Friday, December 31, 2010

The Pakistani ISI it part of the South Asia problem

The recent problem in which the American CIA station chief in Islamabad was "outed" and forced to leave the country, probably by members of the Pakistani Inter-Services Intelligence, is just part of the South Asia problem. The arrest and convictions of David Coleman Headley, an American who participated in the Mumbai terror attack, has provided a great deal more information about the relationship between the Pakistani ISI and the terror group Lashkar-e-Taiba.
Pakistan's powerful intelligence service has been accused for years of playing a "double game:" acting as a front-line U.S. ally in the fight against terror while supporting selected terrorist groups which serve Pakistani interests.

Now, for the first time, there is a detailed inside account of how that game is played. The U.S. investigation of the 2008 Mumbai attacks [1] has built a strong case that officers in Pakistan's Inter-Services Intelligence Directorate (ISI) collaborated with the Lashkar-e-Taiba terrorist group in the plot that killed 166 people, six of them Americans. U.S. and Indian investigators say their understanding of the ISI-Lashkar alliance is drawn from the confessions of David Coleman Headley, an American convicted of participating in the Mumbai plot, as well as documents, phone records and electronic eavesdropping.

Officials from both countries say they are persuaded that ISI officers recruited and trained Headley in spying techniques and gave him money and instructions to scout targets in Mumbai and elsewhere. Headley has told investigators that a Pakistani Navy frogman helped plan the maritime attack on Mumbai, according to a 119-page report recounting his interrogation this year by Indian authorities. The report, which was obtained by ProPublica, quotes Headley as saying his Pakistani intelligence handler took part in a discussion about a subsequent Lashkar plot to attack a Danish newspaper -- information that Pakistan did not share with Danish authorities.

In essence, U.S. and Indian officials say, Headley was more than a terrorist: He served as a Pakistani spy.

During the period that ISI officers allegedly helped Lashkar plan to kill Americans and Jews in Mumbai, the intelligence service was working closely with the CIA and U.S. military in counter-terrorism efforts and Pakistani President Asif Ali Zardari was pledging his support for the U.S. campaign against militants in Pakistan and Afghanistan.

Pakistani officials deny any link to Lashkar and point out that hundreds of ISI officers have died in clashes with militants. They accuse India of politically motivated distortion in the report on Headley's interrogation.

"It is a stereotype, a Pakistan-specific version of an Indian interrogation," said a Pakistani official who requested anonymity because of the sensitive topic. "The Indian version is totally distorted and fabricated as there was no involvement of the ISI whatsoever. Nor did any serving official interact with Headley or any of the perpetrators."

But U.S. investigators see much of Headley's account as credible, U.S. officials said. The investigators believe his main handler, a man identified only as Major Iqbal, was a serving member of ISI and one of several Pakistani intelligence officers who had contact with Headley, according to U.S. officials.

The Obama administration has expressed frustration with Pakistan's failure to bring to justice the suspected masterminds of Mumbai and to rein in Lashkar, the ISI's longtime proxy army against India. Recent intelligence shows Lashkar remains intent on striking the West, according to a U.S. official who requested anonymity.
While the civilian government of Pakistan denies that the ISI was involved in the attack on Mumbai, their denial has to be recognized as necessary because if they failed to deny the ISI involvement then they would be admitting that the Pakistan government is so weak that it cannot prevent rogue elements of the ISI from attacking Pakistan's neighboring countries. Admission of that weakness could easily attract internal opponents to try to replace them. The same dynamic applies to the public complaints the government makes about the American drone strikes against the Taliban in North Wiziristan even though elements of the government are said to be providing targeting information to the Americans in order to guide the drone attacks.

My previous articles on Pakistan are

Want to lose weight? Cut carbohydrates sharply

Two years ago I lost 45 pounds within four months by cutting out almost all carbohydrates and keeping a daily record of everything I ate along with the calories. Essentially it was the Atkins Diet combined with careful record-keeping. It worked.

No sugar, no bread made with processed flour, no white potatoes, no rice, no alcohol. There was almost nothing in a 7-11 store that I could eat. The only thing McDonald's sells that I could eat was a quarter-pounder hamburger Pattie. No bread. The important point, though, it that it worked. Especially important, I was not hungry for more food. Staying under 1000 calories per day was no problem.

But I was told it was dangerous. I had to have carbohydrates many people told me. So I started adding carbohydrates back in. And I became irrationally hungry, binging frequently. I put 25 pounds back on.

Well, today the Los Angeles Times reports studies that confirms my experience.
All carbohydrates (a category including sugars) convert to sugar in the blood, and the more refined the carbs are, the quicker the conversion goes. When you eat a glazed doughnut or a serving of mashed potatoes, it turns into blood sugar very quickly. To manage the blood sugar, the pancreas produces insulin, which moves sugar into cells, where it's stored as fuel in the form of glycogen.

If you have a perfectly healthy metabolism, the system works beautifully, says Dr. Stephen Phinney, a nutritional biochemist and an emeritus professor of UC Davis who has studied carbohydrates for 30 years. "However, over time, as our bodies get tired of processing high loads of carbs, which evolution didn't prepare us for … how the body responds to insulin can change," he says.

When cells become more resistant to those insulin instructions, the pancreas needs to make more insulin to push the same amount of glucose into cells. As people become insulin resistant, carbs become a bigger challenge for the body. When the pancreas gets exhausted and can't produce enough insulin to keep up with the glucose in the blood, diabetes develops.

The first sign of insulin resistance is a condition called metabolic syndrome — a red flag that diabetes, and possibly heart disease, is just around the corner. People are said to have the syndrome when they have three or more of the following: high blood triglycerides (more than 150 mg); high blood pressure (over 135/85); central obesity (a waist circumference in men of more than 40 inches and in women, more than 35 inches); low HDL cholesterol (under 40 in men, under 50 in women); or elevated fasting glucose.

About one-fourth of adults has three or more of these symptoms.

"Put these people on a low-carb diet and they'll not only lose weight, which always helps these conditions, but their blood levels will improve," Phinney says. In a 12-week study published in 2008, Phinney and his colleagues put 40 overweight or obese men and women with metabolic syndrome on a 1,500-calorie diet. Half went on a low-fat, high-carb diet. The others went on a low-carb, high-fat diet. The low-fat group consumed 12 grams of saturated fat a day out of a total of 40 grams of fat, while the low-carb group ate 36 grams of saturated fat a day — three times more — out of a total of 100 grams of fat.

Despite all the extra saturated fat the low-carb group was getting, at the end of the 12 weeks, levels of triglycerides (which are risk factors for heart disease) had dropped by 50% in this group. Levels of good HDL cholesterol increased by 15%.

In the low-fat, high-carb group, triglycerides dropped only 20% and there was no change in HDL.

The take-home message from this study and others like it is that — contrary to what many expect — dietary fat intake is not directly related to blood fat. Rather, the amount of carbohydrates in the diet appears to be a potent contributor.

"The good news," adds Willett, "is that based on what we know, almost everyone can avoid Type 2 diabetes. Avoiding unhealthy carbohydrates is an important part of that solution." For those who are newly diagnosed, he adds, a low-carb diet can take the load off the pancreas before it gets too damaged and improve the condition — reducing or averting the need for insulin or other diabetes meds.

Americans can also blame high-carb diets for why the population has gotten fatter over the last 30 years, says Phinney, who is co-author of "The New Atkins for a New You" (Simon & Schuster, 2010).

"Carbohydrates are a metabolic bully," Phinney says. "They cut in front of fat as a fuel source and insist on being burned first. What isn't burned gets stored as fat, and doesn't come out of storage as long as carbs are available. And in the average American diet, they always are."

Here's how Phinney explains it: When you cut carbs, your body first uses available glycogen as fuel. When that's gone, the body turns to fat and the pancreas gets a break. Blood sugar stabilizes, insulin levels drop, fat burns. That's why the diet works for diabetics and for weight loss.

When the body switches to burning fat instead of glycogen, it goes into a process called nutritional ketosis. If a person eats 50 or fewer grams of carbs, his body will go there, Phinney says. (Nutritional ketosis isn't to be confused with ketoacidosis, a dangerous condition that can occur in diabetics.)

Beyond the fat-burning effects of ketosis, people lose weight on low-carb diets because fat and protein increase satisfaction and reduce appetite. On the flip side, simple carbs cause an insulin surge, which triggers a blood sugar drop, which makes you hungry again.

"At my obesity clinic, my default diet for treating obesity, Type 2 diabetes and metabolic syndrome is a low-carb diet," says Dr. Eric Westman, director of the Lifestyle Medicine Clinic at Duke University Medical Center, and co-author of the new Atkins book. "If you take carbohydrates away, all these things get better."

Though the movement to cap carbs is growing, not all nutritional scientists have fully embraced it. Dr. Ronald Krauss, senior scientist at Children's Hospital Oakland Research Institute and founder and past chair of the American Heart Assn.'s Council on Nutrition, Physical Activity and Metabolism, says that while he fundamentally agrees with those advocating fewer dietary carbs, he doesn't like to demonize one food group.

That said, he adds, those who eat too many calories tend to overconsume carbohydrates, particularly refined carbohydrates and sugars. "It can be extremely valuable to limit carbohydrate intake and substitute protein and fat. I am glad to see so many people in the medical community getting on board. But in general I don't recommend extreme dietary measures for promoting health."

Joanne Slavin, professor of nutrition at the University of Minnesota and a member of the advisory committee for the 2010 Dietary Guidelines for Americans, is less inclined to support the movement. The committee, she says, "looked at carbohydrates and health outcomes and did not find a relationship between carbohydrate intake and increased disease risk."

Most Americans need to reduce calories and increase activity, Slavin adds. Cutting down on carbs as a calorie source is a good strategy, "but making a hit list of carbohydrate-containing foods is shortsighted and doomed to fail, similar to the low-fat rules that started in the 1980s."

As nutrition scientists try to find the ideal for the future, others look to history and evolution for answers. One way to put our diet in perspective is to imagine the face of a clock with 24 hours on it. Each hour represents 100,000 years that humans have been on the Earth.

On this clock, the advent of agriculture and refined grains would have appeared at about 11:54 p.m. (23 hours and 54 minutes into the day). Before that, humans were hunters and gatherers, eating animals and plants off the land. Agriculture allowed for the mass production of crops such as wheat and corn, and refineries transformed whole grains into refined flour and created processed sugar.

Some, like Phinney, would argue that we haven't evolved to adapt to a diet of refined foods and mass agriculture — and that maybe we shouldn't try.
This describes my experience exactly. Look at the two items I have highlighted in green. The first one shows how the weight loss eliminates metabolic syndrome. It worked for me. I both lost weight and improved my cholesterol and lipids.

The second item in green explains the effects so many people successful in phase one of the Atkins diet described to me. In phase one they lost weight. A lot of it. When they started putting carbohydrates and sugar back into their diet, the weight came back. The second item in green explains my hunger binges. Sugar or carbohydrates kicked my blood sugar up rapidly and then it dropped rapidly a short time later making me hungry.

Remember, hunger is something you feel because your brain receives messages about blood sugar from your blood. It has nothing directly to do with your stomach or how much you have eaten.

One more thing I should report, though. I really was NOT hungry on the diet. Restricting my diet to below 800 calories per day led to even more rapid weight loss. But when my vision changed sharply requiring new glasses, then changed back a few weeks later, my ophthalmologist explained that changes in the blood sugar can effect the lens in your eyes. So don't try the diet without the advice of good medical experts who are familiar with the Atkins Diet. MOST medical professionals are unaware of what this diet is doing, and they won't tell you that.

My weight and triglycerides have gone up. I am going back on the diet. But I now have a good reason to totally stop bread, sugars and so on. If you have found your weight slowly going up as you get older, this is why.

Carbohydrates. Get rid of them. Keep a daily record of the foods you eat along with the calorie count each day. Also weigh yourself daily. If your weight starts going back up, check back to what you ate over the previous three weeks and you will see why if you kept honest records.

Thursday, December 30, 2010

Here are the results of the deficit hawks' proposals

When Social Security retirement is stolen to pay for the tax cuts for the rich and for their interminable wars (wars always benefit the wealthy but are fought by the not-so-wealthy) the end result is going to be poor houses. Glenn Beck specifically proposes them.

What will get us there? The bankers and wealthy big business owners are gambling on stock market and bond market speculations. When they lose, they will again demand that the tax payers bail them out because their services are all that will be keeping the economy out of the next Great Depression. The result? Look at Ireland. This is Digby's blog. Here are the pictures of unrest from Ireland.

I really don't want to see that happen here, but the only thing stopping it is the fact that the U.S. dollar was and remains the world currency and will remain so as long as the federal government does not default on its treasury bonds - at least not to foreign banks. Defaulting to the Social Security trust funds is fine. What is being proposed right now is an internal default. Lower Social Security benefits so that the government does not have to pay back the Social Security trust funds the money they have borrowed in order to fight two unnecessary wars and to pay the outlandish tax cuts for the wealthiest Americans. .

By lowering Social Security benefits, the federal government will then only be faced with raising taxes enough to pay back the Chinese, Japanese and Middle Eastern Oil Magnates who own the rest of the bonds. All the government has to do is keep on over-taxing the workers for Social Security and the wealthy and the bankers will do quite well. The only people who will be hurt are future retirees.

The working class is being taxed so that their tax money can make the wealthy better off. That's what the talk of cutting Social Security benefits to lower the deficit is about. But Social Security has never run a deficit, nor will it. .The deficit has come from wars and unnecessary tax cuts on the already under-taxed wealthy Americans.

The strain of libertarianism in American politics

What exactly is libertarianism? Here's one view:
Libertarianism is a long, clunky word for a simple, elegant idea: that government should do as little as possible. In Libertarianism: A Primer, Cato Institute executive vice president David Boaz defines it as “the view that each person has the right to live his life in any way he chooses so long as he respects the equal rights of others.”

Like any political philosophy, libertarianism contains a thousand substrains, ranging from anarchists who want to destroy the state to picket-fence conservatives who just want to put power in local hands.

The traditional libertarian line is that government should be responsible for a standing army, local security, and a courts system, and that’s it—a system called minarchy. But everyone has his own idea of how to get there.

Washington-think-tank libertarians take an incrementalist approach within the two-party system. The Libertarian Party offers a third way. Ayn Rand–inspired Objectivists promote their ideas through education. Reason magazine preaches the gospel of cultural libertarianism. Silicon Valley techno-entrepreneurs would invent their way to Libertopia. Wall Street free-marketers want deregulation. The Free State Project plans to concentrate 20,000 libertarians in New Hampshire. “Seasteaders” dream of building societies on the ocean. And then there are the regular old Glenn Beck disciples who just want to be left alone. “They all want to shoot each other in the face over who gets to be the real libertarian,” says Matt Welch, editor of Reason. At the very least, they all agree they should be allowed to acquire the weapon with which to do so.

[Formatting and highlighting changed by WTF-o editor to improve readability.]
This article looks at libertarianism and the likely results of implementing some of the various proposals.

Why does FOX dominate the ratings wars for news media?

Steve Benen in the Political Animal at Washington Monthly posted an article that reported FOX "News" has going away more viewers than any other media outlet that is counted as part of the news media. I just realized why they dominate those ratings. FOX is the only organization being measured as a member of the news media that caters to viewers who demand social certainty in the face of great social changes. It is also the most likely of any media outlet to warn its viewers that everyone else is lying to them. FOX carefully crafts an image to attract frightened people who recognize that we are in a period of great social change and who are afraid they are going to lose what they have because of it. Then they promise that if the public elects the politicians it promotes that image will come true.

This is not a problem for people with great wealth since possession of wealth protects people from all but the most radical social change. They live in gated communities and avoid meeting with anyone not of their class. They protect themselves by promoting increased police, more laws and in these days of globalism, by getting their friends in government to spend more on the military. But even the most wealthy are afraid, that's why the Republicans are catering to them with tax cuts and with repeal of the inheritance tax.

The poor as a group are not up in arms because they can't be in any worse condition even if things do change radically, and American history shows that little will get better for them no matter what changes.

Look at the public which is being counted as viewers. Fox's ratings are based on middle class cable TV viewers who fear the current social changes will cause them to lose what they have. The American public right now is more afraid generally than I have ever seen, and I am in my late 60's. The closest to this that I have ever seen was during the 60's when the race riots and assassinations were happening, but that was not stacked on top of economic disaster - especially the many foreclosures - and a radical right-wing government removing the social safety net as was installed in 2001 (and which Obama has not appeared to change much.) There are a lot of reasons to be afraid of loss, especially for the middle class, and those who have controlled the government in the twenty-first century advertise that the government will not and cannot help if individuals lost their security. That was Ronald Reagan's great message and it has been the message of the American right-wing since the nineteenth century.

To frightened middle class people a government using authoritarian means of control looks very attractive. That's especially true if the media can sell the idea that the social changes that are the threat are all caused by the demands of the lower social classes. So FOX sells the ideas that the economic problems of today were caused by poorly managed Fannie Mae and Freddie Mac because the Democrats wanted more poor people to get their own homes. (Completely untrue. See also An autopsy of Fannie Mae and Freddie Mac.) The drug problem is caused by crazy poor people hopped up on Meth who have uncontrollable demands to pay for their drug habits, so the only solution it to imprison them. (Also completely untrue.) Other similar simplistic lies include blaming crime on immigrants, usually from Mexico. These lies are especially aimed at the darker-skinned Mexicans of Indian descent since that resonates with America's innate suspicion and fear of darker-skinned people. These and other similar lies are spewed by FOX in order to hand control of the American federal government to their politicians in the conservative Republican Party. But since the solutions being proposes are based on lies and half-truths, they won't work. The government that implements those solutions will see them fail and have to fall back on police powers to control the lower classes who will be taxed to make up the money given to the wealthy and the big businesses.

This is what the attack against Social Security is all about. Social Security retirement is well funded for a long time, but the excess money the baby boomers have paid to cover their own retirement were put into government bonds and either wasted on wars or given to the wealthy in tax breaks. Next year the baby boomers start to retire and are going to demand the money loaned in treasury bonds be paid back. The only solution is for the government to start taxing the wealthy to pay back what it borrowed or lower benefits so that it does not have to pay the money back to the (middle class) retirees who thought they were saving for retirement. Since the wealthy have a lot of investment in government bonds they do not want the government to default and they do not want their taxes raised, so Pete Peterson and friends will lower Social Security benefits so that it never has to be paid back.

Another major problem is that the failed government policies being promoted by FOX lies and half-truths will justly cause criticism. Since the policies are not based on facts which can be independently verified, expect to see government censorship and police reactions against leakers. That's the core of the attack on Julian Assange and Wikileaks. The government applies security primarily to protect themselves from criticism. Most of the material is already known to real enemies. But policies based on lies cannot be supported by reason. They have to be maintained by force.

One group especially likely to react with approval towards an authoritarian government is the elderly middle class. These people are FOX' most fervent viewers. They have a lot to lose and as a person gets older he realizes that he no longer has he time and energy to recover lost property and expected future benefits when those things he expected to have are taken from him. When a person is younger the idea of taking risks to improve his life is exciting, especially since the young are usually sure you will win when they take risks. (Same reason I buy a lottery ticket.) As a person gets older he has more to lose and much more awareness just how easy it will be to lose it. This is why older people are more likely to be afraid and demand greater security than younger people are.

What does that have to do with the ratings? FOX provides the clearest image of a society that does away with uncertainty for the middle class (sure it's mostly lies) and they discourage their viewers from watching any other media that presents a less saccharine (but more realistic) image. All the other "news" media provides information about threats and very little reason to feel secure. So those most in need of reassurance gravitate to the only source in the media - FOX. Everyone else scatters their ratings to all of the other media members.

Voila! FOX dominates the ratings with a very high percentage of older, misinformed viewers.

Thursday, December 23, 2010

111th Congress: Democrats paid a high price, but they chose wisely

Steve Benen, evaluating the recent two years of the 111th Congress, quoted the following from Rachel Maddow:
"Democrats had a choice when they became the governing party. When they won those last two elections and they took control of the two branches of government that are subject to partisan control in our country, they could have governed in a way that was about accumulating political capital with the primary goal of winning the next election. They could have governed in constant campaign mode. Or they could have governed in a way that was about using their political capital, not accumulating more of it, about spending the political capital they had to get a legislative agenda done, to tackle big, complex, longstanding problems that had languished."
The Democrats have really gotten a lot of stuff done that has languished for a long time. The Affordable Care Act is only one element, and it was a really big one. And the process has really exposed the warts of the American political system. (I strongly suggest that the U.S. Senate be simply abolished.)

But America is going to look back at what the Democrats did in the most recent Congress with pride. Republicans are going to whine, cry and lie.

"Birther" Doc convicted, dismissed and given 6 months prison

It has been really difficult to understand what was going through Army Lt. Col. and Doctor Terrence Lakin's mind when he refused orders to deploy to Afghanistan until President Obama proved to his satisfaction that Obama was American-born. Now, after he has been convicted of disobeying orders and missing a deployment, he tearfully explains:
As part of their sentencing evidence, prosecutors played Lakin’s video for the jury. In it, he states that a president who is not a natural-born citizen “would subvert law and truth” and demands that Obama “release your original, signed birth certificate -- if you have one.”

During an hour of unsworn testimony, Lakin called that video an embarrassing mistake, brought on by pressure and poor advice from supposed supporters.

“I would not do this again,” he said. “It was a confusing time for me, and I was very emotional. I thought I was choosing the right path, and I did not.”
He really got some bad advice from some people who wanted to use him to attack Barack Obama. The attack failed, and those people are now gone. They used doctor Lakin and abandoned him.

Just politics. And doctor Lakin is now kicked out of the Army without his pension and with a record of a felony conviction.

Monday, December 20, 2010

US reported to be considering expanding operations inside Pakistan

Reuters reports that U.S. Commanders are considering expanding U.S. special operations activities inside Pakistan..

The U.S. troops in Afghanistan are reported to be gaining control over previously Taliban controlled portions of Afghanistan, but Taliban leaders and fighters have a reasonably safe sanctuary inside neighboring Pakistan. The government of Pakistan is not going after those Taliban, so U.S. commanders are talking of doing it themselves.

The following analysis is mine. As indicated in the previous post, I have no credentials that give me any special qualifications to perform this analysis, nor do I have an information that I have not provided links to in this and the previous post.

The leak of the identity of the U.S. CIA station chief in Islamabad may have been the initial public example of the battle between the CIA and the ISI. The Pakistan government over the weekend denied that the ISI had anything to do with that leak, but what would they say? We did it?? It seems reasonable that the leak that led Reuters to post this report is the next stage in bringing that conflict into the public and putting additional public pressure on the ISI, the Pakistani military and on the Pakistan government.

As indicated in today's Reuters story, the U.S. and its NATO allies are all discussing leaving Afghanistan beginning next Summer. But as long as the Taliban leaders are sitting fat, dumb and happy in Pakistan next door and the Afghanistan government cannot control anything outside of Kabul then for the U.S. and NATO to leave means the Taliban will swoop in and regain control over all the territory they had previously held. Unless...

An escalation on the weak point in the battle for Afghanistan - Pakistan - is a very rational move to be making at this time. Either the U.S, will have to carry out the threat to go into Pakistan or the Pakistanis are going to have to clean out the Taliban on their territory themselves.

The next step in this will happen quite soon. No telling what it is or what we will see in the media, but it has to happen soon.

Saturday, December 18, 2010

CIA Chief in Islamabad reportedly exposed by Pakistani ISI

The Indian English-language on-line newspaper The Hindu today reported that the CIA station chief in Islamabad had to leave Pakistan in a hurry because his cover was blown. The leak was suspected to have come from the Pakistani Inter-Services Intelligence (ISI).
Jonathan Banks was identified as the head of the CIA’s Pakistan office, in a lawsuit filed against the United States’ secretive spy agency by a resident of North Waziristan. The resident, Kareem Khan, was said to have filed the case against the CIA and Mr. Banks for their role in organising drone strikes that killed his son and brother.

The legal case brought by Mr. Khan called for murder charges to be brought against Mr. Banks and the CIA, and also reportedly said they should be executed for their crimes. Mr. Khan’s lawyer was quoted by the Guardian saying he had obtained Mr. Banks’ name from Pakistani journalists.

While Pakistan was quick to deny any involvement in leaking Mr. Banks’ name, U.S. officials were quoted as saying that since he had been identified publicly Mr. Banks “had received a number of death threats,” and they “strongly suspected” that the ISI had a hand in the leak.


Intelligence officers here were also quoted by the New York Times as saying that the leak may have been in retaliation for a civil lawsuit filed in New York City last month implicating the ISI chief Ahmad Shuja Pasha in the Mumbai terror attacks of November 2008.

The incident laid bare the deep and growing mistrust between the U.S. and Pakistani spy agencies even as U.S. President Barack Obama made a speech this week in which he warned that “terrorist safe havens within their borders must be dealt with.”
That's the news as reported from India. I am no expert on Pakistan, but my reading of news reports over recent years has often included statements that the Taliban in Afghanistan was a creation of elements of the ISI and that some elements of the ISI still support the Taliban.

The removal of the military dictator Pervez Musharraf of Pakistan in 2008 allowed a civilian government to be put into place and returned Pakistan to more of a nation under the rule of law. But the civilian heads of government do not appear to have control of all elements of the government and certainly do not have control of all of the territory that is generally recognized as part of the nation of Pakistan. Politically, from what I can tell Pakistan has both a strong fear of its neighbors, resulting in a demand for military power, but that the same time a surprisingly strong desire for a democracy operating under the rule of law.

The core of the problem is often described in the American media as centered on the conflict between Pakistan and India over control of the disputed the state of Kashmir. A quick review of the Wikipedia article on Pakistan suggests that is much too simplistic. In the period since Pakistan became independent in 1947 that nation has constantly been at war or defending its borders on all sides. Briefly, during this period Pakistan has fought wars against India, against China and has fought against aggression from Afghanistan. It is no surprise then that Pakistan has the 7th largest military in the world. Nor should it be a surprise that the ISI would set up and support the Taliban to weaken any Afghanistan government. A strong government in Afghanistan would appear to threaten Pakistan. Since Pakistan faces both China and India on other borders it would be very much to their military advantage to ensure that Afghanistan remains militarily weak and politically divided. However, the Taliban in the Province of Wizirastan are reported to be a threat to the civilian government of Pakistan. The military elements of Pakistan may not consider the Taliban as much of a threat. Since the Taliban are religious extremists, they are unlikely to have much interest in a secular government under the rule of law.

Then there are Pakistan's nuclear weapons. In the threatening neighborhood where Pakistan exists it is no surprise that they would do almost anything to become stronger in a military sense. From the point of view of their neighbors, though, the threat of a nuclear war between Pakistan and India is unthinkably dangerous. (That's assuming such a war would not create a world-wide nuclear winter.) America considers the control of those nuclear weapons by the religious extremist terrorists of the Taliban or al Qaeda to be unthinkable. That remains a major motivation for America to continue to fight against the Taliban, both in Afghanistan and using drone attacks, inside nominally Pakistani territory. Since those drone attacks display the weakness of the current government as well as the inability of the Pakistani military to control the Taliban reliably but at the same time but at the same time weaken the Taliban in Pakistan the mostly negative public response to those attacks is quite reasonable. A government publicly known to be weak draws attackers.

With all of these threats to Pakistan what is really surprising is the effort the Pakistanis are putting into recreating and maintaining a democracy that operates under the rule of law. But the fear of attack from any of their neighbors is very likely a major cause of the weakness of the civilian government since that fear encourages people who want to return to a military-controlled government. That fear also strengthens extremist religious factions, to include those focused on the dispute over Kashmir. So it is organizations like Lashkar-e-Taiba which planned and conducted the Terror attack on Mumbai, India in 2008. It seems very likely that Lashkar-e-Taiba has support from some of the military factions inside the Pakistani government and from significant elements of the public.

In short, the entire region including Afghanistan, Pakistan, Northern India and Southwestern China is politically highly unstable. The instability makes it susceptible to disruption by religious extremists, but it is the political instability that is creating and attracting the religious extremists and allowing them to operate. The religious extremists are a symptom of the problems rather than their cause.

That said, elements of the ISI which dislike the interference by the Americans (who for the most part seem to not understand the situation) are unsurprisingly upset about the American drone attacks on elements of the Taliban operating inside Pakistan. Leaking the identity of the Islamabad CIA station chief looks a lot like a statement from Pakistani hardliners to the Amricans to tell them to back off their pressures.

The recent death of Ambassador Richard Holbrooke who reputedly understood this part of the world may leave American diplomacy in the hands of conservative Ugly Americans who think that American military power can solve such problems. Whether that is the case or not, it certainly reflects the reputation that Americans in Asia have had as being ignorant ham-handed clueless cowboys since the Vietnam era.

This is a highly speculative article based on news reports, Wikipedia and my own unresearched opinions. The statement in The Hindu stating that the CIA chief in Islamabad has quickly left Pakistan is probably reasonably accurate. The attribution of the leak to the ISI seems reasonable, but doesn't have the same likelihood of being true since the source is not attributed. The rest of this is a collection of facts from Wikipedia (the history found there is probably quite accurate) and my speculations built on those reported facts. We all know that Wikipedia is not an authoritative source, but it usually provides a decent overview of any subject.

Anyone who has better information is requested to leave a comment.

Friday, December 17, 2010

Causes of the 2008 financial collapse

Paul Krugman provided a very quick and accurate description of what caused the 2008 Financial Collapse and set off the Great Recession.
First, there was a widely spread housing bubble, not just in the United States, but in Ireland, Spain, and other countries as well. This bubble was inflated by irresponsible lending, made possible both by bank deregulation and the failure to extend regulation to “shadow banks,” which weren’t covered by traditional regulation but nonetheless engaged in banking activities and created bank-type risks.

Then the bubble burst, with hugely disruptive consequences. It turned out that Wall Street had created a web of interconnection nobody understood, so that the failure of Lehman Brothers, a medium-size investment bank, could threaten to take down the whole world financial system.
This is shorthand, but quite accurate.

Sunday, December 12, 2010

Why the Obama taxcut won't cure the economy

Paul Krugman once again throws economic truth to the public where it remains sadly ignored.
The root of our current troubles lies in the debt American families ran up during the Bush-era housing bubble. Twenty years ago, the average American household’s debt was 83 percent of its income; by a decade ago, that had crept up to 92 percent; but by late 2007, debts were 130 percent of income.

All this borrowing took place both because banks had abandoned any notion of sound lending and because everyone assumed that house prices would never fall. And then the bubble burst.

What we’ve been dealing with ever since is a painful process of “deleveraging”: highly indebted Americans not only can’t spend the way they used to, they’re having to pay down the debts they ran up in the bubble years. This would be fine if someone else were taking up the slack. But what’s actually happening is that some people are spending much less while nobody is spending more — and this translates into a depressed economy and high unemployment.

What the government should be doing in this situation is spending more while the private sector is spending less, supporting employment while those debts are paid down. And this government spending needs to be sustained: we’re not talking about a brief burst of aid; we’re talking about spending that lasts long enough for households to get their debts back under control. The original Obama stimulus wasn’t just too small; it was also much too short-lived, with much of the positive effect already gone.
This is about as clear an explanation of the current economic situation as we will get. But it's pure economics and does not include the social changes that have been happening in America. Here's what I have seen:

American workers have not received a pay raise other than inflation since 1980. Consumers (considered in family groups) had to send the wives out to work since the early 80's and also to put the consumption purchases on credit cards or other forms of bank debt after that time. This period started off with the growth of the credit card industry. It wasn't just an easy way to buy things. It gave credit to the masses and heavy fees to the bankers.

By the late 1980's that had become unsustainable if the economy (based 70% on consumption and another 20% on investment that only happens when there are growing consumer markets to invest in) were to continue to expand, so second mortgages and refinancing the inflated homes were required to pay the debt bills.

That would have ended about 2000 had Greenspan not gone out of his way to inflate the market and create the housing bubble. The banks and libertarians were simultaneously creating new financial products to suck money from the housing bubble and hand it off to the banks and hedge funds. Deregulating the bank products was another part of the scam.

In the meantime, the wealthiest 5% of Americans were sucking off literally all the gains from increased productivity, so that they now own what, nearly 50% of all American wealth? As Kevin Phillips pointed out in Wealth and Democracy, the wealthiest families have vastly increased their wealth during this period of time. Much of that increase has been through use of hedge funds and private investment managers.

Paul Farrell at the Wall Street Journal confirms that the average investor no longer gets much return on stock investments. He describes the current situation thus: "America's divided into two stock markets: one for Wall Street's rich insiders, another for Main Street's suckers: 'Investors, as opposed to traders, buy stocks in companies whose profits they expect to rise. The conventional wisdom says stock prices will follow profits up, but over the last two business cycles, that simply has not happened.' "

While a lot of this is common knowledge, the arc of events seems to be getting worse rapidly. When I hear good economic news now my first question is what the source of that news is selling. The good news is always either sourced from or disseminated by someone who makes money by keeping people bullish on the economy. (Of course, there are also the Glenn Becks who are profiting from selling disaster news, but it's the same rip-off.) It is being done on the backs of the working and middle classes and it can't last.

The increasing oppression of the poor is a requirement of these economic changes, as is the increasing farming of the lowest income people for money through sub-prime loans, payday loans, over-priced used car loans, extremely high interest rate rapid tax refund loans, check-cashing services (5% or more of the face value of the check because 30% of the employed are not allowed to have bank accounts - the banks won't give them accounts but employers no longer pay in cash), rent-to-own stores, pawn shops and other ways to sop up money from the low income working people.

This is all systematic. The wealth of America is being shifted from the poor and working classes who create it to the extremely wealthy in old money families. That's the urgency about eliminating the inheritance tax. They want to increase their family wealth. With that wealth goes aristocratic power, of course. [I sometimes wonder how closely this resembles the destruction of the Roman middle class farmers and their descent into serfdom at the end of the western Roman Empire.]

Did I leave out bank centralization and the way big box stores are putting small businesses out of business? According to David Cay Johnston (Free Lunch) Wal-Mart's total corporate profits each year almost exactly match the amount of money the local governments have given up in business taxes in order to encourage Wal-Mart to build a store in their location. But Wal-Mart puts the tax paying local stores out of business by undercutting their prices. All at the price of a few pay-offs to a few local city and county politicians.

Paul Krugman himself severely underestimates the structural changes that have occurred in America. There is going to have to be a lot that changes if America is ever to become truly competitive as an industrial nation again. Until this stuff is recognized, that is not going to happen.

Friday, December 10, 2010

Don't buy stocks! It's a suckers' game!

Think it is safe to get back to investing in stocks and bonds?? That's Wall Street's game, and when Wall Street plays games the only winner is Wall Street. Don't ever forget that the Great Recession which we are slowly climbing back out of right now was a creation of Wall Street banks and their self-dealing.

That's not over. That's why the FBI is currently investigating the Wall Street banks and the hedge funds for illegal insider trading.
The man behind the investigation, U.S. Attorney Preet Bharara in Manhattan, has said the insider trading he's after appears to be "rampant" and has compared the practice to performance-enhancing drugs. Subpoenas from his office have gone out to giant firms, including mutual fund managers Janus Capital Group and Wellington Management. Fox Business News said Chicago hedge fund operator Citadel also drew a subpoena. None of these firms has been charged.

The breadth of the subpoenas suggests the probe could involve many mutual funds, hitting a sector that's always had a reputation of conservatism. It may change the minds of investors who still think the market operates equitably for all.
But it's still a good idea to buy stocks in the long run. They have on average gone up faster than bonds, right? According to Wall Street Jurnal's Paul B. Farrell that has not happened in the last two business cycles. That's because the hedge funds, Wall Street banks and wealthy investors have sucked all the profit out of stocks before the average investor can possibly buy them.

Paul Farrell offers this advice to investors. Stocks are a sucker's bet being offered by Wall Street.
  1. American stocks are a high-risj sucker bet.(America’s divided into two stock markets: one for Wall Street’s rich insiders, another for Main Street’s suckers: “Investors, as opposed to traders, buy stocks in companies whose profits they expect to rise. The conventional wisdom says stock prices will follow profits up, but over the last two business cycles, that simply has not happened.” ) Main street has figured out they are the suckers that the Wall Street bankers are fleecing. They aren't going back into the markets any time soon.
  2. New ‘big short’ dead ahead: Derivatives con game will crash again (Wall Street’s sneaky and will do anything to keep the derivatives casino running hot. Insiders “have no intention of ceasing their prop trading,” according to Lewis. “They are merely disguising the activity, by giving it some other name.) The derivitive game is goning to crash again.
  3. Hedge funds shorting China: Warning — U.S. faces collateral damage (China may well crash first. Fortune’s Bill Powell interviewed hedge-fund kingpin Jim Chanos of Kynikos Associates, who’s “betting that China’s economy is about to implode in a spectacular real estate bust.” China is “an economy on steroids.” In a Charlie Rose interview, Chanos said “China’s on an economic treadmill to hell.” If so, then all of Wall Street’s highly promoted emerging markets are also sucker bets. )
  4. New insider-trading indictments killing Main Street confidence (Investor distrust of Wall Street’s casino will skyrocket in 2011. Before the elections in November, an AP-CNBC poll found 61% of investors had already lost confidence in the market, thanks to extreme volatility; 55% believe the market’s rigged to favor insiders. )
  5. Banksters’ perfect gambling record proves stocks a rigged game (Morici says “J.P. Morgan and Bank of America went through the entire third quarter without a negative trading day, no losing days on proprietary trades. Unless you believe in perfection, something stinks about the information they are using. If someone is winning all the time, then someone else is losing. That’s the ordinary investor. Stocks have become a rigged game.)
  6. Wall Street is socially worthless, existing only to make insiders rich (John Cassidy writes: “Much of what investment bankers do is socially worthless.” Wall Street exists solely “to make itself very, very rich.” )
  7. The Fed is America’s worst nightmare, a $3.3 trillion moral hazard (Moral hazard simply means no consequences for Wall Street’s complicity in triggering the 2008 catastrophe. As a result, Wall Street insiders came away believing they can take bigger and riskier bets in the future because they will get away with it next time, too. )
  8. Wake up to a new normal: no growth, deflation (economist Gary Shilling, a longtime Forbes columnist, warns: “Real economic growth rates of 2% or less are likely through 2011.” But we need 3.3% just to keep up with population growth.

    So “high unemployment remains a political problem … with weak economic growth, looming deflation, and the dollar and Treasurys remaining the safe havens in a sea of global trouble.”

    Warning: America’s new era, featuring no growth, deflation and a jobless recovery, will continue for years, resembling Japan over the past two decades. Worse, brutal deficit cuts will trigger riots, as in England, France. )
  9. Privatize Social Security: New GOP Congress loves dumb ideas. (Wall Street wants to get its hands on $20 trillion of your retirement money to lose in the next crash they create.)
  10. Warning: Wall Street will lose another 20% of your money by 2020.
The fact is the FBI investigation shows that the entire stock buying game is as rigged as your local checking cashing or payday loan outlet. Probably more than your local loan shark. Buy stocks now and you will be fleeced.

Why is Wall street permitted to run such crooked markets? Because Wall Street belongs to the ultra-wealthy, and so does the Republican Party. The wealthy do nothing for the American economy except work to suck it dry so that they can invest the funds they steal in foreign countries where the return on investment is much higher. They are happily foreclosing on homes they don't even own. Would you buy financial products from someone this crooked or careless? You shouldn't.

Just for fun, read this article on American Wealth, Income and Power.

This brings me back to the question I asked in the previous post. Does America really need an extremely wealthy class for anything at all? They are parasites who add no value to America. America's wealth and power is and always has been built on the work of the workers and the middle class.

Thursday, December 09, 2010

So what would be hurt if America simply eliminated wealthy people?

Ted Frier suggests a really different relationship between America's rich and the rest of us.
In an essay last July that asked the provocative question: "have the American people outlived their usefulness to the rich?" one-time William F. Buckley protégé Michael Lind may have put his finger on why today's Republicans can so unashamedly insist on billions for the wealthy while guiltlessly threatening to cut off any help at all for Americans who are out of work.

Time was, says Lind, when the rich and everyone else co-existed according to an ancient and honored social contract: "In return for receiving a disproportionate amount of the gains from economic growth in a capitalist economy, the rich paid a disproportionate percentage of the taxes needed for public goods and a safety net for the majority."

The economic elite needed ordinary people to consume the products put out by the factories the rich invested in. The upper class also needed commoners to be foot soldiers to fight its wars against "totalitarian empires that would have created a world order hostile to a market economy."

But globalization has eliminated the first reason for the rich to support this bargain, says Lind, while the emergence of quasi-public mercenary armies like Blackwater has undermined the second.

"And this marks a historic change in the relationship between capital and labor in the US," Lind insists.

Even the robber barons of the Gilded Age generally recognized the necessity of a rapprochement with labor, says Lind, because the rich lived near the working classes, depended on the domestic American market for their fortunes and were always generally alert to labor strikes and the prospect of revolution should their exploitation of the masses get out of hand.

But this is no longer the case. "Many of the highest-paid individuals on Wall Street have grown rich through activities that have little or no connection with the American economy," writes Lind. "They can flourish even if the US declines, as long as they can tap into growth in other regions of the world."

This is the central argument against supply-side wizardry and extending tax cuts for the rich.

Elites can make money from factories in China by selling to consumers in India, says Lind "while relying entirely on immigrant servants at one of several homes around the country." Between the profits they can earn from overseas factories in countries policed by brutal autocracies, and factories in the US manned by non-voting immigrant labor, "the only thing missing is a non-voting immigrant mercenary army whose legions can be deployed in foreign wars without creating grieving parents, widows and children who vote in American elections." That, maybe in part, is what the Dream Act is about.

There was a time when rich and poor alike subscribed to the promise that a rising tide raises all boats. But American investors and corporate managers no longer need the rest of America to prosper, says Lind, since "they can enjoy their stream of profits from factories in China while shutting down factories in the US." And if Chinese workers have the impertinence to demand higher wages, says Lind, American corporations can find low-wage labor elsewhere.

It may be true that the rich are invested in foreign corporations that do most of their business in the US Market. But this too is changing.

"American consumers are tapped out," says Lind, "and as long as they are paying down their debts from the bubble years, private household demand for goods and services will grow slowly at best in the United States. In the long run, the fastest-growing consumer markets, like the fastest-growing labor markets, may be found in China, India and other developing countries."

The point is, says Lind: If the rich do not depend for their wealth - or even their security -- on American workers, consumers and soldiers "then it is hardly surprising that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people. The rich don't need the rest anymore."
This is an interesting and in fact realistic evaluation of the relationship between the American wealthy and the rest of us. But Ted is asking if the wealthy need the rest of us. That question can easily be reversed! What do we need the wealthy for??

Face it. If the top 2% of the American population own over 40% of the wealth in America, then the American wealthy are well on the way to becoming the new American aristocracy. Aristocracy - That's the American government! That means that America is on the way to no longer being a democracy.

Any surprise in that? The current American federal government is controlled by the 100 wealthy people in the Senate, and the American Congress is controlled by the K-Street lobbyists for the wealthy. Who provides the money used by the candidates for President? largely America's wealthy, that's who.

Why is a major element of the conservative American party demanding elimination of the only American tax on wealth - the inheritance tax? Come on. The children of the wealthy did absolutely nothing to earn their inheritance! All they do is fight to protect that wealth. That is the definition of being conservative. America is no longer a meritocracy in which people personally earn what they are paid. When 2% of the population mostly inherit their wealth and own over 40% of America's wealth, that is an aristocracy that is controlled by those who never earned what they control.

Why are we currently sending Americans to fight in Afghanistan? We were attacked in 9/11 as a direct blowback from the political operations of American oil companies in the Middle East. The Mullah's in Iran took power because they were rejecting the Shah which BP and the American CIA had placed into power to replace the legitimately elected Iranian Prime Minister Mohammad Mosaddegh He threatened to nationalize Iran's oil companies.
From my experience both inside and outside the Republican Party, I've gradually come to believe that one of the major differences separating Republicans from Democrats is that Democrats view service in Congress as the pinnacle of their careers while Republicans look at their time on Capitol Hill as an internship - a chance to do their time, pay their dues and build up a resume of favors and chits they can cash in later for a far more lucrative second career as lobbyist or corporate hack.

Yes, Democrats pass through the same revolving door between government and K Street that Republicans push on. But Republican behavior while still in government seems far more devoted towards creating jobs for themselves when that Big Day finally arrives and they get to make the jump to an appreciative corporate sector.

I am thinking, of course, of parasites like Wendy Lee Gramm (wife of former Senator Phil), the one-time federal regulator with the Commodity Futures Trading Commission who enabled Enron to become the 8th largest corporation in American, and a ticking economic time bomb, when she gave its corrupt owners a waiver to trade energy derivatives without oversight -- and then jumped into bed with the company as a member of Enron's board and, adding insult to injury, its audit committee.

I am also thinking of former Louisiana Republican Congressman Billy Tauzin. As chairman of the House Energy and Commerce Committee, Tauzin was instrumental in writing a Medicare drug benefit into the 2003 bill that specifically barred the government from negotiating drug prices for Medicare recipients. With that chit for Big Pharma firmly in hand, Tauzin was able to cash in his time in government for a position as president of the Pharmaceutical Research and Manufacturers of America.

The point is, examples of corruption like these are now so commonplace they often pass without notice or comment and are very nearly to the point of being accepted as the new political normal.
Consider this carefully. Nothing is enacted today in American politics unless the very wealthy get their share of it and permit it. The American wealthy killed the public option during the effort to create universal health care.
Business lobbyists aren't supposed to act as surrogate whips for the Republican leadership or personally draft statutes themselves. "But it turns out there's no actual law against it."

Scientists and bureaucrats are expected to testify truthfully to Congress when asked. "But it turns out that no regulation prevents political appointees from keeping them muzzled and providing bowdlerized testimony in their place."

All of these things, says Drum, "serve a single purpose: passing business-friendly pork as efficiently and as quietly as possible. Tax bills, energy bills, Medicare prescription bills: all become mere vehicles for corporate largesse."

And when push comes to shove Republicans simply lie.

"Lying has become a systematic necessity," writes Chait. The reason is obvious. "If the Republicans had truly believed that the public shared their goals, businessmen would simply have come forward to proudly announce their support for the tax cuts, explaining that rewarding wealth and success would create a rising tide for one and all."

But they didn't. Instead, says Drum, Republicans sold their tax cuts as a way of giving back the surplus to hardworking Americans. Then Republicans sold it as a way to fight recession. Then they sold it as a way of making the tax code fairer to the poor. "Any rationale would do," says Drum, "except the real one." And America invaded Iraq to destroy Weapons of Mass Destruction.

You can tell that America's New Oligarchy and their Republican house servants are waging class war against the rest of America today because they squeal "class warfare!!!" whenever their shenanigans are found out and exposed.

Eventually, says Drum, someone needs to notice "that Republican policy is no longer rooted in any kind of recognizable conservative principle" and is instead "little more than a program of preventing the middle class from sharing in the gains of economic growth and divvying up the resulting loot among the richest of the rich."


Americans, says Lind, need to begin exercising their unused political authority to demand that their elected representatives give them a new social contract that requires American corporations and America's economic elites to create jobs in this country, for American workers.

And if that doesn't interest corporate shareholders and their managers, says Lind, then perhaps they can do without those legal privileges which are granted to them courtesy of the sovereign American people - such as the legal right to form corporations and do business at all.

The American people, says Lind in short, need to start insisting "that the United States will be a democratic republican nation-state, not a post-national rentier oligarchy.
Really. What do we need the super wealthy for anyway? All that want from the rest of us now is our bodies in their wars to protect their international wealth.

It's time to return to a 90% inheritance tax. America should return to being a middle class nation with little room for power controlled by inherited (read unearned) wealth!

Tuesday, December 07, 2010

Obama? Battered wife syndrome or Stockholm syndrome?

Paul Rosenberg offers some interesting speculations about why Barack Obama gives the Republicans whatever they want, often before they demand it, then lashes out at those on the left who helped elect him President.
The problem with Obama has never been what he's portrayed it as. It's not that people are purists, turning up their noses at less-than-perfect results. It's not that they scorn any sort of compromise. It's not that they insist on "making the perfect the enemy of the good" or any of the other cliched Versailles rationalizations. The problem with Obama has always been that he won't fight for what he says he believes in. But he will at least lash out at those who are frustrated, disappointed, or angry with him, when he capitulates without a real fight. Which raises an increasingly troubling question: Is that the one thing he really believes in? Attacking those who want him to actually stand for something?

Or is it just simply a case of displacement? Republicans beat up on Obama, so he turns around and beats up on us? Last week, in "All the President's Captors" Frank Rich shrewdly noted how Republican's treatment of Obama reflects the most sophisticated strategy of hostage-takers working the psychological dynamics of Stockholm Syndrome, playing Obama like a violin:
THOSE desperate to decipher the baffling Obama presidency could do worse than consult an article titled "Understanding Stockholm Syndrome" in the online archive of The F.B.I. Law Enforcement Bulletin. It explains that hostage takers are most successful at winning a victim's loyalty if they temper their brutality with a bogus show of kindness. Soon enough, the hostage will start concentrating on his captors' "good side" and develop psychological characteristics to please them - "dependency; lack of initiative; and an inability to act, decide or think."

This dynamic was acted out - yet again - in President Obama's latest and perhaps most humiliating attempt to placate his Republican captors in Washington. No sooner did he invite the G.O.P.'s Congressional leaders to a post-election White House summit meeting than they countered his hospitality with a slap - postponing the date for two weeks because of "scheduling conflicts." But they were kind enough to reschedule, and that was enough to get Obama to concentrate once more on his captors' "good side."

And so, as the big bipartisan event finally arrived last week, he handed them an unexpected gift, a freeze on federal salaries. Then he made a hostage video hailing the White House meeting as "a sincere effort on the part of everybody involved to actually commit to work together." Hardly had this staged effusion of happy talk been disseminated than we learned of Mitch McConnell's letter vowing to hold not just the president but the entire government hostage by blocking all legislation until the Bush-era tax cuts were extended for the top 2 percent of American households.

The captors will win this battle, if they haven't already by the time you read this, because Obama has seemingly surrendered his once-considerable abilities to act, decide or think.
If we want to understand Obama's hostility towards progressives, though, we need to switch reference frames from political hostage-takers to personal ones. Think wife-batterers. Anyone who's ever known a battered wife knows a similar dynamic well: the batterer always has a "good side", just like the hostage's captors do. "You don't understand, he's really sweet." "You don't understand, he really loves me." "You don't understand, he says it will be different.... And this time he means it!" "You don't understand...." "You don't understand...." "You don't understand...."

Except, of course, the only one who doesn't understand in these scenarios is always the battered wife. And the longer she spends lecturing others on their lack of understanding, the longer the battering continues. And the more she knows how fruitless her hope of change is, the more desperately she denies it.

Evidence means nothing. Or rather, it means something quite opposite to what anyone else expects. A constant transvaluation takes place: Each new beating only proves how much he needs her. All the previous beatings will have been for nought if she leaves him now. It would be unspeakably cruel for her to leave. He's too helpless. She can't be that heartless. Each beating is an act of love.

I think it's time we stop pleading with Obama to adopt better policies and stick with them. I think it's time for Democratic Clubs, County Committees and the like to start adopting resolutions calling for him to seek therapy
Obviously this is speculation, but speculation based on a great deal of close and detailed observation of Obama's behavior. And he won't like this speculation.

In my experience, people with psychological problems on the order of Battered Wife Syndrome or Stockholm Syndrome, often someone with clear problems, and claim "I don't have a problem! That person has a problem!"

Of course it might just be that Obama is in the underdog position for the first time in his life and hates to lose, so he'll give away the store to try to get an accomplishment he can pass off as winning. Or he might just have a real tin ear for the national public mood from outside the beltway.

Whatever. He damned sure isn't getting his Presidency right. He's not as bad as George Bush, but he is sure trying to get close to the guy. And the American middle class and working class is the loser in this fight.

Saturday, December 04, 2010

Plutocrats stealing from working and middle class Social Security

Peterson really t's me off.

Clinton had the deficit under control in 2000. Then Bush became President to support a Republican House and Senate and gave us two unsustainable tax cuts almost entirely for the rich plutocrats Bush represented. Then the Republicans passed the prescription drug bill - with doughnut hole and without financing it. Then we got two unnecessary wars, and stripped the resources from Afghanistan after appearing to win it for the entirely unnecessary war in Iraq.

Add to that the libertarian idiocy that started with Reagan and was pushed by the Republicans plus Greenspan so that the world-wide economy went into the predictable Great Recession.

Social Security retirement is entirely funded by the FICA tax on up to $106,000 per year in employment earnings. The working and lower middle class pay that. As it is it will not run out of money ever (pay as you go on the FICA tax) but in 2037 the worst case scenario suggests that benefits might have to be reduced - at most by 27%. The SS retirement has never reached one of its worst case scenario cases. Never. Social Security has not and by law never can add to the federal deficit.

The tax cuts went to the wealthy plutocrats. They get their money from investments instead of wages and do not pay FICA tax. Wars are fought because the plutocrats want to fight them, not because they are needed for the working and lower middle class.

But Social Security has been collecting more than it needed to since 1983. The extra funds were loaned to the federal government to pay for the tax cuts and wars - this is in addition to the money loaned by China, of course. But the SS system is going to start cashing those bonds in 2012, and the federal government will either have to pay for the money it wasted on tax cuts and wars or default on federal bonds. It can't default to China without massive world-wide financial problems (affecting the wealthy plutocrats like Pete Peterson and their wealth.) But if they can force workers to work longer and take lower benefits, they'll never have to pay the Social Security System back and America will not be recognized as defaulting on its bonds - even though pulling the funds out of the SS Trust funds is in fact a default.

Folks, this isn't sharing the pain. This is theft from the working people of America. The rich are stealing from the poor and working class. Reverse Robin Hood. That's all it is.

Sunday, November 28, 2010

Krugman: punishing the populace for the bankers’ sins is ... what?

Paul Krugman points at the financial idiocy going on in Ireland. The bankers borrowed money from European bankers for financial and real estate speculation during the recent speculative bubble, and as they did it they bought the Irish politicians. Then the speculative financial bubble created by the bankers and the politicians burst.

Instead of making the lenders who made idiotic loans in the first place take the financial pain of the losses they thoroughly deserved, the paid politicians bailed the banks out with public money and put the taxpayers on the hook to cover the losses. The pain was to be borne by the public, not by the idiot bankers who created the problem. The bought politicians explained this by saying that it was required "to restore confidence" in the Irish economy.

But since the spending cuts have caused a severe recession, the fabled "confidence" is not turning the economy around for some strange reason. Krugman's last line tells the story quite beautifully.
Ireland is now in its third year of austerity, and confidence just keeps draining away. And you have to wonder what it will take for serious people to realize that punishing the populace for the bankers’ sins is worse than a crime; it’s a mistake.

Bob Herbert on the class war being fought in America

Many of us have been focused on the recent elections, elections whose media coverage has been saturated with descriptions of the antics of the Tea Party candidates, the surprising(at least to the media writers) public decline in President Barack Obama's popularity and the larger picture which is the disaster of the overall economy. As far as the media has been concerned all of that was a wave which seemed to culminate in the victory of the Republican Party as it took control of the House of Representatives.

But Friday Bob Herbert in the New York Times dared to lift the lid on the real set of problems at the core of modern American life.
The class war that no one wants to talk about continues unabated.

Even as millions of out-of-work and otherwise struggling Americans are tightening their belts for the holidays, the nation’s elite are lacing up their dancing shoes and partying like royalty as the millions and billions keep rolling in.

Recessions are for the little people, not for the corporate chiefs and the titans of Wall Street who are at the heart of the American aristocracy. They have waged economic warfare against everybody else and are winning big time.
The November election which has dominated much of America's "serious" media is over and the media is now explaining what happened before it moves on to the next American political marker - the elections in November 2012. Why not? The people in the positions of power have been set for the next two years. What else matters? It's time to listen to their pronouncements. They have won, after all. Here is an example:
A stark example of the potential for real conflict is being played out in New York City, where the multibillionaire mayor, Michael Bloomberg, has selected a glittering example of the American aristocracy to be the city’s schools chancellor. Cathleen Black, chairwoman of Hearst Magazines, has a reputation as a crackerjack corporate executive but absolutely no background in education.

Ms. Black travels in the rarefied environs of the very rich. Her own children went to private boarding schools. She owns a penthouse on Park Avenue and a $4 million home in Southampton. She was able to loan a $47,600 Bulgari bracelet to a museum for an exhibit showing off the baubles of the city’s most successful women.

Ms. Black will be peering across an almost unbridgeable gap between her and the largely poor and working-class parents and students she will be expected to serve. Worse, Mr. Bloomberg, heralding Ms. Black as a “superstar manager,” has made it clear that because of budget shortfalls she will be focused on managing cutbacks to the school system.

So here we have the billionaire and the millionaire telling the poor and the struggling — the little people — that they will just have to make do with less. You can almost feel the bitterness rising.

Extreme inequality is already contributing mightily to political and other forms of polarization in the U.S. And it is a major force undermining the idea that as citizens we should try to face the nation’s problems, economic and otherwise, in a reasonably united fashion. When so many people are tumbling toward the bottom, the tendency is to fight among each other for increasingly scarce resources.

What’s really needed is for working Americans to form alliances and try, in a spirit of good will, to work out equitable solutions to the myriad problems facing so many ordinary individuals and families. Strong leaders are needed to develop such alliances and fight back against the forces that nearly destroyed the economy and have left working Americans in the lurch.

Aristocrats were supposed to be anathema to Americans. Now, while much of the rest of the nation is suffering, they are the only ones who can afford to smile.
And smile they are. The aristocrats see the recent election as the take-down of Barack Obama and the Democrats. Byron York already predicts that the results of this November election means Obama is a one-term President. At best York's view is premature. It has no real basis in fact and amounts to little more than premature crowing by one of the conservative media spokesmen of the American aristocrats. Going back to the Bob Herbert piece:
The ranks of the poor may be swelling and families forced out of their foreclosed homes may be enduring a nightmarish holiday season, but American companies have just experienced their most profitable quarter ever. As The Times reported this week, U.S. firms earned profits at an annual rate of $1.659 trillion in the third quarter — the highest total since the government began keeping track more than six decades ago.

The corporate fat cats are becoming alarmingly rotund. Their profits have surged over the past seven quarters at a pace that is among the fastest ever seen, and they can barely contain their glee. On the same day that The Times ran its article about the third-quarter surge in profits, it ran a piece on the front page that carried the headline: “With a Swagger, Wallets Out, Wall Street Dares to Celebrate.”
November's election is over, and it caused some changes in America's political power structure. But the situation on which the antics of politicians and the bloviations of political reporters rest have not changed. If anything, they are getting worse. America's on-going class war is not finished just because the aristocrats are growing fatter and crowing and because the Democrats and the scary Black Democratic President has taken an electoral black eye. Nor will it go away because the media ignores it.

There is a lull in the battles of America's class war right now. That's all. America's wealthy aristocrats think they have finally defeated FDR and the New Deal. But the fact is that the America's middle class and working class have been too busy trying to keep a job and either avoid or deal with foreclosure to fool with the silly games the aristocrats have been playing. Those problems are not going away. If anything, they are getting worse, and the Wall Street Bonuses (estimated at almost $90 billion this year) and the stock market reports of unprecedented earnings this year are going to show them the source of America's problems.

The class war in America has already begun. It will not disappear just because the media is afraid to write or speak of it. Somehow I don't think that Bush's tax cuts for the very wealthy and the elimination of the inheritance tax are likely to last much longer.

Addendum 11:45 AM

Think America is a Democracy? Here from Frank Rich are the results of this recent election demonstrating how money from the aristocracy controls Congress:
Senator Jim Webb, Democrat of Virginia, complained this month that he “couldn’t even get a vote” for his proposal for a one-time windfall profits tax on Wall Street bonuses. Republicans “obviously weren’t going to vote for it,” he told Real Clear Politics, but Democrats also demurred, “saying that any vote like that was going to screw up fund-raising.”


G.E.’s political action committees gave a total of $1.6 million to politicians in both parties in 2010, and one of its former high-powered lobbyists, Dan Coats, is the newly elected Republican senator from Indiana and a probable member of the Senate Finance Committee.
The Tea Party activists may resent the way Congress is bought by big money, but Senator Jon Kyl has already reneged on his pledge against political earmarks.

Democracy in America has been bought off by the wealthy aristocrats. The voters are not served by the government. Big money and America's wealthy aristocrats are getting the service they have paid for.

Monday, November 22, 2010

Visual Presidential votes for the last 88 years

This is a visual representation of the red/blue map of America for the last 88 years by David Sparks. David Sparks is a PhD. candidate in political science at Duke University.

From David Sparks' blog:
"This animated interpretation accentuates certain phenomena: the breadth and duration of support for Roosevelt, the shift from a Democratic to a Republican South, the move from an ostensibly east-west division to the contemporary coasts-versus-heartland division, and the stability of the latter."

[h/t to David Kurtzl at Talking Points Memo.

Tuesday, November 16, 2010

America's banks are shafting customers and investors again.

The foreclosure crisis is getting heavier. America's banks are foreclosing on homes they cannot prove they own, but they are filing so many foreclosures that the judges (if honest) don't have time to look at them. If they did, almost 97% of the foreclosures are based on fraudulent paperwork.
I had a few things to say about this over the last month or two, but I think people had a hard time believing that fraud and perjury on this scale was actually possible; that people were being thrown out onto the street on the basis of affidavits that were forgeries and perjury through and through. Forged, back-dated documents purporting to be contemporaneous records of the transfer of mortgage notes from one party to another. Complete circumvention of the existing legal system for recording real estate ownership - and its associated taxes and fees - and its illegal replacement with an unreliable, understaffed private system. The employees of the corporation running that system passing themselves off as vice-presidents of dozens of banks and servicers so they could foreclose on mortgages. Banks even claiming both that they were and were not the actual owner of the mortage in the very same filings. Failures to convey the actual mortgages to the real estate trusts that backed the securities that were sold to investors. Attempts to convey mortages to those trusts only at the moment of foreclosure. Servicers with a vested interest in the mortages they service going into foreclosure so they can collect fees, and associated failures to collect payments. People given mortgage modifications by the bank, then foreclosed on for failing to pay the original amounts. People without mortgages being foreclosed on. Multiple banks claiming to own the same mortgage foreclosing on the same property.

And at the sharp end of all this, an automated process of perjury and fraud. Notarized affidavits claiming that the signer has personal knowledge of the facts of the case described that were signed by someone else with no knowledge of the facts and not notarized at all. And a court system overloaded with foreclosures unable to and uninterested in examining the facts of the cases in front of it. Families thrown out on the street in the tens or hundreds of thousands on the basis of minute-long hearings in courts where judges refused to consider questions of fraud.

It's hard to comprehend just how pervasive and serious this problem is. Trillions of dollars have already been lost in the bursting of the real estate bubble, but trillions of dollars more of the remaining mortgage-backed securities may be entirely worthless. Not to mention the massive destruction of households and neighborhoods wrought by a mindless, mechanical legal process.

If you don't have time to read the whole thing at RS, I'm excerpting the key parts after the fold. But I recommend taking the time to read it.[ from Rolling Stone.]

There is a great deal more to read all worth it. But if you want to know why the mega banks are working so hard to commit this massive fraud on the courts and on the homeowners, look that this final statement from the Obsidian Wings article. I have bold-faced the key paragraphs below:
It's undeniable that many of the people facing foreclosure bear some responsibility for the crisis. Some borrowed beyond their means. Some even borrowed knowing they would never be able to pay off their debt, either hoping to flip their houses right away or taking on mortgages with low initial teaser rates without bothering to think of the future. The culture of take-for-yourself-now, let-someone-else-pay-later wasn't completely restricted to Wall Street. It penetrated all the way down to the individual consumer, who in some cases was a knowing accomplice in the bubble mess.

But many of these homeowners are just ordinary Joes who had no idea what they were getting into. Some were pushed into dangerous loans when they qualified for safe ones. Others were told not to worry about future jumps in interest rates because they could just refinance down the road, or discovered that the value of their homes had been overinflated by brokers looking to pad their commissions. And that's not even accounting for the fact that most of this credit wouldn't have been available in the first place without the Ponzi-like bubble scheme cooked up by Wall Street, about which the average home­owner knew nothing — hell, even the average U.S. senator didn't know about it.

At worst, these ordinary homeowners were stupid or uninformed — while the banks that lent them the money are guilty of committing a baldfaced crime on a grand scale. These banks robbed investors and conned homeowners, blew themselves up chasing the fraud, then begged the taxpayers to bail them out. And bail them out we did: We ponied up billions to help Wells Fargo buy Wachovia, paid Bank of America to buy Merrill Lynch, and watched as the Fed opened up special facilities to buy up the assets in defective mortgage trusts at inflated prices. And after all that effort by the state to buy back these phony assets so the thieves could all stay in business and keep their bonuses, what did the banks do? They put their foot on the foreclosure gas pedal and stepped up the effort to kick people out of their homes as fast as possible, before the world caught on to how these loans were made in the first place.

Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them. According to the rules of the mortgage trusts, a lender like Bank of America, which controls all the Countrywide loans, is required by law to buy back from investors every faulty loan the crooks at Countrywide ever issued. Think about what that would do to Bank of America's bottom line the next time you wonder why they're trying so hard to rush these loans into someone else's hands.

Addendum 6:22 PM CST
Here is another recent article on the mortgage disaster. It lays out some of the problems and the likely fall out.
Employees or contractors of several major banks have testified in court cases that they signed, and in some cases backdated, thousands of certifying documents for home seizures. Financial firms that service a total $6.4 trillion in mortgages are involved, according to the new report. Big banks including Bank of America Corp., JPMorgan Chase & Co. and Ally Financial Inc.'s GMAC Mortgage have suspended foreclosures at some point because of flawed documents.

Federal and state regulators, including the Federal Reserve and attorneys general in all 50 states, are investigating whether mortgage companies cut corners on their own procedures when they moved to foreclose on people's homes.

"Clear and uncontested property rights are the foundation of the housing market," the report says. "If these rights fall into question, that foundation could collapse."
Here are some ramifications:
  • Borrowers may not be able to ascertain if they're sending their mortgage payments to the right party.
  • Judges may block all foreclosures.
  • Prospective buyers and sellers could be in left in limbo.
  • For major banks, if they discovered that they still owned millions of bad mortgage loans they assumed had been sold, the losses could reach billions.
It's that last one that really frightens the banks.

In theory the banks sold those mortgages on to investors who should take the losses. But if there is no proof that the mortgages were transferred to the investors, then those mortgages still belong to the banks when they go into default. The banks will have to make restitution to the investors because they investors have no court standing to foreclose from the (alleged) defaulters. Only the legal owner can do that.

If you notice in the earlier article (above) that may apply to as many as 97% of the mortgages that are (allegedly) in default. This is not a simple problem that the homeowners failed to pay and should be foreclosed on. This is major. It is a question of who takes the loss when the mortgage goes bad. If the investors legally own the homes, they are out the loss. But if the bank never transferred ownership then it is the banks who are on the hook for the massive and now inevitable losses in those homes.

If you think that the banks took a big hit to their reserves two years ago when the economy went bad, this would very probably dwarf those losses. Think the feds will step in and bail them out a second time in two years??

This is exactly the scenario that Alan Greenspan thought that the self-interest and professionalism of the banks would prevent when he allowed to housing bubble to grow uncontrolled. Greenspan was responsible for regulating the bank's behavior and he did not do so, depending on the invisible hand of the market.

Greenspan is a libertarian. He had been informed that everyone from the original mortgage brokers through the original lending banks to the firms that bundled the mortgages into mortgage-backed securities and sold them on to investors was cutting corners and holding down administrative costs by not doing the due diligence and the required legal document transfers. But the market factors were supposed to handle that. Guess what? The market failed - again!

I'd hate to own stock in a major bank right now.