Is It Just Crumbs We Expect? JPMorganChase Criminality Dissected - Liberal Feel Good & Keith Remembered

Friends, forgive me, but . . .

I may have been going too lightly yesterday on Obama's feel-good (hope so, anyway) state of the union chat (and you've gotta admit that it couldn't have been any warmer if he'd had a roaring fire lighted around him - but that's not really a good image is it?). As I've read other commentary I'm starting to feel that I should have accentuated the real state of the union far more than I did, but it never occurred to me after all I've written about it before that it was necessary.

Paul Krugman addresses one area of Obama's speech that was quite puzzling to me (but not to his neoLib buddies) as I was pretty sure already that he knew better than to be glib about something truly important. I was wrong it seems. (Emphasis marks added - Ed.)

President Obama has telegraphed his main theme: competitiveness. The President’s Economic Recovery Advisory Board has been renamed the President’s Council on Jobs and Competitiveness. And in his Saturday radio address, the president declared that “We can out-compete any other nation on Earth.”

This may be smart politics. Arguably, Mr. Obama has enlisted an old cliché on behalf of a good cause, as a way to sell a much-needed increase in public investment to a public thoroughly indoctrinated in the view that government spending is a bad thing.

But let’s not kid ourselves: talking about “competitiveness” as a goal is fundamentally misleading. At best, it’s a misdiagnosis of our problems. At worst, it could lead to policies based on the false idea that what’s good for corporations is good for America.

About that misdiagnosis: What sense does it make to view our current woes as stemming from lack of competitiveness?

It’s true that we’d have more jobs if we exported more and imported less. But the same is true of Europe and Japan, which also have depressed economies. And we can’t all export more while importing less, unless we can find another planet to sell to. Yes, we could demand that China shrink its trade surplus — but if confronting China is what Mr. Obama is proposing, he should say that plainly.

Furthermore, while America is running a trade deficit, this deficit is smaller than it was before the Great Recession began. It would help if we could make it smaller still. But ultimately, we’re in a mess because we had a financial crisis, not because American companies have lost their ability to compete with foreign rivals.

But isn’t it at least somewhat useful to think of our nation as if it were America Inc., competing in the global marketplace? No.

Consider: A corporate leader who increases profits by slashing his work force is thought to be successful. Well, that’s more or less what has happened in America recently: employment is way down, but profits are hitting new records. Who, exactly, considers this economic success?

Still, you might say that talk of competitiveness helps Mr. Obama quiet claims that he’s anti-business. That’s fine, as long as he realizes that the interests of nominally “American” corporations and the interests of the nation, which were never the same, are now less aligned than ever before.

Take the case of General Electric, whose chief executive, Jeffrey Immelt, has just been appointed to head that renamed advisory board. I have nothing against either G.E. or Mr. Immelt. But with fewer than half its workers based in the United States and less than half its revenues coming from U.S. operations, G.E.’s fortunes have very little to do with U.S. prosperity.

By the way, some have praised Mr. Immelt’s appointment on the grounds that at least he represents a company that actually makes things, rather than being yet another financial wheeler-dealer. Sorry to burst this bubble, but these days G.E. derives more revenue from its financial operations than it does from manufacturing — indeed, GE Capital, which received a government guarantee for its debt, was a major beneficiary of the Wall Street bailout.

So what does the administration’s embrace of the rhetoric of competitiveness mean for economic policy?

The favorable interpretation, as I said, is that it’s just packaging for an economic strategy centered on public investment, investment that’s actually about creating jobs now while promoting longer-term growth. The unfavorable interpretation is that Mr. Obama and his advisers really believe that the economy is ailing because they’ve been too tough on business, and that what America needs now is corporate tax cuts and across-the-board deregulation.

My guess is that we’re mainly talking about packaging here. And if the president does propose a serious increase in spending on infrastructure and education, I’ll be pleased.

But even if he proposes good policies, the fact that Mr. Obama feels the need to wrap these policies in bad metaphors is a sad commentary on the state of our discourse.

The financial crisis of 2008 was a teachable moment, an object lesson in what can go wrong if you trust a market economy to regulate itself. Nor should we forget that highly regulated economies, like Germany, did a much better job than we did at sustaining employment after the crisis hit. For whatever reason, however, the teachable moment came and went with nothing learned.

Mr. Obama himself may do all right: his approval rating is up, the economy is showing signs of life, and his chances of re-election look pretty good. But the ideology that brought economic disaster in 2008 is back on top — and seems likely to stay there until it brings disaster again.

So, speaking about the real state of the union and those now in charge to run it, we really need to look at that latest stellar pick as Chief of Staff (another politician named Daley), who seems to be the epitome of the guy you wouldn't want if you have any progressive values at all (you know, the Chicago-and-all-around-connected guy picked to replace the irreplaceable Rahmbo - the guy responsible for the Blue Dogs' election instead of real Democrats (and their subsequent defeats) and many of the tragic schemes ensuring the demise of the middle class heretofore under Obama and his friendlies on the "other" side).

Let's take a little look at his background with JPMorganChase where he's been providing leadership (for starters). First off, just let me say "No wonder those bonuses were so large!"

Yves Smith, creator of Naked Capitalism and one of the most erudite political/economics reporters is on the case. (And before you start in with how long this piece is (as I've included the comments), please just read it if you have time and then tell me it's unimportant.) (Emphasis marks and some editing inserted for your further enjoyment - Ed.)

Tuesday, January 25, 2011

Ambac Accuses JP Morgan of Fraud in Ongoing Mortgage Suit

One of the big reasons there have been so few fraud charges leveled against what looks like clear and widespread banking industry is that under the law, “fraud” is pretty difficult to prove. Needless to say, that puts commentators in a bit of a bind, because they can be depicted as being hysterical if they use the “f” words, since behavior that is often fraud by any common sense standard may be hard or impossible to prove in court.

The hurdle in litigation and prosecution is proving intent. Basically, the party who is being accused has to not only have done something bad, he has to have been demonstrably aware that he was up to no good. Thus po-faced claims of “I had no idea this was improper, my accountants/lawyers knew about it and didn’t say anything” or “everyone in the industry was doing it, so I had not reason to think this was irregular” is a “get out of jail free” card. Similarly, even if lower level employees knew that their company was up to stuff that stank, if the decision-makers can plausibly claim ignorance, again they can probably get away with it.

So it is gratifying in a perverse way to see a case in which the perp not only looks to have engaged in chicanery, but the facts make it pretty hard for him to say he didn’t know he was pulling a fast one. And even more fun, it involves JP Morgan, which has somehow managed to create the impression that it was better than all the other TARP banks, when on the mortgage front, there is plenty evidence to suggest that all the major banks have been up to their eyeballs in bad practices.

The case involves the bond insurer Ambac and the mortgage company EMC, which was the Bear Stearns conduit for buying mortgages to securitize and now thus part of JP Morgan. In 2010, reports surfaced that EMC had been falsifying mortgage data to keep its pipeline moving as fast as Bear wanted and contain costs.

But a suit by bond insurer Ambac alleges far more serious misbehavior. The discovery process in outstanding putback litigation has unearthed a scheme to defraud investors and Ambac and led the bond insurer to add fraud charges to its complaint. The Atlantic, which broke the 2010 story, gives a good overview:

According to the lawsuit, the Bear traders would sell toxic mortgage securities to investors and then sell back the bad loans with early payment defaults to the banks that originated them at a discount. The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds.

The [Tom] Marano-led traders [Marano was Senior Managing Director and Global Head of Mortgages for Bear and is now CEO of Ally's mortgage operations] also cut the time allowed for early payment defaults, without telling the bond investors. That way, Bear could quickly securitize defective loans, without leaving enough time for investors to do their own due diligence after the bonds were sold and put-back any bad loans to Bear.

The traders were essentially double-dipping — getting paid twice on the deal. How was this possible? Once the security was sold, they didn’t have a legal claim to get cash back from the bad loans — that claim belonged to bond investors — but they did so anyway and kept the money. Thus, Bear was cheating the investors they promised to have sold a safe product out of their cash. According to former Bear Stearns and EMC traders and analysts who spoke with The Atlantic, [Mike] Nierenberg [head of the adjustable-rate mortgage trading desk] and [Jeff] Verschleiser [another senior managing director on the same desk] were the decision-makers for the double dipping scheme, and thus, are named as individual defendants in the suit.

The complaint is duly indignant:

This evidence – obtained for the first time through discovery – demonstrates that at the same time that JP Morgan and EMC were touting to Ambac the quality of the Mortgage Loans and the rigorous procedures for verifying their quality, JP Morgan personnel understood that the loans underlying the transactions were in fact – to use one JP Morgan employee’s unequivocal if impolite words – a “sack of shit.”

And there is another layer of this ugly picture. A much smaller monoline, Sycora, had also insured some Bear mortgages. Bear was pushing the originator to take back some dud mortgages insured by Syncora while simultaneously refusing to let Syncora put them back.

FTAlphaville recounts how JP Morgan continued to rebuff putback claims, even when EMC found them to be legitimate:

Ambac says JPM barred Bear from fulfilling repurchase requests right after it snapped up in 2008. In doing so, a JPM executive director also went against a review by EMC, it is claimed, that said more than half of a set of loans were in breach of reps and warranties. That, Ambac says, enabled the exec to eliminate up to $14m in JPM liabilities and reduce accounting reserves for the loans by almost 50 per cent.

So it will be rather difficult for JP Morgan to claim it has clean hands on this one and merely picked up an outstanding mess when it bought Bear.

This suit is at a minimum a black eye for JP Morgan, which fought tooth and nail to keep it sealed, and may embolden other litigants, like the investors in Bear’s deals. But sadly, it also demonstrates that crime does pay. The executives named in this case as being at the heart of this scheme now run the mortgage businesses at Ally, JP Morgan, and Goldman. Readers comments:

Chirvani says: January 25, 2011 at 3:43 pm

Next the indictment of Ben is required for actively covering this fraud up by facilitating mergers with taxpayers’ money and when this was not enough by parking toxic assets on Fed’s balance sheet away from scrutiny. steelhead23 says: January 25, 2011 at 5:50 pm

You are right of course. But the stock market is up, the recovery is picking up steam, and the sun is rising. TPTB will claim that trying to “dig up the past” would merely delay the day when we can all eat our ice cream. And we dearly love ice cream.

Tao Jonesing says: January 25, 2011 at 9:11 pm

Common law fraud has always required scienter, i.e. both knowledge and intent to defraud. Taking a quick look, it seems that the securities lawas were changed to require a higher threshold for pleading securities fraud (i.e., there must be “a strong inference”), but I’m not limiting the discussion to securities fraud. Garden variety fraud appears to abound on Wall Street, and the fact that many of these fraudulent transactions occurred in the run up to securitizing mortgages does not necessarily make them subject to the securities laws.

I’ve never practiced criminal law, but taking a quick scan of the New York penal code and comparing it to Ambac’s allegations, it looks like there are potential charges of Insurance Fraud (most likely just a misdemeanor), Residential Mortgage Fraud (looks like a potential class B felony), Falsifying Business Records in the First Degree (class E felony), Conspiracy (potential felony), and Enterprise Corruption (the NY state version of RICO). Further, it is my understanding that these state law charges can form the basis of federal RICO charges.

Again, Bill Black is characterizing what’s (not) happening as “de facto decriminilazation,” not actual or “de jure” decriminalization.

Carol says: January 25, 2011 at 4:03 pm

Enron redux

DumpTheBankInfoJulian says:

January 26, 2011 at 12:28 am

Carol,This buries Enron.

readerOfTeaLeaves says: January 25, 2011 at 4:21 pm

So it is gratifying in a perverse way to see a case in which the perp not only looks to have engaged in chicanery, but the facts make it pretty hard for him to say he didn’t know he was pulling a fast one. Gratifying, indeed.

Looking forward to Thursday’s FCIC report. JPM’s actions appear to be part of what Black might call a ‘criminogenic’ environment.

Sunny says: January 25, 2011 at 5:27 pm

Just sickening! What’s the purpose of keeping it sealed till now? Whose interest got furthered? NOT certainly the those of investors or the public! Nothing is surprising any more. What’s surprising or should say shocking is that NONE of these perpetrators are behind bars or not even under indictment! The charade continues unabated and the Banksters still pocketing Millions in bonuses as if nothing happened. Teri Buhl says: January 26, 2011 at 2:49 pm

Sunny – I found JP Morgan’s ability to get the suit sealed an example of serious problems in our judicial process. I went on Russia Today TV – The Keiser Report in November to highlight this issue and challenge the courts to open the case. I have been covering this story since last April – it’s been amazing and sad to see the lengths JP Morgan’s outside counsel went to so(il) the discovery process and even strong arm a key witness to filp his testimoney. You can see some of my coverage at http://www.teribuhl.com/. With all the evidence I’ve seen in the case, some of it not even filed in the courts yet, I just don’t see how Tom Marano and his mortgage trading team are not charged with criminal fraud.

Francois T says: January 25, 2011 at 5:30 pm

In a “criminogenic environment”, to use the expression of Prof. Black, it is safe to work under the hypothesis that for one coming to light, there are many more to be found.

ForeclosureHamlet.org says: January 25, 2011 at 7:43 pm

I knew that Marano character was bad news from his testimony in front of the US House foreclosure fraud at the Nov hearing. http://www.foreclosurehamlet.org/profiles/blogs/pigs-ass-thomas-marano-ceo

Joseph Stephens says: January 25, 2011 at 8:03 pm

I am a forensic loan auditor representing homeowners in Florida. Every day I average 12-15 federal lending violations per loan. Each bank, with the possible exception Suntrust is just over run with fraud. 94% of all loan audits performed to date have fraud from beginning to end. I would love to get a chance to share these cases with someone who make public this overwhelming abuse of the American people.

Tony Savoie says: January 25, 2011 at 9:29 pm

I am sure the folks at foreclosurehamlet.com and 4closurefraud.org and stopforeclosurefraud.com would love to help you share what you know.

MinnItMan says: January 25, 2011 at 8:14 pm

Q: Why is fraud hard to prove? A: “You can’t cheat an honest man.” Well, you can, but it’s a lot harder. It’s a lot easier if you can show he’s just as much a crook. Showing he’s inexcusably dense, greedy, or manipulative might work, too.

My problem with loosely using the term “fraud” is that what is really alleged here is theft or conversion. EMC accepted funds, almost certainly in trust, and didn’t pay the beneficiary. Somebody diverted these funds to someone or something.

The law, for whatever it’s worth, usually gets to the bottom of things. It’s not a stretch for me to say that the bottom of things is simply this: at the moment a true putback is required, it exceedingly unlikely to happen. The money is frequently gone.

And, if I’m following this correctly, EMC already had a shortage in it’s obligation to the securitized trust when it accepted a discounted price on the loan. What was it’s obligations in funding that shortgage? Yeah, eventually this looks like fraud, but it’s on top of a mountain of other illegality.

Michel Delving says: January 26, 2011 at 12:00 am

In addition to being Bear Stearns’ top mortgage trader, global head of mortgages and asset-backed securities, Thomas Marano was also a Director of Bear Stearns subsidiary mortgage servicer EMC Mortgage Corporation while EMC’s mortgage servicing fraud was being investigated by the FTC, resulting in a mere 28 million dollar settlement, September 2008. http://www.ftc.gov/opa/2008/09/emc.shtm EMC’s egregious servicing added much toxicity to these mortgage securities. Helps to have a complicit servicer in pocket while rigging bets.

KnotRP says: January 26, 2011 at 1:16 am

Q: Why is fraud hard to prove? A: “You can’t cheat an honest man.” C: However, if you can get the trustee of the honest man’s pension fund to accept kickbacks in exchange for funding some really dicey MBS and derivatives, you in fact CAN cheat an honest man. They just don’t discover it until the money is all gone.

William Benedict says: January 26, 2011 at 4:08 am

The fraud is so blatant, so totally in your face that is it just bewildering. That not one banker has gone to prison simply confirms the legal system of the USA is of no value whatsoever. Basically it is every thief for himself now!

Brick says: January 26, 2011 at 4:38 am

Perhaps we should ask a different question. After 9/11 the FBI task force to combat financial fraud was severely depleted despite the FBI repeatedly reporting an increase in the need for securities and mortgage related fraud. It was reported that a number of high profile cases were shelved with investigators being re-allocated - The New York Times during the height of the crisis reported. Several former law enforcement officials said in interviews that senior administration officials, particularly at the White House and the Treasury Department, had made clear to them that they were concerned the Justice Department and the F.B.I. were taking an antibusiness attitude that could chill corporate risk taking.

The question is did those same attitudes affect the regulators and what does this say about the current attitude of business friendliness? Are you really surprised that there as been little reported investigation of fraud?

Alex says: January 26, 2011 at 10:31 am

Quick question for anyone with knowledge. The Atlantic article states that the the defective loans were sold back to the originators and the traders “pocketed” the the proceeds instead of passing it along to the trust. How is this in any way possible? Is this a misunderstanding by the Atlantic? Bear/JPM is a third party, so how would funds EVER hit their P&L and why would they act on behalf of the trustee? Something doesn’t sound right. Any comments? Teri Buhl says: January 26, 2011 at 2:56 pm

Alex – it’s not legally right but it’s possible because they did it. The last piece in the puzzle (I’m still working on sourcing it) is who at Countrywide, Wells Fargo, and some smaller originators was agreeing to buy back the EPD loans and not check that they’d already been securitized. There is cleary another person not named yet in the suit who aided in the fraud. Chico says: January 26, 2011 at 3:01 pm

There is definitely a difference on who gets prosecuted, based on class. It’s tough to prove a lot of things, but it doesn’t keep prosecutors from prosecuting (the poor).

For example, if you catch a poor black teenager with three joints in his possession, that’s “possession with intent,” because who needs more than one at a time? I’ve seen hundreds of prosecutions like this.

An ordinary schmuck stopped with a beer on his breath will be prosecuted for “operating under the influence,” even in the absence of an accident or even bad driving. It’s only when the potential defendant is rich that the difficulty of prosecution becomes predominant.

And, of course, I've saved the best for last as this type of philosophical dissection is my stock in trade (except that you've stopped reading by now, I'm betting - but, hey, just for fun - send me an email if you can't comment and you get this far!). (Emphasis marks added - Ed.)

Where Liberals Go to Feel Good Barack Obama is another stock character in the cyclical political theater embraced by the liberal class. Act I is the burst of enthusiasm for a Democratic candidate who, through clever branding and public relations, appears finally to stand up for the interests of citizens rather than corporations. Act II is the flurry of euphoria and excitement.

Act III begins with befuddled confusion and gnawing disappointment, humiliating appeals to the elected official to correct "mistakes," and pleading with the officeholder to return to his or her true self. Act IV is the thunder and lightning scene. Liberals strut across the stage in faux moral outrage, delivering empty threats of vengeance. And then there is Act V. This act is the most pathetic. It is as much farce as tragedy. Liberals-frightened back into submission by the lunatic fringe of the Republican Party or the call to be practical-begin the drama all over again.

We are now in Act IV, the one where the liberal class postures like the cowardly policemen in "The Pirates of Penzance." Liberals promise battle. They talk of glory and honor. They vow not to abandon their core liberal values. They rouse themselves, like the terrified policemen who have no intention of fighting the pirates, with the bugle call of "Tarantara!"

This scene is the most painful to watch. It is a window into how hollow, vacuous and powerless liberals and liberal institutions including labor, the liberal church, the press, the arts, universities and the Democratic Party have become. They fight for nothing. They stand for nothing. And at a moment when we desperately need citizens and institutions willing to stand up against corporate forces for the core liberal values, values that make a democracy possible, we get the ridiculous chatter and noise of the liberal class.

The moral outrage of the liberal class, a specialty of MSNBC, groups such as Progressives for Obama and MoveOn.org, is built around the absurd language of personal narrative - as if Barack Obama ever wanted to or could defy the interests of Goldman Sachs, JPMorgan Chase or General Electric.

The liberal class refuses to directly confront the dead hand of corporate power that is rapidly transforming America into a brutal feudal state. To name this power, to admit that it has a death grip on our political process, our systems of information, our artistic and religious expression, our education, and has successfully emasculated popular movements, including labor, is to admit that the only weapons we have left are acts of civil disobedience.

And civil disobedience is difficult, uncomfortable and lonely. It requires us to step outside the formal systems of power and trust in acts that are marginal, often unrecognized and have no hope of immediate success.

The liberal class' solution to the bleak political landscape is the conference. This, along with letters and cries of outrage circulated on the Internet, is its preferred form of expression. Conferences, whether organized by Left Forum, Rabbi Michael Lerner's Tikkun or figures such as Ted Glick - who is touting a plan to lure progressives, including members of the Democratic Party, into something he calls a "third force" - are where liberals go to feel good about themselves again.

These conferences are not fundamentally about change. They are designed to elevate self-appointed liberal apologists who seek to become advisers and courtiers within the Democratic Party. The conferences produce resolutions no one reads. They build networks no one uses.

But with each conference liberals get to do what they do best - applaud their own moral probity. They make passionate appeals to work within systems, such as electoral politics, that have been gamed by the corporate state. And the result is to spur well-meaning people toward useless and ultimately self-defeating activity.

"What we need is an alliance which consciously incorporates elected Democrats as well as elected Greens and independents, as well as groups, or individual leaders and members of groups, like Progressive Democrats of America and the Green Party," Glick proposes. "More than that, this alliance eventually needs to support and work to elect candidates running both as Democrats and progressive independents, and maybe even an occasional Republican."

The Tikkun Conference held in Washington last June was another pathetic display of liberal apologists begging Obama to be Obama. The organizers called on those participating to "Support Obama to BE the Obama We Voted For - Not the Inside-the-Beltway Pragmatist/Realist whose compromises have led to a decrease in his popularity and opened the door for a revival of the just-recently-discredited Right wing."

Good luck.

The organizers of the Left Forum conference scheduled for this March at Pace University in New York City also communicate in the amorphous, high-blown moral rhetoric that is unmoored from the actual and real. The upcoming Left Forum conference, which has the vacuous title "Towards a Politics of Solidarity," promises to "focus on the age-old theme of solidarity: the moral act of imagination underpinning working-class victories everywhere. It will undertake to examine the new forms of far-reaching solidarity that are both necessary and possible in an increasingly global world."

. . . The conference agenda, which sounds like a parody of a course catalogue description, includes the requisite academic jargon of "moral act of imagination" and "chains of solidarity." This language gives to the enterprise a lofty but undefined purpose. And this is a specialty of the liberal class - to grandly say nothing.

The last thing the liberal class intends to do is fight back. Left Forum brings in a few titans, including Noam Chomsky, who is always worth hearing, but it contributes as well to the lethargy and turpitude that have made the liberal class impotent.

The only gatherings worth attending from now on are acts that organize civil disobedience, which is why I will be at Lafayette Park in Washington, D.C., at noon March 19 to protest the eighth anniversary of the invasion and occupation of Iraq. Veterans groups on March 19 will also carry out street protests in San Francisco, Los Angeles and Chicago. You can link to the protests here. Save your bus fare and your energy for events like this one.

Either we begin to militantly stand against the coal, oil and natural gas industry or we do not. Either we defy pre-emptive war and occupation or we do not. Either we demand that the criminal class on Wall Street be held accountable for the theft of billions of dollars from small shareholders whose savings for retirement or college were wiped out or we do not.

Either we defend basic civil liberties, including habeas corpus and the prosecution of torturers or we do not. Either we turn on liberal institutions, including the Democratic Party, which collaborate with these corporations or we do not. Either we accept that the age of political compromise is dead, that the corporate systems of power are instruments of death that can be fought only by physical acts of resistance or we do not.

If the liberal class remains gullible and weak, if it continues to speak to itself and others in meaningless platitudes, it will remain as responsible for our enslavement as those it pompously denounces. (Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of many books, including: War Is A Force That Gives Us Meaning, What Every Person Should Know About War, and American Fascists: The Christian Right and the War on America. His most recent book is Empire of Illusion: The End of Literacy and the Triumph of Spectacle.)

Please read here for the whole article. And a final word on the departure of Keith Olbermann and what it means to US.

From ConsortiumNews.com:

In nearly eight years at “Countdown,” Olbermann was the brave soul who charted the course for other mainstream media types to be even mildly critical of Bush. Olbermann modeled his style after legendary newsman Edward R. Murrow, who stood up to excesses by communist-hunting Sen. Joe McCarthy in the 1950s, even borrowing Murrow’s close: “Good night, good luck.”

But MSNBC’s parent company, General Electric, never seemed comfortable with Olbermann’s role as critic of the Bush administration, nor with the sniping between Olbermann and his Fox News rival, O’Reilly, who retaliated by attacking corporate GE on his widely watched show.

In 2009, the New York Times reported that GE responded to this pressure by having GE chairman Jeffrey Immelt strike a deal with Murdoch that sought to muzzle Olbermann’s criticism of O’Reilly, in exchange for O’Reilly muting his attacks on GE.

Olbermann later disputed that there ever was a truce and the back-and-forth soon resumed. But it was a reminder that GE, a charter member of the military-industrial complex and a major international conglomerate, had bigger corporate interests at play than the ratings for MSNBC’s evening programming. So, too, will Comcast, the cable giant that is assuming a majority stake in NBC Universal, which controls MSNBC.

The Washington Post reported on Saturday that sources at MSNBC quashed speculation that Olbermann’s departure was connected to the Comcast takeover, which was approved by federal regulators this week.

Media Orphans

The troubling message to progressives is that they remain essentially orphans when it comes to having their political interests addressed by any corporate news outlet. While the Right has built its own vast media infrastructure – reaching from newspapers, magazines and books to radio, TV and the Internet – the Left generally has treated media as a low priority. Though some on the Left saw hope in the MSNBC evening line-up, the larger reality was that even inside the world of NBC News, the other content ranged from the pro-Establishment centrism of anchor Brian Williams to the center-right views of MSNBC’s Joe Scarborough to CNBC’s mix of free-market extremism and corporate boosterism.

While gratified to be given a few hours each night on MSNBC, the Left surely had nothing to compare with Murdoch’s News Corporation and its longstanding commitment to a right-wing perspective on Fox News and News Corp.'s many other print and electronic outlets. As I wrote in an article last November, “Olbermann and the other liberal hosts are essentially on borrowed time, much the way Phil Donahue was before getting axed in the run-up to George W. Bush’s invasion of Iraq, when MSNBC wanted to position itself as a ‘patriotic’ war booster.“

Unlike News Corp. chairman Rupert Murdoch, who stands solidly behind the right-wing propaganda on Fox News, the corporate owners of MSNBC have no similar commitment to the work of Olbermann, Rachel Maddow and Ed Schultz. "For the suits at headquarters, it’s just a balancing act between the ratings that those shows get and the trouble they cause as Republicans reclaim control of Washington.”

Those corporate priorities also were underscored in the pre-Iraq invasion days when MSNBC dumped Donahue, then the network’s biggest draw. But Donahue had allowed on some guests critical of Bush’s planned war. After the invasion in March 2003, MSNBC’s coverage was barely discernable from that of Fox News, with both networks superimposing American flags on scenes from Iraq and producing pro-war promotional segments showing heroic images of U.S. soldiers being welcomed by happy Iraqis (with no scenes of the war’s carnage).

[See Consortiumnews.com's "America's Matrix."] The ongoing significance of America’s media imbalance is that it gives the Right enormous capabilities to control the national debate, not only during election campaigns but year-round. Republicans can deploy what intelligence operatives call “agit-propaganda,” stirring controversies that rile up the public and redound to the GOP’s advantage.

These techniques have proved so effective that not even gifted political speakers, whether the savvy Bill Clinton or the eloquent Barack Obama, have had any consistent success in countering the angry cacophony that the Right can orchestrate.

One week, the Right's theme is “Obamacare’s death panels”; another week, it’s “the “Ground Zero Mosque.” The Democrats are left scrambling to respond – and their responses, in turn, become fodder for critical commentary, as too wimpy or too defensive or too something. The mainstream media and progressives often join in this criticism, wondering why Obama let himself get blind-sided or why he wasn’t tougher or why he can’t control the message.

For the Right and the Republicans, it’s a win-win-win, as the right-wing base is energized, more public doubts are raised about the President, and the Left is further demoralized. Like Clinton before him, Obama has reacted to this political/media landscape by shifting rightward toward the “center,” further alienating his liberal base.

Many on the Left respond by denouncing Obama as a sell-out and deciding to either sit out elections or vote for a third party. This dynamic has been instrumental to the Right’s political victories over the past three decades even as those policies – from Ronald Reagan to George W. Bush – have worsened the lives of middle- and working-class Americans. The sudden disappearance of Keith Olbermann from television is another ominous omen that this dynamic will continue.

Time to rethink?

As this is no secret from anyone.

Suzan __________________________