Thursday, July 24, 2008

Woes Afflicting Mortgage Giants Raise Loan Rates

It seems to me that articles like this one are not being promoted by the MSM as they should be. (Wonder why?) I think anyone would agree that it's just a good self-defense policy to at least start reading about the economic catastrophes (especially in the housing market) that have befallen us in the U.S., but the guy who's getting ready to lose his house already knows this. It's the ones who will suffer the consequences of the increased loan rates who may not quite recognize the efficacy of such yet. Unfortunately, I can't help thinking that when you read deeply enough into these reports you might start to believe that it all sounds like funny-money shuffling (and the clamor of the money printing plants echoes in the background). (Emphasis marks are mine.) And don't forget the concurrent catastrophe afflicting banks that has only made itself clear to the people residing at the bottom of the pyramid with the recent write-downs from Wachovia, Washington Mutual and Bank of America (and the many others upcoming). Read about it here. My vote for best two paragraphs go to the following:
Kenneth D. Lewis, the chief executive of Bank of America, insisted this week that the industry was turning the corner, after his company reported a mere 41 percent drop in profit. Many investors seem to see signs of hope in red ink that once would have shocked them. But it has now been a year since the credit crisis erupted, and, so far, the optimists have been proven wrong time and again. Skeptics say it could take years for banks to recover from the worst financial crisis since the Depression. And even when things do improve, the pessimists maintain, banks’ profits will be a fraction of what they were before.
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Woes Afflicting Mortgage Giants Raise Loan Rates By Vikas Bajaj July 23, 2008 Mortgage rates are rising because of the troubles at the loan finance giants Fannie Mae and Freddie Mac, threatening to deal another blow to the faltering housing market. Even as policy makers rushed to support the two companies, home loan rates approached their highest levels in five years. The average interest rate for 30-year fixed-rate mortgages rose to 6.71 percent on Tuesday, from 6.44 percent on Friday, according to HSH Associates, a publisher of consumer rates. The average rate for so-called jumbo loans, which cannot be sold to Fannie Mae and Freddie Mac, was 7.8 percent, the highest since December 2000. Loan rates are rising because of concern in the financial markets about the future of Fannie Mae and Freddie Mac, which own or guarantee nearly half of the nation’s $12 trillion mortgage market. The federal government has proposed a rescue, and has urged Congress to approve it quickly. But bond investors, worried that the companies may not be as big a support to the market as they have been, are driving up interest rates on securities backed by home loans. That added cost is being passed on to consumers through the mortgage markets. For a $400,000 loan, the increase in 30-year rates in the last few days would add $71 to a monthly bill, or $852 a year. The rise in rates is of greatest concern for homeowners whose mortgages required them to pay only the interest on their loans for the first few years. If such borrowers are unable to refinance into lower-cost loans, many of them will face the prospect of having to pay both interest and principal at higher, adjustable rates. For borrowers with a $400,000 loan, such a jump could send their monthly payments to $2,338 from $1,417, estimates Louis S. Barnes, a mortgage broker at Boulder West Financial in Boulder, Colo. While mortgage rates approached these levels earlier this year and in 2007 during times of stress in the financial markets, the latest move adds urgency to the government’s efforts to restore confidence in Fannie Mae and Freddie Mac. Lawmakers are expected to vote this week on a measure that would give the Treasury Department authority to lend more money to the companies and buy shares in them if they falter. The uncertainty surrounding the two companies is the latest in a series of pressures bearing down on the housing market and the broader economy. Higher interest rates make it harder and more expensive to refinance existing debts and to buy homes. “When we get to rate levels like this, the market just shuts down,” Mr. Barnes said. While mortgage rates remain relatively low by historical standards, they are higher than what homeowners and the economy became accustomed to during the recent housing boom. Lending standards have also tightened significantly in the last 12 months, and many popular loans are no longer available. A government report based on data on Fannie Mae and Freddie Mac loans said on Tuesday that home prices fell 4.8 percent in May from a year earlier. That compared to a 4.6 percent decline in April. Other home price indexes that track a broader set of loans show much bigger declines. Worries about Fannie Mae and Freddie Mac have led to weaker demand for securities backed by home mortgages, analysts say. Inflation, which tends to send bond prices down and bond rates up, is another concern. In a securities filing released on Friday, Freddie Mac suggested that it might have to pare or slow the growth of its mortgage portfolio to bolster its capital. Freddie and Fannie together own about $1.5 trillion in mortgage securities and home loans, and they guarantee an additional $3.7 trillion in securities held by other investors. The companies had a combined net worth of $55 billion as of March. Analysts and critics say the companies need significantly more capital to cushion the blow of growing losses on the more-risky mortgages made during the boom. Important players in the mortgage market for decades, the two companies have become even more vital in the last year as several large lenders have gone out of business and investors have lost confidence in mortgage securities that are not backed by the government, or by Fannie or Freddie. This year, the regulator overseeing the companies gave them more leeway to use their capital and the companies responded by increasing their portfolios. Freddie’s holdings grew 6.9 percent in the first five months of the year from the end of 2007; Fannie’s portfolio increased 1.8 percent. But now it appears the companies, particularly Freddie Mac, might have to slow their purchases of mortgage securities. In its filing, Freddie Mac said it aims to increase its portfolio by a total of 10 percent in 2008. A spokeswoman for Fannie Mae declined to comment on its plans. “That’s one of the ways in which the agencies can increase capital, by slowing down their purchases,” said Derrick Wulf, a bond portfolio manager at Dwight Asset Management. “I don’t think the market expects a dramatic slowdown in purchases but there clearly is uncertainty about that.” Mortgage rates have been driven up in part by a rise in the yield on Treasury notes and bonds. On Tuesday, bond prices, which move in the opposite direction of the yields, slumped after the president of the Federal Reserve Bank of Philadelphia, Charles I. Plosser, said the central bank might need to raise interest rates to combat inflation “sooner rather than later.” Some analysts say the rise in mortgage rates can be explained by technical factors in the bond market that are forcing mortgage companies and banks to sell securities to manage their portfolios. These analysts add that at current prices the mortgage securities guaranteed by Fannie and Freddie should be attractive to investors. Mortgage bonds backed by Fannie Mae, for instance, are trading at a 2.1 percentage point premium to the 10-year Treasury note, up from 1.8 points on July 14. “I don’t see how anyone could argue that the fundamentals of mortgages are not attractive,” said Matthew J. Jozoff, an analyst at JPMorgan. In March, for instance, mortgage rates surged after some big investors were forced to sell billions in mortgage bonds. But rates fell back slowly in the spring after the selling pressure eased and other investors, including Freddie Mac and Fannie Mae, made big purchases. This time, the coming Congressional vote on the Treasury plan to support the companies could help allay investors’ fears, said W. Scott Simon, a managing director at Pimco Advisors, the giant bond fund firm, which owns mortgage securities. “It will go a long way toward reviving demand.”
Suzan _____________________________________

Wednesday, July 23, 2008

On Iraq: Wiping Out the Legend

This new book (Lessons From Iraq: Avoiding the Next War) (from Truthout) should take your mind off WWE and make you pay some attention to what has been and is still happening in this country (and the world) and the legend it inspires. It's worth your time. (Emphasis marks are mine.) _______________________________________________
Truthout Original On Iraq: Wiping Out the Legend Wednesday 23 July 2008 by: Maya Schenwar, t r u t h o u t | Book Review More than five years into the Iraq war, it's time to figure out how to prevent future wars like it, according to the authors of "Lessons From Iraq." A new book from Foreign Policy in Focus explains what made the Iraq war possible, and how we can stop the factors that precipitated it before they breed. "We can't move on. The damage done by this war has to be examined if it is to be repaired." - Miriam Pemberton, editor of "Lessons From Iraq: Avoiding the Next War" A silent mythos is enveloping the liberal consciousness in the waning days of the Bush presidency. It spins like this: When it comes to Iraq, Americans' one reassurance is that this war can't possibly be repeated, not now that we've watched its consequences play out and caught a glimpse of the deception that caused it. As a result of Iraq, the logic goes, we will likely elect a new leader who railed against the war from its inception. We'll then shift toward a foreign policy that disavows offensive interventionism. We will make new friendships and repair old ones. We will live in peace. However, in the forward to "Lessons From Iraq: Avoiding the Next War," a collection of essays from the progressive think tank Foreign Policy in Focus, editor Miriam Pemberton warns against such now-we-know-better thinking. She cautions against the oft-uttered mantra surrounding large-scale deeds of evildoing, "Never Again." "The lessons in this book will not be a guarantee against the next war, even supposing they all took hold," Pemberton writes. "There will be a next war." I winced as I read that line. I wanted to close the book. But because I also wanted to review it, and because the contributors to "Lessons From Iraq" are smart people, and because - despite all pacifist inclinations - I know that, throughout history, there has always, always been a next war, I kept reading. If you too are riding the "hope" wave into 2009, holding your breath for a war vaccine, you too should keep reading, and not because your bubble needs bursting. You should keep reading because "Lessons From Iraq" delineates a realistic path along which we can direct our hope. It also teaches us to recognize those other, pernicious species of bubble, to ensure that, when they evolve again, we can burst them before they get too big. The 16 bite-size essays that make up "Lessons From Iraq" are divided into three sections: Purposes, Ways and Means and Collateral Damage. Some of the freshest essays lie in the Purposes section. In Neta C. Crawford's "The Dangerous Leap: Preventive War," the author distinguishes between "preemptive" and "preventive" wars. A preemptive war is one that defends against an immediate, certain threat. (Picture Saddam with his finger poised over the nuclear button at the point the US stormed Baghdad.) A preventive war is initiated based on an amorphous, ambivalent, might-be threat. (Picture what really happened: an attack based on shaky intelligence and overconfident statements about a potential - not actual - risk.) An attack motivated by only the possibility of a threat turns war into a self-fulfilling prophecy, according to Crawford. Much of the rest of the book addresses these problems: the unwise reasons for and disastrous consequences of preventive war. In "American Imperialism," Chalmers Johnson looks at the transformation of US foreign policy into an agenda that is both imperialist (regarding the "East") and isolationist (regarding Europe). It's an archaic model, according to Chalmers - one used by provincial-thinking presidents of the late 19th and early 20th centuries, for whom far-off lands were "pure abstractions" waiting to be conquered. The imperialist isolationist project is a particularly dangerous one, Chalmers says. It assumes that the US bears the responsibility of making sure no threats emerge in the world, all the while avoiding cooperation with - let alone consensus from - its allies. He describes the Bush-Cheney-Rumsfeld-Rice ideal as "a world where the United States, unfettered by treaties, international law, or commitments to allies, could attack any country at will and where this demonstration of power and resolve would cause all other governments to fall in line behind it - or topple one another." Yet, perhaps more sinister than the bizarre imaginings of neocon utopians are the concrete goals driving the imperialist movement, according to the book's later essays. One of the more obvious of these - the quest for a "secure" oil supply - also fits neatly into Crawford's "preventive war" mold. But instead of preventing nuclear war, this motivation is about heading off oil shortages. In a mixture of imperial zeal and oil-seeking desperation, according to an essay by Michael T. Klare, the Bush administration has advanced a movement to forcefully stamp out any barriers to Gulf oil. That may sound like a grandiose plan, but when a groundwork has been laid that justifies preventive war, American entitlement and unilateral military action, the path to free and easy US oil access becomes alarmingly clear. How was that groundwork laid? In its "Ways and Means" section, "Lessons From Iraq" spells out the careful crafting of public and Congressional opinion - the creation of a "legend" - to meet the needs of the imperialist plan. In John Prados's excellent piece on the political manipulation of intelligence, he shows how the strategic silencing of some people and data and the emphasizing of others generated a body of "evidence" to back that legend. Norman Solomon's essay examining the media's relationship with the legend is especially revealing: Mainstream news sources, with their power to decide what is "objective truth," quickly banished antiwar sentiments to the sidelines as the war in Iraq mounted. Even now, he notes, their "objective" perspective on the war is vastly skewed. For example, mainstream reports on Iraqi casualties are practically nonexistent. How to remedy the vast damage wrought by the legend, as the Iraq war still rages? The book offers a few concrete steps. A piece by Ivan Eland suggests a straightforward yet weighty solution: reduce the US military presence worldwide. Former UN Chief Weapons Inspector Hans Blix urges an emphasis on rigorous weapons monitoring as an alternative to preventive military action. Phyllis Bennis, author of the recent book, "Challenging Empire," recommends a heightened regard for international popular opinion. A foreboding essay by Fred Barbash calls for a revival of checks and balances in the US government, lest we, like Rome, abandon our democracy for empire. Summed up, these essays share a clarion call: It's time to stop the legend in its tracks. For it is useless to call for policy change without recognizing the deep-seated psychological currents that keep the legend going. An uncanny ability to play on those currents allowed the administration and its cheerleaders to implement their destructive policies in the first place. Now, says "Lessons From Iraq," it's time for us, the American people, to take our emotions - and our policies - back. Somewhere between the generous "learning experience" model and the conversation-killing mantra of "Never Again," "Lessons From Iraq" attempts to rebuild from the language on up, refashioning our national discourse - and our dinner table discussions. It urges us to grit our teeth and plunge into the piles of official lies and rhetoric-coated secrets that cloak the horror of the past five and a half years of our country's life. Before the official story is ossified, before the mainstream media pave over public outrage with euphemisms and softened narratives, this book asks us to preempt revisionism, to think long and hard about the way we will remember Iraq.
Suzan ______________________________________

Exposing Bush's historic abuse of power

Try as I may, I cannot think of a word to add to this article from Salon. It's all so shocking (can we really still be shocked?) that I'm not even going to try to place emphasis marks on the worst parts. I'm also running the print version so that you can read it all here if you have trouble logging onto Salon. ______________________________________________
Exposing Bush's historic abuse of power Salon has uncovered new evidence of post-9/11 spying on Americans. Obtained documents point to a potential investigation of the White House that could rival Watergate. By Tim Shorrock Jul. 23, 2008 The last several years have brought a parade of dark revelations about the George W. Bush administration, from the manipulation of intelligence to torture to extrajudicial spying inside the United States. But there are growing indications that these known abuses of power may only be the tip of the iceberg. Now, in the twilight of the Bush presidency, a movement is stirring in Washington for a sweeping new inquiry into White House malfeasance that would be modeled after the famous Church Committee congressional investigation of the 1970s. While reporting on domestic surveillance under Bush, Salon obtained a detailed memo proposing such an inquiry, and spoke with several sources involved in recent discussions around it on Capitol Hill. The memo was written by a former senior member of the original Church Committee; the discussions have included aides to top House Democrats, including Speaker Nancy Pelosi and Judiciary Committee chairman John Conyers, and until now have not been disclosed publicly. Salon has also uncovered further indications of far-reaching and possibly illegal surveillance conducted by the National Security Agency inside the United States under President Bush. That includes the alleged use of a top-secret, sophisticated database system for monitoring people considered to be a threat to national security. It also includes signs of the NSA's working closely with other U.S. government agencies to track financial transactions domestically as well as globally. The proposal for a Church Committee-style investigation emerged from talks between civil liberties advocates and aides to Democratic leaders in Congress, according to sources involved. (Pelosi's and Conyers' offices both declined to comment.) Looking forward to 2009, when both Congress and the White House may well be controlled by Democrats, the idea is to have Congress appoint an investigative body to discover the full extent of what the Bush White House did in the war on terror to undermine the Constitution and U.S. and international laws. The goal would be to implement government reforms aimed at preventing future abuses -- and perhaps to bring accountability for wrongdoing by Bush officials. "If we know this much about torture, rendition, secret prisons and warrantless wiretapping despite the administration's attempts to stonewall, then imagine what we don't know," says a senior Democratic congressional aide who is familiar with the proposal and has been involved in several high-profile congressional investigations. "You have to go back to the McCarthy era to find this level of abuse," says Barry Steinhardt, the director of the Program on Technology and Liberty for the American Civil Liberties Union. "Because the Bush administration has been so opaque, we don't know [the extent of] what laws have been violated." The parameters for an investigation were outlined in a seven-page memo, written after the former member of the Church Committee met for discussions with the ACLU, the Center for Democracy and Technology, Common Cause and other watchdog groups. Key issues to investigate, those involved say, would include the National Security Agency's domestic surveillance activities; the Central Intelligence Agency's use of extraordinary rendition and torture against terrorist suspects; and the U.S. government's extensive use of military assets -- including satellites, Pentagon intelligence agencies and U2 surveillance planes -- for a vast spying apparatus that could be used against the American people. Specifically, the ACLU and other groups want to know how the NSA's use of databases and data mining may have meshed with other domestic intelligence activities, such as the U.S. government's extensive use of no-fly lists and the Treasury Department's list of "specially designated global terrorists" to identify potential suspects. As of mid-July, says Steinhardt, the no-fly list includes more than 1 million records corresponding to more than 400,000 names. If those people really represent terrorist threats, he says, "our cities would be ablaze." A deeper investigation into intelligence abuses should focus on how these lists feed on each other, Steinhardt says, as well as the government's "inexorable trend towards treating everyone as a suspect." "It's not just the 'Terrorist Surveillance Program,'" agrees Gregory T. Nojeim from the Center for Democracy and Technology, referring to the Bush administration's misleading name for the NSA's warrantless wiretapping program. "We need a broad investigation on the way all the moving parts fit together. It seems like we're always looking at little chunks and missing the big picture." A prime area of inquiry for a sweeping new investigation would be the Bush administration's alleged use of a top-secret database to guide its domestic surveillance. Dating back to the 1980s and known to government insiders as "Main Core," the database reportedly collects and stores -- without warrants or court orders -- the names and detailed data of Americans considered to be threats to national security. According to several former U.S. government officials with extensive knowledge of intelligence operations, Main Core in its current incarnation apparently contains a vast amount of personal data on Americans, including NSA intercepts of bank and credit card transactions and the results of surveillance efforts by the FBI, the CIA and other agencies. One former intelligence official described Main Core as "an emergency internal security database system" designed for use by the military in the event of a national catastrophe, a suspension of the Constitution or the imposition of martial law. Its name, he says, is derived from the fact that it contains "copies of the 'main core' or essence of each item of intelligence information on Americans produced by the FBI and the other agencies of the U.S. intelligence community." Some of the former U.S. officials interviewed, although they have no direct knowledge of the issue, said they believe that Main Core may have been used by the NSA to determine who to spy on in the immediate aftermath of 9/11. Moreover, the NSA's use of the database, they say, may have triggered the now-famous March 2004 confrontation between the White House and the Justice Department that nearly led Attorney General John Ashcroft, FBI director William Mueller and other top Justice officials to resign en masse. The Justice Department officials who objected to the legal basis for the surveillance program -- former Deputy Attorney General James B. Comey and Jack Goldsmith, the former head of the Office of Legal Counsel -- testified before Congress last year about the 2004 showdown with the White House. Although they refused to discuss the highly classified details behind their concerns, the New York Times later reported that they were objecting to a program that "involved computer searches through massive electronic databases" containing "records of the phone calls and e-mail messages of millions of Americans." According to William Hamilton, a former NSA intelligence officer who left the agency in the 1970s, that description sounded a lot like Main Core, which he first heard about in detail in 1992. Hamilton, who is the president of Inslaw Inc., a computer services firm with many clients in government and the private sector, says there are strong indications that the Bush administration's domestic surveillance operations use Main Core. Hamilton's company Inslaw is widely respected in the law enforcement community for creating a program called the Prosecutors' Management Information System, or PROMIS. It keeps track of criminal investigations through a powerful search engine that can quickly access all stored data components of a case, from the name of the initial investigators to the telephone numbers of key suspects. PROMIS, also widely used in the insurance industry, can also sort through other databases fast, with results showing up almost instantly. "It operates just like Google," Hamilton told me in an interview in his Washington office in May. Since the late 1980s, Inslaw has been involved in a legal dispute over its claim that Justice Department officials in the Reagan administration appropriated the PROMIS software. Hamilton claims that Reagan officials gave PROMIS to the NSA and the CIA, which then adapted the software -- and its outstanding ability to search other databases -- to manage intelligence operations and track financial transactions. Over the years, Hamilton has employed prominent lawyers to pursue the case, including Elliot Richardson, the former attorney general and secretary of defense who died in 1999, and C. Boyden Gray, the former White House counsel to President George H.W. Bush. The dispute has never been settled. But based on the long-running case, Hamilton says he believes U.S. intelligence uses PROMIS as the primary software for searching the Main Core database. Hamilton was first told about the connection between PROMIS and Main Core in the spring of 1992 by a U.S. intelligence official, and again in 1995 by a former NSA official. In July 2001, Hamilton says, he discussed his case with retired Adm. Dan Murphy, a former military advisor to Elliot Richardson who later served under President George H.W. Bush as deputy director of the CIA. Murphy, who died shortly after his meeting with Hamilton, did not specifically mention Main Core. But he informed Hamilton that the NSA's use of PROMIS involved something "so seriously wrong that money alone cannot cure the problem," Hamilton told me. He added, "I believe in retrospect that Murphy was alluding to Main Core." Hamilton also provided copies of letters that Richardson and Gray sent to U.S. intelligence officials and the Justice Department on Inslaw's behalf alleging that the NSA and the CIA had appropriated PROMIS for intelligence use. Hamilton says James B. Comey's congressional testimony in May 2007, in which he described a hospitalized John Ashcroft's dramatic standoff with senior Bush officials Alberto Gonzales and Andrew Card, was another illuminating moment. "It was then that we [at Inslaw] started hearing again about the Main Core derivative of PROMIS for spying on Americans," he told me. Through a former senior Justice Department official with more than 25 years of government experience, Salon has learned of a high-level former national security official who reportedly has firsthand knowledge of the U.S. government's use of Main Core. The official worked as a senior intelligence analyst for a large domestic law enforcement agency inside the Bush White House. He would not agree to an interview. But according to the former Justice Department official, the former intelligence analyst told her that while stationed at the White House after the 9/11 attacks, one day he accidentally walked into a restricted room and came across a computer system that was logged on to what he recognized to be the Main Core database. When she mentioned the specific name of the top-secret system during their conversation, she recalled, "he turned white as a sheet." An article in Radar magazine in May, citing three unnamed former government officials, reported that "8 million Americans are now listed in Main Core as potentially suspect" and, in the event of a national emergency, "could be subject to everything from heightened surveillance and tracking to direct questioning and even detention." The alleged use of Main Core by the Bush administration for surveillance, if confirmed to be true, would indicate a much deeper level of secretive government intrusion into Americans' lives than has been previously known. With respect to civil liberties, says the ACLU's Steinhardt, it would be "pretty frightening stuff." The Inslaw case also points to what may be an extensive role played by the NSA in financial spying inside the United States. According to reports over the years in the U.S. and foreign press, Inslaw's PROMIS software was embedded surreptitiously in systems sold to foreign and global banks as a way to give the NSA secret "backdoor" access to the electronic flow of money around the world. In May, I interviewed Norman Bailey, a private financial consultant with years of government intelligence experience dating from the George W. Bush administration back to the Reagan administration. According to Bailey -- who from 2006 to 2007 headed a special unit within the Office of the Director of National Intelligence focused on financial intelligence on Cuba and Venezuela -- the NSA has been using its vast powers with signals intelligence to track financial transactions around the world since the early 1980s. From 1982 to 1984, Bailey ran a top-secret program for President Reagan's National Security Council, called "Follow the Money," that used NSA signals intelligence to track loans from Western banks to the Soviet Union and its allies. PROMIS, he told me, was "the principal software element" used by the NSA and the Treasury Department then in their electronic surveillance programs tracking financial flows to the Soviet bloc, organized crime and terrorist groups. His admission is the first public acknowledgement by a former U.S. intelligence official that the NSA used the PROMIS software. According to Bailey, the Reagan program marked a significant shift in resources from human spying to electronic surveillance, as a way to track money flows to suspected criminals and American enemies. "That was the beginning of the whole process," he said. After 9/11, this capability was instantly seen within the U.S. government as a critical tool in the war on terror -- and apparently was deployed by the Bush administration inside the United States, in cases involving alleged terrorist supporters. One such case was that of the Al-Haramain Islamic Foundation in Oregon, which was accused of having terrorist ties after the NSA, at the request of the Treasury Department, eavesdropped on the phone calls of Al-Haramain officials and their American lawyers. The charges against Al-Haramain were based primarily on secret evidence that the Bush administration refused to disclose in legal proceedings; Al-Haramain's lawyers argued in a lawsuit that was a violation of the defendants' due process rights. According to Bailey, the NSA also likely would have used its technological capabilities to track the charity's financial activity. "The vast majority of financial movements of any significance take place electronically, so intercepts have become an extremely important element" in intelligence, he explained. "If the government suspects that a particular Muslim charitable organization is engaged in collecting funds to funnel to terrorists, the NSA would be asked to follow the money going into and out of the bank accounts of that charity." (The now-defunct Al-Haramain Foundation, although affiliated with a Saudi Arabian-based global charity, was founded and based in Ashland, Ore.) The use of a powerful database and extensive watch lists, Bailey said, would make the NSA's job much easier. "The biggest problems with intercepts, quite frankly, is that the volumes of data, daily or even by the hour, are gigantic," he said. "Unless you have a very precise idea of what it is you're looking for, the NSA people or their counterparts [overseas] will just throw up their hands and say 'forget it.'" Regarding domestic surveillance, Bailey said there's a "whole gray area where the initiation of the transaction was in the United States and the final destination was outside, or vice versa. That's something for the lawyers to figure out." Bailey's information on the evolution of the Reagan intelligence program appears to corroborate and clarify an article published in March in the Wall Street Journal, which reported that the NSA was conducting domestic surveillance using "an ad-hoc collection of so-called 'black programs' whose existence is undisclosed." Some of these programs began "years before the 9/11 attacks but have since been given greater reach." Among them, the article said, are a joint NSA-Treasury database on financial transactions that dates back "about 15 years" to 1993. That's not quite right, Bailey clarified: "It started in the early '80s, at least 10 years before." Main Core may be the contemporary incarnation of a government watch list system that was part of a highly classified "Continuity of Government" program created by the Reagan administration to keep the U.S. government functioning in the event of a nuclear attack. Under a 1982 presidential directive, the outbreak of war could trigger the proclamation of martial law nationwide, giving the military the authority to use its domestic database to round up citizens and residents considered to be threats to national security. The emergency measures for domestic security were to be carried out by the Federal Emergency Management Agency (FEMA) and the Army. In the late 1980s, reports about a domestic database linked to FEMA and the Continuity of Government program began to appear in the press. For example, in 1986 the Austin American-Statesman uncovered evidence of a large database that authorities were proposing to use to intern Latino dissidents and refugees during a national emergency that might follow a potential U.S. invasion of Nicaragua. During the Iran-Contra congressional hearings in 1987, questions to Reagan aide Oliver North about the database were ruled out of order by the committee chairman, Democratic Sen. Daniel Inouye, because of the "highly sensitive and classified" nature of FEMA's domestic security operations. In September 2001, according to "The Rise of the Vulcans," a 2004 book on Bush's war cabinet by James Mann, a contemporary version of the Continuity of Government program was put into play in the hours after the 9/11 terrorist attacks, when Vice President Cheney and senior members of Congress were dispersed to "undisclosed locations" to maintain government functions. It was during this emergency period, Hamilton and other former government officials believe, that President Bush may have authorized the NSA to begin actively using the Main Core database for domestic surveillance. One indicator they cite is a statement by Bush in December 2005, after the New York Times had revealed the NSA's warrantless wiretapping, in which he made a rare reference to the emergency program: The Justice Department's legal reviews of the NSA activity, Bush said, were based on "fresh intelligence assessment of terrorist threats to the continuity of our government." It is noteworthy that two key players on Bush's national security team, Cheney and his chief of staff, David Addington, have been involved in the Continuity of Government program since its inception. Along with Donald Rumsfeld, Bush's first secretary of defense, both men took part in simulated drills for the program during the 1980s and early 1990s. Addington's role was disclosed in "The Dark Side," a book published this month about the Bush administration's war on terror by New Yorker reporter Jane Mayer. In the book, Mayer calls Addington "the father of the [NSA] eavesdropping program," and reports that he was the key figure involved in the 2004 dispute between the White House and the Justice Department over the legality of the program. That would seem to make him a prime witness for a broader investigation. Getting a full picture on Bush's intelligence programs, however, will almost certainly require any sweeping new investigation to have a scope that would inoculate it against charges of partisanship. During one recent discussion on Capitol Hill, according to a participant, a senior aide to Speaker Pelosi was asked for Pelosi's views on a proposal to expand the investigation to past administrations, including those of Bill Clinton and George H.W. Bush. "The question was, how far back in time would we have to go to make this credible?" the participant in the meeting recalled. That question was answered in the seven-page memo. "The rise of the 'surveillance state' driven by new technologies and the demands of counter-terrorism did not begin with this Administration," the author wrote. Even though he acknowledged in interviews with Salon that the scope of abuse under George W. Bush would likely be an order of magnitude greater than under preceding presidents, he recommended in the memo that any new investigation follow the precedent of the Church Committee and investigate the origins of Bush's programs, going as far back as the Reagan administration. The proposal has emerged in a political climate reminiscent of the Watergate era. The Church Committee was formed in 1975 in the wake of media reports about illegal spying against American antiwar activists and civil rights leaders, CIA assassination squads, and other dubious activities under Nixon and his predecessors. Chaired by Sen. Frank Church of Idaho, the committee interviewed more than 800 officials and held 21 public hearings. As a result of its work, Congress in 1978 passed the Foreign Intelligence Surveillance Act, which required warrants and court supervision for domestic wiretaps, and created intelligence oversight committees in the House and Senate. So far, no lawmaker has openly endorsed a proposal for a new Church Committee-style investigation. A spokesman for Pelosi declined to say whether Pelosi herself would be in favor of a broader probe into U.S. intelligence. On the Senate side, the most logical supporters for a broader probe would be Democratic senators such as Patrick Leahy of Vermont and Russ Feingold of Wisconsin, who led the failed fight against the recent Bush-backed changes to FISA. (Both Feingold and Leahy's offices declined to comment on a broader intelligence inquiry.) The Democrats' reticence on such action ultimately may be rooted in congressional complicity with the Bush administration's intelligence policies. Many of the war on terror programs, including the NSA's warrantless surveillance and the use of "enhanced interrogation techniques," were cleared with key congressional Democrats, including Pelosi, Senate Intelligence Committee chairman Rockefeller, and former House Intelligence chairwoman Jane Harman, among others. The discussions about a broad investigation were jump-started among civil liberties advocates this spring, when it became clear that the Democrats didn't have the votes to oppose the Bush-backed bill updating FISA. The new legislation could prevent the full story of the NSA surveillance programs from ever being uncovered; it included retroactive immunity for telecommunications companies that may have violated FISA by collaborating with the NSA on warrantless wiretapping. Opponents of Bush's policies were further angered when Democratic leaders stripped from their competing FISA bill a provision that would have established a national commission to investigate post-9/11 surveillance programs. The next president obviously would play a key role in any decision to investigate intelligence abuses. Sen. John McCain, the Republican candidate, is running as a champion of Bush's national security policies and would be unlikely to embrace an investigation that would, foremost, embarrass his own party. (Randy Scheunemann, McCain's spokesman on national security, declined to comment.) Some see a brighter prospect in Barack Obama, should he be elected. The plus with Obama, says the former Church Committee staffer, is that as a proponent of open government, he could order the executive branch to be more cooperative with Congress, rolling back the obsessive secrecy and stonewalling of the Bush White House. That could open the door to greater congressional scrutiny and oversight of the intelligence community, since the legislative branch lacked any real teeth under Bush. (Obama's spokesman on national security, Ben Rhodes, did not reply to telephone calls and e-mails seeking comment.) But even that may be a lofty hope. "It may be the last thing a new president would want to do," said a participant in the ongoing discussions. Unfortunately, he said, "some people see the Church Committee ideas as a substitute for prosecutions that should already have happened."
Suzan _____________________________________

Tuesday, July 22, 2008

Housing Scandal(s)

I read on another blog that Henry Paulson's (Treasury Secretary) son John made millions off the housing catastrophe (subprime fiasco). And, of course, no one's asking them to repay the taxpayers. Wonder why? (Jest kiddin'!) Also, only in blogtopia is anyone questioning the wisdom of not nationalizing these entities entirely, therefore safeguarding the public's payouts. As if this article from The New York Times isn't bad enough, be sure to check the first comment that runs under it. Right. That's spelled with a "tr" not a "b." (Emphasis marks are mine.)
Cost of Loan Bailout, if Needed, Could Be $25 Billion Tuesday 22 July 2008 David M. Herszenhorn, The New York Times Washington - The proposed government rescue of the nation's two mortgage finance giants will appear on the federal budget as a $25 billion cost to taxpayers, the independent Congressional Budget Office said on Tuesday even though officials conceded that there was no way of really knowing what, if anything, a bailout would cost. The budget office said there was a better than even chance that the rescue package would not be needed before the end of 2009 and would not cost taxpayers any money. But the office also estimated a 5 percent chance that the mortgage companies, Fannie Mae and Freddie Mac, could lose $100 billion, which would cost taxpayers far more than $25 billion. The House is expected to act this week on housing legislation that includes the proposed rescue plan. Legislative language has been finalized, but the Congressional Budget Office said its estimates were based on the plan by the Treasury Department and that it did not expect significant changes in the final bill. According to the estimate, which was delivered in the form of a letter to the House Budget Committee chairman, Representative John M. Spratt Jr., Democrat of South Carolina, the director of the budget office, Peter R. Orszag, predicted that "a significant chance, probably better than 50 percent, that the proposed new Treasury authority would not be used before it expired at the end of December 2009." Mr. Orszag, at a briefing with reporters, acknowledged that pinpointing the eventual cost of the package was impossible. "There is very significant uncertainty involved here," he said. The uncertainty runs in both directions, with some government officials and market analysts suggesting that Fannie Mae and Freddie Mac are fundamentally sound and will perform well over the long-term. Others, including some private equity managers, are pessimistic and predict heavy losses. The rescue plan, put forward last week by the Treasury secretary, Henry M. Paulson Jr., would allow the Treasury Department to spend hundreds of billions of dollars to shore up the mortgage companies should they be at risk of collapse, either by extending credit or by purchasing equity in the companies, which are publicly traded. Mr. Orszag said that the analysis by his office did not distinguish between the different forms of aid that might be offered - a credit line or a stock purchase - and that the analysis showed no short-term potential financial benefit for taxpayers even if Fannie Mae and Freddie Mac perform well. But he said the analysis found substantial risk for taxpayers if the companies had steep losses and would not say if his office had analyzed the implications of a full government takeover of the companies. How much the government will end up spending on a rescue, if one is needed, would depend on many factors, he said, including sentiment on Wall Street. "A key question becomes how does the market view the entities?" he said. Fannie Mae and Freddie Mac are commonly referred to as government-sponsored entities, because of the long implicit guarantee that the federal government would step in to save them if they were ever in danger of collapse. One thing that is certain as a result of the rescue proposal is that the guarantee of government aid is now much more explicit, and Mr. Orszag said that the government's assurance that it would not let the companies fail would have to be included in any analysis of their long-term financial prospects. Most immediately, the $25 billion cost estimate provides a precise amount that Congress will have to offset with spending cuts or tax increases if lawmakers intend to comply with "pay as you go" budget rules in the House. Lawmakers could also decide that the $25 billion should be viewed as emergency spending and simply added to the national debt. There was little immediate reaction to the projections on Capitol Hill as lawmakers and staff members reviewed the complicated calculations and the various assumptions they were based on. Mr. Spratt, the chairman of the Budget Committee, issued a statement praising the Congressional Budget Office for moving quickly to produce its analysis. "Estimating the fiscal impact of this proposal is complex and involves considerable uncertainty," Mr. Spratt said. "And not everyone will necessarily agree with every aspect of C.B.O.'s analysis." But he added: "C.B.O. is performing its important institutional role by providing in a timely manner its best professional and independent assessment." The analysis by the Congressional Budget Office also offered a sobering assessment of the mortgage giants based on several different metrics. Under generally accepted accounting principals, Mr. Orszag said that the net worth of the mortgage giants at the end of the first quarter of 2008 was about $55 billion. He also said that the companies held more than $80 billion in capital at the end of March and for regulatory purposes were considered to be "adequately capitalized" by the Department of Housing and Urban Development. But on a fair value basis, the value of the mortgage companies' assets exceeded their liabilities at the end of March by just $7 billion, a thin cushion considering liabilities at the time of $1.6 trillion, and an indication of why there have been numerous calls for the companies to raise additional capital. Mr. Orszag also noted that on July 11, before the Bush administration proposed its rescue plan, the total value of shares in Fannie Mae and Freddie Mac had fallen to a low of $11 billion. Shares in the companies are now worth about $20 billion. The House is expected to vote on the larger package of housing legislation, including the rescue plan for the mortgage companies, as early as Wednesday, and the Senate is expected to quickly follow and send the bill to President Bush. Among the issues that lawmakers have been debating is whether to exempt from the federal debt limit any expenditure that the Treasury Department makes on behalf of the mortgage companies. The current debt limit is $9.815 trillion and outstanding federal debt is roughly $9.5 trillion, leaving a cushion of $310 billion. Congressional Democrats have expressed opposition to exempting the rescue plan from the debt limit, saying administration officials should come back to Congress for emergency authorization if additional spending is needed. Officials said it was probable that a compromise would be reached and the debt limit would still apply. The housing legislation also includes the creation of a regulator for the mortgage companies, an agency apart from the Department of Housing and Urban Development, which oversees the mortgage giants. Some critics have questioned whether the new regulator would have sufficient authority to swiftly increase capital requirements - the amount of cash that the mortgage companies need to maintain to protect against losses. In his letter to Mr. Spratt, Mr. Orszag suggested that simply enacting the proposed rescue plan could bolster the confidence of Wall Street in Fannie Mae and Freddie Mac. "Private markets might be sufficiently reassured to provide the GSE's with adequate capital to continue operations without any infusion of funds from the Treasury," he wrote. "during that time, it is possible that expectations about the duration and depth of the housing market downturn may brighten." But Mr. Orszag said his office had also consulted with market investors with a different outlook. "Many analysis and traders believe there is a significant likelihood that conditions in the housing and financial markets could deteriorate more than already reflected on the GSEs' balance sheets," he wrote, "and such continuing problems would increase the probability that this new authority would have to be used." Taking into account all of the different possibilities and sentiments, and measuring them against the budget "scorekeeping" rules, Mr. Orszag said his office had concluded "that the expected value of the federal budgetary cost from enacting this proposal would be $25 billion over fiscal years 2009 and 2010." _______________________________ First commenter: These loss assumptions are ridiculous! Fannie and Freddie own outright or guaranty close to 50% of all 10 trillion US$ of outstanding US residential mortgages. One just has to look at the balance sheet increase (or increase in mortgage exposure) over the last 5 years. These mortgages represent the biggest risk since they have the lowest standards and represent bubble prices. Most likely home prices will fall back to at least the 2000 level over the next 2-3 years. Fannie and Freddies losses will easily reach 1 trillion US$ before this is over. Mark my words!!! Another commenter: It is insanity to bail out these inflationary cesspools. Any thought of a recovery is completely ridiculous until after all of these non producing, criminal 'banks' and corporations are reduced to their true value, which is pennies to the dollar.
Susan

Crunch: Why Do I Feel So Squeezed?

I watched Jared Bernstein, a senior economist at the Economic Policy Institute, on BookTV at CSPAN2 the other night as he discussed his book, Crunch: Why Do I Feel So Squeezed?. He's a terrific speaker and the book is a must-read for me this summer. In it he "outlines a 'reconnection agenda' to cure the nation’s economic ills." The New York Times (for some not hard to understand reason) chose Harry Hurt III to review it. Why is this guy asked to comment on an important economics text? As I came upon his other works while doing some research on him, he appears not to be. However, he does cover important subjects like "executive pursuits" at The New York Times (according to The New York Post!). And he trivializes Bernstein's rather eloquent and comprehensible text.
His basic thesis about the current state of the economics profession and the American economy is unapologetically left-leaning. “Economics has been hijacked by the rich and powerful, and it has been forged into a tool that is being used against the rest of us,” he declares. “Far too often, economists justify things many of us know to be wrong while claiming the things we believe are critically important can’t be done.” “Economics is not an objective, scientific discipline,” he writes in one of the “Crunchpoints” that serve as his chapter summaries. “It is a set of decisions about how to produce and distribute resources and opportunities.” Those decisions, he says, are based on power, not computer modeling. His goal is to demystify economics so as “to rechannel the power of economic analysis back to the service of those who need it most: the ones in the vice grip of the crunch.” “Crunch” succinctly defines the quandary faced by many Americans. First, Mr. Bernstein duly notes that from 2000 to 2006, the American economy grew by a healthy 15 percent and achieved impressive efficiency gains. But during that same period, he says, the inflation-adjusted weekly earnings of the typical, or median worker, were flat, and the portion of the population officially defined as poor increased to 12.3 percent from 11.3 percent. The costs of health care, child care, college tuition and housing, meanwhile, “have been growing much faster than the overall average of all prices taken together,” he says. “The name of the problem is economic inequality, and it’s been on the rise for decades,” Mr. Bernstein says. Looking at the rise of inequality, he blames the breakdown of “economic mechanisms and forces that used to broadly and fairly distribute the benefits of growth.” These mechanisms and forces specifically include “unions, minimum wages, employer and firm loyalty, global competitiveness, full employment, the robust creation of quality jobs, safety nets, and social insurance.” Mr. Bernstein acknowledges the benefits of globalization in numerous passages, including one in which he describes replacing his 25-year-old stereo with a better, foreign-made system for the surprisingly low price of $130. At the same time, he reminds us of the problems ranging from the outsourcing of American jobs to the demise of American industries because of competition from cheaper goods from abroad. He says, however, that the crisis created by globalization can at least be “shaped” by enlightened political leadership and a sea change in public policies. Mr. Bernstein believes that full employment — as opposed to relatively low unemployment, in the 4 to 6 percent range — is the key to restoring the bargaining power of workers and unions. He says that the Federal Reserve should focus on promoting job growth over limiting inflation. Mr. Bernstein would also reform health care by pooling risk and cutting costs with a government-operated system, because he says “markets tend to be fairly lousy at providing public goods.” He would reform immigration by controlling “immigrant flows” — though he opposes building a wall — and by instituting “economic integration” programs for those who earn legal status. He would grapple with the double-edged effects of globalization by taking “some of the benefits of trade” and plowing them into universal health care, pensions, public infrastructure and a drive for energy independence.
The best part of the Hurtful Times' review is when it accuses Professor Bernstein of glibness. Now we never see that about the daily fare from Fox News and the other MSM, do we? Read it for yourself. My money's on your nonglib enjoyment. Suzan _________________________________

Monday, July 21, 2008

Wall Street's Great Deflation

Here's Bill Greider's astute take in The Nation on exactly what is happening in today's financial markets. (Emphasis marks are mine.) Wall Street's Great Deflation William Greider 07/14/2008 Phil Gramm, the senator-banker who until recently advised John McCain's campaign, did get it right about a "nation of whiners," but he misidentified the faint-hearted. It's not the people or even the politicians. It is Wall Street--the financial titans and big-money bankers, the most important investors and worldwide creditors who are scared witless by events. These folks are in full-flight panic and screaming for mercy from Washington, Their cries were answered by the massive federal bailout of Fannie Mae and Freddy Mac, the endangered mortgage companies. When the monied interests whined, they made themselves heard by dumping the stocks of these two quasi-public private corporations, threatening to collapse the two financial firms like the investor "run" that wiped out Bear Stearns in March. The real distress of the banks and brokerages and major investors is that they cannot unload the rotten mortgage securities packaged by Fannie Mae and banks sold worldwide. Wall Street's preferred solution: dump the bad paper on the rest of us, the unwitting American taxpayers. The Bush crowd, always so reluctant to support federal aid for mere people, stepped up to the challenge and did as it was told. Treasury Secretary Paulson (ex-Goldman Sachs) and his sidekick, Federal Reserve Chairman Ben Bernanke, announced their bailout plan on Sunday to prevent another disastrous selloff on Monday when markets opened. Like the first-stage rescue of Wall Street's largest investment firms in March, this bold stroke was said to benefit all of us. The whole kingdom of American high finance would tumble down if government failed to act or made the financial guys pay for their own reckless delusions. Instead, dump the losses on the people. Democrats who imagine they may find some partisan advantage in these events are deeply mistaken. The Democratic party was co-author of the disaster we are experiencing and its leaders fell in line swiftly. House banking chair, Rep. Barney Frank, announced he could have the bailout bill on President Bush's desk next week. No need to confuse citizens by dwelling on the details. Save Wall Street first. Maybe lowbrow citizens won't notice it's their money. We are witnessing a momentous event - the great deflation of Wall Street - and it is far from over. The crash of IndyMac is just the beginning. More banks will fail, so will many more debtors. The crisis has the potential to transform American politics because, first it destroys a generation of ideological bromides about free markets, and, second, because it makes visible the ugly power realities of our deformed democracy. Democrats and Republicans are bipartisan in this crisis because they have colluded all along over thirty years in creating the unregulated financial system and mammoth mega-banks that produced the phony valuations and deceitful assurances. The federal government protects the most powerful interests from the consequences of their plundering. It prescribes "market justice" for everyone else. Of course, the federal government has to step up to the crisis, but the crucial question is how government can respond in the broad public interest. Bernanke knows the history of the last great deflation in the 1930s - better known as the Great Depression - and so he is determined to intervene swiftly, as the Federal Reserve failed to do in that earlier crisis. By pumping generous loans and liquidity into the system, the Fed chairman hopes to calm the market fears and reverse the panic. So far, he has failed. I think he will continue to fail because he has not gone far enough. If Washington wants real results, it has to abandon the wishful posture that is simply helping the private firms get over their fright. The government must instead act decisively to take charge in more convincing ways. That means acknowledging to the general public the depth of the national crisis and the need for more dramatic interventions. Instead of propping up Fannie Mae or others, the threatened firm should be formally nationalized as a nonprofit federal agency performing valuable services for the housing market. That is the real consequence anyway if the taxpayers have to buy up $300 billion in stock. The private shareholders "are walking dead men, muerto," Institutional Risk Analytics, a private banking monitor, observed. Make them eat their losses, the sooner the better. The real national concern should be focused on the major creditors who lend to Fannie Mae and other US agencies as well as private financial firms. They include China, Japan and other foreign central banks. Foreign investors hold about 21 percent of the long-term debt paper issued by US government agencies--$376 billion in China, $229 billion in Japan. It is not in our national interest to burn these nations with heavy losses. On the contrary, we need to sustain their good regard because they can help us recover by bailing out the US economy with more lending. If these foreign creditors turn away and stop their lending now, the US economy is toast and won't soon recover. Americans should forget about whining; it's too late for that. People need to get angry--really, really angry--and take it out on both parties. What the country needs right now is a few more politicians in Washington with the guts to stand up and tell us the hard truth about out situation. It will be painful to hear. They will be denounced as "whiners." But truth might be our only way out. Comments (104) Suzan ________________________________

Pete Peterson Attacks Social Security (Again!)

I really admire Al Franken and think his campaign is emblematic of what we need to have occurring all over the country in order to take control of the Congress this year. Here is his latest video for your viewing enjoyment. Billionaire Pete Peterson has always impressed me as exactly the right white guy for the task of abolishing Social Security (and Medicare and Medicaid) and the last remnant of the safety net we still brag about having in this country (and inspiring otherwise well-educated people to be quaking in fear at the prospect of its bankruptcy). If we allow him to continue this ideological rant without being held to public account, we probably deserve the poverty-stricken end he and his ilk have in mind for us. Dean Baker, who is co-director of the Center for Economic and Policy Research and previously a senior economist at the Economic Policy Institute (also the writer of Social Security: The Phony Crisis), is an economist to believe in. He is very familiar with Peterson's rantings and calls him a "vicious ideologue," a claim that I believe has quite a bit of merit. (Emphasis marks are mine.)
Truthout Original Vicious Ideologue Renews Attack on Social Security Monday 21 July 2008 Dean Baker, t r u t h o u t | Perspective Billionaire investment banker Peter Peterson is back on the warpath. He just established a new foundation with a $1 billion endowment, the main purpose of which is to cut back spending on Social Security, Medicare and Medicaid. These programs, which provide an essential safety net to virtually the entire country, are hugely popular and will be politically difficult to cut. Nonetheless, $1 billion is a lot of money. Therefore, Peterson's campaign deserves to be taken seriously. Peterson has long been an ardent foe of these programs. He first rose to national prominence as commerce secretary in the Nixon administration. He then returned to the private sector and became a partner in the Blackstone Group, a very successful private equity fund. Mr. Peterson is fond of telling his audiences that he doesn't need his Social Security. Of course, as a manager in a private equity fund, Mr. Peterson was allowed to take advantage of the fund manager tax subsidy - a provision of the tax code that allows some of the richest people in the country to pay much lower tax rates than ordinary workers. With his enormous wealth, Mr. Peterson was probably given more than 1,000 times as much money through this tax subsidy as the typical worker can expect to see on her Social Security. Needless to say, if the rest of us had been beneficiaries of the government's largesse to the same extent as Mr. Peterson, we would not need our Social Security either. Mr. Peterson's public crusading against Social Security, Medicare and Medicaid began in 1992 when he formed the Concord Coalition. This organization crusades for cuts in these programs under the pretext of fiscal responsibility. Mr. Peterson has also written several books calling for cuts in these programs with ominous titles like Gray Dawn: How the Coming Age Wave Will Transform America, which warns that the country will be bankrupted by the retirement of the baby boomers. He uses his power and wealth to publicize these diatribes and get them reviewed in top outlets, such as the New York Times Book Review. While Peterson's efforts appeal largely to Republicans, he generally pulls enough Democrats on board that he can pass off his attacks on the country's key social programs as bipartisan. In fact, the media often treat Peterson's assault on the social safety net as being above the political fray, allowing him to spout his views unanswered on major national talk shows. Peterson has not been shy about using slippery logic to advance his agenda. For example, back in the 90's he argued for cutting the annual cost-of-living adjustment for Social Security, which is tied to the consumer price index (CPI), based on the claim that the CPI substantially overstates the true rate of inflation. If Peterson's claim about a CPI overstatement were true, then it would imply that incomes are rising far more rapidly than our projections show. Peterson's CPI adjustment would mean that our children and grandchildren will be far richer than we could possibly imagine, because incomes are rising so rapidly. Similarly, the retirees for whom he wanted to cut benefits actually spent much of their lives in poverty. If incomes have been rising more rapidly than the official data show, then we must have been far poorer in the past than the data show. In the same vein, Peterson supported the partial privatization of Social Security, based on assumptions on stock returns that were inconsistent with the profit growth projections of the Social Security trustees, and the price-to-earnings ratios that existed in the stock market at the time. In the push to cut Social Security and Medicare, Peterson does not feel the need to be bound by the truths of logic and arithmetic. There is a fundamental point on which Peterson is correct. The long-term budget projections do show a horror story of enormous deficits. But these projections are not driven by aging and overly generous retirement programs. They are driven by projections that our private health care system, which already costs twice as much per person as the average for other rich countries, will get ever more inefficient through time. If we never fix our health care system, then we will face an economic disaster, which will include serious budget problems, since half of our health care is paid for through government programs such as Medicare and Medicaid. This reality would suggest the importance of reforming the health care system. Health care reform would mean confronting the insurance and pharmaceutical industries, as well as the doctors' lobbies. These groups have serious power. That's why Mr. Peterson prefers to stick with granny bashing.
Still enjoying Monday? Suzan

Sunday, July 20, 2008

South Asia Awaits Another Secret War

I thought after 9/11 that sufficient attention had not been paid by the brilliant strategists in the Bush/Cheney administration (yes, these would be Cheney's fabled troops) to the prevailing political situation(s) in Asia - south Asia, specifically, being one such area. Truthout's J. Sri Raman delivers a history lesson attached to the July 7, 2008, targeting of India's embassy in Kabul, which may prove to be the clichéd straw that breaks the Indian camel's back. The background of the assassination of Benadzir Bhutto is also addressed here as we gain details as to how (and how long) the CIA (an agency of the US government) funds and has funded the military in Pakistan. The nuclear capacity brought to Pakistan by A.Q. Khan through CIA funding is only one of this article's inflammatory touchpoints. So many stray dogs coming back to bite us now. (Emphasis marks are mine.) _____________________________________________
Saturday 19 July 2008 J. Sri Raman, t r u t h o u t | Perspective The Kabul blast of July 7, which targeted India's embassy and took a heavy toll of human lives, may trigger yet another secret South Asian war. As noted in these columns (Blasts That Shake South Asia, July 12, 2008), the attack elicited a far-from-routine official Indian reaction. India's National Security Adviser M. K. Narayanan did not stop with blaming Pakistan's Inter-Services Intelligence (ISI) for the blast. He went on to issue an ill-veiled warning: "We should pay them back in their own coin." The outrageously irresponsible observation has gone almost unnoticed, but a significant indication of what it may signal has been forthcoming. The espionage agency of Pakistan has never enjoyed a saintly image. But it is not as if India's own secret warriors haven't used the coin of terrorism that all too often reveals two sides. And the coin may become their currency again, to go by non-official national security advisers who know the business of blasts. Before coming to all that, a word about the ISI. It was set up in 1948, just a year after Pakistan's birth. The ISI remained just one of the country's many intelligence agencies until its time arrived with the US war against the Soviet Union in Afghanistan. The ISI rose to the peak of its power in Pakistan during the military rule of Zia ul-Haq (1977-88), which covered the larger part of the lacerating war (1978-89) with long-term consequences for the region. The war of the eighties witnessed a dramatic enhancement of ISI covert-action capabilities by the US Central Intelligence Agency (CIA). Young men from the ISI went west to the US for training in covert techniques and the CIA loaned cloak-and-dagger experts for assistance to its friends in the killing fields of Pakistan's tribal frontier. The ISI became a conduit for the CIA's financial aid for the Pashtun warlords on the anti-Soviet side and found this a profitable position. Initially, the ISI was given mainly internal tasks - to snoop on the small, Sindh-based Communist Party and monitor political parties, especially the Pakistan People's Party (PPP) of Zulfikar Ali Bhutto. After the war, the ISI returned to domestic politics, trying to prevent Benazir Bhutto's re-election as prime minister. Former BBC correspondent Owen Bennett Jones, in his book, Pakistan: Eye of the Storm, writes: "A former director-general of the ISI, Lt. Gen. (Retired) Azad Durrani, has recorded in a Supreme Court affidavit that he was instructed by Zia's successor as chief of army staff, Gen. Aslam Beg, to provide logistic support to disbursement of funds to Benazir Bhutto's opponents.... According to Durrani, the ISI opened cover bank accounts in Karachi, Rawalpindi and Quetta and deposited money into them. The sums were not small. One account in Karachi was credited with over $2 million and smaller amounts were then transferred to other accounts ... " Jones goes on to say that a sum of $58,000 went to a politician later associated with Pakistan's nuclear bomb, and a fortune of $83,000 went to a fundamentalist party, and so on. We will keep that story for another day, but the point here is that the ISI was always flush with funds for its activities, even when these were extended to operations of much greater importance to the military and the militarists. Especially important, for evident reasons, were the operations in and against India. The ISI is known to have been involved in the eighties in the separatist movement in the Indian State of Punjab (which was not without local causes and catalysts as well). In fact, in the late sixties, the agency reportedly assisted a London-based Sikh Home Rule Movement, which was to be transformed into the secessionist Khalistan campaign. The ISI has been even more deeply involved in the insurgency in the India-administered State of Jammu and Kashmir (again with its local causes and catalysts as well). Jones recalls: "On 31 July 1988, Srinagar (capital of Jammu and Kashmir) rocked to a series of explosions. They were claimed by the JKLF (Jammu and Kashmir Liberation Front) ... The JKLF, it was true, had laid the bombs but the materials had been provided by the Pakistani state, more precisely the ISI." He adds: "In 1987, the ISI and the JKLF had, with General Zia's approval, struck a deal. The JKLF agreed to recruit would-be militants in India-held Kashmir, bring them across the Line of Control and deliver them to ISI trainers. The ISI, in turn, agreed to provide the JKLF fighters with weapons and military instruction. The young men were then sent back across the line so that they could mount attacks." The ISI has been blamed for several bomb blasts in other parts of India as well, though New Delhi has not always shared evidence with the nation. The most notable instance, perhaps, was the series of 13 blasts in Mumbai (formerly Bombay) on March 12, 1993, that took a toll of over 300 lives. The other major examples include the Mumbai serial train blasts of July 11, 2006, and the Jaipur explosions of May 13, 2008. The Indian counterpart of the ISI, the Research and Analysis Wing (RAW), may figure less in the Western media, but is equally infamous in this part of the world. Unlike the Pakistani apparatus, the RAW is only an external intelligence agency, but the similarities between the two on other counts is striking. Set up in 1968, mainly as the result of a years-long security review following India's military fiasco of 1962 against China, the RAW had the US and the CIA presiding over its birth. Organizationally modeled on the CIA, the RAW has worked closely with the superpower's snoopers, especially on subjects of common interest such as China and Pakistan-related nuclear issues. Officially, the RAW functions on an annual budget of around $150 million, but all one knows really is that funds have posed it no problem. Constitutionally a "wing" of the Cabinet Secretariat, it suffers from no agency-like accountability to India's parliament, and its activities lie outside the ambit of the country's recently acquired Right to Information Act. In public pronouncements, the RAW claims to be particularly proud of its role in the creation of Bangladesh after an India-Pakistan war. Its former officials and fervent admirers, however, shower more fulsome praise on its past exploits in Pakistan. Many of them believe that its return to the days of anti-Pakistan blasts, again in the eighties, as not just something to be devoutly desired. To them, it is the demand of the hour. Narayanan, obviously, had the RAW in mind, when he talked of paying back the ISI in its own coin. What even a hawk like Narayanan could not spell out has found explicit expression subsequently. An op-ed article in a respected national daily with a particular reputation for sobriety (Fighting Pakistan's "informal war," July 15, The Hindu), speaking for the RAW and "advocates of retaliation," elaborates on Narayanan's enigmatic statement. It says: "If a Pakistan-based terrorist group carries out strikes against civilians in Mumbai, the argument (of the Narayanans of India) goes, India must be able to assassinate its leaders and their financiers." The crusaders for a covert offensive or counteroffensive, quoted in the article, derive confidence from a specific past operation aimed at striking dread in the enemy camp. "In the mid-1980s," it is recalled, "the RAW unleashed two covert groups, CIT-X and CIT-J (Covert Intelligence Teams given alphabetical identities), the first targeting Pakistan in general and the second directed at Khalistani groups. A low-grade but steady campaign of bombings in major Pakistani cities, notably Karachi and Lahore, followed." The blast series of the eighties included the Bohri Bazaar tragedy in Karachi, still etched in the memory of a large number of survivors. Both these groups are said to have used the services of cross-border traffickers to ferry weapons and funds. The series came in for special praise in 2002 from former RAW official B. Raman, who said: "The role of our covert action capability in putting an end to the ISI's interference in Punjab by making such interference prohibitively costly is little known and understood." The "advocates of retaliation" are quoting him repeatedly now. This is not the first time the demand for revival of the days of "retaliation" through civilian-targeting detonations has been raised. Nostalgia for the RAW's heroic age was voiced even during the period of Pervez Musharraf as a military ruler. Some blasts, it was suggested then, would give a fitting answer to his frequent charge of India's involvement in Balochistan combined with a continuation of cross-border terrorism in Kashmir. The threat of blasts, meanwhile, sounds tame, compared to crueler punishment envisaged in the same article for Pakistan. It says: "Pakistan has long feared a nightmarish future where a hostile India dams its water resources in Jammu and Kashmir and throws its weight behind irredentist forces. Each terror bombing against Indians, paradoxically, is bringing that nightmare one step closer to realization." The waters can be a matter of life and death for Pakistan. Under the Indus Waters Treaty of 1960, India has rights over the waters of the Ravi, Sutlej and Beas rivers, while Pakistan has rights over the waters of the Indus, the Chenab and the Jhelum. All the rivers flow from India to Pakistan. In May 2005, the World Bank appointed a neutral arbitrator in the dispute after Pakistan made a demand for an adjudicator. The next month, Pakistan told India to suspend work on a dam on the Chenab. On December 6, 2006, Pakistan put on record its fears that the dam could be used to choke off water supplies at times of crisis. The issue is supposed to be under discussion as part of the India-Pakistan peace process. The "advocates of retaliation" are also arguing for efforts to set up a common front with Afghanistan's intelligence agency, the Riyasat-e-Amniyat-Milli (RAM). The CIA, as they see it, cannot but side with such a front. If they have their way, South Asia may soon witness a stepped-up secret war, which will spell more blasts and deaths in bazaars and metros. They should not be allowed to have their way.
Hope you had a nice weekend. Back to our regularly scheduled program. Suzan

Saturday, July 19, 2008

Mother's Milk of Politics Turns Sour

I saw Bill's show on PBS Friday night (click on the link for the best interview ever) where he spoke with Bill Grieder (with whom, yes, I am IN LOVE) and was briefly elated by the thought that it was broadcast to millions who could, upon listening and cogitating only a little, begin to put two and two together and decide to join our movement to end the madness inflicted on us by the BushLeagueCheneGang (sorry Terry, I like the spelling). Upon further thought, however, I realized just how hard it is for those ineluctably deaf to decide to hear and act. Would that they did. _________________________________________
Mother's Milk of Politics Turns Sour Friday 18 July 2008 Bill Moyers and Michael Winship Truthout - Perspective Once again we're closing the barn door after the horse is out and gone. In Washington, the Federal Reserve has finally acted to stop some of the predatory lending that exploited people's need for money. And like Rip Van Winkle, Congress is finally waking up from a long doze under the warm sun of laissez-faire economics. That's French for turning off the alarm until the burglars have made their getaway. Philosophy is one reason we do this to ourselves; when you worship market forces as if they were the gods of Olympus, then the gods can do no wrong - until, of course, they prove to be human. Then we realize we should have listened to our inner agnostic and not been so reverent in the first place. But we also get into these terrible dilemmas - where the big guys step all over everyone else and the victims are required to pay the hospital bills - because we refuse to recognize the connection between money and politics. This is the great denial in democracy that may ultimately mean our ruin. We just don't seem able to see or accept the fact that money drives policy. It's no wonder that Congress and the White House have been looking the other way as the predators picked the pockets of unsuspecting debtors. Mega banking and investment firms have been some of the biggest providers of the cash vital to keeping incumbents in office. There isn't much appetite for biting - or regulating - the manicured hand that feeds them. Guess who gave the most money to candidates in this 2007-08 federal election cycle? That's right, the financial services and real estate industries. They stuffed nearly $250 million into the candidate coffers. The about-to-be-bailed-out Fannie Mae and Freddie Mac together are responsible for about half the country's $12 trillion mortgage debt. Lisa Lerer of Politico.com reports that over the past decade, the two financial giants with the down-home names have spent nearly $200 million on campaign contributions and lobbying. According to Lerer, "They've stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain's presidential campaign manager, Rick Davis; Democrat Barack Obama's original vice presidential vetter, Jim Johnson, and scores of others now working for the two rivals for the White House." Last Sunday's New York Times put it as bluntly as anyone ever has: "In Washington, Fannie and Freddie's sprawling lobbying machine hired family and friends of politicians in their efforts to quickly sideline any regulations that might slow their growth or invite greater oversight of their business practices. Indeed, their rapid expansion was, at least in part, the result of such artful lobbying over the years." What a beautiful term: "artful lobbying." It means honest graft. Look at any of the important issues bogged down in the swampland along the Potomac and you don't have to scrape away the muck too deeply to find that campaign cash is at the core of virtually every impasse. We're spending more than six percent of our salaries on gasoline, and global warming keeps temperatures rising, but the climate bill was killed last month and President Bush just got rid of his daddy's longtime ban on offshore drilling. Only in a fairy tale would anyone believe it's just coincidence that the oil and gas industries have donated more than $18 million to federal candidates this year, three-quarters of it going to Republicans. They've spent more than $26 million lobbying this year - that's seven times more than environmental groups have spent. Follow the money - it goes from your gas tank to the wine bars and steak houses of DC, where the payoffs happen. Or ponder that FISA surveillance legislation that just passed the Senate. It let the big telecommunications companies off the hook for helping the government wiretap our phones and laptops without warrants. Over the years those telecom companies have given Republicans in the House and Senate $63 million and Democrats $49 million. No wonder that when their lobbyists reach out and place a call to Congress, they never get a busy signal. Do the same without making a big contribution, and you'll be put on "hold" until the embalmer shows up to claim your cold corpse. The late journalist Meg Greenfield once wrote that trying to get money out of politics is akin to the quest for a squirrel-proof birdfeeder. No matter how clever and ingenious the design, the squirrels are always one mouthful ahead of you. Here's an example. Corporations are limited in how much they can contribute to candidates' campaigns, right? But someone's always figuring out how to open another back door. So Democrats have turned to Steve Farber. He's using the resources of his big K Street law and lobbying factory to help raise $40 million for the Democratic National Convention. Half a dozen of his clients have signed up, including AT&T, Comcast, Western Union and Google. Their presence at the convention will offer lots of opportunities to curry favors at private parties while ordinary delegates wander Denver looking for the nearest Wendy's. By the way, just as you pay at the gas pump for those energy lobbyists to wine and dine your representatives in Washington, you'll pay on April 15 for Denver - corporations can deduct their contributions. Another back door - one quite familiar to Steve Farber and his ilk - leads to presidential libraries. Bill Clinton's in Arkansas required serious political bucks, and we're not talking penny ante fines for overdue books. Again, there's no limit to the amount donors can give and no obligation to reveal their names. Clinton's cost $165 million and we still don't know the identities of everyone who put up the dough, even though four years ago a reporter stumbled on a list that included Arab businessmen, Saudi royals, Hollywood celebs and the governments of Dubai, Kuwait, Qatar, Brunei and Taiwan. Hmmm ... Once George W. is out of the White House, he, too, plans what one newspaper described as a "legacy polishing" institute - a presidential library and think tank at Southern Methodist University in Dallas costing half a billion dollars. Last Sunday, The Times of London released a remarkable video of one of the president's buddies and fund raisers - Stephen Payne, a political appointee named to the Homeland Security Advisory Council. The Times set him up in a video sting, and taped a conversation in which Payne offers an exiled leader of Kyrgyzstan meetings with such White House luminaries as Vice President Cheney and Condoleezza Rice - provided he makes a whopping contribution to the Bush Library, and an even bigger payment to Payne's lobbying firm. Payne tells him, "It will be somewhere between $600,000 and $750,000, with about a third of it going directly to the Bush Library.... That's gonna be a show of 'we're interested, we're your friends, we're still your friends.'" The White House denies any connection between library contributions and access to officials, and harrumphed at the preposterous idea that Payne had a close relationship with the president. Unfortunately, there's at least one photo of Payne with the president, cutting brush at Bush's Crawford ranch. There's also one of Payne demonstrating more guts than common sense, on a rifle range with Deadeye Dick Cheney. Payne, who now is supporting John McCain, says he's done nothing wrong, but a Congressional investigation intends to find out. So, from the financial meltdown brought on by predatory lending to global warming to tax breaks and other favors, the late California politician Jesse "Big Daddy" Unruh got it right: Money is the mother's milk of politics. He knew what he was talking about, because Big Daddy swigged it by the gallon. Now it has curdled into a witch's brew.
________________________________________ Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program, Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers. Enjoy Sunday! Suzan

Which Line of Bullsh*t Will You Buy?

Despite lots of planning of next brilliant moves and brave talk at the NetRoots Nation gathering, the battle is clearly not over, although the corruption factors have been exposed time and time again. In fact, the battle is just beginning to look like Armageddon. Take the upcoming political conventions. Please! What false issues will rule the day for each? Democrats with their "I did the best I could under very trying circumstances and I'm as tough as they are" false bravado about the waging of war against Rethuglican corruption and terr'ists, or the Rethugs with their "The Democrats have been bought-off as much as we have and who will protect you better from terr'ists?" Or perhaps both, who will be arguing about how they "saved" the taxpayers after the latest bubble was burst, and how the taxpayers are lucky that they can assume the costs to ensure their future viability to have (lousy) jobs to continue to pay the necessary taxes until they arrive at the next surprise bubble (and terr'ist threat)? Matt Taibbi in Rolling Stone (from Alternet) reports that Economic Realities Are Killing Our Era of Fantasy Politics, and that "we're at a critical time in our nation's history. For this is the moment when the country's political and media consensus finally settles on the line of bullshit it will be selling to the public as the 'national debate' come fall." Thanks for the essay, Matt, but we already know this out here in 3rd World Suburbanland (not to mention the ongoing Ghettoland population's abiding awareness of same). And I don't mind mentioning also how knowledgeable we are out here about the lack of medical and dental care among our forgotten numbers. (Emphasis marks, and some editing changes, are mine (to improve readability).)

If you pay close attention you can actually see the trial balloons whooshing overhead. There have been numerous articles of late of the Whither the Debate? genus in the country's major dailes and news mags, pieces like Patrick Healy's "Target: Barack Obama. Strategy: What Day is it?" in the New York Times. They ostensibly wonder aloud about what respective "plans of attack" Barack Obama and John McCain will choose to pursue against one another in the fall. In these pieces we already see the candidates trying on, like shoes, the various storylines we might soon have hammered into our heads like wartime slogans. Most hilarious from my viewpoint is the increasingly real possibility that the Republicans will eventually decide that their best shot against Obama is to pull out the old "He's a flip-flopper" strategy - which would be pathetic, given that this was the same tired tactic they used against John Kerry four years ago, were it not for the damning fact that it might actually work again. (I'm actually not sure sometimes what is more repulsive: the bosh they trot out as campaign "issues," or the enthusiasm with which the public buys it.) Naturally we'll also see the "Patriotism Gap" storyline whipped out and reused over and over again. There will also be much talk emanating from the McCain camp about "experience," although this line of attack will not be nearly as fruitful for him as it was for Hillary Clinton, mainly because the word "experience" in McCain's case also has a habit of reminding voters that the Arizona senator is, well, wicked old. The Obama camp, playing with a big halftime lead as the cliché goes, is going to play this one close to the vest, sticking to a strategy of using larger and larger fonts every week for their "CHANGE" placards, and getting the candidates' various aides and spokesgoons to use the term "McCain-Bush policies" as many times as possible on political talk shows. Obama will also use this pre-convention period to do what every general election candidate does after a tough primary-season fight, i.e. ditch all the positions he took en route to securing the nomination and replace them with opinions subtly (or sometimes not-so-subtly) reconfigured to fit the latest polling information coming out of certain key swing states. Both sides as well as the pundit class will describe this early positioning for combat over swing-state electoral votes as a "race for the center" (AP, July 3: "Candidates Courting the Center"), as if the "political center" in America were a place where huge chunks of the population tirelessly obsessed over semi-relevant media-driven wedge issues like stem-cell research and gay marriage, even as they lacked money to buy food and make rent every month. The press, meanwhile, is clearly flailing around for a sensational hook to use in selling the election, as the once-brightly-burning star of blue-red hatred seems unfortunately to have dimmed a little - just in time, perhaps, to torpedo the general election season cable ratings. They are working hard to come up with the WWF-style shorthand labels they always use to sell electoral contests: if 2000 was the "wooden" and "condescending" Al Gore versus the "dummy" Bush, and 2004 featured that same "regular guy" Bush against the "patrician" and "bookish" John Kerry (who also "looked French"), in 2008 we're going to be sold the "maverick" McCain against the "smooth" Obama, or some dumb thing along those lines. Time has even experimented with a "poker versus craps" storyline, feeding off the incidental fact that Obama is a regular poker player while McCain reportedly favors craps, which apparently has some electorally relevant meaning - and if you know what that something is, please let me know. We're also going to be fed truckloads of onerous horseshit about the candidate wives. The Michelle Obama content is going to go something like this: the Fox/Limbaugh crowd will first plaster her with Buckwheatesque caricatures (the National Review cover was hilariously over-the-top in that respect) and racially loaded epithets like "baby Mama" (that via Fox News spokeswhore Michelle Malkin, God bless her) and "angry black woman" (via self-aggrandizing, cop-mustached Chicago-based prune Cal Thomas). Next, the so-called "mainstream" press, the "respectable" press, which of course is above such behavior, will amplify those attacks 10 million-fold via endless waves of secondary features soberly pondering the question of whether or not Michelle Obama is a "political liability" - because of stuff like the Thomas column, and Malkin's quip and the endless rumors about a mysterious "whitey" video. Cindy McCain, meanwhile, will generally be described as a political asset, as the pundit class tends to applaud, mute, stoned-looking candidate wives who have soldiered on bravely while being martyred by rumors of their mostly absent husband's infidelities. It will help on the martyrdom front that McCain launched his political career with her family money and drove her into an actual, confirmable chemical dependency. As long as she keeps gamely wobbling onstage and trying to smile into the camera, she's going to get straight A's from the political press, guaranteed. Some combination of all of these things is going to comprise the so-called "national debate" this fall. Now, we live in an age where our media deceptions are so far-reaching and comprehensive that they almost smother reality, at times seeming actually to replace reality - but even in the context of the inane TV-driven fantasyland we've grown used to inhabiting, this year's crude cobbling together of a phony "national conversation" by our political press is an outrageous, monstrously offensive deception. For if, as now seems likely, this fall's election is ultimately turned into a Swan-esque reality show where America is asked to decide if it can tolerate Michelle Obama's face longer than John McCain's diapers, it will be at the expense of an urgent dialogue about a serious nationwide emergency that any sane country would have started having some time ago. And unless you run a TV network or live in Washington, you probably already know what that emergency is. A few weeks back, I got a call from someone in the office of Vermont Senator Bernie Sanders. Sanders wanted to tell me about an effort his office had recently made to solicit information about his constituents' economic problems. He sent out a notice on his e-mail list asking Vermont residents to "tell me what was going on in their lives economically." He expected a few dozen letters at best - but got, instead, more than 700 in the first week alone (click here for the entire essay): . . . My 90-year-old father in Connecticut has recently become ill and asked me to visit him. I want to drop everything I am doing and go visit him, however, I am finding it hard to save enough money to add to the extra gas I'll need to get there. I make more than I did a year ago and I don't have enough to pay my property taxes this quarter for the first time in many years. They are due tomorrow. . . . This single mother buys clothes from thrift stores and unsuccessfully tried to sell her house to pay for her son's schooling. . . . I don't go to church many Sundays, because the gasoline is too expensive to drive there. Every thought of an activity is dependent on the cost. Sanders got letters from working people who have been reduced to eating "cereal and toast" for dinner, from a 71-year-old man who has been forced to go back to work to pay for heating oil and property taxes, from a worker in an oncology department of a hospital who reports that clinically ill patients are foregoing cancer treatments because the cost of gas makes it too expensive to reach the hospital. The recurring theme is that employment, even dual employment, is no longer any kind of barrier against poverty. Not economic discomfort, mind you, but actual poverty. Meaning, having less than you need to eat and live in heated shelter - forgetting entirely about health care and dentistry, which has long ceased to be considered an automatic component of American middle-class life. The key factors in almost all of the Sanders letters are exploding gas and heating oil costs, reduced salaries and benefits, and sharply increased property taxes (a phenomenon I hear about all across the country at campaign trail stops, something that seems to me to be directly tied to the Bush tax cuts and the consequent reduced federal aid to states). And it all adds up to one thing. "The middle class is disappearing," says Sanders. "In real ways we're becoming more like a third-world country." Here's the thing: nobody needs me or Bernie Sanders to tell them that it sucks out there and that times are tougher economically in this country than perhaps they've been for quite a long time. We've all seen the stats - median income has declined by almost $2,500 over the past seven years, we have a zero personal savings rate in America for the first time since the Great Depression, and 5 million people have slipped below the poverty level since the beginning of the decade. And stats aside, most everyone out there knows what the deal is. If you're reading this and you had to drive to work today or pay a credit card bill in the last few weeks you know better than I do for sure how fucked up things have gotten. I hear talk from people out on the campaign trail about mortgages and bankruptcies and bill collectors that are enough to make your ass clench with 100 percent pure panic. None of this is a secret. Here, however, is something that is a secret: that this is a class issue that is being intentionally downplayed by a political/media consensus bent on selling the public a version of reality where class resentments, or class distinctions even, do not exist. Our "national debate" is always a thing where we do not talk about things like haves and have-nots, rich and poor, employers versus employees. But we increasingly live in a society where all the political action is happening on one side of the line separating all those groups, to the detriment of the people on the other side. We have a government that is spending two and a half billion dollars a day in Iraq, essentially subsidizing new swimming pools for the contracting class in northern Virginia, at a time when heating oil and personal transportation are about to join health insurance on the list of middle-class luxuries. Home heating and car ownership are slipping away from the middle class thanks to exploding energy prices - the hidden cost of the national borrowing policy we call dependency on foreign oil, "foreign" representing those nations, Arab and Chinese, that lend us the money to pay for our wars. And while we've all heard stories about how much waste and inefficiency there is in our military spending, this is always portrayed as either "corruption" or simple inefficiency, and not what it really is - a profound expression of our national priorities, a means of taking money from ordinary, struggling people and redistributing it not downward but upward, to connected insiders, who turn your tax money into pure profit. You want an example? Sanders has a great one for you. The Senator claims that he has been trying for years to increase funding for the Federally Qualified Health Care (FQHC) program, which finances community health centers across the country that give primary health care access to about 16 million Americans a year. He's seeking an additional $798 million for the program this year, which would bring the total appropriation to $2.9 billion, or about what we spend every two days in Iraq. "But for five billion a year," Sanders insists, "we could provide basic primary health care for every American. That's how much it would cost, five billion." As it is, though, Sanders has struggled to get any additional funding. He managed to get $250 million added to the program in last year's Labor, Health and Human Services bill, but Bush vetoed the legislation, "and we ended up getting a lot less."

Okay, now, hold that thought. While we're unable to find $5 billion for this simple program, and Sanders had to fight and claw to get even $250 million that was eventually slashed, here's something else that's going on. According to a recent report by the GAO, the Department of Defense has already "marked for disposal" hundreds of millions of dollars worth of spare parts - and not old spare parts, but new ones that are still on order! In fact, the GAO report claims that over half of the spare parts currently on order for the Air Force - some $235 million worth, or about the same amount Sanders unsuccessfully tried to get for the community health care program last year - are already marked for disposal! Our government is buying hundreds of millions of dollars worth of Defense Department crap just to throw it away! "They're planning on throwing this stuff away and it hasn't even come in yet," says Sanders. According to the report, we're spending over $30 million a year, and employing over 1,400 people, just to warehouse all the defense equipment we don't need. For instance - we already have thousands of unneeded aircraft blades, but 7,460 on the way, at a cost of $2 million, which will join those already earmarked for the waste pile. This is why you need to pay careful attention when you hear about John McCain claiming that he's going to "look at entitlement program" waste as a means of solving the budget crisis, or when you tune into the debate about the "death tax."

We are in the midst of a political movement to concentrate private wealth into fewer and fewer hands while at the same time placing more and more of the burden for public expenditures on working people. If that sounds like half-baked Marxian analysis... well, shit, what can I say? That's what's happening. Repealing the estate tax (the proposal to phase it out by the year 2010 would save the Walton family alone $30 billion) and targeting "entitlement" programs for cuts while continually funneling an ever-expanding treasure trove of military appropriations down the befouled anus of pointless war profiteering, government waste and North Virginia McMansions - this is all part of a conversation we should be having about who gets what share of the national pie. But we're not going to have that conversation, because we're going to spend this fall mesmerized by the typical media-generated distractions, yammering about whether or not Michelle Obama's voice is too annoying, about flag lapel pins, about Jeremiah Wright and other such idiotic bullshit. Bernie Sanders is one of the few politicians out there smart enough and secure enough to understand that the future of American politics is necessarily going to involve some pretty frank and contentious confrontations. The phony blue-red divide, which has been buoyed for years by some largely incidental geographical disagreements over religion and other social issues, is going to give way eventually to a real debate grounded in a brutal economic reality increasingly common to all states, red and blue. Our economic reality is as brutal as it is for a simple reason: whether we like it or not, we are in the midst of revolutionary economic changes. In the kind of breathtakingly ironic development that only real life can imagine, the collapse of the Soviet Union has allowed global capitalism to get into the political unfreedom business, turning China and the various impoverished dictatorships and semi-dictatorships of the third world into the sweatshop of the earth. This development has cut the balls out of American civil society by forcing the export abroad of our manufacturing economy, leaving us with a service/managerial economy that simply cannot support the vast, healthy middle class our government used to work very hard to both foster and protect. The Democratic party that was once the impetus behind much of these changes, that argued so eloquently in the New Deal era that our society would be richer and more powerful overall if the spoils were split up enough to create a strong base of middle class consumers - that party panicked in the years since Nixon and elected to pay for its continued relevance with corporate money. As a result the entire debate between the two major political parties in our country has devolved into an argument over just how quickly to dismantle the few remaining benefits of American middle-class existence - immediately, if you ask the Republicans, and only slightly less than immediately, if you ask the Democrats. The Republicans wanted to take Social Security, the signature policy underpinning of the middle class, and put it into private accounts - which is a fancy way of saying that they wanted to take a huge bundle of American taxpayer cash and invest it in the very companies, the IBMs and Boeings and GMs and so on, that are exporting our jobs abroad. They want the American middle class to finance its very own impoverishment! The Democrats say no, let's keep Social Security more or less as is, and let that impoverishment happen organically. Now we have a new set of dire problems in the areas of home ownership and exploding energy prices. In both of these matters the basic dynamic is transnational companies raiding the cash savings of the middle class. Because those same companies finance the campaigns of our politicians, we won't hear much talk about getting private industry to help foot the bill to pay for these crises, or forcing the energy companies to cut into their obscene profits for the public good. We will, however, hear talk about taxpayer-subsidized bailouts and various irrelevancies like McCain's gas tax holiday (an amusing solution - eliminate taxes collected by government in order to pay for taxes collected by energy companies). Ultimately, however, you can bet that when the middle class finally falls all the way down, and this recession becomes something even worse, necessity will force our civil government - if anything remains of it by then - to press for the only real solution. "Corporate America is going to have to reinvest in our society," says Sanders. "It's that simple." These fantasy elections we've been having - overblown sports contests with great production values, decided by haircuts and sound bytes and high-tech mudslinging campaigns - those were sort of fun while they lasted, and were certainly useful in providing jerk-off pundit-dickheads like me with high-paying jobs. But we just can't afford them anymore. We have officially spent and mismanaged our way out of la-la land and back to the ugly place where politics really lives - a depressingly serious and desperate argument about how to keep large numbers of us from starving and freezing to death. Or losing our homes, or having our cars repossessed. For a long time America has been too embarrassed to talk about class; we all liked to imagine ourselves in the wealthy column, or at least potentially so, flush enough to afford this pissing away of our political power on meaningless game-show debates once every four years. The reality is much different, and this might be the year we're all forced to admit it.

Still having a nice weekend? Heat getting to ya? Suzan _____________________________________