Tuesday, December 30, 2008

The Year is Ending with a Bust

It might be useful to review why this year's biggest story, and probably the biggest economic story since 1929--the collapse of international financial markets--came to be. Many analysts have singled out the deflation of the US housing bubble created by deregulation and cheap credit policy as the precipitating cause. That is certainly part of the problem, but many international banks and even countries (Iceland) went bust without large exposures to the US real estate market. This is so because banks and financial institutions traded complex derivative securities over the counter as a means of financing operations, and utilized extreme leverage (as much as 30 times capital) to generate profit. Executives utilizing the radical methodologies were rewarded with outsize compensation packages (see below). Even after their institutions went bust, some fat cats are still collecting their bonuses at taxpayers' expense.

The fuse was lit in 2006 when the US housing bubble burst. The financial time bomb exploded in August, 2007 when the financial alchemists realized that the piles of mortgage backed securities were actually worth far less than their mathematical models indicated. Worthless mortgage backed securities are only the beginning of the problem. Credit default swaps normally used to insure against bond defaults were used by speculators to gamble. This derivative market represents $60 trillion in face value, and it is also imploding. Fear induced rigor mortis has set in the credit markets as a result of the sobering realization. Banks do not want to lend to another because no one knows what the securities were really worth, nor are they sure their loans would be repaid. Many banks are left with securities on their books worth less than 50% of their booked value. But because of the extreme leverage employed these banks are exposed to losses of up to 15 times their stated capital value. Bottom line: bankruptcy. Unless that is, you cajole your cronies in Washington to print more fiat currency in exchange for the unmarketable securities you are hiding in your vault. That in a nutshell is what the government bailout program is doing. The dollar's value will be sacrificed to save the 'Street of Broken Dreams'. Ordinary citizens will suffer a declining greenback, less buying power, and future inflation. Japan made the same mistake in the 1990s by not allowing banks to fail, and thus allowing the market to clear itself of worthless assets in due course. But market fundamentalists are only true believers when their fortunes are not at stake. Variety's headline of 1929 is as good today as it was then. Hard times (for most) are here again[1].
[AP photo: Wall Street poster child, ex- Merill Lynch CEO John Thain. Another Merill Lynch exec, Peter Krauss, got a $25 million golden parachute after just three months with the firm when it was bought at a distressed sale by Bank of America. He recently purchased a palatial apartment on Park Avenue for $37 million.]
[1] Consumers are tapped out as a result of the easy credit binge. Household debt has reached $14 trillion up from about $8 trillion in 2000. Real median income has decreased by 1%, and the number of families living in poverty has increased by 19% One estimate is that there will be more than 5,000 foreclosures per day--more than at any time since the Great Depression.

Tuesday, December 23, 2008


Persona Non Grata will resume after the Christmas holiday.

Sunday, December 21, 2008

Madoff's List

From Alexander Cockburn at Counterpunch:
Among those apparently taking serious and even financially fatal hits [from Bernie Madoff's Ponzi scheme]: Yeshiva University in New York, Senator Frank Lautenberg, New York Mets owner Fred Wilpon, real estate and media mogul Mortimer Zuckerman (“significantly hurt”), GMAC Financial Services chairman J. Ezra Merkin (who ran a hedge fund, Ascot Partners, which reinvested many charities’ funds with Madoff), the Elie Wiesel Foundation for Humanity, Steven Spielberg’s Wunderkinder Foundation, Jeff Katzenberg, the Boston-based Robert I. Lappin Charitable Foundation (which has closed its doors), Eliot Spitzer’s family, the Chais Family Foundation, the Carl and Ruth Shapiro Foundation, Hadassah (the Women’s Zionist Organization of America), the United Jewish Endowment Fund of the Jewish Federation of Greater Washington , the Los Angeles’ Jewish Community Foundation’s $238 million Common Investment Pool, the American Jewish Congress, the Technion-Israel Institute of Technology...

In less polite society it might be called "street tax"[1]:
....Madoff poured money into the Democratic Senatorial Campaign war chest ($100,000 between 2005 and 2008)and made large contributions to important Democrats on the Finance Committees, like Rep Henry Waxman (D-CA) and Senator Charles Schumer (D-NY) . Waxman and Schumer have hastily announced they’re donating Madoff's money to charity.

[1]Harry Markopolos, who worked for a rival firm, researched Madoff's stock-options strategy and was convinced the outsized results were literally unreal. "Madoff Securities is the world's largest Ponzi Scheme," Mr. Markopolos wrote in a letter to the U.S. Securities and Exchange Commission in 2000. Mr. Markopolos pursued his accusations over the years, dealing with both the New York and Boston bureaus of the SEC, according to documents he sent to the SEC reviewed by The Wall Street Journal. In a statement late Friday, the SEC said, "staff from the Division of Enforcement in New York completed an investigation in 2007, and did not refer the matter to the Commission for enforcement action." Madoff's niece is also married to a former high level SEC enforcement official. The niece worked as a compliance attorney at Madoff's firm. The official was a member of the exam team that audited Madoff's firm in 1999 and 2004. Madoff Investment Secuirties spent $400,000 lobbying Washington over ten years. $39,000 went directly to Senator Schumer, but Madoff also gave to Rep. Vito Fossella (R-NY). http://www.politico.com/news/stories/1208/16608.html

Friday, December 19, 2008

Le Shorter: MoveOn.com Points the Way

MoveOn.com the on-line activist community voted recently for the top social goals of the organization going forward. About 800,000 people bothered to submit their recommendations. The results are in descending order of popularity:

  • Universal health care
  • Jobs and economic recovery
  • Build a green econmy and stop warming
  • End the war in Iraq

The Lie that Started a War

Rep. Henry Waxman (D-CA) in his parting gesture as chair of the House Government Oversight Committee (he will take over Energy and Commerce) writes his colleagues that the CIA objected on the record to using the Niger yellowcake claim in presidential speeches justifying the disastrous invasion of Iraq. Jami Miscik, Deputy Director of Intelligence, told National Security Advisor Rice by telephone that the CIA was "recommending that it [the enriched uranium purchase claim] be taken out". Another official, John Gibson, Director of Speechwriting for Foreign Policy at the NSC, told Waxman's committee that the CIA "never cleared" the uranium purchase claim. Nevertheless in January 2004, White House Counsel Roberto "Gonzo" Gonzales in response to questions wrote the committee on Rice's behalf that the CIA had "orally cleared" the claim for use by the President. On March 7, 2003, two weeks before the Iraq invasion, Mohamed El Baradei director of the IAEA reported to the UN Security Council that the Niger documents forming the basis for reports that Iraq had purchased enriched uranium from Niger were not authentic. Secretary of State Rice never responded to the committee's repeated request for testimony about the deceptive selling of the war. The rest is history.

Brazil Declares Whale Sanctuary

The government of Brazil has declared its 5,000 mile coastline a cetacean sanctuary. The declaration is a major advancement towards the goal of creating an ocean-wide South Atlantic Sanctuary for whales and dolphins. The Brazilian government is engaged in negotiations at the International Whaling Commission to make whale-watching a legitimate management option. Currently, there is controversy among member nations because a few countries such as Japan, Iceland and Norway refuse to give up commercial whaling operations through loopholes or in defiance of the international moratorium on commercial hunting. South American countries have repeatedly failed to establish the South Atlantic Sanctuary at the IWC because of opposition by nations that want to continue commercial hunting traditions. Brazil joins Chile in creating a cetacean sanctuary in its territorial waters. Chile declared its 3400 mile long territorial waters off limits to lethal use of cetaceans in September.

Thursday, December 18, 2008

Le Shorter: Cedric is Sick

Cedric, the last great hope for the Tasmanian devil {4/2/08} has contracted the deadly facial tumour disease that is slowly but surely eradicating the feisty marsupials from Earth. Reports from Sydney say that plans to breed a race of immune devils and create a vaccine from their antibodies have been put on hold. Two small tumours were removed from Cedric's muzzle on Monday. He is expected to fully recover, but the outlook for the rest of his kind is bleak. It is believed that devils spread infection from suppurating growths when they fight, an activity the fiercely territorial devils engage in often. Extinction in the wild could occur within 10 to 20 years.
[photo credit: The Independent]

Wednesday, December 17, 2008

Saving Wilderness

Update (12/23/08): NRDC reached temporary agreement with the Regime regarding leasing of Utah's redrock country for oil and gas exploitation after filing a suit for an injuction. The government agreed to hold the auction but not award any leases until a federal court can review its action for compliance with applicable environmental rules. The court hearing is scheduled in January.

U.S. Person is back from his African safari, and he hopes to share some wildlife pictures with you after the holidays. (He is asking Santa to bring him a new computer for Christmas!) In the meantime, here is a message from actor/activist Robert Redford about the Charlatan's last minute assault on America's natural treasures:

This morning I appeared at a Congressional press conference to announce that NRDC is filing suit to block the giveaway of 110,000 acres of Utah's Redrock wilderness to oil and gas companies. This disastrous auction is scheduled to take place in just two days -- on December 19th -- as a parting gift from the Bush-Cheney Administration to their friends in the oil and gas industries. Please donate now to help us wage this courtroom battle and win back the unspoiled Redrock wilderness for the American people. At stake are world-renowned vistas near Canyonlands and Arches National Parks, as well as near the Dinosaur National Monument. Even parts of Desolation Canyon, which have been proposed for national park status, will be on the auction block.

Help NRDC win another courtroom battle against the despoilers of America. Contributing to pay for the cost of litigation is a lot more effective than throwing shoes.

Friday, November 14, 2008

I Was a Prisoner of the Dow Jones

Stocks are down about forty percent year to date and no bottom in sight, so U.S. Person feels free to now tell you the truth. He will be traveling for the next month and there will no entries during his absence. For two years he has enjoyed sharing news and his views with readers of Persona Non Grata. He wishes to express his gratitude for your interest in this cyberspace. Happy trails!
[image: orignial art by Linda Paul]

Thursday, November 13, 2008


Nearly 1,000 endangered gray wolves could face slaughter if the Regime's new wolf-killing plan goes through -- and we only have two weeks to stop it. Click to send your Official Citizen Comment right now -- before the administration has a chance to pull the trigger on its vile scheme to strip wolves of their endangered species protection. They will not stop until the new president takes the oath of office, so its up to us to stop them. Even before this plan was announced, park biologists were predicting a crash in Yellowstone's wolf population this year. Wolf pups are dying from an outbreak of a yet-to-be-determined disease.

Proof in the Preference

Treasury Secretary Paulson is now facing the enormity of the morass of toxic debt. Consequently, he has backed down from buying up all of the banks securitized mortgage instruments because they are basically worthless. The fact that our economy is a FIRE economy is proved by the extension of more credit to insurance giant AIG and the Regime's refusal to use some of the initial $700 billion in economic aid to bailout General Motors. The explanation for how the money is spent lies in which class the aid benefits the most. Paulson has comitted $265 billion of the $700 billion approved by Congress in TARP (Troubled Asset Relief Program). All of it is going to banks and purchasing $40 billion in preferred shares of AIG. Protecting AIG from failure, which underwrites trillions in investment derivatives, benefits rentiers. Keeping GM going would benefit thousand of skilled workers by keeping them employed. The regime is also balking at helping homeowners facing default. The plan announced so far only helps homeowners who are already delinquent on conventional mortgages owned or guaranteed by Fannie Mae and Freddie Mac. The failure rate for conventional loans is about 2% compared to the 20% for adjustable rate sub prime loans. Unfortunately, there are a massive amounts of those loans at risk of default, a condition which will continue to exert a depressive effect on the national housing market and thereby the economy in general. Some government officials notably Sheila Bair, chairperson of the FDIC, advocated a much bigger rescue effort for home buyers planning $50 billion to modify mortgage terms, but discussions with Treasury failed. It all about whose ox is being gored.

Wednesday, November 12, 2008

Le Shorter:Just Say No To Joe

Joe Lieberman was once a Democrat, but even by the lax standards of Washington politics Joe has burned so many bridges that there should be no way back for him. Its not just that he spoke at the Republican national convention in support of the Republican candidate, but his voting record on issues such as the Iraq war, domestic surveillance, civil rights, torture, energy and social security shows he is progressive no more. His colleagues in the Senate vote next week on whether he can keep his chairmanship of the Homeland Security Committee. With 56 sure seats Democrats can govern without Joe. There are moderate Republicans like Sens. Susan Collins or Olympia Snowe of Maine, or even Arlen Specter of Pennsylvania who could be approached to break a filibuster. They could also be offered cabinet jobs, since their states' Democratic governors should appoint Democratic replacements. Joe, because his adoption of extreme policies, has himself chosen to wander in the wilderness of right-wing politics.

Tuesday, November 11, 2008

The Damage Done

As a parting gift to the nation before he vacates the bunker, the Charlatan is wearing out his executive order pen reducing or eliminating regulations intended to protect workers, consumers and the environment. His favorite target has been the Endangered Species Act, one of the most successful pieces of environmental protection legislation passed during the Nixon era. The effectiveness of the law explains why developers want it weakened or abolished. Former Congressman Pombo's legislative attempt to gut the law failed in the Senate, so now in a last ditch effort to give his supporters what they want, the Charlatan is using executive regulatory power to eliminate required consultation with the US Fish and Wildlife Service or the National Marine Fisheries Service for federal projects that may impact protected species. The change is seen by most wildlife experts as significant weakening of the Act since it takes the independent agencies out of the decision making process and allows project managers who have no in-house biological expertise to make decisions affecting protected species. According to the loyalist lawyers at the Interior Department, such consultations are no longer necessary because federal agencies have developed expertise to review their own construction and development projects. Imagine some manager in the Minerals Management Service responsible for issuing oil and gas leases in Chesapeake Bay, the home of oysters, mussels and crabs enjoyed by gourmands in DC. Is there any doubt about how he or she would decide the question of going ahead with a project or protecting the shortnose sturgeon? The change also gives the severely understaffed wildlife and fisheries agencies only 60 days to reach a decision when consulted on whether a proposed project impacts protected species, or the project moves ahead without such a decision. Between 1998 and 2002, the Fish and Wildlife Service conducted 300,000 consultations. The National Marine Fisheries Service, which evaluates projects affecting marine species, conducts about 1,300 reviews each year. The reviews have helped safeguard protected species such as bald eagles, Florida panthers, and whooping cranes. A federal government handbook from 1998 described the consultations as "some of the most valuable and powerful tools to conserve listed species." When the federal agency I worked for was planning a new medical center in Florida, our project managers had no problems asking me to consult FWS to protect wetlands on the proposed hospital site. The Charlatan's parting shots as president are true to form--the triumph of narrow, blind ideology over the common good. It will take a long time to repair all the damage done.
[photo: Florida panther and cub courtesy www.sweetmagnoliaphoto.com]

Monday, November 10, 2008

'Toontime Extra: DC Rush Hour

[credit: Dwane Powell, Raleigh News & Observer]

Saturday, November 08, 2008

The Old Game

The Russians have made the opening move in the old game of nuclear chess using the map of Europe as the game board. President Demitry Medvedev announced that Russia would install short range missiles in the Kaliningrad enclave to offset the planned installation of American antimissile batteries in Poland. The announcement gave European leaders pause. President-elect Obama has talked by telephone with the Polish president about US-Poland relations, but an aide said that he has not committed to going ahead with US plans for an anti-missile shield. Its obvious that the Russians have offered up a negotiating pawn to the new president to quickly test his attitude towards US-Russian relations which are currently at an uncomfortable nadir. The challenge presents an opportunity for the new administration to implement its professed willingness to negotiate and cooperate with foreign governments and end eight years of confrontational foreign policies pursued by Bush. President-elect Obama will be looking for ways to decrease wasteful spending to offset the billions that will be spent in economic subsidies. Eliminating an unneeded, unproven, and destabilizing missile system in Europe is a good place to start. Besides cost considerations, securing Russian cooperation to contain Iran's nuclear ambitions is a better way to protect our European allies from possible attack.

Friday, November 07, 2008

Thursday, November 06, 2008

Bellwether County, Colorado

Americans can be proud that their nation has made significant social progress in 153 years since the Civil War. A black man will sit in the Oval Office of the White House, the most powerful political office in the world. But the iconography is simply not enough because our country needs real and decisive leadership if it is to cope with the critical problems facing it after eight years of misrule by Republicans. President-elect Obama will have a relatively short period--the so-called honeymoon--to translate some of his stirring campaign rhetoric into legislative action. If his presidency is to be truly a historic one, he must deliver for the average American. Unfortunately he will not have a filibuster proof majority in the Senate. He does have the wind at his back with a more than two to one victory in the Electoral College and a popular vote margin not achieved by a Democrat since Jimmy Carter. Carter attempted too much in his first one hundred days in office, diluting his effectiveness with congressional allies. Obama should not make the mistake of attempting too little in the nation's time of crisis. The public is undoubtably ready for some fundamental change even if Washington politicians are not. The choice of a Chicago machine politician as his chief of staff and a Clinton insider as transition chief are not particularly auspicious of the changes Senator Obama promised the electorate.

US Person spent Election Day in a targeted precinct in Colorado helping protect the vote with a team of volunteer lawyers and others. The experience was heartening in some respects and disappointing in others. The turnout was high, reflecting the largest number of voters at the polls nationwide since 1960. Although McCain won the county by 57% to 41%, that vote count is a very good showing in such a deeply red jurisdiction dominated by military installations. The vote there certainly contributed to Obama's winning Colorado 53% to 46% with its 9 electoral votes. In my view the "winning the west" strategy paid off by offsetting the solid Republican deep South. Obama managed to win three western states with changing demographics and a total of 19 electoral votes. The poll watching experience in Colorado also reminded me that voting is not an easy task for the average American who must take time from work and deal with a confusing--even for lawyers--set of rules and regulations governing casting a valid ballot. About 23% of the votes cast in the precincts I observed were by provisional ballot. The reasons for such a high proportion of provisional voting were many, but most were also avoidable if the registration and voting processes were simplified, and election officials acted as facilitators and not gatekeepers. Voter fraud is in reality almost a phantom problem that does not justify the significant bureaucratic tangle the honest voter must negotiate in order to cast a vote. It is difficult not to conclude that in some cases the rules are strictly enforced to suppress voting, not encourage it. A healthy democracy does everything within fairness to facilitate participation by the citizen, not discourage it. America has a long way to go to improve its election processes. Reliance on technically sophisticated hardware, prone to failure and confusion is not the answer. Making Election Day a federal holiday, as well as requiring early voting periods and optional mail-in ballots would encourage participation, especially by working people. Adopting uniform national standards for voter registration, ballots, and election procedures in federal elections would reduce the amount of waiting for ordinary voters at the polls, insure fairness, as well as increasing opportunities for participation in the best form of government on the planet.

Tuesday, November 04, 2008

Make History


Monday, November 03, 2008

You Are What You Eat

You do not have to be vegetarian to know that farm animals raised in intensive commercial feeding operations suffer terribly from overcrowding, disease and pain. These agribusinesses are run on a production line template to achieve economies of scale with little consideration for their sentient captives. The confined feeding operations have become the predominate method of producing animal protein for our consumption. They produce more than fifty percent of food animals although they comprise only five percent of livestock operations. Their economic efficiency, however is supported by unpaid costs to the environment, our health, and the livestock's well being. These are referred to as "externalities" by economists. Confined feedlots also benefit from taxpayer subsidies for feed grains such as corn, and taxpayer supported clean up of wastes generated in huge quantities (300 million tons of untreated manure per year). Between 1997 and 2005 grain subsidies amounted to $35 billion. Confined animals in large numbers are more susceptible to diseases. Consequently 70% of all antibiotics use in the United States are given to food animals to prevent epidemics. The massive use of human drugs on animals leads to disease resistant strains of bacteria such as E. coli, Campylobacter, and the flesh eating horror, Staphylococcus aureus. Human health in rural communities close to giant feedlots suffer from respiratory problems from particulate pollution as well as contaminated drinking water. The smell alone is enough to drive down property values.

The Union of Concerned Scientists in their report, "The Untold Costs of Confined Animal Feeding Operations" concludes that these public subsidies are leading to problems that could be avoided if animals were raised humanely and sustainably. Apart from obvious ethical considerations, their study also concludes that sustainable operating methods produce better quality at comparable profit when externalities are properly considered in the cost per unit calculations. The report estimates that the cost to clean up contaminated soil under dairy and hog feeding operations would approach $4.1 billion. The Department of Agriculture says it would cost $1.6 billion to transport and spread manure on farmland instead of storing it in waste lagoons. The waste lagoons stink and pollute the atmosphere and soil with ammonia, nitrates, excessive phosphorous and nitrogen. The subsidies give huge confined feeding operations an unfair competitive advantage against integrated farms and mid size feedlots that produce healthy food without damaging the environment. We can have our steak, chops, eggs and breath easy too, if the proper regulatory scheme is put into place.
[photo: commercial feedlot, southwest Kansas]

Sunday, November 02, 2008

'Toontime Extra: We'll Miss You, Buddy

['toon credit: Berkeley Breathed]
No more cares, no more scares, may you sleep a peaceful night everywhere...

Friday, October 31, 2008

Le Shorter: Zogby Three-Day Tracking Poll

10-30/ 50.1%
10/29/ 50.2%
10/28/ 49.1%
10/27/ 49.0%
10-30/ 43.1%
10-29/ 43.3%
10-28/ 44.4%
10-27/ 44.7%
+/- 2.9%, 1201 telephone surveys of likely voters

Don't breath easy yet. Politico and CNN report that Obama and McCain are statistically tied in three key swing states: Missouri(11), North Carolina(15) and Indiana(11). McCain is drawing support in the rural areas of those states while Obama is doing better in metro areas like Research Triangle. If Obama wins North Carolina it will be a historic victory for a Democratic candidate. North Carolina has not voted Democratic since Jimmy.

'Toontime: 22 Months and Counting

[credit: Chris Britt]

Thursday, October 30, 2008

The Purge in Colorado

Update: Voter protection groups suing the Colorado Secretary of State for purging voters from registration rolls reached an agreement late Wednesday just prior to ruling from the bench on a preliminary injunction. Under the agreement voters purged since May 14th will vote on provisional ballots with their votes receiving priority scrutiny to insure valid votes are counted. If they are on a list of purged voters generated by the state after the election, their provisional ballots will be presumed to be valid and counted. The secretary of state's office must also conduct an independent review of each ballot rejected by a county clerk. The state will order the clerk to count the vote if it was improperly rejected prior to the state's certification of the Colorado vote. This last minute bureaucratic patch simply adds to the burden faced by officials trying to cope with what appears to be a record voter turnout all over the country. But the temporary fix is better than not having the votes counted at all since the federal district judge hearing the injunction request indicated he was concerned with the logistical impact of reinstating so many voters so near election day. What is lacking are uniform standards for states to follow when they legitimately purge their election rolls of ineligible voters. In Michigan, a federal appeals court in Detroit delivered a similar victory on Thursday for about 5,500 voters who had been dropped from the rolls. The 2-to-1 ruling by the US Court of Appeals for the Sixth Circuit said state elections officials should not remove registered voters from the rolls, even if their voter ID cards had been returned as undeliverable.

AP and the New York Times are reporting that county clerks in two of Colorado's most populous counties have purged thousands of voters from their registration roles for failing to check a box on their registration forms indicating they do not have a Colorado driver's license. That's right America, these people are being denied their right to vote for not having a driver's license even if they may be legal residents of the state. Activist groups including Common Cause have gone to court to stop the clerks from illegally removing any more voters from the rolls. An estimated 26,931 voters were removed on orders from State Secretary Mike Coffman(R). Federal law (National Voter Registration Act of 1993) says that voters can't be removed from the rolls within 90 days of a federal election unless they have died, been convicted of a felony or requested that they be removed. The watchdog groups allege these voters weren't removed for any of these reasons. Greg Palast, a BBC journalist who wrote an article in the Rolling Stone about Republican efforts to block the vote, says Colorado is the most problematic example of systematic voter disenfranchisement in the nation. "In Colorado," he says, "you've got two-fisted thievery by the Republican Party and two hands over the eyeballs by the Democratic Party." The free publicity Coffman is getting should help him in race for Congress to replace right wingnut Tom Tancredo of the uber-conservative 5th District. Wackydoodle sez: If'in they want to burn books too, I'm a willin' to help!

Wednesday, October 29, 2008

Too Expensive to Meter

I cut my teeth has a young lawyer opposing the building of a nuclear power plant at Allens Creek in South Texas. The case was not about safety--although that was a concern for my clients--but about the high cost of building a nuclear facility. The costs become part of a utility's rate base are of course passed on to consumers through rate increases. Nuclear power is being touted as a clean alternative fuel to replace coal. That sales-talk is misleading on two counts. Nuclear power generates the most toxic wastes of any fuel cycle, and despite higher energy costs for fossil fuels, nuclear power is the most expensive. In a recent analysis, “The Nuclear Illusion,” Amory B. Lovins and Imran Sheikh put the cost of electricity from a new nuclear power plant at 14¢ per kilowatt hour and that from a wind farm at 7¢ per kilowatt hour. No new nuclear plants are under construction in the U.S. Two years ago, building a 1,500-megawatt nuclear plant was estimated to cost $2–4 billion. As of late 2008, that figure had climbed past $7 billion, reflecting the scarcity of essential engineering and construction skills needed for a project as complex as a nuclear power plant. The United States, which leads the world in on-line nuclear capacity, intends to store the wastes from 104 plants at Yucca Mountain in Nevada. The cost of this repository, originally estimated at $58 billion in 2001, climbed to $96 billion by 2008. This comes to a staggering $923 million per reactor, assuming no further repository cost increases. Other significant costs often underestimated by a utility proposing nuclear power (also the case at Allens Creek) are decommissioning costs. Recent estimates show decommissioning costs can reach $1.8 billion per reactor. Nuclear fuel costs have risen even more rapidly. At the beginning of this decade uranium cost roughly $10 per pound. Today it costs more than $60 per pound. The higher uranium price reflects the need to move to deeper mines, which increases the energy needed to extract ore, and shift to lower-grade ore. Uneconomic capital costs are reflected in the declining number of plants being built worldwide--only 36 nuclear power are under construction, 31 in Asia and Eastern Europe. Proponents such as GE said in the go-go days of the 1950s that nuclear power would be "to cheap to meter"--not anymore.
[Left] implosion of the Trojan nuclear power plant cooling tower, May 21, 2006. The plant operated for only 10 years of its projected 50 year life cycle. It was closed by PGE for being uneconomic.
[Right]Members of the "Crabshell Alliance" returning from a protest outside the plant in 1978.
For a full report visit: http://www.earthpolicy.org/Updates/2008/Update78.htm

Tuesday, October 28, 2008

Turning On the Green Light

Every time the wind blows hard here in Stump Town I loose power in my home. It's an inconvenience, but it could be more than that if an outage happens on a cold January night. The service interruptions remind me of the decrepit state of our nation's electrical distribution system, commonly referred to as "the grid" The grid is 100 years old in some places, mostly the northeastern seaboard, and it is falling apart. The grid is actually three connected networks not a monolith[see map]. If we manage to convert the US to more greener sources of power, our distribution system will not be able to handle it without some serious investment and overhaul.

Deregulation of the electrical transmission industry has not been the magic bullet touted by free market zealots. Deregulation helped build numerous new power plants, but little new investment was made in transmission infrastructure. When the grid fails, it costs millions of dollars in lost business revenue, emergency services and damages. At the height of the great northeastern blackout of 2003, 50 million Americans were without power. One authoritative estimate is that the blackout cost between $7-10 billion. The problem is one that needs to be addressed on a national level so economies of scale can be achieved and integrated planning can take place. The cost of interstate electrical transmission is high and is usually born by ratepayers. Rate of return concerns have prevented regional utilities which have the primary responsibility for grid maintenance from undertaking improvements. There is an urgent need for a so-called "smart grid" that gives regional operators a quicker, clearer view of conditions on the system and the ability to remotely correct problems to better manage the flow of power. A smart grid will also be more resilient to natural disasters, sabotage, and have the ability to self-correct when routine problems occur. The federal government could equitably spread the burden to all Americans by subsidizing grid improvements that meet federal standards of efficiency and reliability, thereby encouraging private investment in transmission infrastructure. Money to bail out the fat cats on the Street of Broken Dreams or money for reliable, clean electricity that benefits all Americans? You choose. Now, where is that blasted candle?

Saturday, October 25, 2008

McBush Wants to Redistribute Wealth

McBush is now claiming that Barack Obama wants to "redistribute wealth" through his tax policies implying that his oppnent is a dreaded socialist. Senator Obama has repeatedly said that he wants the Bush tax cuts for the wealthy to expire in 2010. Of course McBush's demagoguery totally ignores the redistribution effects of Bush's tax policies. According to the Congressional Budget Office the effective federal tax rate (2004) was reduced twice as much for the wealthy as the middle class from base year 2001 levels. In Table 2 of the report the effective federal tax rate for the middle quintile increases from 15.2% in 2001 to 18.2% in 2014. In the same period the top 1% income group rate increases from 33.0% to just 33.6%. The IRS reports that the top 10% of families in income accounted for 95.3% of income growth between 2002 and 2006. Yet the regime stubbornly refused to increase the federal minimum wage for almost ten years. McBush proposes more of the same by extending the Bush tax cuts and proposing $175 billion in tax reductions for America's richest corporations. A study by the Center on Budget and Policy Priorities on extending the Bush tax policies says that the middle twenty percent (quintile) would receive 14% of the benefit, but the top quintile income group would recieve 74% of the benefit. Wealth or net worth is distributed even more unequally than income in the US. According to OECD (Organization for Economic Co-operation & Development) the top 1% control some 25-33% of net worth and the top 10% hold 71%. Our forecast is for the disconnect between McBush rhetoric and reality to continue until November 4th.

Friday, October 24, 2008

'Toontime: Call the Real Plumber!

[credit: Duanne Powell]

Wednesday, October 22, 2008

Beluga Whales Win Protection

This story has already made the local paper, but its worth posting here as an example of what on-line activism can accomplish. The regime received 118,000 communications demanding that it take action to protect the last 375 beluga whales living in Cook Inlet, Alaska. Two thirds of those messages were from activists participating in NRDC Action Fund. The National Marine Fisheries finally decided to place these beautiful and intelligent marine mammals on the endangered species list. The Cook Inlet population of whales in one of the smallest on Earth due to increasing industrialization of Alaska's coasts. The regime did not act until NRDC and other environmental groups filed suit to force a decision.

Tuesday, October 21, 2008

Bellweather Counties

For you political junkies out there, here is a list of the US counties that consistently conform to the national outcome in the past 7 presidential elections, in order of the least deviation (notice the number of counties in Pennsylvania and Ohio):1. Defiance, OH 2. Cumberland, PA 3. Howard, IN 4. Ogle, IL 5. Susquehanna, PA 6. Kane, IL 7. Cass, MI 8. Marion, OH 9. Lancaster, PA 10. Wayne, IN 11. Bradford, PA 12. Boone, IN 13. Adams, PA 14. El Paso, CO 15. Carroll, IL 16. Butler, OH 17. Tulsa, OK 18. York, PA 19. Madison County, VA 20. Hancock, OH 21. Johnson, IN 22. Marshall, IN 23. Sacramento, CA 24. Allen, OH 25. Berks, PA 26. Fulton, OH 27. Washington, MD 28. Hendricks, IN 29. Wayne, PA 30. Yamhill, OR 31. Campbell, KY 32. Bartholomew, IN 33. Delaware, OH 34. Kenton, KY 35. St. Joseph, MI 36. Stanislaus, CA 37. Lycoming, PA 38. Wood, OH 39. Sampson, NC 40. Roanoke City, VA 41. Washington, NC 42. Monroe, MI 43. Salem City, VA 44. Harrison, TX 45. Boone, IL 46. King William County, VA 47. Maricopa, AZ 48. Crawford, PA 49. Williams, OH 50. Pima, AZ
[credit: Robert David Sullivan]

Le Shorter: The Kooks of 'Real America'

The Asheville (N.C.) Citizen Times reports a dead bear cub was found dumped yesterday morning on the Western Carolina University campus, draped with a pair of Obama campaign signs. Maintenance workers at 7:45 a.m. found a 75-pound bear cub dumped on the roundabout at the entrance to campus, said Tom Johnson, chief of university police. “It looked like it had been shot in the head as best we can tell." Jerry Meek, chairman of the North Carolina Democratic Party said“I have never seen anything as negative and as nasty as what I’m seeing right now from John McCain and the RNC." Meek thinks that not only is McNutty in danger of loosing the election, "but he will ultimately end up being a disgrace." Sad end for a war hero.

Monday, October 20, 2008

Christmas All Year

The $700+ billion government sweetheart deal[1] for the Street of Broken Dreams is already paying dividends for the insiders. The Guardian reports that financial firm employees can expect discretionary Christmas bonuses and pay worth $70 billion at the time of the worst global financial crisis since 1929. Staff at six of the banks in line for government handouts are waiting to cash in on your tax money. The sums seem unrelated to their firms' performances too. Shares in Citigroup and Goldman Sachs have declined by more than 45% over the year. Merrill Lynch and Morgan Stanley shares have fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers is no more. Bonus pots at these institutions are enormous by Main Street standards (in billions): Goldman Sachs $10.73, Morgan Stanley $10.7, JP MorganChase $6.53, Merrill Lynch $11.7 and days before it collapsed into bankruptcy Lehman Brothers had planned payouts of $6.12. The pregnant question is of course why this hoard of money is not being put up to cover capital requirements in the "liquidity crisis" situation[2].

And if fat pay packets at your expense are not enough to send you to the polls check out what is happening at AIG, the insurance company the US government just rescued for $123 billion in loans. Last month AIG drew criticism when news emerged it had picked up the tab for a $440,000 week long retreat at a luxurious California resort for top-performing insurance agents. Nevertheless, AIG execs had the nerve to go on a partridge shoot in the north of England for a cool $86,000 each. One of the happy hunters told an undercover reporter from London's News of the World that, “The recession will go on until about 2011, but the shooting was great today and we are relaxing fine.” Adding insult to injury, AP is reporting that Freddie Mac paid a lobbying firm in DC $2 million to defeat a regulatory bill sponsored by Republicans when that party controlled the Senate in 2005. DCI targeted 17 Republican senators in 13 states during its campaign to kill the bill. According to Freddie Mac employees the DCI campaign was a stealth job that only a few dozen people knew about. DCI's chief executive is Doug Goodyear who the McCain campaign hired to manage the convention in St. Paul. McCain's campaign manager, Rick Davis, or his lobbying firm has taken more than $2 million from Fannie Mae and Freddie Mac dating back to 2000. One way or another its always Christmas for the "masters of the universe". Ditto MoDo--il faut que les tetes roulent.
[1]Here’s how much of the $125billion in additional capital the Fed’s Primary Dealers (government authorized open market participants) will collect: Citigroup, $25billion; JPMorgan Chase & Co., $25 billion; Bank of America and its soon to be acquired brokerage, Merrill Lynch, $25 billion; Goldman Sachs, $10 billion; Morgan Stanley, $10 billion. In other words, of the first $125 billion outlay from the emergency stock purchase fund of $250 billion, 76% is going to shore up the government's bond brokers and $300,000 is going to retain one of Wall Street’s favorite law firms to oversee the program.
[2] The crisis is one of confidence not liquidity. There is so much bad debt in the market that potential lenders with money prefer to hold it or invest in risk-free securities. Twenty of the nation's largest financial institutions owned a combined total of $2.3 trillion in mortgages as of June 30. They owned another $1.2 trillion of mortgage-backed securities. And they reported selling another $1.2 trillion in mortgage-related investments on which they retained hundreds of billions of dollars in potential liability, according to filings the firms made with regulatory agencies. The numbers do not include investments derived from mortgages in more complicated ways, such as collateralized debt obligations. These three categories of mortgage-related financial instruments add up to a $4.7 trillion obligation for the twenty largest financial institutions.

Saturday, October 18, 2008

New Energy Economy in the Making

As the fossil fuel powered regime in Washington counts the number of days it remains in power, states and private companies are rushing to develop clean alternative fuel sources of wind, solar and geothermal. Clearly green energy is the way forward because it addresses both major challenges to our national security: greenhouse gas emissions and dependence on foreign oil. Even once oil rich Texas sees the future. The state has passed California as the leading generator of electricity from the wind. Texas has nearly 6,000 megawatts of wind-generating capacity online and a staggering 39,000 megawatts in the construction and planning stages. It will have enough wind generated electricity to satisfy the residential needs of 24 million Texans and export electricity to nearby states. Other prairie states where wind is abundant are emerging as powerhouses. The Titan Wind Farm in eastern South Dakota will be the world's largest at 5,000 megawatts or about five times current state consumption. Plans are to deliver electricity to Illinois and the industrial heartland through a transmission line across Iowa along an abandoned railroad right of way. Colorado billionaire Philip Anschutz is developing a 2,000-megawatt wind farm in south central Wyoming. He already has secured the rights to build a 900-mile high-voltage transmission line to California. With this investment, the door will be opened to developing scores of huge wind farms in Wyoming, a wind-rich state with few people.

Solar power is developing rapidly as photovoltaic cells increase in efficiency and decrease in cost. Nellis AFB generates 14MW with its array in the Nevada desert. PG&E has contracted for 800MW of photovoltaic power or about the same power output of a large coal fired plant. Right here in Stump Town metro, the world's biggest solar cell plant has just opened. When fully operational the plant is expected to employ 400 technicians. A newer method using reflecting mirrors to heat a liquid, solar thermal power is also gaining ground rapidly. Ten solar thermal plants are under development or construction in the US. In the next three years the US will go from 420MW of solar thermal generating capacity to 3500MW.

There are 97 geothermal plants now under development and they are expected to double our geothermal generating capacity. As of now the US has about 3,000 MW of capacity generated by the Earth's interior heat. We are the world leaders in on-line geothermal capacity. All the new, efficient and clean energy production needs a national grid worthy of this revolution in the way America powers itself. The current grid is an obsolete patchwork that is highly inefficient and vulnerable to breakdowns. A national grid with capacity for private investment must be carefully planned and executed to maximize the full potential of renewable energy.

For full report go to Earth Policy Institute's website:

Friday, October 17, 2008

"Toontime: Ridin' Shotgun!

[credit: Mike Lukovich, Atlanta Journal-Constitution]

Tell Me It Ain't So, Joe!

Joe the Plumber may not even get to vote for John W. McBush because the Ohio state GOP got a favorable ruling from the Sixth Circuit Court of Appeals affecting 200,000 or more Ohio voters. Partisan poll watchers will be able to challenge voters whose mailing address does not match their voter registration. So Joe you may have to vote a crummy provisional ballot because your name is spelled wrong on your registration. That's right Joe, your vote may not be counted! In Ohio s last primary election in March, 20% of provisional ballots were not counted statewide according to the Cleveland Plain Dealer. The Lucas County board of Elections says the name matching your age and address is Samuel Joseph Worzelbacher, not Samuel Joseph Wurzelbacher. Not having your vote counted is just one of the hazards of having an ethnic last name, or maybe the hazard is being a registered Republican. You might want to tap dance on over to the elections office and get that spelling corrected.
Update: The US Supreme Court has today overturned a lower court ruling allowing Ohio state GOP to challenge voters with address discrepancies. It is fairly clear at this point that the GOP is conducting a scorched earth campaign to suppress voter turnout as it did in 2000 and 2004. Such efforts have publicly surfaced in Montana, Michigan, and Ohio so far. Proactively the Obama campaign has today asked Special Prosecutor Nora Dannehy, who is investigating the firings of US Attorneys for refusing to act on alleged "vote fraud", to expand her investigation to include a review of whether the National Republican Committee is using the apparatus of government to spread unfounded and spurious charges of vote fraud in an effort to suppress voter turnout. The Ohio Secretary of State discussed the Supreme Court ruling on the Rachel Maddow Show, and said the state is determined to conduct a fair election in 2008. She has wisely offered Ohio voters the option of not using touch screen computers to record their vote. US Person's advice: do not use touch screens if there are alternative means of voting available at your polling place because the technology is simply not 100% reliable.

Thursday, October 16, 2008

Debate Final Round

Joe Sixpack has morphed into Joe the Plumber, an avatar for the everyman who actually does not have a license to plumb. He may have been interested in the debate last night since he got a direct answer from Senator Obama concerning the cost of his medical benefits proposal. US Person, however, turned it off after the first ten minutes because he has heard it before: the same patient explanations from Obama, the same errant attacks from McCain fighting to stay in the race and prevent a Democratic landslide. Senator Cool came out ahead simply by not loosing it, and taking a fat pitch over the plate by the new Walter Cronkite, Bob Schieffer of CBS News (I mean it as a compliment, Bob) concerning the qualifications of Governor Sarah Palin, the most under qualified candidate for national office since Dan Quayle. Senator McAngry did not pass up another attempt to tie Obama to the former Weather Underground leader William Ayers. Frankly, Americans are tired of hearing about it. Ayers was never convicted of a bombing (he has admitted his participation in the violent anti-war struggle of the 60's), and he has since lead the life of an upstanding college professor and citizen. The federal charges of crossing state lines to incite a riot during the "Days of Rage" and conspiracy to commit bombings were dropped in 1974 for prosecution misconduct including illegal surveillance. His other crimes, if any, are long past any applicable statue of limitations.

Obama has used little of the smear tactics so favored by the GOP. So the average voter does not get to hear about the less laudable connections of its candidate. Allow US Person to rectify that omission. John McCain endured his Vietnam ordeal still a committed hawk believing that the US military did not loose Vietnam--the civilian leadership did. In line with that firm belief, he wholeheartedly supported the Reagan doctrine of armed suppression of communist revolution in Central America. AP tells us that when McCain was starting his political career in the early 80's as a congressman he met Army Major General John Singlaub who founded the anti-communist group, the U.S. Council for World Freedom. General Singlaub was the former US chief of staff of forces in South Korea but was relieved of duty by President Jimmy Carter after publicly criticizing the President's decision to reduce troop levels there. Singlaub invited the new congressman to serve on the group's board because he knew McCain's father. Singlaub was asked for advice concerning his McCain after he was shot down and became a POW. McCain was elected to Congress in 1982 while a board member of Singlaub's council. He expressed support for the Contras, a CIA guerrilla force operating in Honduras and Nicaragua. Congress cut funds to the Contras in 1984, but months before the Reagan administration put Col. Oliver North in charge of a covert supply network to keep the Contras in the field until public money could again be appropriated. Singlaub's council became the public cover for the operation. Singlaub and North worked secretly, in violation of Congress' mandate (the Boland Amendment), to raise millions from foreign governments including Iran's which was holding American embassy personnel hostage in Tehran. Eventually the North operation, approved by his superior in the White House, Admiral John Poindexter, sold weapons directly to Iran and funneled the profits to the Contras. When the covert operation was blown by a Lebanese magazine, it became known as the "Iran-Contra Affair".

Human Rights Watch issued a report in 1987 accusing the Contras of gross human rights violations, "so prevalent that these [abuses] may be said to be their principle means of waging war." The Catholic Church issued a similar evaluation which said "the record of the Contras in the field...is one of consistent and bloody abuse of human rights, of murder, torture, mutilation, rape, arson, destruction and kidnapping." McCain claims he resigned from the council in 1984 and asked to have his name removed from its letterhead in 1986. Singlaub does not recall any such resignation nor does Joyce Downey who oversaw the group's daily activities. Singlaub told AP, "That's a surprise to me. This is the first time I've ever heard that. There may have been someone in his office communicating with our office." The council was a chapter of the World Anti-Communist League, an organization linked to former Nazi collaborators and ultra-right wing death squads operating in Central America. The Anti-Communist League was founded by Chiang Kai-shek, the nationalist Chinese leader in 1966. By the mid-eighties the League was the world's largest NGO supplier of arms to anti-communist rebels. In 1987 the Internal Revenue Service withdrew the council's tax exempt status because of its activities on behalf of the Contras. You slice 'em, we dice 'em.
[photo: Secretary Fawn Hall testifies to Congress about her boss, Col. Oliver North]

Wednesday, October 15, 2008

Will the Real Heros Please Stand Up?

Rolling Stone has published a long article, "Make Believe Maverick", dissecting the realities of John McCain's military service. Its a subject as touchy as an IED, loaded with downside reaction, and avoided by the corporate media. However McCain and Palin's willingness to pander to rabid supporters on the verge of inciting violence brings their essential characters and judgements into question. Since Palin is the very junior and inexperienced partner of this would-be superhero duo, it is John McCain's judgement and character that should be scrutinized. We all know that McCain spend five and half difficult, painful years as a captive of North Vietnam after being shot down during a bombing sortie, but their are aspects of his military service that are revealing but not as well known. The Rolling Stone article provides some details.

The son and grandson of Navy admirals, John did not have to overly exert himself to recieve a commission at Annapolis and climb his way up the Navy hierarchy. In his final year at Annapolis he nearly "bilged out" because of excessive demerits. His mother intervened with the Academy commandant who relented and allowed the "spoiled" midshipman to finish fifth from the bottom. He was, in his rebellious dissolution, eerily similar to another scion of fortune, George W. Bush. McCain's flying record would have grounded a less connected pilot. He crashed more planes than W (3). Despite his poor flight record he wrangled a combat assignment to Vietnam. McCain's A-4 Skyhawk was involved in the fire that disabled the USS Forrestal. The fire was started by a haywire missile that hit the armed jet next to his, exploded, and caused a fuel fire and the release of two 1,000 pound bombs. One of the bombs blew, incinerating sailors and blowing a crater in the flight deck. The conflagration killed 133 men. After escaping their burning jets, some fellow pilots helped seamen fight the blaze. McCain escaped from his cockpit with minor injuries and went below to watch the battle on closed circuit TV. He left the badly damaged carrier with reporters for some R & R in Saigon.

On his twenty-third mission off the USS Oriskiny in October, 1967 he was shot down while bombing a well defended Hanoi power plant. His captors referred to him as "the crown prince" because McCain told them he was the son of an admiral. In military circles it is well known that John McCain collaborated with the enemy by signing a confession allegedly under torture in August, 1968 and making a radio broadcast (a violation of Section 104, UCMJ). McCain admitted he was "an air pirate" and had bombed civilian targets. McCain may have received special medical treatment from a Soviet physician for his broken bones. He met with foreign delegations, and was interviewed by the North Vietnamese national hero, General Vo Nguyen Giap. Other POWs resisted cooperation and attempted repeated escapes despite horrific punishment when recaptured. His missions totalled about 20 hours over enemy territory. McCain was awarded 28 medals including a Silver Star and DFC. Some grunts logged as much as 7,000 hours of combat. Senator McCain has carefully crafted a public image of a hardened warrior-statesman who does not compromise his principles under pressure or for gain. Those familiar with his career as a connected military officer and opportunistic politician say the reality is much different. "John has made a pact with the devil," says Lincoln Chafee, the former GOP senator, who has been appalled at his one-time colleague's readiness to sacrifice principal for power.

Back stateside and enjoying promotions in his Navy career through family influence, McCain was serially unfaithful to his former model wife, Carol Schepp. She was disfigured in a terrible car accident while McCain was a POW. Adultery is not permitted under the Uniform Code of Military Justice (UCMJ). Nevertheless, he romanced his second socialite wife Cindy while still married. The Reagans were upset with his shabby treatment of Carol, so Nancy Reagan gave her a job in the White House. His penchant for attractive, tall women obviously remains with him in his old age.

As a Senator, McCain was courted by the powerful banker Charles Keating who sought influence against what he considered meddling by federal regulators. Savings and loans had been deregulated in 1980, allowing them to invest in areas such as commercial real estate that had previously been prohibited. Keating went hog wild, mounting up $650 million worth of violations of the direct investment rule, the largest in FTC history. Keating, by his own admission, paid $1 million in contributions to five senators to be immunized from regulatory violations. McCain accepted $112,000 from Keating in poltical contributions. McCain and his family took at least nine free trips at Keating's expense, and vacationed nearly every year at the mogul's estate in the Bahamas. Keating also hired Alan Greenspan to deliver a favorable report recommending Lincoln Savings be exempted from certain regulations. The attempt failed. As a result of Keating's many risky investments with insured deposits, his bank's holding company went bankrupt in 1989. Twenty-one thousand depositors, many elderly, lost their life savings (total: $285 million). Deposit insurance did not cover the loses because the deposits were assets of the holding company and not Lincoln Savings which was an FDIC insured institution. Later, Keating plead guilty to multiple federal felony charges in exchange for a sentence to time served.

McCain's credentials as a mainstream conservative legislator are extensive. "When jackasses like Rush Limbaugh say he's not conservative, that's just total nonsense," says former Democratic Senator Gary Hart who befriended McCain when he was Navy liaison officer to the Senate. McCain sought military spending increases for the Navy during the Carter administration, sought to cut taxes for the wealthy, voted to abolish the department of Education and Energy, voted for Clarence Thomas and Robert Bork for the Supreme Court, supported the Nicaraguan contras, voted twice against campaign finance reform, and in "his greatest legislative victory" voted for a bill that abolished catastrophic health care for seniors. He also voted against the Martin Luther King holiday, a position he clung to until 1989. More recently the former victim of torture supported the CIA's use of water boarding on detainees in the 'global war on terror'.

At least three of McCain's GOP colleagues have gone on record to say that they consider him temperamentally unsuited to be commander in chief. When he was a toddler, John the Third exhibited a volcanic temper when thwarted. He would hold his breath until he literally turned blue and passed out. To dissaude him from this destructive behavior, his parents would dunk him in a bathtub of cold water. The upcoming election results may be the biggest tub of cold water John McCain has experienced in his privileged life.
[image credit: Rolling Stone]
[photo: Green Berets Smith and McClure were prosecuted for violating the military code of conduct while POWs. The charges were eventually dropped. They were dishonorably discharged.]

Tuesday, October 14, 2008

The End of the Free Market

Update: This is not what I had in mind when I wrote that buying stock in failing banks is preferable to buying worthless securities. Britain and European countries talked of nationalizing banks or at least taking a controlling interest, while Secretary Paulson, the die hard enabler[1], gave in to his Wall Street cronies and promised that the government’s stock purchases would not be real. There would be no dilution of existing shareholders, and the government’s investment would be non-voting! Paulson even agreed not to ask executives to give up their golden parachutes, exorbitant annual bonuses or salaries[2]. The first thing the Germans did was fire the head of Hypo bank. No wonder the casino stock market jumped over 900 points: it's another sweetheart deal for our financial masters. Where is the required writedown of assets? Where is the relief for homeowners? Where is the prosecution of the financial con men who wrote all these predatory loans and then leveraged them thirty times? Why are the speculators only paying a flat 15% in capital gains tax while wage earners pay progressive income tax and FICA at a much higher rate? One of the first items on President Obama's desk should be a bill to make the chairman of the Federal Reserve an elected public office. Or would you prefer they bring back debtors' prisons too?
[1] According to a former Assistant Secretary of the Treasury in the Reagan Administration, "the greatest mistake was made in 2004...the investment banks, led by [then Goldman Sachs CEO] Paulson, met with the Securities and Exchange Commission....Paulson convinced the SEC Commissioners to exempt the investment banks from maintaining reserves to cover losses on investments. The exemption granted by the SEC allowed the investment banks to leverage financial instruments beyond any bounds of prudence."
[2]The nine initial banks voluntarily selling preferred shares are Bank of America, Merrill Lynch, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, State Street and Wells Fargo.

{10/10/08}To possibly avoid the cataclysm of a latter day Great Depression, the United States government is on the verge of an ideological shift of seismic significance. This Saturday the outgoing President will be discussing the nationalization of US banks that receive direct financial aid from the United States Treasury. Prime Minister Gordon Brown has already taken this step after Germany did so in its rescue of Hypo Real Estate bank, and is encouraging other nations to take similar steps in a coordinated way. Britain's banks will get an unprecedented 50 billion pound (€64 billion) government lifeline and emergency loans from the Bank of England. The government will buy preference shares from Royal Bank of Scotland Group PLC, Barclays PLC and at least six other banks, and provide about 250 billion pounds of loan guarantees to refinance debt. The Bank of England will make at least 200 billion pounds available. The plan doesn't specify how much each bank will get. That means the UK government will at least partially nationalize its most important international banks.

In contrast Secretary Paulson's plan is a "market" approach in which the US government is stuck buying the most toxic asset backed securities from favored banks at dubious prices. But the plan hurriedly passed by Congress does contain a provsion allowing the Treasury to purchasing equity in companies getting direct infusions of money. From a social justice perspective, a shift from crony capitalist doctrine is long overdue. If private risks are being socialized as has been done in the $1.8 trillion rescue program so far, then equity demands the public should benefit as equity owners in any recovery of value. It is ironic that fate has dictated this latest crisis of capital should occur during a conservative laissez faire regime like that of George W. Bush. However he is being advised by economists, among them Mr. Bernancke of the Federal Reserve, who well understand the mistakes of the Hoover administration in responding to world deflation after the stock market collapse of 1929. Only massive government injections of capital worldwide can restore confidence in banks and restart lending. That capital of course, is fiat money. Unregulated offshore hedge funds, deregulated banking and insurance, and derivative markets gone viral created, with the collaboration of sympathetic policy makers in government[1], this perfect storm. If the international credit system is to be taken off the shoals with tax money, then the policies that got us to these desperate straits must be changed and for good, free market rhetoric and falling stock markets aside. As one financial advisor put it,
"we are all socialists now".
[1]Eric Dinallo, the Superintendent of the New York Insurance Department, testified at the AIG oversight hearing, that funding cutbacks in recent years directed by the Regime had reduced the department that regulates $80 trillion in asset backed securities (ABS), which includes the toxic sub-prime and Alt-A mortgage securities and much more. The Bush Administration took the staff from more than one hundred people down to one. Secretary Paulson, as CEO of Goldman Sachs, was the most aggressive promoter of AB S products on the Street of Broken Dreams.
Chart: MoneyCafe.com. Most adustable rate mortgages (ARMs) are tied to the 1 year LIBOR rate which failed to respond to the coordinated discount rate cut by central banks this week. Washington Mutual and Countrywide wrote more than $300 billion worth of option ARMs in the three years from 2005 to 2007, concentrated in California. Golden West, the creator of the option ARM, and now a part of Wachovia, wrote many billions more. The bulk of these loans will not reset until 2009-11. The 'walk away syndrome' will then be at work. In California as in few other places have so many taken on so much debt with so little equity. So the crisis in California will get much worse. If the first stage of the foreclosure crisis was about people who could not afford their mortgages,the next stage will be about people who have every reason not even to try to pay their mortgages.http://globaleconomicanalysis.blogspot.com/2008/04/walking-away-next-mortgage-crisis.html

Wackydoodle sez: "Boy howdy, I am headin' to the hills to work my claim!"

Monday, October 13, 2008

5,000 Physicians Agree

That in itself is an amazing statement. But on what do they agree? The way to ensure universal, affordable health care coverage in the US is to enact a single payer system. Our insurance and employer based system is irrational and broken. It treats health care as a commodity for profit when it should be a right of every citizen. Senator Obama agrees that health care is a right (response to question in the second debate), but offers a plan that still relies on employers to give their employees coverage, and does not ensure every American has health insurance because it lets "the market" set the price. We have seen to our chagrin how the market allocates resources on Wall Street--badly. Mandate models like Senator Obama's have been tried in several states including Oregon but have failed to provide universal coverage. Politicians have refused to appropriate more money for the state systems as health costs continue to spiral upward. Senator McCain's tax credit is laughable because it is not enough to replace employer provided coverage, and does nothing to control costs. Saving every penny of health care costs will be even more important, now that huge expenditures will be made rescuing the banks from their own greed. Single payer reform could save more than $300 billion annually in administrative expenses. Private insurers have overhead that is four times Medicare's because their profit incentive to deny claims imposes a costly bureaucratic burden on providers. A single payer system would also slow costs through coordination and planning. Incremental approaches will not work. Only a single payer has enough economic leverage to negotiate reasonable prices from private providers of health care and drugs. Such a system is working in Canada and in Europe. Call it socialized medicine if you will, but I would pay taxes for affordable health care over a busted bank any day.

Saturday, October 11, 2008

Fear and Loathing On the Right

The bigoted wing-nuts supporting John W. McBush for president are beginning to realize Obama's 11 point lead in national polls (the lead would be double that in a better world) cannot be overtaken in the three weeks before Election Day barring an Obama meltdown. The candidate himself has even been forced to rebuke the rabble for their increasingly vituperative hatred of a half-black man that is likely to be the next president of the United States. McBush's magic bullet populist, Sarah Palin, has shot herself in the foot over "Troopergate". A bipartisan investigating committee has concluded that she abused executive power when she fired her public safety commissioner after he refused to dismiss a state trooper involved in a messy divorce with her sister. Documents recently released show her husband, Todd, had been engaged in a year long vendetta against the trooper. Unfortunately for McBush all the fear and loathing coming from the fringe right will impact negatively on his chances to become president. The latest attack is against ACORN (Association for Community Organizations for Reform Now), a liberal community action organization whose offices in Las Vegas were raided. Apparently fraudulent voter registrations forms were discovered there months ago. ACORN officials said they fired a number of workers and turned over evidence to Nevada officials after they discovered the phony forms. No actual voter fraud was committed. The GOP is attempting to tie Senator Obama to the organization since he did work for them as a lawyer in Chicago. I have nothing but praise for ACORN because they helped my tiny consumer group take on the nuclear power behemoths in Texas. Their voter registration efforts generally deserve praise, not hysterical condemnation. McBush must share in some of the blame for the vitriol since he decided to go negative in the last weeks of his uphill battle. The election of Barack H. Obama will be the culmination of a century and half struggle for civil rights, so that we may "form a more perfect Union".

Friday, October 10, 2008

'Toontime: The View from London

[Peter Brookes, The Times]

Thursday, October 09, 2008

Voter Suppression Efforts in Montana

Update: The Montana state GOP withdrew its efforts to challenge 6,000 Montana voters in mostly Democratic districts on Tuesday. In a federal suit filed Monday by the Democratic Party seeking a restraining order, Judge Donald Malloy (the same judge that granted a TRO against the wolf slaughter in the northern Rockies) scolded the state party for attempting to challenge voters who filed a change of address form with the USPS writing in his order,"The timing of these challenges is so transparent that it defies common sense to believe the purpose is anything but political chicanery." Judge Malloy also said that state GOP director Jacob Eaton "ingnored" the law that answered his challenges. (Help America Vote Act of 2002). The Judge ruled that a TRO was not necessary since the Secretary of State, Brad Johnson (a Republican) had directed election offices to ignore the challenges. Ouch!

{10/02/08}The Democratic Party is making a concerted effort to win western states to offset the solid (now Republican) south. Montana has traditionally been a red state, but demographic trends are turning it blue. Democratic activists are engaged in a massive registration effort there and it is bringing results. The Billings Gazette reports 36,000 new voters on the roles this year and most of those are Democratic. But the GOP is attempting to counter the get-out-the-vote campaign with something it does best: vote suppression. The state Republican party challenged the eligibility of 6,000 voters who filed a change of address form at the US Postal Service in the last 18 months. All of the challenged voters are in heavily Democratic districts. More than half live or lived in Missoula County. The party cross-referenced the relatively new statewide voter database with the National Change of Address database, a commercial software system for direct marketers, in order to identify electors who aren't living where they are registered to vote. The targeted counties had the highest number of discrepancies. In Missoula County that means 3,422 voters have to prove they are still living where their voter registration says they are living or be prepared to vote a provisional ballot on November 4th. Only twice before in the last 15 years has the Missoula elections office had any voters' eligibility challenged. Its a brave new world in big sky country.

Wednesday, October 08, 2008

Le Shorter: Know Your Spreads

The TED spread reached a record high of 4.02% Wednesday before retreating to 3.81% and after dipping as low as 3.46% Tuesday. Just over a month ago, the TED spread was only 1.04% (typically it is 50 basis points). The spread is the difference between the rate for a 3 month treasury bill and the London Interbank Offerred Rate (LIBOR) for three months and measures banks' risk aversion. The LIBOR-OIS spread (Overnight Indexed Swaps) set a record at 3.22%, before retreating slightly to 3.21%, and blowing past the record 2.97% spread reached Tuesday. The bigger the spread, the less cash is available for lending. Translation: Big trouble, Kimosabe.

Polar Bears Gain Critical Habitat

The federal government has agreed to settle a lawsuit brought by environmental organizations including NRDC to force the Department of Interior to designate critical habitat for ursus maritimus [AP photo], the great white bear of the north. Species for which critical habitat has been designated have been found to be more than twice as likely to recover, and less than half as likely to decline, than those without. The agreement filed yesterday in federal court sets a deadline for the Secretary of the Interior to make the designation and issue guidelines for non-lethal actions concerning bears that pose a threat to humans under the Marine Mammal Protection Act. More and more bears are stranded ashore as their sea ice habitat rapidly melts due to global warming. As a result there is an increase in human-bear interactions. Often such interactions result in the death of the bear. The partial settlement does not cover the issue of whether the Secretary erred in designating the bear as "threatened" rather than "endangered" under the Endangered Species Act, depriving the polar bear of additional protection from human interference. The state of Alaska, under the administration of Sarah Palin, and industry groups have filed suit in Washington, DC seeking to overturn protection for polar bears.

Tuesday, October 07, 2008

Debate Round Two

Again issues of format dominated the debate as both candidates reverted to their often heard talking points under the strain of time constraints and an intrusive moderator. Tom Brokaw insisted he was "just a hired hand" when he met resistance from the debaters to his enforcing the rules. He ultimately is an employee of General Electric, the same company that hired Ronald Reagan as its corporate spokeman. In this viewer's opinion he exhibited a bias in favor of John McCain in both his framing of follow up questions and the timing of his interruptions. The best exchange between the two presidential candidates occurred concerning the financial crisis, but neither offered any detail about how the enormous cost of the bailout plan will affect their proposed programs. Obama scored by successfully identifying McCain with deregulation, a generally accepted underlying cause of the current crisis. McCain did his best to ingratiate himself with the audience, often approaching them closely, and at one point laying his hand on a shoulder of a fellow Navy veteran. He made one new proposal that is actually an old idea: reviving the New Deal's Homeowners Loan Corporation, but someone should tell him that Social Security is solvent until 2049. Obama did a better job of explaining his proposals, but at a distance, and responding to McCain's attack lines. He ignored the succinct and penetrating question of should health care be treated as a profitable commodity in the United States. But it is too much to expect a modern politician to engage in a philosophical discussion before a live television audience in the alloted time. That's too bad for us because it is our country's fundamental principles we urgently need to address.

The Toxic Coast

Lies and more lies. That is what comes out of the mouths of conservatives in this country. To support their "drill, baby drill" policy for the outer continental shelf, they repeatedly claimed that not a drop of oil was spilled in the aftermath of hurricanes Katrina and Rita. That is a lot of crap. A report prepared for the party-goers at the Minerals Management Service (MMS) by a Norwegian firm shows that 457 pipelines were damaged and 113 platforms were destroyed in the storms. Six spills of 1000 barrels or greater were reported to the Coast Guard. The largest was 3,625 barrels. There were 595 onshore spills totalling 9 million gallons, or comparable to the Exxon Valdez disaster in which 10 million gallons were released. The Murphy Oil spill in Mereaux, La. covered one square mile, contaminated 1700 homes, and closed the local high school. The Houston Chronicle ranked the contamination caused by the two hurricanes "among the worst environmental disasters in U.S. history".

An AP study of incident reports before and after the latest hurricane of the season, Ike, found at least 500,000 gallons of oil and other chemicals were spilled along the Gulf coast. 52 platforms were destroyed by the storm and 32 severely damaged according to the MMS. Never let it be said that the oil industry and its paid pols let reality stand in the way of their cynical plans to drill our way to energy independence.
[image credit: Fog City Journal]

The 17 Thousand Pound Gorilla

BAILOUT TYPE & COST (Source: Reuters)
Wall Street bailout package approved this week: up to $700 billion
Bear Stearns financing: $29 billion
Fannie Mae and Freddie Mac nationalization: $200 billion
AIG loan and nationalization: $85 billion
Federal Housing Administration housing rescue bill: $300 billion
Mortgage community grants: $4 billion
JPMorgan Chase repayments: $87 billion
Loans to banks via Fed's Term Auction Facility: $200 billion+
Loans from the Exchange Stabilization Fund: $50 billion
Purchases of securities by Fannie Mae and Freddie Mac: $144 billion
POSSIBLE TOTAL: $1.8trillion+



The $700 billion was never going to be enough and both the Regime and its capitalist collaborators knew it, but it was important to get the hook in to insure future introductions to Mo' Money. Foreknowledge of this situation explains Monday's 800 point drop in the Dow index and its global ripples. The conspirators used fear tactics to stampede the ignorant and venal in Congress to pass an ill-conceived plan just as they did to get authorization to wage aggressive war for oil in Iraq. The Wall Street Relief Plan, as it might more properly be called, does nothing to support the deflating real estate market which is the underlying real asset beneath the mountains of bad paper created by the finance alchemists. Just because the federal government bails out the banks does not mean an end to the bear market in real estate. The real estate market will recover when the excess inventory has been cleared and real estate prices again make investment sense. What the plan does do is create such a massive amount of new public debt that it endangers our country's credit rating. The possibility of ruinous hyperinflation is not far away. Meanwhile the credit squeeze continues unabated as capital flees to safe havens--for now--like T bills, bidding down the discount.

Monday, October 06, 2008

Darth Lies Again

Another incredible claim was made Saturday in Reno, Nevada at a White House policy conference on North American wildlife. The Charlatan was too busy saving his buddies on The Street of Broken Dreams to attend the conference so he introduced his favorite henchman, Darth Cheney by video. Cheney, who has made a high art of the 'big lie' technique of political propaganda, had the audacity to claim, "As all of you know very well, President Bush made wildlife conservation an early and a high priority of his administration." This statement comes from a regime which has fought environmental regulation of all types from the day it took office eight years ago. Its favorite target has been the Endangered Species Act, the pivotal federal law by which habitat for endangered species is preserved. Implementation of the act by the Bush administration has been investigated by the Government Accountability Office, by the House Natural Resources Committee, and by the Department of Interior's own Inspector General. The Inspector General's 2007 report resulted in the resignation of Julie MacDonald, a former deputy assistant secretary in the Department of the Interior who left her post last year under a cloud of scandal. The decision to list the polar bear as endangered was made only after a year of delay by the Interior Department and a lawsuit by environmental groups to force a decision. Before finally making the decision the Regime went ahead with an oil and gas lease sale in the Chuchki Sea, prime polar bear habitat, despite objections from wildlife experts.{5/21/08} Under the current regime the US Fish & Wildlife Service has repeatedly said that "the designation of critical habitat provides little additional protection to most listed species, while preventing the Service from using scarce conservation resources for activities with greater conservation benefits." Regardless of the agency's claim, environmentalists have convinced reviewing courts that political considerations and not the best available science has played an improper role in numerous critical habitat decisions by the nation's leading wildlife management agency. 281 species designations are still awaiting agency action. In a related development the Center for Biological Diversity sued the federal government on Friday in five separate cases concerning political interference in designation of critical habitat for six western species, including the western snowy plover, California tiger salamander, southwestern willow flycatcher, Buena Vista Lake shrew and two California plants. If this pathetic record is an example of "high priority" concern of this adminstration for the preservation of vanishing wildlife, then its one more reason to vote for the opposition.