainty for the global economy in the long run."
The healthier and more profitable bailout recipients are once financial markets rebound, the more taxpayers will earn on their investments. Without a plan, however, banks may limp back to viability while taxpayers lose their investments or even absorb further losses.
5. The bailout's focus on Wall Street mega-banks ignores smaller banks serving millions of American taxpayers that face an equally uncertain future.
The government may not have a long-term strategy for its trillion-dollar bailout, but its guiding principle, however misguided, is clear: what's good for Wall Street will be best for the rest of the country.
On the day the mega-bank stress tests were officially released, another set of stress-test results came out to much less fanfare. In its quarterly report on the health of individual banks and the banking industry as a whole, Institutional Risk Analytics (IRA), a respected financial services organization, found that the stress levels among more than 7,500 FDIC-reporting banks nationwide had risen dramatically. For 1,575 of the banks, net incomes had turned negative due to decreased lending and less risk-taking.
The conclusion IRA drew was telling: "Our overall observation is that US policy makers may very well have been distracted by focusing on 19 large stress test banks designed to save Wall Street and the world's central bank bondholders, this while a trend is emerging of a going concern viability crash taking shape under the radar." The report concluded with a question: "Has the time come to shift the policy focus away from the things that we love, namely big zombie banks, to tackle things that are truly hurting us?"
6. The bailout encourages the very behaviors that created the economic crisis in the first place instead of overhauling our broken financial system and helping the individuals most affected by the crisis.
As Joseph Stiglitz explained in the New York Times, one major cause of the economic crisis was bank overleveraging. "Using relatively little capital of their own," he wrote, banks "borrowed heavily to buy extremely risky real estate assets. In the process, they used overly complex instruments like collateralized debt obligations." Financial institutions engaged in overleveraging in pursuit of the lucrative profits such deals promised--even if those profits came with staggering levels of risk.
Sound familiar? It should, because in the PPIP and TALF bailout programs the Treasury Department has essentially replicated the very over-leveraged, risky, complex system that got us into this mess in the first place: in other words, the government hopes to repair our financial system by using the flawed practices that caused this crisis.
Then there are the institutions deemed "too big to fail." These financial giants--among them AIG, Citigroup and Bank of America-- have been kept afloat by billions of dollars in bottomless bailout aid. Yet reinforcing the notion that any institution is "too big to fail" is dangerous to the economy. When a company like AIG grows so large that it becomes "too big to fail," the risk it carries is systemic, meaning failure could drag down the entire economy. The government should force "too big to fail" institutions to slim down to a safer, more modest size; instead, the Treasury Department continues to subsidize these financial giants, reinforcing their place in our economy.
Of even greater concern is the message the bailout sends to banks and lenders--namely, that the risky investments that crippled the economy are fair game in the future. After all, if banks fail and teeter at the edge of collapse, the government promises to be there with a taxpayer-funded, potentially profitable safety net.
The handling of the bailout makes at least one thing clear, however. It's not your health that the government is focused on, it's theirs-- the very banks and lenders whose convoluted financial systems provided the underpinnings for staggering salaries and bonuses, while bringing our economy to the brink of another Great Depression.
Bob Jensen's threads how your money was put to word (fraudulently) to pay for the mistakes of the so-called professionals of finance --- http://www.trinity.edu/rjensen/2008Bailout.htm#Bailout
Bob Jensen's threads on why the infamous "Bailout" won't work --- http://www.trinity.edu/rjensen/2008Bailout.htm#BailoutStupidity
Bob Jensen's "Rotten to the Core" threads --- http://www.trinity.edu/rjensen/FraudRotten.htm
Anti-Capitalism Trumps God:
The Staunch Atheism of Marx No Longer Matters as the Vatican Sings His Praises
"Marx gets Vatican thumbs up," The Hindu Times, October 22, 2009 --- http://beta.thehindu.com/news/international/article37253.ece#
Amid the worst recession in generations, Karl Marx, who famously described religion as “the opium of the people”, got a thumbs up from the Vatican overturning a century of Catholic hostility to his creed.
Marx, who predicted that capitalism would be destroyed by its internal contradictions, has joined Galileo, Charles Darwin and Oscar Wilde on a growing list of historical figures to have undergone an unlikely reappraisal by the Roman Catholic Church, The Times newspaper said on Thursday.
The British daily, quoting the Vatican newspaper L’Osservatore Romano, said Marx’s early critiques of capitalism had highlighted the “social alienation” felt by the “large part of humanity” that remained excluded from economic and political decision-making.
Amid signs of recovery in global financial markets, Christian leaders have flayed the capitalist system for displaying a lack of moral values, arguing that ethical debates needs to be given greater prominence.
Georg Sans, a German-born professor of the history of contemporary philosophy at the pontifical Gregorian University, argues that Marx’s work remained especially relevant today as mankind was seeking “a new harmony” between its needs and the natural environment.
The report quoted Prof. Sans as saying that Marx’s theories may help to explain the enduring issue of income inequality within capitalist societies.
The Vatican, in a reappraisal of Galileo, last year erected a statue of the great astronomer who was put on trial in 1633 for his observation that the Earth moved around the Sun.
In February a leading Roman church official declared Darwin’s theory of evolution compatible with the Christian faith, and in July L’Osservatore praised Oscar Wilde, the gay playwright, as “a man who behind a mask of amorality asked himself what was just and what was mistaken“.
Two years ago Benedict XVI singled out Marxism as one of the great scourges of the modern age. The Pope’s latest encyclical, Charity in Truth, argued that global capitalism has lost its way and that Church teachings can help to restore economic health by focusing on justice for the weak and closer regulation of the market, the report in the London daily said.
Prof. Sans’s article was first published in La Civiltattolica, a Jesuit paper, which is vetted in advance by the Vatican Secretariat of State. The decision to republish it in the Vatican newspaper gives the unlikely reappraisal of Marx by the Roman Catholic Church added papal endorsement.
Bob Jensen's threads on the economic crises are at
Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm
Return to the October 5, 2009 edition of Tidbits ---
Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm
Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm
Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/