America's Socialism For the Rich (They Brag About It Every Day) & Why Scarahy Is Never Going Away

Joseph Stiglitz delineates "America's Socialism For the Rich" here (and don't forget that Timmy Geithner, formerly running the New York Fed, came up with the idea all by his little self - when tasked by Obama after assuming power - to have the taxpayers guarantee ALL the banks' losses), and Frank Rich tells us that Scarahy (emphasis marks added - Ed.)

Palin won’t go gently into the good night, much as some Republicans in Washington might wish. She is not just the party’s biggest star and most charismatic television performer; she is its only star and charismatic performer. Most important, she stands for a genuine movement: a dwindling white nonurban America that is aflame with grievances and awash in self-pity as the country hurtles into the 21st century and leaves it behind. Palin gives this movement a major party brand and political plausibility that its open-throated media auxiliary, exemplified by Glenn Beck, cannot. She loves the spotlight, can raise millions of dollars and has no discernible reason to go fishing now except for self-promotional photo ops. The essence of Palinism is emotional, not ideological. Yes, she is of the religious right, even if she winks literally and figuratively at her own daughter’s flagrant disregard of abstinence and marriage. But family-values politics, now more devalued than the dollar by the philandering of ostentatiously Christian Republican politicians, can only take her so far. The real wave she’s riding is a loud, resonant surge of resentment and victimization that’s larger than issues like abortion and gay civil rights. That resentment is in part about race, of course. When Palin referred to Alaska as “a microcosm of America” during the 2008 campaign, it was in defiance of the statistical reality that her state’s tiny black and Hispanic populations are unrepresentative of her nation. She stood for the “real America,” she insisted, and the identity of the unreal America didn’t have to be stated explicitly for audiences to catch her drift. Her convention speech’s signature line was a deftly coded putdown of her presumably shiftless big-city opponent: “I guess a small-town mayor is sort of like a community organizer, except that you have actual responsibilities.”

(Funny how this wisdom has been forgotten by her supporters now that she has abandoned her own actual responsibilities in public office.)

Stiglitz articulates our economic/financial reality well. Why is it only the people on the bottom who get this easily? And is it only self-interest that dominates the thinking or is it teh "stoopid" (and greedy) in final spectacular bloom? (Emphasis marks added - Ed.)

The US has a huge corporate safety net, allowing the banks to gamble with impunity, but offers little to struggling individuals. With all the talk of "green shoots" of economic recovery, America's banks are pushing back on efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details – and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past.

The old system worked well for the bankers (if not for their shareholders), so why should they embrace change? Indeed, the efforts to rescue them devoted so little thought to the kind of post-crisis financial system we want that we will end up with a banking system that is less competitive, with the large banks that were too big too fail even larger.

It has long been recognised that those America's banks that are too big to fail are also too big to be managed. That is one reason that the performance of several of them has been so dismal. Because government provides deposit insurance, it plays a large role in restructuring (unlike other sectors). Normally, when a bank fails, the government engineers a financial restructuring; if it has to put in money, it, of course, gains a stake in the future. Officials know that if they wait too long, zombie or near zombie banks – with little or no net worth, but treated as if they were viable institutions – are likely to "gamble on resurrection". If they take big bets and win, they walk away with the proceeds; if they fail, the government picks up the tab.

This is not just theory; it is a lesson we learned, at great expense, during the Savings and Loan crisis of the 1980s. When the ATM machine says "insufficient funds," the government doesn't want this to mean that the bank, rather than your account, is out of money, so it intervenes before the till is empty. In a financial restructuring, shareholders typically get wiped out, and bondholders become the new shareholders. Sometimes the government must provide additional funds; sometimes it looks for a new investor to take over the failed bank.

The Obama administration has, however, introduced a new concept: too big to be financially restructured. The administration argues that all hell would break loose if we tried to play by the usual rules with these big banks. Markets would panic. So, we not only can't touch the bondholders, we also can't even touch the shareholders – even if most of the shares' existing value merely reflects a bet on a government bailout.

I think this judgment is wrong. I think the Obama administration has succumbed to political pressure and scaremongering by the big banks. As a result, the administration has confused bailing out the bankers and their shareholders with bailing out the banks.

Restructuring gives banks a chance for a new start: new potential investors (whether in equity or debt instruments) will have more confidence, other banks will be more willing to lend to them and they will be more willing to lend to others. The bondholders will gain from an orderly restructuring, and if the value of the assets is truly greater than the market (and outside analysts) believe, they will eventually reap the gains.

But what is clear is that the Obama strategy's current and future costs are very high – and so far, it has not achieved its limited objective of restarting lending. The taxpayer has had to pony up billions, and has provided billions more in guarantees – bills that are likely to come due in the future.

Rewriting the rules of the market economy – in a way that has benefited those that have caused so much pain to the entire global economy – is worse than financially costly. Most Americans view it as grossly unjust, especially after they saw the banks divert the billions intended to enable them to revive lending to payments of outsized bonuses and dividends. Tearing up the social contract is something that should not be done lightly.

But this new form of ersatz capitalism, in which losses are socialised and profits privatised, is doomed to failure. Incentives are distorted. There is no market discipline. The too-big-to-be-restructured banks know that they can gamble with impunity – and, with the Federal Reserve making funds available at near-zero interest rates, there are ample funds to do so.

Some have called this new economic regime "socialism with American characteristics". But socialism is concerned about ordinary individuals. By contrast, the US has provided little help for the millions of Americans who are losing their homes. Workers who lose their jobs receive only 39 weeks of limited unemployment benefits, and are then left on their own. And, when they lose their jobs, most lose their health insurance too.

America has expanded its corporate safety net in unprecedented ways, from commercial banks to investment banks, then to insurance and now to cars, with no end in sight. In truth, this is not socialism, but an extension of longstanding corporate welfarism. The rich and powerful turn to the government to help them whenever they can, while needy individuals get little social protection.

We need to break up the too-big-to-fail banks; there is no evidence that these behemoths deliver societal benefits that are commensurate with the costs they have imposed on others. And, if we don't break them up, then we have to severely limit what they do. They can't be allowed to do what they did in the past – gamble at others' expenses.

This raises another problem with America's too-big-to-fail, too-big-to-be-restructured banks: they are too politically powerful. Their lobbying efforts worked well, first to deregulate and then to have taxpayers pay for the cleanup. Their hope is that it will work once again to keep them free to do as they please, regardless of the risks for taxpayers and the economy. We cannot afford to let that happen.

Thanks, Joe! Suzan __________________

A Warning To the Wise (One of Rod Serling's Best (But Your Worst))

When Mitch McConnell (the leader of the Senate pack (of the biggest fraudsters)) starts talking about both parties needing to work together for the common good, right before the election, during a credit freeze as he did earlier, it's time to locate your wallet quickly and run like hell in the opposite direction. I just turned the TV back on to attempt to finish watching the end of the Vice Presidential Debate, hoping (against all rational hope) that it was almost over (it wasn't) and that Scarahy was almost finished with her non-answers and cute "populist-sounding" jabberwocky that had made me pull the plug at 9:20. What a surprise that the news announcers/readers thought Miz Sarah did jest fine. She didn't blow up and her less-than-specific answers were within the realm of acceptability - to them anyway. It was hard for me to believe that a candidate for the most important office in the land (on her ticket) (that of replacing an ill or dying President), would be gently chucked under the chin by the news media when she told them forthrightly that she wouldn't answer their questions, but would choose to provide the answers to other questions as she liked. After that comment, I couldn't help but immediately remember Thomas Frank's September 10, 2008, essay in The Wall Street Journal where he reported:

It tells us something about Sarah Palin's homage to small-town America, delivered to an enthusiastic GOP convention last week, that she chose to fire it up with an unsourced quotation from the all-time champion of fake populism, the belligerent right-wing columnist Westbrook Pegler. "We grow good people in our small towns, with honesty and sincerity and dignity," the vice-presidential candidate said, quoting an anonymous "writer," which is to say, Pegler, who must have penned that mellifluous line when not writing his more controversial stuff. As the New York Times pointed out in its obituary of him in 1969, Pegler once lamented that a would-be assassin "hit the wrong man" when gunning for Franklin Roosevelt. There's no evidence that Mrs. Palin shares the trademark Pegler bloodlust -- except maybe when it comes to moose and wolves. Nevertheless, the red-state myth that Mrs. Palin reiterated for her adoring audience owes far more to the venomous spirit of Pegler than it does to Norman Rockwell. Small town people, Mrs. Palin went on, are "the ones who do some of the hardest work in America, who grow our food and run our factories and fight our wars." They are authentic; they are noble, and they are her own: "I grew up with those people." But what really defines them in Mrs. Palin's telling is their enemies, the people who supposedly "look down" on them. The opposite of the heartland is the loathsome array of snobs and fakers, "reporters and commentators," lobbyists and others who make up "the Washington elite." Presumably the various elite Washington lobbyists who have guided John McCain's presidential campaign were exempt from Mrs. Palin's criticism. As would be former House Speaker Dennis Hastert, now a "senior adviser" to the Dickstein Shapiro lobby firm, who hymned the "Sarah Palin part of the party" thus: "Their kids aren't going to go to Ivy League schools. Their sons leave high school and join the military to serve our country. Their husbands and wives work two jobs to make sure the family is sustained." Generally speaking, though, when husbands and wives work two jobs each it is not merely because they are virtuous but because working one job doesn't earn them enough to get by. The two-job workers in Middle America aren't spurning the Ivy League and joining the military straight out of high school just because they're people of principle, although many of them are. It is because they can't afford to do otherwise. Leave the fantasy land of convention rhetoric, and you will find that small-town America, this legendary place of honesty and sincerity and dignity, is not doing very well. If you drive west from Kansas City, Mo., you will find towns where Main Street is largely boarded up. You will see closed schools and hospitals. You will hear about depleted groundwater and massive depopulation. And eventually you will ask yourself, how did this happen? Did Hollywood do this? Was it those "reporters and commentators" with their fancy college degrees who wrecked Main Street, U.S.A.? No. For decades now we have been electing people like Sarah Palin who claimed to love and respect the folksy conservatism of small towns, and yet who have unfailingly enacted laws to aid the small town's mortal enemies. Without raising an antitrust finger they have permitted fantastic concentration in the various industries that buy the farmer's crops. They have undone the New Deal system of agricultural price supports in favor of schemes called "Freedom to Farm" and loan deficiency payments -- each reform apparently designed to secure just one thing out of small town America: cheap commodities for the big food processors. Richard Nixon's Agriculture Secretary Earl Butz put the conservative attitude toward small farmers most bluntly back in the 1970s when he warned, "Get big or get out." A few days ago I talked politics with Donn Teske, the president of the Kansas Farmers Union and a former Republican. Barack Obama may come from a big city, he admits, but the Farmers Union gives him a 100% rating for his votes in Congress. John McCain gets a 0%. "If any farmer in the Plains States looked at McCain's voting record on ag issues," Mr. Teske says, "no one would vote for him." Now, Mr. McCain is known for his straight talk with industrial workers, telling them their jobs are never coming back, that the almighty market took them away for good, and that retraining is their only hope. But he seems to think that small-town people can be easily played. Just choose a running mate who knows how to skin a moose and all will be forgiven. Drive them off the land, shutter their towns, toss their life chances into the grinders of big agriculture . . . and praise their values. The TV eminences will coo in appreciation of your in-touch authenticity, and the carnival will move on.

When all the political hyperbole is finally silenced (somehow) in our individual consciousnesses, we are left stunned by the fact that the makeup of the House of Representatives is all that's left between us and permanent infamy. And one other indication as to why this is so is that there was a very good reason for Eliot Spitzer being outed at the exact time that he was readying indictments against these economic criminals, and why you will never see any coverage of this in the MSM. (Emphasis marks and some editing is mine.)

"Grand Larceny" on a Monumental Scale: Does the Bailout Bill Mark the End of America as We Know It? Richard C Cook Global Research, October 2, 2008 OCTOBER 1, 2008 — Tonight the Senate passed the $700 billion Wall Street bailout bill by a vote of 74-25. This follows the rejection of the bill by the House on Monday. In an MSNBC poll, 62 percent of Americans oppose the giveaway, but the lobbyists are doing everything possible to assure the rejection is overturned. According to Bob Borosage, co-director of The Campaign for America’s Future, House leaders "are bringing in the small business lobby and the banking lobby to buy the twelve Republican votes they need." The Senate took up the bill in order to pressure House members who voted against it to change their positions when it returns to a vote on the House floor on Friday. This procedure may be unconstitutional, because revenue bills must originate in the House, but there is no time or political will for anyone to mount a challenge on constitutional grounds. As another means of inducement — or blackmail — the bill includes the repeal of the wildly unjust alternative minimum tax. Every reputable economist commenting on the bill opposes it, including NYU’s Nouriel Roubini, who says the plan is "totally flawed." He says the plan is:

"a disgrace: a bailout of reckless bankers, lenders, and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer."

My own view is that the plan is worse than that: a crime; grand larceny on a monumental scale. Here’s why: We know that the debacle started with homeowner defaults on subprime mortgages and that it has now spread to other types of mortgages as foreclosures spread. We know that the unhealthy use of subprime mortgages started during the Clinton administration, as did the bundling and sale of these mortgages into mortgage-backed securities sold in the financial markets. What has not been reported is that the Bush administration turned these acts of reckless lending into a national program of mortgage fraud. Soon after George W. Bush became president in 2001, meetings at the White House between Federal Reserve Chairman Alan Greenspan and administration officials became more frequent. According to mortgage industry insiders I have interviewed, direction soon began to come down from the banks to mortgage brokers to falsify borrower income information to allow them to qualify for loans that were otherwise out of reach. The FBI has investigations underway to prosecute some of these cases of mortgage fraud. But they are not reaching above the brokers’ level. The FBI is not gaining access — or at least they have not reported it publicly — to information about collusion at the political level or at the level of the banks which provided the leveraged funding for mortgage money. But at the time the housing bubble was inflating, no one was watching. Note that when Secretary of the Treasury Henry Paulson testified before the Senate Banking Committee last week, he said he was shocked to learn when assuming office in June 2006 that no federal agency regulated mortgage lending. Rather this was an area left to the states. What Paulson did not say was that when the states attempted to intervene, they were blocked by the Treasury Department’s Office of the Comptroller of the Currency. In a February 14 article in the Washington Post written before he resigned, New York governor Eliot Spitzer wrote:

"In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation."

Why did the Bush administration do this? The only possible answer is that it had every intention of producing the housing bubble, one that had the effect of not only inflating the cost of homes and real estate but also pumping billions of dollars of borrowed cash into the economy through mortgage and home equity loans. The bubble enriched huge numbers of executives, managers, and shareholders throughout the financial and real estate industries, and provided jobs to millions of people. The bubble also brought back foreign capital to U.S. markets that had been scared away by the dot.com bust of 2000-2001. Everyone seemed to benefit, but it was those at the top who skimmed the greatest profits. And for an economy that had already given away millions of its best manufacturing jobs through NAFTA, Most-Favored-Nation trading policies with China, World Trade Organization agreements, etc., the bubble acted as a kind of substitute economic engine. It also resulted in tax revenues that allowed the Bush administration to implement its 2001 and 2003 tax cuts for the rich and provide funding for the Afghanistan and Iraq wars. Of course these tax revenues were not enough, as the national debt soared to over $9 trillion during the Bush years as well. Economist Dean Baker of the Center for Economic and Policy Research makes the point:

"The near hysterical discussion (count the times ‘Great Depression’ appears in news stories) of the bailout still largely fails to recognize the roots of the economy's current problems in the collapse of the housing bubble. Much of the discussion assumes that the problem is just bad subprime loans and that house prices will bounce back once the credit markets are working properly."

The point is critical, because what the Senate and House leaders are telling us, as are President George W. Bush, presidential candidates Barack Obama and John McCain, and Federal Reserve Chairman Ben Bernanke, is that the bailout is to get the American economy moving again. Credit, they say, is the lifeblood of the economy, and without credit no one can make a move. But credit is the lifeblood of the economy only because people are broke. Purchasing power in the U.S. has collapsed, and it is getting worse as the recession which has now begun worsens. People can’t get loans, not because the credit markets are stalled, but because they have no savings for down payments and can’t afford to repay what they wish to borrow. If they could repay their loans, plenty of credit would be available. But there is no money—and no savings—within the economy for it to get moving again. The only possible source is more federal borrowing to prime the pump Keynesian-style. That is what the politicians claim the bailout will do. But it won’t. Then what is happening? What is happening is that the Bush administration is engineering a massive raid on the Federal treasury to pay off the people within the financial industry who have been operating the housing scam because the politicians told them to do it. This is hush money. The people in the financial institutions who are getting the money will be passing it on to the big banks that leveraged their criminal lending practices. The giant sucking sound you hear is almost a trillion dollars of future taxpayer earnings going into the vaults of the nations’s biggest banks, such as Citibank, Bank of American, and — the pet bank of the Rockefeller family — J.P. Morgan Chase. Much will also go into the vaults of foreign investors such as the Bank of China. And these banks have no intention of recycling the money into productive U.S. investments. Despite the political posturing, where much of it will go at the second or third tier is into executive salaries and bonuses. The fat cats are "gittin’ out while the gittin’s good." What happens next? Well, it is already happening. In the post-bubble era there will be no more economic engines for the American economy. A long-term recession and depression are inevitable, and they are expected by those in the know. In fact, there has been a plan in the works for a very long time to bring down the U.S. economy, and it will be happening over the coming months. This is why the government is also preparing to implement martial law, or something close to it, in case public unrest breaks out. We will likely also see a clampdown on free speech, the right to protest, and use of the internet. Federal facilities are being prepared all around the country to backstop state prisons and local jails that are already bursting at the seams. This is the plan, so people need to begin to take whatever measures they can to cut their cost of living, get out of debt, and protect themselves and their families. Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared in numerous websites and print magazines. His book on monetary reform, entitled We Hold These Truths: The Hope of Monetary Reform, will soon be published. He is the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, "the most important spaceflight book of the last twenty years." His website is www.richardccook.com. Comments or requests to be added to his mailing list or to purchase his special report on the 2008 election may be sent to EconomicSanity@gmail.com.

No party for you! Get or update your passports NOW. Suzan

"Look - Shiny Object!" (Bill Maher/Sierra Club/CIA Sighs of Relief/Darker Secrets Exposed)

Bill Maher performed a much-needed public service by devoting one of his shows (during the Republican Convention) to a panel discussing Sarah Palin's candidacy. See it here. (Caution noted for Bill's usual X-rated take on the Scarahy news.) Carl Pope, Sierra Club Executive Director, has an environmental concern he would like one of the media at Thursday night's debate to ask Sarah Palin: Question: "Should mining operators be permitted to destroy streams by dumping the waste, spoil, and tailings from their operations into them, or should mining companies, whether producing coal or gold, have to protect their downstream and downslope neighbors by keeping their waste material out of our waterways?"

The record: As Governor, Palin has consistently sided with mining companies seeking to dump their waste into Alaska's pristine streams and waterways. In 1997 the Coeur d'Alene Mining Company applied for and received a permit to construct and operate its Kensington gold mine and allowed to dispose its waste on land. In 2002, the Bush EPA rewrote the definitions under the Clean Water Act to allow coal mining companies to dump mining waste into streams, by distinguishing between the legally prohibited "discharge" of waste into streams and the legally permitted "filling" of streams. So you can't pollute a river with small quantities of waste, but you can eradicate it with large enough volumes. The Coeur d'Alene Mining Company took advantage of this ruling to rewrite its plans to dump its waste into Lower Slate Lake. The federal courts ruled that this was illegal. The State of Alaska and the mining company asked the Supreme Court to review the ruling. The Bush administration asked the Court not to take the case, but said that if the Court did it would support the mining company. The Court did agree to take the case and will hear oral arguments in early 2009. It's hard to see why the Court would take the case other than to overturn the Ninth Circuit decision. Governor Palin cheered the Court's decision to hear the case.

Here's Lower Slate Lake as it looks today: Governor Palin, tell us: How will it look in a McCain-Palin administration?

- - - - - - - - For a web-version of this essay, please visit here. - - - - - - - -

Poker, Hookers, and Black Contracts: Or How To Make a CIA Trial Go Away NEWS: It wasn't the staff mistress that concerned Langley's spymasters when CIA official Kyle "Dusty" Foggo pled guilty to wire fraud this week. It was the 27 other charges he faced. By Laura Rozen October 1, 2008 Yes, the stock market was falling apart, but up on the seventh floor of CIA headquarters in Langley, Virginia, you could almost hear the sighs of relief Monday thanks to another bit of news: Former top Agency official Kyle Dustin Foggo had quietly entered a guilty plea in an Alexandria, Virginia, federal courtroom. Henry Paulson still has his job cut out trying to rescue the banking system, but Langley's spymasters had just been spared the imminent prospect of having some of the nation's most sensitive secrets spilled in what promised to be one of the more revelatory and cinematic trials of the Bush era. As court documents laid out in 28 charges, the man known to colleagues as "Dusty," a former logistics officer, served as the CIA's number three official and effectively day to day manager when he badgered the Agency to hire one of his mistresses, identified in the indictment as "E.R.": "On or about March 19, 2005," the indictment reads, "Foggo sent the CIA Acting General Counsel an email stating, in part, that his staff would tag E.R.'s conditional offer of employment as 'ExDir Interest' in order to 'zip her to the top of the pile.'" (E.R. was indeed hired, to a new position Foggo created — deputy director of administration. "ExDir" refers to Foggo's position as CIA Executive Director.) Foggo's generosity extended beyond his girlfriend: He also, according to the indictment, engineered the hiring of his best childhood friend's company for a CIA contract to provide bottled water to staff in Iraq at a 60 percent price markup over the offer of another contractor (who, under the deal worked out by Foggo, was hired as the subcontractor to actually perform the work). He was frequently dealt into a weekly poker game at various memorable Washington hotels (the Watergate was one) popular with congressmen such as Randy "Duke" Cunningham (R-Calif.), lobbyists, and House intelligence committee staff members; as well as — according to other court documents — prostitutes. That childhood friend, Brent Wilkes, also turned out to be among two defense contractors bribing House intelligence committee member Duke Cunningham with tens of thousands of dollars in antiques, travel, fancy meals, house payments, and hookers in exchange for earmarks steering more than $100 million worth of government contracts to Wilkes' San Diego-based firm, ADCS. But it wasn't the hookers, the card games, the water contract, or even the staff mistress that concerned the Agency's executives when Foggo spared them by entering a guilty plea on a single count of wire fraud Monday. In exchange for the plea, prosecutors agreed to drop the 27 other charges and requested only three years prison time out of the 20 Foggo could have faced. ("Your lawyers did a good job for you," US District judge James C. Cacheris told Foggo after he accepted his guilty plea, with evident understatement.) No, what truly worried Agency brass were the darker secrets their former top logistics officer was threatening to spill had his case gone to trial as scheduled on November 3. They included the massive contracts Foggo was discussing with Wilkes, estimated by one source at over $300 million dollars. "Wilkes was working on several other huge deals when the hammer fell," a source familiar with Foggo's discussions with Wilkes told me. What kinds of deals? According to the source, they included creating and running a secret plane network, for whatever needs the CIA has for secret planes now that the network it used for extraordinary rendition flights has been outed. "In or about December 2004," the Foggo indictment says, "Foggo discussed with Wilkes and J.C. the idea that Foggo might be able to get Wilkes a classified government contract to supply air support services to the CIA…. In or about January 2005, Wilkes directed various ADCS employees to begin developing an air support proposal that would be designed to answer the CIA's classified needs as outlined by Foggo." The indictment continues: "On or about February 3, 2005, an employee of Wilkes' corporation emailed J.C. with an offer to update him on their work developing the air support proposal. …" (J.C., the indictment explains, is Wilkes' nephew, whom I've identified as Joel G. Combs, the nominal head of a Wilkes' front company, Archer Logistics.) The "classified air support contract" and its implied purposes for renditions are among the truly damaging national security secrets, along with the methods the CIA uses to create front companies and dole out black contracts, that the CIA and Bush White House would have been anxious not to have exposed, especially in a trial set to take place the day before the election in a suburban DC courtroom within a ten-minute drive of the entire national security press corps. "Greymail" is the term of art for an old legal defense technique employed by those in possession of classified information: The accused and his lawyers will demand the revelation of so many government secrets in order to get a fair trial that prosecutors come under pressure to make the case go away. And in Foggo, the official responsible for the logistics of much of the administration's war on terror, federal prosecutors met their greymail match.

Foggo threatened "to expose the cover of virtually every CIA employee with whom he interacted and to divulge to the world some of our country's most sensitive programs—even though this information has absolutely nothing to do with the charges he faces," prosecutors howled in an early September court filing, before they were evidently compelled to extend Foggo the lenient plea deal; Foggo's lawyers, the filing continued, were attempting to "portray Foggo as a hero engaged in actions necessary to protect the public from terrorist acts." The plea deal hasn't stopped Foggo's former CIA colleagues from continuing to fume in outrage at Foggo's behavior, or from pointing the finger at former CIA director Porter Goss for appointing Foggo to the Executive Director position in the first place. "This behavior is not typical of CIA officials," one former senior CIA operations officer told me. "We all knew him to be sleazy…This is a guy who should never have gotten that job." Goss abruptly resigned in May 2006 just as federal investigators were raiding Foggo's office. Foggo is scheduled to be sentenced January 8. His co-conspirator Brent Wilkes is currently serving a 12 year jail sentence in California. Cunningham, a onetime ace fighter pilot who reportedly served as the inspiration for Tom Cruise's character in Top Gun, is serving out an eight year sentence, the longest prison sentence ever meted out to any member of Congress. Meanwhile Foggo, based on his plea agreement, is likely to leave prison well before a McCain or Obama administration finishes its first term. Laura Rozen is the national security correspondent at Mother Jones.

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