Obama’s Nobel Headache

Paul Krugman has emerged as Obama's toughest liberal critic. He's deeply skeptical of the bank bailout and pessimistic about the economy. Why the establishment worries he may be right.

Evan Thomas

NEWSWEEK

From the magazine issue dated Apr 6, 2009

Traditionally, punditry in Washington has been a cozy business. To get the inside scoop, big-time columnists sometimes befriend top policymakers and offer informal advice over lunch or drinks. Naturally, lines can blur. The most noted pundit of mid-20th-century Washington, Walter Lippmann, was known to help a president write a speech—and then to write a newspaper column praising the speech.

Paul Krugman has all the credentials of a ranking member of the East Coast liberal establishment: a column in The New York Times, a professorship at Princeton, a Nobel Prize in economics. He is the type you might expect to find holding forth at a Georgetown cocktail party or chumming around in the White House Mess of a Democratic administration. But in his published opinions, and perhaps in his very being, he is anti-establishment. Though he was a scourge of the Bush administration, he has been critical, if not hostile, to the Obama White House.

Banks Starting to Walk Away on Foreclosures

By SUSAN SAULNY

SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.

Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.

So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.

A Scary Corporate Coup Is Under Way -- We've Got to Stop It

By William Greider, TheNation.com
Posted on March 31, 2009, Printed on March 31, 2009
http://www.alternet.org/story/134217/

Editor's Note: Click here to join the protest!

The Rip Off Must Be Stopped!

Big bankers ruined our economy and now they are gaming the political system so they can profit even more off the crisis they caused. They must be stopped.

On April 11th, 2009, the public will come out in cities across the country to express their frustration and disapproval with how our elected officials have handled the economic crisis. No one has been left unscathed; this protest is yours.

Asia's savers not the culprit

Commentary and weekly watch by Doug Noland

"The extraordinary risk-management discipline that developed out of the writings of the University of Chicago's Harry Markowitz in the 1950s produced insights that won several Nobel prizes in economics. It was widely embraced not only by academia but also by a large majority of financial professionals and global regulators. But in August 2007, the risk-management structure cracked. All the sophisticated mathematics and computer wizardry essentially rested on one central premise: that the enlightened self-interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring their firms' capital and risk positions." Alan Greenspan, March 27, 2009, Financial Times

Former US Federal Reserve chairman Greenspan remains the master of cleverly obfuscating key facets of some of the most critical analysis of our time. The fact is that "the sophisticated mathematics and computer wizardry" fundamental to contemporary derivatives and risk management essentially rested on one central premise: that the Federal Reserve (and, more generally speaking, global policymakers) was there to backstop marketplace liquidity in the event of market tumult.

Obama, Change And China, Part 3: The New Deal dollar and the Obama dollar

By Henry C K Liu
This report is the third in a series.
Part 1: The song stays the same
Part 2: A dangerous balance

Much talk has been floating around comparing United States President Barack Obama with president Franklin D Roosevelt and the yet-to-be-fully-developed - or revealed - Obama recovery plan with the New Deal. So far, the differences between the two leaders in crisis are more visible than the similarities.

Obama's US$787 billion stimulus package is viewed by many economists as too small for the task and too diffused to tackle the immediate need of halting layoffs and promoting new job creation. The $275 billion home mortgage refinancing plan managed by newly installed Treasury Secretary Tim Geithner is beset with complexity that few seem to fully understand or know how to navigate.

Nitrate stimulates greenhouse gas production in small streams

A study conducted at the University of Notre Dame revealed that nitrous oxide, a potent greenhouse gas, is frequently produced in the sediments of small streams and that production rates were best explained by stream water nitrate concentrations. These concentrations are often the result of runoff from agricultural soils, where it is well established that a high presence of nitrates can stimulate nitrous oxide production.

Pension insurer shifted to stocks

Concern increases as losses mount; Failing plans could overwhelm agency

By Michael Kranish, Globe Staff | March 30, 2009

WASHINGTON - Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.

Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.

Credit Union Collapse Signals Depth of Financial Crisis

Geithner's Toxic Asset Plan Not Specifically Designed for Credit Unions

By Mary Kane 3/26/09 3:09 PM

In a sign of how widespread the nation’s financial crisis has become, even the credit unions are getting creamed.

Problems in the credit union system, once considered a largely mom-and-pop operation immune to turmoil, came to light last week, when their regulator seized two of the nation’s largest credit unions, U.S. Central Credit Union in Lenexa, Kanss, and Western Corp. Federal Credit Union in San Dimas, Calif. The two, with combined assets of $57 billion, are in trouble over the same investments in toxic mortgage backed securities that have felled global banks and led to the credit crunch.

Courage Award Honors Two Women Who Warned Us

There has been much hand-wringing, not to mention finger-pointing, regarding who knew what, and when, about the financial calamities that have recently come to pass. However, Brooksley Born and Sheila Bair won’t be counted among the willfully or accidentally ignorant: They’ve been named this year’s winners of the JFK Profile in Courage Award for sounding the alarm far ahead of time.

Obstruction of Justice

By Chris Hedges

U.S. District Judge Leonie M. Brinkema is scheduled to issue a ruling in the Eastern District of Virginia at the end of April in a case that will send a signal to the Muslim world and beyond whether the American judicial system has regained its independence after eight years of flagrant manipulation and intimidation by the Bush administration. Brinkema will decide whether the Palestinian activist Dr. Sami Amin Al-Arian, held for over six years in prison and under house arrest in Virginia since Sept 2, is guilty or innocent of two counts of criminal contempt.

Brinkema’s ruling will have ramifications that will extend far beyond Virginia and the United States. The trial of Al-Arian is a cause célèbre in the Muslim world. A documentary film was made about the case in Europe. He has become the poster child for judicial abuse and persecution of Muslims in the United States by the Bush administration. The facts surrounding the trial and imprisonment of the former university professor have severely tarnished the integrity of the American judicial system and made the government’s vaunted campaign against terrorism look capricious, inept and overtly racist.

Feds declare GM, Chrysler not viable, refuse more aid

By Kevin G. Hall | McClatchy Newspapers

WASHINGTON — President Barack Obama on Monday will reject requests for almost $22 billion in new taxpayer bailout money for General Motors Corp. and Chrysler, saying the car makers have failed to take steps to ensure their viability.

The government sought the departure of GM chief Rick Wagoner and said the company needed to be widely restructured if it had any hope of survival. It said it would provide the company with 60 days operating capital to give it time to undertake reforms.

Microbes turn electricity directly to methane without hydrogen generation

A tiny microbe can take electricity and directly convert carbon dioxide and water to methane, producing a portable energy source with a potentially neutral carbon footprint, according to a team of Penn State engineers.

"We were studying making hydrogen in microbial electrolysis cells and we kept getting all this methane," said Bruce E. Logan, Kappe Professor of Environmental Engineering, Penn State. "We may now understand why."

Paul Krugman: America The Tarnished

Ten years ago the cover of Time magazine featured Robert Rubin, then Treasury secretary, Alan Greenspan, then chairman of the Federal Reserve, and Lawrence Summers, then deputy Treasury secretary. Time dubbed the three “the committee to save the world,” crediting them with leading the global financial system through a crisis that seemed terrifying at the time, although it was a small blip compared with what we’re going through now.

All the men on that cover were Americans, but nobody considered that odd. After all, in 1999 the United States was the unquestioned leader of the global crisis response. That leadership role was only partly based on American wealth; it also, to an important degree, reflected America’s stature as a role model. The United States, everyone thought, was the country that knew how to do finance right.

Digby: Compromise

Fred Clarkson, doing his usual superlative job of tracking the religious right, has noticed a new approach to framing the abortion issue by some Catholic groups. It illustrates once again just how sophisticated the anti-abortion industry has become in shifting its marketing tactics to fit changing political circumstances. They operate strategically in both the long term and the short term, constantly reevaluating their tactics and tweaking them as necessary. (American business could learn something from them at this point.)

Spanish Court Weighs Inquiry on Torture for 6 Bush-Era Officials

By MARLISE SIMONS

LONDON — A Spanish court has taken the first steps toward opening a criminal investigation into allegations that six former high-level Bush administration officials violated international law by providing the legal framework to justify the torture of prisoners at Guantánamo Bay, Cuba, an official close to the case said.

The case, against former Attorney General Alberto R. Gonzales and others, was sent to the prosecutor’s office for review by Baltasar Garzón, the crusading investigative judge who ordered the arrest of the former Chilean dictator Augusto Pinochet. The official said that it was “highly probable” that the case would go forward and that it could lead to arrest warrants.

Frank Partnoy: Derivative Dangers

Fresh Air from WHYY, March 25, 2009 · Years before the current economic crisis, law professor and former Wall Street trader Frank Partnoy was warning about the dangers of risky financial practices.

In his 1997 book FIASCO: Blood in the Water on Wall Street, Partnoy detailed how derivatives — financial instruments whose value is determined by another security — were being used and abused by big financial firms. Partnoy used his experiences as a derivatives trader at Morgan Stanley to give the book an insider's perspective.

Max Baucus and the "Public Plan"

For the new issue of dead-tree TIME, I have written this short profile of Senate Finance Committee Chairman Max Baucus, a most unlikely figure to have emerged as the point man for health care reform in the Senate. (The print version also has a chart detailing the highlights of Baucus' own health reform proposal, which you can read about in detail in the White Paper that he produced last November.)

What didn't make the print edition story was a part of the interview in which I asked Baucus about one of the most controversial elements of both his plan and President Obama's--the so-called "public plan," a option in which people would have a chance to enroll in a Medicare-like publicly financed health system. The insurance companies hate this idea, saying it is would be unfair for them to be forced to compete with the government. Many health care experts, however, argue that this provision is crucial, as a means of holding down health care costs. (The idea being that the government would use its muscle--much as it does in the Medicare and Veterans Administration programs--to negotiate lower reimbursement rates.) Conservatives oppose it as well, because they see it as a first step toward a Canadian-style single-payer system.

No-one rules the world

US economic power is crumbling, but China is not yet ready to take over the reins. Martin Jacques reflects on the potential impact of the G20 ahead of world leaders arriving in London. Part of the NS's unrivalled coverage of the global crisis

Will Europe embrace President Obama like candidate Obama?

By Steven Thomma | McClatchy Newspapers

WASHINGTON — They gave him their hearts when he visited last summer. Now, the question hanging over Europe is how much more they'll give Barack Obama as he returns for the first time as president of the United States. Obama leaves on Tuesday on a whirlwind eight-day tour. He remains enormously popular in Europe, and the throngs that greeted him last summer as a candidate are likely to grow.

Un-Bottled Water Hits the U.S.

By Jennifer Berry, Earth911

posted: 28 March 2009 11:14 am ET

If you're an eco-conscious consumer and feel that small pang of guilt each time you purchase a new bottle of water, don't despair - a new solution is rolling out. Plant It Water™ recently launched its new "un-bottled" spring water, with packaging made from more than 60 percent renewable materials. The company is one of the first in the U.S. to offer water in a recyclable carton.

Unlike plastic water bottles, Plant It Water packaging uses materials from sources like plant fibers. Tetra Pak, the maker of the package, is considered one of the most sustainable liquid food packages on the market and won the presidential medal for sustainable development in 1996 by former Vice President Al Gore.

Krugman: the left's new anti-Obama

By: Mike Allen
March 28, 2009 11:02 AM EST

A stark image of Paul Krugman, the bearded New York Times op-ed columnist and Princeton economist, appears on the cover of next week’s Newsweek, with the headline “OBAMA IS WRONG: The Loyal Opposition of Paul Krugman.”

Krugman, who won the Nobel Prize in economics last fall, has been arguing that Obama is doing too little to respond to threats to the nation’s banking and economic system, and he has contended that the $787 billion stimulus bill should have been bigger.

Bubblespeak

The Orwellian language of Wall Street finds its way to the Treasury Department.

By Daniel Gross
Posted Saturday, March 28, 2009, at 7:44 AM ET

---

In his timeless 1946 essay "Politics and the English Language," George Orwell condemned political rhetoric as a tool used "to make lies sound truthful" and "to give an appear­ance of solidity to pure wind." Were he alive today, Orwell might well be moved to pen a com­panion piece on the use of financial lingo. Remember those toxic assets? The poorly performing mortgages and collateralized debt obligations festering on the books of banks that made truly exe­crable lending decisions? In the latest federal bank rescue plan, they've been transformed into "legacy loans" and "lega­cy securities"—safe for professional in­vestors to purchase, provided, of course, they get lots of cheap government credit.

Jim Webb: The National Criminal Justice Commission Act of 2009

The National Criminal Justice Commission Act of 2009 that I introduced in the Senate on March 26, 2009 will create a blue-ribbon commission to look at every aspect of our criminal justice system with an eye toward reshaping the process from top to bottom. I believe that it is time to bring together the best minds in America to confer, report, and make concrete recommendations about how we can reform the process.

Paul Krugman: The Market Mystique

On Monday, Lawrence Summers, the head of the National Economic Council, responded to criticisms of the Obama administration’s plan to subsidize private purchases of toxic assets. “I don’t know of any economist,” he declared, “who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.”

Leave aside for a moment the question of whether a market in which buyers have to be bribed to participate can really be described as “better functioning.” Even so, Mr. Summers needs to get out more. Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis.

Reform is needed. Reform is in the air. We can't afford to fail

The task is to build a new financial architecture. If we flunk it, the pain will strike most cruelly in the world's poorest countries

Joseph Stiglitz
The Guardian, Friday 27 March 2009

The financial crisis that began in America's sub-prime mortgage market has now become a global recession – with growth projected to be a negative 1.5%, the worst performance since the Great Depression. Even countries that had done everything right are seeing marked declines in growth rates, and even deep recessions. And much of the most acute pain will be felt by developing countries.

A UN commission of experts on reforms of the international monetary and financial system, which I chair, has just published its preliminary report. It focuses especially on the impact of the crisis on developing countries and the poor everywhere, which is likely to be severe. An estimated 30 million more people will be unemployed in 2009 compared to 2007. The increase could even reach 50 million. Progress in reducing poverty may be halted. The report warns that: "Some 200 million people, mostly in developing economies, could be pushed into poverty if rapid action is not taken to counter the impact of the crisis."

Obama's Afghan Spaghetti Western

By Pepe Escobar

As the Barack Obama administration releases the details of its strategic review of Afghanistan's "good war", an acronym-plagued global public opinion is confronted with a semantic dilemma: what in the world is happening to George W Bush's "global war on terror" (GWOT), then slyly rebranded by the Pentagon as "The Long War" (TLW)?

It all started when a mid-level bureaucrat in the Obama administration's Office of Management and Budget (OMB) sent an e-mail to the Pentagon stressing the White House was finally axing GWOT and giving birth to the delightfully Orwellian Overseas Contingency Operations (OCO).

Project For The Rehabilitation Of Neoconservatism

What do you do if your previous organization — and the ideology behind it — has become inextricably bound in the public’s imagination to one of the worst foreign policy blunders in American history? Obviously, shut it down, and start a new organization with a new name.

The Foreign Policy Initiative lists Robert Kagan, Bill Kristol, and Dan Senor on its board of directors, so no prizes for guessing what they’re about (more power, less appeasement, stronger wills.)

The Quiet Coup

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

Budget Deficits and Blow Up Dolls: It's the Economy Stupid!

By Dean Baker

Created 03/26/2009 - 1:13pm

In the movie Lars and the Real Girl, the main character imagines that a female blow-up doll is his fiancé. To humor Lars, his brother and sister-in-law go along with the charade. Over the course of the movie, more people are drawn into the circle, until eventually the whole town is treating Bianca the blow-up doll as one of its leading citizens.

This seems to pretty well describe the debate over the budget deficit, except it's not clear that many people realize it's a charade. The main story is that Lars' budget hawk counterparts are upset that the deficits projected for 2013 or 2019 are too large. They want President Obama to commit to spending cuts and/or tax increases in order to bring these deficits to levels they consider acceptable.

Obama Asks Volcker to Lead Panel on Tax-Code Overhaul

By Roger Runningen and Ryan J. Donmoyer

March 25 (Bloomberg) -- President Barack Obama is putting former Federal Reserve Chairman Paul Volcker in charge of a tax-code review aimed at closing loopholes, streamlining the law and generating revenue, budget Director Peter Orszag said.

Volcker, 81, who heads the president’s Economic Recovery Advisory Board, is being asked to take a look at the laws in an effort to rebalance the tax system.

The Real AIG Scandal: How the Game Is Rigged at Wall Street's Casino

By Lucy Komisar, AlterNet
Posted on March 26, 2009, Printed on March 26, 2009
http://www.alternet.org/story/133228/

There's nothing like a grandstanding member of Congress to deflect attention from the real issues at hand by throwing a few juicy bones to the masses.

Most legislators at a House Finance subcommittee hearing last week deftly avoided the real story of AIG's collapse. Instead, they homed in on the public relations disaster of hundreds of top AIG officials and staff getting $165 million (later revealed as over $218 million) in bonuses.

Give credit to Timothy Geithner's new toxic asset plan

By Matthew Richardson and Nouriel Roubini

Wednesday, March 25th 2009, 4:00 AM

For the economy to be viable, the financial system must be healthy. For this to occur, the system needs to be cleansed of its poorly performing loans and so-called toxic securities backed by loans. This way, once creditworthy institutions and individuals come to the market looking for capital to borrow, financial firms will be in a position to lend them money.

Secretary Timothy Geithner's new toxic asset plan is a serious step in the right direction in that it creates a public-private partnership to buy the troubled assets of financial firms - in other words, to do the necessary cleansing. Up until now, with all the government bailouts, the financial system has been barely treading water. With this plan, it will still be a hard swim, but, at least, there is a path to shore.

Larry Summers: Brilliant Mind, Toxic Ideas

According to most commentators, the president's press conference went a long way towards taking the spotlight off the roiling anger over AIG, bonuses, and Wall Street abuses -- and putting it back where the president wants it: on the imperative need to pass his budget.

But the best laid plans of our remarkable president may be laid to waste by a bank rescue plan that is the product of exhausted ideas put together by men far too beholden to Wall Street.

The Way of All Debt

By John Gray

Payback: Debt and the Shadow Side of Wealth

by Margaret Atwood

Toronto: House of Anansi, 230 pp., $15.95 (paper)

A perturbation arising from the American market in subprime mortgages has spread through the banking system to disrupt economic activity throughout the world. The pattern of cause and effect will be debated for many years, with historians asking when and how the global economy was set on the path that led to its current condition. Already there are some who trace the crisis to decisions of Alan Greenspan, chairman of the board of governors of the Federal Reserve from 1987 to 2006, when he responded to events such as the collapse in the late 1990s of a hedge fund, Long Term Capital Management, and the subsequent bursting of the dot-com bubble by creating a climate of easy borrowing, which in turn inflated another bubble in the housing market.

Others suggest that a change in the legal system of banking brought about by the repeal in 1999 of the Glass-Steagall Act of 1933, which had aimed to limit speculation by separating commercial and investment banking, created an environment that allowed reckless lending. Yet others explain the turmoil in world markets as a symptom of an endemic instability in the type of finance capitalism that has developed in America, Britain, and some other Western countries.

Thomas Frank: The 'Populists' Are Right About Wall Street

What's wrong with well-directed anger?

By THOMAS FRANK

How has a popular Democratic president with a convincing electoral mandate failed to translate the opportunities of recent events into the "change" for which voters clamored? What kind of miscalculation allowed his administration to stir up such a wave of populist fury in such a short time?

The short answer, of course, is AIG. Why did the Treasury Department allow the payout of many millions in bonuses to executives of the unit that sank the company? Every answer the president's brain trust offered made them look more feckless, at the very moment they were rolling out a bank plan designed to spare stakeholders of our troubled financial institutions the haircut they so richly deserve.

Social skills, extracurricular activities in high school pay off later in life

Phil Ciciora, News Editor
217-333-2177;pciciora@illinois.edu

CHAMPAIGN, Ill. — It turns out that being voted “Most likely to succeed” in high school might actually be a good predictor of one’s financial and educational success later in life.

According to a University of Illinois professor who studies the sociology of education, high school sophomores who were rated by their teachers as having good social skills and work habits, and who participated in extracurricular activities in high school, made more money and completed higher levels of education 10 years later than their classmates who had similar standardized test scores but were less socially adroit and participated in fewer extracurricular activities.

Pundits Gone Wild (in Dumping on Obama)

By David Corn | March 23, 2009 10:22 AM

Sitck a fork in it. Obama's presidency is done. He's lost the people. He's adrift. He's screwed the pooch.

Some pundits are already pronouncing the O Era a bust--or suggesting it's near the cliff's edge. In the White House press room, reporters routinely ask press secretary Robert Gibbs if the Obama White House has already lost its mojo. Over at The Weekly Standard, Fred Barnes has declared Obama's stint a "flailing presidency." Given that Barnes considers the Bush presidency one of the best in this country's long history, his success-o-meter may be in need of recalibration.

Congress Passes Wide-Ranging Bill Easing Bank Laws

An old article from 1999, on the repeal of Glass-Steagall...read it and weep--Dictynna

By STEPHEN LABATON

Congress approved landmark legislation today that opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another's businesses.

The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.

We Need to Regulate the Financial Instruments That Took AIG Down

By George Soros, The Financial Times
Posted on March 25, 2009, Printed on March 25, 2009
http://www.alternet.org/story/133272/

In all the uproar over AIG, the most important lesson has been ignored. AIG failed because it sold large amounts of credit default swaps (CDS) without properly offsetting or covering their positions. What we must take away from this is that CDS are toxic instruments whose use ought to be strictly regulated: Only those who own the underlying bonds ought to be allowed to buy them. Instituting this rule would tame a destructive force and cut the price of the swaps. It would also save the U.S. Treasury a lot of money by reducing the loss on AIG's outstanding positions without abrogating any contracts.

CDS came into existence as a way of providing insurance on bonds against default. Since they are tradable instruments, they became bear-market warrants for speculating on deteriorating conditions in a company or country. What makes them toxic is that such speculation can be self-validating.

Do the Secret Bush Memos Amount to Treason? Top Constitutional Scholar Says Yes

By Naomi Wolf, AlterNet
Posted on March 25, 2009, Printed on March 25, 2009
http://www.alternet.org/story/133273/

In early March, more shocking details emerged about George W. Bush legal counsel John Yoo's memos outlining the destruction of the republic.

The memos lay the legal groundwork for the president to send the military to wage war against U.S. citizens; take them from their homes to Navy brigs without trial and keep them forever; close down the First Amendment; and invade whatever country he chooses without regard to any treaty or objection by Congress.

Liquid war: Welcome to Pipelineistan

By Pepe Escobar

What happens on the immense battlefield for the control of Eurasia will provide the ultimate plot line in the tumultuous rush towards a new, polycentric world order, also known as the New Great Game.

Our good ol' friend the nonsensical "global war on terror", which the Pentagon has slyly rebranded "the Long War", sports a far more important, if half-hidden, twin - a global energy war. I like to think of it as the Liquid War, because its bloodstream is the pipelines that crisscross the potential imperial battlefields of the planet. Put another way, if its crucial embattled frontier these days is the Caspian Basin, the whole of Eurasia is its chessboard. Think of it, geographically, as Pipelineistan.

Glenn Greenwald: A Major Difference Between Conservatives and Progressives

One of the linchpins of the Bush presidency, especially during the first term (and well into the second, until he became a major political liability), was the lock-step uncritical reverence - often bordering on cult-like glorification - which the "conservative" movement devoted to the "Commander-in-Chief." An entire creepy cottage industry arose - led not by fringe elements but by right-wing opinion-making leaders - with cringe-inducing products paying homage to Bush as "The First Great Leader of the 21st Century" (John Podhoretz); our "Rebel-in-Chief" (Fred Barnes); "The Right Man" (David Frum); the New Reagan (Jonah Goldberg); "a man of extraordinary vision and brilliance approaching to genius" who is our "Big Brother" (John Hinderaker); and "the triumph of the seemingly average American man," the supremely "responsible" leader who, when there's a fire, will "help direct the rig to the right house and count the kids coming out and say, 'Where's Sally'?" (Peggy Noonan).

Fiscal Plan Fails both Markets and Taxpayers

by Joseph E. Stiglitz<

Let's be clear: President Barack Obama inherited an economy in freefall and could not possibly have turned things around in the short time since his election. Unfortunately, what he is doing is not enough.

The real failings in the Obama recovery program lie not in the stimulus package -- though it is too heavily weighted toward tax cuts, and much of it merely offsets cutbacks by states -- but in its efforts to revive financial markets.

Brain quirk could help explain financial crisis

With hindsight, the causes of the current global financial meltdown seem obvious, even predictable. Now, brain imaging offers one explanation for why so few investors challenged foolhardy fiscal advice.

Our brains raise few objections when presented with seemingly expert guidance, new research suggests.

Memo to the media: Where's W?

So how did we get to this point? Job losses in the hundreds of thousands every month, almost weekly bank failures, and 401(k)s at half their value from a year and a half ago. The media treat the question as a mystery that can be solved through scrutiny of the Obama administration's actions starting on January 20, 2009 -- an approach that is absurd on its face. The media's erasure of the Bush administration and its policies in their coverage of the economy has been so pervasive that they have given round-the-clock attention to the AIG bonus scandal for days on end with virtually no mention of the fact that it was the Bush administration that last fall approved billions of dollars in aid to AIG without requiring the company to nullify its bonus contracts.

“The Zombie Ideas Have Won”–Paul Krugman on $1 Trillion Geithner Plan to Buy Toxic Bank Assets

Treasury Secretary Timothy Geithner is preparing to unveil a plan today to purchase as much as $1 trillion in troubled mortgages and other assets from banks. The government is reaching out to hedge funds, private equity firms and sovereign wealth funds to help buy the toxic assets. The Obama administration has described the plan as a public-private partnership, but most of the actual money will be put up by the government. We speak with Nobel Prize-winning economist and New York Times columnist, Paul Krugman. [includes rush transcript]

Down the dark path

[...]

That's a little bit like the situation with the newly revealed, final US Treasury Secretary Timothy Geithner toxic asset recovery bank program. It may work. It may not. Whatever happens with its effectiveness, one thing is certain. US taxpayers are definitely going to be getting the chop, maybe you could even say they're getting it in the chops, as a result of its implementation and administration.

It has now been over a year since I advocated that the subprime and other mortgage-related debt securities that were depreciating away, as a result of falling real estate prices, in major banks' portfolios be somehow removed. (See And the band played on, Asia Times Online, March 6, 2008.)

The Geithner Plan: Billions More for Failed Banks

The last-ditch effort to save Wall Street will hurt taxpayers and still require another big bailout down the line

by Dean Baker

Treasury secretary Timothy Geithner's latest bank bailout plan is another Rube Goldberg contraption intended to funnel taxpayer dollars to bankrupt banks, without being overly transparent about the process. The main mechanism is a government guarantee that would allow investors to buy junk with a 12-to-1 leverage ratio, where they only risk the downside on their own investment, not the borrowed money.

Ostensibly, this is supposed to reveal the "true" price for junk assets, as investors compete at auctions to buy assets under the new rules. But this story doesn't pass the laugh test. All we will really learn is what price investors are willing to pay for these junk assets when they are given a large subsidy from the government to buy them. In reality, this plan is a way to use taxpayer dollars to get investors to pay far more than these assets are worth in order to give more money to bankrupt banks.

America Is in Need of a Moral Bailout

By Chris Hedges

In decaying societies, politics become theater. The elite, who have hollowed out the democratic system to serve the corporate state, rule through image and presentation. They express indignation at AIG bonuses and empathy with a working class they have spent the last few decades disenfranchising, and make promises to desperate families that they know will never be fulfilled. Once the spotlights go on they read their lines with appropriate emotion. Once the lights go off, they make sure Goldman Sachs and a host of other large corporations have the hundreds of billions of dollars in losses they incurred playing casino capitalism repaid with taxpayer money.

We live in an age of moral nihilism. We have trashed our universities, turning them into vocational factories that produce corporate drones and chase after defense-related grants and funding. The humanities, the discipline that forces us to stand back and ask the broad moral questions of meaning and purpose, that challenges the validity of structures, that trains us to be self-reflective and critical of all cultural assumptions, have withered. Our press, which should promote such intellectual and moral questioning, confuses bread and circus with news and refuses to give a voice to critics who challenge not this bonus payment or that bailout but the pernicious superstructure of the corporate state itself. We kneel before a cult of the self, elaborately constructed by the architects of our consumer society, which dismisses compassion, sacrifice for the less fortunate, and honesty. The methods used to attain what we want, we are told by reality television programs, business schools and self-help gurus, are irrelevant. Success, always defined in terms of money and power, is its own justification. The capacity for manipulation is what is most highly prized. And our moral collapse is as terrifying, and as dangerous, as our economic collapse.

The Real AIG Scandal, Continued!

The transfer of $12.9 billion from AIG to Goldman looks fishier and fishier.

By Eliot Spitzer
Posted Sunday, March 22, 2009, at 9:42 AM ET

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The AIG scandal is getting ever-more disturbing. Goldman Sachs' public conference call explaining its trading relationship and exposure with AIG established, once again, that Goldman knows how to protect itself. According to Goldman, even if AIG had failed, Goldman's losses would have been minimal.

How did Goldman protect itself? Sensing AIG's weakening capital position through 2006 and 2007, Goldman demanded more collateral from AIG and covered outstanding risk with instruments from other firms.

Paul Krugman: Financial Policy Despair

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

US unveils $1tn toxic asset plan

The US has announced details of a plan to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks' balance sheets.

The "Public-Private Investment Programme" will purchase the troubled mortgages and securities that have been at the root of the credit crunch.

The Treasury has committed $75bn to $100bn to the programme and said the private sector would also contribute.

On Wall Street key share indexes soared by up to 7% on the news.

The President Needs to Hear Millions of Second Opinions on His Economic Plans

By William Greider, The Washington Post
Posted on March 23, 2009, Printed on March 23, 2009
http://www.alternet.org/story/132858/

This is part of a special AlterNet series on Obama's latest plans for a rescue of the bankers and Wall Street's toxic assets.
Read our editorial on the big picture.

The president is getting what he asked for, but perhaps not what he had in mind. During the campaign, Barack Obama beckoned Americans to put aside their cynicism about politics and re-engage as active citizens. They are now doing so with red-hot anger. They are outraged by events and forcing their way into congressional affairs and behind closed doors where policy wonks discuss issues with cerebral civility. The president is now trapped between these two realms -- the governing elites who decide things and the people who are governed. Which side is he on? If he does not choose wisely, the anger could devour his presidency.

Tax to the rescue

By Hazel Henderson

Reforming the unregulated global casino must be addressed at the summit of the Group of 20 (G-20) countries in London next month. The communique from the November 2008 summit of G-20 leaders in Washington, DC, clearly cited increased cooperation between nations as essential, particularly oversight of global banks and other financial players. Cooperation is necessary to avoid "beggar-thy-neighbor" policies.

Yet, no mention was made at the November summit of the most urgent priority: tackling the up to US$3 trillion of daily currency trading, over 90% of which is speculation. Bouncing currencies have caused much of the turbulence and excessive volatility in world markets as contagion spreads in minutes in this around-the-clock trading. A small tax (less than 1%) on all trades has been advocated since the 1970s, when it was proposed by economist James Tobin. The idea was also floated in 1989 by now US National Economic Council head Lawrence Summers, who also attended the Washington summit.

Petraeus hands over a 'political hot potato'

By Gareth Porter

WASHINGTON - United States special operations forces in Afghanistan, whose commando raids and airstrikes against suspected Taliban targets have caused large numbers of civilian casualties that have angered Afghans, have quietly been put under the "tactical control" of the commander of US and North Atlantic Treaty Organization (NATO) forces in Afghanistan, General David McKiernan, for the first time.

An order issued last Tuesday at the direction of Central Command (CENTCOM) chief General David Petraeus gives McKiernan authority over all operations by special operations units stationed in the country, as Colonel Gregory Julian, McKiernan's spokesperson, confirmed in an e-mail to Inter Press Service (IPS). The order, which has not been made public, modifies previous command arrangements which had excluded US special operations forces from McKiernan's command authority.

The Two Documents Everyone Should Read to Better Understand the Crisis

As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.¹ When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.

Climate Change Myths and Facts

By Chris Mooney
Saturday, March 21, 2009; A13

A recent controversy over claims about climate science by Post op-ed columnist George F. Will raises a critical question: Can we ever know, on any contentious or politicized topic, how to recognize the real conclusions of science and how to distinguish them from scientific-sounding spin or misinformation?

Congress will soon consider global-warming legislation, and the debate comes as contradictory claims about climate science abound. Partisans of this issue often wield vastly different facts and sometimes seem to even live in different realities.

Guess What Got Lost in the Loan Pool?

By GRETCHEN MORGENSON

WE are all learning, to our deep distress, how the perpetual pursuit of profits drove so many of the bad decisions that financial institutions made during the mortgage mania.

But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks’ minimalist approach to meeting legal requirements — bookkeeping matters, really — when pooling thousands of loans into securitization trusts.

Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.

James K. Galbraith Reponds to Geithner’s Toxic Asset Plan

I've just been reading the NYT report.

The central Treasury assumption, at least for public consumption, seems to be that the underlying mortgage loans will largely pay off, so that if the PPIP buys and holds, at an above-present-market price governed by auction, the government's loan to finance the purchase will not go bad.

Recovery rates on sub-prime residential mortgage-backed securities (RMBS) so far appear to belie this assumption. IndyMac lost $10.8 bn on a $15bn portfolio (and if you count the wipeout of equity, the total loss is about $12bn). That's an 80 percent loss. It's possible that recovery rates at other banks will be better, but how can we know? No one is examining the loan tapes.

WaMu sues FDIC for more than $13 billion over forced sale

Stephen C. Webster
Published: Saturday March 21, 2009

Washington Mutual, the bankrupt, seized and "under investigation" financial institution which saw some operations forcibly sold off to JPMorgan Chase in 2008, is suing the agency that guarantees Americans' deposits, and that agency is running low on funds.

Washington Mutual (WaMu), formerly one of the nation's most prestigious banks and alleged holder of over $307 billion in assets, is suing the Federal Deposit Insurance Corporation for more than $13 billion over the roll-up of its banking division into JPMorgan Chase & Co.

Frank Rich: Has a ‘Katrina Moment’ Arrived?

A CHARMING visit with Jay Leno won’t fix it. A 90 percent tax on bankers’ bonuses won’t fix it. Firing Timothy Geithner won’t fix it. Unless and until Barack Obama addresses the full depth of Americans’ anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: “President Obama may not realize it yet, but his Katrina moment has arrived.”

The Virtues of Public Anger and the Need for More

by Glenn Greenwald

With lightning speed and lockstep unanimity, opinion-making elites jointly embraced and are now delivering the same message about the public rage triggered this week by the AIG bonus scandal: This scandal is insignificant. It's just a distraction. And, most important of all, public anger is unhelpful and must be contained or, failing that, ignored.

This anti-anger consensus among our political elites is exactly wrong. The public rage we're finally seeing is long, long overdue, and appears to be the only force with both the ability and will to impose meaningful checks on continued kleptocratic pillaging and deep-seated corruption in virtually every branch of our establishment institutions. The worst possible thing that could happen now is for this collective rage to subside and for the public to return to its long-standing state of blissful ignorance over what the establishment is actually doing.

Sorry Krugman, Geithner's Plan is the Least Risky Option

March 21, 2009, 11:59AM

Krugman, who shined so much light in the dark days of the Bush administration, and who is still doing more than anyone outside of This American Life to help non-economists understand the banking crisis, is fundamentally wrong in his assessment of Obama's plan to rescue the financial system.

Mrs. Obama Speaks Out About Her Household

By MARIAN BURROS

WASHINGTON — Reporters are not the only ones with a particularly keen interest in what Michelle Obama wears. Her husband, Mrs. Obama says, notices everything. In fact, she has learned not to wear a certain gray metallic belt when the president is around.

“Barack calls it my ‘Star Trek’ belt,” the first lady said in an interview this week. “He doesn’t understand fashion.”

The interview, which started out on the subject of the new White House vegetable garden, ended up ranging over a variety of household topics, which Mrs. Obama addressed with substantial fun-poking at her husband, her mother and herself.

Real concentration camps USA: Our immigrant-detention system is spiraling out of control

Friday, March 20, 2009
-- by Dave

Jackie Mahendra points out an Associated Press story describing some of the most recent information about how we're detaining illegal immigrants -- and it's profoundly disturbing:

The U.S. detention system for immigrants has mushroomed in the past decade, creating a costly building boom in an effort to sweep up criminals and ensure that illegal immigrants are quickly deported.

However, an Associated Press computer analysis of the entire detention population on a Sunday night in January found that most did not have a criminal record and many were not about to leave the country soon — voluntarily or through deportation.

The Rise And Fall Of AIG's Financial Products Unit

By Zachary Roth and Ben Buchwalter - March 20, 2009, 9:36AM

As we delve into the back-story behind the collapse of AIG, we thought it might be useful to lay out some key factual information about the firm's Financial Products unit, known as AIGFP, whose disastrous credit default swaps brought the company to its knees. How and when did AIG Financial Products get started? Who ran it, and from where? How did it get into credit default swaps, and what exactly are they, anyway? And how did this group of derivatives traders eventually wind up bringing down one of the most admired financial firms in the world?

Paul Krugman: Despair over financial policy

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

This is the way the Internet ends: not with a bang, but DPI

Free Press claims that deep packet inspection could bring about the end of the Internet "as we know it." But the rest of the world knows it all too well already.

By Nate Anderson | Last updated March 20, 2009 12:33 PM CT

Does deep packet inspection mean the end of the Internet?

Deep packet inspection (DPI) gear has always been marketed to ISPs as a way to earn more money by scanning Internet traffic and charging more for various services. Want to game online? Better upgrade to the "Gaming Xtreme!" plan. Want to use VoIP? Prepare to open your wallet. Watch much streaming video? Well, it would be a whole lot smoother if you just paid another $2.99 a month.

U.S. seizes 2 big credit unions

U.S. takes over two credit unions after tests find vulnerability. U.S. Central Federal Credit Union and WesCorp have combined assets of $57 billion.

By Catherine Clifford, CNNMoney.com staff writer

Last Updated: March 20, 2009: 9:17 PM ET

NEW YORK (CNNMoney.com) -- The federal government, in its latest effort to prop up the financial system, took over two big wholesale credit unions Friday with combined assets of $57 billion.

U.S. Central Federal Credit Union in Lenexa, Kan., and Western Corporate Federal Credit Union in San Dimas, Calif., were placed under conservatorship "to stabilize the corporate credit union system and resolve balance sheet issues," according to the National Credit Union Administration.

Naked Short Sales Hint Fraud in Bringing Down Lehman

By Gary Matsumoto

March 19 (Bloomberg) -- The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts.

As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30.

Reagan: The Great American Socialist

Friday 20 March 2009
by: Ravi Batra, t r u t h o u t | Perspective

Socialism has been much in the news for some months. Recently, some GOP stalwarts charged President Obama with preaching the heresy. John Boehner, the House minority leader, characterized Obama's stimulus package as, "one big down payment on a new American socialist experiment."

"Socialism" is a pejorative term in American politics and needs to be carefully examined. It usually refers to increased government control over the economy, or policies that promote the redistribution of wealth. There is no doubt that President Obama's economic measures, passed and proposed, will raise tax rates on the richest Americans to pay for increased government funding of health care, green energy and education. So the new president is indeed a redistributionist, but so was Ronald Reagan, except that Obama's plans will transfer wealth from the rich to the poor, whereas Reagan's bills transferred wealth from the poor and the middle class to the opulent. In fact, Obama's measures are puny, whereas Reagan's were massive. If the Democrat is a "small" socialist, Reagan was the Great American Socialist.

U.N. panel says world should ditch dollar

By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

US Fed's move is the bigger problem

By Julian Delasantellis

It couldn't always have been like this. No, the country today would be a far different place if across the span of American history had the nation constantly chosen to focus on the most picayune of arcane and unimportant irrelevancies, as it's doing currently with the AIG bonus controversy, instead of on matters with some actual import.

FEMA concentration camps? The militia good times are rollin' again

-- by Dave

David Shuster was making fun of Glenn Beck's preoccupation with militia-style right-wing conspiracy theories yesterday on 1600 Pennsylvania Avenue, and wondering why mainstream conservatives have so much trouble standing up to and denouncing this stuff.

There's actually a reason why mainstream conservatives never stand up to the far-right elements within their own coalition: they find them very useful.

It has ever been so. Harkening back to the days when Monarchists attacked the Enlightenment's pro-democracy thinkers as a plotting cabal of elites (which is where the old Illuminati conspiracy theories originate), the wealthy and those otherwise invested in maintaining the status quo in our civilization have always found these kinds of conspiracy theories a handy way of stirring up working-class resentment against progressive reformers.

The Big Takeover

The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution

MATT TAIBBI

Posted Mar 19, 2009 12:49 PM

It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The AIG Saga: A Brief Primer

by Dean Baker

The awarding of $165 million in bonuses to AIG executives has dominated the news in the last week. There has been widespread outrage over the idea that taxpayers' dollars are being used to reward the people who effectively bankrupted AIG and cost the government more than $160 billion in bailout funds to meet the company's obligations. This primer addresses some of the issues raised by both the bonuses and the much larger sum going toward the AIG bailout.

The Bonuses: What Did They Know and When Did They Know It?

One of the silliest distractions in the AIG saga has been the various accounts of when AIG told Treasury Secretary Geithner of the bonuses and when Geithner passed the information along to President Obama. This discussion is silly because Geithner almost certainly knew of the bonuses ever since the initial takeover on September 15th. He just didn't think they were important.

In a State

Being a governor has become America's toughest job.

By Eliot Spitzer
Posted Thursday, March 19, 2009, at 12:16 PM ET

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There has never been a tougher time to be a governor. Governors must deal with all the problems confronting our economy, but they lack the federal government's ability to run a deficit. With the $787 billion stimulus and sundry other bailout spending, President Obama and Congress have the rather pleasant task of printing gobs of money and throwing it toward favored sectors and projects.

Governors can only gaze on with envy. The numbers from the states are downright horrifying—and getting worse. The best estimate is that states, nearly all of which are constitutionally obligated to balance their budgets, collectively face deficits of about $350 billion over the next 30 months. That is about 20 percent of total state spending.

Don't Be Afraid To Kill the F-22

Why Pentagon program cuts won't necessarily bring job cuts.

By Fred Kaplan
Updated Thursday, March 19, 2009, at 6:19 PM ET

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Word is that Secretary of Defense Robert Gates plans to slash or kill several big-ticket weapons programs when he rolls out the full details of the Pentagon budget next month. The contractors for some of the projects on the chopping block are fighting back pre-emptively with the most potent slogan in politics today: Jobs!

Many lawmakers and commentators who are otherwise critical of excess military spending wonder whether it's a good idea to swing the ax at a time when the government is spending more than a trillion dollars to stimulate the economy.

Lockheed-Martin is milking this sentiment, most blatantly with a full-page ad in the Washington Post warning that halting production of its F-22 Raptor fighter jet—believed to be a top candidate for cancellation—would mean the loss of 95,000 jobs. The advertisement's photo features not the sleek supermodern plane itself, as similar ads have in the past, but rather a blue-collar worker in a Chicago foundry, one of more than 1,000 factories in 46 states that share a piece of the Raptor's action.

The Nationalization Option

By Harold Meyerson
Wednesday, March 18, 2009; A13

You might think that having anted up $173 billion of our own money, we taxpayers would have some leverage at AIG, now that we own 80 percent of the shares. You might think that when chief executive Edward Liddy, a holdover appointee of Hank Paulson's, told Treasury Secretary Tim Geithner that he had just mailed $165 million of our money as bonuses to the geniuses at the firm's financial products unit -- who probably did more on a per-banker basis to destroy global capitalism than any other kindred group -- that Geithner, upon hearing this news, would have responded, "Liddy, you're fired."

No Return To Normal

Why the economic crisis, and its solution, are bigger than you think.

by James K. Galbraith

Barack Obama's presidency began in hope and goodwill, but its test will be its success or failure on the economics. Did the president and his team correctly diagnose the problem? Did they act with sufficient imagination and force? And did they prevail against the political obstacles-and not only that, but also against the procedures and the habits of thought to which official Washington is addicted?

The president has an economic program. But there is, so far, no clear statement of the thinking behind that program, and there may not be one, until the first report of the new Council of Economic Advisers appears next year. We therefore resort to what we know about the economists: the chair of the National Economic Council, Lawrence Summers; the CEA chair, Christina Romer; the budget director, Peter Orszag; and their titular head, Treasury Secretary Timothy Geithner. This is plainly a capable, close-knit group, acting with energy and commitment. Deficiencies of their program cannot, therefore, be blamed on incompetence. Rather, if deficiencies exist, they probably result from their shared background and creed-in short, from the limitations of their ideas.

How to Destroy the Government in Three Easy Steps

Thursday 19 March 2009

by: Joe Brewer, t r u t h o u t | Perspective

In eight short years, conservatives have effectively bankrupted many state governments and left the fed in shambles. And now citizens have to "make tough decisions" and share the suffering equally across the land (unless of course, you're part of that lucky 1 percent who co-opted the functions of government to serve their own ends ... they'll be cozy with their offshore bank accounts, golden parachutes and permanent tax holidays).

Are you a teacher who educates our future citizens? Too bad. You've got to tighten your belt and let that job go. Manual laborer? Sorry, but that job can earn more money for our shareholders if it's done in Micronesia. Need a college degree? Prepare for indentured servitude because you'll be working to pay us off for most of your adult life. Health care? Ha! That's just a Ponzi scheme dreamed up by a bunch of socialists.

Climate change deniers have media outlets 'everywhere' now

Despite the success of public awareness efforts on the dangers of climate change by the likes of Al Gore and others, the global warming denial lobby is still going strong, as can be seen by recent polling numbers that show fewer Americans believe climate change is a serious threat.

A poll released last week by Gallup says that while a majority of Americans still believe the seriousness of global warming is “either correctly portrayed in the news or underestimated,” an all-time high of 41 percent of those polled say it is exaggerated.

Why money messes with your mind

8 March 2009 by Mark Buchanan

Dough, wonga, greenbacks, cash. Just words, you might say, but they carry an eerie psychological force. Chew them over for a few moments, and you will become a different person. Simply thinking about words associated with money seems to makes us more self-reliant and less inclined to help others. And it gets weirder: just handling cash can take the sting out of social rejection and even diminish physical pain.

This is all the stranger when you consider what money is supposed to be. For economists, it is nothing more than a tool of exchange that makes economic life more efficient. Just as an axe allows us to chop down trees, money allows us to have markets that, traditional economists tell us, dispassionately set the price of anything from a loaf of bread to a painting by Picasso. Yet money stirs up more passion, stress and envy than any axe or hammer ever could. We just can't seem to deal with it rationally... but why?

Forget the bonuses: AIG can't repay its loans, GAO says

By Kevin G. Hall | McClatchy Newspapers

WASHINGTON — Lost in all the shouting over the $165 million in bonuses paid to executives of disgraced insurer American International Group was this sober message delivered to Congress on Wednesday by a government watchdog: AIG's ability repay its $170 billion in loans from taxpayers has eroded significantly.

Testifying before Congress, Orice Williams, the director of the Government Accountability Office's financial markets division, said that AIG has had only limited success in restructuring itself, despite more than $170 billion in federal aid in four separate bailouts since last September.

Great Tech Innovation: Find Food Health and Safety Info From Your Phone

By Tim Kingston, AlterNet
Posted on March 19, 2009, Printed on March 19, 2009
http://www.alternet.org/story/131752/

The price of a dysfunctional food system is a potentially dangerous dinner. To put it bluntly, in our profit-driven food system, the very nutrients needed to stay alive could kill you. If it's not Chinese melamine in your milk, it's American E.coli in your spinach. If it's not the salmonella in your peanut butter from Georgia, it's that same bug in your Mexican green chilies. Consumers -- health conscious or not -- have a right to be paranoid.

What's to be done?

Does America Face the Risk of a Fascist Backlash?

By Robert Freeman, AlterNet
Posted on March 19, 2009, Printed on March 19, 2009
http://www.alternet.org/story/132155/

In early 1919, Germany put in place a new government to begin rebuilding the country after its crushing defeat in World War I. But the right-wing forces that had led the country into the War and lost the War conspired even before it was over to destroy the new government, the "Weimar Republic." They succeeded.

The U.S. faces a similar "Weimar Moment." The devastating collapse of the economy after eight years of Republican rule has left the leadership, policies, and ideology of the right utterly discredited. But, as was the case with Germany in 1919, Republicans do not intend to allow the new government to succeed. They will do everything they can to undermine it. If they are successful, the U.S. may yet go the way of Weimar Germany.

Free markets are not rational

By Aetius Romulous

The markets are rational. From that inviolate truth, a pillar of economic thought for 233 years, flows all else economics understands about markets, men, and money - an unalterable belief that markets can be measured, quantified, cut and pasted in mute acceptance that under it all lies the consistent and undeniable force of rational behavior, a religion gone unquestioned.

The theory of rational markets - that buyers and sellers will always act in their best interests - was given life by Adam Smith in his Wealth of Nations in 1776. The new study of economics, born into a moment between ages, grew and developed with its gospel already written and sanctified. Economics became nothing more than competing studies that tried to squeeze the maximum utility out of the blandness of rational, human behavior. The competition reached a turning point at the end of two brutal wars and an economic depression that sent buildings full of newly minted economists running for their slide rules.

Burn, Balochistan, burn

By Pepe Escobar

The "strategic reviewers" of United States President Barack Obama's "good war" in Afghanistan are almost finished. Even before the new policy is set in stone - in Badakshan's famed lapis lazuli, maybe? - by Obama himself within the next few days (with sensitive covert aspects of course withheld from public opinion), its contours are raising many an eyebrow.

The new mix will likely feature an ongoing wild goose chase for "good Taliban"; an expanded Central Intelligence Agency-operated drone war (a George W Bush policy decision); assorted CIA and special forces cross-border attacks (also a Bush policy decision); more carrots for the Pentagon-friendly Pakistani army (and Inter-Services Intelligence); more US troops in Afghanistan (starting with the announced 17,000 who will hit Helmand province before summer); and more training for the Afghan army.

Treasury Attempts to “Blame Dodd” for AIG Bonuses

By: Jane Hamsher
Tuesday March 17, 2009 1:15 pm

As Geithner tries to get out of the way of the AIG bonus train wreck, it looks like the designated sin eater is going to be Chris Dodd:

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

So Treasury says Chris Dodd did this? In a word. . . no.

Battling the CRA Myth

Push To Expand Law That Encourages Loans to Low-Income Communities

By Mike Lillis 3/18/09 6:00 AM

Amid the ongoing debate over mortgage lending reform, a top federal regulator took a seat before Congress last week and debunked the myth — popular among conservatives — that a law encouraging loans to low-income communities has been largely responsible for the nation’s housing crisis.

“I can state very definitively,” Sandra Braunstein, director of the Federal Reserve’s consumer and community affairs division, said during a House Financial Institutions subcommittee hearing Wednesday, “that from the research we have done, the Community Reinvestment Act is not one of the causes of the current crisis.”

" Diebold Admits Audit Logs in ALL Versions of Their Software Fail to Record Ballot Deletions "

Startling admission made during public hearing in CA to consider decertification of the company's voting and tabulation software...

Guest Blogged by Mitch Trachtenberg, with Brad Friedman

Even the audit log system on current versions of Premier Election Solutions' (formerly Diebold's) electronic voting and tabulating systems --- used in some 34 states across the nation --- fail to record the wholesale deletion of ballots. Even when ballots are deleted on the same day as an election. That's the shocking admission heard today from Justin Bales, Premier's Western Region manager, at a State of California public hearing on the possible decertification of Diebold/Premier's tabulator system, GEMS v. 1.18.19.

Hedge funds could reap billions from AIG

$160 million in bonuses to AIG executives? Try billions in dollars slated to be paid by AIG to hedge funds.

The massive now mostly-government owned insurer American International Group is slated to shell out billions of dollars to hedge funds that bet against the US housing market, according to documents reviewed by the Wall Street Journal.

Senate quietly stripped measure restricting bonuses from bailout legislation

A new revelation in the scandal surrounding AIG's decision to pay multi-million dollar bonuses to executives -- a provision that would have restricted companies receiving federal government bailout aid from paying bonuses was quietly stripped from a bill last month.

Media ignore Bush Treasury Department role in last year's AIG bailouts, notwithstanding bonus packages

Summary: In numerous instances, media reporting on AIG's employee retention bonus packages did not point out that it was the Bush Treasury Department that worked with the Federal Reserve in carrying out last year's bailouts and bought AIG stocks notwithstanding the existence of these bonus contracts.

Thomas Frank: Financial Journalists Fail Upward

"Listen, you knew what the banks were doing and yet were touting it for months and months," said "Daily Show" host Jon Stewart to CNBC superstar Jim Cramer in their much-discussed confrontation last week. "The entire network was, and so now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst."

The applause Mr. Stewart has received for his j'accuse is the sound of the old order cracking. We have turned on the financial CEOs, inducting them one by one into the Predator Hall of Fame. We have gone deaf to the seductive rhythms of the culture wars. We have tossed out the politicians whose antigovernment rhetoric seemed invincible for so long.

The Granny Bashers: Different Facts, Same Policy

Monday 16 March 2009
by: Dean Baker, t r u t h o u t | Perspective

The granny basher crew constitutes one of the largest and most determined lobbies in Washington. The top priority for this lobby is to cut Social Security and Medicare.

The lobby includes the Peter G. Peterson Foundation, with an endowment of more than $1 billion from the private equity tycoon himself. It also includes The Washington Post, which liberally sprinkles assertions about the need to cut Social Security and Medicare in both its news and editorial pages. Many prominent members of Congress also belong to the club, along with much of the punditry who make their living pronouncing on public policy.

The granny bashers' theme is that Social Security and Medicare constitute an enormous generational injustice because the young, and those yet to be born, will be forced to pay for the cost of these programs for retirees and current workers. Of course, the reality is that the vast majority of the granny bashers' horror stories about generational inequity stems from the cost of sustaining a broken health care system not from programs for retirees.

Getting Lehman Wrong a Second Time

US officials were wrong to let Lehman Brothers go bankrupt. Now they wrongly assume all banks are too big to fail

by Dean Baker

There are few economists who would defend the decision to allow Lehman Brothers to go bankrupt last September. Its collapse induced a worldwide panic that sent stock markets plummeting and caused credit to freeze up. In the subsequent months, the downturn went into over-drive, with the United States losing almost three million jobs from October through February.

This set of events has led almost everyone to conclude that the trio who let Lehman go under - Treasury secretary Henry Paulson, Federal Reserve chairman Ben Bernanke and the then-head of the New York Fed, Timothy Geithner - erred badly in this decision. That seems a reasonable judgment.

The Real AIG Scandal

It's not the bonuses. It's that AIG's counterparties are getting paid back in full.

By Eliot Spitzer
Posted Tuesday, March 17, 2009, at 10:41 AM ET

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Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

Florida legislator wants random drug tests for the unemployed

03/16/2009 @ 9:42 am

Filed by David Edwards and Muriel Kane

Employers have justified drug tests in the workplace by pointing to such negative effects of drug use as absenteeism and work-related injuries. Now a Florida legislator has proposed that random drug-testing also be applied to those receiving unemployment insurance, justifying it as a way to make state funds go further.

Florida State Senator Michael S. Bennett told Fox News host Steve Doocy on Monday that with the unemployment rate in his recession-battered state running between 10% and 11%, he worries that the Unemployment Trust Fund might be exhausted.