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Politicized Justice Department Firings Are Not the Only Investigation Needed

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Politicized Justice Department Firings Are Not the Only Investigation Needed

Rove, Miers


That Karl Rove and Harriet Miers are finally going to testify in some fashion before the House Judiciary Committee is encouraging news. It is to be hoped that ultimately their testimony 1) will be open to the public, and 2) will actually clarify something about politicized hirings and firings in the Bush Justice Department.

But we must  remember that other issues besides politicizing Justice, however grave that was, have left residual dangers for this country.

 

U.S. economy March 2009

Now, with an avalanche of economic news and the continuing drain on our resources of occupation in Iraq and strife in Afghanistan, among other issues, the entire topic of illegal wiretapping has faded from view.

For eight years, the Bush administration and its allies in the GOP and the corporate media portrayed illegal wiretapping as an irreconcilable clash of fundamental civil liberties against the need for security. Much of the press and the Democratic Party fell into this rhetorical trap.

 

Signs of the times

To this day, too few of our leaders have challenged the Bush White House claim that any illegal actions were committed in order to protect and defend Americans.

This issue is not merely political, not merely ethical. It has intrinsic connections to domestic security for the United States.


A few reminders here, still relevant from a much earlier post:

  • While claiming to protect Americans, the Bush White House accepted an ambassador from Saudi Arabia—home to 14 of the 19 highjackers who carried out the attacks of 9/11–with connections to al-Qaeda, Osama bin Laden and the Pakistani secret intelligence service (ISI).
  • The same White House failed to expose or refused to expose support received by the 9/11 hijackers from Pakistan’s highest levels of government. Instead, Bush-Cheney embraced Gen. Musharraf as a full partner in the ‘war on terror.’
  • The same administration disrupted an effective investigation in Pakistan by exposing a contact there.
  • Needless to say, the same White House not only failed to capture Osama bin Laden but began to state, fairly soon after 9/11, that capture of bin Laden was somehow unimportant or irrelevant to our national security. No administration official ever pointed out publicly that UBL might be a valuable source of information regarding terrorism. This implication that UBL was unimportant persisted throughout the Bush administration, along with vague suggestions that he was hidden in some hut in the Pak-Afghan mountains—despite signs of high production value in some of the ‘civilized office-type videos released by bin Laden.
  • Bush-Cheney also failed to glean all possible information from bin Laden’s employees and relatives.
  • Quite the contrary, immediately after 9/11 it helped to put highly placed Saudis in this country on planes, and flew them out of the U.S.
  • Throughout its terms, the same administration prevented genuine interrogation of prisoners, by accredited professionals, in venues controlled by the U.S. government, including lawyers for the accused in the process. The effect has been to prevent discerning which individuals were culpable of what acts, and perhaps to conceal lack of evidence.
  • The same administration fogged counter-terrorism and anti-terrorism efforts by detaining hundreds of innocent Middle Easterners, and by exploiting national security to issue dubious alerts and ex-post-facto anecdotes about evildoers chastised, politically timed. Karl Rove among others openly stated that the ‘war on terror’ was politically useful in elections.
  • The administration also bullied and suppressed the intelligence community to obtain intelligence products politically and financially advantageous for itself. In doing so, it fragmented and crippled government agencies engaged in genuine intelligence, research and analysis.
  • The same administration also allowed or caused investigation into the bombing of the U.S.S. Cole to be stymied.
  • Administration fiscal policy supported business practices including off-shoring, outsourcing, and privatizing that undermine security at U.S. ports and borders.
  • For obvious reasons, the administration failed to reveal and clarify what business ventures Bush, Cheney, and their cronies and relatives engaged in, including business associations with foreign businesses and governments.
  • While calling on the general public to join in the ‘war on terror’ and to maintain vigilance, the administration opposed every move to open up transmission of valid information to the public.

 

All these issues raise questions still unanswered to this day, and all of them are relevant to security.

As said, political consequences are by no means the most important consequences. Still, the danger to our political system, the enfeebling of a vital participatory democracy that replaces its public officials rather than keeping them for life and makes their positions hereditary, is significant. Flying in the face of reason, evidence and common sense, the Bush White House got away for eight years with arguing that government secrecy must be the sign of something good. We’re doing this for you.

The argument would be reasonable if law enforcement and intelligence personnel were eager to admit incarcerating the wrong person or other mistakes. But observation and experience remind us that secrecy is much more often the sign of a cover-up than of anything effective, favorable or beneficial.

Questions remain regarding the Cole bombing; the assassination of Massoud at the same time as 9/11; the deaths of so many Loya Girga soon after 9/11; the head of the ISI in the U.S. during 9/11; the 9/11 hijackers’ involuntary trips around the U.S., including to Las Vegas; and Riggs Bank’s financing persons of interest. Questions still remain regarding the anthrax mailings. Questions still remain regarding vote suppression and other anti-election efforts under the previous administration. Questions remain about even the lead-up to the Iraq war and the conduct of the war, the issue that has been most nearly investigated thoroughly. Questions remain about the construction of the world’s biggest U.S. embassy in Iraq and about the construction of so many U.S. installations encircling Saudi Arabia.

It is an open shame that current GOP officeholders, probably all of them, are eagerly urging President Obama to ‘look forward’ rather than ‘backward’—the metaphor used to justify failing to apply reasonable standards of professional responsibility. But the Democrats have no obligation to go along with a rejection of accountability and a ratification of false history. Quite the contrary.

 

[This article, deleted by the system among hundreds of articles and blog posts in summer 2011, is re-posted using archives and Word files.]

There Was Never Going to Be ‘Bipartisanship’

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There Was Never Going to Be ‘Bipartisanship’

 

President Obama delivers the State of the Union address

President Obama is receiving credit, rightly, for being considerably more polite and decent to his strident opponents—neocon media personalities, the GOP in Congress, former Republican candidates for office—than George W. Bush and his cohorts ever were to Democrats. He didn’t even wear garlic, going to dine with George Will, Bill Kristol and a host of other neocons in a house presumably free of mirrors. But it’s a good thing the news cycle moves so quickly nowadays. Otherwise, that quick set-up by the GOP in DC, to make ‘lack of bipartisanship’ the putative hallmark of presidential failure, might not have been so quickly seen through–and shot down.

The simple truth, to coin a phrase, is that there was never going to be bipartisanship from Republicans in Congress and/or angling for office. That’s not what they’re there for. They’re there to protect the interests they have always protected, at least at the highest party echelons.

Hence the rapidity and the blind rigidity with which the GOP already attempts to represent every fiscal move by the new administration in the old tax-and-spend light, ‘positioning’ Republicans in Congress as in favor of ‘cuts’ and Democrats as the reverse. Disregarding budget-busting amendments to the stimulus offered by the GOP, some media outlets have gone along with this line.

Predictably, one of the biggest differences between the House version of the stimulus package and the Senate version, the latter more affected by GOP demands, was that the Senate version included more, and more regressive, ‘tax cuts’. Thus the ‘cut spending’ line—actually, a rise in deficits—melds neatly with the ‘cut taxes’ line.

 

It’s a neat formulation but an Orwellian distortion.

 

When the GOP, which recently brought about the biggest wave of government spending in U.S. history and capped it off with a Wall Street bailout for some of the biggest beneficiaries of that spending, talks about ‘cutting taxes,’ in practice the ‘cuts’ boil down to two policies:

1)      Shifting the tax burden from the wealthy and corporations to the middle class; and

2)      Shifting the burden of raising taxes from the federal government to states and localities.

Both of these shifts are in practice regressive, bearing down hardest on those least able to bear any further financial strain. Over-all, what happens to ordinary taxpayers—especially hardworking, non-indigent individuals who have to watch every dime—when the Grover Norquist types go to work drowning the government in the bathtub?

We are seeing the answer right now, most prominently in Schwarzenegger’s California. In general, taxes imposed by state and local governments tend to burden ordinary individuals more than they do the affluent or corporations (which often operate above the aegis of state law). As today’s Washington Post sums it up, the new cuts being passed in California fit the typical pattern:

 “The budget measure would trim spending by $15 billion, including $8.6 billion from funding for public schools. It would raise $14 billion in taxes by increasing the sales tax by 1 percent and the gasoline tax by 12 cents a gallon, by doubling vehicle registration fees and by levying a 2.5 percent surcharge on income taxes. The rest would come from new borrowing.”

It’s like reward-the-billionaire pinball. Of all forms of broad taxation, the most regressive is the sales tax. Such sales taxes as gasoline tax and fuel tax hit individuals and businesses dependent in transportation and housing particularly hard. Vehicle registration fees and other so-called ‘user’s fees’ are generally just a form of sales tax under another name, and btw not doing much to enhance the health of our automobile industry or our transportation sector generally. After all, the only way to avoid paying more in these sectors is to do without a car or to keep your old one. (And if you do without, you are still paying more, lately, for mass transit. See below.)

Ditto for all the ‘recordation fees’ and other fees so beloved of states and localities, imposed on you—“They’re gonna nick you every way they can,” an older guy around here commented—when you go to record your will or the deed to your house, or get a driver’s license or become a notary public, or buy a boat or hunt or fish, etc. For all the talk about a ‘death tax’—actually a very lenient estate tax—tax policy proposed by every Republican administration in memory is much like a tax on everyday living.

Property taxes are only somewhat less regressive—and they are pinned to a ‘market’ that may be nonexistent and is skewed to start with. Full discussion of the way the term ‘markets’ is used is far beyond the scope of this article, but just try to imagine what would happen to housing prices in your neighborhood if—here’s the paradox—your neighborhood became the most ideally stable in the country, with everybody paying off the mortgage and nobody moving. The effect: Since the most recent house sales, on a totally-paid-up block, would be years in the past, house prices as set by the ‘market,’ without correcting for lack of indebtedness, would be destructively low.

Be it noted that ‘small business,’ which we sometimes hear about a lot from GOP lawmakers, who have recently emphasized the talking point about reducing the tax burden on small business, is also hit hard by the most regressive taxes. As with individuals of modest means, genuine small businesses struggle the most with higher fuel prices, more recording and other user’s fees. They also have the hardest time maintaining adequate paperwork for ever-increasing sales taxes, which can also eat into their sales.

Then there’s the steadily rising cost of getting to the store or other place of business. Unsurprisingly, customers are numerous for delivery businesses–UPS, FedEx—and for online shopping centers—eBay, Amazon. That rise, good news in a commercial sense for some buyers and sellers, is directly related to transportation costs (as well as to the desire to save time and effort).

As I have noticed before, the subway and train station near my home illustrate the effects of federal ‘tax cuts’ connected to reduced federal transportation subsidies. Parking at the nearest Metro station, while limited, used to cost $1.75 per day, and you could get out for free if you left before 3:00 p.m.  Now, the price has more than doubled and stays the same regardless of what time you leave.

A small item, by itself. But multiply $1.75 by 5, and you get a weekly increase of $8.75; multiply that by 4, and you get a monthly increase of $35.00; multiply that by 12, and you get a yearly increase of $420.00, give or take a little for either vacations or overtime.  Meanwhile, both train fares and subway fares have also gone up, partly because of the pressure of fuel costs and maintenance costs.

Obviously, increases in the cost of transportation hit those people hardest who can least afford to pay. They hit the middle class, the going-to-work-class, much harder than the wealthy. But the nation’s counties, cities, towns and states have to levy such increases to pay for services. We have a growing population that requires transportation, and a shrinking proportion of the over-all percentage of taxes paid by the wealthy and by corporations.

NOTE

Below is a partial list, which used to be passed around by email, of taxes-by-any-other-name. None of these taxes have gone down in any state or locale:

Accounts Receivable Tax                  Building Permit Tax
CDL license Tax                                Cigarette Tax
Court Fines (indirect taxes)               Dog License 
Fishing License                                  Food License 
Fuel permit tax                                   Gasoline Tax (42 cents per gallon [dated])
Hunting License Tax                                     Liquor Tax
Local Income Tax                              Luxury Taxes
Marriage License                              Medicare Tax
Property Tax                                      Real Estate Tax

Septic Permit                                      Service Charge Taxes
Road Usage Taxes (Truckers)                      Sales Taxes
Recreational Vehicle Tax                  Road Toll Booths
School Tax                                          State Income Tax
State Unemployment Tax (SUTA)    Telephone federal excise tax
Telephone federal universal service fee tax
Telephone federal, state and local surcharge taxes
Telephone minimum usage surcharge tax
Telephone recurring and non-recurring charges tax
Telephone state and local tax                       Telephone usage charge tax
Toll Bridges                                        Toll Tunnels
Traffic Fines (indirect taxation)        Trailer registration tax
Utility Taxes                                       Vehicle License Registration Tax
Vehicle Sales Tax                              Watercraft registration Tax

Well Permit Tax

This partial list does not include every ‘recordation fee,’ mentioned above, for everyday official documents like deeds and wills, or the raft of ‘license fees’ levied on entrance to most occupations or professions, or the extra sales taxes levied on airport parking and airplane tickets. Again, all these measures become more essential to small governments when they can count on neither federal support nor general economic prosperity.

Soaking the middle class, of course, goes much farther even than fees and indirect taxes, as everyone knows who has faced rising college tuition and rising health care costs. If people are now hoping fervently that President Obama will be a new FDR, it is in large part because President Bush implemented the unstated platform of reversing everything positive accomplished by FDR’s New Deal.

The Middle Class Needs Legal Aid, Too

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Middle class needs legal aid too

In a sad, terrifying piece titled “Foreclosure’s Final Act,” today’s Washington Post reports a rare glimpse of our courtrooms from the perspective of the ordinary citizen:

“The court clerk calls his name, and Harry Rexrode, not entirely sure what to do, steps to the defendant’s table. He is dressed in jeans, a flannel shirt with dried paint spattered on the sleeves and work boots. He has no attorney.

“In a stern tone,Prince George’s County Circuit Judge Herman Dawson asks Rexrode whether he knows what is happening to him.

Rexrode, 50, nods his head.

“I want to see if I can get a continuance,” he says.

Dawson grins, as if amused by Rexrode’s use of the legal term. “A continuance? For what?”

“To stay,” Rexrode says.

“Rexrode is seeking a miracle really, in a place where there are precious few. He is in the county’s foreclosure court, asking Dawson to let him remain in the Hyattsville home he has owned since 1997 a little longer before the bank takes it and he is put out in the cold.”

This particular report is set in a courtroom in Prince George’s County, Md., where I live. It could have been set in any county in the larger Washington, D.C., region.

More on that below. The point to start with is that the report shows what happens not just to the poor, but to ordinary middle-class people, in this large and wealthy nation of ours, once they land in court.

One of the horrors of our legal system is one that has been too little reported: Judges in our courts are often inclined not to listen to parties who appear without an attorney. This might make sense in many legal cases, especially criminal matters, though it is awfully hard on the parties involved.

But telling Party A, or Party B, that he/she ‘should have gotten a lawyer’ is counter-intuitive to the point of abuse in some kinds of cases—particularly those cases where the party, whether plaintiff or defendant, is in court in the first place for financial reasons—in other words, for being cash-strapped.

From the Post:

“Courtrooms such as this across theWashingtonregion are the forums where banks ask judges to grant a default decree so they can take ownership of a home, and people such as Rexrode try to reverse or delay that decision.

They are almost always too late, and tragically ill-equipped to do so. Seated in Dawson’s nondescript courtroom, most share a look of puzzlement, fearful about their futures and uncertain of how the legal system works. They sound confused when the judge begins to pepper them with questions about dates of missed payments and when the bank began warning them about default. Few offer any evidence to support their claims.

“Have you talked to a lawyer?”Dawsonasks Rexrode.

“I didn’t know I needed one,” Rexrode responds.

Dawson, who often hears criminal and juvenile cases and has a reputation for toughness, shakes his head. Then he says something he will repeat over and over all day.

“You don’t come to court without a lawyer. This is the problem.”

That is a judge’s perspective. From the perspective of the ordinary citizen, one problem is landing in the courtroom of a judge who insists that everyone should get a lawyer.

At this point it is necessary to note that judges are not all alike. Some judges are better than others (demonstrating that the other judges could improve). Some judges, to their eternal credit, understand that people already drowning in a sea of debt are not in good position to pay a lawyer’s bills. Some judges appear to realize that most legal aid organizations—whether public entities or non-profits—provide lawyers only for proven indigents.

The unpalatable truth is that, if you are still in your house, you still have assets on the books—even if you are in arrears, even if you are facing foreclosure. And while you have assets on paper, forget about getting legal aid for free. Free legal aid has to go to the people who need it most urgently, in our system of legal triage—indigents on the street, mentally ill indigents who should never have ended up in the legal system to begin with, indigents facing the death penalty—whether or not their court-appointed defense counsel fell asleep during their capital trial.

Legal aid at reduced cost, at a sliding scale connected to income, is available only to a limited extent. The waiting lists of potential clients in any populous area far exceed the numbers of attorneys available to do pro bono work.

This particular newspaper article concerns people whose houses are being taken away from them by foreclosure. Sad to say, the basic situation is portrayed here with utmost realism: These people get dragged into court because they cannot pay their bills—and the first thing the judge says to them, with a certain obliviousness to the fact that lawyers cost money, is something along the lines of ‘You should have gotten a lawyer’ or ‘Where is your lawyer?’ or ‘Why didn’t you get a lawyer?’ And then the judge treats them like deadbeats for not hiring a lawyer—even while the legal system is punishing these hapless defendants for having run up bills. For having run up debt. For having spent money. For not having money left.

I can understand the impatience of a judge who—having put in years of hard work, first in law school and then in the legal system—has to put up with listening to uninformed people (of all classes/incomes) mangle legal language and degrade legal principles. I sincerely appreciate the occasional irritation of a judge faced with a party who clearly watched too much courtroom television at some point. More broadly, we can always find ways as spectators after the fact to divine what the out-of-money fellow citizen should have done, even if we did not do same ourselves: You should have lived with your parents until you got married, instead of renting an apartment. You should have postponed college until you could pay for it with cash. You should have waited to buy a car until you could pay for it outright, without financing.

Sure.

But even the most hard-nosed among us—that would be you, Mr. Will and Mr. Limbaugh, and by the way it’s not my country I’m blaming; it’s you—do not say, You should have waited to buy a house until you could pay for it outright. Lenders and the real estate agents themselves never, never, never took that line. (I bought my house in the go-go Eighties, and I still remember the puzzlement of the lender when I paid 20 percent of the price in down payment. His attitude was, since no one was forcing me to do so, why was I doing it?)

But back to our courtrooms.

Court

There are ironies in saying ‘You should have hired a lawyer’ to someone in court being foreclosed, or to someone in court declaring bankruptcy. But the Catch-22 problem is not confined to people in court for financial matters. It also faces people with difficulties in family court—not only in Prince George’s County but also in neighboring Montgomery County.

I watched firsthand, in one family court in Montgomery County, a Family Law Master who began every proceeding—child support, visitation, divorce, separation, every proceeding without exception—asking the party whether s/he had hired a lawyer. This in spite of large signs all over the courthouse, conspicuously saying that in Montgomery County, persons appearing pro se are (supposed to be) treated like those appearing with a lawyer.

Sure.

This particular Master took the same line even where the case was a simple matter of enforcing an agreement already settled by the courts, and even in cases so small that the amount of court award would be less than a lawyer’s bill.

In another courtroom devoted for the day to small family law cases, the judge entered—some minutes late—at exactly the same time as the attorney in the upcoming case. The opposing party, waiting in the courtroom, had no attorney, and lost a simple request that a previous court order, compelling the ex-husband to make a will to protect the minor in the case, be enforced.

In no way is this scene unusual. InMaryland, state and local judges are nominally elected by the people, but the judicial candidates are previously selected by—basically—other lawyers. A judge has every incentive to throw jobs to fellow attorneys.

Besides, attorneys are also hurting in the current economic downtown, particularly those in a small firm or in a solo practice who finished law school in debt, and they always need work.

 

Lawyers have to eat, too

However, hiring a lawyer, even if the client goes deeper into the hole to do so, is no guarantee of success:

“Terry Reeley of Bowie has an attorney. He speaks for her in court but is unable to convince Dawson that the bank failed to notify her about the default in a timely manner.

“”The judge didn’t want to hear anything,” Reeley says later. “We could see sitting there that he didn’t want to hear what people had to say. He was just tossing people and their lives out the door. Now I have no idea when the sheriffs will come and say ‘You’re out.’ ”

Reeley and her husband ran into financial problems after they lost their garage door business in October 2007. They fell behind on their mortgage, but she said she was unaware of the foreclosure and the sale of her four-bedroomCape Codhome until a notice was taped to her front door.

Dawson orders Reeley and her husband to pay $60.82 a day to the bank until they leave the property or are evicted. Reeley runs from the courtroom and falls into the arms of her best friend. “This isn’t fair,” she said, tears streaming down her cheeks. “They stole my house.”

As it happens, another Post article ran this morning on how Vice President Biden is going to head a task force on issues facing the middle class. This effort should be supported.

One issue is how inutile our courts too often are for protecting the middle class. There are some good places to start dealing with this broad and widespread problem.

1) Legal task forces. The legal profession could put up some of its money in a team effort, as trial lawyers have done on some other issues, to protect clients from attorneys who do not do the job they were hired to do.

2) Subsidized legal aid. Competent, qualified legal aid—could be subsidized for every individual in foreclosure for financial reasons, with some conditions. Many lawyers, as stated above, need work. Surely the talent could be found.

3) Legal aid for child support. Legal help could be subsidized for custodial parents trying to stay in the middle class with a little help from child support.

4) Better child-support legislation. Legislation might help more in getting the non-custodial parent to pay part of the minor’s educational expenses. (In Maryland, financial support for the minor ends when the minor turns eighteen; thus the non-custodial parent is free to wash his hands of college expenses. This, btw, is an incentive for divorce/family abandonment in hard times.)

5) Better oversight on foreclosures. Legislation could require any bank or other lender attempting to foreclose to meet certain conditions including subjecting itself to careful review of its lending practices, executive compensation, and investment practices.

Et cetera.

Congress should adjourn, just go home

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CONGRESS SHOULD ADJOURN. JUST GO HOME.

–More thoughts on the bailout

1. CONGRESS SHOULD ADJOURN. JUST GO HOME.

–The immediate question, right now, is whether the bailout bill can still be defeated in Congress. I have no prediction about the outcome—though obviously I hope it will be defeated. But it is a reasonable prediction that the news media, today and tomorrow, will be filled with horse-race treatment on the topic. We all know the kind; it was the kind of media treatment that the Bush team got when trying to gin up the war with Iraq. This is the kind of thing the big media outlets do whenever possible, even when one outcome is unthinkably horrible: Will Sarah Palin get through the debate without revealing her ignorance and incapacity? [etc] We could avoid seeing our major media outlets throw some more credibility, as well as save our nation some fiscal dreadfulness, if Congress would just adjourn. Take the autumn recess.Go home.

 

2. More on immediate remedies: Persons gifted with hundreds of millions of dollars should pick a county and, forthwith, start paying off hard-working fellow Americans’ mortgages. Pick a county, any county [thanx to Groucho Marx]—the one they grew up in, the one they live in, the poorest county in the nation; the single county hardest hit—whichever that might be—by the current ‘liquidity problems’; the county they were born in; the county their parents were born in; etc. Be sentimental. Be clinical. I don’t care. Just pick one, bonanza winner. Secretary Paulson, you could set the example.

Or they could pick a zip code: Admittedly even a multi-millionaire, could not single-handedly carry away the mortgage debt of a whole state, with the possible exception of Montana. But our country does have individuals—and this is a historic inequity—who could single-handedly carry away the mortgage debt of, say, the ten poorest zip codes in the U.S. [Disclaimer: This proposal contains nothing that could benefit me personally; for one thing, my mortgage is paid off, via the wonder of EE Series U.S. savings bonds; for another, I do not live in one of the 10 poorest zip codes.] [N.b.: This is what I would do if I were to win some mega-lottery.] Paulson is not the only figure who could carry out this feat, of course; VP Cheney, several members of the Bush family, and a number of former CEOs of current and former companies could do likewise.

 

3. Speaking of personal interest, it is somewhat remarkable how little our journalists are being held to any standard of disclosure, while they scream in favor of the bailout. The WashPost’s Dana Milbank, e.g., published an uncharacteristically heated column Tuesday on how ‘the lunatics had taken over the asylum’ in Congress, and Milbank is not exactly an apache. There is a real question re which journalists screaming in favor of the bailout have 401(k)s affected temporarily by the drop on the stock market on Tues—that kind of bloodthirsty fervor is usually the sign of the small investor—but you notice they’re not saying. Their editors are not making them follow the principle of journalistic disclosure—Hey, why shd they have to follow the rules when their richers and betters don’t. [Disclaimer: In the interest of full disclosure, I am not checking how the immediate situation affects my own family, so I do not know whether I am writing against interest. Obviously I think that our long-term interest, including mine, wd be better served other ways.]

Anyway, an astounding assortment of historians, economists, pop-economists and other commentators weighing in on behalf of this bailout—including some whose commentary I generally respect–are not being required to disclose their personal, individual stake in the topic.

 

4. A serious list of 200 well-respected economists oppose the bailout. That shd be a sign.

 

5. And oh yes, on that topic of inflation: GIVEN THE POTENTIAL FOR HYPER-INFLATION IN PUMPING A TRILLION DOLLARS INTO THE FINANCIAL SECTOR, ONE COULD REASONABLY SUSPECT how little the Fed’s concern was ‘inflation,’ all those times it raised the key interest rate, before. Washington novelist David Baldacci (I think–can’t remember the title of the novel) has a passage in one of his whodunits, on how the Fed knows exactly, can compute exactly, the ripple effect of human loss, every time it raises the interest rate: for every quarter of a point, thus much job loss, marital breakups, spikes in gambling and substance abuse . . .

Either it’s going to be hard for the Fed to have credibility, in coming months, raising interest rate to contain ‘inflation,’ or real inflation will give them cover to do exact that—right when the new Obama administration comes in.

Who will win the race–the Senate or the public?

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WHO WILL WIN THE RACE? – THE SENATE OR THE PUBLIC?

OUR SENATE IS RACING TO COMPLETE A MISSION IT SHOULD NEVER HAVE TAKEN ON.

–Upending its constitutional place as the deliberative body in our bicameral legislature, the Senate is planning to vote tonight–instead of tomorrow–on a massive ‘package’ that includes the $700 billion in giveaways for financial entities already rejected by the U.S. House.

The senators’ reason for taking up this legislation tonight, of course, is simply to outwit and outflank the public. When the House was taking up the bailout, emails and calls overwhelmed the Capitol. The senators know that. Further public demonstrations are being organized for tomorrow. The senators know that.

In taking up the bailout, the senate is including some measures not included in the House version–including one provision that may actually be a good idea, raising FDIC insurance on bank deposits to cover up to $250,000 from its current $100,000. This provision could have been rushed through both houses pretty efficiently.

For the rest, though, the Senate is rushing pell-mell to vote against fiscal probity (as well as to reward bad behavior by some very well-heeled entities). How do we know this? Simple. Even for those of us who are not economists, who did not major in finance or commerce in college, we can use logic.

First logical step: Think; which parts of the bailout are certainty, and which are not?

Certainty: Up to $700 billion is authorized TO BUY BAD MORTGAGES AND MYSTERIOUS MORTGAGE-RELATED PRODUCTS. We know that this is certainty, because this is the guts of the bailout bill. This is its central purpose.


Certainty: Any immediate financial benefit from these purchases will accrue to the business entities (dignified by the term ‘institutions’) that sell them. If the mortgage products were profitable and valuable, the companies would not be selling them. This is no secret; this aspect of the deal is again part of its guts.

Certainty: Thus, to a logical certainty, these purchases stand to transfer up to $700 billion to financial entities that we do not yet know the names of, for ‘troubled assets.’ This in spite of the fact that even supporters of the bailout are criticizing the conduct of the businesses that stand to receive this money.

Now to some uncertainties:

Uncertainty: We are told that some of these troubled assets may eventually improve in value or become valuable. But the bailout includes no guarantee, no amounts, not even a percentage, and not even a timeline. Related:

Uncertainty: We are told that defaults and foreclosures led to this problem. But we are not told what proportion of the $700 billion is to be spent buying mortgages, and what proportion will go instead to paying lenders, insurance companies, etc., for their bad artificial mortgage products–derivatives and the rest.

Uncertainty: We are told that these purchases are needed to ‘stabilize the markets.’ But the bailout includes no guarantee and not even a kicker clause–something saying that the purchases will be voided or revoked, etc., if they do not stabilize the markets.

Uncertainty: We are told that credit is drying up–and indeed it has been, for months now–

 with some implication that purchasing these bad mortgage products will free up monies to be lent to Americans who want to buy houses or cars or college educations. This argument was made by commentator Maria Bartiromo, who used to be pretty good, on Chris Matthews’ Nerfball last night. (Bartiromo did not mention the derivatives, of course.) But the bailout includes no guarantee and again, no kick-out clause, saying that unless the lenders turn around and lend, the deals will be rescinded.


Uncertainty: We are told that the economy needs this bailout because of job loss, housing foreclosures, unemployment. But the bailout does not include a guarantee or even a strong argument that it will improve employment or housing. As other writers have pointed out, it does not address health care costs, the single biggest reason, aside from or along with job loss, why ordinary householders default on mortgages. It also has nothing to address the inflation, let alone hyper-inflation, that a full trillion injected into the financial sector–at the cost of watering the dollar and trying to borrow yet more from abroad–may well unleash.

For good measure, the bailout does not include specifics on how to make real estate companies and agents bear some of the pain for pushing real estate deals that result in default.

And–of all the cruelties–it still does not include specifics designed to prevent foreclosures.

If we really wanted to ‘stabilize’ the housing market, we would start with the FDIC measure and a moratorium on foreclosures under some circumstances (with reasonable conditions).

Net: This bill is certainty as a bailout. Uncertainty–to put it nicely–as a rescue.

Trying to water the dollar while pretending the sky is falling

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THEY ARE TRYING TO WATER THE DOLLAR WHILE PRETENDING THE SKY IS FALLING

–One by-product of the bailout bill, as independent journalist Dave Lindorff has pointed out, is the enormous effect it would have on the U.S. dollar. As traditional and iconoclastic economists both know, a net effect of pumping hundreds of billions of dollars into the economy all at once, when that money has to be borrowed from abroad, is inflation.

Not the kind of ‘inflation’ hawked as a bogeyman in connection with wages–CNBC just aired an interesting stat that the median salary of white men in their thirties declined 12 percent from 2004 to 2007–but genuine inflation, the kind you get in Germany at the collapse of governments between the wars and at the collapse of the Third Reich. The kind where citizens joked, gallows-humor style, that they had to fill their grocery carts with Marks (currency) to buy a single head of cabbage.

The line being taken on the airwaves is that ‘the markets’ need to be ‘reassured,’ ostensibly so that lending money can happen. Meanwhile–somewhat rebutting the sky-is-falling line, one would think–small banks are lending money to local customers quite successfully, regional banks are doing well compared even to this past summer, and the stock market opened sharply higher this morning.

Certainly we need to take some specific financial measures, in our own national interest. Raising the cap on single bank accounts insured by the FDIC (Federal Deposit Insurance Corporation) from $100,000 to $250,000 probably would be a good idea. This item is currently proposed by Barack Obama and agreed to by John McCain. It has been proposed before, and could have been done any time in the past eight years.

One key solipsism being fed out to the public via the air waves right now, though, is that only a sweeping, omnibus piece of legislation will do the trick. As the argument goes, implicitly, omnibus legislation is needed, even though 1) there is no guarantee that it would work, 2) the details of how it would work have yet to be clarified, and 3) what was the third?–oh, yes: the proposed legislation itself is unclear.

There must be a lot of Congress members panicking over the prospect of 401Ks losing money in the stock market. But the biggest supporter of the bailout package, be it noted, is George W. Bush. Cable networks supported by Wall Street advertisers also support it. Some major newspapers support it, backed by their biggest investors.

Why didn’t the government just intervene to pay off vulnerable mortgages?

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WHY DIDN’T THE GOVERNMENT JUST INTERVENE TO PAY OFF VULNERABLE MORTGAGES?

Sign of the times

FUNNY HOW THIS SEEMS TO HAVE OCCURRED TO NO ONE IN THE BUSH ADMINISTRATION–

but the waves of foreclosures that are said to have begun the current financial crisis, if it is one, could have been held back from the get-go. How? Simple: Through government intervention. If Uncle Sam was going to jump into the housing market with fistfuls of billions, he could have paid off selected mortgages. Here is what A. Maslow would call the hierarchy of needs in the current situation, as broad-brushed by this morning’s Washington Post: “In a practical sense, the government is trying to revive the markets because buying up all the troubled assets would require far more than $700 billion.

Twenty of the nation’s largest financial institutions owned a combined total of $2.3 trillion in mortgages as of June 30. They owned another $1.2 trillion of mortgage-backed securities. And they reported selling another $1.2 trillion in mortgage-related investments on which they retained hundreds of billions of dollars in potential liability, according to filings the firms made with regulatory agencies. The numbers do not include investments derived from mortgages in more complicated ways, such as collateralized debt obligations.”

 

Setting aside if one could how horrible all this is, what one notices is that

1. Mortgages themselves are less than half the total indebtedness: $2.3 trillion.

2. This $2.3 trillion number in mortgages is huge but comes to far less than the combined total estimated at $1.2 trillion in ‘mortgage-backed securities,’ plus $1.2 trillion in ‘mortgage-related investments’ ($2.4 trillion so far), plus ‘collateralized debt obligations’ with an unestimated paper value–thus probably about twice the rest of the Ponzi total. We can thus estimate a total in mortgage-backed financial mirages of somewhere around $5 trillion.

3. It should be pointed out that most mortgages are not in trouble. What proportion of these mortgages are commercial and what proportion are residential is not stated, but in any case, the overwhelming majority of people with mortgages are paying them. Notwithstanding the horrendous difficulties facing Detroit, in residential real estate one-third of all U.S. mortgages now in trouble are in California–where residential real estate prices went to vertiginous and unstable highs unrelated to concrete land values. (The West Coast is desirable, but it is not squeezed for space. It is not Hawaii.)

Back to basics.

If foreclosures were indeed what started the current problems, and if government intervention is warranted, then government should step in by paying off people’s mortgages. Help the people–homeowners–who really need the help. Help the city blocks and the streets in midsized towns that really need help. Stabilize the real estate markets by keeping nice people in their houses.

This remedy would have to be applied within limits, of course, and the Treasury Secretary would have to be given some latitude in picking his jurisdictions (counties or towns):

a) He could start with a short list of the hundred poorest zip codes in the United States and simply pay off troubled mortgages in those zip codes. Given house prices in the poorest regions, that assistance would amount to less than one percent of one percent of the dollar totals being bandied in Washington. He could then move on to another short list of the hundred next-poorest zip codes in the nation, and pay off the troubled mortgages in those zip codes. He could then progress up the list to the next hundred poorest zip codes in the U.S., and pay off the troubled mortgages there.

b) He could also start with a short list of the hundred zip codes in the U.S. with the highest foreclosure rates, and pay off troubled mortgages in those zip codes, proceeding as above in a).

c) He could also start with a short list of hundred zip codes in the U.S. where abusive lenders have done their worst–abusive ARMs, low-balling, etc.–and pay off the troubled mortgages in those zip codes, proceeding as above in a) and b).

Certain conditions would apply: The houses would have to be the mortgage holders’ primary and actual residences–not investment properties or second homes. The owners would have to have lived there some set number of years, say 3 years; to have made their payments up to some set point; to have made a good-faith effort, in other words, to meet their mortgage payments. There would have to be a cap on the mortgage balances to be paid off–no jumbo mortgages–and some cap on the income of householders eligible to receive the help–no millionaires.

This would be no single-pronged attack on the problem. It would have to accompany investigation and conviction for abusive lenders, a thorough crackdown on corporate fraud at all levels, and a stringent reining in of corporate waste–including lobbying, advertising and executive compensation. 

But surely the banks and other mortgage lenders would have little to complain about. After all, they would be getting their money, the money they lent via those mortgages, plus the hundreds of billions in interest already paid on the mortgages.

The only things not supported by government—taxpayers–would be those nebulous collateralized obligations and mortgage-backed securities, which they never should have invented in the first place.

What’s not to like?

Why are they listening to Warren Buffett on the bailout?

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WHY ARE THEY LISTENING TO WARREN BUFFETT?

Why is Congress inviting in a major investor–who stands to recoup more billions of $ in the wake of the bailout proposal, if enacted–to weigh in on legislation?

Buffett has made billions through–if I read his own words correctly–buying when other people are selling, and selling when other people are buying.

Admittedly this simple principle, following the so-called law of supply & demand to its logical application, has not occurred to everyone else, especially everyone else on Wall Street–people who have instead fomented and pursued one Ponzi scheme after another.

But it hardly makes Buffett the go-to person in a situation where the financial interest of millions of ordinary citizens is pitted against that of a few of the mega-wealthy.

You want some perspective on Buffett as the populist protector? 1) He was one of Arnold Schwarzenegger’s top two or three advisors, when Schwarzenegger hijacked the California recall campaign conducted mostly by Darrell Issa and unceremoniously replaced Issa with himself. GOP movers and shakers enforced the replacement–which took place within hours of the successful recall. One result is that Californians–who are suffering mightily from a lethal bubble in the real estate market in that state–are stuck with Schwarzenegger as Gov. And Buffett was, as mentioned, his advisor.

2) Buffett is a major stakeholder in the Washington Post Company, the parent company of the Washington Post newspaper. This connection is sometimes mentioned in Post news reports and columns, sometimes not. (Why the editors do not insist on making the mention routine, every time Buffett’s name appears in their newspaper, is beyond me.) Buffett has been connected with the Post ever since the Post started trending toward the rightwing Washington Times, including the period in which the WP treated George W. Bush as a credible presidential candidate.


These people are not unbiased sources on questions like whether the purchase of “troubled assets”–essentially, a guaranteed price for an unguaranteed product, except multiplied by millions–is genuinely in the longterm public interest.

Barack Obama had a measured response on this topic on today’s Face the Nation. Interviewed by Bob Schieffer, Obama pointed out accurately that the [exact] wording of the legislation being proposed is key.

Obama said he will support the bill, WITH the conditions he has already laid down–oversight, taxpayer protections, etc. More importantly, Obama said that the conditions have to be “meaningfully included.”

Presumably that means that the conditions will have to be clear and specific, with teeth in them.

Otherwise they would carry about as much weight as John McCain’s repeated claim, on This Week with George Stephanopoulos this morning, that he is “a Teddy Roosevelt Republican.”

Bailout Extortion

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Bailout Extortion

Paulson, Bernanke

 

 

 

 

Treasury Secretary Paulson and Federal Reserve Director Bernanke issued only generalized warnings, if dire, in testifying at the Senate Banking Committee hearing yesterday. One question left unanswered was a big one–‘What exactly is the harm in not authorizing the smashing sum of $700 billion+ to bail out some entities in the financial industry?’

(Another big question not answered: Which entities would get the money, or the most, and why?)

The only itemization was some consumer lending—automobile loans, mortgages, and college education loans—with a few references to businesses lending money to each other.

Lending and cramdown

Tabling that second category for now, the argument about consumer lending seems to be that businesses will no longer be found—absent the $700 billion authorization–willing to lend Americans money for automobile purchases, mortgages, or college tuition. No car loans; no mortgages; no education loans.

My first response: Huh?

Not even a Hugo Chavez would be willing to help people in the U.S. buy cars, in the interests of sustaining the U.S. automobile, petroleum and highway sectors if nothing else? Says who?

Second response: This, if true, is extortion. If true, also, it has to be industry-wide and thus surely violates U.S. Antitrust law. Go, FBI!

(The FBI is launching investigations on Fannie Mae, Freddie Mac, Lehman Brothers, AIG and other companies, and on their top management and executives, for fraud. Let’s hope the FBI moves very, very swiftly. You know there is fire beneath the smoke when the FBI and Daily Kos are on the same page.)

DK

 

 

Setting aside the crime-fighting for the moment, it is pathetically obvious that our automobile industry at the very least does not have to be held hostage to Wall Street. While Sen. Charles Schumer (D-N.Y.) joined the chorus about the automobile industry at the hearing yesterday, there are clearly alternatives to bailing out (unnamed) lenders in the hope of a lateral trickle over to Detroit:

 

In simplest terms, if the administration is really worried about people not being able to buy cars, then by all means lend the U.S. automakers with monies they can use—to extend car loans to customers themselves–without going through some middleman entity of the Lehman Brothers ilk. Similar proposals have already been floated by Detroit.

 

Obviously, lending to giant automakers—or underwriting loans they extend—is less than the ideal solution. But lending money to Big Auto has to be better than giving money to Big Bankruptcy.

Same for education loans. If they’re worried about students loans drying up, if the powers that be are genuinely so worried about what might happen to student loans that they can contemplate a proposal like the bailout bill–then by all means lend/underwrite our institutions of higher learning themselves—either lend to students directly, at a reasonable, modest rate of interest; or extend the Pell Grants to save the (financially) bottom half of the college population from graduating in debt; or at the very least extend loans to higher education so that it can lend the money itself—without, again, going through a middleman like the Lehman brethren. Or some combination of the above. Every state has a department of higher education, btw. The states could help.

Ditto home mortgages. If a dearth of available mortgages really awaits, then—by all means, extend lending or underwriting to or through—picking a random example here–Fannie Mae and Freddie Mac. In fact, I thought they were doing that already. After all, these two entities are already under strengthened federal oversight.

Meanwhile, what happened to the old guidelines like ‘Never give in to a blackmailer. Not only is it wrong, it doesn’t work anyway’?

 

Note: The president is scheduled to speak on television in primetime tonight, to boost public support for the bailout. They are smart to have him wait until 9:00 p.m. (ET). If he did it during business hours, everybody in the nation could watch the Dow drop by hundreds of points during a 14-18-minute presentation.

Bush at war

And that’s without allowing questions from reporters afterward.

 

[This and the subsequent articles on the Wall Street bailout, deleted by the system among hundreds of articles and blog posts in summer 2011, are re-posted using archives and Word files.]

Fox News, Barack Obama, and Ignorance of Religion

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Ignorance of religion . . .

Fox News Sunday today is relentlessly flogging the Reverend You-know-who. In its pursuit to bring down Barack Obama, Fox has shifted tactics somewhat, allowing some questions about Hillary Clinton into interviews—asking Terry McAuliffe, for example, about several prominent members of the Clinton administration who now support Obama. (McAuliffe’s answer: I cd give you a list of thousands of former Clinton people who still support Hillary Clinton. Fair enough.)

 

Joe Andrews speaks for himself

Chris Wallace harped on the Reverend throughout his interviews with DNC chair Howard Dean, McAuliffe, and Rep. Joe Andrew, who famously has switched from supporting Clinton to supporting Obama. The harping continues into the panel discussion graced with neocon luminaries like Bill Kristol. Meanwhile, as Wallace repeatedly mentions, the Republicans are trying to tie Democratic candidates around the nation (read: the South) to the reverend, for his “damnAmerica” remarks . . .

Proving once again that some of these highly compensated political consultants really are as underqualified as some of television pundits and news figures (George Stephanopoulos and Charles Gibson, Bill Kristol, George F. Will and Charles Krauthammer, etc).

 

All the little foxes/neocons

Not that everyone has taken Comparative Religion, History of Religion, or any similar college course usually taught in the philosophy department of your nearest university. Many nominally educated people have, in fact, never taken any course touching on world history. Still, there are a few fundamental points that many Westerners do grow up knowing, if only by osmosis, or by . . . let’s see—oh, yes—thinking. Fox personnel like Wallace, above, really do seem to have convinced themselves that the Reverend You-know-who is ‘radioactive.’ I think they’re overreaching.

Meanwhile, on the other ticket . . .

 

(YouTube video clip of opposing party, re religion, here)

 

A quick recap, Comparative Religion 101-style, here:

  • Contemptus mundi, contempt of this world in anticipation of the next, has always been an extremist problem for Christianity. Since the first century of the Christian era, there has always been a tension between “In my father’s house are many mansions” and all the other visions of a better hereafter, on one hand, and instructions to live this life well and make this world better while you’re here, on the other. Contempt of earthly dross—flesh, gold—is good up to a point. But when you get into arrogance (spiritual pride), lack of charity (unloving behavior) and suicide, you have problems.
  • Still, it is consistent with every known Christian denomination to downplay earthly power. Put not your faith in princes or principalities. Strong stuff; goes way back.
  • In this tradition, we often—routinely—have preachers and other men (usually) of the cloth excoriating this country. Fire and brimstone from the pulpit does not spare self; it does not spare one’s own community; it does not spare one’s own country. If more of the media figures and political consultants who pander to the right wing actually entered some of those churches they try to get money from, they would know this.
  • The history of the United States, from Sinners in the Hands of an Angry God to now, is replete with these religious traditions. For many millions of Americans, they are central in everyday thought. Very few churches inAmerica would seriously tell their congregants to place a president above conscience, above God, or even above their church. The Supreme Being, in this line of thought, does hold the power of salvation and damnation.
  • Some commentators on the left are bringing up rightwing pastors—Jerry Falwell springs to mind—as a riposte to the Reverend You-know-who inChicago. I think this is a basic misreading. Anyone who does this kind of thing is invading another place of worship, at least intellectually invading it, in a way that millions of people feel instinctively—and rightly—to be a violation.
  • Btw, this phenomenon is by no means restricted to “black churches.” Nor are members of “black churches” the only Americans offended by the current media harping—entirely by overpaid individuals—on Reverend You-know-who.

I am not going to quote other American preachers making equivalent or similar statements aboutAmerica. But I could. And this little point is one widely known—to people who have actually sat through a sermon in their lives.

Speaking of churches, African-Americans, and related topics: I leave you, my brethren and sisters, with a brighter historical note for the day. The reverend Billy Graham, a member of a large and prominent Baptist church in Dallas, and already world-famous himself, became concerned at the fact that his church was segregated.

So, in some of the best traditions that have made America what it is today, he took steps. He visited with his church elders, and told them point-blank, in no uncertain words, to desegregate. Otherwise, he informed them, he would leave the church—and would tell the world why.

The church desegregated in short order. It’s called blackmail. Wonder whether some of those elders left the gathering thinking, “God damn . . .”

But there was no Chris Wallace and Fox News in those days, so we’ll never know. Oh, come to think of it, we would never have found out from Fox News anyway.