Fold/Spindle/Mutilate 2.1

By Scott Lanman and Craig Torres

Sept. 29 (Bloomberg) — The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed’s emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed’s expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.

“Today’s blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, “the Fed’s balance sheet is about to explode.”

The MSCI World Index of stocks in 23 developed markets sank 6 percent, the most since its creation in 1970. Credit markets deteriorated further as authorities tried to save more financial institutions from collapse.

European Rescue

European governments have rescued four banks in two days and the Federal Deposit Insurance Corp. said today it helped Citigroup Inc. buy the banking operations of Wachovia Corp. after its shares collapsed. The Standard & Poor’s 500 Index fell 3.8 percent and the cost of borrowing dollars for three months rose to the highest since January. The rate for euros hit a record.

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By BOB HERBERT

Madness.

I’m not holding my breath, but I would like to see the self-proclaimed conservative, small government, anti-regulation, free-market zealots step up and take responsibility for wrecking the American economy and bringing about the worst financial crisis since the Depression.

Even now, with the house on fire, the most extreme among them won’t pick up the fire hoses and try to put it out.

With the fate of the Bush administration’s desperate $700 billion bailout of the financial industry hanging in the balance, Representative Darrell Issa, a Republican from California, stuck to his political playbook like a man covered in Krazy Glue. He pronounced himself “resolute” in his opposition to the bailout because to be otherwise would amount to a betrayal of party principles.

To deviate from those principles, in Mr. Issa’s view, would be like placing “a coffin on top of Ronald Reagan’s coffin.”

We are in very strange territory here.

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by David Swanson

Prosecution Is on the Table in Congress

Congresswoman Tammy Baldwin has just introduced the Executive Branch Accountability Act of 2008, which calls on the next President of the United States to

* Fully investigate Bush/Cheney administration officials’ alleged crimes and hold them accountable for any illegal acts.
* Ensure that any Bush/Cheney administration official guilty of a war crime is prosecuted under the War Crimes Act and the Anti-Torture Act.
* Affirm that it is the sole legal right of Congress to declare war.
* Restore the writ of habeas corpus.
* Ensure that torture and rendition are uniformly prohibited under United States law.
* Immediately close the Guantanamo Bay Detention Camp.
* Ensure that Americans can bring claims against their government.
* Immediately take affirmative steps to protect all documents from the Bush/Cheney Administration.
* Publicly review potential abuses of the presidential pardon process.
* Reform the use of presidential signing statements.

A copy of the Executive Branch Accountability Act of 2008 as introduced is at:
http://afterdowningstreet.org/baldwinbill

While no future president will take these steps unless compelled to by the people and our representatives in Congress, and while many of these steps should be taken by Congress itself rather than by the president, the first step in placing this critical set of tasks on the agenda of both the next Congress and the next White House is to ask every member of Congress to cosponsor this resolution immediately.

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Baldwin Calls for Executive Accountability To Reverse Illegal Actions and Prevent Further Abuses

Congresswoman Tammy Baldwin has introduced the Executive Branch Accountability Act of 2008, calling on the next President to reverse the damaging and illegal actions taken by the Bush/Cheney Administration and to collaborate with Congress to proactively prevent any further abuses of executive branch power.

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Yesterday, Ohio attorney Cliff Arnebeck asked the federal court in Columbus to allow him to place Bush IT guru Michael Connell under oath to ask him about his 20 year work for the Bush family, including his work for Jeb Bush in Florida 2000 and for Ken Blackwell in Ohio 2004.  “The public has a need and right to know, before the next presidential election, that the top Republican IT expert shares a concern about the vulnerability of electronic voting systems to fraudulent manipulation, and that this is not just “conspiracy theory,” Arnebeck wrote.   Arnebeck also advised the court that he would seeking depositions from others, including Karl Rove.  See Court filing.

Attached to the filing are two affidavits, one from cyber security expert Stephen Spoonamore and the other from analyst Richard Hayes Phillips.  The Spoonamore affidavit asserts that the election computer setup used by Ken Blackwell in 2004 provided the means and opportunity for the manipulation of the election results.  “ The vote tabulation and reporting system, as modified at the direction of Mr. Blackwell, allowed the introduction of a single computer in the middle of the pathway. This computer located at a company principally managing IT Systems for GOP campaign and political operations (Computer C) received all information from each county computer (Computer A) BEFORE it was sent onward to Computer B. This centralized collection of all incoming statewide tabulations would make it extremely easy for a single operator, or a preprogrammed single “force balancing computer” to change the results in any way desired by the team controlling Computer C. In this case GOP partisan operatives. Again, if this out of state system had ANY digital access to the Secretary of State’s system it would be cause for immediate investigation by any of my banking clients.” See Spoonamore Affidavit.

The Hayes affidavit asserts that after reviewing hundreds of thousands of documents, ballots and other election records, “it is my conclusion that there is so much evidence of ballot alteration, ballot substitution, ballot box stuffing, ballot destruction, vote switching, tabulator rigging, and old fashioned voter suppression, that the results of the 2004 presidential election, would have been reversed” had there been a real investigation. See Hayes Affidavit.  He insists that the time is now to take depositions from those implicated in the theft of that election.

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Will Bunch

There’s been a huge debate within the newspaper world — and beyond — about a fiery DVD targeting Islamic extremism called “Obsession” that over the last couple of weeks has been packaged in newspaper ads and distributed to hundreds of thousands of readers, especially in swing states. (The Philadelphia Inquirer was one of those papers.) Proponents say its an honest portrayal of anti-American jihadism, while critics said the video would stir up hatred toward decent God-fearing Muslims, not just those involved in or supporting terrorism. Some wonder if it’s all just a big ploy to help John McCain and the GOP, who want to focus the campaign on the threat of Islamic extremists. Here’s a review from the Orlando Sentinel, for example:

It’s a complicated mess, but if you invoke Neville Chamberlain’s “appeasement” of Hitler (not sure what anybody could have done, other than force a confrontation years before Germany or the Depression ridden, war-weary West were really “ready” for WWII ) often enough, show enough snippets of Michael Moore (yeah, I want HIM making Middle East policy about as much as the accident prone GOP) and reduce things to “the culture of hatred,” you can certainly stir folks up. I stopped counting the historic Mein Kampf/Hitler comparisons at about the 50 minute mark.

This inflammatory video — funded by a new and, I think it’s fair to say, shadowy group called the Clarion Fund — “Obsession” is the kind of controversial thing that newspapers tend to stay away from, but only a couple have turned the insert down so far. Understandably, without hard proof that the documentary contains major factual errors, many are concerned about the First Amendment issues and, let’s be candid, given the battered state of the newspaper economy, some publishers NEED the money.

There’s no more key battleground state in America than Ohio — and sure enough thousands were delivered there on Monday in a number of newspapers, including the Dayton Daily News, which is in a hotly contested corner of the Buckeye State.

Four days later, this happened as Muslims in Dayton attempted to worship:

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By Chris Rodda

On Friday, September 26, the end of a week in which thousands of copies of Obsession: Radical Islam’s War Against the West — the fear-mongering, anti-Muslim documentary being distributed by the millions in swing states via DVDs inserted in major newspapers and through the U.S. mail — were distributed by mail in Ohio, a “chemical irritant” was sprayed through a window of the Islamic Society of Greater Dayton, where 300 people were gathered for a Ramadan prayer service. The room that the chemical was sprayed into was the room where babies and children were being kept while their mothers were engaged in prayers. This, apparently, is what the scare tactic political campaigning of John McCain’s supporters has led to — Americans perpetrating a terrorist attack against innocent children on American soil.

I read the story as reported by the Dayton Daily News, but this was after I had received an email written by a friend of some of the victims of these American terrorists. The matter of fact news report in the Dayton paper didn’t come close to conveying the horrific impact of this unthinkable act like the email I had just read, so I asked the email’s author for permission to share what they had written. The author was with one of the families from the mosque — a mother and two of the small children who were in the room that was gassed — the day after the attack occurred.

“She told me that the gas was sprayed into the room where the babies and children were being kept while their mothers prayed together their Ramadan prayers. Panicked mothers ran for their babies, crying for their children so they could flee from the gas that was burning their eyes and throats and lungs. She grabbed her youngest in her arms and grabbed the hand of her other daughter, moving with the others to exit the building and the irritating substance there.

“The paramedic said the young one was in shock, and gave her oxygen to help her breathe. The child couldn’t stop sobbing.

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by Brad Friedman

Mike Connell Gets Served, Karl Rove Could be Next…

A recent flurry of activity in the long-standing King Lincoln v. OH Sec. of State lawsuit concerning voting rights violations in the state during the 2004 election has resulted in the judge lifting the stay to allow depositions to be taken of key GOP tech-guru Mike Connell, and potentially others, such as Karl Rove.

A subpoena has now been served to Connell, who was recently described by the attorneys working on the case, as a ‘high-IQ Forrest Gump…at the scene of every GOP crime.’

Federal District Court Judge Algenon Marbley’s brief order [PDF], agreeing to lift the stay, was quietly issued on September 19th. It reads:

On motion of the plaintiffs and agreement of the defendant Secretary of State Jennifer Brunner, the stay in this matter is lifted for the sole purpose of permitting the plaintiffs to take the deposition of Michael Connell and any other witnesses whose testimony, in the judgment of these parties, may be warranted based upon the deposition of Michael Connell.

The BRAD BLOG had learned about the latest court action, which could soon entangle Rove as well, some time ago, but we were asked by parties involved in the case to embargo the information until such time as they were able to serve Connell with his subpoena…

The lifting of the stay comes on the heels of a troubling declaration filed with the court by Republican cyber-security expert and Connell colleague, Stephen Spoonamore who testified that he’s concerned a classic “Man in the Middle” cyber hack may have occurred on Election Night in 2004 as Connell’s Republican firm handled results reporting for Ohio’s Presidential election.

According to Spoonamore, control of Ohio’s election system by Connell’s firm, may have allowed for the compromise of election results as they were being reported. The structure of the system, as results were allowed to be first diverted to Connell’s servers that night, would have been “cause to launch an immediate fraud investigation” in the banking industry, charges Spoonamore, who ferrets out such problems in the financial services industry.

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MATTHEW BARAKAT | 

ALEXANDRIA, Va. — A former high-ranking CIA official pleaded guilty Monday to abusing his influence within the agency to direct lucrative contracts toward an old friend who showered him with tens of thousands of dollars worth of gifts.

Kyle “Dusty” Foggo, 53, of Vienna, Va., struck a deal in U.S. District Court, pleading guilty to a single count of wire fraud for “depriving the United States and its citizens of their right to his honest services.”

As part of the plea, prosecutors dropped 27 other counts against him and agreed to seek a prison term no longer than three years and a month.

Foggo was the agency’s third-highest ranking officer from 2004 to 2006 and responsible for its daily operations. He will be sentenced on Jan. 8 and faces up to 20 years in prison. However, it is far more likely that U.S. District Judge James Cacheris will impose a sentence more closely in line with the three-year term recommended by prosecutors.

Foggo was not charged with taking bribes, but prosecutors said in court papers that he received up to $70,000 worth of gifts from his friend Brent Wilkes, a defense contractor. The gifts included expensive dinners at gourmet steakhouses and free vacations for Foggo and his family in Scotland and Hawaii.

He and his lawyer declined comment after the hearing.

The case against Foggo resulted from an investigation of former congressman Randy “Duke” Cunningham, R-Calif., who admitted taking bribes from Wilkes. Cunningham pleaded guilty and was sentenced to more than eight years in prison. Wilkes was convicted and sentenced to 12 years.

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By Adrianne Appel

A woman protests on Wall Street, Sep. 25, 2008.

BOSTON, (IPS) – U.S. lawmakers and the George W. Bush administration are continuing their closed-door meetings through the weekend to try and fashion a softer 700-billion-dollar deal for Wall Street that will appeal to citizens angry at the prospect of the mega-corporate bailout.

Treasury Secretary Henry Paulson brought the plan to Congress on Sep. 19 in a three-page outline, and said it was necessary to prevent the collapse of the finance market due to complex trades involving subprime mortgages.

The plan would have allowed Paulson, a former CEO of Goldman Sachs, complete control of the massive payout with no oversight, no auditing and no plan of a payback to the taxpayer.

ACORN president Maude Hurd captured the nation’s sentiment when she hinted at the potential electoral fallout in a speech this week: “There is a palpable populist revolt rolling through towns and cities across the country, and if Main Street doesn’t get any real help with the mortgage out of this deal, the American people only have to wait a few weeks for a constructive outlet for their anger.”

ACORN is the nation’s largest grassroots community organisation of low- and moderate-income people, with over 400,000 member families in 110 cities across the country.

At the Capitol, members of Congress attempted to convince taxpayers — and voters — that they had their best interests in mind, and that meant a big bailout for Wall Street.

“Hundreds of billions of dollars that Americans invested in retirement accounts and mutual funds have evaporated,” and more surely would, warned Democrat Chris Dodd, Senate Banking Committee chairman, while giving the impression that the income security of average people is at stake.

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Ron Suskind

So, how did we get a war inside the Republican party that may leave the economy in shambles? Look to the end of last week, when McCain made his odd Washington cameo.

First, a bit of subtext: the legacy of the Bush years is how politics trumped governance. McCain, egging on these Republican anti-Bush/Paulson insurgents during his brief return, was doing the politics-first, win-at-all-cost, dance. He was, in essence, telling Bush it was payback time (after all McCain had done, holding his nose, in a support role for W since 2004). Specific, unspoken instructions to Bush in that big White House blow up: give way (and lose face) as the new Republican party — which McCain now claims to lead — alters his Treasury Secretary’s $700 billion bailout. This will make McCain seem like the de facto president, filling a vaccum, giving him a huge election time boost — maybe enough of a boost to win. Bush’s response, screw you; I’m still in charge and, incidentally, I don’t believe in reciprocity. Bush’s position: Loyalty goes one way with me, it flows upward, and I’m still the President. I thought you got that, John.

This behind the scenes power putcsh is why most of the House Republicans are now opposing Bush. They’re done with him, that’s clear, and running from him like the Republicans did in Nixon’s final days. For his part, Bush is trying to make sure no one else (and especially McCain) has a chance to step up into the void. With Bush, everything is personal — it’s how he makes sense of a complex world and tries to bend it to his will.

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by John Nichols

There is nothing more frustrating than listening to defenders of fundamentally flawed bailout plan that House Speaker Nancy Pelosi and top Democratic and Republican leaders failed in passing Monday must be “saved” by Democrats who recognized when the House voted on Monday that this was the wrong response.

Pelosi’s plan is based on Treasury Secretary Hank Paulson’s wrongheaded scheming. Democrat leaders may have tinkered a bit with the Bush aide’s proposal, but certainly not enough to make it acceptable — let alone wisely enacted.

Oregon Congressman Peter DeFazio says, correctly, that the problem with the Democratic speaker’s bailout measure, which the House rejected by a 228-205 vote – with progressive Democrats joining fiscally conservative Republicans to say “no” – is that it “is still built on the Paulson-Bush premise.”

DeFazio, a Democratic dissenter, says that the bill Pelosi tried to get the House to back Monday demands that taxpayers take on too much of the risk which creating openings for Wall Streeters to pocket millions (perhaps billions) in federal dollars. While the Pelosi plan may put some limits on so-called golden parachutes, it still allows for what DeFazio describes as “camouflage parachutes”–hidden payouts to the corporate CEOs who created the crisis.

“We can do better,” says DeFazio. “We should start again on a new package.”

That’s exactly what the Oregon populist is doing with a new proposal, the “No BAILOUTS Act” (Bringing Accountability, Increased Liquidity, Oversight, and Upholding Taxpayer Security). Introduced Tuesday with co-sponsorship from some of the most outspoken critics of the Paulson machinations – including Ohio Democrat Marcy Kaptur, a leader of the anti-bailout movement in Congress – the measure would impose a securities tax equivalent to one quarter of one percent of profits and empower the Federal Deposit Insurance Corporation to deal more effectively with bank failures.

The plan is based on a proposal made last week by former FDIC chair William Isaac, who recalled that in the 1980s Congress enacted a “net worth certificate” program – which allowed the federal agency to shore up the capital of weak banks to give them more time to resolve their problems – and the FDIC resolved a $100 billion insolvency in savings banks for a total cost of less than $2 billion.

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Paul Krugman

House votes no. Rex Nutting has the best line: House to Wall Street: Drop Dead. He also correctly places the blame and/or credit with House Republicans. For reasons I’ve already explained, I don’t think the Dem leadership was in a position to craft a bill that would have achieved overwhelming Democratic support, so make or break was whether enough GOPers would sign on. They didn’t.

I assume Pelosi calls a new vote; but if it fails, then what? I guess write a bill that is actually, you know, a good plan, and try to pass it — though politically it might not make sense to try until after the election.

For now, I’m just going to quote myself:

So what we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch.
As a friend said last night, we’ve become a banana republic with nukes.

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The Huffington Post |  Rachel WeinerThe LA Times reports:

Soon after Sarah Palin was elected mayor of the foothill town of Wasilla, Alaska, she startled a local music teacher by insisting in casual conversation that men and dinosaurs coexisted on an Earth created 6,000 years ago — about 65 million years after scientists say most dinosaurs became extinct — the teacher said.After conducting a college band and watching Palin deliver a commencement address to a small group of home-schooled students in June 1997, Wasilla resident Philip Munger said, he asked the young mayor about her religious beliefs.

Palin told him that “dinosaurs and humans walked the Earth at the same time,” Munger said. When he asked her about prehistoric fossils and tracks dating back millions of years, Palin said “she had seen pictures of human footprints inside the tracks,” recalled Munger, who teaches music at the University of Alaska in Anchorage and has regularly criticized Palin in recent years on his liberal political blog, called Progressive Alaska.

The idea of a “young Earth” — that God created the Earth about 6,000 years ago, and dinosaurs and humans coexisted early on — is a popular strain of creationism.

Though in her race for governor she called for faith-based “intelligent design” to be taught along with evolution in Alaska’s schools, Gov. Palin has not sought to require it, state educators say.

In a widely-circulated interview, Matt Damon said of Palin, “I need to know if she really think that dinosaurs were here 4000 years ago. I want to know that, I really do. Because she’s gonna have the nuclear codes.”

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by Al Rodgers

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Michael Isikoff and Holly Bailey
NEWSWEEK

Few advisers in John McCain’s inner circle inspire more loyalty from him than campaign manager Rick Davis. McCain and his wife, Cindy, credit the shrewd, and sometimes volatile, Republican insider with rescuing the campaign last year when it was out of money and on the verge of collapse. As a result, McCain has always defended him—even when faced with tough questions about the foreign lobbying clients of Davis’s high-powered consulting firm. “Rick is a friend, and I trust him,” McCain told NEWSWEEK last year.

Last week, though, McCain’s trust in Davis was tested again amid disclosures that Freddie Mac, the troubled mortgage giant that was recently placed under federal conservatorship, paid his campaign manager’s firm $15,000 a month between 2006 and August 2008. As the mortgage crisis has escalated, almost any association with Freddie Mac or Fannie Mae has become politically toxic. But the payments to Davis’s firm, Davis Manafort, are especially problematic because he requested the consulting retainer in 2006—and then did barely any work for the fees, according to two sources familiar with the arrangement who asked not to be identified discussing Freddie Mac business. Aside from attending a few breakfasts and a political-action-committee meeting with Democratic strategist Paul Begala (another Freddie consultant), Davis did “zero” for the housing firm, one of the sources said. Freddie Mac also had no dealings with the lobbying firm beyond paying monthly invoices—but it agreed to the arrangement because of Davis’s close relationship with McCain, the source said, which led top executives to conclude “you couldn’t say no.”

The McCain campaign told reporters the fees were irrelevant because Davis “separated from his consulting firm … in 2006,” according to the campaign’s Web site, and he stopped drawing a salary from it. In fact, however, when Davis joined the campaign in January 2007, he asked that his $20,000-a-month salary be paid directly to Davis Manafort, two sources who asked not to be identified discussing internal campaign business told NEWSWEEK. Federal campaign records show the McCain campaign paid Davis Manafort $90,000 through July 2007, when a cash crunch prompted Davis and other top campaign officials to forgo their salaries and work as volunteers. Separately, another entity created and partly owned by Davis—an Internet firm called 3eDC, whose address was the same office building as Davis Manafort’s—received payments from the McCain campaign for Web services, collecting $971,860 through March 2008.

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