Sunday, September 29, 2013

(This Town Reveals How the Village People Are Staunchly Behind US Slide) Sy Hersh Says We Lie About Everything - Including Bin Laden's Death - and Everybody Knows (And Names Names): You Can Now Call Us Fishface (If We Don't Stop Using Neonicotinoids) Again



One event continues to stick in my craw about JP Morgan Chase's CEO Jamie Dimon and that's that first time when I heard Obama sound like some kind of paid advertising or a cheerleader for him personally as he said how glad he was to know that he was in charge of his bank and that he's the best in his field. Or something.

That field, it turns out, is enormous theft from a gullible public. A lot more on this topic can be found in the essay below.

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I'm deep into Bob Shacochis' (National Book Award winner) first novel in 20 years The Woman Who Lost Her Soul (and it's a fine work with Pulitzer (or National Book Award or something grand) written all through it), but I have to confess a bad habit of not being able to resist the quick look elsewhere when other new books cross my path (mainly because of my obsessive library visits).  The new Pynchon, The Bleeding Edge, has captured my attention and after reading the first chapters I'm thinking he's changed his style a little bit - it's less jarring (but still stuttering) - but more about that later. Also, I'm reading Mark Leibovich's This Town (just out in August) which is so funny/raunchy/telling (and need-to-know) that I want to share a few of the gems on its pages with you, particularly as a warning shot as to how and why this so-called culture leaders gang has worked so hard to bring us to where we live (and fear) today (and been enabled by the MSM to lead us off the cliff of rationality about phantom worries like the deficit during a recession/depression). Hint: It's all about the moolah, but I digress. (All of these tomes deserve your attention, particularly Bob's.)

Tim Russert is dead. But the room was alive.

You can't work it too hard at a memorial service, obviously.
It's the kind of thing people notice. But the big-ticket Washington departure rite can be such a great networking opportunity. You can almost feel the ardor behind the solemn faces:  lucky stampedes of power mourners, about two thousand of them, wearing out the red-carpeted aisles of the Kennedy Center.
Joe Scarborough and Mika Brzezinski are mobbed as well; they can barely get to their seats: assaulted with kudos for the success of Morning Joe, their dawn roundtable on MSNBC and a popular artery in the bloodstream of the Leading Thinkers. People keep pressing business cards into the cohorts' palms, eager to get themselves booked, or their clients books, or their books mentioned . . . "A new low, even for Washington tackiness," Mika will lament of the funeral hustle."
Bill and Hillary Clinton walk stiffly down the left aisle. Heads lurch . . .: that exotic D.C. tingle falls over the room, the kind that comes with proximity to Superpowers. Bill and Hill. They are given wide berth. It had been a tough stretch. Hillary has just conceded the Democratic nomination. It ended an epic primary saga in which Bill had disgraced himself, making unpresidential and maybe racially loaded remarks about Obama. Neither Clinton is in a particularly good "place" with Washington at the moment, or with the media, or with the Democratic Party - or, for that matter, maybe with each other.
Bill's top post-White House aide, Doug Band, is keeping a list on his Blackberry of all the people who screwed over the Clintons in the campaign and who are now, as they say, "dead to us." Some of them dead are here at the Kennedy Center. There is a running joke inside Clinton World about all the bad things happening to the Clinton crossers.

Ted Kennedy, who pivotally endorsed Obama in January, is now dying from a brain tumor. (After Kennedy's endorsement, which came months before the tumor was discovered, his colleague Lindsey Graham asked Kennedy if he could inherit his Senate hideaway office. Why? "Because the Clintons are gonna kill you," Graham joked.) John Edwards, who also endorsed Obama, was busted
for cheating on his dying wife; his disgrace is now in full spiral. The state of Iowa, whose Democratic voters slapped a humiliating third-place finish on Hillary in January's caucuses, was devastated by biblical floods in the spring.

Now true to her stoic and gritty precedent, Hillary is keeping her smile affixed like hardened gum and sending out powerful "Stay away from this vehicle" vibes. Ignoring the vibes, an eager producer for MSNBC's Countdown beelines toward her, introduces herself to the Almighty, and prepares to launch a Hail Mary "ask" about whether the senator might possibly want to come on Countdown that night.

"It's a pleasure to meet you," Clinton responds to the eager producer, while the smile stays tight and she keeps on walking. Hillary has a memorial service to attend: the memorial service of a man she and her husband plainly despised and who they believed (rightly) despised them back.
But the Clintons are pros at death and sickness. They show up. They play their assigned roles. They send nice notes and lend comfort to the bereaved in that warm and open-faced Clinton way. They are here with empathetic eyes to pay respects, like heads of Mafia families do when a rival godfather falls. Washington memorial services have that quality when the various personality cults convene.

Bill and Hillary walking a few feet away from Newt and Callista Gingrich and right past David Shuster, the MSNBC host who has just been suspended by the network for saying the Clinton campaign "pimped out" Chelsea by having her call superdelegates. (Shuster has been barely heard from since. To reiterate: Don't mess with the Clintons!) Bill and Hill, who appear not to have reserved seats, find two several rows back next to Madeleine Albright, the former secretary of state, and Condoleesa Rice, the current one.
Not far from the . . . receiving line, NBC's Andrea Mitchell walks in with her husband, the conservative monetary oracle and former Federal Reserve chairman Alan Greenspan. One of the most dogged reporters in the city, Andrea adores her work and her friends, but mostly adores Alan. He is a prime Washington Leading Thinker who even when being blamed by many for running the economy off a cliff can always be seen on Andrea's arm doing his courtly old dignitary thing at D.C. social events. If Washington was a comic book - and it sort of is - Greenspan would be in the background of every panel.

A few rows from Alan and Andrea sits Barbara Walters, the luminary TV interviewer and Chairman Greenspan's former girlfriend. Back when Alan and Andrea were first dating, during the George H.W. Bush administration, they attended a dinner to honor Queen Elizabeth at the British embassy. In the presidential receiving line, Bush introduced Andrea to the queen. "Your Majesty, this is one of our premier American journalists," the president said, then turned to Mitchell and said, "Hello, Barbara." Bush sent a person note of apology to Andrea the next day.

Think anyone else is gearing up for Hillary's run in 2016? Not to mention putting the Greenspans into their sights?

Our guy Seymour Hersh has the real information on this crowd for us.

And it's not good.

And we're not good (or ready) for it.

From PaulCraigRoberts.org we learn:

Hersh is writing a book about national security and has devoted a chapter to the bin Laden killing. He says a recent report put out by an “independent” Pakistani commission about life in the Abottabad compound in which Bin Laden was holed up would not stand up to scrutiny. “The Pakistanis put out a report, don’t get me going on it. Let’s put it this way, it was done with considerable American input. It’s a bullshit report,” he says hinting of revelations to come in his book.

The Obama administration lies systematically, he claims, yet none of the leviathans of American media, the TV networks or big print titles, challenge him.

“It’s pathetic, they are more than obsequious, they are afraid to pick on this guy [Obama],” he declares in an interview with the Guardian.

“It used to be when you were in a situation when something very dramatic happened, the president and the minions around the president had control of the narrative, you would pretty much know they would do the best they could to tell the story straight. Now that doesn’t happen any more. Now they take advantage of something like that and they work out how to re-elect the president.

Seymour Hersh on Obama, NSA and the 'Pathetic' American Media


By Lisa O'Carroll, Guardian UK

27 September 13

eymour Hersh has got some extreme ideas on how to fix journalism - close down the news bureaus of NBC and ABC, sack 90% of editors in publishing and get back to the fundamental job of journalists which, he says, is to be an outsider.
It doesn't take much to fire up Hersh, the investigative journalist who has been the nemesis of US presidents since the 1960s and who was once described by the Republican party as "the closest thing American journalism has to a terrorist".
He is angry about the timidity of journalists in America, their failure to challenge the White House and be an unpopular messenger of truth.
Don't even get him started on the New York Times which, he says, spends "so much more time carrying water for Obama than I ever thought they would" - or the death of Osama bin Laden. "Nothing's been done about that story, it's one big lie, not one word of it is true," he says of the dramatic US Navy Seals raid in 2011.
The Obama administration lies systematically, he claims, yet none of the leviathans of American media, the TV networks or big print titles, challenge him.
"It's pathetic, they are more than obsequious, they are afraid to pick on this guy [Obama]," he declares in an interview with MediaGuardian.
He isn't even sure if the recent revelations about the depth and breadth of surveillance by the National Security Agency will have a lasting effect.
Snowden changed the debate on surveillance.
He is certain that NSA whistleblower Edward Snowden "changed the whole nature of the debate" about surveillance. Hersh says he and other journalists had written about surveillance, but Snowden was significant because he provided documentary evidence - although he is sceptical about whether the revelations will change the US government's policy.
"Duncan Campbell [the British investigative journalist who broke the Zircon cover-up story], James Bamford [US journalist] and Julian Assange and me and the New Yorker, we've all written the notion there's constant surveillance, but he [Snowden] produced a document and that changed the whole nature of the debate, it's real now," Hersh says.
"Editors love documents. Chicken-shit editors who wouldn't touch stories like that, they love documents, so he changed the whole ball game," he adds, before qualifying his remarks.
"But I don't know if it's going to mean anything in the long [run] because the polls I see in America - the president can still say to voters 'al-Qaida, al-Qaida' and the public will vote two to one for this kind of surveillance, which is so idiotic," he says.
Holding court to a packed audience at City University in London's summer school on investigative journalism, 76-year-old Hersh is on full throttle, a whirlwind of amazing stories of how journalism used to be; how he exposed the My Lai massacre in Vietnam, how he got the Abu Ghraib pictures of American soldiers brutalising Iraqi prisoners, and what he thinks of Edward Snowden.
Hope of redemption
Despite his concern about the temerity of journalism he believes the trade still offers hope of redemption.
"I have this sort of heuristic view that journalism, we possibly offer hope because the world is clearly run by total nincompoops more than ever ... Not that journalism is always wonderful, it's not, but at least we offer some way out, some integrity."
His story of how he uncovered the My Lai atrocity is one of old-fashioned shoe-leather journalism and doggedness. Back in 1969, he got a tip about a 26-year-old platoon leader, William Calley, who had been charged by the army with alleged mass murder.
Instead of picking up the phone to a press officer, he got into his car and started looking for him in the army camp of Fort Benning in Georgia, where he heard he had been detained. From door to door he searched the vast compound, sometimes blagging his way, marching up to the reception, slamming his fist on the table and shouting: "Sergeant, I want Calley out now."
Eventually his efforts paid off with his first story appearing in the St Louis Post-Despatch, which was then syndicated across America and eventually earned him the Pulitzer Prize. "I did five stories. I charged $100 for the first, by the end the [New York] Times were paying $5,000."
He was hired by the New York Times to follow up the Watergate scandal and ended up hounding Nixon over Cambodia. Almost 30 years later, Hersh made global headlines all over again with his exposure of the abuse of Iraqi prisoners at Abu Ghraib.
Put in the hours
For students of journalism his message is put the miles and the hours in. He knew about Abu Ghraib five months before he could write about it, having been tipped off by a senior Iraqi army officer who risked his own life by coming out of Baghdad to Damascus to tell him how prisoners had been writing to their families asking them to come and kill them because they had been "despoiled".
"I went five months looking for a document, because without a document, there's nothing there, it doesn't go anywhere."
Hersh returns to US president Barack Obama. He has said before that the confidence of the US press to challenge the US government collapsed post 9/11, but he is adamant that Obama is worse than Bush.
"Do you think Obama's been judged by any rational standards? Has Guantanamo closed? Is a war over? Is anyone paying any attention to Iraq? Is he seriously talking about going into Syria? We are not doing so well in the 80 wars we are in right now, what the hell does he want to go into another one for. What's going on [with journalists]?" he asks.
He says investigative journalism in the US is being killed by the crisis of confidence, lack of resources and a misguided notion of what the job entails.
"Too much of it seems to me is looking for prizes. It's journalism looking for the Pulitzer Prize," he adds. "It's a packaged journalism, so you pick a target like - I don't mean to diminish because anyone who does it works hard - but are railway crossings safe and stuff like that, that's a serious issue but there are other issues too.
"Like killing people, how does [Obama] get away with the drone programme, why aren't we doing more? How does he justify it? What's the intelligence? Why don't we find out how good or bad this policy is? Why do newspapers constantly cite the two or three groups that monitor drone killings. Why don't we do our own work?
"Our job is to find out ourselves, our job is not just to say - here's a debate' our job is to go beyond the debate and find out who's right and who's wrong about issues. That doesn't happen enough. It costs money, it costs time, it jeopardises, it raises risks. There are some people - the New York Times still has investigative journalists but they do much more of carrying water for the president than I ever thought they would ... it's like you don't dare be an outsider any more."
He says in some ways President George Bush's administration was easier to write about. "The Bush era, I felt it was much easier to be critical than it is [of] Obama. Much more difficult in the Obama era," he said.
Asked what the solution is Hersh warms to his theme that most editors are pusillanimous and should be fired.
"I'll tell you the solution, get rid of 90% of the editors that now exist and start promoting editors that you can't control," he says. I saw it in the New York Times, I see people who get promoted are the ones on the desk who are more amenable to the publisher and what the senior editors want and the trouble makers don't get promoted. Start promoting better people who look you in the eye and say 'I don't care what you say'.
Nor does he understand why the Washington Post held back on the Snowden files until it learned the Guardian was about to publish.
If Hersh was in charge of US Media Inc, his scorched earth policy wouldn't stop with newspapers.
"I would close down the news bureaus of the networks and let's start all over, tabula rasa. The majors, NBCs, ABCs, they won't like this - just do something different, do something that gets people mad at you, that's what we're supposed to be doing," he says.
Hersh is currently on a break from reporting, working on a book which undoubtedly will make for uncomfortable reading for both Bush and Obama.
"The republic's in trouble, we lie about everything, lying has become the staple." And he implores journalists to do something about it.

As if the owners would hire editors today who are independent . . . and, of course, Sy knows this. But what else could possibly be done to improve the "news" the U.S. actually gets?
_ _ _ _ _ _ _

You may remember my mentioning some time ago that we all have inner fish, right? Well, there's a very good book by that name, and it's one of the ways I chose to teach my daughter as she grew up how we were living in an interconnected evolving world with relatives at every turn (so live gently).

Today we learn that one of our older fish relatives actually had a face (so to speak) with a jaw with a skull and dentary bone, and that the shark cartilege idea (as our precursor) has been discarded.

SYDNEY (Reuters) - An international team of scientists in China has discovered what may be the earliest known creature with a distinct face, a 419 million-year-old fish that could be a missing link in the development of vertebrates.
The fossil find in China's Xiaoxiang Reservoir, reported by the journal "Nature" on Thursday, is the most primitive vertebrate discovered with a modern jaw, including a dentary bone found in humans
(This find) " finally solves an age-old problem about the origin of modern fishes," said John Long, a professor in palaeontology at Flinders University in Adelaide.
Scientists were surprised to find that the heavily armoured fish, Entelognathus primordialis, a previously unknown member of the now extinct placoderm family, had a complex small skull and jaw bones.
That appeared to disprove earlier theories that modern vertebrates with bony skeletons, called osteichthyes, had evolved from a shark-like creature with a frame made of cartilage.
Instead, the new find provides a missing branch on the evolutionary tree, predating that shark-like creature and showing that a bony skeleton was the prototype for both bony and cartilaginous vertebrates.
"We now know that ancient armoured placoderms gave rise to the modern fish fauna as we know it," said Long, who was not part of the team in China.

I've felt all along that the rise of the Koch-funded Tea Party and their like-minded compatriots, who some call the Rethuglicans (because of their unconcern (almost hatred) for those who work at low-level jobs without being remunerated well or even appreciated by those who reap the rewards from their efforts), would result in a complete shut down of government services at the end of the path of not-ever-enough-compromise on the part of the Democrats (and Obama's refusal to mint a coin that will fund the hated deficit/debt) represents the final victory of mindless capitalism.

It's hurrying towards us now although it seems that it won't be a complete shutdown. Yet.

September 27, 2013

David Hunt says:

I still think Obama should stamp Ronald Reagan’s face on Trillion Dollar Platinum coin and deposit it in the Government’s account at the Federal Reserve. Showing them that they gain ABSOLUTELY NOTHING by their brinksmanship is the only way to make the GOP stop trying it. Accomplishing that without the world economy imploding seems like a major side-benefit to me.

The real solution is one that no one in power will even discuss. Let alone at this fraught time.

But that terrible man, Ralph Nader, will.

People Want Full Medicare for All


By Ralph Nader, The Nader Page

27 September 13

reshman Senator Ted Cruz (R-Texas), who somehow got through Princeton and Harvard Law School, is the best news the defaulting Democratic Party has had in years.
As the Texas bull in the Senate china shop, he has been making a majority of his Republican colleagues cringe with his bare-knuckle antics and language. His 21 hour talkathon on the Senate floor demanding the defunding of Obamacare made his Republican colleagues cringe. His Nazi appeasement analogies, and threats to shut down were especially embarrassing.
After listening to his lengthy rant on the Senate Floor on Tuesday and Wednesday, one comes away with two distinct impressions. Ted Cruz cannot resist inserting himself here, there and everywhere. And nothing is too trivial for Senator Talkathon. He likes White Castle hamburgers, he loves pancakes; he talked about what he liked to read as a little boy, where he's travelled, what clothes he wears and other trivia.
You'd think he would have used his time to talk specifically about the suffering that uninsured people and their children are going through, especially in the Lone Star State. Or about what could replace Obamacare other than his repeated "free market" solution, which is to say the "pay or die" profiteering, tax-subsidized corporate system.
It was puzzling why he never mentioned that during his two days of talking, over two hundred Americans died, on average, because they couldn't afford health insurance to get diagnoses and timely treatment. (A peer reviewed study by Harvard Medical School researchers estimated about 45,000 die annually for lack of affordable health insurance every year.)
The other reaction to Senator Cruz was that many of his more specific objections to Obamacare - its mind-numbing complexity, opposition by formerly supportive labor unions, and employers reacting by reducing worker hours below 30 hours a week to escape some of the law's requirements - are well-taken and completely correctible by single-payer health insurance, as provided in Canada. Single-payer, or full Medicare for all, with free choice of physician and hospital has been the majority choice of Americans for decades. Even a majority of doctors and nurses favor it.
Single-payer's advantage is that everybody is in, nobody is out. It is far more efficient, allows for better outcomes, saves lives, prevents injuries and illnesses, relieves people of severe anxieties and wasted time spent figuring out often fraud-ridden, inscrutable computerized bills and allows for the collection of pattern-detecting data to spot harmful trends.
For example, in Canada, full Medicare covers everyone at half the per capita cost that Americans pay even though 50 million Americans are still not covered. The U.S. per capita figure is almost $9,000 a year and over 17% of our total GDP. In Canada, administrative costs are much lower.
Symbolically, the single-payer legislation that passed in Canada over four decades ago was 13 pages long, compared to over two thousand pages for Obamacare.
Critics of Canada's system charge it with delays for patients. For some elective procedures, provinces that were under-investing have experienced some delays until Ottawa raised its contributions. Canada spends just over 10% of its GDP on healthcare, by comparison.
But in the U.S. not being able to pay for treatment is the biggest problem. And in the U.S., who hasn't heard of delays in various areas of the country due to lack of primary care physicians or other specialties? I have many friends and relatives in Canada who have not complained of delays for routine, essential or emergency treatments.
For those who prefer to believe hard-bitten businesspeople, Matt Miller, writing yesterday in The Washington Post, interviewed big business executives - David Beatty who ran the giant Weston Foods and Roger Martin long-time consultant to large U.S. companies in Canada. They were highly approving of the Canadian system and are baffled at the way the U.S. has twisted itself in such a wasteful, harmful and discriminatory system.
. . . Mr. Martin, an avowed capitalist, who has experienced healthcare in the U.S. and Canada, according to Mr. Miller, called Canadian Medicare "incredibly hassle-free," by comparison. (In Canada, single-payer means government insurance and private delivery of healthcare under cost controls). Now Dean of the business school at the University of Toronto, Mr. Martin told reporter Miller: "I literally have a hard time thinking of what would be better than a single-payer system."
So why the U.S. is the only Western country without some version of a single-payer system?
Most concessionary Democrats, including Barack Obama and Hillary Clinton, have said in the past that they prefer single-payer, but that the corporate forces against it cannot be overcome. (They use phrases like "single-payer is not practical.")
But with the Cruz crew in Congress going berserk against Obamacare, now is the time to press again for the far superior single-payer model. Or at least get single-payer into the public discussion. Unfortunately, even some of the major citizen groups organized for single-payer, behind H.R. 676, are keeping quiet, not wanting to undercut Obama and the Congressional Democrats.
Go to Single Payer Action and connect with the movement that does not play debilitating politics and seeks your engagement.
Comments:
# tedrey 2013-09-27 11:52
Let the Republicans know that if they block Affordable Care, then we'll move on to Single Payer. Compared to what both the Republicans and Democrats have been offering, single payer's simplicity, efficiency, and honesty should now be an easy sell, if the pubic can just be told about it.
# Onterryo 2013-09-27 11:55
I live in Canada. My son had a 12 hour heart operation 7 years ago. The cost to me? About $60 worth of parking lot fees plus some pain pills for him after he was discharged. It's time for America to realize they are being lied to by the Republicans and their supporters who will continue to rake in huge profits at the expense of the American taxpayer. I am 62, my mom is 81 and you will never hear us complain about our system. Last year at the age of 82 my dad passed away from a stroke. He was in the hospital for more than a week before he died. Again, the cost was parking fees. For all of that time but two days he was in a private room. For his last two days he was in another private room where my mom could sleep in a convertible chair beside him until he breathed his last breath. There was no "death panel", just professional and loving care. Not only did the staff take care of him but also my mother while she stayed at his bedside more than 16 hours a day. Yes, sometimes things do not go perfectly but I would be willing to compare our clinics, emergency clinics and hospitals to those the US. We may not win every comparison but I believe we would win the vast majority.
 And if you were worried about what's been disappearing the bees . . . it's not just the bees . . .

Neonicotinoids are now the most widely used group of insecticides in the world, and their use in the U.S. has been steadily increasing since their initial registration in the mid-1990s. Neonicotinoids have been promoted as low-risk chemicals: low impact on human health, low toxicity to nontarget organisms, lower application rates and compatibility with Integrated Pest Management. Unfortunately, the many studies completed since these compounds began being used have not born out the validity of these assumptions.
 And the latest from Dealbreaker?

Now That That Bob Diamond Character Is Out Of There, Barclays Is A Real Buy, Says Bob Diamond

by Bess Levin | September 27, 2013
 Bob Diamond, who was ousted last year as the boss of British bank Barclays Plc, said it has grown stronger since he left and he plans to buy shares in its 6 billion-pound ($9.6 billion) rights issue. “I’m buying my rights, I’m bullish on Barclays … Barclays has become a better and stronger institution,” Diamond…
26 Sep 2013


Charlie Gasparino Knows When A Meeting Is More Than Just A “Meeting,” And His 6th Sense For These Sorts Of Things Tells Him Dimon-Holder Is One Of Those Times

By Bess Levin

Comments:

segoviacobain · 22 hours ago
 
Once you know that JMP processes all of the EBT nationwide, the Kabuki element comes into very sharp relief.
 
Eric Holder: You and your bank could be in real danger, Mr. Dimon.

Jamie Dimon: I am NOT IN danger, Mr. Holder. I AM the danger!

Guest · 21 hours ago
 
$6 billion, $11 billion ... who cares when it's not your money and the board won't fire you over it.
Guest · 22 hours ago
Damn you autocorrect! That's supposed to say "shitdrown".
---Chazzer


What makes this story so striking
is that Holder as Attorney General is meeting with JP Morgan Chase CEO Jamie Dimon at all. Holder should not be. The DoJ investigation is by it's very nature a criminal probe, and the Attorney General should not have direct contact at all with any subject of that investigation. Again as in the HSBC Money Laundering case JP Morgan appears to be too big to be subject to the normal rules of Justice Department criminal investigative procedure. - ma/RSN
PMorgan Chase & Co CEO Jamie Dimon met Thursday morning with U.S. Attorney General Eric Holder as the nation's biggest bank attempts to end investigations into its sales of shoddy mortgage securities leading up to the financial crisis.
The bank and federal and state authorities are trying to resolve the probes with a potential $11 billion settlement, according to sources familiar with the matter.
After the meeting at the U.S. Justice Department, which lasted about an hour, Holder told reporters that he had met with representatives of JPMorgan but did not mention Dimon by name. He declined to give details of the talks.

Not really a surprise.


Saturday, September 28, 2013

(Morally Unchallenged? Sociopaths Unite!) How Privatization (Theft) Has Picked Up Speed As Its Failures Manifest Everywhere (And How Financialization of Everything Enriches Administrators and Impoverishes Assets Owners) Goodbye, Friends



(Please consider making even a small contribution to the Welcome to  Pottersville2 Quarterly Fundraiser happening now ($5.00 is suggested for those on a tight budget) or sending a link to your friends if you think the subjects discussed here are worth publicizing. Thank you for your support. We really appreciate it. Anything you can do will make a huge difference in this blog's ability to survive in these difficult economic times.)


Feeling any affinity (after reading the essay below) with those being blamed for use of poison gas in Syria after discovering that the gassing came courtesy of the CIA-Saudi-funded insurgents?

. . . the idea that these benefit packages are causing the fiscal crises in our states is almost entirely a fabrication crafted by the very people who actually caused the problem. It's like Voltaire's maxim about noses having evolved to fit spectacles, so therefore we wear spectacles. In this case, we have an unfunded-pension-liability problem because we've been ripping retirees off for decades - but the solution being offered is to rip them off even more.

Looting the Pension Funds


By Matt Taibbi, Rolling Stone

26 September 13

All across America, Wall Street is grabbing money meant for public workers.
n the final months of 2011, almost two years before the city of Detroit would shock America by declaring bankruptcy in the face of what it claimed were insurmountable pension costs, the state of Rhode Island took bold action to avert what it called its own looming pension crisis. Led by its newly elected treasurer, Gina Raimondo - an ostentatiously ambitious 42-year-old Rhodes scholar and former venture capitalist - the state declared war on public pensions, ramming through an ingenious new law slashing benefits of state employees with a speed and ferocity seldom before seen by any local government.
Called the Rhode Island Retirement Security Act of 2011, her plan would later be hailed as the most comprehensive pension reform ever implemented. The rap was so convincing at first that the overwhelmed local burghers of her little petri-dish state didn't even know how to react. "She's Yale, Harvard, Oxford - she worked on Wall Street," says Paul Doughty, the current president of the Providence firefighters union. "Nobody wanted to be the first to raise his hand and admit he didn't know what the fuck she was talking about."
Soon she was being talked about as a probable candidate for Rhode Island's 2014 gubernatorial race. By 2013, Raimondo had raised more than $2 million, a staggering sum for a still-undeclared candidate in a thimble-size state. Donors from Wall Street firms like Goldman Sachs, Bain Capital and JPMorgan Chase showered her with money, with more than $247,000 coming from New York contributors alone.
A shadowy organization called EngageRI, a public-advocacy group of the 501(c)4 type whose donors were shielded from public scrutiny by the infamous Citizens United decision, spent $740,000 promoting Raimondo's ideas. Within Rhode Island, there began to be whispers that Raimondo had her sights on the presidency. Even former Obama right hand and Chicago mayor Rahm Emanuel pointed to Rhode Island as an example to be followed in curing pension woes.
What few people knew at the time was that Raimondo's "tool kit" wasn't just meant for local consumption. The dynamic young Rhodes scholar was allowing her state to be used as a test case for the rest of the country, at the behest of powerful out-of-state financiers with dreams of pushing pension reform down the throats of taxpayers and public workers from coast to coast.
One of her key supporters was billionaire former Enron executive John Arnold - a dickishly ubiquitous young right-wing kingmaker with clear designs on becoming the next generation's Koch brothers, and who for years had been funding a nationwide campaign to slash benefits for public workers.
Nor did anyone know that part of Raimondo's strategy for saving money involved handing more than $1 billion - 14 percent of the state fund - to hedge funds, including a trio of well-known New York-based funds: Dan Loeb's Third Point Capital was given $66 million, Ken Garschina's Mason Capital got $64 million and $70 million went to Paul Singer's Elliott Management.
The funds now stood collectively to be paid tens of millions in fees every single year by the already overburdened taxpayers of her ostensibly flat-broke state. Felicitously, Loeb, Garschina and Singer serve on the board of the Manhattan Institute, a prominent conservative think tank with a history of supporting benefit-slashing reforms. The institute named Raimondo its 2011 "Urban Innovator" of the year.
The state's workers, in other words, were being forced to subsidize their own political disenfranchisement, coughing up at least $200 million to members of a group that had supported anti-labor laws. Later, when Edward Siedle, a former SEC lawyer, asked Raimondo in a column for Forbes.com how much the state was paying in fees to these hedge funds, she first claimed she didn't know.
Raimondo later told the Providence Journal she was contractually obliged to defer to hedge funds on the release of "proprietary" information, which immediately prompted a letter in protest from a series of freaked-out interest groups. Under pressure, the state later released some fee information, but the information was originally kept hidden, even from the workers themselves.
"When I asked, I was basically hammered," says Marcia Reback, a former sixth-grade schoolteacher and retired Providence Teachers Union president who serves as the lone union rep on Rhode Island's nine-member State Investment Commission. "I couldn't get any information about the actual costs."
This is the third act in an improbable triple-fucking of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era. Five years ago this fall, an epidemic of fraud and thievery in the financial-services industry triggered the collapse of our economy.
The resultant loss of tax revenue plunged states everywhere into spiraling fiscal crises, and local governments suffered huge losses in their retirement portfolios - remember, these public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.
Today, the same Wall Street crowd that caused the crash is not merely rolling in money again but aggressively counterattacking on the public-relations front. The battle increasingly centers around public funds like state and municipal pensions. This war isn't just about money. Crucially, in ways invisible to most Americans, it's also about blame.
In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops - not bankers - as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities.
Not only did these middle-class workers already lose huge chunks of retirement money to huckster financiers in the crash, and not only are they now being asked to take the long-term hit for those years of greed and speculative excess, but in many cases they're also being forced to sit by and watch helplessly as Gordon Gekko wanna-be's like Loeb or scorched-earth takeover artists like Bain Capital are put in charge of their retirement savings.
It's a scam of almost unmatchable balls and cruelty, accomplished with the aid of some singularly spineless politicians. And it hasn't happened overnight. This has been in the works for decades, and the fighting has been dirty all the way.
There's $2.6 trillion in state pension money under management in America, and there are a lot of fingers in that pie. Any attempt to make a neat Aesop narrative about what's wrong with the system would inevitably be an oversimplification.
But in this hugely contentious, often overheated national controversy - which at times has pitted private-sector workers who've mostly lost their benefits already against public-sector workers who are merely about to lose them - two key angles have gone largely unreported. Namely: who got us into this mess, and who's now being paid to get us out of it.
The siege of America's public-fund money really began nearly 40 years ago, in 1974, when Congress passed the Employee Retirement Income Security Act, or ERISA. In theory, this sweeping regulatory legislation was designed to protect the retirement money of workers with pension plans.

ERISA forces employers to provide information about where pension money is being invested, gives employees the right to sue for breaches of fiduciary duty, and imposes a conservative "prudent man" rule on the managers of retiree funds, dictating that they must make sensible investments and seek to minimize loss.
But this landmark worker-protection law left open a major loophole: It didn't cover public pensions. Some states were balking at federal oversight, and lawmakers, naively perhaps, simply never contemplated the possibility of local governments robbing their own workers.
Politicians quickly learned to take liberties. One common tactic involved illegally borrowing cash from public retirement funds to finance other budget needs. For many state pension funds, a significant percentage of the kitty is built up by the workers themselves, who pitch in as little as one and as much as 10 percent of their income every year.
The rest of the fund is made up by contributions from the taxpayer. In many states, the amount that the state has to kick in every year, the Annual Required Contribution (ARC), is mandated by state law.
Chris Tobe, a former trustee of the Kentucky Retirement Systems who blew the whistle to the SEC on public-fund improprieties in his state and wrote a book called Kentucky Fried Pensions, did a careful study of states and their ARCs.
While some states pay 100 percent (or even more) of their required bills, Tobe concluded that in just the past decade, at least 14 states have regularly failed to make their Annual Required Contributions. In 2011, an industry website called 24/7 Wall St. compiled a list of the 10 brokest, most busted public pensions in America. "Eight of those 10 were on my list," says Tobe.
Among the worst of these offenders are Massachusetts (made just 27 percent of its payments), New Jersey (33 percent, with the teachers' pension getting just 10 percent of required payments) and Illinois (68 percent).
In Kentucky, the state pension fund, the Kentucky Employee Retirement System (KERS), has paid less than 50 percent of its ARCs over the past 10 years, and is now basically butt-broke - the fund is 27 percent funded, which makes bankrupt Detroit, whose city pension is 77 percent full, look like the sultanate of Brunei by comparison.
Here's what this game comes down to. Politicians run for office, promising to deliver law and order, safe and clean streets, and good schools. Then they get elected, and instead of paying for the cops, garbagemen, teachers and firefighters they only just 10 minutes ago promised voters, they intercept taxpayer money allocated for those workers and blow it on other stuff.
It's the governmental equivalent of stealing from your kids' college fund to buy lap dances. In Rhode Island, some cities have underfunded pensions for decades. In certain years zero required dollars were contributed to the municipal pension fund. "We'd be fine if they had made all of their contributions," says Stephen T. Day, retired president of the Providence firefighters union. "Instead, after they took all that money, they're saying we're broke. Are you fucking kidding me?"
There's an arcane but highly disturbing twist to the practice of not paying required contributions into pension funds: The states that engage in this activity may also be committing securities fraud.
Why? Because if a city or state hasn't been making its required contributions, and this hasn't been made plain to the ratings agencies, then that same city or state is actually concealing what in effect are massive secret loans and is actually far more broke than it is representing to investors when it goes out into the world and borrows money by issuing bonds.
Some states have been caught in the act of doing this, but the penalties have been so meager that the practice can be considered quasi-sanctioned. For example, in August 2010, the SEC reprimanded the state of New Jersey for serially lying about its failure to make pension contributions throughout the 2000s.
"New Jersey failed to provide certain present and historical financial information regarding its pension funding in bond-disclosure documents," the SEC wrote, in seemingly grave language. "The state was aware of ... the potential effects of the underfunding."
Illinois was similarly reprimanded by the SEC for lying about its failure to make its required pension contributions. But in neither of these cases were the consequences really severe. So far, states get off with no monetary fines at all. "The SEC was mistaken if they think they sent a message to other states," Tobe says.
But for all of this, state pension funds were more or less in decent shape prior to the financial crisis of 2008. The country, after all, had been in a historic bull market for most of the 1990s and 2000s and politicians who underpaid the ARCs during that time often did so assuming that the good times would never end. In fact, prior to the crash, state pension funds nationwide were cumulatively running a surplus.
But then the crash came, and suddenly states everywhere were in a real, no-joke fiscal crisis. Tax revenues went in the crapper, and someone had to take the hit. But who?
Cuts to corporate welfare and a rolled-up-newspaper whack of new taxes on the guilty finance sector seemed a good place to start, but it didn't work out that way. Instead, it was then that the legend of pension unsustainability was born, with the help of a pair of unlikely allies.
Most people think of Pew Charitable Trusts as a centrist, nonpartisan organization committed to sanguine policy analysis and agnostic number crunching. It's an odd reputation for an organization that was the legacy of J. Howard Pew, president of Sun Oil (the future Sunoco) during its early 20th-century petro-powerhouse days and a kind of australopithecine precursor to a Tea Party leader.
Pew had all the symptoms: an obsession with the New Deal as a threat to free society, a keen appreciation for unreadable Austrian economist F.A. Hayek and a hoggish overuse of the word "freedom."
Pew and his family left nearly $1 billion to a series of trusts, one of which was naturally called the "Freedom Trust," whose mission was, in part, to combat "the false promises of socialism and a planned economy."
Still, for decades Pew trusts engaged in all sorts of worthy endeavors, including everything from polling to press criticism. In 2007, Pew began publishing an annual study called "The Widening Gap," which aimed to use states' own data to show the "gap" between present pension-fund levels and future obligations. The study quickly became a leading analysis of the "unfunded liability" question.
In 2011, Pew began to align itself with a figure who was decidedly neither centrist nor nonpartisan: 39-year-old John Arnold, whom CNN/Money described (erroneously) as the "second-youngest self-made billionaire in America," after Mark Zuckerberg.
Though similar in wealth and youth, Arnold presented the stylistic opposite of Zuckerberg's signature nerd chic: He's a lipless, eager little jerk with the jug-eared face of a Division III women's basketball coach, exactly what you'd expect a former Enron commodities trader to look like.
Anyone who has seen the Oscar-winning documentary The Smartest Guys in the Room and remembers those tapes of Enron traders cackling about rigging energy prices on "Grandma Millie" and jamming electricity rates "right up her ass for fucking $250 a megawatt hour" will have a sense of exactly what Arnold's work environment was like.
In fact, in the book that the movie was based on, the authors portray Arnold bragging about his minions manipulating energy prices, praising them for "learning how to use the Enron bat to push around the market." Those comments later earned Arnold visits from federal investigators, who let him get away with claiming he didn't mean what he said.
As Enron was imploding, Arnold played a footnote role, helping himself to an $8 million bonus while the company's pension fund was vaporizing. He and other executives were later rebuked by a bankruptcy judge for looting their own company along with other executives. Public pension funds nationwide, reportedly, lost more than $1.5 billion thanks to their investments in Enron.
In 2002, Arnold started a hedge fund and over the course of the next few years made roughly a $3 billion fortune as the world's most successful natural-gas trader. But after suffering losses in 2010, Arnold bowed out of hedge-funding to pursue "other interests."
He had created the Arnold Foundation, an organization dedicated, among other things, to reforming the pension system, hiring a Republican lobbyist and former chief of staff to Dick Armey named Denis Calabrese, as well as Dan Liljenquist, a Utah state senator and future Tea Party challenger to Orrin Hatch.
Soon enough, the Arnold Foundation released a curious study on pensions. On the one hand, it admitted that many states had been undercontributing to their pension funds for years. But instead of proposing that states correct the practice, the report concluded that "the way to create a sound, sustainable and fair retirement-savings program is to stop promising a [defined] benefit."
In 2011, Arnold and Pew found each other. As detailed in a new study by progressive think tank Institute for America's Future, Arnold and Pew struck up a relationship - and both have since been proselytizing pension reform all over America, including California, Florida, Kansas, Arizona, Kentucky and Montana.
Few knew that Pew had a relationship with a right-wing, anti-pension zealot like Arnold. "The centrist reputation of Pew was a key in selling a lot of these ideas," says Jordan Marks of the National Public Pension Coalition.
Later, a Pew report claimed that the national "gap" between pension assets and future liabilities added up to some $757 billion and dryly insisted the shortfall was unbridgeable, minus some combination of "higher contributions from taxpayers and employees, deep benefit cuts and, in some cases, changes in how retirement plans are structured and benefits are distributed."
What the study didn't say was that this supposedly massive gap could all be chalked up to the financial crisis, which, of course, had been caused almost entirely by the greed and wide-scale fraud of the financial-services industry - particularly with regard to state pension funds.
A study by noted economist Dean Baker at the Center for Economic Policy and Research bore this out. In February 2011, Baker reported that, had public pension funds not been invested in the stock market and exposed to mortgage-backed securities, there would be no shortfall at all. He said state pension managers were of course somewhat to blame, but only "insofar as they exercised poor judgment in buying the [finance] industry's services."
In fact, Baker said, had public funds during the crash years simply earned modest returns equal to 30-year Treasury bonds, then public-pension assets would be $850 billion richer than they were two years after the crash. Baker reported that states were short an additional $80 billion over the same period thanks to the fact that post-crash, cash-strapped states had been paying out that much less of their mandatory ARC payments.
So even if Pew's numbers were right, the "unfunded liability" crisis had nothing to do with the systemic unsustainability of public pensions.
Thanks to a deadly combination of unscrupulous states illegally borrowing from their pensioners, and unscrupulous banks whose mass sales of fraudulent toxic subprime products crashed the market, these funds were out some $930 billion. Yet the public was being told that the problem was state workers' benefits were simply too expensive.
In a way, this was a repeat of a shell game with retirement finance that had been going on at the federal level since the Reagan years. The supposed impending collapse of Social Security, which actually should be running a surplus of trillions of dollars, is now repeated as a simple truth.
But Social Security wouldn't be "collapsing" at all had not three decades of presidents continually burgled the cash in the Social Security trust fund to pay for tax cuts, wars and God knows what else. Same with the alleged insolvencies of state pension programs.
The money may not be there, but that's not because the program is unsustainable: It's because bankers and politicians stole the money.
Still, the public mostly bought the line being sold by Arnold, Pew and other anti-pension figures like the Koch brothers. To most, it didn't matter who was to blame: What mattered is that the money was gone, and there seemed to be only two possible paths forward. One led to bankruptcy, a real-enough threat that had already ravaged places like Vallejo, California; Jefferson County, Alabama; and, this summer, Detroit.
In Rhode Island, the tiny town of Central Falls went bust in 2011, and even after a court-ordered plan lifted the town out of bankruptcy in 2012, the "rescue" left pensions slashed as much as 55 percent. "You had guys who were living off $24,000, and now they're getting $12,000," says Day.
Though Day and his fellow retirees are still fighting reform, he says other union workers might rather settle than file bankruptcy. Holding up an infamous local-newspaper picture of a retired Central Falls policeman in a praying posture, as though begging not to have his whole pension taken away, Day sighs. "Guys take one look at this picture and that's it. They're terrified."
Such images chilled many public workers into accepting the second path - the kind of pension reform meagerly touted by one-percent-friendly politicians like Gina Raimondo. Anyone could see that "reform" meant giving up cash.
But the other parts of these schemes were murkier. Most pension-reform proposals required that states must go after higher returns by seeking out "alternative investments," which sounds harmless enough. But we are now finding out what that term actually means - and it's a little north of harmless.
One of the most garish early experiments in "alternative investments" came in Ohio in the late 1990s, after the Republican-controlled state assembly passed a law loosening restrictions on what kinds of things state funds could invest in.
Sometime later, an investigation by the Toledo Blade revealed that the Ohio Bureau of Workers' Compensation had bought into rare-coin funds run by a GOP fundraiser named Thomas Noe. Through Noe, Ohio put $50 million into coins and "other collectibles" - including Beanie Babies.
The scandal had repercussions all over the country, but not what you'd expect. James Drew, one of the reporters who broke the story, notes that a consequence of "Coingate" was that states stopped giving out information about where public money is invested. "If they learned anything, it's not to stop doing it, but to keep it secret," says Drew.
In fact, in recent years more than a dozen states have carved out exemptions for hedge funds to traditional Freedom of Information Act requests, making it impossible in some cases, if not illegal, for workers to find out where their own money has been invested.
The way this works, typically, is simple: A hedge fund will refuse to take a state's business unless it first provides legal guarantees that information about its investments won't be disclosed to the public. The ostensible justifications for these outrageous laws are usually that disclosing commercial information about hedge funds would place them at a "competitive disadvantage."
In 2010, the University of California reinvested its pension fund with a venture-capital group called Sequoia Capital, which in turn is a backer of a firm called Think Finance, whose business is payday lending - a form of short-term, extremely high-interest rate lending that's basically loan-sharking without the leg-breaking, and is banned in 15 states and D.C.
According to American Banker, Think Finance partnered with a Native American tribe to get around state interest-rate caps; someone borrowing $250 in its "plain green loans" program would owe $440 after 16 weeks, for a tidy annual percentage rate of 379 percent.
In a more recent case, the pension fund of L.A. County union workers invested in an Embassy Suites hotel that is trying to prevent janitors and other employees from organizing. California passed a law in 2005 making hedge-fund investments secret.
The American Federation of Teachers this spring released a list of financiers who had been connected with lobbying efforts against defined-benefit plans. Included on that list was hedge-funder Loeb of Third Point Capital, who sits on the board of StudentsFirstNY, a group that advocates for an end to these traditional plans for public workers - that is, pensions that promise a guaranteed payout based on one's salary and years of service.
When Rhode Island union rep Reback complained about hiring funds whose managers had anti-labor histories, she was told the state couldn't make decisions based on political leanings of fund managers. That same month, Rhode Island moved to disinvest its workers' money from firearms distributors in the wake of the Sandy Hook shooting.
Hedge funds have good reason to want to keep their fees hidden: They're insanely expensive. The typical fee structure for private hedge-fund management is a formula called "two and twenty," meaning the hedge fund collects a two percent fee just for showing up, then gets 20 percent of any profits it earns with your money.
Some hedge funds also charge a mysterious third fee, called "fund expenses," that can run as high as half a percent - Loeb's Third Point, for instance, charged Rhode Island just more than half a percent for "fund expenses" last year, or about $350,000. Hedge funds will also pass on their trading costs to their clients, a huge additional line item that can come to an extra percent or more and is seldom disclosed. There are even fees states pay for withdrawing from certain hedge funds.
In public finance, hedge funds will sometimes give slight discounts, but the numbers are still enormous. In Rhode Island, over the course of 20 years, Siedle projects that the state will pay $2.1 billion in fees to hedge funds, private-equity funds and venture-capital funds. Why is that number interesting? Because it very nearly matches the savings the state will be taking from workers by freezing their Cost of Living Adjustments - $2.3 billion over 20 years.
"That's some 'reform,'" says Siedle.
"They pretty much took the COLA and gave it to a bunch of billionaires," hisses Day, Providence's retired firefighter union chief.
When asked to respond to criticisms that the savings from COLA freezes could be seen as going directly into the pockets of billionaires, treasurer Raimondo replied that it was "very dangerous to look at fees in a vacuum" and that it's worth paying more for a safer and more diverse portfolio.
She compared hedge funds - inherently high-risk investments whose prospectuses typically contain front-page disclaimers saying things like, WARNING: YOU MAY LOSE EVERYTHING - to snow tires. "Sure, you pay a little more," she says. "But you're really happy you have them when the roads are slick."
Raimondo recently criticized the high-fee structure of hedge funds in the Wall Street Journal and told Rolling Stone that "'two and twenty' doesn't make sense anymore," although she hired several funds at precisely those fee levels back before she faced public criticism on the issue. She did add that she was monitoring the funds' performance. "If they underperform, they're out," she says.
And underperforming is likely. Even though hedge funds can and sometimes do post incredible numbers in the short-term - Loeb's Third Point notched a 41 percent gain for Rhode Island in 2010; the following year, it earned -0.54 percent. On Wall Street, people are beginning to clue in to the fact - spikes notwithstanding - that over time, hedge funds basically suck.
In 2008, Warren Buffett famously placed a million-dollar bet with the heads of a New York hedge fund called Protégé Partners that the S&P 500 index fund - a neutral bet on the entire stock market, in other words - would outperform a portfolio of five hedge funds hand-picked by the geniuses at Protégé.
Five years later, Buffett's zero-effort, pin-the-tail-on-the-stock-market portfolio is up 8.69 percent total. Protégé's numbers are comical in comparison; all those superminds came up with a 0.13 percent increase over five long years, meaning Buffett is beating the hedgies by nearly nine points without lifting a finger.
Union leaders all over the country have started to figure out the perils of hiring a bunch of overpriced Wall Street wizards to manage the public's money. Among other things, investing with hedge funds is infinitely more expensive than investing with simple index funds. On Wall Street and in the investment world, the management price is measured in something called basis points, a basis point equaling one hundredth of one percent. So a state like Rhode Island, which is paying a two percent fee to hedge funds, is said to be paying an upfront fee of 200 basis points.
How much does it cost to invest public money in a simple index fund? "We've paid as little as .875 of a basis point," says William Atwood, executive director of the Illinois State Board of Investment. "At most, five basis points."
So at the low end, Atwood is paying 200 times less than the standard two percent hedge-fund fee. As an example, Atwood says, the state of Illinois paid a fee of just $57,000 last year on $550 million of public money they put into an S&P 500 index fund, which, again, is exactly the sort of plain-vanilla investment that Warren Buffett used to publicly kick the ass of Wall Street's cockiest hedge fund.
The fees aren't even the only costs of "alternative investments." Many states have engaged middlemen called "placement agents" to hire hedge funds, and those placement agents - typically people with ties to state investment boards - are themselves paid enormous sums, often in the millions, just to "introduce" hedge funds to politicians holding the checkbook.
In Kentucky, Tobe and Siedle found that KRS, the state pension funds, had paid a whopping $14 million to placement agents between 2004 and 2009. In Atlanta, a member of the city pension board complained to the SEC that the city had hired a consultant, Larry Gray, who convinced the city pension fund to invest $28 million in a hedge fund he himself owned. Raimondo says she never hired placement agents, but the state did pay a $450,000 consulting fee to a firm called Cliffwater LLC.
Doughty says the endless system of highly paid middlemen reminds him of old slapstick comedies. "It's like the Three Stooges," he says. "When you ask them what happened, they're all pointing in different directions, like, 'He did it!'"
Even worse, placement agents are also often paid by the alternative investors. In California, the Apollo private-equity firm paid a former CalPERS board member named Alfred Villalobos a staggering $48 million for help in securing investments from state pensions, and Villalobos delivered, helping Apollo receive $3 billion of CalPERS money.
Villalobos got indicted in that affair, but only because he'd lied to Apollo about disclosing his fees to CalPERS. Otherwise, despite the fact that this is in every way basically a crude kickback scheme, there's no law at all against a placement agent taking money from a finance firm. The Government Accountability Office has condemned the practice, but it goes on.
"It's a huge conflict of interest," says Siedle.
So when you invest your pension money in hedge funds, you might be paying a hundred times the cost or more, you might be underperforming the market, you may be supporting political movements against you, and you often have to pay what effectively is a bribe just for the privilege of hiring your crappy overpaid money manager in the first place. What's not to like about that? Who could complain?
Once upon a time, local corruption was easy. "It was votes for jobs," Doughty says with a sigh. A ward would turn out for a councilman, the councilman would come back with jobs from city-budget contracts - that was the deal. What's going on with public pensions is a more confusing modern version of that local graft.
With public budgets carefully scrutinized by everyone from the press to regulators, the black box of pension funds makes it the only public treasure left that's easy to steal. Politicians quietly borrow millions from these funds by not paying their ARCs, and it's that money, plus the savings from cuts made to worker benefits in the name of "emergency" pension reform, that pays for an apparently endless regime of corporate tax breaks and handouts.
A notorious example in Rhode Island is, of course, 38 Studios, the doomed video-game venture of blabbering, Christ-humping ex-Red Sox pitcher Curt Schilling, who received a $75 million loan guarantee from the state at a time when local politicians were pleading poverty. "This whole thing isn't just about cutting payments to retirees," says syndicated columnist David Sirota, who authored the Institute for America's Future study on Arnold and Pew. "It's about preserving money for corporate welfare."
Their study estimates states spend up to $120 billion a year on offshore tax loopholes and gifts to dingbats like Schilling and other subsidies - more than two and a half times as much as the $46 billion a year Pew says states are short on pension payments.
The bottom line is that the "unfunded liability" crisis is, if not exactly fictional, certainly exaggerated to an outrageous degree. Yes, we live in a new economy and, yes, it may be time to have a discussion about whether certain kinds of public employees should be receiving sizable benefit checks until death.
But the idea that these benefit packages are causing the fiscal crises in our states is almost entirely a fabrication crafted by the very people who actually caused the problem. It's like Voltaire's maxim about noses having evolved to fit spectacles, so therefore we wear spectacles.
In this case, we have an unfunded-pension-liability problem because we've been ripping retirees off for decades - but the solution being offered is to rip them off even more.
Everybody following this story should remember what went on in the immediate aftermath of the crash of 2008, when the federal government was so worried about the sanctity of private contracts that it doled out $182 billion in public money to AIG.
That bailout guaranteed that firms like Goldman Sachs and Deutsche Bank could be paid off on their bets against a subprime market they themselves helped overheat, and that AIG executives could be paid the huge bonuses they naturally deserved for having run one of the world's largest corporations into the ground.
When asked why the state was paying those bonuses, Obama economic adviser Larry Summers said, "We are a country of law ... The government cannot just abrogate contracts."
Now, though, states all over the country are claiming they not only need to abrogate legally binding contracts with state workers but also should seize retirement money from widows to finance years of illegal loans, giant fees to billionaires like Dan Loeb and billions in tax breaks to the Curt Schillings of the world.
It ain't right. If someone has to tighten a belt or two, let's start there. If we've still got a problem after squaring those assholes away, that's something that can be discussed. But asking cops, firefighters and teachers to take the first hit for a crisis caused by reckless pols and thieves on Wall Street is low, even by American standards.

Comments:

#RMDC - 9/27/13

What we know is that any pool of money that people save or accumulate will be targeted by the criminal rackets called "banks." It has always been that way. That is what big, investment banks have always done. Either we regulate the hell out of them, or they will loot the wealth that the people of the world generate. The problem is that the banks now control governments who are the only regulators possible. We are all screwed. And it will get a lot worse than even Matt Taibbi can imagine.

#traugotm - 9/27/13

Matt I am glad you outed the Pew Charitable Trust. I came across them when researching genetic engineering policy [GMOs]. They had a Pew Initiative on Food and Biotechnology that claimed to be presenting "objective" info about GMOs, but really was supporting Monsanto and others, really promoting, rather than analyzing. They were good at collecting survey data, for instance, how many Americans know about GMOs, what is their attitude towards them, and [notice] what arguments could make Americans more receptive to GMOs . . . in other words, they were doing market research for Monsanto. In this case they were good pollsters, but for the wrong reasons. And when you look at the conference they sponsored in 2006 about "coexistence," how GMOs and organic farming could coexist peacefully together, you can see their strong bias in favor of GMOs, and against those who don't want genetically engineered genes in their crops. Decidedly un-objective! Now that Matt has given some history of Pew, I can understand this better. Everyone cites Pew; look at them with a grain of salt!

Paul Krugman has it figured out. It's simple!

Sociopaths want their way.

Deal with it, peasants!

(And pay their share of taxes (obediently and quietly, please).)

September 26, 2013

Plutocrats Feeling Persecuted


By Paul Krugman

Robert Benmosche, the chief executive of the American International Group, said something stupid the other day. And we should be glad, because his comments help highlight an important but rarely discussed cost of extreme income inequality — namely, the rise of a small but powerful group of what can only be called sociopaths.
For those who don’t recall, A.I.G. is a giant insurance company that played a crucial role in creating the global economic crisis, exploiting loopholes in financial regulation to sell vast numbers of debt guarantees that it had no way to honor. Five years ago, U.S. authorities, fearing that A.I.G.’s collapse might destabilize the whole financial system, stepped in with a huge bailout. But even the policy makers felt ill used — for example, Ben Bernanke, the chairman of the Federal Reserve, later testified that no other episode in the crisis made him so angry.
And it got worse. For a time, A.I.G. was essentially a ward of the federal government, which owned the bulk of its stock, yet it continued paying large executive bonuses. There was, understandably, much public furor.
So here’s what Mr. Benmosche did in an interview with The Wall Street Journal: He compared the uproar over bonuses to lynchings in the Deep South — the real kind, involving murder — and declared that the bonus backlash was “just as bad and just as wrong.”
You may find it incredible that anyone would, even for an instant, consider this comparison appropriate. But there have actually been a series of stories like this. In 2010, for example, there was a comparable outburst from Stephen Schwarzman, the chairman of the Blackstone Group, one of the world’s largest private-equity firms. Speaking about proposals to close the carried-interest loophole — which allows executives at firms like Blackstone to pay only 15 percent taxes on much of their income — Mr. Schwarzman declared, “It’s a war; it’s like when Hitler invaded Poland in 1939.”
And you know that such publicly reported statements don’t come out of nowhere. Stuff like this is surely what the Masters of the Universe say to each other all the time, to nods of agreement and approval. It’s just that sometimes they forget that they’re not supposed to say such things where the rabble might learn about it.
Also, notice what both men were defending: namely, their privileges. Mr. Schwarzman was outraged at the notion that he might be required to pay taxes just like the little people; Mr. Benmosche was, in effect, declaring that A.I.G. was entitled to public bailouts and that its executives shouldn’t be expected to make any sacrifice in return.
This is important. Sometimes the wealthy talk as if they were characters in “Atlas Shrugged,” demanding nothing more from society than that the moochers leave them alone. But these men were speaking for, not against, redistribution — redistribution from the 99 percent to people like them. This isn’t libertarianism; it’s a demand for special treatment. It’s not Ayn Rand; it’s ancien régime.
Sometimes, in fact, members of the 0.01 percent are explicit about their sense of entitlement. It was kind of refreshing, in a way, when Charles Munger, the billionaire vice chairman of Berkshire Hathaway, declared that we should “thank God” for the bailout of Wall Street, but that ordinary Americans in financial distress should just “suck it in and cope.” Incidentally, in another interview — conducted at his seaside villa in Dubrovnik, Croatia — Mr. Benmosche declared that the retirement age should go up to 70 or even 80.
The thing is, by and large, the wealthy have gotten their wish. Wall Street was bailed out, while workers and homeowners weren’t. Our so-called recovery has done nothing much for ordinary workers, but incomes at the top have soared, with almost all the gains from 2009 to 2012 going to the top 1 percent, and almost a third going to the top 0.01 percent — that is, people with incomes over $10 million.
So why the anger? Why the whining? And bear in mind that claims that the wealthy are being persecuted aren’t just coming from a few loudmouths. They’ve been all over the op-ed pages and were, in fact, a central theme of the Romney campaign last year.
Well, I have a theory. When you have that much money, what is it you’re trying to buy by making even more? You already have the multiple big houses, the servants, the private jet. What you really want now is adulation; you want the world to bow before your success. And so the thought that people in the media, in Congress and even in the White House are saying critical things about people like you drives you wild.
It is, of course, incredibly petty. But money brings power, and thanks to surging inequality, these petty people have a lot of money. So their whining, their anger that they don’t receive universal deference, can have real political consequences. Fear the wrath of the .01 percent!

Join the humanitarians (and me) at Paulie the K's blog. Just click and join in. You don't have to follow unless you want to, and today's story is a sad one relating how Paul's cat, Albert, who was 21, has joined Doris in the great beyond (and its effect on Paul and thousands of readers). Reminding me of how I dealt with the loss of Barth and Virginia. (Don't miss the Goodbye Kitty song by the Roches.)

Paul Krugman - New York Times Blog

September 18, 2013 

Goodbye, Albert (Personal)


No taper, at least yet. Government shutdown and maybe debt ceiling crisis looming. Obamacare rollout begins in a couple of weeks. There are a lot of important things happening in the world.
But we all have lives, too — and here in our household the sad news of the day was the end of the road for our surviving cat, Albert Einstein. We did the necessary for his sister Doris Lessing last fall; today Albert had reached the point where he could no longer stand up, and it was time to say goodbye. From happier days (Doris on the left, Albert on the right):

“Maxwell” - The Roches

Paul Krugman

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New York Times Op-Ed columnist and blogger.