Wednesday, November 19, 2014

More Connections Between the Mafia and Wall Street   (Stark Parallels Between Gambino Crime Family and JPMorgan Chase)  Why Do These Persist After Madoff's Escape from View? (Jamie Dimon Worth the Bonuses!)



No comment here.

The joke is on US.

From our friend, Pam, at Wall Street on Parade.

Wiseguys:  Drawing Parallels Between the Mafia and Wall Street Persists


Pam Martens
November 19, 2014


Every now and then, someone raises the question of Mafia infiltration on Wall Street or suggests that Wall Street has become an Ivy-league educated, better tailored version of the mob. Now, two lawyers, Helen Davis Chaitman and Lance Gotthoffer have dramatically ratcheted up the debate, suggesting boldly in the latest chapter of their free on-line book that there are stark parallels between the Gambino crime family and JPMorgan Chase – the nation’s largest bank.

Writer Matt Taibbi had a similar epiphany back in 2012 in an article for Rolling Stone titled The Scam Wall Street Learned from the Mafia – the story of how major Wall Street firms conspired together to rig bidding in the municipal bond market. Taibbi writes:  “In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business.”

In 2009, the book, Nothing but Money by "New York Daily News" reporter Greg B. Smith was released, detailing actual Mafia infiltration in stock pump and dump schemes on Wall Street, albeit at small firms. That was preceded in 2003 by Born to Steal:  When the Mafia Hit Wall Street by long-time business writer and author, Gary Weiss. The Weiss book took an in-depth look at Mob-run stock brokerage firms selling phantom stocks by following the career of one of the stock swindlers, Louis Pasciuto, who eventually turned state witness.

But what attorneys Chaitman and Gotthoffer are doing is extraordinary and unprecedented. They are asking the public to seriously look at the parallels between the Mafia and JPMorgan Chase, a bank holding over $1.7 trillion in Federal Reserve assets and more than $1.3 trillion in deposits, the bulk of which are insured by the FDIC and ultimately backstopped by the U.S. taxpayer.

Lance Gotthoffer

Lance Gotthoffer

Chaitman is a nationally recognized litigator and author of "The Law of Lender Liability." She is also a Bernie Madoff victim who lost a large part of her life savings to his Ponzi scheme and then tenaciously represented other victims of his fraud in district and appellate courts. Chaitman has teamed up with fellow attorney, Lance Gotthoffer, to conduct an exhaustive investigation of the intersection of the Madoff fraud with the bank that was criminally charged by the U.S. Justice Department in the matter – JPMorgan Chase. (The bank signed a deferred prosecution agreement and paid $1.7 billion to the Madoff victims’ fund to avoid prosecution.)

The book is titled JPMadoff:  The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook. The authors are releasing a new chapter of the book each month as well as a quick means of contacting your legislator in Washington to urge Congress to “act in the interests of the American people, not in the interests of the financial institutions that are rich enough to make significant contributions.”


The latest chapter looks at the culture inside JPMorgan and provides a detailed portrait of some of the main insiders:  among them, Chairman and CEO Jamie Dimon; General Counsel Stephen M. Cutler; and Lee R. Raymond, the Lead Independent Director on the JPMorgan Chase board. The public will be further shocked to learn that the members of JPMorgan’s board who have kept Dimon as the Chairman and CEO through an endless series of government charges of law breaking by the firm are paid the enormous sum of $245,000.

But the most damning parallel to a Mafia crime family are the crimes themselves:  they are unconscionable and they just don’t stop. Outside of the more than $3 billion that JPMorgan paid to settle both criminal and civil charges related to Madoff, below is the additional JPMorgan rap sheet Chaitman and Gotthoffer include in the book, spanning just the last four years.

“In April 2011, JPMorgan Chase agreed to pay $35 million to settle claims that it over-charged members of the military service on their mortgages in violation of the Service Members Civil Relief Act and the Housing and Economic Recovery Act of 2008.

“In March 2012, JPMorgan Chase paid the government $659 million to settle charges that it charged veterans hidden fees in mortgage refinancing transactions.

“In October 2012, JPMorgan Chase paid $1.2 billion to settle claims that it, along with other banks, conspired to set the price of credit and debit card interchange fees.

“On January 7, 2013, JPMorgan Chase announced that it had agreed to a settlement with the Office of the Controller of the Currency (OCC) and the Federal Reserve Bank of charges that it had engaged in improper foreclosure practices.

“In September 2013, JPMorgan Chase agreed to pay $80 million in fines and $309 million in refunds to customers whom the Bank billed for credit monitoring services that the Bank never provided.

“On November 15, 2013, JPMorgan Chase announced that it had agreed to pay $4.5 billion to settle claims that it defrauded investors in mortgage-backed securities in the time period between 2005—2008.

“On December 13, 2013, JPMorgan Chase agreed to pay 79.9 million Euros to settle claims of the European Commission relating to illegal rigging of benchmark interest rates.

“In February 2012, JPMorgan Chase agreed to pay $110 million to settle claims that it over-charged customers for overdraft fees.

“In July 2013, JPMorgan Chase paid $410 million to the Federal Energy Regulatory Commission to settle claims of bidding manipulation of California and Midwest electricity markets.

“On November 19, 2013, JPMorgan Chase agreed to pay $13 billion to settle claims by the Department of Justice, the FDIC, the Federal Housing Finance Agency, the States of California, Delaware, Illinois, Massachusetts and New York, and to consumers, relating to fraudulent practices with respect to mortgage-backed securities.

“In November 2012, JPMorgan Chase paid $296,900,000 to the SEC to settle claims that it mis-stated information about the delinquency status of its mortgage portfolio.

“In December 2013, JPMorgan Chase paid $22.1 million to settle claims that the Bank imposed expensive and unnecessary flood insurance on homeowners whose mortgages the Bank serviced.”

That Jamie Dimon.

What a prince.



Fall has left the building.




Yummy swiss chard parmesan onion pizza from local market veggies.


Saturday, November 15, 2014

What We Know When We Accept Bought/Hyped News Reporting (A Big Fat But Extremely Persuasive NOTHING) Another Fake Bin Laden (and Job Growth) Story (QE Morphs) JPMorgan Owns NY Fed and All of US?



Norwegian film director reveals viral "Syrian hero boy" video a hoax to Invade Syria

This we read, but we read nothing as to why this may be so, assuming for argument’s sake it is. We are invited to accept that there is no reason worth reporting.
If it hasn't occurred to you at least several times over the last months (if not for decades before) that the news that the major media is reporting to denizens of the U.S. (and the West in general) is not just tainted with a smell of tricksyness flavored heavily by massive amounts of dollars at work internationally (and is demonstrably false), then maybe you're just not paying attention (anymore). Or have just lost interest in learning what's really going on in the world due to a history of invasive but secretive powerful-interest-protecting mendacity.

Again.

And again.

And if you don't read through this essay for the full meaning of bought-off reporting (and this is still going light as it is still a media maven voice), then no unexpected, threatening future events should displease you (very much anyway).

Salon steps up (making me wonder what the back story is there):

What Really Happened in Beijing:  Putin, Obama, Xi — And the Back Story the Media Won’t Tell You

Ukraine, Iran's nukes, the price of oil:  There are ties worthy of a Bourne film, if the media connected the dots

By way of events on the foreign side, the past few weeks start to resemble some once-in-a-while event in the heavens when everyone is supposed to go out and watch as the sun, moon and stars align. There are lots of things happening, and if we put them all together, the way Greek shepherds imagined constellations, a picture emerges. Time to draw the picture.

The situation on the ground in Ukraine is getting messy again. Equally, events of the past year now leave Ukraine’s economy not far from sheer extinction. You have not read of this because it does not fit the approved story, but Ukraine’s heart barely beats. Further east, we hear in the financial markets that the ruble’s decline brings Russia to the brink of another financial collapse.

Let’s see. Oil prices are now below $80 a barrel. It costs me nearly $20 less to put gasoline in my car than it did a year ago, and good enough. But why has the price of crude tumbled in so short an interval? It makes little sense when you gather the facts, and — goes without saying — you get no help with that from our media.

Let’s keep on trucking. Secretary of State Kerry went to Oman for another round of talks on the Iranian nuclear question last weekend. Russia recently emerged as a potentially key part of a deal, which will be the make-or-break of Kerry’s record. In effect, he now greets Russian Foreign Minister Sergei Lavrov with one hand and punches him well below the belt with the other. Somewhere beyond our view this must make sense.

En avant! Obama went to Beijing last week for a sit-down with Xi Jinping, who makes Vladimir Putin look like George McGovern when he wants to, which is not infrequently. Still in the Chinese capital, our president then attended a meeting with other Asian leaders to push a trade agreement, one primary purpose of which is to isolate China by bringing the rest of the region into the neoliberal fold. (Or trying to. Washington will never get the overladen, overimposing Trans-Pacific Partnership off the ground, in my view.)

A big item on Xi’s agenda — he was in on the Pacific economic forum, too — was the recent launch of an Asians-only lending institution intended to rival the Asian Development Bank, the World Bank affiliate doing the West’s work in the East. Being entirely opposed to people helping themselves advance without American assistance and all that goes with it, Washington used all means possible to sink this ship. When Obama got off the plane in Beijing, the Asian Infrastructure Investment Bank had $50 billion in capital and 20 members, more to come in both categories.


Xi, meantime, had a productive encounter — another — with the formidable Vlad. My sources in attendance tell me both put in strong performances. In short order, Russia will send enough natural gas eastward to meet much of China’s demand and — miss this not — in the long run could price out American supplies in other Pacific markets, which are key to the success of the current production boom out West.

This is a lot of dots to connect. As I see it, the running themes in all this are two:   There is constructive activity and there is the destructive. Readers may think this oversimplifies, but for this there is the ever-lively comment box below. I am willing to listen.

Let’s go back to early September. On Nov. 5, Germany brokered a cease-fire between the Ukraine government in Kiev and the rebels in the eastern Donbass region. Washington made it plain it wanted no part of this, preferring to continue open hostilities. And then strange things happened.

Less than a week after the Minsk Protocol was signed, Kerry made a little-noted trip to Jeddah to see King Abdullah at his summer residence. When it was reported at all, this was put across as part of Kerry’s campaign to secure Arab support in the fight against the Islamic State.

Stop right there. That is not all there was to the visit, my trustworthy sources tell me. The other half of the visit had to do with Washington’s unabated desire to ruin the Russian economy. To do this, Kerry told the Saudis 1) to raise production and 2) to cut its crude price. Keep in mind these pertinent numbers:  The Saudis produce a barrel of oil for less than $30 as break-even in the national budget; the Russians need $105.

Shortly after Kerry’s visit, the Saudis began increasing production, sure enough — by more than 100,000 barrels daily during the rest of September, more apparently to come. Last week they dropped the price of Arab Light by 45 cents a barrel, Bloomberg News just reported. This has proven a market mover, sending prices to $78 a barrel at writing.

Think about this. Winter is coming, there are serious production outages now in Iraq, Nigeria, Venezuela and Libya, other OPEC members are screaming for relief, and the Saudis make back-to-back moves certain to push falling prices still lower? You do the math, with Kerry’s unreported itinerary in mind, and to help you along I offer this from an extremely well-positioned source in the commodities markets:  “There are very big hands pushing oil into global supply now,” this source wrote in an e-mail note the other day.

The Russians, meantime, are reported to be sending soldiers and artillery back across, or maybe just across, the Ukrainian border. This we read, but we read nothing as to why this may be so, assuming for argument’s sake it is. We are invited to accept that there is no reason worth reporting.

I decline the invitation. The possibility-likelihood-probability — it is impossible to say, we are so ill-informed — is that these reported deployments are in reaction to moves kept out of sight. Given Washington’s disapproval of the Minsk accord and its underhanded manipulations in the oil markets since it was signed, I label this a likelihood, at least, maybe more.

As to the Ukrainian economy, this is getting sordid even before the International Monetary Fund gets its mitts on the place. A Royal Bank of Scotland analyst in Hong Kong, Roland Hinterkoerner, just published a tour d’horizon, a few of the highlights (or lowlights) being these:


  • With the Russian ruble cratering, Kiev recently had to remove a currency peg of 13 hryvnia to the dollar. It dropped 15 percent in the next five trading sessions. From a rate of 8 to 1 a year ago, it now cost 16 hryvnia to buy a dollar.

  • With the banking system in peril, a third of deposits had been withdrawn—before the currency collapsed, this is. “There is no way to repair this damage by doing some kind of recapitalization exercise that may still work in the eurozone,” the RBS man writes.
  • Efforts to stem the hryvnia’s fall have dangerously depleted foreign currency reserves. As of October, the central bank had $12.6 billion dollars in assets—taxi fare in the context.
  • Ukraine owes Russia $1.6 billion in gas bills by yearend—and then faces fees of $700 million a month for new supplies.
  • The Ukrainian automobile association, to burrow in slightly, just reported that new car registrations fell by 65 percent in October from the previous year, to 5,900 units—this in a nation of 46 million. The No. 1 producer, Saporisky Awtomobilebudiwny Sawod, turned out 1,007 vehicles. It has 21,000 employees on the payroll.
This kind of report leaves me nearly speechless — and our correspondents silent, of course. All that we have read of this past year, events taking place in the name of democracy and a better life for Ukrainians, comes to this. “The economy?” Hinterkoerner concludes. “What economy?”

Onward. “Going forward,” as the State Department’s chirpy spokespeople like to put it.

Kerry just finished up in Oman, where a round of talks on the Iran question were held just short of the Nov. 24 deadline for a deal. Russia’s role in these talks has suddenly grown potentially large. To break the impasse over Iran’s centrifuge count, Moscow offers to take most of Iran’s stockpile of unprocessed uranium and send back enriched fuel when Iran needs it to power the nuclear energy program it wants. This is a reprise of an idea first floated five years ago, and this time Tehran finds it acceptable, at least tentatively.

Put this in the larger context:  With the prospect of ending three and a half decades of pointless hostility within reach, this is the moment to be battering Russia as near to a pulp as possible with sanctions, market interventions to its disadvantage, and who can tell what on the military side in Ukraine? You start to think Washington simply cannot help itself, and more on this in a minute.

And so to Beijing. Nobody will put it this way, but Obama arrived with one failure already accomplished and others to come. It was a mistake to oppose the Beijing-sponsored Asian lending institution in the first place, and already it begins to cost the Americans. The TPP trade pact is no further along, you may have noticed. The climate pact Obama and Xi signed looks so far like an agreement for the sake of an agreement — something Obama could bring home in triumph. The only “successes” American media were able to report were a few market-opening measures of benefit to specific American corporations. Nothing visionary, fair to say. A junior trade negotiator could have got this done.

And here is why, a point hardly lost on the Chinese:  There is no vision on the American side, only resistance and objection. Xi has consistently urged a “new great power relationship,” and if someone can explain why this is not a perfectly logical thought in the face of 21st century realities, again, to the comment box with it.

Washington’s claim to be an unrivaled Pacific power by destiny goes back to Teddy Roosevelt’s imperial cruise around the region after the U.S. defeated the Spanish and massacred the Jefferson-reading Filipino democratic movement. We simply cannot surrender the turf, realities be damned.

Xi, on the other hand, is all about realities, and not a few have to do with stronger ties with Russia. Xi and Putin shook hands on a historically huge, $400 billion gas deal earlier this year. How did Obama feel when the two announced during his visit that they have just reached another one, this time for $325 billion?

Details:  The gas will arrive from Siberia by way of a not-yet-constructed pipeline. PetroChina will take a 10 percent share of a subsidiary of Rosneft, the Russian gas company. By 2020, China will source a quarter of its demand from Russia; the Russians, in turn, will by then sell more gas to China than they now send to Europe.

Listen to the sound of the world turning. Wonder why your media do not pass it on to you.

Always more in this line, it seems. Russia is also in numerous other energy deals with China, including one that doubles petroleum exports to the People’s Republic. Then there is the Silk Road Investment Fund, a $40 billion vehicle to finance development projects in the seven nations of Central Asia. Relations with Vietnam and Japan, horrible of late, now appear to be on the mend. So much, maybe, for Washington’s role as protector of the region from the reawakening empire.

Add this up,” writes Ken Courtis, a close observer of the international scene for decades, “and you have the outline of a number of important initiatives which will be key to China’s increased lead role in development through investment in other emerging market economies.”

Courtis had a curious exchange with Putin during some of the economic forum sessions in Beijing. He asked if Russia would provide North Korea security guarantees if it agreed to renounce nuclear weapons.

Putin replied in part:  “Your question is too clever. This is not the moment yet even to raise that question, let alone answer it. Often, the problem in the world is not that small countries, who feel they are under siege, are unwilling to change. Rather, it is that the bigger countries are all piling on like bullies in the school yard – and they don’t know when to stop.”

I hope Kerry and Obama were listening at that moment. As Courtis heard it, “I think Putin was signaling to the West that there will be no more help from Russia with sanctions on North Korea, or anywhere else. One could also read Iran, Syria, Venezuela, etc., into that line of reasoning.”

I agree. We can start to connect the stars, then, see our constellation, and identify the costs of a consistent pattern of destructive behavior on Washington’s part here, there and everywhere. Specific to the case, the Sino-Russian energy deals cannot possibly be taken as other than long-term responses to the West’s renewal of Cold War hostilities toward Russia and its refusal to countenance China’s emergence. More narrowly, Putin wants an Iran deal to demonstrate Russia’s importance as a global player, yes, but he is not so far from fed up even there.

The obvious question is what we are watching as all these events unfold and then coalesce into a single reality. This peculiar moment seems to make this reality clear. Nostalgic for the period of primacy known as the American Century, the U.S. cannot accept its passing. Logically enough, the task becomes essentially destructive of the world as it is a-borning — an effort, in the end, to destroy history itself.

The planet’s other major powers, for all their imperfections and, indeed, disgraces, understand that their time has come, parity between West and non-West is upon us. This is the core reality, not to be lost sight of. China’s and Russia’s domestic problems are rather like America’s; they are to be resolved by Chinese, Russians and Americans, a point we understand easily when it comes to the interference of others but not the other way around, when the question is our interference elsewhere.

All too bad. But only for those who insist on holding on to the wrong end of the stick. This century’s winners and losers are not yet clearly marked — I have to preserve my optimism on this point — but with each passing event, each mistake, who is fated for which side becomes a little more evident.

I like the thought a Chinese scholar-turned-diplomat-turned-scholar again made at a dinner in Beijing the other night, as passed on by a friend. He spoke of Ukraine, but the remark applies across the board.

From our perspective, we see all of this agitation as noise at the surface,” he said. Then he cited that scene from “Macbeth” at Dunsinane Castle, “Life’s but a walking shadow, a poor player that struts and frets his hour upon the stage, and then is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing.”

The Chinese — always attuned to the long view. Who are the idiots in this man’s rendering?

I leave it there.

(Patrick Smith is the author of “Time No Longer: Americans After the American Century.” He was the International Herald Tribune’s bureau chief in Hong Kong and then Tokyo from 1985 to 1992. During this time he also wrote “Letter from Tokyo” for the New Yorker. He is the author of four previous books and has contributed frequently to the New York Times, the Nation, the Washington Quarterly, and other publications. Follow him on Twitter, @thefloutist.)


Comments:
bastawisee
@Schnitzler The rising value of the $ must be compensation to the Saudis for dropping the price of oil, don't you think?


The other side of increased Saudi oil production is that lower prices undercut the viability of the Keystone pipeline, which relies on higher prices to exceed high production and transportation costs.  Simply raising the question of intermediate term economic viability could substantially cut into North American oil production in the decade ahead and maintain the economic and political importance of Middle East oil for the foreseeable future.

@freebird:  Everyone wants to get their hands on sectors of the Ukrainian economy, and the more it implodes, the easier it will be for EVERYONE to get what they want: cheap agricultural products for the EU; coal, coke and steel for China; geo-political control for Russia; farmland for the US and the EU; cheap, educated labour force for whoever needs/wants it. If Ukraine becomes a rump state as it has always been in world affairs, the easier for other groups to pick and choose what they want. No further sanctions against Russia from the EU and the US? (They got what they wanted, which was a cheaper rouble.) No more talk of aid for Syria? (It's become a military free-for-all and a chance to test even more of the latest weaponry--same with the Russians in Ukraine.) Dropping price of oil doesn't just hurt Russia but also the frack-heads in the US, who also have huge costs of production. (Letting the Saudis pump more oil is a way for the US to "cede" production to the Saudis and allow them a freer hand in controlling or abusing OPEC production quotas.) China emerges as the world leader in everything: energy consumption AND balance-of-payment deals in renminbi, not USD; they will soon dominate global economic trading on a scale never before appreciated, especially as they ramp up green tech to sell to the rest of the world. Spending money with China means buying and selling renminbi. The Chinese hold a lot of USD in forex b/c they want to be in control of world currency markets before the collapse of the USD and the rise of the CNY (renminbi).
Who's ultimately behind all of this? Well, just go watch The Wizard of Oz again:   smoke and mirrors, smoke and mirrors. It's always the same people on both sides of the balance so that there's never any betting but just greed, greed, greed.

Why is it the leaders in China seem to make the best decisions now? Not to mention Putin who sees very clearly where his country's headed.

Short-term $$$$$$$?

Always a civilization killer.

(Ask the Romans.)

Why isn't their internal corruption leading them to shun green products and stop building industries within their increasingly expensive civilizations?

It's just a time problem maybe.

_ _ _ _ _ _ _

Paul Craig Roberts has some media-maven stories of his own for our continued dismay. I know that I've thought "What unbelievable nonsense!" many times since 9/11/01.

And did you catch his essay on the fake job-creation/growth statistics? It's a doozie.

Economists, or rather the few who haven’t sold their souls, know that the government’s economic data are pulled out of a magician’s hat and massaged to produce numbers contradicted by reality. Unemployment is measured according to methodologies designed to prevent its discovery. Inflation is measured according to methodologies designed to deny its existence. Jobs are reported that don’t exist, and GDP growth rates are announced that declines in real median family incomes and consumer credit make impossible.The poverty level income is set artificially low in order to minimize welfare spending.
The lies that Washington and the powerful private interest groups that control the US government tell us go unchallenged by the print and TV media and by NPR. The propaganda that Americans are fed is more extreme than the propaganda of Big Brother in George Orwell’s 1984.
. . . The uncounted unemployed can be measured in the sharp 21st century decline in the labor force participation rate. The labor force participation rate has declined because there are no jobs to participate in. But Washington, the financial media, and the bought and paid for economists lie. They say the participation rate is down because the baby boomers are retiring. However, as John Titus, Dave Kranzler, and I documented with the government’s own data in a recent column, the participation rate of baby boomers is the highest of all and the only one that is rising. . . . To supplement their Social Security pensions (a rigged CPI prevents or minimizes cost-of-living increases), retirees take the temporary, lowly paid jobs that are all that the US economy can produce.
. . . As I have pointed out for a decade, or longer, the US economy no longer creates First World jobs. The US economy creates jobs for waitresses and bartenders, hospital orderlies, and retail clerks. The fact that the complexion of the US work force is becoming Third World is not considered a notable problem by the media or financial press, and economists seem immune to the facts.
. . . If you look at the jobs that the BLS reports the US is creating, they are third-world jobs. How is the US “the world’s only superpower” when it cannot create a middle class job?

Oh well, who's listening anyway? It's just the ultimate House of Cards.

The Federal Reserve’s announcement that QE is terminated has improved the outlook for the US dollar. However, as Nomi Prins makes clear, QE has not ended, merely morphed. http://www.nomiprins.com/thoughts/2014/11/10/qe-isnt-dying-its-morphing.html

As Dave Kranzler and I (and no doubt others) have pointed out, a stable or rising dollar exchange value is the necessary foundation to the house of cards. Until three years ago, the dollar was losing ground rapidly with respect to gold. Since that time massive sales of uncovered shorts in the gold futures market have been used to drive down the gold price. . . . The extent of financial corruption involving collusion between the mega-banks and the financial authorities is unfathomable.

And no one in the U.S. even seems concerned except for when the next Kevin Spacey (great name, eh?) rerun is scheduled.

Another Fake Bin Laden Story

Paul Craig Roberts

November 7, 2014

RT, one of my favorite news sources, has fallen for a fake story put out by the Pentagon to support the fantasy story that a SEAL team killed Osama bin Laden, who died a second time in Abbottabad, Pakistan, a decade after his first death from illness and disease. ( http://rt.com/usa/202895-navy-seal-shot-binladen/)

This fake story together with the fake movie and the fake book by an alleged SEAL team member is the way the fake story of bin Laden’s murder is perpetrated. Bin Laden’s alleged demise at the hands of a SEAL team was a propaganda orchestration, the purpose of which was to give Obama a hero’s laurels and deep six Democratic talk of challenging his nomination for a second term.


Osama bin Laden died in December 2001 of renal failure and other health problems, having denied in his last recorded video any responsibility for 9/11, instead directing Americans to look inside their own government. The FBI itself has stated that there is no evidence that Osama bin Laden is responsible for 9/11. Bin Laden’s obituary appeared in numerous foreign and Arabic press, and also on Fox News.

No one can survive renal failure for a decade, and no dialysis machine was found in the alleged Abbottabad compound of bin Laden, who allegedly was murdered by SEALs a decade after his obituary notices.

Additionally, no one among the crew of the ship from which the White House reported bin Laden was buried at sea saw any such burial, and the sailors sent messages home to that effect. Somehow a burial was held onboard a ship on which there are constant watches and crew on alert at all hours, and no one witnessed it.


Additionally, the White House story of the alleged murder of bin Laden changed twice within the first 24 hours. The claim that Obama and his government watched the action transmitted live from cameras on the SEALs’ helmets was quickly abandoned, despite the release of a photo of the Obama regime intently focused on a TV set and alleged to be watching the live action. No video of the deed was ever released. To date there is no evidence whatsoever in behalf of the Obama regime’s claim. Not one tiny scrap. Just unsubstantiated self-serving claims.

Additionally, as I have made available on my website, witnesses interviewed by Pakistan TV reported that only one helicopter landed in Abbottabad and that when the occupants of the helicopter returned from the alleged bin Laden compound, the helicopter exploded on takeoff and there were no survivors. In other words, there was no bin Laden corpse to deliver to the ship that did not witness a burial and no SEAL hero to return who allegedly murdered an unarmed bin Laden. Moreover, the BBC interviewed residents in Abbottabad, including those next door to the alleged “bin Laden compound,” and all say that they knew the person who lived there and it was not bin Laden.

Any SEAL who was so totally stupid as to kill the unarmed “Terror Mastermind” would probably have been courtmartialed for incompetency. Look at the smiling face of the man Who Killed Bin Laden. He thinks that his claim that he murdered a man makes him a hero, a powerful comment on the moral degeneracy of Americans.

So what is this claim by Rob O’Neill about? He is presented as a “motivational speaker” in search of clients. What better ploy among gullible Americans than to claim “I am the one who shot bin Laden.” Reminds me of the western movie:  "The Man Who Shot Liberty Valance." What better way to give Rob O’Neill’s claim validity than for the Pentagon to denounce his revelation for breaking obligation to remain silent.

The Pentagon claims that O’Neill by claiming credit has painted a big target sign on our door asking ISIS to come get us.

What unbelievable nonsense. ISIS and anyone who believed Obama’s claim to have done in bin Laden already knew, if they believed the lie, that the Obama regime claimed responsibility for murdering an unarmed bin Laden. The reason the SEAL team was prevented from talking is that no member of the team was on the alleged mission.

Just as the ship from which bin Laden was allegedly buried has no witnesses to the deed, the SEAL unit, whose members formed the team that allegedly dispatched an unarmed Terrorist Mastermind rather than to take him into custody for questioning, mysteriously died in a helicopter crash when they were loaded in violation of procedures in an unprotected 1960s vintage helicopter and sent into a combat zone in Afghanistan shortly after the alleged raid on “bin Laden’s compound.”

For awhile there were news reports that the families of these dead SEALS do not believe one word of the government’s account. Moreover, the families reported receiving messages from the SEALs that suddenly they felt threatened and did not know why. The SEALs had been asking one another:  “Were you on the bin Laden mission?” Apparently, none were. And to keep this a secret, the SEALs were sent to their deaths.

Anyone who believes anything the US government says is gullible beyond the meaning of the word.
(Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.)

Continuing on in the wake of Tim Geithner's New York Fed leadership (and his tome's mea culpas, the few there were), the following dismaying major headline hardly even excites the D.C. pulse anymore. (Well, we don't want to punish our friends too much, do we?)

The New York Fed Has Contracted JPMorgan to Hold Over $1.7 Trillion of its QE Bonds Despite Two Felony Counts and Serial Charges of Crimes


The Federal Reserve Board of Governors in Washington, D.C., which functions as the central bank of the United States, has farmed out much of its Quantitative Easing (QE) programs to the Federal Reserve Bank of New York since the financial crisis of 2008. The Federal Reserve Bank of New York has, in turn, contractually farmed out a hefty chunk of the logistics of that work to JPMorgan Chase in the last six years.

Sitting quietly on the Federal Reserve Bank of New York’s web site is a vendor agreement and other documents indicating that JPMorgan Chase holds all of the Mortgage Backed Securities (MBS) that the New York Fed has purchased under its various Quantitative Easing programs. As of last Wednesday, that figure was $1.7 trillion dollars. (The New York Fed has confirmed that JPMorgan is custodian for these assets.)

In addition to holding the MBS, JPMorgan also has a contractual agreement to exercise discretion (its own judgment) in trading the surplus cash that sits in the New York Fed’s cash account. While JPMorgan is restricted to holding collateral backed by U.S. government securities for these cash trades in Repurchase Agreements, its approved list of counter parties include global banks variously charged with rigging the international interest rate benchmark known as Libor, money laundering, aiding and abetting tax evasion, and defrauding clients.

I'm guessing that they're no longer afraid now to let us know who's really in charge.


Thursday, November 13, 2014

(Bye Bye Blue Dawgs But No Thank You for New Dims Gift)   Obstruction Pays Off for Republicans (F*cks Rest of Country, So It's All GOOD!)  Market Liars Still Rule  (Dead In the USA?)  Coal Kills Thousands  (Dirty Dirty Amazon)



BREAKING (Your Attention, Please!):

U.S. Companies Now Stash $2 Trillion Overseas. That's More Than They Have Onshore

U.S. companies are for the first time holding more than $2 trillion overseas, according to an analysis that paints a bleak picture of whether that money will make its way home and the limited economic impact it would have even if it does.

Corporate cash has hit $2.1 trillion, a sixfold increase over the past 12 years, Capital Economics said, citing its own database as well as that of Audit Analytics and other sources. There is no official total, but the firm also used regulatory filings that included "indefinitely reinvested foreign earnings" to glean the total sitting outside U.S. borders.

"The latest signs suggest that, as business confidence improves in light of the continued economic recovery, U.S. firms are starting to hold less cash domestically," Capital economists Paul Dales and Andrew Hunter said in a report for clients. "However, the foreign cash piles of the largest firms have almost certainly continued to grow."

That total, while daunting in its own right, is now greater than the amount held on U.S. shores, which totals just under $1.9 trillion, according to the latest Federal Reserve flow of funds tally.

. . . during the 2004 tax holiday "most of that (untaxed, incoming from abroad) cash was used to fund dividend payouts and share buybacks rather than to boost investment." A Democratic congressional report indicated that the biggest companies receiving the benefits of $360 billion in repatriated funds actually cut a net 20,000 jobs, and that the holiday cost Treasury coffers $3.3 billion.

"This is supported by the results of a 2009 study by the (National Bureau of Economic Research), which found that every $1 that was repatriated during the tax holiday resulted in an increase of almost $1 in shareholder payouts," the Capital note said. "Around $0.80 went towards share buybacks and $0.15 to dividend payments."

Very little, then, went to hiring and reinvestment.

Worst Voter Turnout in 72 Years

So, the fat cats have won and won long term it would seem to us who fear the onslaught of the Ryan Eviscerating Social Security/Rest of Public Safety Enhancing Programs Squads?

No wonder the number of voters was so low. The electorate knew (having seen solid evidence in more outsourcing and part-time job growth for six years) that the money wasn't in the U.S. for their benefit already (and that they may as well be smoking legal jays needed constantly to alleviate their pain and outrage.)

Want to know why things never seemed to change no matter the "change" that everyone thought they had voted for previously (and how its inutility has affected the electorate for both this and probably all future elections unless a real change occurs in election buying Citizens United style), why the fall of the Blue Dogs has finally occurred in the South and what has been introduced by the powerful to take its place?

Not much you don't.

Not that the members weren’t traditional values types. Most were. And they surely ran for office on those issues as well. But there is not one word in the official Blue Dog materials about social issues. The old local Democratic yellow dog institution may have been a party that openly included “traditional” views on culture and race but the new Blue Dogs were all about the Benjamins. They were, in fact, simply an arm of the Chamber of Commerce, industry and Wall Street.

. . . Howard Dean used to famously insist that the guys with confederate flags flying on their pick-ups trucks ought to be voting with the Democrats because they need health care too. And yes, you’d think so. But they haven’t done it . . .  for a whole host of reasons.

On the other hand, it didn’t help the Blue Dogs to be so “pro-business” that they sold themselves lock, stock and barrel to the financial elites either. But, as political parties are wont to do, the Democratic establishment decided that the problem was more a matter of “branding” and “messaging” than a problem of strategy or ideology. Somewhere along the line all these Southern Conservatives decided they just didn’t like those Blue Democrats as much as they like those Red Republicans so it must be the logo or the sales pitch that didn’t work.

And as it happens, in anticipation of the imminent extinction of the Dogs, they thought ahead enough to hire Dr Franken-Dem to cobble together yet another monster to take their place.
They cleverly called it the New Dem Coalition. Started back in 2005 when the Dogs started to disappear, by 2010 the new Dems had become a powerful force in the Party. In this article about the financial reform process in 2010, they were described as “a group of 69 lawmakers whose close relationship with several hundred Washington lobbyists has made their organization one of the most successful political money machines since the Republican K Street Project collapsed in 2007.”

And this is how they describe themselves on their web site:

A fiscally-responsible, moderate bloc of lawmakers dedicated to policies that foster American success, the New Democrat Coalition is a vehicle for the millions of Americans who feel unrepresented in today’s broken political process.
As you can see it’s completely different than the Blue Dogs. Except for the fact that it’s exactly the same.

Comments:

rtb61
The lie that social democratic parties need conservatives is basically a corporate-led mass media lie. In fact conservatives are a toxic poison for social democratic parties because they kill off participation by the community at large.

Blue dogs are there to insert corporate-controlled politicians, paid for by corporations and who end up being nothing but PR=B$ representatives for those corporations and propped up by corporate-controlled mass media.

Every single one that gains power means losing tens of thousands of grass roots supporters who hate what the blue dogs stand for. That grass roots support is essential for social democratic parties, it is what they are at their core.

The blue dog loses far more than it gains in reality and only modern corporate marketing keeps it alive.

BRDoug
Blue Dogs were bound to fail. I mean....If you're conservative, why vote for a conservative Democrat when you can vote for a real Republican? And if you're liberal....why choose between a vomit shake and a turd sandwich? Republicans have terrible ideas, but they're not ashamed of them. They don't run away from them. They repeat them often enough that enough rubes buy into it...and they win elections. Democrats might as well be liberals and own it. People might not agree, but they might at least respect them for not being disingenuous all the time.

There's a reason this election had the lowest % turnout in 70 years and it's not because Republicans are winning the war of ideas. They're certainly not. It's because those who want a real Progressive agenda often have no one to vote for. As a southern liberal, I lament my state being entirely controlled by Republicans; I see no end to that in my lifetime. However, the country as a whole might be better off if liberal progressive politicians stop trying to appeal to people who would never vote for them anyway and start appealing to the people who simply don't vote.

Greywolf Borealis
You do not need the South to win the White House or to control both houses of the Congress. Which is why Democrats must go back to their progressive roots.

One of the best reporters and clearest thinking, quick-witted bon vivants in the wonderful world of Progressives has solidly placed her finger on the throbbing artery of how this election has been reported by major media such as the pearl-grasping New York Times and what it preordains:

Shame, shame, shame on the voters, was the subliminal message in a New York Times editorial published on Tuesday. Shame on the stay-at-home slackers who let a combination of acrimony and apathy get in the way of handing a mandate to the most loathsome and undeserving bunch of  hacks to come along in.... well, three-quarters of a century.

The Times editorial was about as clueless as the candidates themselves, as if that were even possible.

To be fair, the writers also partially blamed negative advertising and lack of a clear message (there they go with that "narrative deficit" meme again!) on the Democrats' resounding defeat, and the anti-Obama craze and outright mendacity of Republicans for their own relative success. But the Times missed the forest for the trees: it's the plutocracy and the corruption and the influence-peddling, stupid! The Supreme Court's decision equating money with speech went totally unmentioned in the data-driven angst and Gray Lady pearl-clutching.

My published response:


 It wasn't just the disgust, the apathy, the voter suppression, the nasty TV ads. It was the mass epiphany that voting, all by itself, just doesn't mean what it used to, as in the good old days before Citizens United.

As Benjamin Page and Martin Gilens showed in their study of voting patterns, it wouldn't matter if there was an 80% turnout. Politicians pass laws based on what the wealthy want, period. What the authors call "economic elite domination" trumps democratic pluralism. Pro-change majorities get what they want only about 30% of the time, the study shows, and usually only if their desires mesh with those of the wealthy.

 For example, since the rich generally favor marriage equality as much as the average voter, we're seeing huge legislative successes in gay rights initiatives. On the other hand, since economic elites aren't too keen on a federal minimum wage or expanded Social Security, those ideas are going nowhere fast -- as are most policies that would benefit ordinary people.

So, blaming voters, telling us that "we get the government we deserve" based on apathy, or "voting against our interests" is getting mighty stale, mighty fast.


We are smarter than we're given credit for, while the intelligence of the elites who actually run this de facto oligarchy is tragically over-estimated.

 Memo to the victors with their spoils - if you think that this rigged system has given you a popular mandate, you need to think again.
And in a follow-up response to a reader who disagreed with me:

I didn't mean to suggest that we not vote at all. I can very well understand why so many people abstained, however. I voted in the meh-terms myself (albeit with some cynicism) because it was a local election, and states and counties are the only places where there is even a prayer for change., esp. with the progressive props on many ballots this year. I have also written comments and blog posts urging others to vote, with the full awareness that there are more weighted and "valuable" votes than ours being cast. So, we can't simply traipse to the polls every two and four years and then just sit back and rest and feel that we've done our entire "permitted" civic duty. 
There are plenty of other valuable ways to be a good citizen. I engage my more conservative friends in political discussions all the time.... sometimes my lefty reasoning strikes a chord, most times not, but at least I've engaged. I find there is a lot of common ground with "the other side" re Wall Street corruption and government surveillance, for example. So ... voting, boycotting, writing, protesting, picketing, striking, organizing, not giving in to the divide-and-conquer techniques the duopoly uses to maintain its power. Activism of all kinds is necessary if we have a hope of reanimating our democracy.
Very few pundits are actually talking about the duopolistic complicity of the whole corrupt system. They don't dare admit that our elected officials hold all of us in utter, sneering contempt, and that the low turnout last week is tantamount to a corporate coup. They don't dare admit that through this default "victory" our rulers hold power illegitimately. Not many of them are talking about the inconvenient truth that even with its abysmal 13% approval rating, Congress has seen the return of 95% of its members.

Admitting all of this might hasten the inevitable collapse of the fraudulent facade on top of the very real ruins of our democracy. And thus we pretend, we deflect, we scapegoat, we ignore the forest for the trees.

Plus ça change, plus c'est la même chose we can believe in, toujours and ad infinitum.

All righty, Karen!

I'm pretty sure that if the Dems try even a mildly obstructive campaign against the Republican black tide (no, not a racist hit) getting ready to be unleashed bigtime by the Ryan Retardeds on Social Security, Medicare, Medicaid, Disability and every other program dear to Progressives and consumer advocates that the media won't give them a pass.

Like they have the last six years to the kinder, gentler Republicans (who tried every conceivable avenue they could squeeze into to murder every Progressive and safety-net-for-the-fragile program left operating after the previous welfare-safety-net-program-eradication regime - and the people most dependent on them if at all possible).

"Obstruction has just been rewarded, in a huge way," wrote Michael Tomasky at The Daily Beast.

Led by Sen. Mitch McConnell (R-KY), Republicans vowed in 2009 to oppose every political move Obama made, not matter how sweeping or how minor. "To prevent Obama from becoming the hero who fixed Washington, McConnell decided to break it. And it worked," wrote Matthew Yglesias at Vox, in the wake of the midterm election results. New York's Jonathan Chait made a similar observation about McConnell:   "His single strategic insight is that voters do not blame Congress for gridlock, they blame the president, and therefore reward the opposition."

But why? Why don't voters blame Congress for gridlock?

Why would the president, who's had virtually his entire agenda categorically obstructed, be blamed and not the politicians who purposefully plot the gridlock? Because the press has given Republicans a pass. For more than five years, too many Beltway pundits and reporters have treated the spectacular stalemate as if it were everyday politics; just more "partisan combat." It's not. It's extraordinary.


Note the press complaint Sen. Diane Feinstein (D-CA) logged four years ago. It was about how timid the news media were in covering Republican obstructionism. Her critique still applies today:

You guys don't write about [it], and this is what they do. I don't see it, and I take five newspapers. I don't see it on the tube, and I don't see it anywhere. It's obstruction. It's obfuscation. It's bringing the body to a halt and it's been done dozens of times. And this is one more of those times ... and they haven't gotten much criticism for it clearly or they would have stopped it.

On paper, the GOP's desperate maneuver in 2009 looked risky:  Just gum up the works of Congress and stand in the way of every proposal from the new president who was just swept into office with a public mandate for change?

Wouldn't commentators clobber the GOP for blind partisanship and hollow obstruction?

Looking back though, there was very little risk involved. There was no element of chance because within days of Obama being sworn into office, the Beltway press sent out clarion call:   If Republicans don't cooperate with the new, wildly popular president, it's the president's fault.

And that press judgment hasn't budged since 2009.

The redoubtable Michael Lewis (whose The New, New Thing I taught when it was a brand-new book over 10 years ago) documented even worse that went on in the money-mad deregulated 80's, which brought us the Savings & Loan debacle costing the taxpayers billions of dollars before the good guys were put back in charge of the rules.

I want to recommend, if you haven't read it before, Lewis' first book, Liar's Poker, which is being reprinted this year for many more salient reasons than that it's been 25 years since it first appeared. Salon gets down with Lewis about his personal history on Wall Street as well as his book's prescience:

Salon:  Wall Street was booming, the City of London, which had been sleepy for a long time, was booming as well. It seems like, looking back, it wasn’t as much of an anomaly as it was the beginning of the world we’re in now. The scenes you’ve sketched almost feel like a photographic negative of the financial crash of 2008. I wonder the extent to which you felt like you were witnessing the birth of something.

Michael Lewis:  That’s exactly how I feel. I misread it at the time. In fact, if I had read it right I might have had less energy about the book. I thought what I was doing was capturing this very bizarre moment that could not be sustained. I really thought it was freakish; this isn’t humility, this is true:   I thought, “these people are paying me hundreds of thousands of dollars to give financial advice, that’s fucking insane,” and nobody else around me was any more qualified than me. I just felt like people were going to look back and say, “Can you believe they did this?” but it turned out to be the start of a new world where this became normal.

The big trends that originated, actually, at Salomon Brothers swept over Wall Street. The proprietary trading business, and the idea of turning your partnership into a corporation, and the idea that what you’re supposed to be doing if you’re a salesman is dreaming up really, really complicated products that the customer doesn’t understand — all that starts there and then, and it just kept going. So yes, I do feel like the reason the book has continued to sell is that it speaks to people still going to Wall Street, which is bizarre.

SalonWell, some of these people are kind of charming, and they’re all colorful. Besides the financial collapse, how did these people and the world they made possible change our world? What are the long-term impacts of this fervor?

Michael Lewis:  I think the mortgage bond example is the best. At the time, even though the mortgage department was raping the clients and making reams of money, I really thought — and I do think — that this was a really, really useful innovation. It would be really great to get capital from all over the world to the American home buyer, just to lower the cost of owning a home, as long as it was done on the up-and-up, where people knew what they were lending to. It was a really good idea at the origins, but it metastasized into something that was a horrible idea. You don’t find the actual characters who dreamed up the good idea … they didn’t help metastasize it. They were there for one part of it and then it kind of got away from them.

Proprietary trading, too. There was a moment where it weirdly made some sense for the proprietary trading that was going on at Salomon Brothers to be as dominant in the firm as it was. It was really smart, and if you were a shareholder you would say keep doing it. It metastasized into an opportunity for the people who were on the sharp end of things to make huge bets, and if they worked out they got rich, and if they didn’t work out the firm suffered.

It’s a little hard to blame the people who have the idea for the consequences of the idea. There’s no way anybody in this “Liar’s Poker” foresaw what was going to happen. I can remember sitting down with one of the guys from the mortgage department, who happened to be a very senior person at Merrill Lynch when they were loading up on subprime bonds, and he got fired because he said, “We don’t do this.” He said, “This is insane” … I would say the dynamic is something like the revolution consuming the revolutionary. These particular people would have been very ill-suited to perpetrate what’s been perpetrated, basically, in the name of their ideas.


Having said that, they were obviously not sane. It was vulgar and it was rapacious, up to a point.

SalonYou’ve mentioned the huge amount of money that you were making at the time, and you were low on the totem pole and quite young there. What did money do to these people? Did it change them? Did it make them happy? Did it make you happy?

Michael Lewis:  No. One of the reasons it was so easy to leave is that I looked up and I said, “How am I going to feel 10 years from now?” I didn’t see any examples of people who seemed happy. It was more like the money owned them, rather than that they owned the money, and they came to need it. Having said that, the sums of money now seem trivial. John Gutfreund, the head of the firm, was paid $3 million a year and that was considered scandalous. Now that’s the ante for –

Salon:   I think Larry Ellison makes that on his lunch break.

I have always respected John Fogerty's political insight and musical accomplishments. Rock on, John!

The discussion within the essay by the seemingly young(?) journalist no-minds of their comprehension of the meaning of "Fortunate Son" is priceless.

Bruce Springsteen, Dave Grohl and the Zac Brown Band playing John Fogerty's 'Fortunate Son' at the Concert for Valor on Veteran's Day. (photo: Carolyn Kaster/AP)

Bruce Springsteen, Dave Grohl and the Zac Brown Band playing John Fogerty's 'Fortunate Son' at the Concert for Valor on Veteran's Day. (photo: Carolyn Kaster/AP)

Team Springsteen: Why 'Fortunate Son' Belonged at the Concert for Valor


Fogerty was drafted when he was 20 years old, in 1965, and came home from active duty two years later. In his own words, he was inspired to write “Fortunate Son” because “I did not support the policy or the war… If you asked anyone in the army at that time why we were going to Vietnam to fight, no one could answer… Probably the real answer was keeping the war machine going, and business. To sacrifice a young man’s life with no real purpose, taking these young men from their mothers and families, was wrong. I was the guy who was living this life… I had very strong feelings about all of this… To me, those soldiers were my brothers. I understood them because I was also drafted into the army just like them. The protest was against the policy, not the soldiers…

“I had been thinking about all this turmoil… It had been on my mind for some time how sons of certain senators escaped the draft. It was very upsetting to me, as a young man of draft age. In political conventions, many times, states will use the phrase “favorite son,” as they recognize their leader to make a nomination. The songwriter in me thought about this, and I changed the name to ‘Fortunate Son,’ a phrase to describe what we have all witnessed in our time… When the troops came home, Nixon turned his back on the soldiers. As my feelings about this got stronger and stronger, I knew I had to write about it.” Fogerty wrote the music first “without even knowing what the lyrics were.” Later, he went to his bedroom with a pen and paper and wrote the lyrics in twenty minutes. “It was very personal to me.”

Interestingly enough, there did not appear to be the same level of uproar when Springsteen played “Born in the U.S.A.,” a song that, in the understatement of the evening, he said was one he “wrote 30 years ago, and I think it still holds up today.”

Maybe because people just think it’s a rah-rah, go America jam? If so, they would not be the first to make that mistake. Shortly after its release, “Born in the U.S.A.” was famously used by Ronald Reagan as a campaign song.



“Born in the U.S.A.” is, to quote music critic Greil Marcus, “about the refusal of the country to treat Vietnam veterans as something more than nonunion workers in an enterprise conducted off the books. It is about the debt the country owes to those who suffered the violation of the principles on which the country was founded, and by which it was justified itself ever since.” Given that the takehome message of the Concert for Valor was to not forget our veterans after they get back from combat — celebrity emcees spent much of their speeches pointing viewers to foundations aimed at employing and aiding vets here at home — “Born in the U.S.A.” is a perfect fit for the theme.

Coal Kills!


The experts at Stuttgart University posited that the largest 300 coal plants cause approximately 22,300 premature deaths a year. Of the 50 projects still in the planning phase, were they to come to fruition, they would be responsible for an additional 2,700 premature deaths.

The entire coal industry kills nearly 30,000 Americans each year due to respiratory illnesses. An additional 670,000 Chinese lose their lives each year due to pollutants and the world total is over a million annual deaths.

Amazon's Dirty Energy Problem


While the rest of the Internet goes green, Amazon's bringing its next big data center to coal country

If the Internet were a country, it’d rank sixth in the world for electricity demand. Fortunately, it’d also rank as one of the greenest, thanks in large part to efforts by industry leaders like Google, Yahoo and Microsoft to invest in renewable energy to power their massive data centers.

Bucking the trend entirely is Amazon, which continues to be the big, dirty smudge on that otherwise gleaming record. Back in April, Greenpeace released a report slamming Amazon Web Services — which plays host not just to the online retail empire but also Netflix, Pinterest and Spotify, among other popular sires — for what appears to be a utter lack of interest in going green.

And now, the company’s expected to be bringing its next big data center to coal-heavy Ohio, meaning its environmental record could be about to get even dirtier.

Sunday, November 9, 2014

(Wise Up, Janet Weiss 2!)  Actually, Democrats Have a Clear Agenda and Are More Ideological Than Republicans (They Are the Proud Neolibs)  How the Koches Made All That Money and How They Intend To Keep It (Loopholes (and They Own US))



Now, neoliberalism is often thought of as synonymous with privatization, deregulation, and trade and capital liberalization, but the state will discard these policies for corporate handouts the instant elites get into a self-inflicted mess, as with the Wall Street crash. 

This has left the Democratic Party in a bind. It relies on votes from social groups like women, union members, Blacks, Latinos, and environmentalists who favor redistributive policies like gender equity in income, a higher minimum wage, lower healthcare costs, more environmental protection, and stronger immigrant rights. At the same time, Democrats need billions of dollars to run elections and their party machinery. They go hat in hand to corporations and promise more tax breaks and corporate welfare in return. But Democrats can never be as committed to the free-market ideology as Republicans. Democrats need to satisfy some needs of their social base while Republicans can move the goalposts further right and wait for the Democrats to play catch up.

To resolve the contradiction, Democrats like Obama and likely 2016 presidential nominee Hillary Clinton say we will manage trickle-down economics more efficiently. This will increase taxes for modest market-based redistribution in the form of healthcare, housing and higher education subsidies, and tax breaks for the working poor. It’s the same role many traditional left parties play in other countries. Democrats offer a bit more funding, miniscule compared to military spending and corporate welfare, for food stamps, homelessness, and energy assistance. But the commitment to neoliberalism leaves the programs vulnerable. Obama readily cut tens of billions of dollars in social welfare to appease Republicans complaining about a $17.9 billion national debt. Obamacare is part of this framework. While it did extend coverage to uninsured millions, the goal was to reduce costs through intensified neoliberal restructuring, which is reducing overall quality of healthcare.

And the game goes on.

Or so I hear from every endearing (smarmy) pundit.

But before I move on I want to linger on this prescient essay, which was published before the election (and I wish I had read it right after the 2008 election).

Obama, however, spared no effort to rescue the sinking yachts. In October 2009 the New York Times noted that the bailouts begun a year earlier were fueling a “new era of Wall Street wealth.”

That will shape his legacy:  the real unemployment rate is still at 12 percent, and since 2008, 5.5 million more Americans live in poverty and the median household income has declined 4.6 percent.

Corporate profits are at their highest level since record-keeping began in 1929, the effective corporate tax rate is lower than any point since Hoover was president, and workers are taking home the smallest share of national income in 65 years.

Obama and Democratic Party leaders have passed up few opportunities to kick their voting base in the face. They abandon supporters the instant an issue becomes contentious, such as capping carbon emissions, federal funding of reproductive healthcare, or anti-union legislation. In contrast, the Republicans stick to their guns in pursuing an ideological agenda of upward redistribution of wealth, increased police and military force, and reactionary social policies.

But it’s time to rethink this notion that Democrats lack principles. They have a clear agenda and are actually more ideological than Republicans. Democrats like Obama are willing to lose power to carry out the neoliberal agenda. Since the Clinton era, Democrats have been the most effective architects of policies that increase the wealth and power of those on the top of the economic pyramid. Now, neoliberalism is often thought of as synonymous with privatization, deregulation, and trade and capital liberalization, but the state will discard these policies for corporate handouts the instant elites get into a self-inflicted mess, as with the Wall Street crash.

. . . The Republicans opt for naked class warfare as with huge tax breaks to the wealthy under Reagan and Bush Jr. But the breed of hard-right Republicans that came into Congress in 1994 will play chicken with the economy if that serves their power interests, as they did by repeatedly shutting down the government and damaging the U.S. credit rating.

Lacking a progressive vision, Democrats follow the GOP on economic policy, pushing the center rightward. Most media outlets have little interest in unpacking historical conditions that shape politics, preferring gossip about the personality, values, tastes and lineages of candidates.

And we know why, don't we?

Imagine being at that most important crowded table now and planning how Hillary will recapture the Democrats who refused to vote for Obama's neolibalism.

Fun times.

No courage required.

Speaking of fun times . . . .

Don't you know the Koches are quite gleeful after winning that election? It's not a mystery as to who was the money behind the GOP's rightward dash since the 80's. The mystery has been who is the money behind the Democrats'?

And speaking of the below-mentioned "moral clarity" that the Koches like to claim, if you've been wondering why so little real legislation is introduced, let alone passed, on all the issues that could slow global climate change for at least ourselves and our children? Keep looking askance at the Koches, who were never above committing every type of fraud known to earthlings if it made a quick buck.

All I want to say on the subject of their decency (or lack thereof) is that my father was an educated man who worked in an important technical industry and managed many of its chemical processes very carefully because he knew the poisons (and risk of fire) that would affect the public if the highest standards of safety were not maintained at all times, and that I know he never was one of these "white men."

Inside the Koch Brothers' Toxic Empire

Together, Charles and David Koch control one of the world's largest fortunes, which they are using to buy up our political system. But what they don't want you to know is how they made all that money

By Tim Dickinson | September 24, 2014

The enormity of the Koch fortune is no mystery. Brothers Charles and David are each worth more than $40 billion. The electoral influence of the Koch brothers is similarly well-chronicled. The Kochs are our homegrown oligarchs; they've cornered the market on Republican politics and are nakedly attempting to buy Congress and the White House. Their political network helped finance the Tea Party and powers today's GOP. Koch-affiliated organizations raised some $400 million during the 2012 election, and aim to spend another $290 million to elect Republicans in this year's midterms. So far in this cycle, Koch-backed entities have bought 44,000 political ads to boost Republican efforts to take back the Senate.
koch brothers

Koch Industries Responds to RS – And We Answer Back


What is less clear is where all that money comes from. Koch Industries is headquartered in a squat, smoked-glass building that rises above the prairie on the outskirts of Wichita, Kansas. The building, like the brothers' fiercely private firm, is literally and figuratively a black box. Koch touts only one top-line financial figure: $115 billion in annual revenue, as estimated by Forbes. By that metric, it is larger than IBM, Honda or Hewlett-Packard and is America's second-largest private company after agribusiness colossus Cargill. The company's stock response to inquiries from reporters: "We are privately held and don't disclose this information."

But Koch Industries is not entirely opaque. The company's troubled legal history – including a trail of congressional investigations, Department of Justice consent decrees, civil lawsuits and felony convictions – augmented by internal company documents, leaked State Department cables, Freedom of Information disclosures and company whistle­-blowers, combine to cast an unwelcome spotlight on the toxic empire whose profits finance the modern GOP.

Under the nearly five-decade reign of CEO Charles Koch, the company has paid out record civil and criminal environmental penalties. And in 1999, a jury handed down to Koch's pipeline company what was then the largest wrongful-death judgment of its type in U.S. history, resulting from the explosion of a defective pipeline that incinerated a pair of Texas teenagers.

The volume of Koch Industries' toxic output is staggering. According to the University of Massachusetts Amherst's Political Economy Research Institute, only three companies rank among the top 30 polluters of America's air, water and climate:  ExxonMobil, American Electric Power and Koch Industries. Thanks in part to its 2005 purchase of paper-mill giant Georgia-Pacific, Koch Industries dumps more pollutants into the nation's waterways than General Electric and International Paper combined. The company ranks 13th in the nation for toxic air pollution. Koch's climate pollution, meanwhile, outpaces oil giants including Valero, Chevron and Shell. Across its businesses, Koch generates 24 million metric tons of greenhouse gases a year.

David Koch

Three New Ways the Koch Brothers Are Screwing America


For Koch, this license to pollute amounts to a perverse, hidden subsidy. The cost is borne by communities in cities like Port Arthur, Texas, where a Koch-owned facility produces as much as 2 billion pounds of petrochemicals every year. In March, Koch signed a consent decree with the Department of Justice requiring it to spend more than $40 million to bring this plant into compliance with the Clean Air Act.

The toxic history of Koch Industries is not limited to physical pollution. It also extends to the company's business practices, which have been the target of numerous federal investigations, resulting in several indictments and convictions, as well as a whole host of fines and penalties.

And in one of the great ironies of the Obama years, the president's financial-regulatory reform seems to benefit Koch Industries. The company is expanding its high-flying trading empire precisely as Wall Street banks – facing tough new restrictions, which Koch has largely escaped – are backing away from commodities speculation.


It is often said that the Koch brothers are in the oil business. That's true as far as it goes – but Koch Industries is not a major oil producer. Instead, the company has woven itself into every nook of the vast industrial web that transforms raw fossil fuels into usable goods. Koch-owned businesses trade, transport, refine and process fossil fuels, moving them across the world and up the value chain until they become things we forgot began with hydrocarbons: fertilizers, Lycra, the innards of our smartphones.

The company controls at least four oil refineries, six ethanol plants, a natural-gas-fired power plant and 4,000 miles of pipeline. Until recently, Koch refined roughly five percent of the oil burned in America (that percentage is down after it shuttered its 85,000-barrel-per-day refinery in North Pole, Alaska, owing, in part, to the discovery that a toxic solvent had leaked from the facility, fouling the town's groundwater). From the fossil fuels it refines, Koch also produces billions of pounds of petrochemicals, which, in turn, become the feedstock for other Koch businesses. In a journey across Koch Industries, what enters as a barrel of West Texas Intermediate can exit as a Stainmaster carpet.

Koch's hunger for growth is insatiable:   Since 1960, the company brags, the value of Koch Industries has grown 4,200-fold, outpacing the Standard & Poor's index by nearly 30 times. On average, Koch projects to double its revenue every six years.

Koch is now a key player in the fracking boom that's vaulting the United States past Saudi Arabia as the world's top oil producer, even as it's endangering America's groundwater.

In 2012, a Koch subsidiary opened a pipeline capable of carrying 250,000 barrels a day of fracked crude from South Texas to Corpus Christi, where the company owns a refinery complex, and it has announced plans to further expand its Texas pipeline operations. In a recent acquisition, Koch bought Frac-Chem, a top provider of hydraulic fracturing chemicals to drillers.  

Thanks to the Bush administration's anti-regulatory­ agenda – which Koch Industries helped craft – Frac-Chem's chemical cocktails, injected deep under the nation's aquifers, are almost entirely exempt from the Safe Drinking Water Act.

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A 1996 explosion of a Koch-owned pipeline in Texas killed two teens. (Photo: National Transportation Safety Board)

Koch is also long on the richest – but also the dirtiest and most carbon-polluting – oil deposits in North America: the tar sands of Alberta. The company's Pine Bend refinery, near St. Paul, Minnesota, processes nearly a quarter of the Canadian bitumen exported to the United States – which, in turn, has created for Koch Industries a lucrative sideline in petcoke exports. Denser, dirtier and cheaper than coal, petcoke is the dregs of tar-sands refining.

U.S. coal plants are largely forbidden from burning petcoke, but it can be profitably shipped to countries with lax pollution laws like Mexico and China. One of the firm's subsidiaries, Koch Carbon, is expanding its Chicago terminal operations to receive up to 11 million tons of petcoke for global export. In June, the EPA noted the facility had violated the Clean Air Act with petcoke particulates that endanger the health of South Side residents. "We dispute that the two elevated readings" behind the EPA notice of violation "are violations of anything," Koch's top lawyer, Mark Holden, told Rolling Stone, insisting that Koch Carbon is a good neighbor.

Over the past dozen years, the company has quietly acquired leases for 1.1 million acres of Alberta oil fields, an area larger than Rhode Island.

By some estimates, Koch's direct holdings nearly double ExxonMobil's and nearly triple Shell's. In May, Koch Oil Sands Operating LLC of Calgary, Alberta, sought permits to embark on a multi-billion­dollar tar-sands-extraction operation. This one site is projected to produce 22 million barrels a year – more than a full day's supply of U.S. oil.

Charles Koch, the 78-year-old CEO and chairman of the board of Koch Industries, is inarguably a business savant. He presents himself as a man of moral clarity and high integrity. "The role of business is to produce products and services in a way that makes people's lives better," he said recently. "It cannot do so if it is injuring people and harming the environment in the process."

The Koch family's lucrative blend of pollution, speculation, law-bending and self-righteousness stretches back to the early 20th century, when Charles' father first entered the oil business.

Fred C. Koch was born in 1900 in Quanah, Texas – a sunbaked patch of prairie across the Red River from Oklahoma. Fred was the second son of Hotze "Harry" Koch, a Dutch immigrant who – as recalled in Koch literature – ran "a modest newspaper business" amid the dusty poverty of Quanah. In the family legend, Fred Koch emerged from the nothing of the Texas range to found an empire. But like many stories the company likes to tell about itself, this piece of Koch­lore takes liberties with the truth. Fred was not a simple country boy, and his father was not just a small-town publisher.

Harry Koch was also a local railroad baron who used his newspaper to promote the Quanah, Acme & Pacific railways. A director and founding shareholder of the company, Harry sought to build a rail line across Texas to El Paso. He hoped to turn Quanah into "the most important railroad center in northwest Texas and a metropolitan city of first rank." He may not have fulfilled those ambitions, but Harry did build up what one friend called "a handsome pile of dinero."

Harry was not just the financial springboard for the Koch dynasty, he was also its wellspring of far-right politics. Harry editorialized against fiat money, demanded hangings for "habitual criminals" and blasted Social Security as inviting sloth. At the depths of the Depression, he demanded that elected officials in Washington should stop trying to fix the economy: "Business," he wrote, "has always found a way to overcome various recessions."

In the company's telling, young Fred was an innovator whose inventions helped revolutionize the oil industry. But there is much more to this story. In its early days, refining oil was a dirty and wasteful practice. But around 1920, Universal Oil Products introduced a clean and hugely profitable way to "crack" heavy crude, breaking it down under heat and heavy pressure to boost gasoline yields. In 1925, Fred, who earned a degree in chemical engineering from MIT, partnered with a former Universal engineer named Lewis Winkler and designed a near carbon copy of the Universal cracking apparatus – making only tiny, unpatentable tweaks.

Relying on family connections, Fred soon landed his first client – an Oklahoma refinery owned by his maternal uncle L.B. Simmons. In a flash, Winkler-Koch Engineering Co. had contracts to install its knockoff cracking equipment all over the heartland, undercutting Universal by charging a one-time fee rather than ongoing royalties.

It was a boom business. That is, until Universal sued in 1929, accusing Winkler­Koch of stealing its intellectual property. With his domestic business tied up in court, Fred started looking for partners abroad and was soon doing business in the Soviet Union, where leader Joseph Stalin had just launched his first Five Year Plan.

Stalin sought to fund his country's industrialization by selling oil into the lucrative European export market. But the Soviet Union's reserves were notoriously hard to refine. The USSR needed cracking technology, and the Oil Directorate of the Supreme Council of the National Economy took a shining to Winkler-Koch – primarily because Koch's oil-industry competitors were reluctant to do business with totalitarian Communists.

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Outside its London offices, protesters gather. (Photo: P.Wolmuth/REPORT DIGITAL-REA/Re)

Between 1929 and 1931, Winkler-Koch built 15 cracking units for the Soviets. Although Stalin's evil was no secret, it wasn't until Fred visited the Soviet Union, that these dealings seemed to affect his conscience. "I went to the USSR in 1930 and found it a land of hunger, misery and terror," he would later write. Even so, he agreed to give the Soviets the engineering know-how they would need to keep building more.

Back home, Fred was busy building a life of baronial splendor. He met his wife, Mary, the Wellesley-educated daughter of a Kansas City surgeon, on a polo field and soon bought 160 acres across from the Wichita Country Club, where they built a Tudor­style mansion. As chronicled in Sons of Wichita, Daniel Schulman's investigation of the Koch dynasty, the compound was quickly bursting with princes: Frederick arrived in 1933, followed by Charles in 1935 and twins David and Bill in 1940. Fred Koch lorded over his domain.

"My mother was afraid of my father," said Bill, as were the four boys, especially first-born Frederick, an artistic kid with a talent for the theater.

"Father wanted to make all his boys into men, and Freddie couldn't relate to that regime," Charles recalled. Frederick got shipped East to boarding school and was all but disappeared from Wichita.
With Frederick gone, Charles forged a deep alliance with David, the more athletic and assertive of the young twins. "I was closer with David because he was better at everything," Charles has said.


Fred Koch's legal battle with Universal would drag on for nearly a quarter-century. In 1934, a lower court ruled that Winkler-Koch had infringed on Universal's technology. But that judgment would be vacated, after it came out in 1943 that Universal had bought off one of the judges­ handling the appeal. A year later, the Supreme Court decided that Fred's cracker, by virtue of small technical differences, did not violate the Universal patent. Fred countersued on antitrust grounds, arguing that Universal had wielded patents anti-competitively. He'd win a $1.5 million settlement in 1952.

Around that time, Fred had built a domestic oil empire under a new company eventually called Rock Island Oil & Refining, transporting crude from wellheads to refineries by truck or by pipe. In those later years, Fred also became a major benefactor and board member of the John Birch Society, the rabidly anti-communist organization founded in 1958 by candy magnate and virulent racist Robert Welch.

Bircher publications warned that the Red endgame was the creation of the "Negro Soviet­ Republic" in the Deep South. In his own writing, Fred described integration as a Red plot to "enslave both the white and black man."

Like his father, Charles Koch attended MIT. After he graduated in 1959 with two master's degrees in engineering, his father issued an ultimatum:   Come back to Wichita or I'll sell the business. "Papa laid it on the line," recalled David. So Charles returned home, immersing himself in his father's world – not simply joining the John Birch Society, but also opening a Bircher bookstore. The Birchers had high hopes for young Charles. As Koch family friend Robert Love wrote in a letter to Welch: "Charles Koch can, if he desires, finance a large operation, however, he must continually be brought along."

But Charles was already falling under the sway of a charismatic radio personality named Robert LeFevre, founder of the Freedom School, a whites-only­ libertarian boot camp in the foothills above Colorado Springs, Colorado. LeFevre preached a form of anarchic capitalism in which the individual should be freed from almost all government power. Charles soon had to make a choice.

While the Birchers supported the Vietnam War, his new guru was a pacifist who equated militarism with out-of-control state power. LeFevre's stark influence on Koch's thinking is crystallized in a manifesto Charles wrote for the Libertarian Review in the 1970s, recently unearthed by Schulman, titled "The Business Community: Resisting Regulation."

Charles lays out principles that gird today's Tea Party movement. Referring to regulation as "totalitarian," the 41-year-old Charles claimed business leaders had been "hoodwinked" by the notion that regulation is "in the public interest." He advocated the "barest possible obedience" to regulation and implored, "Do not cooperate voluntarily, instead, resist whenever and to whatever extent you legally can in the name of justice."

After his father died in 1967, Charles, now in command of the family business, renamed it Koch Industries. It had grown into one of the 10 largest privately owned firms in the country, buying and selling some 80 million barrels of oil a year and operating 3,000 miles of pipeline. A black-diamond skier and white-water kayaker, Charles ran the business with an adrenaline junkie's aggressiveness.

The company would build pipelines to promising oil fields without a contract from the producers and park tanker trucks beside wildcatters' wells, waiting for the first drops of crude to flow. "Our willingness to move quickly, absorb more risk," Charles would write, "enabled us to become the leading crude-oil­gathering company."

Charles also reconnected with one of his father's earliest insights:  There's big money in dirty oil. In the late 1950s, Fred Koch had bought a minority stake in a Minnesota refinery that processed heavy Canadian crude. "We could run the lousiest crude in the world," said his business partner J. Howard Marshall II – the future Mr. Anna Nicole Smith. Sensing an opportunity for huge profits, Charles struck a deal to convert Marshall's ownership stake in the refinery into stock in Koch Industries. Suddenly the majority owner, the company soon bought the rest of the refinery outright.

Almost from the beginning, Koch Industries' risk-taking crossed over into recklessness. The OPEC oil embargo hit the company hard. Koch had made a deal giving the company the right to buy a large share of Qatar's export crude. At the time, Koch owned five supertankers and had chartered many others. When the embargo hit, Koch had upward of half a billion dollars in exposure to tankers and couldn't deliver OPEC oil to the U.S. market, creating what Charles has called "large losses."

Soon, Koch Industries was caught overcharging American customers. The Ford administration in the summer of 1974 compelled Koch to pay out more than $20 million in rebates and future price reductions.

Koch Industries' manipulations were about to get more audacious. In the late 1970s, the federal government parceled out exploration tracts, using a lottery in which anyone could score a 10-year lease at just $1 an acre – a game of chance that gave wildcat prospectors the same shot as the biggest players. Koch didn't like these odds, so it enlisted scores of frontmen to bid on its behalf. In the event they won the lottery, they would turn over their leases to the company. In 1980, Koch Industries pleaded guilty to five felonies in federal court, including conspiracy to commit fraud.

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The Koch family, mid-1950s. (Photo: Wichita State University Libraries)

With Republicans and Democrats united in regulating the oil business, Charles had begun throwing his wealth behind the upstart Libertarian Party, seeking to transform it into a viable third party.

Over the years, he would spend millions propping up a league of affiliated think tanks and front groupsa network of Libertarians that became known as the "Kochtopus."

Charles even convinced David to stand as the Libertarian Party's vice-presidential candidate in 1980 – a clever maneuver that allowed David to lavish unlimited money on his own ticket. The Koch-funded 1980 platform was nakedly in the brothers' self-interestslashing federal regulatory agencies, offering a 50 percent tax break to top earners, ending the "cruel and unfair" estate tax and abolishing a $16 billion "windfall profits" tax on the oil industry.

The words of Libertarian presidential candidate Ed Clark's convention speech in Los Angeles ring across the decades: "We're sick of taxes," he declared. "We're ready to have a very big tea party." In a very real sense, the modern Republican Party was on the ballot that year – and it was running against Ronald Reagan.

Charles' management style and infatuation with far-right politics were endangering his grip on the company. Bill believed his brothers' political spending was bad for business. "Pretty soon, we would get the reputation that the company and the Kochs were crazy," he said.


In late 1980, with Frederick's backing, Bill launched an unsuccessful battle for control of Koch Industries, aiming to take the company public. Three years later, Charles and David bought out their brothers for $1.1 billion. But the speed with which Koch Industries paid off the buyout debt left Bill convinced, but never quite able to prove, he'd been defrauded. He would spend the next 18 years suing his brothers, calling them "the biggest crooks in the oil industry."

Bill also shared these concerns with the federal government. Thanks in part to his efforts, in 1989 a Senate committee investigating Koch business with Native Americans would describe Koch Oil tactics as "grand larceny."

In the late 1980s, Koch was the largest purchaser of oil from American tribes. Senate investigators suspected the company was making off with more crude from tribal oil fields than it measured and paid for. They set up a sting, sending an FBI agent to coordinate stakeouts of eight remote leases. Six of them were Koch operations, and the agents reported "oil theft" at all of them.

One of Koch's gaugers would refer to this as "volume enhancement." But in sworn testimony before a Texas jury, Phillip Dubose, a former Koch pipeline manager, offered a more succinct definition: "stealing."

The Senate committee concluded that over the course of three years Koch "pilfered" $31 million in Native oil; in 1988, the value of that stolen oil accounted for nearly a quarter of the company's crude-oil profits.

"I don't know how the company could have figures like that," the FBI agent testified, "and not have top management know that theft was going on."

In his own testimony, Charles offered that taking oil readings "is a very uncertain art" and that his employees "aren't rocket scientists." Koch's top lawyer would later paint the company as a victim of Senate "McCarthyism."

By this time, the Kochs had soured on the Libertarian Party, concluding that control of a small party would never give them the muscle they sought in the nation's capital. Now they would spend millions in efforts to influence – and ultimately take over – the GOP.

 The work began close to home; the Kochs had become dedicated patrons of Sen. Bob Dole of Kansas, who ran interference for Koch Industries in Washington.

On the Senate floor in March 1990, Dole gloatingly cautioned against a "rush to judgment" against Koch, citing "very real concerns about some of the evidence on which the special committee was basing its findings." A grand jury investigated the claims but disbanded in 1992, without issuing indictments.

Arizona Sen. Dennis DeConcini was "surprised and disappointed" at the decision to drop the case. "Our investigation was some of the finest work the Senate has ever done," he said. "There was an overwhelming case against Koch."

But Koch did not avoid all punishment. Under the False Claims Act, which allows private citizens to file lawsuits on behalf of the government, Bill sued the company, accusing it of defrauding the feds of royalty income on its "volume-­enhanced" purchases of Native oil. 

A jury concluded Koch had submitted more than 24,000 false claims, exposing Koch to some $214 million in penalties. Koch later settled, paying $25 million.

Self ­interest continued to define Koch Industries' adventures in public policy. In the early 1990s, in a high-profile initiative of the first-term Clinton White House, the administration was pushing for a levy on the heat content of fuels. Known as the BTU tax, it was the earliest attempt by the federal government to recoup damages from climate polluters.

But Koch Industries could not stand losing its most valuable subsidy:   the public policy that allowed it to treat the atmosphere as an open sewer.

Richard Fink, head of Koch Company's Public Sector and the longtime mastermind of the Koch brothers' political empire, confessed to The Wichita Eagle in 1994 that Koch could not compete if it actually had to pay for the damage it did to the environment:   "Our belief is that the tax, over time, may have destroyed our business."

To fight this threat, the Kochs funded a "grassroots" uprising – one that foreshadowed the emergence, decades later, of the Tea Party.

The effort was run through Citizens for a Sound Economy, to which the brothers had spent a decade giving nearly $8 million to create what David Koch called "a sales force" to communicate the brothers' political agenda through town hall meetings and anti-tax rallies designed to look like spontaneous demonstrations. In 1994, David Koch bragged that CSE's campaign "played a key role in defeating the administration's plans for a huge and cumbersome BTU tax."

Despite the company's increasingly sophisticated political and public-relations operations, Charles' philosophy of regulatory resistance was about to bite Koch Industries in the form of record civil and criminal financial penalties imposed by the Environmental Protection Agency.

Koch entered the 1990s on a pipeline-buying spree. By 1994, its network measured 37,000 miles. According to sworn testimony from former Koch employees, the company operated its pipelines with almost complete disregard for maintenance. As Koch employees understood it, this was in keeping with their CEO's trademarked business philosophy, Market­Based Management.

For Charles, MBM – first communicated to employees in 1991 – was an attempt to distill the business practices that had grown Koch into one of the largest oil businesses in the world. To incentivize workers, Koch gives employees bonuses that correlate to the value they create for the company. "Salary is viewed only as an advance on compensation for value," Koch wrote, "and compensation has an unlimited upside."

To prevent the stagnation that can often bog down big enterprises, Koch was also determined to incentivize risk-taking. Under MBM, Koch Industries books opportunity costs – "profits foregone from a missed opportunity" – as though they were actual losses on the balance sheet. Koch employees who play it safe, in other words, can't strike it rich.

On paper, MBM sounds innovative and exciting. But in Koch's hyperaggressive corporate culture, it contributed to a series of environmental disasters. Applying MBM to pipeline maintenance, Koch employees calculated that the opportunity cost of shutting down equipment to ensure its safety was greater than the profit potential of pushing aging pipe to its limits.

The fact that preventive pipeline maintenance is required by law didn't always seem to register. Dubose, a 26-year Koch veteran who oversaw pipeline areas in Louisiana, would testify about the company's lax attitude toward maintenance. "It was a question of money. It would take away from our profit margin." The testimony of another pipeline manager would echo that of Dubose: "Basically, the philosophy was 'If it ain't broke, don't work on it.'"

When small spills occurred, Dubose testified, the company would cover them up. He recalled incidents in which the company would use the churn of a tugboat's engine to break up waterborne spills and "just kind of wash that thing on down, down the river."

On land, Dubose said, "They might pump it [the leaked oil] off into a drum, then take a shovel and just turn the earth over." When larger spills were reported to authorities, the volume of the discharges was habitually low-balled, according to Dubose.

Managers pressured employees to falsify pipeline-maintenance records filed with federal authorities; in a sworn affidavit, pipeline worker Bobby Conner recalled arguments with his manager over Conner's refusal to file false reports: "He would always respond with anger," Conner said, "and tell me that I did not know how to be a Koch employee." Conner was fired and later settled a wrongful-termination suit with Koch Gateway Pipeline.  

Dubose testified that Charles was not in the dark about the company's operations. "He was in complete control," Dubose said. "He was the one that was line-driving this Market-Based Management at meetings."

Before the worst spill from this time, Koch employees had raised concerns about the integrity of a 1940s-era pipeline in South Texas. But the company not only kept the line in service, it increased the pressure to move more volume.  

When a valve snapped shut in 1994, the brittle pipeline exploded. More than 90,000 gallons of crude spewed into Gum Hollow Creek, fouling surrounding marshlands and both Nueces and Corpus Christi bays with a 12-mile oil slick.

By 1995, the EPA had seen enough. It sued Koch for gross violations of the Clean Water Act. From 1988 through 1996, the company's pipelines spilled 11.6 million gallons of crude and petroleum products. Internal Koch records showed that its pipelines were in such poor condition that it would require $98 million in repairs to bring them up to industry standard.

Ultimately, state and federal agencies forced Koch to pay a $30 million civil penalty – then the largest in the history of U.S. environmental law – for 312 spills across six states. Carol Browner, the former EPA administrator, said of Koch, "They simply did not believe the law applied to them."

This was not just partisan rancor. Texas Attorney General John Cornyn, the future Republican senator, had joined the EPA in bringing suit against Koch. "This settlement and penalty warn polluters that they cannot treat oil spills simply as the cost of doing business," Cornyn said. (The Kochs seem to have no hard feelings toward their one-time tormentor; a lobbyist for Koch was the number-two bundler for Cornyn's primary campaign this year.)

Koch wasn't just cutting corners on its pipelines. It was also violating federal environmental law in other corners of the empire. Through much of the 1990s at its Pine Bend refinery in Minnesota, Koch spilled up to 600,000 gallons of jet fuel into wetlands near the Mississippi River.

Indeed, the company was treating the Mississippi as a sewer, illegally dumping ammonia-laced wastewater into the river – even increasing its discharges on weekends when it knew it wasn't being monitored.

Koch Petroleum Group eventually pleaded guilty to "negligent discharge of a harmful quantity of oil" and "negligent violation of the Clean Water Act," was ordered to pay a $6 million fine and $2 million in remediation costs, and received three years' probation. This facility had already been declared a Superfund site in 1984.

In 2000, Koch was hit with a 97-count indictment over claims it violated the Clean Air Act by venting massive quantities of benzene at a refinery in Corpus Christi – and then attempted to cover it up.

According to the indictment, Koch filed documents with Texas regulators indicating releases of just 0.61 metric tons of benzene for 1995 – one-tenth of what was allowed under the law. But the government alleged that Koch had been informed its true emissions that year measured 91 metric tons, or 15 times the legal limit.

By the time the case came to trial, however, George W. Bush was in office and the indictment had been significantly pared downKoch faced charges on only seven counts.

The Justice Department settled in what many perceived to be a sweetheart deal, and Koch pleaded guilty to a single felony count for covering up the fact that it had disconnected a key pollution-control device and did not measure the resulting benzene emissions – receiving five years' probation. Despite skirting stiffer criminal prosecution, Koch was handed $20 million in fines and reparations – another historic judgment.

On the day before Danielle Smalley was to leave for college, she and her friend Jason Stone were hanging out in her family's mobile home. Seventeen years old, with long chestnut hair, Danielle began to feel nauseated. "Dad," she said, "we smell gas." It was 3:45 in the afternoon on August 24th, 1996, near Lively, Texas, some 50 miles southeast of Dallas. The Smalleys were too poor to own a telephone.

So the teens jumped into her dad's 1964 Chevy pickup to alert the authorities. As they drove away, the truck stalled where the driveway crossed a dry creek bed. Danielle cranked the ignition, and a fireball engulfed the truck. "You see two children burned to death in front of you – you never forget that," Danielle's father, Danny, would later tell reporters.

Unknown to the Smalleys, a decrepit Koch pipeline carrying liquid butane – literally, lighter fluid – ran through their subdivision. It had ruptured, filling the creek bed with vapor, and the spark from the pickup's ignition had set off a bomb. Federal investigators documented both "severe corrosion" and "mechanical damage" in the pipeline. A National Transportation Safety Board report would cite the "failure of Koch Pipeline Company LP to adequately protect its pipeline from corrosion."

Installed in the early Eighties, the pipeline had been out of commission for three years. When Koch decided to start it up again in 1995, a water-pressure test had blown the pipe open. An inspection of just a few dozen miles of pipe near the Smal­ley home found 538 corrosion defects.

The industry's term of art for a pipeline in this condition is Swiss cheese, according to the testimony of an expert witness – "essentially the pipeline is gone."

Koch repaired only 80 of the defects – enough to allow the pipeline to withstand another pressure check – and began running explosive fluid down the line at high pressure in January 1996. A month later, employees discovered that a key anti­corrosion system had malfunctioned, but it was never fixed.

Charles Koch had made it clear to managers that they were expected to slash costs and boost profits. In a sternly worded memo that April, Charles had ordered his top managers to cut expenditures by 10 percent "through the elimination of waste (I'm sure there is much more waste than that)" in order to increase pre-tax earnings by $550 million a year.

The Smalley trial underscored something Bill Koch had said about the way his brothers ran the company:   "Koch Industries has a philosophy that profits are above everything else." A former Koch manager, Kenoth Whitstine, testified to incidents in which Koch Industries placed profits over public safety. As one supervisor had told him, regulatory fines "usually didn't amount to much" and, besides, the company had "a stable full of lawyers in Wichita that handled those situations." 

When Whitstine told another manager he was concerned that unsafe pipelines could cause a deadly accident, this manager said that it was more profitable for the company to risk litigation than to repair faulty equipment. The company could "pay off a lawsuit from an incident and still be money ahead," he said, describing the principles of MBM to a T.

At trial, Danny Smalley asked for a judgment large enough to make the billionaires feel pain: "Let Koch take their child out there and put their children on the pipeline, open it up and let one of them die," he told the jury. "And then tell me what that's worth." The jury was emphatic, awarding Smalley $296 million – then the largest wrongful-death judgment in American legal history. He later settled with Koch for an undisclosed sum and now runs a pipeline-safety foundation in his daughter's name. He declined to comment for this story. "It upsets him too much," says an associate.

The official Koch line is that scandals that caused the company millions in fines, judgments and penalties prompted a change in Charles' attitude of regulatory resistance. In his 2007 book, The Science of Success, he begrudgingly acknowledges his company's recklessness.  

"While business was becoming increasingly regulated," he reflects, "we kept thinking and acting as if we lived in a pure market economy. The reality was far different."

Charles has since committed Koch Industries to obeying federal regulations. "Even when faced with laws we think are counterproductive," he writes, "we must first comply." Underscoring just how out of bounds Koch had ventured in its corporate culture, Charles admits that "it required a monumental undertaking to integrate compliance into every aspect of the company." In 2000, Koch Petroleum Group entered into an agreement with the EPA and the Justice Department to spend $80 million at three refineries to bring them into compliance with the Clean Air Act. After hitting Koch with a $4.5 million penalty, the EPA granted the company a "clean slate" for certain past violations.

Then George W. Bush entered the White House in 2001, his campaign fattened with Koch money

Charles Koch may decry cronyism as "nothing more than welfare for the rich and powerful," but he put his company to work, hand in glove, with the Bush White House. Correspondence, contacts and visits among Koch Industries representatives and the Bush White House generated nearly 20,000 pages of records, according to a Rolling Stone FOIA request of the George W. Bush Presidential Library.

In 2007, the administration installed a fiercely anti-regulatory academic, Susan Dudley, who hailed from the Koch-funded Mercatus Center at George Mason University, as its top regulatory official.


Today, Koch points to awards it has won for safety and environmental excellence. "Koch companies have a strong record of compliance," Holden, Koch's top lawyer, tells Rolling Stone. "In the distant past, when we failed to meet these standards, we took steps to ensure that we were building a culture of 10,000 percent compliance, with 100 percent of our employees complying 100 percent." To reduce its liability, Koch has also unwound its pipeline business, from 37,000 miles in the late 1990s to about 4,000 miles. Of the much smaller operation, he adds, "Koch's pipeline practice and operations today are the best in the industry."

But even as compliance began to improve among its industrial operations, the company aggressively expanded its trading activities into the Wild West frontier of risky financial instruments. In 2000, the Commodity Futures Modernization Act had exempted many of these products from regulation, and Koch Industries was among the key players shaping that law.

Koch joined up with Enron, BP, Mobil and J. Aron – a division of Goldman Sachs then run by Lloyd Blankfein – in a collaboration called the Energy Group. This corporate alliance fought to prohibit the federal government from policing oil and gas derivatives.

"The importance of derivatives for the Energy Group companies . . . cannot be overestimated," the group's lawyer wrote to the Commodity Futures Trading Commission in 1998. "The success of this business can be completely undermined by . . . a costly regulatory regime that has no place in the energy industry."

Koch had long specialized in "over-the-counter" or OTC trades – private, unregulated contracts not disclosed on any centralized exchange. In its own letter to the CFTC, Koch identified itself as "a major participant in the OTC derivatives market," adding that the company not only offered "risk-management tools for its customers" but also traded "for its own account."

Making the case for what would be known as the Enron Loophole, Koch argued that any big firm's desire to "maintain a good reputation" would prevent "widespread abuses in the OTC derivatives market," a darkly hilarious claim, given what would become not only of Enron, but also Bear Stearns, Lehman Brothers and AIG.

The Enron Loophole became law in December 2000 – pushed along by Texas Sen. Phil Gramm, giving the Energy Group exactly what it wanted. "It completely exempted energy futures from regulation," says Michael Greenberger, a former director of trading and markets at the CFTC. "It wasn't a matter of regulators not enforcing manipulation or excessive speculation limits – this market wasn't covered at all. By law."

Before its spectacular collapse, Enron would use this loophole in 2001 to help engineer an energy crisis in California, artificially constraining the supply of natural gas and power generation, causing price spikes and rolling blackouts.

This blatant and criminal market manipulation has become part of the legend of Enron. But Koch was caught up in the debacle. The CFTC would charge that a partnership between Koch and the utility Entergy had, at the height of the California crisis, reported fake natural-gas trades to reporting firms and also "knowingly reported false prices and/or volumes" on real trades.

One of 10 companies punished for such schemes, Entergy-Koch avoided prosecution by paying a $3 million fine as part of a 2004 settlement with the CFTC, in which it did not admit guilt to the commission's charges but is barred from maintaining its innocence.

Trading, which had long been peripheral to the company's core businesses, soon took center stage. In 2002, the company launched a subsidiary, Koch Supply & Trading. KS&T got off to a rocky start. "A series of bad trades," writes a Koch insider, "boiled over in early 2004 when a large 'sure bet' crude-oil trade went south, resulting in a quick, multimillion loss."

But Koch traders quickly adjusted to the reality that energy markets were no longer ruled just by supply and demand – but by rich speculators trying to game the market. Revamping its strategy, Koch Industries soon began bragging of record profits. From 2003 to 2012, KS&T trading volumes exploded – up 450 percent.

 By 2009, KS&T ranked among the world's top-five oil traders, and by 2011, the company billed itself as "one of the leading quantitative traders" – though Holden now says it's no longer in this business.

Since Koch Industries aggressively expanded into high finance, the net worth of each brother has also exploded – from roughly $4 billion in 2002 to more than $40 billion today.

In that period, the company embarked on a corporate buying spree that has taken it well beyond petroleum. In 2005, Koch purchased Georgia Pacific for $21 billion, giving the company a familiar, expansive grip on the industrial web that transforms Southern pine into consumer goods – from plywood sold at Home Depot to brand-name products like Dixie Cups and Angel Soft toilet paper.

In 2013, Koch leapt into high technology with the $7 billion acquisition of Molex, a manufacturer of more than 100,000 electronics components and a top supplier to smartphone makers, including Apple.

Koch Supply & Trading makes money both from physical trades that move oil and commodities across oceans as well as in "paper" trades involving nothing more than high-stakes bets and cash. In paper trading, Koch's products extend far beyond simple oil futures.  

Koch pioneered, for sale to hedge funds, "volatility swaps," in which the actual price of crude is irrelevant and what matters is only the "magnitude of daily fluctuations in prices." Steve Mawer, until recently the president of KS&T, described parts of his trading operation as "black-box stuff."

Like a casino that bets at its own craps table, Koch engages in "proprietary trading" – speculating for the company's own bottom line. "We're like a hedge fund and a dealer at the same time," bragged Ilia Bouchouev, head of Koch's derivatives trading in 2004.

"We can both make markets and speculate." The company's many tentacles in the physical oil business give Koch rich insight into market conditions and disruptions that can inform its speculative bets. When oil prices spiked to record heights in 2008, Koch was a major player in the speculative markets, according to documents leaked by Vermont Sen. Bernie Sanders, with trading volumes rivaling Wall Street giants like Citibank.  

Koch rode a trader-driven frenzy – detached from actual supply and demand – that drove prices above $147 a barrel in July 2008, battering a global economy about to enter a free fall.

Only Koch knows how much money Koch reaped during this price spike. But, as a proxy, consider the $20 million Koch and its subsidiaries spent lobbying Congress in 2008 – before then, its biggest annual lobbying expense had been $5 million – seeking to derail a raft of consumer-protection bills, including the Federal Price Gouging Prevention Act, the Stop Excessive Energy Speculation Act of 2008, the Prevent Unfair Manipulation of Prices Act of 2008 and the Close the Enron Loophole Act.

In comments to the Federal Trade Commission, Koch lobbyists defended the company's right to rack up fantastic profits at the expense of American consumers. "A mere attempt to maximize profits cannot constitute market manipulation," they wrote, adding baldly, "Excessive profits in the face of shortages are desirable."

When the global economy crashed in 2008, so did oil prices. By December, crude was trading more than $100 lower per barrel than it had just months earlier – around $30. At the same time, oil traders anticipated that prices would eventually rebound.

Futures contracts for delivery of oil in December 2009 were trading at nearly $55 per barrel. When future delivery is more valuable than present inventory, the market is said to be "in contango." Koch exploited the contango market to the hilt. The company leased nine supertankers and filled them with cut-rate crude and parked them quietly offshore in the Gulf of Mexico, banking virtually risk-free profits by selling contracts for future delivery.

All in, Koch took about 20 million barrels of oil off the market, putting itself in a position to bet on price disruptions the company itself was creating.

Thanks to these kinds of trading efforts, Koch could boast in a 2009 review that "the performance of Koch Supply & Trading actually grew stronger last year as the global economy worsened." The cost for those risk-free profits was paid by consumers at the pump. Estimates pegged the cost of the contango trade by Koch and others at up to 40 cents a gallon.

Artificially constraining oil supplies is not the only source of dark, unregulated profit for Koch Industries. In the years after George W. Bush branded Iran a member of the "Axis of Evil," the Koch brothers profited from trade with the state sponsor of terror and reckless would-be nuclear power.  

For decades, U.S. companies have been forbidden from doing business with the Ayatollahs, but Koch Industries exploited a loophole in 1996 sanctions that made it possible for foreign subsidiaries of U.S. companies to do some business in Iran.


In the ensuing years, according to Bloomberg Markets, the German and Italian arms of Koch-Glitsch, a Koch subsidiary that makes equipment for oil fields and refineries, won lucrative contracts to supply Iran's Zagros plant, the largest methanol plant in the world. And thanks in part to Koch, methanol is now one of Iran's leading non-oil exports. "Every single chance they had to do business with Iran, or anyone else, they did," said Koch whistle-blower George Bentu. Having signed on to work for a company that lists "integrity" as its top value, Bentu added, "You feel totally betrayed. Everything Koch stood for was a lie."

Koch reportedly kept trading with Tehran until 2007 – after the regime was exposed for supplying IEDs to Iraqi insurgents killing U.S. troops. According to lawyer Holden, Koch has since "decided that none of its subsidiaries would engage in trade involving Iran, even where such trade is permissible under U.S. law."

These days, Koch's most disquieting foreign dealings are in Canada, where the company has massive investments in dirty tar sands. The company's 1.1 million acres of leases in northern Alberta contain reserves of economically recoverable oil numbering in the billions of barrels. With these massive leaseholdings, Koch is poised to continue profiting from Canadian crude whether or not the Keystone XL pipeline gains approval, says Andrew Leach, an energy and environmental economist at the business school of the University of Alberta.

Counterintuitively, approval of Keystone XL could actually harm one of Koch's most profitable businesses – its Pine Bend refinery in Minnesota. Because tar-sands crude presently has no easy outlet to the global market, there's a glut of Canadian oil in the midcontinent, and Koch's refinery is a beneficiary of this oversupply; the resulting discount can exceed $20 a barrel compared to conventional crude. If it is ever built, the Keystone XL pipeline will provide a link to Gulf Coast refineries – and thus the global export market, which would erase much of that discount and eat into company profit margins.

Leach says Koch Industries' tar-sands leaseholdings have them hedged against the potential approval of Keystone XL. The pipeline would increase the value of Canadian tar-sands deposits overnight. Koch could then profit handsomely by flipping its leases to more established producers. "Optimizing asset value through trading," Koch literature says of these and other holdings, is a "key" company strategy.

The one truly bad outcome for Koch would be if Keystone XL were to be defeated, as many environmentalists believe it must be. "If the signal that sends is that no new pipelines will be built across the U.S. border for carrying oil-sands product," Leach says, "that's going to have an impact not just on Koch leases, but on everybody's asset value in oil sands." Ironically, what's best for Koch's tar-sands interests is what the Obama administration is currently delivering: "They're actually ahead if Keystone XL gets delayed a while but hangs around as something that still might happen," Leach says.

The Dodd-Frank bill was supposed to put an end to economy-­endangering speculation in the $700 trillion global derivatives market. But Koch has managed to defend – and even expand – its turf, trading in largely unregulated derivatives, once dubbed "financial weapons of mass destruction" by billionaire Warren Buffett.

In theory, the Enron Loophole is no longer open – the government now has the power to police manipulation in the market for energy derivatives. But the Obama administration has not yet been able to come up with new rules that actually do so. In 2011, the CFTC mandated "position limits" on derivative trades of oil and other commodities. These would have blocked any single speculator from owning futures contracts representing more than a quarter of the physical market – reducing the danger of manipulation. As part of the International Swaps and Derivatives Association, which also reps many Wall Street giants including Goldman Sachs and JPMorgan Chase, Koch fought these new restrictions. ISDA sued to block the position limits – and won in court in September 2012. Two years later, CFTC is still spinning its wheels on a replacement. Industry traders like Koch are, Greenberger says, "essentially able to operate as though the Enron Loophole were still in effect."

Koch is also reaping the benefits from Dodd-Frank's impacts on Wall Street. The so-called Volcker Rule, implemented at the end of last year, bans investment banks from "proprietary trading" – investing on their own behalf in securities and derivatives. As a result, many Wall Street banks are unloading their commodities-trading units. But Volcker does not apply to nonbank traders like Koch. They're now able to pick up clients who might previously have traded with JPMorgan. In its marketing materials for its trading operations, Koch boasts to potential clients that it can provide "physical and financial market liquidity at times when others pull back." Koch also likely benefits from loopholes that exempt the company from posting collateral for derivatives trades and allow it to continue trading swaps without posting the transactions to a transparent electronic exchange. Though competitors like BP and Cargill have registered with the CFTC as swaps dealers – subjecting their trades to tightened regulation – Koch conspicuously has not. "Koch is compliant with all CFTC regulations, including those relating to swaps dealers," says Holden, the Koch lawyer.

That a massive company with such a troubling record as Koch Industries remains unfettered by financial regulation should strike fear in the heart of anyone with a stake in the health of the American economy. Though Koch has cultivated a reputation as an economically conservative company, it has long flirted with danger. And that it has not suffered a catastrophic loss in the past 15 years would seem to be as much about luck as about skillful management.

The Kochs have brushed up against some of the major debacles of the crisis years. In 2007, as the economy began to teeter, Koch was gearing up to plunge into the market for credit default swaps, even creating an affiliate, Koch Financial Products, for that express purpose. KFP secured a AAA rating from Moody's and reportedly sought to buy up toxic assets at the center of the financial crisis at up to 50-times leverage. Ultimately, Koch Industries survived the experiment without losing its shirt.

More recently, Koch was exposed to the fiasco at MF Global, the disgraced brokerage firm run by former New Jersey Gov. Jon Corzine that improperly dipped into customer accounts to finance reckless bets on European debt. Koch, one of MF Global's top clients, reportedly told trading partners it was switching accounts about a month before the brokerage declared bankruptcy – then the eighth-largest in U.S. history. Koch says the decision to pull its funds from MF Global was made more than a year before. While MF's small-fry clients had to pick at the carcass of Corzine's company to recoup their assets, Koch was already swimming free and clear.

Because it's private, no one outside of Koch Industries knows how much risk Koch is taking – or whether it could conceivably create systemic risk, a concern raised in 2013 by the head of the Futures Industry Association. But this much is for certain:   Because of the loopholes in financial-regulatory reform, the next company to put the American economy at risk may not be a Wall Street bank but a trading giant like Koch. In 2012, Gary Gensler, then CFTC chair, railed against the very loopholes Koch appears to be exploiting, raising the specter of AIG. "[AIG] had this massive risk built up in its derivatives just because it called itself an insurance company rather than a bank," Gensler said. When Congress adopted Dodd-Frank, Gensler added, it never intended to exempt financial heavy hitters just because "somebody calls themselves () insurance . . .

In "the science of success," Charles Koch highlights the problems created when property owners "don't benefit from all the value they create and don't bear the full cost from whatever value they destroy." He is particularly concerned about the "tragedy of the commons," in which shared resources are abused because there's no individual accountability. "The biggest problems in society," he writes, "have occurred in those areas thought to be best controlled in common: the atmosphere, bodies of water, air. . . ."

But in the real world, Koch Industries has used its political might to beat back the very market-based mechanisms – including a cap-and-trade market for carbon pollution – needed to create the ownership rights for pollution that Charles says would improve the functioning of capitalism.

In fact, it appears the very essence of the Koch business model is to exploit breakdowns in the free market. Koch has profited precisely by dumping billions of pounds of pollutants into our waters and skies – essentially for free. It racks up enormous profits from speculative trades lacking economic value that drive up costs for consumers and create risks for our economy.

The Koch brothers get richer as the costs of what Koch destroys are foisted on the rest of us – in the form of ill health, foul water and a climate crisis that threatens life as we know it on this planet. Now nearing 80 – owning a large chunk of the Alberta tar sands and using his billions to transform the modern Republican Party into a protection racket for Koch Industries' profits – Charles Koch is not about to see the light. Nor does the CEO of one of America's most toxic firms have any notion of slowing down. He has made it clear that he has no retirement plans:  "I'm going to ride my bicycle till I fall off."

UPDATEKoch Industries Responds to Rolling Stone — And We Answer Back

From The Archives Issue 1219: October 9, 2014

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