Opinion-Columns.com

BAILING OUT WOODEN ARROWS WITH WOODEN NICKELS

According to the gurus over at Wikipedia, “A wooden nickel, in the United States, is wood token coin, which are usually issued by a merchant or bank as a promotion, sometimes redeemable for a specific item such as a drink. Wooden nickels were most commonly issued in the US in the 1930s, after the Great Depression.”

Which is fine (as far as it goes), although in the sense of the current bailout of fraudulent and specious investment vehicles, it seems the wooden nickel is upon us almost before the fact. We have been snookered out of our underwear before the game began.

Investment ‘vehicles’ are well named, invented as they are to drive off with your money. In case you missed the point of the failure in the House of Representatives to pass Hank Paulson’s giveaway to his former partners in crime over at Goldman Sachs, it was to provide political cover for the coming election, while allowing the Senate to unashamedly lard the legislation.

Seldom does the Senate step in ahead of the House, but paid-off Senators were well paid and only a third of them are standing for reelection. Thus are leaders made. Such is the power of a corrupt two-party system that badly needs a viable third party to disrupt partisanship where stalemate and power-plays have all but replaced representative government.

Hope for a future lies in meaningful coalition governance. What we have allowed in Washington simply will not suffice. Consider what Nancy Pelosi (rhymes with Bela Lugosi) has given us for this month’s monster under the bed;

(Rescue Sweetened With Tax Incentives, by Cecilia Kang, Washington Post)

The House of Representatives yesterday approved $107 billion in tax breaks for businesses and consumers as part of a sweeping financial rescue package designed to stave the credit crisis.

Saddled onto the 450-page bill is a provision to shield as many as 25 million Americans from the alternative minimum tax and $18 billion in tax credit extensions for wind and solar energy production.

Yet to appease lawmakers and make the bill more attractive, several more prosaic tax provisions are included, according to a government budgetary watchdog group.

Saddled. Well chosen metaphor. Indeed, the nation’s economic horse very nearly sank to its knees under the load. Any vague hope that “the best Congress money can buy” would seek anything other than its own unending grip on Democratic dominance (under an Obama administration) sank as well.

Pelosi, who has an absolute majority in the House, said, “We were dealt a bad hand; we made the most of it.” This witless Speaker of the House has made nothing but excuses for the deplorable job she has done since the 2006 mid-term election gave her what she wanted and cannot find a way to use—control.

In the week that was, last week’s $700 billion refusal became this week’s acceptance--larded with an additional $150 billion in earmarks and other buried treasures. Republicans have been watching all year, like cats at a mouse hole, for a bill that could not be refused to which they could attach pet legislation.

They got it this week on a platter, thanks to the Pelosi-Reid dumbo combo. Less able 'leadership' has seldom haunted the halls of Congress. Republicans are not always civic-minded, by by god they are able and showed it by their expansive mood.

(Time Magazine) Paulson's original request was barely three pages long, whereas the bill passed today runs well over 400 pages.

Pork, of course, is not exactly speech-writing, but it does take language and language takes pages. Fortunately, that language was at the ready, loaded, primed and parsed, eager to be fired so everyone could go home and leave the mess to Obama or McCain. With change like this, who really cares who occupies the White House?

(Washington Post again) NASCAR will be able to write off racetrack costs over 7 years and manufacturers of wooden arrows for children will be shielded from an excise tax applied to other shafts. The NASCAR provision was introduced by Rep. Mike Thompson (D-Calif.), who voted in favor of the bill.

Nice job, Mike. That certainly bails out the auto-racing industry, which grosses more than any other organized sport and is awash in profits. A friend of mine, just today, sent me a pretty good idea--that those in Congress be required to wear NASCAR-like uniforms, so we could readily see their sponsorship. I don't know the attribution, it's not original with him, but it's pretty accurate and (would be) funny if it didn't cleave so close to the bone.

The bailout package also provides tax rebates on rum imported from Puerto Rico and the Virgin Islands and tax credits for economic development on the island of American Samoa.

"In the midst of a debate over a historic bailout package, Senate pulled out an old bag of tricks: piling billions of dollars of unrelated legislative provisions into the package and daring the House to reject the bailout again," said Ryan Alexander, president of Taxpayers for Common Sense. "Many of these provisions are tax extenders that have been waiting in the wings for months, hoping for a legislative train to leave the station."

The bill passed the House yesterday 263 to 171. It was a last-ditch effort of sorts for proponents of renewable energy to get tax provisions extended before they were set to expire by the end of the year. Those extensions, estimated at $18 billion, had repeatedly failed to pass legislative muster in both the Senate and House over the past year.

The tax breaks in the legislation total $149 billion over 10 years, and are offset by $42 billion in tax increases. The hikes include a new levy on hedge-fund managers who avoid taxes by transferring income offshore, a provision that would raise $25 billion over 10 years.

It was an absolutely bi-partisan effort. Everyone got their hand in the till, regardless of race, creed, gender or political affiliation. No cause was too large ($150 billion in tax breaks) or too small (39 cents on wooden arrows).

(Bloomberg) Senators attached a provision repealing a 39-cent excise tax on wooden arrows designed for children to an historic $700 billion financial-markets rescue that passed tonight by a vote of 74-25. The provision, originally proposed by Oregon senators Ron Wyden [D] and Gordon Smith [R], will save manufacturers such as Rose City Archery in Myrtle Point, Oregon, about $200,000 a year.

Senators Widen and Smith can’t get any more bi-partisan than that.

(Wikipedia) It was during this (depression era) decade that some banks and chambers of commerce in the United States issued wooden nickels with expiration dates to mitigate difficulties faced by merchants in making change at times of instability.

Wooden arrows—wooden nickels—guess we’ve now seen the closing of the circle. We can hope, but not be assured, that the circle is not a noose in disguise.

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Media comment:

• Houston Chronicle-Equal treatment
• Boston Globe-Benevolence amid an orgy
• National Post-Canada-Bailout bill more about shafts than building confidence
• Guardian-UK-Now Wall Street may shun $700bn bail-out
• The Australian-Australia-Paulson bailout won't impress sceptics

A CHEAP SHOT AT CRAVING CHEAP CREDIT

Don’t Talk to Me About Craving Cheap Credit to Spend on Imported Goods.

It’s our cravings that are at fault, the fraudsters on Wall Street bray. Consumers demanded cheap credit and we just didn’t know what to do except provide it—even at the personal cost of having to take those hundred million dollar salaries. They made us do it, with their lifestyle demands. Wal-Mart wasn’t a scheme to wreck Main Streets across America, centralize all the purchasing in the Walton family private coffers—it was the cry of manic consumer demand for Chinese TVs and toxic toys for the kids.

We had a gun at our head to create credit default swaps out of the whole cloth that used to be collateralized lending. Remember when you went to your bank for a loan? In those creaky old horse-and-buggy days, the banker wanted some reasonable idea you were going to pay him back. He cared about such things, because it was your (and his) neighbors’ money he was lending. Your reputation might count for something back then, because he knew your reputation. But every month at the loan committee meeting, you were smiled or frowned upon.

I never craved cheap credit, worthless goods or seven credit cards. Credit cards weren’t even in common use until Visa and MasterCard rolled out in the sixties. Oh yeah, you might have carried a Texaco or Standard Oil card for buying gas, maybe had a department store charge account, but the swiping of card-readers came with the usury-friendly 18% interest rates for unpaid balances.

Texaco, Standard Oil or the department store merely got angry with you, cancelled the card and hounded you into court. Visa, MasterCard and the other big guys made a profit out of a great new business opportunity. Why make 5% warehousing, transporting and selling a sofa, when you can make three times that loaning out the money and the Congress of the United States will enable the process.

You can’t get a more prominent enabler than that.

Everyone jumped on the band-wagon of marketing and consuming because they had made the actual manufacture of goods a pauper’s business. No longer able to invent and build, the world’s most successful nation of inventors and builders turned to selling each other cheap crap and calling it the new economy. In a scant forty years, the core values of a nation were cored like apples.

So, the race was on and in four decades that race essentially boarded up the Main Streets of small towns, outsourced our jobs to the cheapest offshore producer, transformed us from the world’s largest lender to the world’s biggest debtor, put college educations out of common reach, changed the relationship between worker productivity and reward, busted the unions, set off an advertising based feeding-frenzy of consumption and—now that it has busted the bank—hands us both the bill and the blame.

Unlike your friendly neighborhood bank of forty years ago, the new-age swindlers who arranged a home mortgage or line of credit for the un-creditworthy, needed a place to offload the offal. Bingo, derivatives were invented—not regulated, but invented—the not regulated part was just another low and outside curve-ball lobbed to a well-fed and well-paid-off Congress.

Derivatives were a hedge-fund invention, a way to whistle up large fees and churn the money pump, essentially hiding rotten apples at the bottom of otherwise shining and radiant barrels of produce. The language in these shell-game contracts was so arcane as to be un-understandable to those who took their cut, closed their eyes, held their nose and shoveled them on down the line.

Rating agencies knew of the stink and approved them AAA in spite of it, for (what else) money. Mortgage bankers, investment bankers, rating agencies and insurers—essentially all the guys looking for bailouts now—knew and collaborated and stirred the conspiracy-pot for a classic RICO indictment.

Instead, Henry Paulson is Santa Claus to save the financial markets.

(TARP—Your Money at Work) those unregulated derivative contracts that allow investors to bet on a debt issuer’s financial prospects, loomed so big on balance sheets that they now drive every bailout decision.

. . . “The last eight years have been about permitting derivatives to explode, knowing they were unregulated,” said Eric R. Dinallo, New York’s superintendent of insurance. “It’s about what the government chose not to regulate, measured in dollars. And that is what shook the world.”

Don’t bother to save the co-conspirators, Henry. Rhett Butler nailed it when he looked deep into Scarlett’s eyes and said, “Frankly, my dear, I don’t give a damn.” As a taxpayer, I’m still reeling from the $11 trillion we’ve accumulated in national debt since Ronnie Reagan (the communicator) deregulated me out of my underwear.

Now you guys have come after the underwear.

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Media comment:

• Bloomberg-Treasury Seeks Asset-Buying Power Unchecked by Courts
• Guardian-UK-US Treasury takes on the house in high-stakes game
• Wall Street Journal-Paulson Presses Congress to Act On $700 Billion Bailout Plan
• Reuters-Treasury plan lacks taxpayer protection: Sen.Schumer
• Boston Globe-Can America afford it?

BORDER SECURITY--ACCEPTING THE FABRIC OF FEAR

We are not a fearful nation, nor (if we reject Michael Chertoff’s continuing effort to scare us to death) will we become one. That said, we are certainly and willingly Balkanizing ourselves, dividing a previously United States into a rag-tag and very unAmerican obsession with what are essentially ghosts under the bed.

Derby Line, Vermont is an unfortunate current example.

Homeland Security Comes to Vermont, Changes in Border Town Unsettle Some Residents, blares a headline from the Washington Post;

DERBY LINE, Vt. -- The changes started coming slowly to this small town where the U.S. border with Canada runs across sleepy streets, through houses and families, and smack down the middle of the shared local library.

First was the white, painted lettering on the pavement on three little side streets -- "Canada" on one side, "U.S.A." on the other. Then came the white pylons denoting which side of the border was which. After that, signboards were erected on some streets, ordering drivers to turn back and use an officially designated entry point.

And along with the signposts came an influx of American Border Patrol agents, cruising through the town in their green-and-white sport-utility vehicles with sirens, chasing down cars and mopeds that ignored the posted warnings.

‘ The changes started coming slowly to this small town’ sounds like a badly written voice-over, opener to a Grade B movie. Fade to screaming sirens and white SUVs chasing down—what?—international criminals? Not hardly. A kid on a dirt-bike, rolling through the wooded trail he’s ridden since Dad finally gave in to his pleas and let him buy a used Honda CRF 150.

“Don’t shoot, for God’s sake, that’s my kid!”

Derby Line has peacefully coexisted somehow with its American-Canadian divisions and friendships since 1791. The War of 1812 with Britain caused hardly a ripple of dissatisfaction among American and Canadian neighbors who shared church, the watching of kids and celebration of inter-marriages. The U.S. invaded Canada in that ill-begotten war, but apparently not at Derby Line. Washington, D.C. burned (partially) to the ground, but the New England area kept up a brisk trade with Canada throughout.

According to Wikipedia, the little village shared with Stanstead in Quebec is best known for the Haskell Free Library and Opera House, deliberately constructed on the international border and opened in 1904. The donors were a binational couple: Carlos F. Haskell was a local American businessman who owned a number of sawmills, while Martha Stewart Haskell was Canadian.

It’s not an accident that the line runs down the floor of the library, bisecting it’s reading-room.

The intent was that people on both sides of the border would have use of the facility, which is now a designated historic site. Patrons of the library from either side of the border may use the facility without going through border security.

Does Martha Stewart, the modern-day namesake of that Canadian woman know about this?

For longtime residents accustomed to a simpler life that flowed freely across a largely invisible border, the final shock -- and what made most people really take notice -- was a proposal by the border agents last year to erect fences on the small streets to officially barricade the United States from Canada, and neighbor from neighbor.

"They're stirring up a little hate and discontent with that deal," said Claire Currier, who grew up in this border area and works at Brown's Drug Store, which has operated on the same spot since 1884. "It's like putting up a barrier. We've all intermingled for years."

For the Department of Homeland Security, the changes are part of a gradual fortification of America's northern border that began shortly after the Sept. 11, 2001, terrorist attacks and has accelerated in recent years.

Well, the stirring up of hatreds is an initial and necessary step toward fascism. Too strong a word? That’s because you and I and most Americans and Canadians have been used to hearing it applied to Hitler’s Germany or Italy’s Mussolini. Calm yourself for a moment before writing me a hot reply about the necessity of protecting our cities. Look up fascism. The definition is: (noun) a political theory advocating an authoritarian hierarchical government (as opposed to democracy or liberalism). Fits pretty well.

Europe relies on efficient police work to track down terrorists, with not always perfect, but less intrusive restraint. During the worst of the IRA terrorisms, England never walled itself off from Scotland and (thereby) Northern Ireland. The United States shares with Israel a less effective, yet far more isolating rationale of walls, barbed-wire and checkpoints.

It has served them terribly and will serve us terribly as well.

The hardening of the northern frontier is unsettling to many in the small towns along the border. For as long as most of these people can remember, the line between the United States and Canada has been little more than a historic curiosity, rather than the hard and fast demarcation that is America's southern border.

Named the Secure Border Initiative, the project calls for more than tripling the number of agents along the northern border, adding boats and helicopters, and deploying sophisticated new technology including hundreds of millions of dollars in new communications equipment, radiation detectors and three different types of camera-mounted sensors in the uninhabited wooded areas.

"It was freer before, but we live in a different world now," said agent Mark Henry, the operations officer at the Border Patrol's Swanton Sector, headquartered in Swanton, Vt. The sector encompasses about 24,000 square miles, extending from the town of Champlain, in Upstate New York, on the east all the way across to the border with Maine. The sector now has 250 agents, up from 180 three years ago, and the number is scheduled to reach 300 next year.

I would submit that we only live in a different world if we elect to live in one. To allow 19 terrorists in hijacked aircraft to change our very form of government and constitutionally protected civil freedoms of movement and protection from unwarranted inquiry is to have already abandoned the game to the enemy.

What are we but our freedoms? Just another too powerful loose cannon smashing the china (small C) in the world order.

The nations of the world, who once looked our way with hope and envy, now see us as disturbers of the peace. Disturbing the peace (the unsettling of proper order in a public space through one's actions) is an American misdemeanor that is about to become (if we continue to let it) a felony against the civilized world.

I am not merely angry at the stupidity enforced against Derby Line and Stanstead. I am outraged at what has been asked of America and how easily it has been given.

Bombed at Pearl Harbor, our entire Pacific fleet on the bottom and 2,400 servicemen killed, Franklin Roosevelt addressed the Congress. That wasn’t three hijacked airliners, it was a deliberate attack by 353 warplanes launched from six separate aircraft carriers. The time was ripe for demagoguery and we had some (Japanese internment camps), but we also had a president who brought the country together in purpose rather than dividing it in fear.

Cicero told us two thousand years ago that ‘endless money forms the sinews of war.’ It was true two thousand years before him, but the writing has been lost.

300 agents now in Vermont alone, eager and ignorant, chase down kids and annoy lifelong neighbors, where there were but 300 along the entire Canadian border before Bush and Chertoff.

Bush and Chertoff? Cheney and Addington? Rumsfeld and Gonzales? Are these the statesmen to whom we offer up our Founder’s sacrifice? These rank politicians risk nothing of personal wealth and power. Washington, Jefferson and their peers risked the very real probability that they would be tried for treason and hanged, their fortunes confiscated. Not possibility--probability.

We have traded a sacred heritage for a handful of beads. Not even beads, this travesty of false preservation is worth less than beads. Will the real America please stand up, less the last of us be left to turn out the lights?

"We're more visible," Henry said. "We've gotten more aircraft, more vehicles, more boats, more ATVs -- pretty much everything, we've got more. And we've got more people to man them."

"9/11 changed everything," said Border Patrol agent Fernando Beltran, the operations chief for Swanton Sector's Newport station, which includes Derby Line. "This may have been Mayberry before, but it's not anymore."

Not in my America. In my America only your ignorance is more visible.

. . . for the border agents, Sept. 11 exposed the vulnerability of America's northern frontier and the ease with which anyone -- a terrorist with a portable nuclear device, for example -- could cross into the United States from Canada using one of the multitude of unguarded back roads or forest paths, or, in a border town such as Derby Line, simply by crossing the street.

Beltran said he instructs his agents to use discretion and "common sense." It goes like this: "If a kid [on the Canada side] throws a Frisbee over here, he can come and get it. But if he got the Frisbee and kept walking down to the Arby's to get a soda, we're going to stop you."

"We can't be wrong once," Beltran added. "If we're wrong once, that could be devastating to the whole country."

No Fernando, actually it’s your being there at all that is devastating to the country. You have already been wrong a number of times, wrong to intervene in small border villages, wrong to cut the streets of that village in half, wrong to disturb the peace along the longest unmilitarized border in the world, wrong to institutionalize what should be low-tech police work.

Martin Luther King, Jr. said it effectively and correctly, if we can take a moment to listen to a word of advice from the past, rather than the fear-mongering of the present:

The means by which we live have outdistanced the ends for which we live. Our scientific power has outrun our spiritual power. We have guided missiles and misguided men.

Confusing the means and the ends. Sounds right. Ability to do outrunning the reason to do. That, when you sit down, shut off the TV and put your feet up, feels right as well. Guided missiles and misguided men. Bingo, Martin. And for that and the other truths of your illuminated life, they assassinated you.

Illuminate: (verb) Make free from confusion or ambiguity; make clear.

A president that our current president claims to admire, said quite famously; “Mr. Gorbachev, tear down this wall.” Not perhaps as catchy and bite-sized as ‘bring ‘em on’ or ‘we do not torture,’ but a better quote and a better legacy upon which to be judged.

Amazingly, the choice of legacy is not his, but ours. We must choose the Bush legacy and lose our own or choose differently and save our nation.

It is as simple as that.

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Media comment:

• Vancouver Sun-Canada-Canada needs to be proactive to counter U.S. protectionism
• United Press International-Vermont town decries security changes
• Washington Post-Taking Liberties At Homeland Security
• ASAP News-UK-Security online registration for US visitors sparks controversy
• Associated Press-Homeland Security setting up counterspy unit

“First We Take,” the Lessons of 1933 Germany

As may be apparent from the title, I am going to make comparisons to the early years of Hitler Germany, when he demanded and took various powers by entirely legal and democratic methods. Hitler ended up a dictator, but he was enabled to that ultimate goal by a population terrified by an economic maelstrom and the ever growing lawlessness across Germany.

Conservative, disheartened and increasingly desperate Germans repeatedly went to the polls and elected National Socialist (Nazi) candidates.

The Holocaust has taken Nazi Germany as ‘off the table’ of political discussion as Nancy Pelosi’s unilateral removal of impeachment and perhaps for similar reasons; sensitivity. It’s just too divisive, says Nancy, as though we were frightened children needing to hide our faces in her skirt. Never again, say the Israelis, as 800,000 Rwandans are massacred and Stalin kills (by some estimates) 25 million of his own people, Mao another 35 million and the carnage goes on, uncompared.

Forbidding the discussion of parallels is to make them invisible. Invisibility is the workplace of those who would do us wrong, not in the light of discussion and criticism, but behind closed doors, in secret session. Every attack against our constitutionally guaranteed rights, since 9-11, has been whisked behind the opaque door of ‘top secret’ and ‘national interest,’ thereby kept from the public view.

Comparison? We are denied comparison as well. Nazi, has been made yet another N-word; unspeakable in polite society and therefore far more dangerous to our civil rights and the lessons history has to teach. Author Aldous Huxley cautioned us that "Facts do not cease to exist because they are ignored"

Unable to debate the similarity between America today and Hitler’s 1933 Germany, those who oppose authoritarian presidencies in place of constitutional balance are disarmed. Relegated to the pillow-fights of uncritical media, we stand impotent while our country is slid out from under us. If you value Nancy Pelosi’s sensitivity above and beyond the lessons of history, go turn on MTV and leave this column to the less frightened.

(Washington Post, August 16^th, U.S. May Ease Police Spy Rules, by Spencer Hsu and Carrie Johnson)

The Justice Department has proposed a new domestic spying measure that would make it easier for state and local police to collect intelligence about Americans, share the sensitive data with federal agencies and retain it for at least 10 years.

The proposed changes would revise the federal government's rules for police intelligence-gathering for the first time since 1993 and would apply to any of the nation's 18,000 state and local police agencies that receive roughly $1.6 billion each year in federal grants.

Forget 9-11 and put aside the past eight years of the Bush-Cheney administration, clear your head of various blue-ribbon panel recommendations and recognize that this ruling is made at the exit-gate, by an organization on its way out the door. It’s publicly announced by the Justice Department on a Saturday in mid-August.

With Germanic precision, Bush’s Department of Homeland Security has put the nation’s police departments on the intravenous-drip of federal money. Did you ever suspect that one day America would be called a Homeland. Did you ever in your most Orwellian dream believe that Americans would stand for that? Not only stand for it, but wave the flag?

You guys need night-vision, armored personnel carriers, automatic weaponry, training, anti-terror camps? Line right up at the fed spigot and drink deeply. It’s the nationalist thing to do, patriotic to the core, swinging into step for God and country. Nice new toys, huh? Shiny and cool, you bet. Manly and preparedness-friendly, yessir.

For the Phoenix police? For Detroit? We need armored personnel-carriers and machine-guns for Phoenix and Detroit? This, for a response to a terrorist act? Crowd control against American crowds? Gimme a break.

Now, says the Fed, we don’t want to see you lose all that great stuff and we don’t want to intimidate—not us. But, remember where those toys came from. Quicker’n a sub-prime loan, they can be taken back. 18,000 police departments that grab a part of that $1.6 billion (and more to come), lose most of their autonomy (noun: Immunity from arbitrary exercise of authority: political independence).

Quietly unveiled late last month, the proposal is part of a flurry of domestic intelligence changes issued and planned by the Bush administration in its waning months. They include a recent executive order that guides the reorganization of federal spy agencies and a pending Justice Department overhaul of FBI procedures for gathering intelligence and investigating terrorism cases within U.S. borders.

Taken together, critics in Congress and elsewhere say, the moves are intended to lock in policies for Bush's successor and to enshrine controversial post-Sept. 11 approaches that some say have fed the greatest expansion of executive authority since the Watergate era.

They are also, without a shred of doubt, setting groundwork and legal precedent to protect Bush administration abuses from actually sending officials to prison. Prior to January 20^th, look for Bush to provide blanket immunity for all acts against terrorism—however that term may be defined. The Reagan administration, choir-boys by comparison, suffered 61 indictments.

Bush, while still president (and, in his own mind, still able to preside by decree) will absolutely protect Cheney, Addington, Rumsfeld, Rice and whatever smaller fish threaten to fall into the nets of American justice.

1933 Germany was a parliamentary republic and thus the Chancellor was subject only to votes of confidence. Wobbly in his hold on office, Hitler chose to burn down the Reichstag (parliament), blame it on his nearest political enemy and take immediate dictatorial control in the heat of public panic. The Bolsheviks were at the gates.

We elect our presidents for a maximum of eight years, but there are those who fear an attack on Iran and a ‘temporary’ suspension of habeus corpus and a ‘necessary’ period of martial law ‘until the terrorist threat subsides.’ Terrorists rather than Bolsheviks at the gates. Easier perhaps, than a bogus fire within the Congress of the United States.

America has already been scared half to death in preparation, but Blackwater stands ready to ‘assist’ local police, should there be any ‘outbreaks of terrorist activity.’ New Orleans was the prep event.

As in 1933 Germany, first we take the public confidence. Then we replace the democracy blamed for losing the public confidence by trains that run on time, a hustling off of dissenters, polishing the apple of modern media and possibly an additional sop such as a holiday on mortgage foreclosures. The banks will be massively subsidized for their inconvenience.

When first we have taken, then all else falls into place. Writers of columns such as this will be gone.

White House spokesman Tony Fratto said the administration agrees that it needs to do everything possible to prevent unwarranted encroachments on civil liberties, adding that it succeeds the overwhelming majority of the time.

Bush homeland security adviser Kenneth L. Wainstein said, "This is a continuum that started back on 9/11 to reform law enforcement and the intelligence community to focus on the terrorism threat."

Those statements, in and of themselves, ought to chill the most conservative blood.

Under the Justice Department proposal for state and local police, published for public comment July 31, law enforcement agencies would be allowed to target groups as well as individuals, and to launch a criminal intelligence investigation based on the suspicion that a target is engaged in terrorism or providing material support to terrorists. They also could share results with a constellation of federal law enforcement and intelligence agencies, and others in many cases.

Allowed to target, with no more than a suspicion of providing support to terrorists. We have by that, just given over innocent until proven guilty to its direct opposite. Would be allowed to smash down your door at 2AM and hustle you (or me) off to Guantanamo and no one the wiser.

And last week, Attorney General Michael B. Mukasey said that the Justice Department will release new guidelines within weeks to streamline and unify FBI investigations of criminal law enforcement matters and national security threats. The changes will clarify what tools agents can employ and whose approval they must obtain.

Clarify. Ja, ve vill clarify, but first ve vill streamline.

Critics say preemptive law enforcement in the absence of a crime can violate the Constitution and due process. They cite the administration's long-running warrantless-surveillance program, which was set up outside the courts, and the FBI's acknowledgment that it abused its intelligence-gathering privileges in hundreds of cases by using inadequately documented administrative orders to obtain telephone, e-mail, financial and other personal records of U.S. citizens without warrants.

Constitution, poof! Ve haff already crossed that bridge and who obcheckted? No von, not von obchecktion from the Reichstag, uh, Congress. Vat critics remain, ve haff means to silence critics.

Jamie Gorelick cited the recent disclosure that undercover Maryland State Police agents spied on death penalty opponents and antiwar groups in 2005 and 2006 to emphasize that the policies would require close oversight.

Ofersight, ja. Ve haff no problems with oversight.

German, an FBI agent for 16 years, said easing established limits on intelligence-gathering would lead to abuses against peaceful political dissenters. In addition to the Maryland case, he pointed to reports in the past six years that undercover New York police officers infiltrated protest groups before the 2004 Republican National Convention; that California state agents eavesdropped on peace, animal rights and labor activists; and that Denver police spied on Amnesty International and others before being discovered.

"If police officers no longer see themselves as engaged in protecting their communities from criminals and instead as domestic intelligence agents working on behalf of the CIA, they will be encouraged to collect more information," German said. "It turns police officers into spies on behalf of the federal government."

Ja (chuckle), I qvote the vice-prezident; “So vat!” First ve take, then vill be plenty time to give.

Conspiracy theorist? Me? Please, that charge is so 1933.

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Media comment:

• Islam Online-Police Allowed to Spy on Americans
• Los Angeles Times-Justice Department eyes domestic spy role for local police
• Baltimore Sun-Police spying prompts hearings
• Hagerstown Herald Mail-Maryland must investigate police spying
• AlterNet-CA-Dissent Is Essential to Democracy

 

 

ONE MAN'S STRANGLEHOLD IS ANOTHER MAN'S MARKET-SHARE

Here we go again, reprising the old cold-war language of strangleholds and us against them communist-capitalist comparisons. Except for the fact that they no longer (if indeed they ever did) hold water.

Some very bad stuff has just transpired in Georgia and I’m not writing about Atlanta, but rather Tbilisi. Seem a long way from home? Yeah, five or six thousand miles, but surely I need not remind you the world is becoming smaller, if not more hospitable.

Russia's Strike Shows The Power Of the Pipeline, by Steven Pearlstein

It was surely not lost on Russia's bully in chief, Vladimir Putin, that the oil giant BP decided to shut down the pipeline that runs through parts of Georgia controlled by Russian troops. Indeed, that was one of the aims of the cross-border incursion.

Putin understands better than anyone that oil and gas are the source of Russia's resurgence as a military and economic power and his own control over the Russian government and key sectors of its economy. It is oil and gas that provide the money to maintain Russia's powerful military, along with a vast internal security apparatus and network of government-controlled enterprises that allow the president-turned-premier to maintain his iron grip on the levers of political and economic power.

Iron grips and who is bully to whom are a matter of definition. Steven Pearlstein seems not to feel that the illegal and vilified hounding of Iraq into a destroyed sovereignty is the result of anything other than Iraq's thirst for democracy satisfying itself at the well (or possibly wellhead) of American ideals. 

One could hardly call George Bush America’s bully in chief, at least not without a major helping of irony. It’s amazing and not a little unsettling that these similarities continue to be lost in the translation from Eastern (push) belligerence to Western (push, push) belligerence.

. . . Nabucco (a Western intervention pipeline) also became a top priority of the Bush State Department -- in particular, of Matt Bryza, a deputy assistant secretary of state, and C. Boyden Gray, a Bush family confidante who was named a special envoy for Eurasian energy, who began actively courting the leaders of Azerbaijan. (the plot thickens--these are my parentheticals)

. . . Putin, quite correctly, viewed Nabucco as part of a larger campaign by Washington to contain and isolate Russia and limit the expansion of its burgeoning energy empire. With Gazprom, the state gas monopoly, Putin launched his own competing proposal called South Stream to build a new pipeline to the Caucasus.

Well Steve, certainly no offense taken when, shortly after the boat ride and fishing in Kennebunkport, George Bush moved to isolate and limit Russia’s energy interests.

A campaign by Washington.

I’ll be that wasn’t on the agenda over hot dogs and hamburgers. How is it that George could look into Vladimir’s eyes, see into his soul and miss South Stream? And there was Dad, right there on the boat, grinning and baiting hooks.

Ah, those baited hooks.

. . . What we've been reminded once again is that Vladimir Putin is perfectly willing to sacrifice the rule of law and the good opinion of others to protect the Russian empire and the energy monopoly that sustains it. The techniques he used to bring Georgia to heel, while more lethal and destructive, have the same thuggish quality as the techniques Putin uses to silence domestic opposition and to expropriate the energy assets of Yukos, Shell and BP.

Ouch. Steven, you are my most admired economic writer, but the references here sound as though they came directly out of the administration media-machinery. It's becoming more apparent every day that Bush and Cheney encouraged Georgian president Mikheil Saakashvili to lean out over the abyss, whispering in his ear that they wouldn't let go of his hand. And, like countless U.S. promises to countless dissident groups, we were not there when they got nudged from behind.

C. Boyden Gray can put that in his diplomatic bonafides when he next represents Bush in Eurasian energy circles. George Bush's thumb on the scales suddenly seemed very evidently up an embarrassing part of his anatomy. And there he was, enjoying himself so much in China--another country he works overtime to alienate.

This man and his so-called foreign policy is unable to do other than stride the world in very muddy seven-league boots, staining diplomatic carpets and muddying up the international landscape for decades to come.

Oil--the obsession of this administration and the subject of still secret energy policy constructed in the silence and darkness of Dick Cheney's office--continues to

• stoke an American with-us-or-against-us belligerence,
• triple the cost of crude,
• depreciate our currency by half,
• spiral the nation into unending debt
• and set the stage for an American economic crash second to (possibly) only one.

This administration and (I would suppose by this article) Steven Pearlstein seem to think that sovereign Russia is incapable of protecting its interests in the sphere in which those interests reside.

That's a very dangerous bit of foolishness.

America has encouraged Georgia to shove a stick in the eye of the Russian bear a time too often. What in the name of god are American military advisors doing in Georgia--smack bang up against the border of Russia?

It's no surprise Russia reacted militarily. It's no surprise that thousands died and lost their homes because of our encouragement. It's no surprise (except perhaps to a very shaken Saakashvili) that we left him holding that stick and looking stupid. It's no surprise that this poisonous and dangerous administration continues to risk American blood, treasure and reputation for their own narrow self-interest and that of their crony war-profiteers.

It's no surprise that John McCain would fall into step and march to the same sad, failed, disproven and ignorant tune.

The worst of it is that it's no surprise to find a large part of the country feeling good about itself by following in those same muddy prints.

________________________________________________

Media comment:

• al-Jazeera-Qatar-Russian forces sink Georgian ships
• Reuters-Russian troops not going to Tbilisi: ministry
• United Press International-Georgian troops pull back
• Guardian-UK-Georgian villages burned and looted as Russian tanks advance
• ABC News-Georgia-Russia Shaky Cease Fire

When Steven Pearlstein Writes, We Are Obliged to Pay Attention

Steven Pearlstein is, at least for me, one of the few reasons left to bother reading the Washington Post. Others who quickly come to mind are the two Danas, Milbank and Priest, but altogether they  whole lot number less than the fingers on one hand.

Political writers with equal skepticism for both sides are hard to come by, investigative reporters too far and in-between and top-notch writers on the economy almost non-existent. Pearlstein must have somehow missed the opportunity of a Harvard MBA. He is not of that ilk and a man of rare insight in a profession that has lost it along the way.

(Washington Post-A Delicate Balance, By Steven Pearlstein)

You know something's up when both the secretary of the Treasury and the chairman of the Federal Reserve give speeches calling for a new mechanism to allow them to manage the orderly liquidation of a major financial institution.

You have a sense that things are getting desperate when General Motors has to offer six-year loans at zero-percent interest to unload its gas-guzzling trucks and SUVs, and people openly speculate about how long it will be before the automaker runs out of cash.

And you can feel the foundation shaking under Wall Street when Fannie Mae and Freddie Mac have to pay three-quarters of a percentage point more to borrow money than the U.S. Treasury, which implicitly guarantees their debt, and top government officials feel compelled to reaffirm their support.

We're nearing that delicate point in the cycle when even the usual cheerleaders have hung up their pompoms, consumer and business confidence has disappeared and investors are driven mostly by fear rather than greed.

Well, we have been a long time wandering down this road. It’s not something we can boast of having come to honestly, because there’s been dishonesty aplenty and it feels more like the snake-oil days of the late twenties than it does the beginning of a new millennium. Distracted by the threat of computer meltdown as the millennium turned, we failed to see the true culprit—our native fascination with something for nothing.

Disaster takes its toll on credulity and the ten years after the ’29 crash dropped the nation to its knees, adding desperation after desperation, as Ford cars cost $500 a copy and no one had the five hundred. Hell, no one had five bucks, at least not to spare. There were three cures to this misery.

1. Franklin Roosevelt’s massive public works programs, a Democratic effort to pull the country back to a reasonable level of employment, that would not be matched until a Republican president Dwight Eisenhower launched the Interstate Highway program just after WWII.

2. World War Two itself, a struggle so intense that all hands were at work churning out the material of war.

3. The G.I. Bill, which educated beyond all precedent an entire generation of homeward bound military personnel from the war. Partly, the bill prevented the wholesale dumping of soldiery on a delicate jobs market, but the unintended consequence was to ultimately provide the best-educated workforce the nation had seen to date.

Sobering and useful circumstances all, yet they are beyond the living memory of only a diminishing few. Returning heroes begat the Boomers, the Boomers begat the exuberance of the fifties, the social upheaval of the sixties, the Vietnam seventies, Madonna eighties and Monica nineties. Unsure of what they had wrought and nervously peering into the new century, the World Trade Center fell and all the cats were let out of the box at one time.

My old daddy once said of an aunt of mine near the end of her days, “she spent her whole life worried she wouldn’t get what was coming to her—and now she’s afraid she will.” Spoken, dear old daddy, for a generation you didn’t live to see—from Wall Street to K Street to Congress, the Pentagon, the halls of Congress and deep into the heart of every man who ever drew to a straight-flush.

. . . A financial crisis is not a morality play. What matters most isn't the precedents that are set, the amount of taxpayer money that's implicated or whether people are made to suffer fully for their financial misjudgments. In the end, what matters most is that we get through it as quickly as possible with an economy and a financial system intact.

I have a problem with Pearstein's last paragraph. I absolutely agree that the financial crisis is not a morality play, but Band-Aiding our way through the present turmoil is not a goal he and I share. I don't so much care that the top investment bankers rake in major dough from throwing monkey-wrenches in the gears. I'm not even all that outraged by $5 million birthday parties or $50 million severance packages.

What I am scandalized by is the money that has been made available from Wall Street and the business community to pay off the most corrupt Congress in memory (and my memory extends through eight decades). Those who worried they wouldn’t get what was coming to them. If they finally do get what they have coming, it will be because

• Hedge funds are totally unregulated, lobbying and bribing their way past regulation.
• Military contractors (icons like Boeing and Lockheed-Martin) regularly commit fraud against paid-off Pentagon administrators, protected in turn by paid-off Congressmen and Senators.
• Earmarks are such a source of mutual profit between crooked representatives and their equally crooked constituents, that they threaten the basic terms of self-government.
• Healthcare has been made hostage to the profiteering of pharmaceutical companies, doctors, insurance companies and third-party providers.
• Congress is so swamped by bribery that the likes of Blackwater and Halliburton have burst the dam of public intervention.

Money, in quantities unknown to prior generations has served to buy every special interest, confound every legal recourse and overwhelm every civic responsibility. Each day a dozen major thefts and frauds are exposed against the common people by their industries, their institutions and their representatives. If we ignore what Pearlstein calls 'an economic morality play,' we will have lost perhaps the last chance to regain control of a basic ability to self-govern.

America is losing on all fronts as our small town merchants are destroyed, industrialized agriculture wrecks the safety and balance of our food supply, we declare the undeclared, spend the unearned, torture and bomb and lie our way through foreign policy as if we are telling truths.

A financial crash of epic proportion--a '29 style meltdown--would cause absolute havoc over the lives of the nation's mostly innocent populace. But what has been raised as tribute to our 'consumer economy' over the past thirty or forty years is a death-by-a-thousand-cuts to traditional American progress and prosperity. We are bleeding and helpless as Wal-Mart destroys our Main Streets, the insurance industry destroys our healthcare and off-shoring destroys our job base.

Welcome (you Boomers and the offspring you now find back in their upstairs bedrooms) to the 'service society.' If your life seems less productive, your family needs two (or three) jobs to survive, your kids got a crappy education, you worry about retirement and reach for Valium and Viagra to get through the week . . .

. . . dial 9 and remain on hold for 40 minutes while you are assured your business, or problem (or potential suicide) is very important to us.

Compared to where we find ourselves, Mr. Pearlstein, at the end of a forty-year pornographic consumerized massage, a morality-play might be a snap. If not exactly a snap, perhaps better medicine than Viagra or Valium.

But beware the side-effects.

In the substitute for morals that we have eagerly accepted and welcomed into the lexicon of what it means to be an American consumer, an economic meltdown might be the best medicine.

____________________________________________________

Media comment;

• Dallas Morning News-Phil Gramm's alternate universe
• Detroit Free Press-Worse to come on foreclosures?
• CBS News-Paulson And Bernanke: Economic Melt-down "ongoing"
• MarketWatch.com-Options expert calls Fannie, Freddie shares 'worthless'
• Baltimore Sun-Fannie Mae, Freddie Mac meltdown?

 

Conversations With the Clueless; (a discouraging look at where the Fed is taking us)

The Washington Post headline is Stocks Surge as Fed Offers A Boost and it’s written by T. M. Tse and Neil Irwin, who are staff writers and may be forgiven their sins. Certainly they are not Steven Pearstein (probably one of the finest business-writers extant today) even though he too is beginning to waver on Fed actions that ‘may prevent a serious meltdown.’

Serious meltdown is what we need, Steve. It may in fact be our only hope.

Unfortunately, no politician likes to see SM (sado-masochism or serious meltdown, take your pick) on his or her watch, and so we’ve had a half century of transgressions patched over and forwarded to the next bunch coming in. Getting down to the nitty and the gritty;

NEW YORK, March 11 -- The Federal Reserve took bold action Tuesday to revive the economy's ossified credit markets by offering to take over the risk of spurned mortgage securities, igniting a rally on Wall Street that sent stocks to their best performance in five years.

It annoys me when a national newspaper, ostensibly of some repute, characterizes an inflationary printing of money as bold action. It’s not. Bold action would be letting the fraudulently inflated markets take their well-deserved bath, while still preserving the value of the dollar. That's the job of the Fed, defending against inflation and supporting the dollar.

Ben Bernanke has failed miserably at both. I don’t damned doubt a rally was ignited, as Wall Street dodged another bullet and went out to celebrate.

When your securities stink so badly that no one will touch them, it’s a relief to have the Fed come along and haul your ashes. Ossified indeed. The credit market is road-kill, lying there with all four legs in the air, body swelling with the rot of gigantic fraud.

Setting aside earlier reservations, the Fed essentially made itself the lender of last resort to investment banks squeezed for cash by offering them up to $200 billion in new credit against their holdings of highly rated mortgage securities that no one else is eager to buy. This move, coordinated with four other central banks, was the most aggressive step the Fed has taken to address the spreading credit crisis.

Nice try, Tse and Irwin, but no home run there either. The Fed has not made itself lender of last resort, it has made the American taxpayer lender of last resort, without ever checking in to see if it was OK. The Revolutionary War was begun over just such an issue. Christ, that argument was over tea.

The Federal Reserve doesn’t have $200 billion, nor does it have the additional $100 billion it has promised each and every month until the cows come home (or don’t, in which case they become someone else’s cows) The Fed is

• watering your currency,
• destroying what little credibility the dollar has left,
• making every single thing you own worth less,
• shooing off any foreign interest in financing our astounding national debt
• and getting the Washington Post to present it to you as an aggressive step to address the crisis.

Does anyone ask any questions, or do Tse and Irwin just jot it all down in their notebooks?

Bernanke and Co. are doing this treasonous damage to the American economy in order to keep the Dow Jones Industrial Average up in the vicinity of 12,000. Their reasons have nothing at all to do with the integrity of markets. That went down the drain decades ago.

They are doing it to protect the assets of the CEOs on top, keep the hedge-fund shenanigans in play and let President Bush flee his office with the myth intact that he is not actually President Hoover reincarnated.

The Dow Jones industrial average of 30 blue-chip stocks responded to the morning announcement by jumping 250 points within the first moments of trading and ended the day up 416.66 points, or 3.5 percent, to 12,156.81. 

Another rabbit will have to be dragged out from yet another hat. At $100 billion a month, rabbits are easily come by.

But while the Dow's percentage gain was its steepest since 2003, the rebound in trading still left markets below where they'd been just a week ago. Nor did the move by the central bank address the underlying weakness of the economy triggered by widespread exposure to failing subprime mortgage loans, though the initiative did blunt the immediate threat: a run from even the safest high-grade bonds.

Underlying weakness. There you have it, you intrepid reporters. Even a blind pig occasionally finds a peanut and Tse and Irwin have found theirs, but misnamed it. Failing sub-prime mortgage loans should more properly and accurately read 'fraudulently packaged and mis-represented hedge-fund derivatives.' These bonds have already been declared AAA. The so-called (by crooked bond rating companies) safest have failed.

Now it gets complicated, but only slightly. In the rest of the world—that strange and romantic, dangerous and chaotic place outside America—the value of the dollar has dropped by half during this administration. Your
house, car, savings and hopes are all worth half what they were six years ago . . . and no one told you.

The Cliff Notes are that galloping federal debt ($3 trillion increased to $9 trillion), a savings rate that is less than zero, a huge buildup of personal debt, tax giveaways to the rich, an unfunded war and oil prices goosed by that war ($31 suddenly up to $104 a barrel) have made us a bad bet for the loaning of money.

Unfortunately, our thirst for debt is $1.5 billion a day. Uncle Sam has become a profligate uncle. Somebody has to come up with the dough or else the world is going to make us turn in our credit card.

Mostly, it’s been the Chinese. But understand this. A $100 Chinese investment in ten-year U.S. Debt, paid into our Treasury in 2000, is now only worth $50 and there are still two years to go on the loan. Foreign investors are less and less willing to fund us at that kind of loss, especially when they can buy us up at bargain-basement prices—as the Chinese and Dubai princes have been doing.

So much for blind pigs and peanuts, at least for the moment.

Until Tuesday, the central bank had been unable to reverse the downward slide of the U.S. economy despite a series of interest rate cuts and other steps to introduce liquidity into the system. The series of cuts to the federal funds rate had threatened to stoke inflation and, by driving down the value of the dollar, contributed to price rises in oil and other imported commodities. But these moves had done little to restore the confidence of banks, which have increasingly tightened the credit they offer to businesses and home buyers, even those with excellent credit.

Bingo. What might have restored confidence would be federal indictments, lengthy trials into the lending conspiracy and prison terms for some $100 million executives. Unfortunately for them, the prison terms would have been fairly evenly distributed among the CEOs of mortgage banks, investment banks, bond rating firms and hedge funds. Thanks to Bernanke, those are the very co-conspirators who are celebrating having just dodged the bullet of accountability.

The peanut again. This time under a shell in an economic shell-game (noun; A swindling sleight-of-hand game; victim guesses which of three shells a peanut is under).

All this was choking off already anemic economic activity. The government reported last week that the economy shed jobs for the second consecutive month. Consumer spending has softened, corporate profits have flagged, and both residential and commercial real estate have displayed new signs of stress.

In the past week, the vicious cycle accelerated. Bankers demanded that hedge funds and other investors holding troubled securities put up more cash to back them, prompting a sell-off of high-grade securities such as those issued by the mortgage giants Fannie Mae and Freddie Mac, to raise the money. Some investment funds, like one run by Carlyle Group of the District, could not meet these margin calls, and they defaulted. Rumors of trouble at one of the largest Wall Street banks, Bear Stearns, and speculation that other banks would soon disclose new, staggering losses, added to the mounting panic.

Some call it a vicious cycle, others characterize it as chickens home to roost or the horse gone after the barn door is closed. We have destroyed American agriculture by abandoning it to corporate interests, but the metaphor of the barnyard has not yet left us.

So the Fed moved Tuesday to auction up to $200 billion in Treasury securities, which will be available to large financial institutions if they put up collateral including highly rated mortgage-backed securities. The aim was to make Wall Street firms more confident about buying and holding these mortgage investments and provide an outlet for them. This could free up money for banks to lend.

Choke that one down, if you are able. Here you are (pretending to be an investor), holding junk bonds that were presented to you as AAA bonds. It said so right on the investment documents (a fraud by the bond raters) and here they are today, not worth a fart in a whirlwind (a compounded fraud, perpetrated across state boundaries, making it a RICO offense).

The Fed Chairman, Ben Bernanke, is going to take them off your hands--as collateral--for billions of dollars. You laugh hysterically and put the money under the mattress. This is supposed to make you more confident about buying and holding these mortgage investments, but you’re not fool enough for that, thank you very much. As for freeing up money, that’s safely under your mattress until your heart rate slows down and you venture forth yet again.

Helping liquidity? Forget about it, this shell game is about helping greedy investors who have done exactly as greedy investors are supposed to do—lost their investment.

After the announcement, the market for these highly rated mortgage securities showed signs of improvement.

I’ll just bet it did.

Economists and analysts largely praised the move, saying it goes further in directly addressing current problems than simply cutting a short-term interest rate, which adds to inflationary fears.

"They may have hit the right spot in the marketplace where the help was needed," said Bill Tedford, fixed-income strategist at Stephens Capital Management.

Cutting short-term interest rates is inflationary, but somehow printing $1 trillion a year is not. And Bill is right. They hit Bear Stearns exactly in the right spot, that spot that keeps them from going bankrupt as they deserve to do.

"The mortgage market has just been locked up," said Craig Elder, fixed-income senior analyst at Robert W. Baird & Co. "I'm not sure if it solves all of the problems, but I think it should free up a considerable amount of liquidity."

What we have (thus far) failed to lock up is the crooks and liars who created this mortgage market.

In announcing the program, the Fed also extended agreements with central banks in Switzerland and the European Union that allow them to borrow billions of more dollars from the Fed and inject this money into their financial systems.

What, me worry? Hey--it’s party time. Does the NATO Alliance extend to bailing out millionaires and billionaires? Unfortunately, Tse and Irwin had only analysts and strategists available for interview. Their analysis was understandably a little on the ‘wasn’t our fault’ side and their strategy leaned heavily on the ‘money under the mattress solution’ before the pension trusts find out their money is under that other shell.

Do not leave this Conversation With the Clueless without watchingThe Last Laugh--George Parr—Subprime on YouTube. It is not to be missed and explains the whole sorry mess in a mere nine minutes.

Enjoy.

_________________________________________________________

Media comment;

• Guardian-UK-Federal Reserve leads world central bank move by injecting $200bn
• Reuters-Economy.com says Fed action helps but not enough
• Wall Street Journal-Euro Hits Another New High As ECB Hints at Holding Rates
• Reuters-US STOCKS-Wall St slips on rethink of Fed plan, oil over $110
• The Age-Australia-Did Bernanke do it for Fannie Mae?

Smash the Presses Before Ben Bernanke Starts Printing

In about a year it will be the 90th anniversary of the establishment of the Weimar Republic, the nickname for post-WWI Germany and a moniker forever connected with the hyper-inflationary economy of Germany. That circumstance lead directly to the democratic election of Adolph Hitler and WWII.

In 1914, the German mark was worth about 25 cents, or four to the dollar. Nine years later in 1923, Germany had printed itself enough marks to make 50 million of them worth exactly one dollar.

Fed to Make $200 Billion Available To Lenders
Bank Seeks to Loosen Credit
(Neil Irwin and David Cho, Washington Post Staff Writers, March 8, 2008)

The Federal Reserve took strong action yesterday to restore order to frazzled lending markets while a new report showing unexpected job losses underscored the toll that credit markets are taking on the economy.

The world's financial plumbing is so clogged that the central bank sees a need for new steps to clean it out to prevent severe damage. Mounting panic in the credit markets is making it harder for Americans to get mortgages and is increasing the rates they must pay on credit cards and auto loans. Even solid businesses are finding it difficult to raise money to expand.

Ben Bernanke, who is the current chairman of the Fed is hardly a plumber. One can only wish he was.

Under his tutelage, we may as well take the book from the left hand of the Statue of Liberty and replace it with a can of gasoline. A torch in one hand, gasoline in the other, the perfect metaphor for an American economy so distorted and so finance-driven, it hardly deserves the name.

"Send us your investors, your huddled capital funds"

We are no longer a capitalist society and have not been one for some years now. We are an interest-rate dependent consumer society and the sole, wheezing, smoking engine left to support that house of cards is consumer confidence. Essentially, the American dream has become a confidence-game (noun: a swindle in which you cheat at gambling or persuade a person to buy worthless property).

The immediate problem is that a massive sub-prime mortgage fraud has sucked us dry of the basic fuel necessary for staggering on--confidence. There ain’t none left. The tank is dry.

Ben Bernanke is going to fill ‘er up on money. He and George Bush and Henry Paulson have connived between them a ‘stimulus package to bolster the economy.’ If you look up ‘bolster,’ one meaning is to support and strengthen and another is to add padding. I leave it to your judgment which definition most closely defines giving each taxpayer $300 to $1,200 of his own money to goose the economy in the sole interests of the above-named public officials' personal friends.

None but the Washington Post (deprived in these days of cutbacks of any true financial writer other than Steven Pearlstein) could possibly swallow without a fit of coughing, the swindler’s excuse that ‘the world's financial plumbing is so clogged that the central bank sees a need for new steps to clean it out to prevent severe damage.’ Who on earth fed WaPo that line? Certainly it was not vetted by Steve. I don’t doubt he choked on his coffee when he saw it.

The Fed said it will make $200 billion available to financial institutions in an effort to ease a crisis of confidence that is making it harder for families and businesses to borrow money.

"They're recognizing that financial markets aren't functioning well, and that that creates risks to the real economy," said Vincent Reinhart, a resident scholar at the American Enterprise Institute and a former senior Fed official.

Where do they get these people? Can I get a job at the Fed?

Financial markets have been looted, Ben. Wake up. This is not about families and businesses, this is about pumping up the worthless investments hedge-funds created. It’s about papering-over the hole in the missing billions before their major institutional investors sue them for fraud and send the whole crop of $100 million a year criminals off to Sing Sing.

Bernanke’s $200 billion is merely the camel’s nose in the tent. He proposed to create (read that print) $100 billion a month to prop up the banks for at least a year, but essentially for as long as it takes. Another ‘surge’ in an unwinnable war--anything it takes to get George safely back at the ranch before this whole swindle collapses on his head. Every 12 months (unless it’s not enough), Bernanke proposes to add $1.2 trillion to a money supply that totals approximately $7 trillion.

And the sworn duty of the Fed is to prevent inflation. Don’t cry for me, Argentina.

The dollar this administration has contrived to devalue by approximately half during its brief term in office, is now to be further demolished by stimulating, diddling, futzing with and printing their way over the edge of the cliff.  The printing press is to monetary policy as Viagra is to maintaining an erection. The one gives you a sore dick, but the other turns the United States into Argentina.

"A lot of what we've done has been mostly just to offset the tightening of credit that has arisen because of the financial situation," Fed Chairman Ben S. Bernanke said in congressional testimony last week.

Instead of simply cutting interest rates further, the Fed responded to this latest crisis yesterday with carefully targeted measures. The central bank said it will auction $100 billion to financial institutions, injecting money into the banking system by trading cash for troubled securities. The Fed will also make another $100 billion in cash available in exchange for securities issued by Fannie Mae and Freddie Mac, trying to restore confidence to the market for home mortgages.

The problems are the latest wave of a crisis in debt markets that began in August and reappeared again in November and late February. This crisis is one major factor in a pullback by consumers and businesses that has driven the economy to the brink of recession, or possibly over it.

• Lie #1: Offsetting the tightening of credit is (for Ben) easier than tightening the handcuffs on the criminals who profited from this fraud on the taxpayer.
• Lie #2: Measures were not carefully targeted, but recipients were. Wall Street will get its plumbing unclogged and you, dear taxpayer, will get the bill for it. (Before all this manipulation was factored in, your personal share of ‘unfunded debt,’ including tax breaks to the rich and an untaxed war, is—as of 8pm today-- $30,967.40. Family of four? Pony up $123,868.96.)
• Lie #3: No one is injecting anything. They are not ‘trading for troubled securities,’ they are buying bad debts with your tax money. They are bailing out criminals, so that no one will call them at their game, which has been to fleece the American public and blame it on ‘market conditions.’
• Lie #4: Bailing out Freddy Mac and Fannie Mae does nothing to restore confidence to the market for home mortgages, it merely supports fragile government backed institutions, who have been part of the game—again, with your dough. The same money you don’t have to pay child-care and health-insurance.
• Lie #5: There was no August crisis in debt markets. In August, we had the first indications of a purposeful financial fraud, committed against investors by a consortium of co-conspirator mortgage salesmen, mortgage bankers, bond rating companies, investment banks and hedge-funds. This will probably turn out to be the largest and most damaging Wall Street fraud ever to bring down an economy—far larger than the 1929 crash.
• Lie #6: A misnamed and lied-about ‘crisis,’ cannot possibly be a factor in anything other than the continuing cover-up of massive financial fraud.

Six lies is a lot of lies to pack into three paragraphs and 161 words. Amazingly, the WaPo failed to call a single one of them. No major newspaper in the United States has been carrying this as the widespread crime that it is. Steven Pearlstein has come the closest, which is why he no doubt spit coffee all over his office when he read the piece.

There is a cure for all this sickness and greed and fraud, but it will not be found in the halls of Congress, the meeting rooms of the Fed or within a new administration, no matter how much ‘change’ is promised.

Attempting to repair a half-century of financial malfeasance is as dreary a chore as trying to ‘fix’ communism. Just as Ronald Reagan never ‘won’ the Cold War (the wheels finally came off, while he happened to occupy the office), Bernanke, Paulson and Bush haven’t a clue about what to do. Other, that is, than run around with a torch in one hand, gasoline in the other, trying to calm crooked markets.

"The Fed has been running around putting fingers in dikes," said Diane Swonk, chief economist of Mesirow Financial. "Without that, the dike would have imploded, and water would have been spilling in."

Diane is closer to the truth than any of them. The dike will indeed implode and therein lies the only viable cure. An international crash.

The world danced around the Argentine problem, the Mexican difficulty and the Asian unpleasantness, but the financial capitals of the planet are not strong enough or flexible enough to waltz their way past an American crash.

From the ashes, we may be sufficiently humbled and perhaps even wise enough to do the things we haven’t courage enough to accomplish now;

• Oversee the absolutely uncontrolled hedge-fund industry that triggered this mess
• Disconnect business and industry from the IPO as a borrowing mechanism and send them back to traditional loans at traditional banks
• Do away entirely, completely and irrevocably with leverage
• Disabuse the investor of the charming fairy tale that uncontrolled growth is anything other than the definition of malignancy
• Return corporate stock certificates to their intended purpose of investment, rather than speculative instruments
• Make criminal the offer of stock options as incentives to management
• Consider laws initiating minimum-term (3-6 month) investment requirements to reduce the volatility of markets
• Tax capital gains as ordinary income
• Do away with the income tax
• Re-institute logical trade tariff policy

Those would be a few things that could be successfully accomplished following a crash. Add to those massive government investments in infrastructure, schools, public transport, alternative power sources, the de-corporatizing of agriculture and re-planning of our auto-centric and dehumanizing suburban sprawl.

Taking back control of the investment community would prevent the flight of scarce capital from the have-nots to the haves. Infrastructure investment, reorganizing agriculture, instituting tariffs and killing off the income tax are positive ways of creating good jobs at good wages. There is simply no political will to accomplish any of these goals, otherwise they would hardly have gained the half-century momentum that set us up for the current financial landslide, avalanche, tsunami or metaphor of your choice.

Meanwhile, someone please take the keys to the currency-printing presses away from Ben Bernanke.
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Media comment;

• Bloomberg-Most Read on Bloomberg: Carlyle; Bernanke on Mortgages; Ambac
• New York Times-When Ben Bernanke Speaks
• Financial Times-UK-Mortgage principal forgiveness will meet resistance from servicers
• Bloomberg-Paulson Says Deal `Very Close' With Congress on Housing Bill
• Wall Street Journal-Trichet Urges Dollar Unity

HAMAS AND THE TALIBAN--WINNING HEARTS AND MINDS ON A BUDGET, WHILE WE PISS AWAY BILLIONS

Just when you think every possible outrage has been committed in the name of George Bush's policy of pre-emptive war, something more comes from the blind-side to knock the wind from an already winded American experience.

BUSTED--THE COMING CREDIT-CARD MELTDOWN

A brutally frank and honest assessment of our past 30 years would make the argument there is little hope for the credit-addicted working poor but a '29 style crash. An entire nation has been sold down the river of hopeless wages and easy credit.