America's Imperial Hegemony History And Its Logical Outcome (Reporting of MSM on Syria Is Travesty)

Russ Baker at WhoWhatWhy says that the media coverage of the Syrian conflict "is a travesty."

No due diligence (practiced) by the mainstream media."

Very deliberate propaganda campaigns.

Has anyone asked why the Assad thugs are worse than the Saudi Arabian thugs? Or the Bahraini thugs? Or the Chinese thugs? And exactly where the charter for the U.S./western alliance to overthrown thugs at whim arises?



Is Israel Attacking Iran (Now?)

Noam Chomsky: America's Decline Is Real - and Increasingly Self-Inflicted

By Noam Chomsky, TomDispatch.com

February  16, 2012

Read Part 2 of Chomsky's "Decline of America" series here.

Significant anniversaries are solemnly commemorated -- Japan’s attack on the U.S. naval base at Pearl Harbor, for example.  Others are ignored, and we can often learn valuable lessons from them about what is likely to lie ahead.  Right now, in fact.

At the moment, we are failing to commemorate the 50th anniversary of President John F. Kennedy’s decision to launch the most destructive and murderous act of aggression of the post-World War II period: the invasion of South Vietnam, later all of Indochina, leaving millions dead and four countries devastated, with casualties still mounting from the long-term effects of drenching South Vietnam with some of the most lethal carcinogens known, undertaken to destroy ground cover and food crops.

The prime target was South Vietnam.  The aggression later spread to the North, then to the remote peasant society of northern Laos, and finally to rural Cambodia, which was bombed at the stunning level of all allied air operations in the Pacific region during World War II, including the two atom bombs dropped on Hiroshima and Nagasaki.  In this, Henry Kissinger’s orders were being carried out -- “anything that flies on anything that moves” -- a call for genocide that is rare in the historical record.  Little of this is remembered.  Most was scarcely known beyond narrow circles of activists.

When the invasion was launched 50 years ago, concern was so slight that there were few efforts at justification, hardly more than the president’s impassioned plea that “we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence” and if the conspiracy achieves its ends in Laos and Vietnam, “the gates will be opened wide.”

Elsewhere, he warned further that “the complacent, the self-indulgent, the soft societies are about to be swept away with the debris of history [and] only the strong... can possibly survive,” in this case reflecting on the failure of U.S. aggression and terror to crush Cuban independence.

By the time protest began to mount half a dozen years later, the respected Vietnam specialist and military historian Bernard Fall, no dove, forecast that “Vietnam as a cultural and historic entity… is threatened with extinction...[as]...the countryside literally dies under the blows of the largest military machine ever unleashed on an area of this size.” He was again referring to South Vietnam.

When the war ended eight horrendous years later, mainstream opinion was divided between those who described the war as a “noble cause” that could have been won with more dedication, and at the opposite extreme, the critics, to whom it was “a mistake” that proved too costly.  By 1977, President Carter aroused little notice when he explained that we owe Vietnam “no debt” because “the destruction was mutual.”

There are important lessons in all this for today, even apart from another reminder that only the weak and defeated are called to account for their crimes.  One lesson is that to understand what is happening we should attend not only to critical events of the real world, often dismissed from history, but also to what leaders and elite opinion believe, however tinged with fantasy.  Another lesson is that alongside the flights of fancy concocted to terrify and mobilize the public (and perhaps believed by some who are trapped in their own rhetoric), there is also geostrategic planning based on principles that are rational and stable over long periods because they are rooted in stable institutions and their concerns.  That is true in the case of Vietnam as well.  I will return to that, only stressing here that the persistent factors in state action are generally well concealed.

The Iraq war is an instructive case.  It was marketed to a terrified public on the usual grounds of self-defense against an awesome threat to survival: the “single question,” George W. Bush and Tony Blair declared, was whether Saddam Hussein would end his programs of developing weapons of mass destruction.   When the single question received the wrong answer, government rhetoric shifted effortlessly to our “yearning for democracy,” and educated opinion duly followed course; all routine.

Later, as the scale of the U.S. defeat in Iraq was becoming difficult to suppress, the government quietly conceded what had been clear all along.  In 2007-2008, the administration officially announced that a final settlement must grant the U.S. military bases and the right of combat operations, and must privilege U.S. investors in the rich energy system -- demands later reluctantly abandoned in the face of Iraqi resistance.  And all well kept from the general population.

Gauging American Decline

With such lessons in mind, it is useful to look at what is highlighted in the major journals of policy and opinion today.  Let us keep to the most prestigious of the establishment journals, Foreign Affairs.  The headline blaring on the cover of the December 2011 issue reads in bold face: “Is America Over?”

The title article calls for “retrenchment” in the “humanitarian missions” abroad that are consuming the country’s wealth, so as to arrest the American decline that is a major theme of international affairs discourse, usually accompanied by the corollary that power is shifting to the East, to China and (maybe) India.

The lead articles are on Israel-Palestine.  The first, by two high Israeli officials, is entitled “The Problem is Palestinian Rejection”: the conflict cannot be resolved because Palestinians refuse to recognize Israel as a Jewish state -- thereby conforming to standard diplomatic practice: states are recognized, but not privileged sectors within them.  The demand is hardly more than a new device to deter the threat of political settlement that would undermine Israel’s expansionist goals.
The opposing position, defended by an American professor, is entitled “The Problem Is the Occupation.” The subtitle reads “How the Occupation is Destroying the Nation.”

Which nation?  Israel, of course.  The paired articles appear under the heading “Israel under Siege.”

The January 2012 issue features yet another call to bomb Iran now, before it is too late.  Warning of “the dangers of deterrence,” the author suggests that “skeptics of military action fail to appreciate the true danger that a nuclear-armed Iran would pose to U.S. interests in the Middle East and beyond. And their grim forecasts assume that the cure would be worse than the disease -- that is, that the consequences of a U.S. assault on Iran would be as bad as or worse than those of Iran achieving its nuclear ambitions. But that is a faulty assumption. The truth is that a military strike intended to destroy Iran’s nuclear program, if managed carefully, could spare the region and the world a very real threat and dramatically improve the long-term national security of the United States.”

Others argue that the costs would be too high, and at the extremes some even point out that an attack would violate international law -- as does the stand of the moderates, who regularly deliver threats of violence, in violation of the U.N. Charter.

Let us review these dominant concerns in turn.

American decline is real, though the apocalyptic vision reflects the familiar ruling class perception that anything short of total control amounts to total disaster.  Despite the piteous laments, the U.S. remains the world dominant power by a large margin, and no competitor is in sight, not only in the military dimension, in which of course the U.S. reigns supreme.

China and India have recorded rapid (though highly inegalitarian) growth, but remain very poor countries, with enormous internal problems not faced by the West.  China is the world’s major manufacturing center, but largely as an assembly plant for the advanced industrial powers on its periphery and for western multinationals.  That is likely to change over time.  Manufacturing regularly provides the basis for innovation, often breakthroughs, as is now sometimes happening in China.  One example that has impressed western specialists is China’s takeover of the growing global solar panel market, not on the basis of cheap labor but by coordinated planning and, increasingly, innovation.

But the problems China faces are serious. Some are demographic, reviewed in Science, the leading U.S. science weekly. The study shows that mortality sharply decreased in China during the Maoist years, “mainly a result of economic development and improvements in education and health services, especially the public hygiene movement that resulted in a sharp drop in mortality from infectious diseases.” This progress ended with the initiation of the capitalist reforms 30 years ago, and the death rate has since increased.

Furthermore, China’s recent economic growth has relied substantially on a “demographic bonus,” a very large working-age population. “But the window for harvesting this bonus may close soon,” with a “profound impact on development”:  “Excess cheap labor supply, which is one of the major factors driving China's economic miracle, will no longer be available.”

Demography is only one of many serious problems ahead.  For India, the problems are far more severe.

Not all prominent voices foresee American decline.  Among international media, there is none more serious and responsible than the London Financial Times.  It recently devoted a full page to the optimistic expectation that new technology for extracting North American fossil fuels might allow the U.S. to become energy independent, hence to retain its global hegemony for a century.  There is no mention of the kind of world the U.S. would rule in this happy event, but not for lack of evidence.

At about the same time, the International Energy Agency reported that, with rapidly increasing carbon emissions from fossil fuel use, the limit of safety will be reached by 2017 if the world continues on its present course. “The door is closing,” the IEA chief economist said, and very soon it “will be closed forever.”

Shortly before the U.S. Department of Energy reported the most recent carbon dioxide emissions figures, which “jumped by the biggest amount on record” to a level higher than the worst-case scenario anticipated by the International Panel on Climate Change (IPCC).  That came as no surprise to many scientists, including the MIT program on climate change, which for years has warned that the IPCC predictions are too conservative.

Such critics of the IPCC predictions receive virtually no public attention, unlike the fringe of denialists who are supported by the corporate sector, along with huge propaganda campaigns that have driven Americans off the international spectrum in dismissal of the threats.  Business support also translates directly to political power.  Denialism is part of the catechism that must be intoned by Republican candidates in the farcical election campaign now in progress, and in Congress they are powerful enough to abort even efforts to inquire into the effects of global warming, let alone do anything serious about it.

In brief, American decline can perhaps be stemmed if we abandon hope for decent survival, prospects that are all too real given the balance of forces in the world.

“Losing” China and Vietnam

Putting such unpleasant thoughts aside, a close look at American decline shows that China indeed plays a large role, as it has for 60 years.  The decline that now elicits such concern is not a recent phenomenon.  It traces back to the end of World War II, when the U.S. had half the world’s wealth and incomparable security and global reach.  Planners were naturally well aware of the enormous disparity of power, and intended to keep it that way.

The basic viewpoint was outlined with admirable frankness in a major state paper of 1948 (PPS 23).  The author was one of the architects of the New World Order of the day, the chair of the State Department Policy Planning Staff, the respected statesman and scholar George Kennan, a moderate dove within the planning spectrum.  He observed that the central policy goal was to maintain the “position of disparity” that separated our enormous wealth from the poverty of others.  To achieve that goal, he advised, “We should cease to talk about vague and... unreal objectives such as human rights, the raising of the living standards, and democratization,” and must “deal in straight power concepts,” not “hampered by idealistic slogans” about “altruism and world-benefaction.”

Kennan was referring specifically to Asia, but the observations generalize, with exceptions, for participants in the U.S.-run global system.  It was well understood that the “idealistic slogans” were to be displayed prominently when addressing others, including the intellectual classes, who were expected to promulgate them.

The plans that Kennan helped formulate and implement took for granted that the U.S. would control the Western Hemisphere, the Far East, the former British empire (including the incomparable energy resources of the Middle East), and as much of Eurasia as possible, crucially its commercial and industrial centers.  These were not unrealistic objectives, given the distribution of power.  But decline set in at once.

In 1949, China declared independence, an event known in Western discourse as “the loss of China” -- in the U.S., with bitter recriminations and conflict over who was responsible for that loss.  The terminology is revealing.  It is only possible to lose something that one owns.  The tacit assumption was that the U.S. owned China, by right, along with most of the rest of the world, much as postwar planners assumed.

The “loss of China” was the first major step in “America’s decline.” It had major policy consequences.  One was the immediate decision to support France’s effort to reconquer its former colony of Indochina, so that it, too, would not be “lost.”

Indochina itself was not a major concern, despite claims about its rich resources by President Eisenhower and others.  Rather, the concern was the “domino theory,” which is often ridiculed when dominoes don’t fall, but remains a leading principle of policy because it is quite rational.  To adopt Henry Kissinger’s version, a region that falls out of control can become a “virus” that will “spread contagion,” inducing others to follow the same path.

In the case of Vietnam, the concern was that the virus of independent development might infect Indonesia, which really does have rich resources.  And that might lead Japan -- the “superdomino” as it was called by the prominent Asia historian John Dower -- to “accommodate” to an independent Asia as its technological and industrial center in a system that would escape the reach of U.S. power.  That would mean, in effect, that the U.S. had lost the Pacific phase of World War II, fought to prevent Japan’s attempt to establish such a New Order in Asia.

The way to deal with such a problem is clear: destroy the virus and “inoculate” those who might be infected.  In the Vietnam case, the rational choice was to destroy any hope of successful independent development and to impose brutal dictatorships in the surrounding regions.  Those tasks were successfully carried out -- though history has its own cunning, and something similar to what was feared has since been developing in East Asia, much to Washington’s dismay.

The most important victory of the Indochina wars was in 1965, when a U.S.-backed military coup in Indonesia led by General Suharto carried out massive crimes that were compared by the CIA to those of Hitler, Stalin, and Mao.  The “staggering mass slaughter,” as the New York Times described it, was reported accurately across the mainstream, and with unrestrained euphoria.

It was “a gleam of light in Asia,” as the noted liberal commentator James Reston wrote in the Times.  The coup ended the threat of democracy by demolishing the mass-based political party of the poor, established a dictatorship that went on to compile one of the worst human rights records in the world, and threw the riches of the country open to western investors.  Small wonder that, after many other horrors, including the near-genocidal invasion of East Timor, Suharto was welcomed by the Clinton administration in 1995 as “our kind of guy.”

Years after the great events of 1965, Kennedy-Johnson National Security Adviser McGeorge Bundy reflected that it would have been wise to end the Vietnam war at that time, with the “virus” virtually destroyed and the primary domino solidly in place, buttressed by other U.S.-backed dictatorships throughout the region.

Similar procedures have been routinely followed elsewhere.  Kissinger was referring specifically to the threat of socialist democracy in Chile.  That threat was ended on another forgotten date, what Latin Americans call the first 9/11,” which in violence and bitter effects far exceeded the 9/11 commemorated in the West.  A vicious dictatorship was imposed in Chile, one part of a plague of brutal repression that spread through Latin America, reaching Central America under Reagan.  Viruses have aroused deep concern elsewhere as well, including the Middle East, where the threat of secular nationalism has often concerned British and U.S. planners, inducing them to support radical Islamic fundamentalism to counter it.

The Concentration of Wealth and American Decline

Despite such victories, American decline continued.  By 1970, U.S. share of world wealth had dropped to about 25%, roughly where it remains, still colossal but far below the end of World War II.  By then, the industrial world was “tripolar”: US-based North America, German-based Europe, and East Asia, already the most dynamic industrial region, at the time Japan-based, but by now including the former Japanese colonies Taiwan and South Korea, and more recently China.

At about that time, American decline entered a new phase: conscious self-inflicted decline.  From the 1970s, there has been a significant change in the U.S. economy, as planners, private and state, shifted it toward financialization and the offshoring of production, driven in part by the declining rate of profit in domestic manufacturing.  These decisions initiated a vicious cycle in which wealth became highly concentrated (dramatically so in the top 0.1% of the population), yielding concentration of political power, hence legislation to carry the cycle further: taxation and other fiscal policies, deregulation, changes in the rules of corporate governance allowing huge gains for executives, and so on.

Meanwhile, for the majority, real wages largely stagnated, and people were able to get by only by sharply increased workloads (far beyond Europe), unsustainable debt, and repeated bubbles since the Reagan years, creating paper wealth that inevitably disappeared when they burst (and the perpetrators were bailed out by the taxpayer).  In parallel, the political system has been increasingly shredded as both parties are driven deeper into corporate pockets with the escalating cost of elections, the Republicans to the level of farce, the Democrats (now largely the former “moderate Republicans”) not far behind.

A recent study by the Economic Policy Institute, which has been the major source of reputable data on these developments for years, is entitled Failure by Design.  The phrase “by design” is accurate.  Other choices were certainly possible.  And as the study points out, the “failure” is class-based.  There is no failure for the designers.  Far from it.  Rather, the policies are a failure for the large majority, the 99% in the imagery of the Occupy movements -- and for the country, which has declined and will continue to do so under these policies.

One factor is the offshoring of manufacturing.  As the solar panel example mentioned earlier illustrates, manufacturing capacity provides the basis and stimulus for innovation leading to higher stages of sophistication in production, design, and invention.  That, too, is being outsourced, not a problem for the “money mandarins” who increasingly design policy, but a serious problem for working people and the middle classes, and a real disaster for the most oppressed, African Americans, who have never escaped the legacy of slavery and its ugly aftermath, and whose meager wealth virtually disappeared after the collapse of the housing bubble in 2008, setting off the most recent financial crisis, the worst so far.

(Noam Chomsky is Institute Professor emeritus in the MIT Department of Linguistics and Philosophy. He is the author of numerous best-selling political works. His latest books are Making the Future: Occupations, Intervention, Empire, and Resistance, The Essential Chomsky (edited by Anthony Arnove), a collection of his writings on politics and on language from the 1950s to the present, Gaza in Crisis, with Ilan Pappé, and Hopes and Prospects, also available as an audiobook. To listen to Timothy MacBain’s latest Tomcast audio interview in which Chomsky offers an anatomy of American defeats in the Greater Middle East, click here, or download it to your iPod here.)

Hostage Taking: U.S. Style (And Making Big Moolah From It) GOOD TIMES!!!

Remember when the Bush/Cheney people threw all the Clinton holdovers out of the government? I do.

You gotta love those Dims, don't you?

And have any of you been wondering about anyone's (not sitting on a huge deposit) chance of ever owning a house again? I have. And in light of those now (and still) in charge of the executive decisions, we learn that they (also) are betting against us.

I saw this information some time ago and noticed that it has that zing of American specialness to it so much that it's irresistible.

Or not.

But it does tell us just about all we need to know about the Obama plans, doesn't it?

And do you think this guy has a pock-marked face? (And I'm being way more than just unkind.)

Crooks and Liars

Wednesday February 15, 2012

Edward DeMarco: The Ideologue Who's Holding Homeowners - And The Economy - Hostage

By Richard RJ Eskow

Close your eyes and imagine:

The year is 2027. President Peace N. Love lost his re-election bid three years ago, after the disaster created by his military and intelligence cuts turned millions of Americans into homeless refugees.

His successor quickly appointed General Cathy Common-Sense (USMC, Ret.) to be Secretary of Defense. but Congress is controlled by President Love's party and refused to confirm her. So President Love's appointee, Sunshine Harmony Rainbow III, is still in charge at the Pentagon.

Defense Secretary Rainbow has halted all attempts to defend the homeland. "We're saving billions of dollars for the taxpayer instead," Secretary Rainbow tells Congress, "thanks to our secret plan. Maybe," the Secretary adds helpfully, "maybe we can spend the money learning to love one another." Soon it's discovered that Secretary Rainbow has misled Congress and the "plan" is really costing billions.

How do you think conservatives would react?

How would voters react to a public servant like Sunshine Harmony Rainbow III?

Credit: allgov.com

Meet Edward J. DeMarco, the "Secretary Rainbow" of America's housing crisis. It's 2012. Irresponsible banking actions devastated the economy, driving millions out of their homes and leaving Americans with three-quarters of a trillion dollars owed to bailed-out banks for nonexistent property values.

Fannie and Freddie followed Wall Street's crazy behavior, rather than leading it. But that, plus the irresponsibility and greed of their "privatized" executives, made it necessary for taxpayers to bail them out and take management control away from the failed private sector.

The housing crisis wasn't an act of God or an accident of fate. It was caused by radical conservatism and compliant "centrism" that pushed deregulation - the economic equivalent of demilitarization - and stripped oversight agencies of their power. Deregulation is an impractical fantasy, which is why voters rejected it in 2008.

So why are the radical ideologues of this failed philosophy still controlling our fate?

FHFA: The Mortgage Pentagon

One agency, the Federal Housing Finance Agency (FHFA), has the power to dramatically change the situation. It controls Fannie Mae and Freddie Mac, which taxpayers repurchased and bailed out after they were destroyed by "privatized" mismanagement and Wall Street greed.

Fannie and Freddie are behind more than half of the mortgages in the country. If the FHFA directed them to do so they could issue principal reductions, negotiate lower interest rates, push refinancing deals through the system, and dramatically reduce foreclosures.That would do far more than last week's settlement deal can ever hope to accomplish - without Congressional approval, with a stroke of its executive's pen.

But Congress has refused to appoint President Obama's nominee, Joseph Smith. Smith, as you might imagine from previous Obama appointments, is a centrist choice who should have been entirely non-controversial. He's a highly qualified and competent choice who has worked for banks as an attorney, as well as having served as a regulator.

Smith isn't an ideologue - but Edward De Marco and his senior managers are. DeMarco's the Acting Director of the FHFA. He's still in charge because, three years after he was elected, Obama has been unable to get his choice approved.

A.W.O.L.

Like "Defense Secretary Rainbow" in our little story, De Marco refuses to carry out his agency's assignment for ideological reasons. The Defense Department's mission is to protect the American people from attack, and the FHFA's mission is to protect American homeowners - and in so doing, help the economy as well.

But instead of making it easier for homeowners to get relief, De Marco and his lieutenants are making it harder. Outrageously, they're even paying a financial manipulator millions in taxpayer money to bet billions against the same homeowners.They're betting that these homeowners can't refinance, while at the same time making it harder for them to do it . . . .

The more these homeowners lose out, the more money the financial guy makes.

Wait. It gets worse.

Nothing For Money

As a letter from Reps. Elijah Cummings and John Tierney reveals, a former FHFA employee testified that there was a pilot program in principal reduction but it "was terminated by senior officials at Fannie Mae who were 'philosophically opposed' to the concept of reducing principal."

If so, then these DeMarco appointees are also "philosophically opposed" to the mission of their own institution.

DeMarco didn't reveal the existence of this program or its termination in his Congressional testimony. He also misled Congress and the public when he said that principal forgiveness for all (underwater) mortgages would cost "almost $100 billion," since $100 billion is the estimated total of all underwater principal, not just the amount that would be reduced for distressed homeowners.

Another FHFA study showed that not reducing principal on these mortgages would cost more than $100 billion, as Cummings and Tierney noted, while yet another showed that a well-designed principal reduction program would actually save taxpayers $28 billion.

DeMarco didn't mention those studies, either.

Who Is Edward DeMarco?

DeMarco's a career bureaucrat who joined FHFA under George W. Bush and was named Acting Director by Obama in 2009. The FHFA is an independent agency, so both the White House and DeMarco claim that he can't be fired. But DeMarco is still obligated to carry out his agency's mission - and to speak truthfully to his ultimate employers, the American people. (He has refused to speak with reporters or respond to press inquiries on a number of occasions.)

DeMarco defends his unwillingness to carry out his duties by claiming that principal reductions for underwater homeowners - some of whom are still paying seven percent interest or more for nonexistent home value, when the prevailing rate is as much as three points lower - "would not meet (the FHFA's) responsibilities as conservator of Fannie and Freddie." He told Congress that "FHFA has a statutory responsibility to preserve and conserve the enterprises’ assets."

What agency on Earth has a greater responsibility to not spend money serving its purpose than it does to do its job? It seems absurd, doesn't it? DeMarco's suggesting that not doing anything is a greater obligation for his agency than carrying out the function for which it was created.

Reverse Mission Creep

When he talks about "statutory responsibility," DeMarco is presumably referring to a provision of the Housing and Recovery Act of 2008 establishing the FHFA, which says that "in exercising any right, power, privilege, or authority as conservator or receiver ... the Agency shall conduct its operations in a manner which ... maximizes the net present value return from the sale or disposition of such assets."

But this is only one provision in a massive bill, one which reads like it was designed to address conservatorship for private-sector Federal home loan banks. Fannie and Freddie have an overarching objective which those banks don't have, which were the purpose for which they were created. That purpose is not to maximize asset value but to serve the public interest by helping homeowners.

Even James Lockhart, his Bush-appointed predecessor at the OHFEO (which became the FHFA), agrees with the assessment of Administration-friendly critics like Larry Summers that DeMarco is interpreting his mandate too narrowly.

What is the real purpose behind Freddie Mac and the FHFA?

Freddie's mission, clearly stated on its website, is "to stabilize the nation's residential mortgage markets and expand opportunities for homeownership and affordable rental housing ... (and) provide liquidity, stability and affordability to the U.S. housing market." The website lists Freddie's three key functions as follows:

• Meet the needs of the mortgage market by making homeownership and rental housing more affordable
• Reduce the number of foreclosures
• Helping families keep their homes

The FHFA's mission in overseeing Fannie, Freddie, and the Federal home loan banks is laid out on its website, too. "to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market."

The phrase "saving the taxpayer money" cannot be found on either the Freddie Mac or FHFA website.

Ideology

But it's much too generous to say that DeMarco has interpreted his mandate "too narrowly." Even by that artificially constricted standard, DeMarco's refusal to permit principal reductions is an abrogation of his responsibility that's likely to cost taxpayers tens of billions of dollars.

Why? Why would an anti-spending bureaucrat insist on making such a costly decision? Perhaps DeMarco and his colleagues, like too many misguided Washingtonians, thinks that helping underwater homeowners would "reward the undeserving."

Few of their peers had the same compunctions toward Wall Street billionaires, of course, and there's ample evidence that these homeowners were deceived - by a bank-driven bubble, by mortgage brokers who misled them while banks "looked the other way," by deceptive appraisers who inflated their home's value, and by the widespread bank-fueled myth that "real estate values will always go up."

Even if you accept the wacky notion that an agency's highest obligation is to avoid executing its own function, however, DeMarco's rationale still doesn't wash. If DeMarco really believes that "asset management" and expense reduction is his prime responsibility, banks negotiate principal reductions all the time - for corporations. A sound fiscal manager would do the same thing here.

Besides, if DeMarco's prime responsibility is fiduciary, then he shouldn't let his moral judgments - sound or otherwise - interfere with the execution of his responsibility.

DeMarco also seems to be in an unseemly hurry to re-privatize Fannie and Freddie, despite the disastrous results the last time around. Consider former Fannie Mae CEO Daniel Mudd: An investigation concluded that he fostered an "arrogant and unethical corporate culture, where Fannie Mae employees manipulated accounting and earnings to trigger bonuses for senior executives."

Based on his actions, DeMarco apparently thinks those were the good old days.

Hostages

What other explanation is there? DeMarco's appointees are hurting their organizations - and the taxpayer - because they are "philosophically opposed" to carrying out their own mission statements.

It appears that the housing agency - and therefore the entire real estate market, and our whole economy - is in the grip of a conservative "Secretary Rainbow," an anti-government ideologue who would rather subvert his agency's mission in pursuit of a small-government agenda.

America's underwater homeowners, and its economy, are being held hostage to Edward DeMarco's ideology.

Dereliction

The actions of DeMarco and his appointees aren't just wrong. They're a subversion of their own duties.

Edward DeMarco has failed to carry out his responsibility as head of the FHFA. Intentionally or not, he has also misled Congress and the public, withheld vital information, and failed to answer questions from the press or the people's representatives in a timely fashion.

As Reps. Cummings and Tierney wrote:

" ... (N)ew information ... calls into serious question the accuracy and completeness of your response, as well as your motivation for continuing to oppose principal reduction programs even when they have the potential to save American taxpayers billions of dollars."

Those are serious charges. But then, not performing your duty is pretty serious too.
Rainbows

Given his aversion to candor, we can only speculate about Mr. DeMarco's motivation. But both public testimony and his actions themselves suggest that he holds fairly radical right-wing views that are well outside the mainstream. That's certainly his right, just as it's every American's right to believe that military action is morally wrong.

But a pacifist would be a poor choice for Defense Secretary, and an apparent anti-government ideologue is a poor choice to lead the FHFA - especially when that ideologue appears to play fast and loose with the facts.
All of which raises the question: Why is Edward DeMarco still in this important post? We need leaders to solve our housing problem. Instead, this responsibility has been left in the hands of an ideologue whose deregulatory dreamworld is made up of nothing but rainbows.

Bipartisan Support for WW3 Touted? (Spy Vs. Spy Rides Again!)

It's nice that these groups are finally working together, isn't it?

I feel about this development as warmly as I felt when hearing earlier today that the Congressional groups had finally reached a mutual decision, which had them all pleased, on reducing coverage to retirement benefits (not theirs, of course), people on Medicare and the unemployed in order to be able to continue to jeopardize the benefits of the Social Security system. Hip hip hooray!

And it's spy versus spy time. And as usual (as we were taught by Mad Magazine) the spies are all on one side (against us).

"Bipartisan Support for World War III

Philip Giraldi On February 15, 2012

The Bipartisan Policy Center (BPC) is surely one of the more bizarre pro-Israel think tanks doing business in Washington. Its sage advice pops up here and there, most recently in The Wall Street Journal, where it advocated giving Israel tanker aircraft so its warplanes can fly to Iran, bomb the hell out of that country’s nuclear facilities, and make it safely back.

The BPC’s National Security Project is headed by Charles Robb, a former senator and governor from Virginia and living proof that you can fool most people more than once. Robb argues that enabling a devastating Israeli attack on Iran would create a credible deterrent to Tehran’s misbehavior and maintains that his judgment is derived from a “fact-driven consensus.”

But perhaps more interesting than the center itself is the reaction to the horse manure that it was trying to sell in the Journal. It is worth looking at the comments on the Op-Ed, which are generally hostile to the idea of a new war on behalf of Israel. It is refreshing to think that maybe Americans, even readers of The Wall Street Journal, are actually wising up to the con job they have been subjected to, even if it is a bit late to do anything about it.

The BPC claims to be bipartisan because it includes both Democrats and Republicans, but that does not mean that it is objective. More than three years ago it produced a “task force” report on the Iranian threat called “Meeting the Challenge: U.S. Policy Toward Iranian Nuclear Development.” It concluded that Iran has no right to enrich nuclear fuel for any purpose and predicted that Tehran would have sufficient highly enriched uranium in a year’s time to build a bomb. It advocated talking to Tehran to give it a chance to surrender on all key issues before attacking it, and it urged newly elected but not yet inaugurated President Barack Obama to build up forces for the assault. The task force recommended that the U.S. military should, after bombing Iran into submission, remain in the area, vigilant and ready to react to any attempt at retaliation by Tehran. 

Now, long after the alarming report, Iran has neither a nuclear device not any weapons-grade fuel, and there is no actual evidence that it has a program to produce a bomb, meaning that a war would have been another case of "preemption" against nonexistent weapons of mass destruction, reminiscent of the deceptions that led to the invasion of Iraq. And call for a U.S. attack could hardly have been otherwise, based on the makeup of the Bipartisan Policy Center task force that produced it. It included Dennis Ross, who had been described as the State Department's "lawyer for Israel;" Steve Rademaker, husband of Danielle Pletka of the American Enterprise Institute (AEI); Michael Rubin of AEI; Kenneth Weinstein of the Hudson Institute; and Kenneth Katzman of the Congressional Research Service.

Rubin drafted the report with projcct director Michael Makovsky, brother of David Makovsky, the senior fellow at the Washington Institute for Near East Policy, a pro-Israel think tank that was founded by the American Israel Public Affairs Committee. No one on the task force was an independent expert on Iran who might have been willing or able to express Iran’s concerns or point of view. Indeed, apart from Rubin, no one on the task force knew anything about Iran at all, except possibly that it was supposed to be part of the axis of evil.

The BPC followed up on its brilliant analysis of developments in Iran with another blockbuster a year later. Its National Security Project’s September 2010 report, “Assessing the Terrorist Threat,” concluded that there is a growing danger to the United States derived from the radicalization of some American Muslims, a number of whom allegedly had joined extremist groups abroad. The report and its conclusions received wide distribution in the United States mainstream media, including The Washington Post, National Public Radio, and the Associated Press.

But the alarm appears to have been sounded a bit too early and too stridently. Since 2010, there has been a notable lack of homegrown terrorist plots. In fact, The Christian Science Monitor reported two weeks ago that “homegrown terrorists have become less numerous, less organized, and less lethal in the past few years.” There were only 20 domestic terror cases leading to arrests in all of 2011, and of the 14,000 murders in the United States that year, none were terrorism-related.

The current effort by the BPC team on Iran is derived from a much longer piece called “Meeting the Challenge: Stopping the Clock,” which the Center describes as its “fourth report on the most immediate national security challenge facing our nation: Iran’s continued progress toward nuclear-weapons capability.” Robb and his stalwart cohorts seem unaware that there are at least 50 countries that have “nuclear-weapons capability,” including Saudi Arabia, Egypt, Brazil, Argentina, and Turkey.

They also appear to be uninterested in explaining exactly why Iran poses more of an immediate national security challenge than already nuclear armed North Korea or the deteriorating relationships with China and Russia. The 13 “experts” convened to deliberate over the report included Robb, Rademaker, Eric Edelman (who replaced Doug Feith at the Pentagon), and Mortimer Zuckerman. There is not a single actual expert on Iran among the names. It should be presumed that well-known neocon Michael Makovsky actually wrote the report.

The BPC has plush offices on I Street in Washington, a sizable staff, and a number of important people on its masthead. It might be churlish to ask where its money comes from, but I would hate to embarrass someone as self-important as former senator and governor Charles Robb. The fact is that groups like BPC do a major disservice to the people of the United States because they promote themselves as nonpartisan and free of any particular political agenda when they are anything but.

Their claimed objectivity is clearly a fiction, as they have been calling for military action against Iran for years, citing nonexistent threats and even speculating on the state of a nuclear program that does not exist. Their failure to include anyone who actually knows anything about Iran on their team and their choice to exclude anyone who might oppose a new war or be disinclined to think that all Muslims are potential traitors should tell us everything we need to know. It is a sad commentary on the state of the United States that ignorant, blowhard warmongers such as the BPC receive money, political support, and press coverage while groups that want to restore sanity and balance to American foreign policy are forced to scramble to raise nickels and dimes.

Read more by Philip Giraldi

• The World Turned Upside Down – February 8th, 2012
• Another War on the Cheap – February 1st, 2012
• Avoiding a ‘Dumb War’ With Iran – January 25th, 2012
• Creating American Terrorists – January 18th, 2012
• What War With Iran Might Look Like – January 11th, 2012

Iran? Here We Come As Bought-Off Media Leads Way (To Hell) and How Greece's Nightmare Arrives at U.S. Door And Why Debt Strategy Is and Has Been So Useful to "Lenders"

[If you have even a very small contribution you could make to this blog's continued operation, it will be wholeheartedly appreciated. Thank you for your support. Peace to all!]

Glenn Greenwald, whom I admire and respect as well as read religiously (my only religious observance, obviously) says (in much more precision-selected words) "Prepare yourself - Iran will be attacked soon (if it hasn't started already) and the media is now leading the way."

Brrrrrr!

Almost makes you wish for that "subtle" media build-up to the War on Iraq, doesn't it?

Please read his essay above when you have a spare 10 minutes or so. It contains so much past and current history (and connivance of the major American players) that it blows away the (Swedish) Millennium Trilogy. (And you know how much I enjoyed those books and movies.)



Max Keiser provides a nifty little guide about exactly what IMF policy has done to defenseless countries, which has come home to roost in Greece and the rest of the PIIGS, and will continue.

To US.

Bet on it.

Barry Ritholtz provides a primer (although one from back in olden times) on debt madness for us below.

How Trillion-Dollar Deficits Were Created

Barry Ritholtz

Today’s must read article is a front page NYT story by David Leonhardt. It looks at the process by which boom time surpluses were turned into boom time deficits, and then even greater crash deficits.

The two economic takeaways from the piece fits into some of the nonsense I have been criticizing here: 1) President Obama budgets are “responsible for only a sliver of the deficits” (despite what GOP critics say); and 2) Team Obama has no realistic plan to deal with the deficit (despite what DEM supporters say). This is simply the reality of the past 10 years.

Note that I am not a blind defender of this administration, and was named one of the 14 most strident critics of the Obama economic policies.

My favorite part of the article was the ginormous graphic that accompanied it.

Chart courtesy of NYT
>
Attention partisans: Try to be aware of your own selective perception here. Very dumb comments of a partisan nature on both sides will be deleted.

Fraudclosure Bailout Revealed In All Its Glory (Americans Must Love Getting Snookered (Screwed))

The Keiser Report is the best news reporting you will see of this catastrophic situation anywhere. Today, he interviews, among others, James Kunstler of Clusterfuck! Give it a few moments. You won't regret it!

I've been reading Neil Garfield for quite a long time and I have to tell you that it's addictive. He has one of the best opinion blogs (with the economic data to back it up) that I've seen anywhere detailing what I'm starting to think of as "The Great American Bailout of Financial Liars: Foreclosure? (Fraudclosure!)." Please do yourself a favor and read through this essay of his (notes, actually, on all things financially disturbing) on what has happened up to now legislatively and judicially, and why we may never see the end of this now-obvious fraud that has ravaged millions who may never recover.

Happy Valentines!

MarketWatch 666

“All media exist to invest our lives with artificial perceptions and arbitrary values”

Sunday, February 12, 2012

Notes on the Fraudclosure Bailout, the Dysfunctional Congress, Consumer Credit, et al.

You have likely all heard the depressing news this past week that all the state attorney generals caved in & "agreed in principle" to the administration's $25 billion mortgage fraud settlement with the 5 major banks who are mortgage loan servicers (oklahoma's AG reached a separate settlement worth $18.6 million); since virtually nothing had changed in the terms of this that we knew about a few weeks ago, it's apparent that all the rhetoric about bringing the perpetrators to justice of recent weeks was either orchestrated for public consumption or positioning as a way of negotiating for those state attorneys a bigger piece of the national pie...the lion's share of this deal is a three year $17 billion "commitment" to "homeowner relief" by the 5 servicers, which is expected to be through principal reduction, and since those loans are effectively owned by the holders of the mortgage backed securities those loans are pledged to, it will be the investors in those MBS that take the hit, not the banks; furthermore, since the total underwater equity in the US is estimated at $700 billion, this $17B is less than 3% of the total, and will like only be distributed to one million of the approximately 11 million borrowers who are underwater; loans outstanding that are owned or controlled by fannie & freddie, the majority of the total, will not be participating in this settlement

...The servicers also "commit" an additional $3 billion to refinance underwater homes at 5.25%, a lower mortgage rate than they are now paying...both the principal reduction and the refinancing aspects of this settlement tend to help the banks, because they encourage underwater homeowners to stay current & keep making house payments; as we've seen, over 6 million, or one in eight indebted homeowners, have already stopped paying on their mortgages...there will also be $5 billion in direct payments ($4.25 billion to the states and $750 million to the federal government)...of those funds to the states, about $3 billion will be distributed to whatever portion of the approximately four million homeowners who have already been fraudulently foreclosed on between 2008 and 2011 who apply and are determined to be eligible; this is expected to amount to a payment of between a $1500 and $2000 each for those who've already had their homes taken illegally...the remainder will go to the state attorney generals offices, to defray their expenses in managing this program…to put it in perspective, the total price tag on this settlement of $25 billion is only one tenth the cost of the state's 1998 medicaid settlement with the tobacco companies, & thats not even adjusting for inflation...bank stocks responded favorably, with BofA up 6% on the announcement...    

Banks have already set aside reserves to cover their out of pocket expenses, and most of the principal write-downs have already been taken by the banks, who knew going in that these underwater mortgages are worth far less than their nominal value; they now gain immunity from prosecution for servicer related abuses, including document fabrication and foreclosure of homes they had no right to take, no one goes to jail for forgery and they have promised to never do it again...on the other hand, the attorney generals retain the right to pursue civil claims outside of the agreement including securitization fraud and criminal cases; nor does the agreement prevent homeowners or investors from pursuing individual civil cases against the five servicers

...It appears that Schneiderman’s & Biden's lawsuits against MERS will survive, but the nevada & arizona lawsuits against BofA for Countrywide violations of previous consent decrees will be "folded into" the new consent decree...so essentially, the banks are absolved of all crimes against the people; on the other hand, if they defrauded another bank, or investors, they might still be held liable; their rights were the only ones that the administration and the AGs wanted to preserve...our government exists to protect the banks, everything & everyone else is secondary...

You should all recall that congress left last year with a lot of unfinished business regarding routinely renewed  tax breaks and only passed a two month extension for unemployment rations, the payroll tax cut, & the "doc fix"...to facilitate coming to an agreement that would last for the rest of the year, a conference committee composed of members of both houses has met several times so far this year in an attempt to hammer out their differences, and they haven't met with much success; although there's been bipartisan agreement to extend the payroll tax cut, they're still encumbered by the ridiculous provision of the debt control act that they must "pay for it", and how to do that is the source of the conflict;

Republicans proposed a package of spending cuts including layoffs & a pay freeze for federal workers, while democrats want a surtax on those earning over a million; for the "doc fix:, which you'll recall would correct the legislated mandate that would cut medicaid doctors reimbursements by 27.4%, the republican rejected a democratic plan to pay for it with savings from war funding; the greatest contention, however has been as to how long to extend rations for the unemployed; while the democrats lean toward cutting 6 weeks from 99 to leave 93 weeks of payments, the republicans would cut as much as 40 weeks, leaving the unemployed with only 59 weeks of assistance, since they're of the belief that only congresscritters should get a check for doing nothing for two years...but even if they extended the unemployment plan now in place, changes they made to the complex eligibility formula when they passed the two month extension will still result in the 32 states that still have the maximum number of weeks  gradually having their federal stipends shortened, something that has already happened to the unemployed in michigan, because its jobless rate fell from 11.1 percent at the end of 2010 to 9.3% in december, enough to trigger the state off the extended program...of course, with interest rates for government borrowing effectively negative, they could borrow now at today's rates to pay for these programs, and then pay back less than they borrowed at such time in the future as the economy improves and revenues increased; but understanding that demands that their economic advisers know a little accounting, and as steve roth at angry bear has pointed out, that's not part of their training...



It's been a rather light week for economic reports; probably the most important of those released was for our trade deficit for december (pdf), which came in at a larger than expected deficit of $48.8 billion, up from $47.1 in november...imports of $227.6 billion were far from covering the exports of $178.8 billion, most of which could be accounted for by oil imports averaging over $104 a barrel and a $23 billion trade deficit with china...the report we're going to take a closer look at this week is the december report on consumer credit from the Fed, because the unusual spike of 9.9% we noticed in the november report seems to have started a trend, as december's consumer credit increased at an annual rate of 9.3% over that...remember, these amounts are already seasonally adjusted, so we're not just seeing a normal holiday related jump, we're looking at increases that are at a 9.9% & 9.3% jump above what would have been expected for those months

...Now, this was widely reported as a surge in holiday credit card borrowing, but if you check the Fed report, you'll see that the 9.3% increase resulted from only a 4.1% increase in revolving credit (ie, credit cards) up $2.76 billion, to $800.98 billion, while non revolving credit (cars, yachts, student loans) increased 11.8%, up $16.55 billion, to $1.697 trillion...this is shown clearly in the adjacent chart from zero hedge, which shows revolving credit monthly increases or decreases in blue, and non-revolving credit in red, over the past 5 years...scroll down to the third table in the Fed release, where unadjusted amounts of consumer credit outstanding are reported,  and you'll see debt increases by holder; and what stick outs like a sore thumb is consumer debt held by the federal government, which is almost increasing exponentially: $98.4B in 2007  $111.0B in 2008, $186.0B in 2009, $316.4B in 2010, & $425.1B at the end of 2011

...Since this report doesnt include home loans, it's pretty clear we're seeing a spike in borrowing for education...and since approximately the same number of young people are entering college each year, this more than likely is indicative of underemployed adults borrowing to enhance their education, which is exactly what a “credit karma” analysis of student debt found; for those between age 35 and 49 saw their student debt burden increase by 47%..and just this week, the NACBA (National Association of Consumer Bankruptcy Attorneys) warned of a student loan "debt bomb", now nearly a trillion dollars, which cant be discharged thorough bankruptcy, & which they believe could be the next bubble to burst…& btw, that's something else congress has to address, as the interest rate on federal student loans is scheduled to double from 3.4% to 6.8% unless Congress acts before summer...



Just one more thing i want to look at, that's been kicking around this week in some of the more obscure corners of the blogosphere...after a reader at Mish's blog noted a significant decline in gasoline consumption, charles hughes smith dug up this adjacent chart of gasoline retail (ie gas station) deliveries per monthly rate from the US EIA; its easy to see how much our gasoline usage has declined during the recession, and as he discusses, there are some obvious reasons; unemployment, more efficient cars, behavior changes, etc...what is of concern is the collapse over the past 2 months; its now down to nearly 30 million gallons a day, which is about half of what was being used early last decade...scanning the 90s, we can see that january is typically an outlier to the downside, but there doesnt appear to be any 2 month precipitous drop anywhere near as severe as we've just seen in the historical record...since there's nothing else in any of the other reports that i've seen that could explain this, i really dont know what to make of it...but it's something we'll have to keep an eye on...

A foreclosure fraud footnote: each state gets a different amount of the mortgage fraud settlement...for instance, ohio gets $335 million, kansas gets $50 million, etc...yves smith has posted a Settlement Breakdown by State Plus Other Official Propaganda; i found the embedded scribd documents difficult to load and navigate; to find out how much your state got its probably easier just to google state name mortgage settlement amount, invariably the amount shows on google without linking to & reading a local article...