Fold/Spindle/Mutilate 2.1

By Nancy Trejos
Washington Post Staff Writer

Eileen Griffin always wanted to own a bookstore. So three years ago, when she retired from her job as a national account manager for Random House, she took all her savings and opened the Griffin Bookshop and Coffee Bar in downtown Fredericksburg. It became a local favorite, with live music performances on Friday and Saturday nights. “This is my big dream. When I retired, I thought, ‘This is great — I’m going to open a bookstore and a coffee bar,” she said. “Then the economy started doing what it’s doing.”

Sales slowed in September. In December, around the holidays, there was a rally. But January brought with it a terrible slump. She cut some of her employees’ hours and ordered fewer shipments of books. She stopped offering live music on Saturdays, shutting down the store at 5 p.m. instead of 9:30 p.m.

“Rather than paying myself, I’m putting all the money back in the store. I’m praying this is all going to get better in the next couple of months,” she said.

Griffin, 62, is terrified of losing her business. She has turned to her friends, her daughter and fellow business owners for comfort. “I have my entire retirement in the store,” she said.

The country might be not be in a depression, but many Americans feel that they are. Local and national mental health experts said that the loss of jobs, homes and retirement savings has triggered an increase in the number of people with symptoms related to anxiety or depression, such as changes in sleeping and eating patterns, headaches, and nervousness. Some psychologists and therapists said they are getting calls from new clients seeking their help in dealing with the financial crisis. Others said current patients are increasingly talking about how the recession is causing them angst. Financial advisers, meanwhile, said they are spending more time, on the phone or in person, reassuring their clients.

“People were riding a false wave,” said Nicholas Yrizarry, an adviser with Nicholas Yrizarry & Associates in Reston. “Their house values were going up. They were spending money. They were buying brand-new cars. This puts a tremendous strain on people when not only are their portfolios down, but they’ve lost their jobs.”

In the latest Washington Post-ABC News poll, 57 percent of those surveyed said the nation’s economic condition is a cause of stress in their lives. More than a quarter said they had “serious” anxiety. The percentage of stressed-out people was higher among those who said their finances had suffered “a great deal” from the recession. Among this group, 83 percent said they were stressed, with 55 percent reporting serious anxiety.

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by P.M. Carpenter

One of the many pleasant aftereffects of ultraconservatism’s crackup is the retirement of a civic need for appalled spectators to demonize its out-patient disciples — or whacko-ize them, if you will — because they’re doing such a marvelous job of it all by themselves.

I mean, what additional diagnosis or prognosis is required when, for instance, the far right gathers with such convenient tidiness at events like CPAC, the Conservative Political Action Conference, and puts on pitiable display not only a wholesale absence of serious public policy, but a virtual 24/7 unraveling of whatever slim dignity it once strove to possess.

When even goddess-of-the-right Sarah Palin declines an appearance — she suspects her old pals now have the cooties, I guess, plus she’s too busy cramming for her 2012 finals, uncomprehendingly digesting copious past issues of Foreign Policy and Time for Kids — then one knows the heavy black curtains are being lugubriously drawn.

“Man, this CPAC thing is crazy,” observed Mr. Samuel Wurzelbacher, a.k.a. Joe the Plumber, to fellow attendee Mike Huckabee — and that’s probably the sanest thing we’ll ever hear Sam/Joe utter. With concise but tragically fleeting lucidity, he captured the moment, the spirit, the zeitgeisty degeneration of his semi-philosophical compadres.

Sam/Joe Wurzelbacher/Plumber was, as the Politico reported, “a headliner at a Thursday panel titled ‘Conservatism 2.0.’ ” A headliner, mind you: an itinerant, breathtakingly clueless bullshitter was a CPAC-Chosen One to enlighten the multitudes on the fundamentals of conservatism. Breathtaking indeed.

Also on Thursday there were book signings by the still-unnetted Ann Coulter — just the name chills for itself — and the vastly disingenuous David Horowitz. (I once heard David say in an interview that college professors lead a carefree, easy life of leisure with phenomenal pay; oh, they give occasional lectures, but that’s pretty much the burden of their existence. A few months later, in another interview that touched on why there are so few female professors in the sciences, I heard him say it’s because women don’t care to suffer the grueling schedules and demands of a college professorship. This is a man who makes his living by deriding the intellectual honesty of higher-education sorts.)

So that was Thursday but today, of course, is Saturday, which brings us — or, rather, just them, thankfully — to CPAC’s bookended finale of … Rush Limbaugh, scheduled to bellow and bray at 5:00pm EST, then — get this — receive at 5:30 the “Defender of the Constitution Award.” (America’s Constitution?)

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by Dave Lindorff

When President Barack Obama made his quick dash up to Ottawa last week, it’s too bad he didn’t suffer a gastrointestinal attack, or slip on some ice and twist an ankle or something. If he had, he might have had a chance to do what he should have done anyhow: visit a Canadian health clinic.

Maybe then he would have had his eyes opened to a better idea: government-run health care.

It is a sad commentary on the pinched and strictly censored level of political discourse in this nation that any serious consideration of Canada’s successful approach to health care is simply out of bounds in America. It is nothing short of absurd that even though the nation that is closest to the U.S. geographically, culturally, linguistically and economically has, since 1973, had a system of provincially administered single-payer government-run health systems that have kept the country’s health costs at about 2/3 of what they are in the U.S. as a percentage of GDP, at the same time serving all people and (not surprisingly) achieving better health statistics than the U.S., no one in Washington has talked about inviting Canadian health authorities down to explain how their system works and whether it might make sense here.

Canadians have complete freedom to choose their physicians. They pay nothing to go to a hospital. I interviewed one hospital administrator in Canada who had worked earlier managing a U.S. hospital. He said a whole wing of the facility in the U.S. was devoted to billing and accounting staff, while he had only two people for that job in Canada, “mostly to handle the bills of the occasional American tourist!” (Some 20% of every U.S. health care dollar goes for paperwork.) Interestingly, when I interviewed the CEOs of a number of huge Canadian subsidiaries of U.S. corporations, they universally told me that they were ardent supporters of the Canadian system, and in fact, were involved in lobbying to have it expanded to include long-term care and psychiatric benefits.

There has for years been a huge ongoing propaganda campaign by U.S. health care companies and their lobbies to denigrate Canada’s system, but the big truth that they cannot deny is that it is loved by Canadians. The best evidence of this: Despite years of conservative governments in Canada, and in the various provinces, no political leader has ever tried to re-privatize health care in Canada. Clearly such an effort would be political suicide, so popular is the system there. As Canadian resident Joe Sotham explains, “In Canada we complain about wait list length, and the reality is that there is rationing, but everyone gets care and nobody is bankrupted, no HMO clerk stands in the way of treatment. We treat health care like a fundamental right. I took my cat to the vet last year and got a 3-page, $1,875 bill.  My comment was this must be what it’s like in the States for people.”

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Filed by David Edwards and Stephen C. Webster

Goddard: Cartel violence has killed over 1,000 in Mexico ‘this year.’

When President Bush vowed to “smoke ‘em out” in the chase for Osama bin Laden — who his administration claimed to be America’s greatest enemy — he meant it in the Wild West sense, not the California sense.

Who’d have thought that by the time his predecessor took office, otherwise conservative officials would be considering another way of smoking out a new and growing threat to Americans’ safety: Mexican drug cartels, whose profits are largely derived from the illegal smuggling and sale of marijuana.

On Friday, Democrat Terry Goddard, Arizona’s Attorney General, said that while he’s not in favor of legalizing marijuana, he thinks it should be debated as a way of curbing violence in the increasingly deadly clashes between Mexico’s gangs.

He emphasized that over 1,000 people have been killed in cartel-related violence “this year.”

Thursday, the Mexican government said it was sending 5,000 soldiers to Ciudad Juarez, a border town racked with violence, which recently saw its police chief resign and its mayor’s life threatened. The troops are in addition to 2,000 others already station there.

Speaking to CNN’s Kiran Chetry about the firearms trade between the US and Mexico, he noted that almost all the guns seized in Mexico’s drug war came from the US.

“This is the source,” he said. “This is the gun store for a great deal of the world.”

“What’s the answer?” asked Chetry.

“There’d have to be a variety of answers,” he said. “But one of ‘em would be to enforce our laws more aggressively.”

Goddard said he believes new firearm purchasing requirements could be key in helping stop what’s called “straw buying,” or purchasing a weapon with no intent of actually owning it and instead turning it over to a criminal for a fee.

“If we could isolate those, we’d find a lot of the criminals,” he suggested.

“The entire trade, of course, is fueled by the selling and buying of drugs,” said Chetry. “There are some who make the case, including a former deputy foreign minister of Mexico who now works for the Brookings Institution — somebody by the name of Andres Rosenthal — who says maybe we need to rethink our drug laws.”
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by Jamison Foser

The media are outraged at the “class warfare” supposedly present in President Obama’s budget plans. In the past few days alone, Michelle Bernard said Barack Obama “was almost declaring class warfare” in his speech to Congress; CNBC’s Carlos Quintanilla said, “I don’t want to call it class warfare, although that’s what it may end up being in the end, this debate over wealth redistribution”; the AP’s Jennifer Loven asked White House press secretary Robert Gibbs, “Are you all worried at all that that kind of argument, that ‘class warfare’ argument could sink the ability to get some of these big priorities through?” Politico ran a Jeanne Cummings article headlined “Class warfare returns to D.C.” And this afternoon, MSNBC joined the pile-on, with a segment asking: “Is there a war against the wealthy? Do we have a class war developing?”

What sparked this sudden concern about “class warfare”? President Obama indicated that in order to fund things like health care, the very wealthiest Americans (individuals who make more than $200,000 and families making more than $250,000) might have to pay slightly more in taxes, via the expiration of President Bush’s tax cuts for those earners. Under this plan, the wealthiest Americans (again, those making more than $200,000) would be subject to the same income tax rate they paid in the 1990s — when, it should be remembered, the rich got richer and the economy did quite well.

If this plan — raising taxes slightly on people who make more than $200,000 a year in order to pay for things like health care for people who don’t — sounds familiar, it’s because Obama campaigned on it for roughly two years. Conservatives, amplified by the news media, ridiculed it with labels like “socialism” and “class warfare” and used all kinds of scary rhetoric. And the American people voted for it anyway.

So it’s a bit odd to see all this media angst over the idea that Barack Obama’s plans to do something he said he would do — and something the American public supported.

Cummings’ Politico article is the oddest of all, promoting the “class warfare” theme with a series of misguided and nonsensical grievances. She began by complaining, essentially, of being insufficiently surprised by Obama’s plans:

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At the height of the real estate bubble, I was desperate to buy a home. I had no idea what kind of trouble I was borrowing.

By Mary Elizabeth Williams

Editor’s note: The follow is excerpted with permission from “Gimme Shelter,” published by Simon & Schuster (March, 2009).

In 2003, after leasing a charming but erratically maintained Brooklyn brownstone for several years, my family and I decided to attempt the impossible — to become homeowners. But two years later, with nothing to show for our efforts but a lot of cancelled rent checks, we were still searching. The Brooklyn we had originally fallen in love with was disappearing under new construction and chain stores, and the housing market was more out of control than ever. Then a reconaissance trip to a new neighborhood, in upper Manhattan of all places, gave us fresh hope. The only question now was — had the bubble inflated too far beyond our means?

We are feeling optimistic enough about our prospects that Jeff meets with our accountant to get a clear sense of our finances and possible down-payment picture. I was supposed to be there too, but our daughter Lucy is home with an ear infection, so I’m doling out penicillin and running an all-day “Wizard of Oz” festival instead.

Our accountant makes me tense. When I’m around him, I feel judged for how little I make, ashamed that I’m not performing up to expectations. The last time I was in Laurence’s office, he bluntly demanded to know why we weren’t saving more. I told him it was because we weren’t earning more, and I felt thoroughly mortified about it.

I’m cranky and edgy all morning; between the feverish child and the whole unceasing trying-to-uproot-our-lives thing. The ring of the telephone doesn’t make it better.

“We may have to wait a while,” Jeff says gently. “Laurence says that most co-ops will ask for 20 percent down, and we don’t have much liquidity. He thinks we should try to put a thousand away every month for a year.”

“Well that’s bullshit,” I whisper as Lucy naps, “because housing is going up faster than we can keep up. Does Laurence know that? Does he read the papers? What good does it do to save $12,000, even if we could, which we can’t, when a place that’s $350,000 now will be $70,000 more in a year? Did you tell him that interest rates are going up? Did you tell him to go blow himself?”

Jeff informs me he did not.

Then I can’t talk anymore. “I have to go,” I say, and I hang up and put my head in my hands for a long time.

It’s not that I think buying a home will make us happy. I do believe it will make us more secure. And the thought of not having that security makes me sad. A home is not like wine. Its intrinsic merit does not increase with time. Its value is whatever the market says its value is. Part of the terror and the thrill of real estate is how much of it rests on the “bigger fool” theory. You buy at a certain price, then you find the sucker who will buy it from you at the most obscene markup. Then that person can turn around and do likewise. None of the houses in Carroll Gardens, the Brooklyn neighborhood where we live, have changed radically in the last three years. The perception of their worth, however, has, to our utmost exclusion.

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Jason Linkins | HuffPost Reporting From DC

When Federal agents raided the offices of Stanford Financial Group earlier this month, exposing a massive fraud and successfully preventing its perpetrator, Allen Stanford, from lamming it overseas, it was the culmination of more than an investigation into a despicable “mini-Madoff” Ponzi operation. It was also a neat little public relations moment for the beleaguered Financial Industry Regulatory Authority and their former head Mary Schapiro, who now heads up the equally beleaguered Securities and Exchange Commission. Despite what you may have thought about the way FINRA and the SEC seemed to be clueless to the ways of Bernie Madoff — and those agencies could have made use of both celebrated whistleblower Harry Markopolos and a timely article from Michael Ocrant at MAR Hedge — this new regulatory regime was serious about bringing scofflaws to justice, and those who were formerly asleep at the switch were going to get regular wake up calls.

Rolling up Stanford Financial would have been an excellent, and subtle way of noting that times have changed. As usual though, reality isn’t that simple. It turns out that another forgotten reporter, in this case David Ivanovich of the Houston Chronicle, had raised some serious alarms about Stanford back in 2000. In an article entitled “Houston Banker Tries to Create Caribbean Empire, Runs into Problems with Feds” (July 16, 2000) Ivanovich chronicles Stanford’s wheeler-dealing in the nation of Antigua, painting a picture of Stanford that finds him waist deep in shadiness, even downright creepiness.

Back around the turn of the century, Stanford had managed to run afoul of the State Department, who were, at that time, on a “crusade against [offshore] money laundering”:

Stanford, a little-known investment banker and real estate developer in Houston, caught the State Department’s attention for his leading role in tightening Antigua’s already secretive banking laws.
Washington insisted that the changes could hamper international efforts to halt the flow of drug money. The result was a protracted confrontation between the United States and Antigua that is only now being resolved.

Stanford had deep ties to Antigua and their government, and the way Ivanovich describes it, Stanford’s conduct comes across more like a cult-leader than a financier:

Holding dual U.S.-Antiguan citizenship, Stanford owns Antigua’s largest newspaper, heads a local commercial bank and enjoys access to Prime Minister Lester Bird.
He is the man to whom the islanders have turned to help finance construction of a hospital, build a shelter for single mothers and start up a carrier when airline service to the region was curtailed.

And honestly? This part alone is mindbending enough:

When a Catholic priest stricken with the stigmata (wounds resembling those Jesus suffered in his crucifixion) needed medical treatment in the United States, Stanford flew him on his private plane.
“That was a major personal event in my life,” Stanford said. “It was truly an out-of-this-world experience, a supernatural experience.” Indeed, Stanford still carries with him congealed fluids that drained from the priest’s foot.

You see, where I come from, people who carry around a jar of congealed priest foot-juice? You keep an eye on them. As it turns out, however, Stanford didn’t begin to attract attention until he started injecting himself into the formulation of Antigua’s banking laws. Ivanovich fleshes out the timeline:

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by Will Bunch

Here we go again.

There’s nothing worse in life than watching a feel-good story wear off, which is what seems to be happening at 400 North Broad Street, the home of the Philadelphia Daily News (and the Inquirer). The feel-good story came in 2005 and 2006, after the staff of the Daily News was whittled beyond the bone by buyouts and then — with the Philly papers’ parent up for sale — when a bunch of “experts” (more on them in a minute) opined that any buyer would have to close the People Paper for good.

And so a bunch of us took to the Web and went to anyone else who would listen and explained why — if you knew anything about Philadelphia or the newspapers here — that, no, whacking the city’s daily tabloid actually made no sense at all. And our campaign actually worked. Talk about closing the DN died down after that, and the papers were sold to an offspring of the middle-class streets of Upper Darby who — pushing other issues off to the side for now — understood the unusual bond between the Daily News and its readers.

The new owners didn’t understand a lot of other things, however — like the notion that the American newspaper wasn’t just down in the dumps, but plunging off a cliff. This week, the parent of the Daily News and Inquirer filed for Chapter 11, unable to pay back the massive sum they borrowed to buy the paper three years ago. The news was jarring, but all we really have for now is a court battle between lawyers for millionaires and lawyers for multi-millionaires — the papers are still publishing, the staffs are still writing stories and getting paid, for now. But into that vacuum has flooded the speculation, with Topic A that the Daily News will have to close. But as anyone who watches too much cable news (like me) could tell you, the first cousins of “speculation” are “laziness” and “uninformedness.”

Some of these newspaper pundits I have little or no respect for — like Lauren Rich Fine, who used to be a highly paid newspaper analyst despite writing in 2005 that the Daily News was “an afternoon paper,” something it ceased being in 1991. Fine actually claims that she grew up in Philadelphia, but maybe she means Philadelphia, Miss., because she doesn’t seem to really know a lot about journalism here, just how to read a bloodless accounting book that assumes whoover owns 400 N. Broad could save a ton of cash by whacking a tabloid aimed at the middle class. You see, analysts and pundits have to say something, and “close the Daily News” makes a compelling second-day headline after the shock of Chapter 11.

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By James K. Galbraith | Tue July 1, 2008

Is the worst over? Are we on the road to recovery? Will the next president take office against a backdrop of economic improvement, as Bill Clinton did in 1993? Or has something deeper and more intractable gone wrong?

Early this year, the optimists, including Citigroup chairman Bob Rubin and Treasury secretary Hank Paulson, argued that the slowdown was short-term and that a “stimulus” package should be “targeted and temporary.” This with rare haste the Democratic Congress enacted. As a result, most taxpayers got one-time $600 checks in May, prefigured by bubbly messages touting “Good News!” if you filed your taxes electronically.

The rebate isn’t the only little Dutch boy thrown headlong at the dike this election year. Government spending, especially for defense, will be up: Military spending as a share of gdp is expected to grow by $75 billion in fiscal 2008, enough to neutralize a 0.3 percent decline in gdp. Dick Cheney was secretary of defense for Bush 41; just before the 1992 election he engineered a big run-up in outlays, as the military restocked following the first Gulf War. (It was exposed in the first Clinton “Economic Report.”) Is the Pentagon up to that trick again? I’d be astonished if it were not.

Under intense pressure from panicky bankers, Ben Bernanke cut interest rates relentlessly from August 2007 through the spring of 2008. I don’t accuse Bernanke of playing politics. But it’s worth noting that this is what usually happens. In presidential election years when Republicans are in office, the Fed regularly and predictably pursues a more expansionary policy than when Democrats rule—after controlling for differences in the rates of inflation and unemployment. (I made these calculations myself; see the chart.) Maybe they just can’t help themselves.

But much of the ordinary effect of interest cuts on new lending—like a rebound in construction and automobile sales—didn’t happen this time. That’s because the fall in home prices (and therefore the value of collateral) overwhelmed the benefit of cheaper money to the banks. And the banks barely cut mortgage rates, so consumers saw no benefits at all. Lower interest rates did cut the value of the dollar, however, and that promotes exports and foreign investment. (These days New York Times real estate listings come with a currency converter.) It also boosts the stock market, since multinational firms can report their (unchanged) foreign income as higher dollar earnings.

Possibly all this stimulus will ward off the two-quarter decline that has historically defined a recession. Don’t be surprised: Republicans haven’t had an election-year slump since 1960. On the other hand, the National Bureau of Economic Research, which has the official call, may describe the early spring as a recession anyway. Republicans will welcome that, too, so long as they can plausibly call the summer a “recovery.” Even if they can’t stop a recession, they may be able to make it short and shallow enough, this year, to put John McCain in the White House. But all this brings up an important question—what of next year?

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A Timeline of the Mortgage Crisis
1913: Federal Reserve Act creates national banking system. 1914: Federal Trade Commission Act prohibits unfair or deceptive business practices. 1933: With memories of 1929 stock crash still fresh, Glass-Steagall Act separates “commercial banks” focusing on consumer activities (checking, savings) from “investment banks,” which deal with speculative trading and mergers.	1968: Truth in Lending Act requires banks to disclose loan terms & fees. 1970: Bank Holding Company Act Amendments first step toward weakening Glass-Steagall; allow commercial banks, via holding companies, to both accept deposits and make commercial loans. 1978: Supreme Court’s Marquette decision gives banks the right to make loans in states other than where they are headquartered; lenders rush to places with the weakest consumer protections, e.g. Delaware and South Dakota.
1980: After interest rates rise 13 percentage points in 2 years, President Carter signs law further hollowing out Glass-Steagall. The measure—pushed through by Sen. Jake Garn (R-Utah), a former insurance executive—demolishes usury caps for mortgages and raises bar for prosecuting lenders. Jan 1981: Sen. Garn becomes chair of Senate Banking, Housing, and Urban Affairs Committee with fellow deregulation advocate M. Danny Wall as majority staff director. American Banker exults that “lobbyists here view Mr. Wall’s promotion as a gift swept to shore by the [gop] tide last election day.” 1982: Sen. Garn coauthors Garn-St. Germain Depository Institutions Act, which deregulates savings and loan industry. 1984: S&Ls start crashing in Texas as oil boom peters out. More than 1,000 thrifts nationwide will fail between 1986 and 1995; debacle will cost $500 billion, including $124 billion in taxpayer money.	April 2, 1987: Sen. John McCain meets with federal regulators to discuss investigation of Lincoln Savings and Loan. The thrift’s owner, Charles Keating, was the senator’s business partner and campaign contributor, and flew McCain around on his private jet. Sept: Drexel Burnham Lambert, home to “junk-bond king” Michael Milken, creates “collateralized debt obligations” (cdos)—securities made up of myriad loans and bonds with different risk levels. Dec 9, 1988: Silverado S&L collapses, leaving $1.3 billion taxpayer liability; board members include Neil Bush, who engineered loans to friends in what federal Office of Thrift Supervision will call “multiple conflicts of interest.” Bush later tells Congress a few of his deals may have looked “a little fishy.” Feb 6, 1989: President George H.W. Bush bails out S&L industry; among those helped is his son, Jeb, as government takes over most of a $5 million second mortgage on his Miami office building.
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By David Corn

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— By Nick Baumann

The financial crisis is even worse than people think (and people already think it’s pretty bad), and we aren’t doing enough to stop it, economist and Mother Jones contributor James K. Galbraith told the House Financial Services Committee on Thursday morning. From his prepared testimony:

In 1930, John Maynard Keynes wrote, “The world has been slow to realize that we are living this year in the shadow of one of the greatest economic catastrophes of modern history.” That catastrophe was the Great Crash of 1929, the collapse of money values, the destruction of the banking system. The questions before us today are: is the crisis we are living through similar? And if so, are we taking adequate steps to deal with it? I believe the answers are substantially yes, and substantially no.

Galbraith pointed to six significant problems with the Obama administration’s response to the financial crisis. First, he said, the White House is being way too optimistic:

… [B]ad news has been outrunning the forecasts for months. Professional economists, working with the normal models, failed to predict the crisis. In many important cases, including high officials, they actively denied it could happen. Chairman Bernanke was typical: through July of 2007, he argued that the Federal Reserve Board’s predominant concern was inflation; thus the Federal Reserve was unable to give Congress a foretaste of a crisis that was to erupt within days. And as the crisis has unfolded, events have repeatedly come in worse than expected or caught us by surprise. This should tell us something.

Second, we know that the origins of the crisis lie in a breakdown of the banking and financial system, following a breakdown in the regulation of mortgage originations, in underwriting, and in credit default swaps. This is something we have not seen in our lifetimes. We know that the actions already taken in response – the TARP, the nationalization of the commercial paper market and the swap agreements with the ECB and other central banks – are unprecedented. We know that these measures have, at best, only averted a deeper catastrophe. And we know that the baseline forecast, which is a mechanical procedure based on statistical relationships between non-financial variables, for the most part, takes none of this into account.

We therefore have no basis for confidence in the baseline forecasts, and we should prepare ourselves, as Churchill said to Parliament at the time of Dunkirk, “for hard and heavy tidings.”

The second problem Galbraith identified with the Obama administration’s response to the crisis is an over-reliance on monetary policy:

[M]onetary policy today has little power to restore growth. In the Depression they called it “pushing on a string.” With interest rates already at zero, there is little more the Federal Reserve can do.

The Obama administration’s bank rescue plan is also fatally flawed, Galbraith says:

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On February 23, Karl Rove was supposed to testify before the House Judiciary Committee in accordance with a Congressional subpoena. But Rove didn’t show up. Again.

Rove didn’t show up last year when he was ordered to testify, because his old friend President Bush said that Rove’s testimony was protected by executive privilege. Now that Bush is no longer in office, we may finally have an opportunity to learn the truth about his alleged misdeeds, from authorizing voter suppression tactics to orchestrating the arrest of Alabama Governor Don Siegelman.

But even though we have a new president, Karl Rove is still acting like he’s entitled to all the privileges that came with his old job.

I just took action to tell Attorney General Eric Holder to compel Karl Rove to comply with the subpoena. I hope you will, too.

Please have a look and take action.

Click Here

http://act.credoaction.com/campaign/rove_testify/?r_by=-446499-T2U.kBx&rc=paste

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In the mid-’80s, Wall Street turned to the quants—brainy financial engineers—to invent new ways to boost profits. Their methods for minting money worked brilliantly… until one of them devastated the global economy.

By Felix Salmon

A year ago, it was hardly unthinkable that a math wizard like David X. Li might someday earn a Nobel Prize. After all, financial economists—even Wall Street quants—have received the Nobel in economics before, and Li’s work on measuring risk has had more impact, more quickly, than previous Nobel Prize-winning contributions to the field. Today, though, as dazed bankers, politicians, regulators, and investors survey the wreckage of the biggest financial meltdown since the Great Depression, Li is probably thankful he still has a job in finance at all. Not that his achievement should be dismissed. He took a notoriously tough nut—determining correlation, or how seemingly disparate events are related—and cracked it wide open with a simple and elegant mathematical formula, one that would become ubiquitous in finance worldwide.

For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.

Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li’s formula hadn’t expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system’s foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.

David X. Li, it’s safe to say, won’t be getting that Nobel anytime soon. One result of the collapse has been the end of financial economics as something to be celebrated rather than feared. And Li’s Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.

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by Larisa Alexandrovna

The Conservative Political Action Conference is like summer camp for wealthy and disturbed outcasts of civilized society. It is a place where members of the KKK can stroll hand-in-hand with blond coked-out socialites and discuss mutual fantasies of domestic terrorism against their target list of undesirables.

In 2006, for example,  neo-Nazi Barbie – Ann Coulter – entertained at this hate extravaganza, where she was applauded for saying things like:

“I think our motto should be post-9-11, ‘raghead talks tough, raghead faces consequences.’”

Or, in 2007:

“I was going to have a few comments on the other Democratic presidential candidate John Edwards, but it turns out you have to go into rehab if you use the word ‘faggot,’ so I — so kind of an impasse, can’t really talk about Edwards.”

That’s right, the hate constituency feels no shame in letting their inner demons shine for the world to see. Moreover, this collective of fanatical nationalists and white-power devotees frequently express their fantasies of assassinating someone, usually the President of the United States if he is a Democrat. This year of course is no different. This time around the scandal-ridden failure and discredited former ambassador to the United Nations under Il Dunce – John Bolton – joked about a nuke attack on Chicago:

This morning, former U.N. ambassador John Bolton spoke to the Conservative Political Action Conference (CPAC). He tried to up the fear quotient in the room by raising the prospect of an Iranian-sent nuclear attack on an American city. “It’s [a] tiny [threat] compared to the Soviet Union,” Bolton said, “but is the loss of one American city — pick one at random: Chicago — is that a tiny threat?” The audience erupted in cheers and laughter at the idea of Obama’s home city being obliterated.

By all means, continue your descent into further irrelevancy and finally into extinction.

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by John Byrne and David Edwards

In a little-noticed remark Wednesday, Obama Attorney General Eric Holder said that the Justice Department will no longer raid medical marijuana dispensaries established under state laws but technically prohibited by the federal government.

The decision marks a shift from the Bush Administration, which was more draconian in its approach to hunting those who sought to dispense marijuana for medical purposes.

Numerous states have decriminalized marijuana in recent years, and new fiscal pressures are turning more states toward being more lenient toward first-time drug offenders as the cost of keeping drug users in jail becomes untenable for state budgets.

The remark was caught by The Huffington Post’s Ryan Grimm.

The Drug Enforcement Administration continued to carry out such raids after Obama’s inauguration, Grimm says, despite an Obama campaign promise to cease the practice. But asked at a press conference Wednesday, Holder said it wouldn’t be the Administration’s policy going forward.

“No” it won’t be Obama policy, Holder said. “What the president said during the campaign, you’ll be surprised to know, will be consistent with what we’ll be doing in law enforcement. He was my boss during the campaign. He is formally and technically and by law my boss now. What he said during the campaign is now American policy.”

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Jeremy Gantz

If California Assemblyman Tom Ammiano has his way, the Golden State might become known as the Green State to pot smokers around the country.

During a press conference Monday morning in San Francisco, Ammiano introduced “The Marijuana Control, regulation and education act.” The far-reaching bill would go well beyond decriminalization of marijuana to actually legalize the cultivation, sale, purchase and possession of the plant.

“With the state in the midst of an historic economic crisis, the move towards regulating and taxing marijuana is simply common sense,” Ammiano said. “This legislation would generate much needed revenue for the state, restrict access to only those over 21, end the environmental damage to our public lands from illicit crops, and improve public safety by redirecting law enforcement efforts to more serious crimes.”

Ammiano and a group of speakers during the press conference described the bill as “a simple matter of fiscal common sense,” according to the San Francisco Weekly.

The bill would remove “all penalties under California law for the cultivation, transportation, sale, purchase, possession, and use of marijuana, natural THC and paraphernalia by persons over the age of 21″; would “prohibit local and state law enforcement officials from enforcing federal marijuana laws”; and would create a $50 state fee for each ounce of marijuana sold, beyond whatever pot will cost once it becomes legal, the newspaper reported.

“Marijuana arrests actually increased 18 percent in California in 2007 while all other arrests for controlled substances fell,” Steve Gutwillig, California’s director of Drug Policy Alliance, said during the press conference. “This costs the state a billion dollars a year and taxpayers are footing the bill. Meanwhile, black marketers are laughing all the way to the bank.”

Ammiano’s bold legislation comes on the heels of a recent statement by three former Latin American presidents, who called for legalization of marijuana and described the U.S. “War on Drugs” as a failure. Former Colombian President Cesar Gaviria said there was no meaningful debate over drugs policy in the United States, despite a broad consensus that current policies had failed.

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jsanders@sacbee.com

California may be going to pot – literally.

Marijuana would be grown and sold openly to adults 21 and older under legislation introduced this morning by a San Francisco lawmaker.

Assemblyman Tom Ammiano, D-San Francisco, said the cash-starved state could generate more than a billion dollars by taxing pot growers and sellers.

Ammiano predicted that the public would support loosening marijuana laws that require substantial public funds to enforce.

“I think there’s a mentality throughout the state and the country that this isn’t the highest priority,” he said. “And that maybe we should start to reassess.”

Before California could legalize marijuana, however, it also might have to persuade the federal government to alter its prohibition on cannabis.

Ammiano said federal officials may be receptive to such changes under the administration of President Barack Obama.

“We may be on a parallel track here,” said Ammiano, a freshman legislator who was sworn into office less than three months ago.

The Drug Policy Alliance, an advocate of loosening pot laws, applauded Ammiano’s proposal.

“Marijuana already plays a huge role in the California economy,” said Stephen Gutwillig, the group’s California state director. “It’s a revenue opportunity we literally can’t afford to ignore any longer.”

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The Reality Campaign has released a new ad. They’re the folks behind the widely-played ad that featured a foreman in a hard hat taking viewers on a tour of a non-existent clean coal facility.

In this new ad, a pitchman gives us the hard sell on a “Clean Coal Clean”-scented air freshener that works just as well as “clean coal.”

The ad is directed by the Coen brothers, the team that wrote and directed “The Big Lebowski,” “Fargo,” “The Hudsucker Proxy” and other great films.

WATCH:

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Hank Plante

The granddaughter of the man who founded Bank of America in San Francisco in the early 1900s called the bank’s current condition “totally repulsive” and blasted the bank’s management for being “idiots.”

The harsh criticism from Virginia Hammerness, the heiress to A.P. Giannini’s family fortune and a significant stockholder in the bank he launched, came during an interview Monday with CBS 5.

She reflected on how her grandfather founded B of A as the Bank of Italy in San Francisco’s North Beach neighborhood in 1904 as a reaction to the fact that the big eastern banks wouldn’t lend to middle class immigrants like Italians.

Hammerness was outspoken about what has happened to the bank that is her family’s legacy, saying she had little doubt that Giannini was “rolling over in his grave.”

She added that her father, who succeeded her grandfather as bank president and “gave his life for the bank,” would have had a similar reaction upon seeing today’s decline of the institution.

“I think its totally repulsive,” Hammerness said when asked what she thinks of Bank of America now. ”What idiots, what kind of idiots are running that bank?”

Hammerness directed some of her criticsm at the bank’s decision to go ahead with the purchase of the near-bankrupt Merill Lynch brokerage, even after learning that huge bonuses were paid out to Lynch employees right after the deal was announced.

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