The Economic Crisis and the "Formula For Fraud"

Understanding how deregulation of banks helped caused the present economic calamity.
[Edited 4/18/12]
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During the current economic crisis, millions of homeowners have lost their homes through foreclosure, over 1.9 million in 2009 and 2010 alone. Almost everyone knows someone who has lost their home or who is currently at risk. The banks who made and encouraged the bad loans, and who sold them off as triple A rated, but nearly worthless, bundled, complex securities, and who are arguably most responsible for the economic collapse, have been bailed out. Little has been done to help those foreclosed upon, or homeowners in distress.

Back in 2010-2011, Dean Baker at the Center for Economic and Policy Research, (Right-to-Rent Would Ease Foreclosure Mess ) suggested the following:

"There is a simple alternative that involves no government money and no new bureaucracy. We could temporarily change the rules on foreclosure to allow homeowners the right to stay in their home as renters for a substantial period of time (e.g., 5 years) following a foreclosure.

During this period, they would pay the market rent as determined by an independent appraiser. They would have the same rights and responsibilities as other tenants, with the exception that they could not be evicted without cause. The lender would own the property and would be free to sell it, although the former homeowner would still have the right to remain as a tenant even if the home is sold.

This policy accomplishes several important goals. First and foremost it provides housing security for homeowners who got caught up in the middle of the bubble. These people can be blamed for having made a mistake by buying homes at bubble-inflated prices. But this mistake is small compared with the mistakes made by the banks that made hundreds of billions of dollars of bad and often deceptive loans.

We were willing to give these banks trillions of dollars of loans at below market rates. Allowing foreclosed homeowners to stay in their homes as renters seems a rather small concession in comparison. This right-to-rent provision can also be narrowly structured so that it only applies to owner-occupied homes of less than the median value that were bought during the bubble years. This will ensure that it is not exploited by wealthy homeowners or investors."

The banks and Congress didn't listen to Dean Baker, CEPR, and other economists who felt similarly.

So now, unfortunately, NPR reported on April 16, 2012, that instead, banks are selling thousands of seized homes to "big-time investors" so that they can rent them out at what ever price the market will bear, to, in many cases, the people who have been turned out of their homes.

Another article by NPR, City Rents Rise As Buyers Wait Out Housing Bust
by JIM ZARROLI

notes that:

"There's very little supply, there's lots of demand," he says. "People have been staying in the rental market longer 'cause they're not comfortable jumping into the sales market or they don't have the necessary down payments, so all of those things have been factored into a very tight and successful rental market."

That pattern is being repeated in many other parts of the country. Chris Herbert, research director of Harvard's Joint Center for Housing Studies, says rents rose more than 5 percent last year in Seattle, Chicago, Minneapolis, Boston, Pittsburgh and other cities. Herbert says the increases reflect growing demand for rental properties."

"In 2011, there was growth of a million renter households across the country, while homeowner households fell by 350,000," Herbert says. "So in one year to have growth of a million renters, that's a number we haven't seen in a long time."

A million renter mystery?

But wait, where did a million renters come from? Dean Baker in the article mentioned above, notes that:

"We are virtually certain to see at least a million foreclosures in 2011 and comparable numbers in 2012 and 2013. Many more homeowners will lose their homes through distressed sales."

If homeowner households only fell by 350,000 in 2011, what about the million or so who were put out of their homes in 2011 alone by foreclosures? (Not to mention the few million in previous years of the current recession.) Did NPR count them? Are they homeless, living with parents or friends, or are they, like the millions before them, seeking rentals? NPR doesn't bother to make a connection between rising rents and a few million foreclosures. That's par for NPR's uninformative, mind-easing course, which is; every thing's fine: "People have been staying in the rental market longer 'cause they're not comfortable jumping into the sales market or they don't have the necessary down payments, so all of those things have been factored into a very tight and successful rental market."

At least the Huffington Post notes that:

"The practice of turning foreclosed homes into rentals is becoming so popular that the Federal Reserve issued guidelines earlier this month for banks to use when they're flipping foreclosures into rentals. But the practice also faces criticism: Namely, some are concerned that the very banks and agencies responsible for the housing crisis in the first place will now benefit from their own questionable practices."

See also:
Rentals Continue to Outshine Purchase Market, Home Values Still Plagued By Foreclosures
Foreclosure re-sales challenge previous peak in February, According to February Zillow Real Estate Market Reports

"The rental market remains a bright spot in the housing market, where many markets, especially hard hit ones, are experiencing significant annual rent appreciation and drawing the attention of investors. Converting distressed and vacant properties into rental units will reduce the oversupply of homes and speed up the recovery process."

Not to mention making rich people wealthier. Recovery? Recovery for who? Certainly not for the millions tossed out of their homes. Sounds like recovery for the 1 or 2%.

When you consider the reasonable alternative promoted by Dean Baker, i.e., to allow people to stay in their homes as renters, and the current reality that people's homes are being auctioned off at fire-sale prices to wealthy investors who charge increasing rents, that really says all you need to know about who the government cares about and who they are responsive to.

So why are all these people being foreclosed upon and how did the economic crisis come about in the first place?

William Black, "Formula for Fraud":

I’m going to quote from George Akerlof and Paul Romer’s famous article, or, at least, an article that should be famous where the title says it all: 'Looting: The Economic Underworld of Bankruptcy for Profit.' So, the bank fails or, in the modern era, is 'bailed' out, but the CEO walks away wealthy. And this is what Akerlof and Romer wrote about 20 years ago:

"Neither the public, nor economists foresaw that savings and loan deregulation was bound to produce looting, nor, unaware of the concept, could they have known how serious it would be. Thus, the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now, we know better. If we learn from experience, history need not repeat itself.'

(c. 8:22) “George Akerlof was awarded the Nobel Prize in Economics in 2001. So, you might think economists would pay attention. You might think, since this article was written nearly 20 years ago, that the textbooks would mention fraud and looting. They don’t just ignore everyone here. They ignore Nobel Prize winners in Economics.

“So, what, again, was this lesson? It was the regulators in the field, the little people, not the fancy people, who understood from the beginning that deregulation would lead to massive looting. And it was the economists that ignored them. And after we had proven that it was fraud, after we had sent over a thousand elite bankers and their cronies to prison, after a Nobel Prize winner warned about it, after all those things, they ignored it and produced crisis after crisis, including the one we experience now.

(c. 9:59) “So, what did we know out of that savings and loan crisis, that was widely described at the time as the worst financial scandal in U.S. history? And we have a history rich in scandal. Here is what the national commission that investigated the causes of the crisis reported:

"'The typical large failure [grew] at an extremely rapid rate, achieving high concentrations of assets in risky ventures... [E]very accounting trick available was used... Evidence of fraud was invariably present, as was the ability of the operators to 'milk' the organisation.'

(c. 11:04) "That means to loot the organisation. But, speaking of milk, [Applause] the frauds I’m describing are in no way limited to the Unites States; they exist in every country. And they are common enough to explain; and they are old enough to explain what Balzac was saying because many of the wealthy become rich through precisely the scandals, the fraud, I will describe.

“In criminology, we call them financial super predators when we’re being lyrical. When we’re writing journals, we call them ‘control frauds,’ which is boring. Control fraud occurs when the person who controls a seemingly legitimate entity, like Parmalat, uses it as a weapon to defraud. And they can often use this weapon with impunity. In finance, accounting is the weapon of choice.  And these accounting frauds cause greater losses than all other property crimes combined, yet economics, again, never talks about it.  Worse, when many of these frauds occur in the same area, they hyperinflate financial bubbles, which is what causes financial crises and mass unemployment.  It makes the CEOs wealthy, produces Balzac scandals, and destroys democracy."

"William Black is Associate Professor of Law and Economics at the University of Missouri, Kansas City.  He is a lawyer, academic, and former bank regulator and the author of The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S&L Industry."

The speech is highly recommended for those who still believe, after all the economic collapses we have repeatedly been experiencing, that deregulation is the answer.

Guns and Butter
"Formula For Fraud" with William K. Black from the first Italian economic Summit on Modern Money Theory in Rimini, Italy. How to become a billionaire - the four necessary ingredients in the recipe for fraud; the three sure consequences of banking control fraud; gutting of the underwriting process; Gresham's Law; The Business Roundtable; hyperinflation of a bubble.

Guns and Butter - April 4, 2012 at 1:00pm

Click to listen (or download)

Transcript Here

Today’s show has been ‘Formula for Fraud.’  William Black is Associate Professor of Law and Economics at the University of Missouri, Kansas City.  He is a lawyer, academic, and former bank regulator and the author of The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S&L Industry.  

“Please visit the University of Missouri, Kansas City New Economic Perspectives blog at www.NewEconomicPerspectives.org.  Visit the website for the first Italian Summit on Modern Money Theory at www.DemocraziaMMT.info.
Transcript by Felipe Messina for Media Roots and Guns and Butter

[Here is an outline of the recipe for bank fraud, by William K. Black, so please click this link if you are looking for an outline of the transcript of the speech. It is digestible if you have a general knowledge of the players and "economics" (god forbid!) and read it while listening to the speech, but the speech transcript is an easier read.]

Iran Nuke Propaganda Debunked, NPR on Iran, and The Greek Experiment

In this Edition:
- Iran Nuke Propaganda Debunked (Video, my comments on NPR & other coverage, several articles & PEW Poll)
- The Greek Experiment (Videos & Article)

[In my now deleted 2/15/12 post on these subjects, I had forgotten about some comments from a few weeks back on Iran press coverage that I had not yet posted, so I have added them and some articles to fill out the portion on Iran's nuclear program for this new post.]
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Iran Propaganda debunked in less than 6 minutes

See Also:
Scott Horton Interviews Flynt Leverett
Scott Horton Interviews Flynt Leverett-- December 30, 2011
Scott Horton Interviews Gareth Porter
Scott Horton Interviews Gareth Porter--January 19, 2012
Scott Horton Interviews Philip Giraldi
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NPR's Navarro lies on Iran Nuke

I like some of the programming on Oregon Public Broadcasting, but I always let out a very loud grumpy groan, which is not unlike the sound of a large tree falling down in a forest far away from any human ear, when during an NPR/PBS/OPB funding drive, I hear the words of some obsequious, allegedly well informed individual say, like many others before them, something to the effect that if it were not for NPR, they would not know what really is going on in the world.

I'm thinking "Really? How unfortunate that you are apparently unplugged from so many alternative news sources on the internet." Sources, I might add, that value truth over the views of administrative overseers, advertisers, or subscriber donations.

Remembering back to the run-up to the Iraq war, NPR was among the others in the mainstream media, like the New York Times, NBC, and the like, that in some cases produced, and at least eagerly repeated, the lies coming out from the Bush administration and the Neocon think tanks. NPR programs, like Morning Edition and Talk of the Nation, even called some of the discredited "experts," or their sponsoring think tanks, back to comment on newer developments years after their previous reports had been show to be utterly baseless and false.

NPR, and even Democracy Now!, to some extent, have given much air time to reporters who told us with righteous glee how Gadaffi was being defeated, but you don't hear many reports now that the country is in a shambles, and the people they supported have turned on each other, and have committed barbarous acts against imprisoned Libyan blacks and others thought to have supported Gaddafi. The corporate media in general behaves the same, and now they all report alleged war crimes and civilian casualties in Syria on the flimsiest of evidence. NPR entertains "experts" who urge US intervention, as they did in Iraq and Libya, without providing much analysis of what the real results of intervention will be. We know what a disaster the wars have become in Iraq and Afghanistan, with Libya and others not far behind.

So now we have had a near constant drumbeat in recent weeks, years really, from that same media, concerning the imminent nuclear threat posed to Israel and the US by Iran.

Without getting in to Iran's actual treaty rights to develop the same nuclear energy for peaceful purposes that the US and Europe have enjoyed for decades, and without bringing into the discussion the fact that the US, some European nations, and Israel, already threaten the world with nuclear weapons, it is important to focus on the lies that NPR (and other media sources) tell us about Iran's nuclear capability.

Here is a recentt lie from NPR:
Lourdes Garcia-Navarro, NPR News, 12 Noon, 2/3/12, from her base in Jerusalem:

"Most intelligence suggests Iran could have the bomb within a year."

Most intelligence suggests Iran could have the bomb within a year? Who's intelligence? Here are recent statements and articles about US intelligence sources:

Graham Doesn’t Believe Clapper: ‘I’m Very Convinced’ Iran Is Building Nuclear Weapons

By Eli Clifton

February 16, 2012 "Think Progress" - -

Testifying before the Senate Armed Services Committee today, Director of National Intelligence James Clapper, repeated his position that Iran has not yet decided whether to develop a nuclear weapon. Clapper, both in his prepared remarks [PDF] and in an exchange with Sen. Lindsey Graham (R-SC), emphasized that sanctions and diplomacy were the best option for stopping Iran from acquiring a nuclear weapon and that Iran’s decision making is guided by a a rational “cost-benefit approach.”

Graham — who is currently spearheading a resolution limiting President Obama’s policy options on Iran — tried to push Clapper into acknowledging that Iran has decided to pursue a nuclear weapon, but the top U.S. intelligence failed to agree, leading Graham to disagree with the U.S. intelligence assessment of Iran’s nuclear intentions:

LINDSEY GRAHAM: You have doubt about the Iranian’s intention when it comes to making a nuclear weapon?

JAMES CLAPPER: I do.

GRAHAM: So you’re not sure they’re trying to make a bomb? [...]

CLAPPER: I think they’re keeping themselves in a position to make that decision but there are certain things they have not yet done and have not done for some time. [...]

GRAHAM: I guess my point is that I take a different view. I’m very convinced they’re going down the road of developing a nuclear weapon.

Watch it:

James Clapper Discusses Iran's Nuclear Intentions

Read Rest of article at Think Progress.
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Rep. Dennis Kucinich:
Fact Checking the Media
http://youtu.be/o6k1VTmOPyE

"The media coverage on Iran is mirroring the coverage in the lead-up to the Iraq war: grand claims about a smoking gun that doesn't exist. For example, The New York Times incorrectly reported last month that the latest International Atomic Energy Agency (IAEA) report on Iran concluded that their nuclear program had a military objective. The paper's public editor, Arthur Brisbane, was forced to acknowledge their mistake and wrote: "Some readers, mindful of the faulty intelligence and reporting about Saddam Hussein's weapons program, are watching the Iran nuclear coverage very closely." Other media outlets such as National Public Radio, PBS and The Washington Post have been challenged on their coverage too. 

A recent publication from the Center for Strategic and International Studies titled "The IAEA's Iran Report and Misplaced Paranoia," noted that "With few exceptions, these revelations are not exactly new. More importantly, neither is the thrust of the report: that Iran is developing some capabilities that can only be understood as preliminaries to the development of nuclear weapons. Unfortunately, early coverage of the report's release gives the opposite impression."


Many have recognized that the media failed to do its job in the lead-up to the Iraq war. The potential consequences of treading on that same path with Iran are grave. The U.S. has thus far spent over $1.2 trillion of borrowed money on the wars in Iraq and Afghanistan. Military action against Iran would be disastrous for the region and for U.S. moral standing. A serious diplomatic track based on mutual trust and respect is the only way to achieve increased transparency."

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Face The Nation, CBS News, January 8, 2012

Defense Secretary, Recently CIA Chief, Leon Panetta:

"Are they trying to develop a nuclear weapon? No."

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Israel: No Iranian Nuclear Weapons Program; Barak: Any decision to Strike Iran “Far off.”
Haaretz, via Juan Cole (no peacenik) January,2012:

“The intelligence assessment Israeli officials will present later this week to Dempsey indicates that Iran has not yet decided whether to make a nuclear bomb. The Israeli view is that while Iran continues to improve its nuclear capabilities, it has not yet decided whether to translate these capabilities into a nuclear weapon – or, more specifically, a nuclear warhead mounted atop a missile. Nor is it clear when Iran might make such a decision.”

This is the same conclusion to which the 16 US intelligence agencies have come in 2007 and 2010. It is also consistent with what the Iranian government itself says, which is that the Iranian nuclear enrichment program is a civilian one and that Iran is not trying to construct a nuclear weapon. Likewise, the International Atomic Energy Agency, which continues to inspect Iranian nuclear facilities, has repeatedly and consistently stated that no nuclear material has been diverted from the civilian program.
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Divining the Truth about Iran
February 1, 2012

Exclusive: Like before the invasion of Iraq, the U.S. news media is flooding Americans with alarmist accounts about Iran’s alleged pursuit of nuclear weapons. Even when U.S. officials suggest nuance and caution, the media ignores the signals, as ex-CIA analyst Ray McGovern reports.
By Ray McGovern

Watching top U.S. intelligence officials present the annual “Worldwide Threat Assessment” before the Senate Intelligence Committee, I found myself wondering if they would depart from the key (if politically delicate) consensus judgment that Iran is NOT working on a nuclear weapon.

In last year’s briefing, Director of National Intelligence James Clapper had stood firm on this key point, despite severe pressure to paint Iran in more pernicious terms. On Tuesday, I was relieved to see in Clapper’s testimony a reiteration of the conclusions of a formal National Intelligence Estimate (NIE) of November 2007, issued unanimously by all 16 U.S. intelligence agencies, including judgments like this:

Director of National Intelligence James Clapper
“We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program; … Tehran’s decision to halt its nuclear weapons program suggests it is less determined to develop nuclear weapons than we have been judging since 2005.”
Sadly, this judgment still comes as news to many of those Americans who are malnourished on the low-protein gruel of the Fawning Corporate Media (FCM) – even though the NIE was immediately declassified in 2007 and has been in the public domain for more than four years.

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In Iran Dispute, Who’s at Fault?
February 3, 2012

The Israeli government and the major U.S. news media are escalating their rhetoric in support of a new “preemptive” war, this time against Iran. Yet, as with the Iraq invasion, little attention is focusing on the rules of international law and which side is in the wrong, as Nat Parry describes.
By Nat Parry
. . . .
Former CIA analyst Ray McGovern recently wrote an article for Consortiumnews.com, reminding readers of a formal National Intelligence Estimate (NIE) from November 2007.
The NIE was issued unanimously by all 16 U.S. intelligence agencies and included the following conclusion: “We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program; … Tehran’s decision to halt its nuclear weapons program suggests it is less determined to develop nuclear weapons than we have been judging since 2005.”
This 2007 joint assessment of the U.S. intelligence community was essentially restated by Defense Secretary Leon Panetta last month, who stated frankly on national television that Iran is not currently attempting to develop nuclear weapons.
“Are they trying to develop a nuclear weapon? No. But we know that they’re trying to develop a nuclear capability. And that’s what concerns us,” Panetta told “Face the Nation” host Bob Schieffer. “And our red line to Iran is to not develop a nuclear weapon. That’s a red line for us.”

For its part, Iran has consistently said its nuclear program is peaceful, for electricity and medical purposes. If the Iranian government decides it is in its security interests to attain nuclear weapons, however, it has the legal right under Article 10 of the Non-Proliferation Treaty to withdraw:

“Each Party shall in exercising its national sovereignty have the right to withdraw from the Treaty if it decides that extraordinary events, related to the subject matter of this Treaty, have jeopardized the supreme interests of its country. It shall give notice of such withdrawal to all other Parties to the Treaty and to the United Nations Security Council three months in advance. Such notice shall include a statement of the extraordinary events it regards as having jeopardized its supreme interests.”
But Iran has not chosen to withdraw, and in accordance with its obligations under the NPT, is continuing to cooperate with the International Atomic Energy Agency (IAEA), which has the sole authority under the treaty to ascertain states parties’ commitments on non-acquisition of nuclear weapons.. . . .

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Despite the facts cited in the Scott Horton video and articles above, the PEW Research Center tells us 39% of the American People, mostly Republicans, would support Israel if it were to attack Iran over Iran's nuclear program, 51% would stay neutral, and only 5% would oppose. Go figure! The constant barrage of anti-Iranian propaganda from the corporate press seems to have had its predicted effect.

PEW RESEARCH CENTER FOR THE PEOPLE & THE PRESS
Public Takes Tough Line on Iran’s Nuclear Program

February 15, 2012

Nearly six-in-ten (58%) of Americans say it is important to prevent Iran from developing nuclear weapons, even if it means taking military action. Just 30% say it is more important to avoid a military conflict with Iran.

When it comes to the possibility that Israel may soon attack Iran's nuclear facilities, as has been reported in news stories, 51% say the U.S. should remain neutral. But for those saying the U.S. should take a position, 39% believe it should support an Israeli attack compared to 5% who say it should oppose such action.

Read the summary of the report for a partisan and demographic breakdown of U.S. public opinion on dealing with Iran. The survey also includes findings on overall public opinion about President Obama's plans for withdrawing troops from Afghanistan as well as an analysis of partisan divisions over his plan.

Read Full Report Here
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The Greek Experiment

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Greek Unrest the Result of Suppressed Democracy

By William Pfaff
[Added 2/16/12]

When the first international effort to impose an economic austerity regime upon Greece was completed, George Papandreou, the prime minister, surprised and infuriated the negotiators from the IMF, European Commission and European Central Bank by proposing that the draft agreement be submitted to a popular referendum in Greece. The negotiators and their governments knew very well that the Greek people would reject it.

Mr. Papandreou was hustled out of the limelight, and foreign leaders, the EU, international financial officials, and right-thinking commentators in Europe and the United States all deplored his proposal, since democracy was not part of the deal. . . . .

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Greece riots: Athens burns, police fire tear gas as violence flares up

So How's That "Citizens United" Thing Working Out For Ya?

After the rabidly Zionist gambling Mogul and newspaper owner, Sheldon Adelson, and his wife, revived Newt Gingrich's campaign with $10 million plus in contributions, even some in Congress were rattled. But, this was the predicted outcome of the "Citizens United" decision, so no one should be surprised. You might, however, want to support the groups that are trying to promote a needed constitutional amendment that would overturn the decision like Move to Amend. Interestingly, Mr.Adelson seems to prefer giving his money primarily to political ventures favoring Israel, where he maintains the most read newspaper, and along those lines, he is willing to provide whatever it takes to influence our Presidential election on Israel's behalf. Unprincipled politicians like Gingrich are all too eager to become Adelson's sock puppet for 10 million dollars, and Gingrich's hyperbolic and exaggerated, Likud-like statements about the Palestinians and Iran in recent weeks demonstrate that Adelson's purchase may be a sound one.

Here are some articles about Sheldon and his good work:
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Adelson, Gingrich, and the Selling of America
Posted By Justin Raimondo On January 24, 2012

If you want to know what’s wrong with our campaign finance laws – and our political system in a more general sense – look at the way Sheldon Adelson is buying the Republican nomination for his sock puppet, Newt Gingrich.

Right now, the anonymous donors to a political action committee, or PAC, can buy ads on behalf of – or against – a candidate, and spend unlimited amounts as long as there is no official connection between the PAC and any candidate. This degree of separation, however, is pure fiction: in reality, “former” aides to the candidate can and do operate these “Super PACs,” which are funded by one Daddy Warbucks or another: no overt coordination is necessary. What’s important here is disclosure, or the lack of it: the PACs don’t have to say who is funding these ads, only that the “Committee for Good Government” or some such semi-fictional entity is paying for it. In this way, Adelson – a casino billionaire, one of the richest people in the country – can drop a cool $10 million into the race (with more in the pipeline) and in effect buy the election, without the average voter knowing who is paying the bills. In short, Adelson can operate in the dark, as far as Joe Voter is concerned – and darkness is what the Adelsonian agenda requires above all.

So what is Adelson’s agenda? . . . .

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Gingrich’s Extremist Anti-Palestinian Stance Follows Millions from Casino Magnate Sheldon Adelson
Democracy Now! 1/27/12

. . . . Gal, explain what it is, this Adelson-Gingrich relationship, why he supports him.

GAL BECKERMAN: Well, he supports—the relationship is really symbiotic, in a way. It developed, as you said, in the mid-'90s over issues of union busting. Adelson wanted some help; Gingrich was able to offer it. And it developed as time went on. It seems to have helped kind of in Gingrich's evolution in terms of his pro-Israel stance. Wayne Barrett recently reported in The Daily Beast that, you know, if you look at what Gingrich was saying about Palestinians and Israel in 2005, even, as recently as 2005, it was kind of a different line. He was talking about investing in their ancestral lands. He was really speaking a much different language. This is now changed. You won’t hear Gingrich saying anything like that anymore. And it’s not—you know, one can’t draw a direct causal link, you know, find the telephone call in which Adelson said, you know, "I want you to say this." But it’s not hard to imagine that if your political life depends on a man who has very extreme-right views when it comes to the conflict between Israelis and Palestinians, that you’re going to hear that same language come out of that candidate’s mouth. . . . .

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NYPD Commissioner Ray Kelly Urged to Resign After Police Conceal Role in Anti-Muslim Documentary
Democracy Now! 1/27/12

. . . .
LINDA SARSOUR: The film is absolutely outrageous. Any rational-minded person that watches it will say, "Wow! How did the New York Police Department, the largest police force in this country, supposedly the most credible, have access to this film?" And what’s most astonishing is that while the NYPD surveils our community and creates files on us and checks us and all this kind of intelligence, the fact that there was no due diligence on the part of the NYPD to check out who the Clarion Fund is and to look up—look at their history—you don’t even need to have intelligence; just go on Google and find out who these people are—and connecting the dots, and looking at, you know, someone like Sheldon Adelson, who like funded this film, is also funding Newt Gingrich. It’s all connected. And this Third Jihad is not a one-time, you know, just a film, and we’re all mad and offended. It’s not about being offended. It’s about the security of all New Yorkers. If one bad judgment like this is happening in the NYPD, only God knows what other films are being shown that we don’t have the names in order for us do a FOIA request on these films. It’s absolutely outrageous. . . . .

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Who is Newt Gingrich’s biggest donor and what does he want?

. . . . Sheldon Adelson is also, far and away, the biggest patron of Newt Gingrich’s now-surging Republican presidential bid. Adelson and his wife, Miriam, have pumped $10 million into a political action committee backing Gingrich that is run by the former House speaker’s onetime aides. Campaign finance experts say the two $5 million contributions are among the largest known political donations in U.S. history.

No other candidate in the race to challenge President Barack Obama in the November election appears to be relying so heavily on the fortune of a single donor. It’s been made possible by last year’s Supreme Court rulings — known as Citizens United — that recast the political landscape by stripping away restrictions on contributions and how outside groups can spend their money.

Sheldon Adelson is Citizens United come to life. . . . .

As the Republican Presidential candidates focus on each other's numerous faults, America focuses on tax injustice

[Edited 1/25/12]
As most of the Republican candidates turn their inherently mean, greedy, and compassionless natures against each other during the debates, in what has become a free-for-all circus of incompetence, demonization of poor people, and back-biting, they have managed to bring the issue of tax fairness into America's living rooms. Mitt Romney has become the poster boy for how fabulously wealthy people can end up paying a lower tax rate than ordinary working people. Mitt Romney, who even though he tells us he does his own laundry, does have an estimated wealth of $190 to $250 million, and paid only about 13.9% in taxes, i.e. $3 million, on $21.7 million of unearned income in 2010. (Unearned--they got that adjective right, because the easier the work, the more you make) At least he pays more than nothing, as is the case with many corporations. His tax rate for the 2011 tax year is estimated to come in around 15.4%. The reason offered for why his rate is so low is due to the fact that most of his income is from investments (long-term capital gains), which are taxed at a 15% rate. The average person pays above 15%, some much more, when payroll taxes for medicare and Social Security are included. Newt Gingrich says he paid almost $1 million, or about 30%, on his 2010 income of roughly $3.1 million. Perhaps it is worth noting that in 1961, an individual making $200,000 or over, and a couple making $400,000 or over had a tax rate of 91%, which, even when adjusted for inflation ($200,000 in 1961=$1,504,608.70 in 2011), would still include both Romney and Gingrich.

The long-term capital gains tax rate is currently as low as it has been for at least the last 50 years. Until the George W. Bush administration, when it was lowered to 15%, it has ranged from a high around 40% to a low of 20%, and for most of the years before W, it was at, or most often above, 25%.

It is difficult however, for Newtie to criticize Romney or even to capitalize on what many people see as inherent unfairness in the tax code, because Gingrich has a 15% flat tax plan, which he now calls the Mitt Romney flat tax, and which would eliminate taxes on capital gains entirely, while cutting his own taxes in half. Then Newt will be able to keep $2.6million instead of a paltry $2.1 million on a $3.1 million income derived from influence peddling and speech making, and Mitt would pay almost nothing as a corporate raider/restructurer. Under Newtie's plan, the corporate rate would fall from its current 35% to only 12.5%, lower that the individual's flat 15%, and both corporations and the rich would reap large tax savings, while tax revenues tumble into the abyss. Fabulous ideas? Are we going to saddle the resurgence of the American Dream on the backs of the vast majority who are already seeing their share of the dream continuously shrink towards desperation? I read tonight that Obama said in his SOTU that he wants a tax plan where people making a $million or more pay at least a 30% rate, which is definitely a move in the right direction.

Romney responds to any criticism of capitalist inequality or thoughts of increasing the low tax load of the rich as "the politics of envy" and "class warfare," as if there couldn't possibly be an objective, fact based, critical analysis and thoughtful evaluation of tax fairness and our growing inequalities in wealth and opportunity between the rich, the middle class, and the poor. No, he and his class would have us believe that it's not the politics of fairness and justice, it's only "envy." He, and many Republican leaders, would have us believe that "class warfare" isn't by the rich on the poor, and isn't about the growing inequality and the increasing wealth and power of the rich at the expense of the poor and middle class, but that somehow, in the face of the facts, the poor are waging war against the rich! If he thinks that listening to poor and middle class people criticizing and protesting against outrageous inequality, in a peaceful, democratic fashion is warfare, then what would he call a situation where the poor actually decided to stand up and fight?

Partly in the hope of avoiding that eventuality, some folks are turning their skills to documentary film making so as to clearly explain the situation to Americans, in the hope that once armed with the facts, they will be able to bring change through the ballot box, even in the face of the Citizen's United ruling which grants corporations and unions unlimited campaign spending.

Below are two video variations on the same theme: We're Not Broke (We're just not taxing the rich and corporations enough, like we used to when all Americans mattered!) These are followed up by an informative Democracy Now! article on the Sundance Film Festival documentary "We're Not Broke," and a blog article by Robert Reich on the effects of globalization and "a Government Overwhelmed by Corporate money."
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We're Not Broke (Documentary at Sundance Film Festival)

From Synopsis in Sundance Film Festival Film Guide:

"With the United States in the grip of the worst economic recession since the Great Depression and an unprecedented budget deficit, the conclusion that our country is broke seems unquestionable. At least that's what politicians and pundits want ordinary citizens to believe as they call for massive spending cuts.

Karin Hayes and Victoria Bruce's searing exposé reveals that, strangely absent from this rhetoric, is the infuriating fact that multibillion-dollar corporations are based in the U.S., make money from American consumers, and often even receive lucrative contracts from the government, yet pay nothing in U.S. income taxes. By exploiting tax-law loopholes and spending millions on lobbyists to pressure politicians to protect their interests, corporations pocket billions while the less-connected middle class disappears, and the poor get poorer. . . . ."

Watch a short clip on Prescreen:
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Democracy Now!
As Romney Releases Tax Returns, Fmr Senate Investigator Says: We’ve Got To Start Taxing Corporations

During the GOP primary, Mitt Romney has come under fierce attack for parking millions of dollars of his personal wealth in investment funds set up in the Cayman Islands, a notorious Caribbean tax haven. We speak with Tax Justice Network USA chair Jack Blum, a former top congressional investigator of financial crimes, who says tax evasion could seriously cripple the already struggling economy. Blum appears in "We’re Not Broke," a documentary that premiered at the Sundance Film Festival. The film examines widespread corporate tax evasion in the United States and the increasing role of offshore tax havens. "Has [Romney] cheated? No," Blum says. "What he’s done is take full advantage of a system that has been structured the way it is because of political influence and a tremendous amount of lobbying money on Capitol Hill... We must not only rewrite the Internal Revenue Code, but we must get a fair contribution from the very wealthy and from corporations, and that is the only way to balance the budget."

[Link added] [Read rush transcript]
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We're Not Broke, Just Twisted: Extreme Wealth Inequality in America


Go To inequality.org
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The State of Our Disunion: A Globalizing Private Sector, A Government Overwhelmed by Corporate Money

Robert Reich

MONDAY, JANUARY 23, 2012

. . . .
An Apple executive says “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.” He might have added “and showing a big enough profits to continually increase our share price.”
. . . .
What they want in America is lower corporate taxes, less regulation, and fewer unionized workers. But none of these will bring good jobs to America. These steps may lower the costs of production here, but global companies can always find even lower costs abroad.
. . . .
Put simply, American workers are hobbled by deteriorating schools, unaffordable college tuitions, decaying infrastructure, and declining basic R&D. All of this is putting us on a glide path toward even lousier jobs and lower wages.

Get it? The strategic responsibility for making Americans more globally competitive can’t be centered in the private sector because the private sector is rapidly going global, and it’s designed to make profits rather than good jobs. The core responsibility has to be in government because government is supposed to be looking out for the public, and investing in public schools, colleges, infrastructure, and basic R&D.

But here’s the political problem. American firms have huge clout in Washington. They maintain legions of lobbyists and are pouring boatloads of money into political campaigns. After the Supreme Court’s Citizen’s United decision, there’s no limit.

Who represents the American workforce? Organized labor represents fewer than 7 percent of private-sector workers and has all it can do to protect a dwindling number of unionized jobs.

Republicans like it this way, and for three decades have been trying to convince average working Americans government is their enemy. Yet corporate America isn’t their friend. Without bold government action on behalf of our workforce, good American jobs will continue to disappear.

_

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock. His "Marketplace" commentaries can be found on publicradio.com and iTunes. He is also Common Cause's board chairman.

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See also:

Income inequality: Theme of 2012
By Marshall McComb
LTE, Baker City Herald
Baker City, Oregon

. . . .
But the inequality issue is not going away. Despite Republicans’ avoidance of this issue or their decrying it as “class warfare,” most of us realize that we have become a society more unequal than at any time since the 1920s. Automation, globalization, union-busting, and legalized financial abuse have drained middle-class purchasing power and stymied upward mobility. Health care and public education are in critical decline. Most of us have been left behind, while Romney and his cohorts pursue a never-ending quest for more money ... and the political power to cut their taxes even further. . . . .

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Iris Dement Wasteland Of The Free

Property Maintenance Ordinances: The Slippery Slope to Eviction

In This Edition:

- Why is the Government Driving Folks off Their Land? Classism Gone Wild!
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Why is the Government Driving Folks off Their Land?
http://youtu.be/yw3RiMdS7sE



L.A. County's War on Desert Rats

-
LA Weekly Articles:

"The crackdown, and the denial by some that a crackdown is under way, have fueled speculation as to Antonovich's, Cooley's and the NAT teams' motives. Residents suggest "they need to justify their jobs — and fill their budget." Others fear a land grab for future development plans. Bell calls that an "absurd" idea that he won't "validate" with a response."

"L.A. Weekly found in a six-week investigation that county inspectors and armed DA investigators also are pursuing victimless misdemeanors and code violations, with sometimes tragic results."

"Los Angeles County has left some residents, who appeared to be doing no harm, homeless."

"Until the county enforcers came calling, Gallo led a stable life. He wasn't in any danger of becoming homeless."

"Interestingly, county officials appear to understand what they are forcing Gallo into: A recent NAT visit was from "a lady at the gate," he says angrily, who handed him a flier for Stand Down, a program for homeless vets."

"Before NAT came around, Sterner had two valuable, sturdy cargo containers — and no neighbor gave a damn. "
"Fahey points out that those who purportedly "hate" his buildings remain anonymous. "They said it was A. Nonymous," he jokes."

"Robert McNamara is an attorney at the Institute for Justice, which litigates nationwide on behalf of individuals whose rights are violated by the government. Property rights is a key area in which "the courts are completely deferent to government, and have stopped acting as a check on government," he says."

"Tim Cavanaugh, senior editor of Reason, a libertarian magazine, says Los Angeles County has "started going after the lifestyle that has existed forever in the Antelope Valley." And such campaigns, Cavanaugh says, can escalate."

"city people are moving to the desert and they expect a higher level of cleanliness and conformity."

"They're not talking about setting up whorehouses," Rajkovacz says. "They live in the high desert, a lot in Antelope Valley. There's a reason they live in rural, downtrodden areas — because that's all they can afford."

"Cavanaugh suggests what is under way in the high desert is an intolerance toward working-class and poor people who are 'different.' 'Thank God they don't have resources to go around enforcing everything,' he says. 'It may not be your cup of tea, but that's the way people live.' "

L.A. County's Private Property War
By Mars Melnicoff
published: June 23, 2011

Defending Desert Rats
By L.A. Weekly readers
published: June 30, 2011
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See Also:

SUNDAY, MAY 17, 2009
Property Maintenance Jihad Targets Disabled Life-long Baker City Resident

FRIDAY, JUNE 5, 2009
Democracy In Baker City, Plus Calder Update (YouTube)

War on the Poor Escalates--City Ordinance Would Add Restrictions to Burn Barrels (There is a New Burn Fee Too!)

(The City relented on the burning permit fee later, and relaxed some of the restrictions, but no campfires for the relatives when they visit, and no burning after normal working hours.)

BEAR STEARNS BAILOUT—Whatever happened to Laissez-faire and “The Free Market?”

Bailouts for Wall Street, Bankruptcy for the little guy.

As we witness the bailout of billionaires and the economy sinking into recession, or worse, Robert Kuttner’s comments on the effects of deregulation in his 2007 book, The Squandering of America, seem even more prescient:

“But if some technical entrepreneurs arguably deserve large earnings, the Wall Street billionaires are a whole different story. There is a very good case that their windfall profits are actually making the economy worse off. The gains to hedge fund operators and merger-and-acquisition specialists in the newly deregulated environment are often not a case of inventing something new and valuable, but rather taking advantage of an insider position to capitalize on information that will move markets before it becomes widely known, or manipulating those markets for personal gain, or rearranging assets for the value that can be extracted from the transaction. While some Wall Street insiders do add value, spillover costs of the windfall economy frequently exceed the benefits.”

Ah, yes—the spillover costs. The fed is doing its best to shield those primarily responsible for the problem from those spillover costs. Those costs will be paid for by the taxpayer, as they often are in American special interest capitalism for the rich.

As the denial continues in some quarters, the 5 articles and the blog comments below help put the Fed’s actions in proper perspective. -Chris

- - - - -

"Bernankerupted"

Bear Stearns Fire-sale sends Global Markets Plunging; Dollar Routed

By Mike Whitney

Bear's travails are just the beginning of Wall Street's woes. Now there's talk of Lehman Brothers going under. According to the Wall Street Journal:
http://www.informationclearinghouse.info/article19552.htm

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Too Big to Bail

The Fed's Wall Street Dilemma

By Pam Martens

Americans learned two new truths last week from the Bush Administration's version of Life's Little Instruction Book: if you're a Wall Street miscreant you're thrown a lifeline; if you're a Wall Street crime fighter you're thrown a land mine.
http://www.informationclearinghouse.info/article19555.htm
See also: http://www.alternet.org/story/74510/?page=entire
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The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

By Greg Palast
Reporting for Air America Radio’s Clout

Listen to Palast on Clout at http://www.GregPalast.com

While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.

This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.

Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.

Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and it’s variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chuck of these ‘sub-prime.’

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 a month payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. Grinnings move into their Toyota.

Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.

‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hardy – it was OK now to steer’m, fake’m, charge’m and take’m.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”

What that means is that they took a bunch of junk mortgages, like the Grinnings, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bail-out. Not one family was saved – but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.

Do I believe the banks called Justice and said, “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press – one was “Wall Street Declares War on Spitzer” - made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”

Bush, said Spitzer right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”

But now, the Administration can rest assured that this love story – of Bush and his bankers - will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.

A note on “Prosecutorial Indiscretion.”

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, 'indiscretion.'
- - - - -

March 17, 2008

Bailing Out Billionaires

Ward Sloane is a CBS News producer based in Washington.
http://www.cbsnews.com/blogs/2008/03/17/couricandco/printable3944450.shtml

“. . . . Over the weekend, the Federal Reserve Board's Ben Bernanke announced another billionaire bail-out. This time he has decided the American people should take on $30 billion in potentially and likely bad mortgage debt so that JP Morgan could then assume the other assets of the formerly venerable Bear Stearns investment house. We get $30 billion in bad debt; JP Morgan gets Bear Sterns at two dollars per share.
. . . .
What seems to be happening before our eyes is the evolution of a national economic policy that puts the full faith and credit of the United States government behind Wall Street at the expense of the United States taxpayer.
. . . .
Here's what the Federal Reserve and the economic gurus of the administration think about the average homeowner facing sky-rocketing mortgage increases or worse, foreclosure: Too bad. Those folks made bad decisions and now should have to live with them.
. . . .
The current economic crisis can be boiled down to this – the big bad boys and girls on Wall Street sold to a willing public the idea that it's possible to get something for nothing.
. . . .
I generally don't have much sympathy for people who buy into this, but let's be real. Everyone bought into it and the economic boom times rolled merrily along.

The only difference, it seems, is that when Wall Street billionaires live beyond their means, they never have to pay the consequences when the house of cards comes tumbling down. The have the full faith and credit of the United States Government to back them. For everyone else it's just tough noogies.

And here is the endgame. The fat cats are reaping their rewards for the millions and millions of dollars they've pumped into the political system. Money talks, everybody else walks."

Read the entire article: http://www.cbsnews.com/blogs/2008/03/17/couricandco/printable3944450.shtml
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Bear Stearns in Bankruptcy: Can You Feel Their Pain?


By Dean Baker
 http://www.truthout.org/docs_2006/031708J.shtml

Monday 17 March 2008

According to the current plans being crafted in Washington, you will. Bear Stearns, one of the longstanding giants of Wall Street investment banking, is now on life support, the victim of its own excessive greed and bad judgment. Apparently, the wizards who run the show at Bear Stearns (I will resist the temptation to use initials) somehow couldn't see an $8 trillion housing bubble in the US economy. They made highly leveraged bets on assets backed by mortgages.

These bets have turned bad in a big way. Bear Stearns would now have less value than a corner lemonade stand, if not for the generosity of the Federal Reserve Board. The Fed lent money to Bear Stearns under terms no private lender would have agreed to. The risk it will end up with a substantial loss on its loans to Bear Stearns is quite large, with no prospect for any real return on its investment.

This raises the obvious question: Why is the Fed, an agency of the government, using our tax dollars to keep Bear Stearns and its rich managers and shareholders above water? After all, the government supposedly doesn't have enough money to provide kids with health care and childcare, to guarantee families decent housing or to meet a long list of other needs. Why do we have the money to lend tens of billions of dollars to Bear Stearns at below market interest rates?

There are two points about this bailout that should be clear. First, this is a bailout - we are handing money to Bear Stearns. Second, we don't have to hand tens of billions of dollars to the country's richest people to save the financial system.

The politicians will try to do their best to obscure the first point. They say, "we aren't giving them money - we're lending money and we're getting interest, so the government can make a profit."

This is what politicians tell people who they think are stupid. No private bank would lend money to Bear Stearns at the same interest rate and under the same terms as the Fed. (We know this for certain; otherwise, Bear Stearns would not have run to the Fed.) When the government makes a loan at below market interest rates, it is giving away money. People on Wall Street know this very well, that is how they got to be fabulously rich: They borrow money at a lower interest rate than they lend it out.

If they can't get away with the "no bailout" nonsense, the Wall Street welfare boys will then try the route of claiming we have to bail them out in order to prevent the whole financial system from collapsing. Such a collapse could turn the recession into a depression leaving millions unemployed for years.

This is also nonsense. We know how to keep banks operating even as they go into bankruptcy. England just did this with Northern Rock, a major bank that managed to get itself into huge trouble because of its holding of bad mortgage debt. After it was clear the bank was insolvent, the Bank of England stepped in and essentially took over the bank. It replaced the incompetent managers who had ruined the bank and brought in a new team to straighten out the books. The plan is to resell the bank to the private sector once the books are in order.

In the meantime, the bank keeps operating. The depositors can continue to make deposits and withdrawals just as before. This prevents any chain reaction from bringing down the financial system.

The difference between the Northern Rock route and what happened with Bear Stearns last week is that in the Northern Rock, the highly paid managers that ruined the bank are sent packing. Similarly, the shareholders will get little or nothing. They own a bankrupt company; why should the government give them money?

As the financial crisis deepens, it is important the public realize the distinction between what the Bank of England did with Northern Rock and the handout from the Fed to Bear Stearns. There are other banks in serious trouble that are also looking to the Fed for help.

The best thing the Fed can do is to go the Northern Rock route. Instead of giving more money to troubled banks, it should give less. It should end the Term Auction Facility and other special mechanisms for injecting money into banks. The economy will recover quickest if we let the banks and the bankers get the full benefit of their own bad judgment. When they have written down their bad debts and are taken over by new management, the banks will again be able to play a productive role in financing growth.

- - - - -

Robert Rubin Still Doesn't Know
Dean Baker and others have been alerting people to the housing bubble and the enormity of the problems associated with it for some time. Robert Rubin, who was head of the Treasury Department in the Clinton Administration and who even today is a Democratic policy advisor, is still pretending otherwise.


March 14, 2008

Robert Rubin Still Doesn't Know that People Warned About the Bubble

"Former Treasury Secretary Robert Rubin was at a session at the Brookings Institution this morning at which said that "few, if any" people anticipated the sort of meltdown that we are seeing in the credit markets at present.
This should be newsworthy. Mr. Rubin is not only a former Treasury Secretary, he is in the top management at Citigroup and he is one of the top Democratic policy advisers. The failure to recognize the housing bubble and the danger it posed was an act of extraordinary negligence that would get people fired in most lines of work. The fact that he still doesn't recognize the enormity of this oversight even after the fact (economists did recognize the housing bubble and the dangers its collapse would pose to the financial system) is remarkable.
There were several reporters from major media outlets at this event. It would have been appropriate to note that Mr. Rubin is apparently still does not recognize that the collapse of the bubble and the resulting financial chaos was both predictable and predicted by economists who did understand the financial crisis that it would create."
--Dean Baker

The NYT Hides the Bailout of Bear Stearns From Readers

"The NYT told readers why the Fed had to use tens of billion of taxpayer dollars to kep Bear Stearns in business. It explained that letting the bank go under would lead to a chain reaction of collapses throughout the financial system.
This is not true. The Fed could have followed the example of the Bank of England in its takeover of Northern Rock. Northern Rock continues to function paying off depositors and honoring other commitments. The major difference is that the incompetent managers who drove Northern Rock into bankruptcy were thrown out on the street. At Bear Stearns they are still collecting multi-million dollar salaries.
The other big difference is that Northern Rock's shareholders essentially lost all their money. That's what happens when you buy stock in a company that goes bankrupt. (It is possible that when the company is resold to the public there will be some money from the sales to kick back to shareholders.) By contrast, stockholders in Bear Stearns still have $4 billion in equity, courtesy of U.S. taxpayers."
--Dean Baker

See all of Dean Baker’s Blog at:
http://www.prospect.org/csnc/blogs/beat_the_press

Quotes for Your Soul & Merry Christmas!

In this edition:

Information Clearing House Freedom Quotes

Merry Christmas From John Lennon & Yoko Ono


Struggling National Symbol Wonders What We Have Become
(© Christopher Christie)

When one is overcome with “outrage fatigue,” it is sometimes helpful, or at least validating, to embrace the thoughts of those who came before. A good source of those thoughts is a news service such as Information Clearing House, which provides worthy quotes with every issue.
http://www.informationclearinghouse.info/

Please read the most recent offering:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Information Clearing House Newsletter
News You Won't Find On CNN
12/22/07
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

"It is only when the people become ignorant and corrupt, when they degenerate into a populace, that they are incapable of exercising their sovereignty. Usurpation is then an easy attainment, and an usurper soon found. The people themselves become the willing instruments of their own debasement and ruin." -- James Monroe (1758-1831), 5th US President Source: First Inaugural Address, 1817

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"Under every government the dernier [Fr. last, or final] resort of the people, is an appeal to the sword; whether to defend themselves against the open attacks of a foreign enemy, or to check the insidious encroachments of domestic foes. Whenever a people... entrust the defence of their country to a regular, standing army, composed of mercenaries, the power of that country will remain under the direction of the most wealthy citizens." -- A Framer - Anonymous 'framer' of the US Constitution Source: Independent Gazetteer, January 29, 1791

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"He is free who lives as he wishes to live; who is neither subject to compulsion nor to hindrance, nor to force; whose movements to action are not impeded, whose desires attain their purpose, and who does not fall into that which he would avoid." -- Epictetus (ca 55-135 A.D.) Greek philospher Source: Discourses, ca 100 A.D.

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"The only freedom deserving the name, is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it. Each is the proper guardian of his own health, whether bodily, or mental and spiritual. Mankind are greater gainers by suffering each other to live as seems good to themselves, than by compelling each to live as seems good to the rest." -- John Stuart Mill - (1806-1873) English philosopher and economist Source: On Liberty, 1859

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"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone." -John Maynard Keynes, British economist

And from yesterday's edition:

"It belongs to human nature to hate those you have injured." Tacitus

http://www.informationclearinghouse.info/
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The Eagle Cap Wilderness and Baker County In Winter
(© Christopher Christie)

Oh, and Merry Christmas!

http://www.youtube.com/watch?v=-BAvAA53sLo

Some Steve Earle Lyrics:

Ashes to Ashes (dust to dust)

There was blood on their hands and a plague on the land
They drew a line in the sand and made their last stand
They said "God made us in his image
And it's in God that we trust"
When asked about the men that had died by their hands
They said "ashes to ashes and dust to dust"

Now, nobody lives forever
Nothin' stands the test of time
Oh, you heard 'em say "never say never"
But it's always best to keep it in mind
That every tower ever built tumbles
No matter how strong, no matter how tall
Someday even great walls will crumble
And every idol ever raised falls
And someday even man's best laid plans
Will lie twisted and covered in rust
When we've done all that we can but it slipped through our hands
And it's ashes to ashes and dust to dust


Amerika V. 6.0 (The Best We Can Do)

Look at ya
Yeah, take a look in the mirror now tell me what you see
Another satisfied customer in the front of the line for the American dream
I remember when we was both out on the boulevard
Talkin' revolution and singin' the blues
Nowadays it's letters to the editor and cheatin' on our taxes
Is the best that we can do
Come on

Look around
There's doctors down on Wall Street
Sharpenin' their scalpels and tryin' to cut a deal
Meanwhile, back at the hospital
We got accountants playin' God and countin' out the pills
Yeah, I know, that sucks that your HMO
Ain't doin' what you thought it would do
But everybody's gotta die sometime and we can't save everybody
It's the best that we can do

Four score and a hundred and fifty years ago
Our forefathers made us equal as long as we can pay
Yeah, well maybe that wasn't exactly what they was thinkin'
Version six-point-oh of the American way
. . . .
Yeah, I realize that ain't exactly democratic, but it's either them or us and
And it's the best we can do

Yeah, passionately conservative
It's the best we can do

Conservatively passionate
It's the best we can do

Meanwhile they’re still thinkin’ Hey--
Lets go blow up Iraq—I mean North Korea
I mean Syria, I mean Texas. . . .

Mortgage Meltdown--Who Is Responsible?

Many thoughtful observers and economists saw the inevitable burst of the housing bubble a few years ago. A few have even been able to explain why & how it happened. It appears to be yet another of capitalism's predictable periodic fleecings (Think savings and loan scandal, for example), where wealthy insiders bleed hopeful (greedy?) investors dry, bring the financial system to near collapse, and then get their friends in government to make sure there are no consequences and that the taxpayer bails everyone, or at least the responsible parties, out.

"As chief of Goldman Sachs, Paulson was involved, to degrees as yet unrevealed, in the mortgage securitization process during the halcyon days of mortgage fraud from 2004 to 2006.

Paulson became the U.S. Treasury secretary on July 10, 2006, after the extent of the debacle was coming into focus for those in the know. Goldman Sachs achieved recent accolades in the markets for having bet heavily against the housing market, while Citigroup, Morgan Stanley, Bear Sterns, Merrill Lynch and others got hammered for failing to time the end of the credit bubble."
....
"It is truly amazing that right now everyone in the country is deferring to Paulson and the heads of Countrywide, JPMorgan, Bank of America and others as the best group to work out a solution to this problem. No one is talking about the fact that these people created the problem and profited to the tune of hundreds of billions of dollars from it."

From the San Francisco Chronicle
MORTGAGE MELTDOWN
Interest rate 'freeze' - the real story is fraud
Bankers pay lip service to families while scurrying to avert suits, prison

Sean Olender
Sunday, December 9, 2007

New proposals to ease our great mortgage meltdown keep rolling in. First the Treasury Department urged the creation of a new fund that would buy risky mortgage bonds as a tactic to hide what those bonds were really worth. (Not much.) Then the idea was to use Fannie Mae and Freddie Mac to buy the risky loans, even if it was clear that U.S. taxpayers would eventually be stuck with the bill. But that plan went south after Fannie suffered a new accounting scandal, and Freddie's existing loan losses shot up more than expected.

Now, just unveiled Thursday, comes the "freeze," the brainchild of Treasury Secretary Henry Paulson. It sounds good: For five years, mortgage lenders will freeze interest rates on a limited number of "teaser" subprime loans. Other homeowners facing foreclosure will be offered assistance from the Federal Housing Administration.

But unfortunately, the "freeze" is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with "working families," keeping people in their homes or any of that nonsense.

The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth.

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

And, to be sure, fraud is everywhere. It's in the loan application documents, and it's in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies - all the way up to senior management - knew about it.

I can hear the hum of shredders working overtime, and maybe that is the new "hot" industry to invest in. There are lots of people who would like to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy time and make this all go away. Cuomo is just inches from getting what he needs to start putting a lot of people in prison. I bet some people are trying right now to make him an offer "he can't refuse."

Despite Thursday's ballyhooed new deal with mortgage lenders, does anyone really think that it can ultimately stop fraud lawsuits by mortgage bond investors, many of them spread out across the globe?

The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.

The problem isn't just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply - period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world. Even your pension or 401(k) might have some of these bonds in it.

Perhaps some U.S. government department can make veiled threats to foreign countries to suggest they will suffer unpleasant consequences if their largest holders (central banks and investment funds) don't go along with the plan, but how could it be possible to strong-arm everyone?

What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back. The time to look into this is before the shredders have worked their magic - not five years from now.

Those selling the "freeze" have suggested that mortgage-backed securities investors will benefit because they lose more with rising foreclosures. But with fast-depreciating collateral, the last thing investors in mortgage bonds ought to do is put off foreclosures. Rate freezes are at best a tool for delaying the inevitable foreclosures when even the most optimistic forecasters expect home prices to fall. In October, Goldman Sachs issued a report forecasting an incredible 35 to 40 percent drop in California home prices in the coming few years. To minimize losses, a mortgage bondholder would obviously be better off foreclosing on a home before prices plunge.

The goal of the freeze may be to delay bond investors from suing by putting off the big foreclosure wave for several years. But it may also be to stop bond investors from suing. If the investors agreed to loan modifications with the "real" wage and asset information from refinancing borrowers, mortgage originators and bundlers would have an excuse once the foreclosure occurred. They could say, "Fraud? What fraud?! You knew the borrower's real income and asset information later when he refinanced!"

The key is to refinance borrowers whose current loans involved fraud in the origination process. And I assure you it was a minority of borrowers whose loans didn't involve fraud.

The government is trying to accomplish wide-scale refinancing by tricking bond investors, or by tricking U.S. taxpayers. Guess who will foot the bill now that the FHA is entering the fray?

Ultimately, the people in these secret Paulson meetings were probably less worried about saving the mortgage market than with saving themselves. Some might be looking at prison time.

As chief of Goldman Sachs, Paulson was involved, to degrees as yet unrevealed, in the mortgage securitization process during the halcyon days of mortgage fraud from 2004 to 2006.

Paulson became the U.S. Treasury secretary on July 10, 2006, after the extent of the debacle was coming into focus for those in the know. Goldman Sachs achieved recent accolades in the markets for having bet heavily against the housing market, while Citigroup, Morgan Stanley, Bear Sterns, Merrill Lynch and others got hammered for failing to time the end of the credit bubble.

Goldman Sachs is the only major investment bank in the United States that has emerged as yet unscathed from this debacle. The success of its strategy must have resulted from fairly substantial bets against housing, mortgage banking and related industries, which also means that Goldman Sachs saw this coming at the same time they were bundling and selling these loans.

If a mortgage bond investor sues Goldman Sachs to force the institution to buy back loans, could Paulson be forced to testify as to whether Goldman Sachs knew or had reason to know about fraud in the origination process of the loans it was bundling?

It is truly amazing that right now everyone in the country is deferring to Paulson and the heads of Countrywide, JPMorgan, Bank of America and others as the best group to work out a solution to this problem. No one is talking about the fact that these people created the problem and profited to the tune of hundreds of billions of dollars from it.

I suspect that such a group first sat down and tried to figure out how to protect their financial interests and avoid criminal liability. And then when they agreed on the plan, they decided to sell it as "helping working families stay in their homes." That's why these meetings were secret, and reporters and the public weren't invited.

The next time that Paulson is before the Senate Finance Committee, instead of asking, "How much money do you think we should give your banking buddies?" I'd like to see New York Sen. Chuck Schumer ask him what he knew about this staggering fraud at the time he was chief of Goldman Sachs.

The Goldman report in October suggests that rampant investor demand is to blame for origination fraud - even though these investors were misled by high credit ratings from bond rating agencies being paid billions by the U.S. investment banks, like Goldman, that were selling the bundled mortgages.

This logic is like saying shoppers seeking bargain-priced soup encourage the grocery store owner to steal it. I mean, we're talking about criminal fraud here. We are on the cusp of a mammoth financial crisis, and the Federal Reserve and the U.S. Treasury are trying to limit the liability of their banking friends under the guise of trying to help borrowers. At stake is nothing short of the continued existence of the U.S. banking system.

Sean Olender is a San Mateo attorney.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

DAMS, FISH, COWS, CAPITALISM & IRAQ

HERALD WATCH

There they go again…! Last night’s (5/1/07) Herald had another example of the sort of anthropocentric environmental insensitivity and general nonsense we can continue to expect from the Herald and their editorial board. While the rest of the world is beginning to understand the damn damage that dams have done to our riparian and aquatic ecosystems—as acknowledged by the Herald’s admission that the trend is toward removing dams, not building them--the board goes against the flow and plays to local backward, anti-environmental sentiment by supporting the County appointed “Water and Stream Health” (WASH) Commission’s efforts to build one or more new dams in Baker County.

I am told the WASH Commission was formed to explore options to improve local stream health. Hey, guess what Herald--Guess what WASH. According to the World Commission on Dams, THE CONSENSUS AMONG RIVER ECOLOGISTS IS THAT DAMS ARE THE SINGLE GREATEST CAUSE OF THE DECLINE OF RIVER ECOSYSTEMS!

Chinook Salmon

One concern voiced by the editorial board is that “billions of gallons of water” are escaping from the “county without doing a lick of useful labor on the way.” Yeah, we've got lazy water right here in Baker County. God forbid that water should just be allowed to run its course. The facts are, that left to its own devices, the water flow regime in streams and rivers works for us in many ways. Services include maintenance of water quality, aquatic, riparian and floodplain habitat, including the organisms dependent on them like fish and birds, as well as water flows to enable successful fish migration and reproduction. And thinking about the latter, who comes first, native fish or a few Johnny come lately irrigators wanting even more of what should be a public resource. Many streams in the West are already de-watered every year by irrigators, so while the water may not be serving its natural function, it is certainly working overtime for irrigators such as ranchers and farmers.

The natural rush of snow melt and rainwater in spring is what signals salmonids to migrate up river. To them it is not a “surplus” (as the herald puts it), but a necessity. But not to worry, because the Herald says that a dam or two will “nourish our [actually their--Ed] crops and sustain our fish” and that our “rivers and streams don’t harbor federally protected salmon or steelhead” so there shouldn’t be any “environmental controversy that could kill such a project outright or delay it for years….”

Well, actually, the North Powder does still contain protected bull trout, and just because the Bureau of Reclamation, FERC, power generators and users have helped to destroy the local native salmon and steelhead fishery by constructing dams, that doesn’t mean that there aren’t any salmon or steelhead populations clinging to life down stream—populations that will need minimum and seasonally appropriate flows of their water to survive.

Bull Trout

But once again--not to worry. Those flows will be OK because the Herald says that “Storing water in a reservoir isn’t the same as stealing the water from downstream users . . . . Irrigation water seeps into the soil and much of it eventually trickles back into a stream or river . . .” The questions of course are how much water will be impounded, how much gets back to the stream or river, and is it in the river or stream when the fish need it the most? If these were to be very small scale, low volume projects, water loss may not be much of an issue, but as the plans have not been finalized, it is hard to know. There are some straight forward realities though.

Simple fact: impounded water evaporates at a greater rate than it would in the same length of natural stream due to increased surface area. It is estimated that Lake Powell in Utah loses 163 billion gallons of water a year just to evaporation.

Simple fact #2: Irrigation through fields and furrows increases water surface area, which leads to increased rates of evaporation—up to a 50% loss.

Simple fact #3: Irrigated plants use irrigation water—that’s why people irrigate. Plants transpire large amounts of water into the atmosphere.

So I beg to differ. Storing water in a reservoir is the same as stealing from downstream users, struggling salmon and steelhead in particular. A lot of water disappears into thin air.

There is also the issue of restoring the natural salmonid fisheries that once existed in both the Powder and Malheur River watersheds. In early April, the 9th Circuit Court of Appeals upheld U.S. District Judge Redden’s rejection of the Bush administration’s laughable plan to save salmon, leaving open the possibility that hydroelectric dams on the lower Snake River could come down in an effort to help restore them. Take out a few more, including Hell’s Canyon and Oxbow, and you can begin to reclaim stolen upstream habitat to restore salmon and steelhead to Pine Creek, Powder River and the Malheur. Additional dams would likely hurt that effort. Let’s not dream about making water available to a few irrigators and recreationists, let’s dream about reclaiming water and stream habitat for steelhead, salmon and future generations.

<>

Steelhead Trout

As for project delays, according to the County Water Master, those wanting to use the impounded water will have to apply for new water rights, which, he says, is a pretty lengthy and rigorous process involving many studies and lots of delay time. That is as it should be. The State and concerned citizens have a right to attempt to protect the environment from profit driven expropriators of what is a God-given resource for all to share, including natural ecosystems. We can be thankful if we can look to a fair and rigorous State and Federal process, and not to the Herald, to determine whether additional dams of any size are appropriate in today’s depleted world. The Herald’s old argument of “invigorating the economy” with new expropriations of our natural capital is just a tired and dangerous corollary to the “multiply and subdue the earth” paradigm that we have been enmeshed in for centuries—its time to back off, to reduce human populations, to give back, and to restore.


ONDA Wins a Big One

Cows Destroy Public Lands

Ungrazed Creek Inside Exclosure

On April 17th, the Oregon Natural Desert Association won a rare victory in the difficult battle to protect public ecosystem from cattle abuse by private ranching outfits operating on public lands. The case specifically dealt with the biological opinions (BiOps) rendered by the National Marine Fisheries Service (NMFS) and the U.S. Fish and Wildlife Service (FWS) concerning threatened fish and the Forest Service’s management of grazing on allotments in the Malheur National Forest, just across the County line in Grant County. As one who has worked on grazing issues for a number of years, I can’t over emphasize how difficult it is to bring “change on the range” by fighting the Feds and powerful ranching interests in court.

Cow-Bombed Area on Malheur National Forest

(Area inside fence on uper left is protected from grazing)

Here is a summary prepared by an ONDA representative (arbitrary and capricious = arb/cap):

-The court found the BiOps not moot because the short length of the biops make them "capable of repetition yet evading review."

-The court found NMFS' steelhead critical habitat determination to be arbitrary and capricious. NMFS improperly relied on the Forest Service's grazing management strategy and their claim of "near natural rates of recovery" because "NMFS has failed to evaluate whether short-term habitat degradation caused each grazing season will reduce the steelhead's ability to survive and recover." The court also noted the history of noncompliance with standards and the BiOps' "vague statements about what, if any, administrative corrective action will be taken against noncompliant permittees."

-The court found NMFS' steelhead no-jeopardy determination to be arb/cap because "there is no indication in the BiOps that NMFS considered any effects of grazing on the species in arriving at its no-jeopardy conclusion." While NMFS recognized the possibility of cattle directly stepping on redds (Fish "nurseries"), it "does not describe any effects on habitat caused by grazing in its allotment-specific analysis and, more importantly, does not indicate that it considered how the admitted habitat degradation would affect the survival and recovery of steelhead...."

-The court upheld the FWS BiOp's bull trout no-jeopardy determination.

-The court found NMFS' incidental take statement arb/cap because it did not consider whether incidental take from habitat degradation would occur. "Without an evaluation of indirect effects of grazing on an allotment by allotment basis, as discussed above, and given these admitted effects of grazing," NMFS' reasoning was arb/cap.

-The court found FWS' incidental take statement arb/cap becaause its take proxy authorizes a level of take that is reached only when "the project itself is complete" and is "coextensive with the project's own scope."

The hope is that the victory will inspire the Forest Service and ranchers to clean up their act, forest-wide.

Stream Outside an Exclosure
(Note lack of streamside vegetation and trampling of banks)

Contrast at Exclosure Fenceline
(Cows remove all palatable vegetation, exposing banks to erosion & leaving little cover or shade for fish & wildlife)

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OTHER NEWS
From Democracy Now! 5/1/07

http://www.democracynow.org/article.pl?sid=07/05/01/1410216

"Israeli Whistleblower Vanunu Convicted For Speaking to Media
The Israeli nuclear whistleblower Mordechai Vanunu might be heading back to jail soon for speaking to the international media. In 2004 Israel released Vanunu after he spent18 years in jail for disclosing information that proved Israel had a stockpile of nuclear weapons. After he was released, Israel barred Vanunu from speaking to the foreign press but Vanunu defied the order. He spoke to several foreign outlets including Democracy Now. On Monday an Israeli court convicted him of violating the terms of his release from jail."

Now that's my kind of "democracy." No wonder neighboring countries might think they need nuclear weapons. Israel, an illegally occupying power, isn't even a signatory to the nuclear non-proliferation treaty that we use to browbeat countries like Iran.

STRAIGHT TALK

Two people sent me the following quote from Lee Iacocca, the ex-Chrysler CEO—definitely worth repeating:

"Had Enough?
Am I the only guy in this country who's fed up with what's happening? Where the hell is our outrage? We should be screaming bloody murder. We've got a gang of clueless bozos steering our ship of state right over a cliff, we've got corporate gangsters stealing us blind, and we can't even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, "Stay the course." Stay the course? You've got to be kidding. This is America, not the damned Titanic. I'll give you a sound bite: Throw the bums out! You might think I'm getting senile, that I've gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore. The President of the United States is given a free pass to ignore the Constitution, tap our phones, and lead us to war on a pack of lies. Congress responds to record deficits by passing a huge tax cut for the wealthy (thanks, but I don't need it). The most famous business leaders are not the innovators but the guys in handcuffs. While we're fiddling in Iraq, the Middle East is burning and nobody seems to know what to do. And the press is waving pom-poms instead of asking hard questions. That's not the promise of America my parents and yours traveled across the ocean for."
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More Quotes:

From Anti-Capitalism in Five Minutes or Less

By Robert Jensen
http://uts.cc.utexas.edu/%7Erjensen/freelance/lastsunday5.htm

We know that capitalism is not just the most sensible way to organize an economy but is now the only possible way to organize an economy. We know that dissenters to this conventional wisdom can, and should, be ignored. There’s no longer even any need to persecute such heretics; they are obviously irrelevant.

How do we know all this? Because we are told so, relentlessly — typically by those who have the most to gain from such a claim, most notably those in the business world and their functionaries and apologists in the schools, universities, mass media, and mainstream politics. Capitalism is not a choice, but rather simply is, like a state of nature. Maybe not like a state of nature, but the state of nature. To contest capitalism these days is like arguing against the air that we breathe. Arguing against capitalism, we’re told, is simply crazy.
. . . .

TGILS: Thank God It’s Last Sunday

We have been gathering on Last Sunday precisely to be crazy together. We’ve come together to give voice to things that we know and feel, even when the dominant culture tells us that to believe and feel such things is crazy. Maybe everyone here is a little crazy. So, let’s make sure we’re being realistic. It’s important to be realistic.

One of the common responses I hear when I critique capitalism is, “Well, that may all be true, but we have to be realistic and do what’s possible.” By that logic, to be realistic is to accept a system that is inhuman, anti-democratic, and unsustainable. To be realistic we are told we must capitulate to a system that steals our souls, enslaves us to concentrated power, and will someday destroy the planet.

But rejecting and resisting a predatory corporate capitalism is not crazy. It is an eminently sane position. Holding onto our humanity is not crazy. Defending democracy is not crazy. And struggling for a sustainable future is not crazy.

What is truly crazy is falling for the con that an inhuman, anti-democratic, and unsustainable system — one that leaves half the world’s people in abject poverty — is all that there is, all that there ever can be, all that there ever will be.

If that were true, then soon there will be nothing left, for anyone.

I do not believe it is realistic to accept such a fate. If that’s being realistic, I’ll take crazy any day of the week, every Sunday of the month.

Robert Jensen is a journalism professor at the University of Texas at Austin and board member of the Third Coast Activist Resource Center http://thirdcoastactivist.org . His latest book is Getting Off: Pornography and the End of Masculinity (South End Press, 2007). Jensen is also the author of The Heart of Whiteness: Race, Racism, and White Privilege and Citizens of the Empire: The Struggle to Claim Our Humanity (both from City Lights Books); and Writing Dissent: Taking Radical Ideas from the Margins to the Mainstream (Peter Lang). He can be reached at rjensen@uts.cc.utexas.edu. His articles can be found online at http://uts.cc.utexas.edu/~rjensen/index.html
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Why there was no exit plan

By Lewis Seiler, Dan Hamburg
There are people in Washington ... who never intend to withdraw military forces from Iraq and they're looking for 10, 20, 50 years in the future ... the reason that we went into Iraq was to establish a permanent military base in the Gulf region, and I have never heard any of our leaders say that they would commit themselves to the Iraqi people that 10 years from now there will be no military bases of the United States in Iraq. -- former President Jimmy Carter, Feb. 3, 2006

04/30/07 "SFGate" -- -- - For all the talk about timetables and benchmarks, one might think that the United States will end the military occupation of Iraq within the lifetimes of the readers of this opinion editorial. Think again.

There is to be no withdrawal from Iraq, just as there has been no withdrawal from hundreds of places around the world that are outposts of the American empire. As UC San Diego professor emeritus Chalmers Johnson put it, "One of the reasons we had no exit plan from Iraq is that we didn't intend to leave."
More: http://www.informationclearinghouse.info/article17628.htm
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"For in every city these two opposite parties [people vs aristocracy] are to be found, arising from the desire of the populace to avoid oppression of the great, and the desire of the great to command and oppress the people....For when the nobility see that they are unable to resist the people, they unite in exalting one of their number and creating him prince, so as to be able to carry out their own designs under the shadow of his authority." (Machiavelli, The Prince, ch. IX)

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"Protest that endures...is moved by a hope far more modest than that of public success: namely, the hope of preserving qualities in one's own heart and spirit that would be destroyed by acquiescence." Wendell Berry

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Major Decision:
There is a time in everyone’s life when they have to decide: Will they seek the truth and tell it like it is, or will they remain silent and suck ass for personal gain. The deteriorating world you see around you was shaped by the powerful because the majority of less fortunate souls chose to suck ass. – Guess Who?