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Don’t Blame Bunning March 3, 2010

Posted by rogerhollander in Economic Crisis.
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Published on Wednesday, March 3, 2010 by TruthDig.comby Robert Scheer

How convenient that seemingly everyone in the liberal blogosphere, and even at many points to the right, got to use Jim Bunning as a scapegoat. The venom of the attacks suggests that the maverick Republican senator from Kentucky provided a welcome alternative to the real villains: bankers much closer to the centers of power. As if Bunning’s denial of unanimous consent to a stopgap extension of unemployment insurance-easily overcome, as was demonstrated Tuesday night-is at the root of our economic crisis. 

It isn’t, and it is vicious nonsense to transform Bunning, who has a long record of opposition to the bipartisan policies that caused America’s financial mess, into a poster boy for economic heartlessness. The issue was not one of extending aid for another month to those whose benefits had run out but rather holding the government accountable for the means of payment. 

Bunning’s action was a sideshow, a boneheaded symbolic gesture that backfired with slight consequences. Yet the senator was made to look the dangerous fool in media accounts while many of those who enabled the financial catastrophe continue to be treated as reasonable experts after being rewarded for their folly with the highest posts in both the Bush and Obama administrations. 

The real issue here is the banking bailout, a bipartisan swindle that Bunning opposed and that has led to a dangerously spiraling deficit without providing relief to ordinary folk. It is the same issue that carried Texas Gov. Rick Perry to victory Tuesday in his state’s Republican gubernatorial primary, in which he defeated U.S. Sen. Kay Bailey Hutchison in part because of her support of the bank bailout. 

As with the January defeat of the Democratic candidate in the Massachusetts election for a U.S. Senate seat, the message from voters is loud and clear: The political establishment cares only about the fat cats and not the people who are hurting. Bunning’s gesture was not intended, as his critics insisted, to increase that pain but rather to hold the government accountable for the money it is spending. He has consistently blasted the bailout as a shameless gift to the Wall Street hustlers and urged that the money being wasted on them instead be spent to aid homeowners and other victims of their greed.

This is not the first time that Bunning has stood alone in Congress. He was the sole member of the Senate to vote against the nomination of Ben Bernanke to be head of the Federal Reserve. That appointment came from Republican President George W. Bush, and yet it was Republican Sen. Bunning who warned that Bernanke as a Fed governor had been allied with then-Fed Chairman Alan Greenspan in his disastrous policymaking. 

That was four years ago, when Greenspan was still being lionized by most Democratic and Republican politicians as well as by much of the media. On Jan. 28 of this year, Bunning once again rose in the Senate to challenge Bernanke, this time after President Barack Obama had nominated him for a second term:

“Chairman Bernanke … bowed to the political pressure of the Bush and Obama administrations and turned the Fed into an arm of the Treasury. … Instead of taking that money and lending to consumers and cleaning up their balance sheets, the banks started to pocket record profits and pay out billions of dollars in bonuses. … So if you like those bailouts, by all means vote for Chairman Bernanke.  But if you want to put an end to bailouts and send a message to Wall Street, this vote is your choice.”

He is right to point out that enormous sums always seem to exist to aid Wall Street but that assistance to average Americans has consistently been only an afterthought. And he does have a point in noting that if the latest spending extension was felt to be so important, why wasn’t it funded in a timely manner or in an orderly procedure by his congressional colleagues from both parties who are now trouncing him? 

The money is always there when they want it, as we have witnessed throughout the banking bailout when enormous sums have suddenly been made available to those who least need it. The Treasury Department managed to find $200 billion last week to deposit with the Fed to increase the purchase of toxic mortgages to $1.25 trillion to make the bankers whole.

But the level of vituperation unleashed against this senator is so disproportionate to his role in the economic catastrophe as to raise questions of motive. The overreaction to Bunning’s protest was never anything more than a ploy for Democratic and Republican leaders to profess great sorrow for the folks on Main Street while they continue to coddle Wall Street.

© 2010 TruthDig.com

Robert Scheer is editor of Truthdig.com and a regular columnist for The San Francisco Chronicle.

Ayn Rand, Hugely Popular Author and Inspiration to Right-Wing Leaders, Was a Big Admirer of Serial Killer February 28, 2010

Posted by rogerhollander in Art, Literature and Culture, Right Wing.
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Alan Greenspan with his heroine, Ayn Rand
 
 
 
Today her works treated as gospel by right-wing powerhouses like Alan Greenspan and Clarence Thomas, but Ayn Rand found early inspiration in 1920′s murderer William Hickman.
Mark Ames, www.alternet.org, February 26, 2010  |  
 

There’s something deeply unsettling about living in a country where millions of people froth at the mouth at the idea of giving health care to the tens of millions of Americans who don’t have it, or who take pleasure at the thought of privatizing and slashing bedrock social programs like Social Security or Medicare. It might not be as hard to stomach if other Western countries also had a large, vocal chunk of the population who thought like this, but the US is seemingly the only place where right-wing elites can openly share their distaste for the working poor. Where do they find their philosophical justification for this kind of attitude?

It turns out, you can trace much of this thinking back to Ayn Rand, a popular cult-philosopher who exerts a huge influence over much of the right-wing and libertarian crowd, but whose influence is only starting to spread out of the US.

One reason why most countries don’t find the time to embrace her thinking is that Ayn Rand is a textbook sociopath. Literally a sociopath: Ayn Rand, in her notebooks, worshiped a notorious serial murderer-dismemberer, and used this killer as an early model for the type of “ideal man” that Rand promoted in her more famous books — ideas which were later picked up on and put into play by major right-wing figures of the past half decade, including the key architects of America’s most recent economic catastrophe — former Fed Chair Alan Greenspan and SEC Commissioner Chris Cox — along with other notable right-wing Republicans such as Supreme Court Justice Clarence Thomas, Rush Limbaugh, and South Carolina Gov. Mark Sanford.

The loudest of all the Republicans, right-wing attack-dog pundits and the Teabagger mobs fighting to kill health care reform and eviscerate “entitlement programs” increasingly hold up Ayn Rand as their guru. Sales of her books have soared in the past couple of years; one poll ranked “Atlas Shrugged” as the second most influential book of the 20th century, after The Bible.

So what, and who, was Ayn Rand for and against? The best way to get to the bottom of it is to take a look at how she developed the superhero of her novel, Atlas Shrugged, John Galt. Back in the late 1920s, as Ayn Rand was working out her philosophy, she became enthralled by a real-life American serial killer, William Edward Hickman, whose gruesome, sadistic dismemberment of 12-year-old girl named Marion Parker in 1927 shocked the nation. Rand filled her early notebooks with worshipful praise of Hickman. According to biographer Jennifer Burns, author of Goddess of the Market, Rand was so smitten by Hickman that she modeled her first literary creation — Danny Renahan, the protagonist of her unfinished first novel, The Little Street — on him.

What did Rand admire so much about Hickman? His sociopathic qualities: “Other people do not exist for him, and he does not see why they should,” she wrote, gushing that Hickman had “no regard whatsoever for all that society holds sacred, and with a consciousness all his own. He has the true, innate psychology of a Superman. He can never realize and feel ‘other people.’”

This echoes almost word for word Rand’s later description of her character Howard Roark, the hero of her novel The Fountainhead: “He was born without the ability to consider others.”

The Fountainhead is Supreme Court Justice Clarence Thomas’s favorite book — he even requires his clerks to read it.

I’ll get to where Rand picked up her silly Superman blather from later — but first, let’s meet William Hickman, the “genuinely beautiful soul” and inspiration to Ayn Rand. What you will read below — the real story, details included, of what made Hickman a “Superman” in Ayn Rand’s eyes — is extremely gory and upsetting, even if you’re well acquainted with true crime stories — so prepare yourself. But it’s necessary to read this to understand Rand, and to repeat this over and over until all of America understands what made her mind tick, because Rand’s influence over the very people leading the fight to kill social programs, and her ideological influence on so many powerful bankers, regulators and businessmen who brought the financial markets crashing down, means her ideas are affecting all of our lives in the worst way imaginable.

Rand fell for William Edward Hickman in the late 1920s, as the shocking story of Hickman’s crime started to grip the nation. His crime, trial and case was a non-stop headline grabber for months; the OJ Simpson of his day:

Hickman, who was only 19 when he was arrested for murder, was the son of a paranoid-schizophrenic mother and grandmother. His schoolmates said that as a kid Hickman liked to strangle cats and snap the necks of chickens for fun — most of the kids thought he was a budding manic, though the adults gave him good marks for behavior, a typical sign of sociopathic cunning. He enrolled in college but quickly dropped out, and quickly turned to violent crime largely driven by the thrill and arrogance typical of sociopaths: in a brief and wild crime spree that grew increasingly violent, Hickman knocked over dozens of gas stations and drug stores across the Midwest and west to California. Along the way it’s believed he strangled a girl in Milwaukee, and killed his crime partner’s grandfather in Pasadena, tossing his body over a bridge after taking his money. Hickman’s partner later told police that Hickman told him how much he’d like to kill and dismember a victim someday — and that day did come for Hickman.

One afternoon, Hickman drove up to Mount Vernon Junior High school in Los Angeles, and told administrators that he’d come to pick up “the Parker girl” — her father, Perry Parker, was a prominent banker. Hickman didn’t know the girl’s first name, so when he was asked which of the two Parker twins — Hickman answered, “the younger daughter.” And then he corrected himself: “The smaller one.” The school administrator fetched young Marion, and brought her out to Hickman. No one suspected his motive; Marion obediently followed Hickman to his car as she was told, where he promptly kidnapped her. He wrote a ransom note to Marian’s father, demanding $1,500 for her return, promising that the girl would be left unharmed. Marian was terrified into passivity — she even waited in the car for Hickman when he went to mail his letter to her father. Hickman’s extreme narcissism comes through in his ransom letters, as he refers to himself as a “master mind [sic]” and “not a common crook.” Hickman signed his letters “The Fox” because he admired his own cunning: “Fox is my name, very sly you know.” And then he threatened: “Get this straight. Your daughter’s life hangs by a thread.”

Hickman and the girl’s father exchanged letters over the next few days as they arranged the terms of the ransom, while Marion obediently followed her captor’s demands. She never tried to escape the hotel where he kept her; Hickman even took her to a movie, and she never screamed for help. She remained quiet and still as told when Hickman tied her to the chair — he didn’t even bother gagging her because there was no need to, right up to the gruesome end.

Hickman’s last ransom note to Marion’s father is where this story reaches its  disturbing: Hickman fills the letter with hurt anger over her father’s suggestion that Hickman might deceive him, and “ask you for your $1500 for a lifeless mass of flesh I am base and low but won’t stoop to that depth ” What Hickman didn’t say was that as he wrote the letter, Marion was already several chopped-up lifeless masses of flesh. Why taunt the father? Why feign outrage? This sort of bizarre taunting was all part of the serial killer’s thrill, maximizing the sadistic pleasure he got from knowing that he was deceiving the father before the father even knew what happened to his daughter. But this was nothing compared to the thrill Hickman got from murdering the helpless 12-year-old Marion Parker. Here is an old newspaper description of the murder, taken from the Pittsburgh Post-Gazette on December 27, 1927:

“It was while I was fixing the blindfold that the urge to murder came upon me,” he continued, “and I just couldn’t help myself. I got a towel and stepped up behind Marian. Then before she could move, I put it around her neck and twisted it tightly. I held on and she made no outcry except to gurgle. I held on for about two minutes, I guess, and then I let go. “When I cut loose the fastenings, she fell to the floor. “I knew she was dead. “Well, after she was dead I carried her body into the bathroom and undressed her, all but the underwear, and cut a hole in her throat with a pocket knife to let the blood out.”

Another newspaper account dryly explained what Hickman did next:

Then he took a pocket knife and cut a hole in her throat. Then he cut off each arm to the elbow. Then he cut her legs off at the knees. He put the limbs in a cabinet. He cut up the body in his room at the Bellevue Arms Apartments. Then he removed the clothing and cut the body through at the waist. He put it on a shelf in the dressing room. He placed a towel in the body to drain the blood. He wrapped up the exposed ends of the arms and waist with paper. He combed back her hair, powdered her face and then with a needle fixed her eyelids. He did this because he realized that he would lose the reward if he did not have the body to produce to her father.

Hickman packed her body, limbs and entrails into a car, and drove to the drop-off point to pick up his ransom; along his way he tossed out wrapped-up limbs and innards scattering them around Los Angeles. When he arrived at the meeting point, Hickman pulled Miriam’s head and torso out of a suitcase and propped her up, her torso wrapped tightly, to look like she was alive–he sewed wires into her eyelids to keep them open, so that she’d appear to be awake and alive. When Miriam’s father arrived, Hickman pointed a sawed-off shotgun at him, showed Miriam’s head with the eyes sewn open (it would have been hard to see for certain that she was dead), and then took the ransom money and sped away. As he sped away, he threw Miriam’s head and torso out of the car, and that’s when the father ran up and saw his daughter–and screamed.

This is the “amazing picture” Ayn Rand — guru to the Republican/Tea Party right-wing — admired when she wrote in her notebook that Hickman represented “the amazing picture of a man with no regard whatsoever for all that a society holds sacred, and with a consciousness all his own. A man who really stands alone, in action and in soul. Other people do not exist for him, and he does not see why they should.”

Other people don’t exist for Ayn, either. Part of her ideas are nothing more than a ditzy dilettante’s bastardized Nietzsche — but even this was plagiarized from the same pulp newspaper accounts of the time. According to an LA Times article in late December 1927, headlined “Behavioralism Gets The Blame,” a pastor and others close to the Hickman case denounce the cheap trendy Nietzschean ideas that Hickman and others latch onto as a defense:

“Behavioristic philosophic teachings of eminent philosophers such as Nietzsche and Schopenhauer have built the foundation for William Edward Hickman’s original rebellion against society,” the article begins.

The fear that some felt at the time was that these philosophers’ dangerous, yet nuanced ideas would fall into the hands of lesser minds, who would bastardize Nietzsche and Schopenhauer and poison the rest of us. Which aptly fits the description of Ayn Rand, whose philosophy developed out of her admiration for “Supermen” like Hickman. Rand’s philosophy can be summed up by the title of one of her best-known books: The Virtue of Selfishness. She argues that all selfishness is a moral good, and all altruism is a moral evil, even “moral cannibalism” to use her words. To her, those who aren’t like-minded sociopaths are “parasites” and “lice” and “looters.”

But with Rand, there’s something more pathological at work. She’s out to make the world more sociopath-friendly so that people like Ayn and her hero William Hickman can reach their full potential, not held back by the morality of the “weak,” whom Rand despised.

That’s what makes it so creepy how Rand and her followers clearly get off on hating and bashing those they perceived as weak–Rand and her followers have a kind of fetish for classifying weaker, poorer people as “parasites” and “lice” who need to swept away. This is exactly the sort of sadism, bashing the helpless for kicks, that Rand’s hero Hickman would have appreciated. What’s really unsettling is that even former Central Bank chief Alan Greenspan, whose relationship with Rand dated back to the 1950s, did some parasite-bashing of his own. In response to a 1958 New York Times book review slamming Atlas Shrugged, Greenspan, defending his mentor, published a letter to the editor that ends: “Parasites who persistently avoid either purpose or reason perish as they should. Alan Greenspan.”

As much as Ayn Rand detested human “parasites,” there is one thing she strongly believed in: creating conditions that increase the productivity of her Supermen – the William Hickmans who rule her idealized America: “If [people] place such things as friendship and family ties above their own productive work, yes, then they are immoral. Friendship, family life and human relationships are not primary in a man’s life. A man who places others first, above his own creative work, is an emotional parasite.”

And yet Republican faithful like GOP Congressman Paul Ryan read Ayn Rand and make declare, with pride, “Rand makes the best case for the morality of democratic capitalism.” Indeed. Except that Ayn Rand also despised democracy, as she declared: “Democracy, in short, is a form of collectivism, which denies individual rights: the majority can do whatever it wants with no restrictions. In principle, the democratic government is all-powerful. Democracy is a totalitarian manifestation; it is not a form of freedom.”

“Collectivism” is another one of those Randian epithets popular among her followers. Here for example is another Republican member of Congress, the one with the freaky thousand-yard-stare, Michelle Bachman, parroting the Ayn Rand ideological line, to explain her reasoning for wanting to kill social programs:

“As much as the collectivist says to each according to his ability to each according to his need, that’s not how mankind is wired. They want to make the best possible deal for themselves.”

Whenever you hear politicians or Tea Baggers dividing up the world between “producers” and “collectivism,” just know that those ideas and words more likely than not are derived from the deranged mind of a serial-killer groupie. When you hear them threaten to “Go John Galt,” hide your daughters and tell them not to talk to any strangers — or Tea Party Republicans. And when you see them taking their razor blades to the last remaining programs protecting the middle class from total abject destitution — Social Security, Medicare and Medicaid — and brag about their plans to slash them for “moral” reasons, just remember Ayn’s morality and who inspired her.

Too many critics of Ayn Rand– until I was one of them — would rather dismiss her books and ideas as laughable, childish, hackneyed. But it can’t be dismissed because Rand is the name that keeps bubbling up from the Teabagger crowd and the elite conservative circuit in Washington as The Big Inspiration. The only way to protect ourselves from this thinking is the way you protect yourself from serial killers: smoke the Rand followers out, make them answer for following the crazed ideology of a serial-killer-groupie, and run them the hell out of town and out of our hemisphere.

Why We Should Banish Larry Summers From Public Life April 20, 2009

Posted by rogerhollander in Economic Crisis.
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by Naomi Klein

I vote to banish Larry Summers. Not from the planet. That wouldn’t be nice. Just from public life.

The criticisms of President Obama’s chief economic adviser are well known. He’s too close to Wall Street. And he’s a frightful bully, of both people and countries. Still, we’re told we shouldn’t care about such minor infractions. Why? Because Summers is brilliant, and the world needs his big brain.

And this brings us to a central and often overlooked cause of the global financial crisis: Brain Bubbles. This is the process wherein the intelligence of an inarguably intelligent person is inflated and valued beyond all reason, creating a dangerous accumulation of unhedged risk. Larry Summers is the biggest Brain Bubble we’ve got.

Brain Bubbles start with an innocuous “whiz kid” moniker in undergrad, which later escalates to “wunderkind.” Next comes the requisite foray as an economic adviser to a small crisis-wracked country, where the kid is declared a “savior.” By 30, our Bubble Boy is tenured and officially a “genius.” By 40, he’s a “guru,” by 50 an “oracle.” After a few drinks: “messiah.”

The superhuman powers bestowed upon these men — and yes, they are all men — shield them from the scrutiny that might have prevented the current crisis. Alan Greenspan’s Brain Bubble allowed him to put the economy at great risk: When he made no sense, people assumed that it was their own fault. Brain Bubbles also formed the key argument Greenspan and Summers used to explain why lawmakers couldn’t regulate the derivatives market: The wizards on Wall Street were too brilliant, their models too complex, for mere mortals to understand.

Back in 1991, Summers argued that the subject of economics was no longer up for debate: The answers had all been found by men like him. “The laws of economics are like the laws of engineering,” he said. “One set of laws works everywhere.” Summers subsequently laid out those laws as the three “-ations”: privatization, stabilization and liberalization. Some “kinds of ideas,” he explained a few years later in a PBS interview, have already become too “passé” for discussion. Like “the idea that a huge spending program is the way to stimulate the economy.”

And that’s the problem with Larry. For all his appeals to absolute truths, he has been spectacularly wrong again and again. He was wrong about not regulating derivatives. Wrong when he helped kill Depression-era banking laws, turning banks into too-big-to-fail welfare monsters. And as he helps devise ever more complex tricks and spends ever more taxpayer dollars to keep the financial casino running, he remains wrong today.

Word is that Summers’s current post may be a pit stop on the way to the big prize, Federal Reserve chairman. That means he could actually make “maestro.”

Mr. President, please: Pop this bubble before it’s too late.

This column first appeared in The Washington Post.

Naomi Klein is an award-winning journalist and syndicated columnist and the author of the international and New York Times bestseller The Shock Doctrine: The Rise of Disaster Capitalism, now out in paperback. Her earlier books include the international best-seller, No Logo: Taking Aim at the Brand Bullies; and the collection Fences and Windows: Dispatches from the Front Lines of the Globalization Debate (2002). To read all her latest writing visit www.naomiklein.org

Larry Summers, Tim Geithner and Wall Street’s Ownership of Government April 5, 2009

Posted by rogerhollander in Barack Obama, Economic Crisis.
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by Glenn Greenwald

White House officials yesterday released their personal financial disclosure forms, and included in the millions of dollars which top Obama economics adviser Larry Summers made from Wall Street in 2008 is this detail:

Lawrence H. Summers, one of President Obama’s top economic advisers, collected roughly $5.2 million in compensation from hedge fund D.E. Shaw over the past year and was paid more than $2.7 million in speaking fees by several troubled Wall Street firms and other organizations. . . .

Financial institutions including JP Morgan Chase, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch paid Summers for speaking appearances in 2008. Fees ranged from $45,000 for a Nov. 12 Merrill Lynch appearance to $135,000 for an April 16 visit to Goldman Sachs, according to his disclosure form.

That’s $135,000 paid by Goldman Sachs to Summers — for a one-day visit.  And the payment was made at a time — in April, 2008 — when everyone assumed that the next President would either be Barack Obama or Hillary Clinton and that Larry Summers would therefore become exactly what he now is:  the most influential financial official in the U.S. Government (and the $45,000 Merrill Lynch payment came 8 days after Obama’s election). Goldman would not be able to make a one-day $135,000 payment to Summers now that he is Obama’s top economics adviser, but doing so a few months beforehand was obviously something about which neither parties felt any compunction.  It’s basically an advanced bribe.  And it’s paying off in spades.  And none of it seemed to bother Obama in the slightest when he first strongly considered naming Summers as Treasury Secretary and then named him his top economics adviser instead (thereby avoiding the need for Senate confirmation), knowing that Summers would exert great influence in determining who benefited from the government’s response to the financial crisis.

Last night, former Reagan-era S&L regulator and current University of Missouri Professor Bill Black was on Bill Moyers’ Journal and detailed the magnitude of what he called the on-going massive fraud, the role Tim Geithner played in it before being promoted to Treasury Secretary (where he continues to abet it), and — most amazingly of all — the crusade led by Alan Greenspan, former Goldman CEO Robert Rubin (Geithner’s mentor) and Larry Summers in the late 1990s to block the efforts of top regulators (especially Brooksley Born, head of the Commodities Futures Trading Commission) to regulate the exact financial derivatives market that became the principal cause of the global financial crisis.  To get a sense for how deep and massive is the on-going fraud and the key role played in it by key Obama officials, I highly recommend watching that Black interview (it can be seen here and the transcript is here).

This article from Stanford Magazine — an absolutely amazing read — details how Summers, Rubin and Greenspan led the way in blocking any regulatory efforts of the derivatives market whatsoever on the ground that the financial industry and its lobbyists were objecting:

As chairperson of the CFTC, Born advocated reining in the huge and growing market for financial derivatives. . . . One type of derivative—known as a credit-default swap—has been a key contributor to the economy’s recent unraveling. . .

Back in the 1990s, however, Born’s proposal stirred an almost visceral response from other regulators in the Clinton administration, as well as members of Congress and lobbyists. . . . But even the modest proposal got a vituperative response. The dozen or so large banks that wrote most of the OTC derivative contracts saw the move as a threat to a major profit center. Greenspan and his deregulation-minded brain trust saw no need to upset the status quo. The sheer act of contemplating regulation, they maintained, would cause widespread chaos in markets around the world.

Born recalls taking a phone call from Lawrence Summers, then Rubin’s top deputy at the Treasury Department, complaining about the proposal, and mentioning that he was taking heat from industry lobbyists. . . . The debate came to a head April 21, 1998. In a Treasury Department meeting of a presidential working group that included Born and the other top regulators, Greenspan and Rubin took turns attempting to change her mind. Rubin took the lead, she recalls.

“I was told by the secretary of the treasury that the CFTC had no jurisdiction, and for that reason and that reason alone, we should not go forward,” Born says. . . . “It seemed totally inexplicable to me,” Born says of the seeming disinterest her counterparts showed in how the markets were operating. “It was as though the other financial regulators were saying, ‘We don’t want to know.’”

She formally launched the proposal on May 7, and within hours, Greenspan, Rubin and Levitt issued a joint statement condemning Born and the CFTC, expressing “grave concern about this action and its possible consequences.” They announced a plan to ask for legislation to stop the CFTC in its tracks.

Rubin, Summers and Greenspan succeeded in inducing Congress — funded, of course, by these same financial firms — to enact legislation blocking the CFTC from regulating these derivative markets.  More amazingly still, the CFTC, headed back then by Born, is now headed by Obama appointee Gary Gensler, a former Goldman Sachs executive (naturally) who was as instrumental as anyone in blocking any regulations of those derivative markets (and then enriched himself by feeding on those unregulated markets).

Just think about how this works.  People like Rubin, Summers and Gensler shuffle back and forth from the public to the private sector and back again, repeatedly switching places with their GOP counterparts in this endless public/private sector looting.  When in government, they ensure that the laws and regulations are written to redound directly to the benefit of a handful of Wall St. firms, literally abolishing all safeguards and allowing them to pillage and steal.  Then, when out of government, they return to those very firms and collect millions upon millions of dollars, profits made possible by the laws and regulations they implemented when in government.  Then, when their party returns to power, they return back to government, where they continue to use their influence to ensure that the oligarchical circle that rewards them so massively is protected and advanced.  This corruption is so tawdry and transparent — and it has fueled and continues to fuel a fraud so enormous and destructive as to be unprecedented in both size and audacity — that it is mystifying that it is not provoking more mass public rage.

All of that leads to things like this, from today’s Washington Post:

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials. . . .

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials. . . .

In one program, designed to restart small-business lending, President Obama’s officials are planning to set up a middleman called a special-purpose vehicle — a term made notorious during the Enron scandal — or another type of entity to evade the congressional mandates, sources familiar with the matter said.

If that isn’t illegal, it is as close to it as one can get.  And it is a blatant attempt by the White House to brush aside — circumvent and violate — the spirit if not the letter of Congressional restrictions on executive pay for TARP-receiving firms.  It was Obama, in the wake of various scandals over profligate spending by TARP firms, who pretended to ride the wave of populist anger and to lead the way in demanding limits on compensation.  And ever since his flamboyant announcement, Obama — adopting the same approach that seems to drive him in most other areas — has taken one step after the next to gut and render irrelevant the very compensation limits he publicly pretended to champion (thereafter dishonestly blaming Chris Dodd for doing so and virtually destroying Dodd’s political career).   And the winners — as always — are the same Wall St. firms that caused the crisis in the first place while enriching and otherwise co-opting the very individuals Obama chose to be his top financial officials.

Worse still, what is happening here is an exact analog to what is happening in the realm of Bush war crimes — the Obama administration’s first priority is to protect the wrongdoers and criminals by ensuring that the criminality remains secret.  Here is how Black explained it last night:

Black:  Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it’s going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have masses losses, and that they’re fine.

These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because…

Moyers:  What do you mean?

Black: Well, Geithner has, was one of our nation’s top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he’s a failed legacy regulator. . . .

The Great Depression, we said, “Hey, we have to learn the facts. What caused this disaster, so that we can take steps, like pass the Glass-Steagall law, that will prevent future disasters?” Where’s our investigation?

What would happen if after a plane crashes, we said, “Oh, we don’t want to look in the past. We want to be forward looking. Many people might have been, you know, we don’t want to pass blame. No. We have a nonpartisan, skilled inquiry. We spend lots of money on, get really bright people. And we find out, to the best of our ability, what caused every single major plane crash in America. And because of that, aviation has an extraordinarily good safety record. We ought to follow the same policies in the financial sphere. We have to find out what caused the disasters, or we will keep reliving them. . . .

Moyers: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?

Black: Absolutely.

Moyers: You are.

Black: Absolutely, because they are scared to death. . . . What we’re doing with — no, Treasury and both administrations. The Bush administration and now the Obama administration kept secret from us what was being done with AIG. AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson’s firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn’t want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG.

Where Congress said, “We will not give you a single penny more unless we know who received the money.” And, you know, when he was Treasury Secretary, Paulson created a recommendation group to tell Treasury what they ought to do with AIG. And he put Goldman Sachs on it.

Moyers: Even though Goldman Sachs had a big vested stake.

Black: Massive stake. And even though he had just been CEO of Goldman Sachs before becoming Treasury Secretary. Now, in most stages in American history, that would be a scandal of such proportions that he wouldn’t be allowed in civilized society.

This is exactly what former IMF Chief Economist Simon Johnson warned about in his vital Atlantic article:  ”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.”   This is the key passage where Johnson described the hallmark of how corrupt oligarchies that cause financial crises then attempt to deal with the fallout:

Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique — the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large. . . .

As much as he campaigned against anything, Obama railed against precisely this sort of incestuous, profoundly corrupt control by narrow private interests of the Government, yet he has chosen to empower the very individuals who most embody that corruption.  And the results are exactly what one would expect them to be.

Glenn Greenwald was previously a constitutional law and civil rights litigator in New York. He is the author of the New York Times Bestselling book “How Would a Patriot Act?,” a critique of the Bush administration’s use of executive power, released in May 2006. His second book, “A Tragic Legacy“, examines the Bush legacy.

Close the Barn Door, the Horses Have Escaped! October 24, 2008

Posted by rogerhollander in Economic Crisis.
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WASHINGTON (MarketWatch) — Three current and former financial regulators told Congress on Thursday that they made fateful mistakes that helped drive the global financial system to the brink of disaster, and urged Congress to fill the regulatory gaps.
“We have learned that voluntary regulation does not work,” said Christopher Cox, chairman of the Securities and Exchange Commission, in testimony on Thursday at the House Oversight and Government Reform Committee. “It was a fateful mistake” that no one was given the authority “to regulate investment bank holding companies other than on a voluntary basis.”
Video: Greenspan ‘shocked’ by breakdown
Former Federal Reserve Chairman Alan Greenspan said he was “shocked” by the breakdown in the credit system and told Congress the crisis was once in a century. Video courtesy of Reuters. (Oct. 23)

Former Federal Reserve Chairman Alan Greenspan testified that he still believes the “self-interest” of banks and other financial firms is the best protection against malfeasance, because both sides of the trade will police the other.

But, Greenspan said, he and others are in “a state of shocked disbelief” that “counterparty surveillance” failed.
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Greenspan said.
The “solid edifice” of his de-regulatory philosophy “did break down,” he said. “And I think that, as I said, shocked me. I still do not fully understand why it happened.” See commentary on Greenspan’s disbelief.
Self-interest was at the root of the crisis, said Rep. Henry Waxman, D-Calif., chairman of the oversight committee. “Corporate excess and greed enriched company executives at enormous cost to shareholders and our economy,” Waxman said.
Greenspan said now he favors strengthening the regulatory structure. “As much as I would prefer it otherwise, in this financial environment I see no choice but to require that all securitizers retain a meaningful part of the securities they issue,” Greenspan said.
Cox urged Congress to create a select committee made up of the ranking members of the several committees that have jurisdiction over financial institutions and markets to come up with “a new, overarching statutory scheme” to eliminate gaps in the regulations. Turf battles in Congress have led to the hodge-podge regulatory system, he said, speaking from experience as a 17-year veteran of the House.
The financial system exists to raise and direct the capital the economy needs to grow and “should not be an end in itself – a baroque cathedral of complexity dedicated to limitless compensation for itself in the short-term, paid for with long-term risk capable of threatening the entire nation’s sustenance and growth,” Cox said.
Rep. John Mica, R-Fla., tried to turn the hearing into an examination of the role that Fannie Mae and Freddie Mac played in creating the subprime mortgage market, but Waxman told him that the committee would examine Fannie and Freddie later.
Former Treasury Secretary John Snow said he warned early and often about the risks posed by Fannie and Freddie’s implicit backing by the government. “I regret I wasn’t more effective in trying to persuade Congress of the need for action to deal with the risks that I saw as the largest and — and most visible systemic risk at the time,” Snow said.
Republican leaders have said that risky lending by Fannie and Freddie, with the support of the Democrats in Congress, were the major causes of the subprime crisis.
“This is a political argument, not a factual one,” Waxman said. To argue that Fannie and Freddie caused the problem “makes as much sense as saying offshore drilling will solve our energy problems,” he said. End of Story
Rex Nutting is Washington bureau chief of MarketWatch.

GREENSPAN: “OOPS” October 23, 2008

Posted by rogerhollander in Economic Crisis.
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IF THE CURRENT CRISIS, WHICH APPEARS DESTINED TO GENERATE A 1929 LIKE DEPRESSION, DOESN’T STRIP BARE THE FATAL FLAW IN THE U.S. STATE CAPITALIST ECONOMY, I DON’T KNOW WHAT WILL.

 

LISTEN TO THE GREAT ECONOMIC GURU, ALAN GREENSPAN, WHO BELIEVED – BELIEVED ! – THAT BANKS WOULD BE PRUDENT IN THEIR LENDING PRACTICES TO PROTECT THEIR SHAREHOLDERS.  SO THE HEALTH OF THE AMERICAN ECONOMY WAS DEPENDENT ON REPUBLICAN DEREGULATED AND INSPIRED “PRUDENT BANKERS” TO PROTECT OUR HARD EARNED MONIES?

 

IF IT WEREN’T TRAGIC, IT WOULD BE LAUGHABLE.

 

WEALTH IS CREATED BY THE BLOOD AND SWEAT OF WORKING PEOPLE, AND WE HAVE BEEN BETRAYED BY BOTH THE OWNERS OF CAPITAL – FINANCIAL AND OTHERWISE – AS WELL AS OUR QUISLING ELECTED GOVERNMENT OFFICIALS IN CONGRESS AND ELSEWHERE.

 

THE BAILOUT ONLY EXACERBATES THE SITUATION, AND IT IS NOT WORKING.  NOTHING LESS THAN SYSTEMIC CHANGE IS NEEDED.

Greenspan Concedes Error in Regulatory View

Doug Mills/The New York Times

Alan Greenspan, former Federal Reserve chairman, with John Snow, former Secretary of the Treasury, at a hearing on Capitol Hill on Thursday.

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    Published: October 23, 2008

    WASHINGTON (AP) — Alan Greenspan, the former Federal Reserve chairman, said Thursday that the current financial crisis had uncovered a flaw in how the free market system works that had shocked him.

    Mr. Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proved to be wrong.

    Mr. Greenspan said he had made a “mistake” in believing that banks operating in their self-interest would be enough to protect their shareholders and the equity in their institutions.

    Mr. Greenspan said that he had found “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”

    Mr. Greenspan, who headed the nation’s central bank for 18.5 years, said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a “state of shocked disbelief.”

    He said that the current crisis had “turned out to be much broader than anything that I could have imagined.”

    The committee called Mr. Greenspan to testify along with former Treasury Secretary John W. Snow and the Securities and Exchange Commission chairman, Christopher Cox, as lawmakers sought to discover if regulatory failings had contributed to the crisis.

    The committee chairman, Henry A. Waxman, said he believed that the Federal Reserve, which regulates banks, the S.E.C. and the Treasury had all played a role in contributing to the mistakes.

    “The list of mistakes is long and the cost to taxpayers is staggering,” Mr. Waxman, a California Democrat, told the three men. “Our regulators became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The mantra became that government regulation is wrong. The market is infallible.”

    In his testimony, Mr. Greenspan blamed the problems on heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt.

    “Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” Mr. Greenspan said. “Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity.”

    Mr. Greenspan said that a necessary condition for the crisis to end would be a stabilization in home prices but he said that was not likely to occur for “many months in the future.”

    When home prices finally stabilize, Mr. Greenspan said, then “the market freeze should begin to measurably thaw and frightened investors will take tentative steps towards re-engagement with risk.”

    Mr. Greenspan said until that occurred, the government was correct to move forward aggressively with efforts to support the financial sector. He called the $700 billion rescue package passed by Congress on Oct. 10 “adequate to serve the need” and said that its impact was already being felt in markets.

    Mr. Greenspan did not specifically address the criticism he is receiving now as being partly to blame for the current crisis.

    Mr. Greenspan’s critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed’s powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that led to the current crisis.

    In his testimony, Mr. Greenspan put the blame for the subprime collapse on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.

    “It was the failure to properly price such risky assets that precipitated the crisis,” Mr. Greenspan said.

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