Sunday, 25 April 2010

Is Lindsey Graham a security risk?

One of the arguments used 50 years ago to expel homosexuals from government service was that they were vulnerable to blackmail and couldn’t be trusted to keep secrets. Washington-based gay activist Franklin Kameny turned that argument on its head in the 1950s when he said he couldn’t be threatened with outing because he wasn’t hiding. He still lost his federal job, but he was on to something.

Republican Senator Lindsey Graham of South Carolina made a big fuss this week about backing off from cooperation on a climate change bill, ostensibly because he wasn’t being treated nicely enough by the Democrats. But the timing is suspicious. Graham was publicly gay-baited in recent days by tea-bagger elements indignant about his occasional less-than-reactionary positions. They demanded to know if someone was threatening Graham with exposure—and in the process, did their best to expose him.

Funny that this should be happening in the same week that Archie Comics decided to introduce a gay character, another sign that high school just ain’t what it used to be.

I don’t know if Graham is gay or not although when I worked in South Carolina, I met people who swore they knew his boyfriend. But if he’s that sensitive about being called out as a happy cocksucker, maybe someone should be reconsidering his security clearance. When people who are privy to important national secrets are running around doing things they’re ashamed of, it makes them vulnerable to ruthless blackmailers like the righteous warriors of the Palin brigades.

Saturday, 24 April 2010

How we do things in New York State - Lesson I

Some readers of this blog find the references to New York state and city politics a bit obscure. Allow me to provide a handy introductory course.

Pedro Espada, Jr., is currently a member of the New York State Senate representing a district in the Bronx, one of the city’s five boroughs. In fact, he is the president of that legislative body (how he got there is a long story). To get a firm grasp of how things are done in Albany, our state capital, please continue reading.
Espada founded a nonprofit community health-care facility called ‘Soundview’ in 1978. It is not unusual for a politician to shower his district with public works, get his name above the door and smile for the cameras at the ribbon-cutting. Soundview, however, is not your typical community service organization.

Espada himself is president and CEO of Soundview where he earns $287,000 a year or approximately four times his salary as a state senator. His son Gauthier Espada is its facilities manager where he oversees the janitorial services provided by Espada Management Company, which is owned by his dad and which miraculously wins the Soundview contract for maintenance every year. Gauthier is also the contract compliance manager where he checks to make sure there are no conflicts of interest.

Soundview’s marketing director is another son, Alejandro Espada, who runs outreach and mass mailings. Lo and behold these often extol the bounteous good deeds of dad, even when he is running for office—an obvious violation of Soundview’s nonprofit status.

All in all, 12 members of the Espada family work at Soundview and collectively have received $2 million in compensation from the clinic in the past five years.

However, Soundview’s director of human resources is not a blood relative of the Espada’s. Indeed, Maria Cruz is not an Espada, merely a convicted felon for illegally diverting Soundview resources to the 2005 Espada reelection campaign. Christian forgiveness reigns at Soundview—her case lost, Ms. Cruz still had a job—at the nonprofit she had just looted. Her $10,000 in legal fees were generously paid by Pedro Espada, Jr., who cashed in some of his three months of annual paid vacation from Soundview to do so.

Two other Soundview employees were also convicted in the 2005 case and remain on its staff. One of them, Norma Ortiz, now serves as Espada’s administrative assistant and manages his Soundview corporate credit card. That alone turns out to be a full-time job.

In the last four years, Espada has racked up $250,000 in charges on that card, including: family vacations in Puerto Rico, Las Vegas and Miami and $80,000 in restaurant bills (including $20,000 for carry-out sushi) delivered to his suburban home.

To provide a fig leaf for this looting, Soundview’s board authorized Espada to take 14 weeks of paid leave per year, which accumulates indefinitely and can be converted to cash. After living high on the Soundview dime, Espada periodically declared that he was cashing out some vacation time and thereby annulled the ‘personal’ expenses.

Espada represents the Bronx but actually lives in Westchester county at a comfortable remove from the urban grit. To resolve his legal requirement to live in the impoverished district he represents, he turned once again to Soundview. The clinic increased his CEO salary by $2,500 a month to cover the cost of renting a coop.

With such burdensome expenses involving the Espada family, Soundview has become, not surprisingly, a deadbeat with its suppliers. With the accounting department in disarray, the entity was prosecuted by the IRS for failure to fund payroll withholding taxes in the amount of $700,000.

In addition to Espada’s annual salary, his board also awarded him an automatic 100% bonus for each of his 30 years of ‘service’, to be paid to him or his inheritors upon his departure for any reason (including prison or death). That now adds up to another $9 million in obligations to the chief, leaving the clinic technically insolvent. Were the board to become displeased with Espada for some far-fetched reason, his departure would trigger the severance provision, thus effectively destroying the institution.

This is the gentleman whom the distinguished senators of the state of New York elected to preside over their august deliberations.

[All details above gleaned from public documents available at the Web site of the Attorney General of New York State -]

Friday, 23 April 2010

Obama & Wall Street

The President’s address yesterday to the Captain Crunches of Industry purporting to run our financial system was reliably thoughtful and answered the tendentious and opportunistic criticisms—if they can be given such a respectable term—from the Know-Nothing party.

Some commentators say Obama should try to be more like FDR who denounced the plutocrats and money-changers to their faces. But luckily for a lot of people, it’s not 1933, and we don’t have 25 percent unemployment (yet). The bankers are still rolling in money, and although people are pissed at them, the country is teetering not on the brink of ruin, but on the brink of mass stupidity, which constrains Obama rather than empowering him.

Also, righteous anger just isn’t Obama’s style as we should have learned by now—and by the way, he got elected by avoiding it. If we wanted someone to kick Wall Street’s ass and love every minute of it, we should have elected Ralph Nader.

Obama is much more likely to go for the Kum-ba-ya moment as he did in the Cooper Union address by trying to convince the assembled Wall Street poo-bahs that it’s in their own interest to clean up their game. No doubt there are some in that unlovely number who agree with him—though we haven’t heard from very many so far.

Harry Markopolos thinks such decent-minded folk are in the majority among financiers, and he has more legitimacy to offer an opinion on the subject than just about anyone. Markopolos is the guy who tried to alert the Securities and Exchange Commission about the Madoff Ponzi scheme for a decade while that scam artist was looting many dozens of billions of dollars from Jewish charities, European banks and little old ladies with blue hair.

His book, No One Would Listen, is a gripping page-turner, and that’s saying a lot given that its subject matter is collateralized debt obligations and split-strike conversion strategies. I read it in two nearly sleepless nights because I could not believe my eyes and kept waiting for the nightmare he describes to end in the next chapter.

Markopolos lays out in fairly understandable detail how no one with a basic introductory course in financial instruments could have swallowed the idea that Madoff’s numbers were real. Yet he was allowed to continue to swindle sophisticated investors and unsophisticated marks for two decades. How?

The inevitable conclusion is that everyone knew Madoff was crooked but thought he was being crooked in their favor. They also must have assumed (with excellent reason) that no one would ever come after him, or that at worst, Madoff would take a dive while their inexplicable profits would be untouched.

As always, greed turned people into patsies just as reliably as the Nigerian oil company scams do. Not that individual investors necessarily saw what was happening (although steady 12 percent annual returns even while the Dow was tanking should have generated a little suspicion). But the big players had to know.

After finishing the book, one wants to reach for the bank passbooks and put one’s savings under the mattress like the far-sighted Argentine woman I interviewed during that country’s bank bust who laughed at the idea of entrusting her cash to professional thieves dressed in business suits. ‘I haven’t kept money in a bank account in my entire life,’ she snorted, despite owning a textile business employing 22 seamstresses.

Perhaps at the height of the crisis Obama could have cut through the b.s. and demanded a radical reform of our permanent banker rip-off, but once things settled back down to some semblance of normal, it was probably too late to do much more than the minor tinkering in the bill he was peddling yesterday.

It’s nice to see our 401(k)s bouncing back to almost where they were two years ago, and we can only hope that employment follows soon. But the finance and economic experts have been warning us that the underlying conditions that almost brought down the house at the end of the Bush spectacle are still there and perhaps in worse shape than before. We have a smart and reasonable guy in the White House as a result, but there is plenty of evidence that people may prefer the wackos given half a chance. It’s a good reminder that no matter how bad things are, they can always get worse.

Wednesday, 21 April 2010

Justice served

A half-dozen suburban teenagers decide to go ‘Mexican-hopping’ on weekend evening, by which they mean hunting for Hispanic dishwashers to beat up. They hit upon Marcelo Lucero, an Ecuadorian immigrant, who unexpectedly fights back. One of the marauding kids pulls a knife and stabs him. He dies.

After a rash of disturbing verdicts that emboldened a racist undercurrent in our allegedly pluralistic city, such as the ‘oops!-we-accidentally-shot-him-50 times’ Sean Bell case involving NYPD officers and the lesser-known John White conviction in Port Jefferson, the jury did the right thing in convicting Jeffrey Conroy, 19, of manslaughter as a hate crime. He’s facing a sentence of 8 to 25 years, long enough perhaps to think about what caused him and his buddies to turn into racist thugs.

Here’s an idea for Conroy to consider: Steven Levy, former Suffolk Couty supervisor who just left the Democratic Party so that he could run against Mario Cuomo for governor. Levy is now a credible Republican because he has spent the last decade immigrant-bashing and pandering to the worst instincts of his suburban constituents.

Levy’s district includes the notorious Farmingville, subject of a devastating PBS Point of View program that meticulously shows how the community’s upheaval over the sudden influx of Latino workers was pumped up into a racist backlash. The documentary ends with the inevitable attempted murder of two Mexicans chosen at random—that was in 2002 when Jeffrey Conroy was 11.

Levy knew a winning political posture and continued to throw red meat at his white majority even after the Lucero crime, which he downplayed as unimportant. He continues to crack racist jokes about immigrants and encourages county cops to act as immigration agents.

Given the Arizona legislature’s recent descent into overt racial profiling despite the state’s continued dependence on the exploitation of cheap immigrant labor, it’s no wonder that Levy would be a credible Republican candidate this year. But the Republicans will pay a long-term price for embracing the latest version of Orville Faubus trying to keep ‘those people’ out of Little Rock High School.

It was reassuring to see the mostly white jury reach a fair verdict, endorsing the obvious hate crime aspect but refusing to convict Conroy for murder since it wasn’t clear that he meant to kill. That won’t bring Marcelo Lucero back, but it’s a reminder that the Hispanic population of Long Island will soon become middle-class Americans that can’t be so easily hounded through the streets.

Meanwhile, Republicans thinking of climbing on the Levy bandwagon should think about whether they want to be remembered as modern Klansmen in white hoods.

Sunday, 18 April 2010

Meet Nick Clegg

While we are busily examining our neo-Confederate navels on this side of the pond, the Brits may be about to give our exhausted political assumptions the most serious poke since the Obama phenomenon of 2008.

Largely unnoticed unless you read the British press, Liberal Democrat leader Nick Clegg has vaulted very close to the lead in the three-way campaign to form the next U.K. government after he dazzled potential voters in the country’s first-ever televised debate in the run-up to the May 6 poll.

Clegg is not exactly a household word in the U.S., but suffice it to know that he is (1) not a Tory and (2) not a Blairite. Hey, he’s got my vote.

Anyone who could be contemplating casting a ballot for the horrible war-criminal party of Tony Blair should be scourged and bitten by scorpions. Not content with following Blair up George W. Bush’s asshole with a bowl and a spoon to join into the Iraq debacle, the Labourites then allowed American cowboy capitalism to infect their banks and nearly push the Isles into the company of the over-indebted PIIGS (Portugal, Ireland, Italy, Greece, Spain), any one of which may implode at short notice.

Many commentators insist that the Tories would have done the same or been even worse, but they forget that being in opposition for over a decade relieves you of direct blame. Writers in The Guardian, to cite one example, trot out lame excuses for its alleged ‘left-of-center’ party, somehow managing to forget that invading foreign countries on phony pretences pretty much scotches any claim to that label.

By our standards national elections in Britain are an expeditious affair and were expected to be rather dull. Everyone assumed that the Conservatives led by David Cameron would finally crawl back into office; then the polls showed a narrowing gap and suggested that Blair’s long-time enabler and current PM, Gordon Brown, would make it a race, perhaps resulting in what they call a ‘hung parliament’, with no party capturing an absolute majority.

That would have left Clegg’s Liberal Democrat, the country’s third party, in the powerful role of arbiter, negotiating a deal to join the cabinet for the first time as well as permanently holding the fate of the new regime in his hands since the British system permits a government to collapse at any time after a losing parliamentary vote.

But the dramatic debate threw everyone in a tizzy and now opens up the previously unimagined possibility that Clegg’s Liberal Dems might nudge past Labour for second place—or even win. The upheaval is a good indication that New Labour’s project of moving so far to the right that they have become virtually indistinguishable from the Tory fox-hunters has finally disgusted a large swatch of the British electorate, with unpredictable consequences.

Saturday, 17 April 2010

All Hail the SEC!

Without getting our hopes up too, too high, it is certainly good for the soul in these unfair times to see Goldman Sachs get hit with a Securities Exchange Commission indictment and watch its shares drop 10 percent in minutes.

The defenders of these scammer squids were not long in mobilizing to explain why it was perfectly reasonable for GS to engineer a $1 billion transfer of money from European banks to hedgemeister John Paulson’s pocket. But for a short time, we can bask in the probably illusory glow of Lady Justice smacking Obama’s favorite Wall Streeters across the room.

In any other field of endeavor, the case against Goldman Sachs for the Abacus rip-off would be hilariously open-and-shut: you take a big fee for letting a private investor package a lousy bond deal almost sure to tank, sell the bonds to gullible Europeans, then allow the investor to place huge bets against the bonds and cash in a few months later when they collapse.

It’s kind of like letting Tony Soprano secretly pick the players for the Superbowl and then organizing an office pool on it with Paulie and Sil getting half the boxes.

GS and its lawyers have plenty of our money and can probably flip this case like an overpriced Arizona ranch house at the height of the boom. But in the long run the issue of transparency and access to information isn’t likely to go away, not just for Goldman but for the whole financial system. All the free-market-worshiping poo-bahs still beating us over the head with the wonders of laissez-faire capitalism include a tiny caveat in their defense of the system: markets, they say, are efficient when all economic actors have access to the same information.

What the SEC lawsuit places in the crosshairs is the fact that Paulsen’s private deal with GS was hidden from the institutions plunking down their millions to buy the toxic security. The information was highly skewed, and that’s how the conniving partners made a bundle. Paulson the financier-genius who bet against sub-prime mortgage bonds suddenly looks less miraculously clever and more like a vulgar crook trading on insider skinny.

A financial system cannot forever resist body-blows to its credibility, which in the end underpins all investment and trading activity. If huge entities like Goldman cannot be trusted to tell the truth about the products they are selling, sophisticated people who handle other people’s hard-earned money eventually will not buy them. It may not happen tomorrow, but for how long can GS continue to defraud players like ABN-Amro and the European Union and not kill the goose that laid the platinum egg?

Thursday, 15 April 2010

Chilean upheaval

After an earthquake, homeowners have to decide whether the spidery ruptures in the walls are cosmetic or structural. Do they plaster them over, dust them off and get back to life as usual after carting away a few bucketfuls of debris?

Or is the structure irreparably cracked and damaged to the core? Do the nasty fissures mean that the whole thing is ruined and has to be pulled down, like my friend Alberto’s house in Curicó [above]?

The four-party Concertación that had ruled Chile for two decades until losing the March elections is asking itself precisely those questions this week in a hastily-organized conclave. The meeting was announced as an opportunity to exercise ‘self-criticism’ and examine what caused them to get blown off by voters who chose the right-wing opposition instead, led by finance, media and transportation mogul Sebastián Piñera, the richest man in the country.

Oh goody, self-criticism, intoned the nation’s shocked Socialists, Radicals and vaguely generic ‘Democrats’—can’t wait! The Christian Democrats, the fourth Concertación partner, promptly announced that they wouldn’t go to any damn losers’ meeting. This despite their prominent role in causing the debacle by insisting on re-running as their presidential candidate the geriatric war-horse Eduardo Frei Junior, who already had bored the entire country to death for six interminable years back in the 1990s. Not surprisingly, Frei lost.

The Concertación originally emerged from the fight against the Pinochet dictatorship (1973-1990) and took shape as a governing coalition of all democratic forces except the Communist Party, which the army insisted be kept out as a condition of the negotiated transfer of power. The coalition divvied up the patronage and held the fractious civilian forces together as Pinochet (who remained as commander-in-chief) and the armed forces tried to hang on to their privileges and political role.

But now that the democratic rules are largely restored, albeit in a perverted shape, it is not clear what holds the Concertación together today. During my recent visit, I heard endless tales of how it had warped into a system of closed, favor-trading clans, impenetrable to anyone not enrolled in one of the party rosters. The four parties had long since jettisoned the popular movements that ousted Pinochet and had ignored their grassroots. Instead, the only palpable presence in the country’s vast popular sectors today are the marginalized Communists and the unapologetic pinochetista brigades of the Democratic Independent Union (UDI), a highly resilient party of corporatist, ultra-Catholic reactionaries created by the military dictatorship to channel its favors to the poor.

I lived through 14 years of Concertación government, the first few as a journalist, and recall hearing one of its top political operatives describe how useful it was to have Pinochet still around, hovering over the civilian regime like a bad dream. ‘You keep the old guy in a cage like a lion at the circus’, he explained, ‘and every once in a while you take him out and parade him around’.

The idea was that a frightening figure like Pinochet would keep people from demanding too much of the new civilian government. It was a revealing comment on how comfortable the incoming ‘democrats’ were with the thugs and their apologists who had slaughtered thousands of Chileans in cold blood and tortured an estimated 100,000 people in the preceding 15 years. On the other hand, the Concertación’s fear of populist or left-wing challenges to their incipient rule was very real.

This demobilization strategy was quite successful: the Concertación did things its way for two decades, and today millions of voting-age youth refuse to register or go near the polls.

Piñera, who so far has governed more like a moderate Republican in the Eisenhower mold (remember them?) than an admirer of Mussolini, could be envisioning a new political paradigm in the country, which has been neatly divided into three thirds for nearly a century: right, left and center. If he can peel off enough Christian Democrats and other middle-of-the-roaders, he could forge a sizable centrist force that would appeal to the largely depoliticized population.

To do so, he needs to purge his ranks of any remnants of the old repressive structure and govern pragmatically. The Concertación’s greatest fear should be the possibility that Piñera will make prudent decisions, clean up or at least reduce the rampant corruption that plagued his predecessors and improve management of the state apparatus—especially important given the country’s huge post-earthquake reconstruction needs.

If Piñera manages a program of this sort, he could fairly well launder the right-wing parties’ bloody shirt of association with the historic crimes of the dictatorship, which after all enabled them to get obscenely rich. He could pull the younger generations who don’t remember the slaughter of the 1970s and ’80s into a new consensus on laissez-faire capitalism, stripped of any challenge to the country’s grotesquely unfair class divisions.

Meanwhile, the four parties of the Concertación will have to consult their political architects to see whether they can resuscitate a movement that purported to represent the middle and lower classes but in the end saw and treated them as passive observer/recipients of a paternalistic state—much like the Democrats here at home.

Thursday, 8 April 2010

Return of the pinochetistas

Chileans are still trying to absorb what it means to have elected a new government led by the right-wing parties that cheered and profited from the vicious military dictatorship of the 1970s and 1980s led by the notorious Augusto Pinochet. Incoming president Sebastian Pinera is often compared to Italy’s national embarrassment, Silvio Berlusconi, as both are billionaire businessmen and media moguls turned politicians.

I find the comparison too facile at least so far, and the early signs emanating from Pinera’s administration are generally not disturbing or suggestive of a return to the bad old days of secret police impunity. The government is struggling with the effects of the devastating Feb. 27 earthquake, whose impact remains overshadowed by the Haitian experience and secondarily by the outgoing administration’s knee-jerk attempt to downplay the chaos out of a misguided need to look competent, modern and not—perish the thought—“underdeveloped”.

Pinera has even called for a temporary tax increase on businesses to build up funds for national reconstruction—hardly the posture of a typical rightist ideologue—and is taking heat from his own camp over it.

However, a current case is generating painful reminders of past abuses and the decades of collusion in them provided by the parties now in the majority acting as Pinochet’s claques. Pinera named a retired general of the national police, Ivan Andrusco, to head the country’s prison system, and human rights groups raised holy hell over it.

Andrusco was investigated but never charged in one of the country’s most shocking cases, the degollados murders, in which three opposition intellectuals were kidnapped off the streets—in one case at the entrance to a schoolyard where the man was dropping off his daughter—and later found with their throats cut. Andrusco worked for a special unit of the Carabineros, the national police force, that was later discovered to have committed the crime, and several top officials eventually went to prison for life. Andrusco claimed he was only a driver and escaped indictment.

Opposition legislators are indignant that Andrusco could have decision-making powers over the prison conditions of his former colleagues and have demanded that the nomination be withdrawn. Pinera’s ministers have told them to piss off, but the issue shows no signs of going away.

The case is an excellent example of the loss of the moral high ground by the Concertacion, the outgoing four-party coalition that governed Chile for two decades since the end of the dictatorship in 1990. As Pinera’s justice minister delights in pointing out, Andrusco was regularly promoted by the previous government and even participated in an official delegation to report to the Commission on Human Rights in Geneva in 2004.

The Concertacion was so eager to “look to the future, not the past”, as Barack Obama might put it, that it regularly turned a blind eye to the dubious records of many intermediate functionaries in the military and police services. Now these pragmatists or opportunists (choose one) find themselves denouncing the new government for boosting the careers of pinochetista collaborators whom they refused to marginalize when they had a chance. The howls of outrage are ringing rather hollow.

Tuesday, 6 April 2010

(SANTIAGO, Chile) -- Signs of my adopted country’s insouciant delight in itself did not take long to appear when I touched down a few days ago. Despite the serious earthquake damage at the airport, the lines for immigration and customs moved quickly. My permanent resident’s visa had been renewed three times outside the country, and my Chilean identity card was expired, so I anticipated at least a minor mess in trying to convince the passport stamper not to charge me the $140 reciprocity fee that U.S. citizens have to pay to enter the country (equivalent to what Chileans pay for a visa to the U.S.) But I was surprised to be waved through without comment.

The first announcement on view in the tunnel-like approach to the exits was a gigantic billboard that read, “In Chile the people is very buena onda!” Someone paid a lot to create this paean to the locals’ capacity to welcome tourists—too bad no one thought to proofread the English.

In the waiting area I sat with my bags for a while fending off the hordes of taxi drivers who cluster around anyone looking like a potential fare. My friends were nowhere in sight, which was odd given the delays. It took a good 15 minutes for a passer-by to inform me that due to the structural damage, no one was permitted to enter the building and that all the people waiting for their relatives were huddled in a large tent in the parking lot. No signs, no announcements, no airport employees in uniforms directing you to the exits—just the “very typical” Chilean way of assuming that since they all know how the system works, you will too.

The February 27 quake hasn’t appeared on our TV screens as the major disaster that it clearly was, in part because Santiago, the capital of over 5 million inhabitants, was largely spared. All over the city residents have produced neat piles of rubble (also “very typical”) from cleaning up the collapsed walls and fallen roofs that the quake caused. But for most santiaguinos, the damages were relatively minor even if costly in many cases.

The reports from further south, however, are quite grim. Smaller cities like Curico, Talca and Santa Cruz, and the dozens of towns and villages in the area like Nancagua, Licanten, Peralillo, Curepto and other crossroads hardly found on the map are said to look like war zones, with hardly a building left standing. Signs for help are still up on the main roads saying things like “S.O.S. NO WATER”—this fully five weeks after the event itself. While officialdom projects an image of competence and modernity for the outside world, those affected are quickly losing patience with facile promises. A demonstration occurred yesterday in the beach town of Dichato nearly washed away in the tsunami where residents have yet to see the arrival of a single emergency mediagua, the slapped-together wooden lean-tos used by the poorest that all too often become permanent domiciles.

Autumn has arrived in the southern hemisphere, and the temperatures are just beginning to drop. When the rains begin in a few weeks, people will need to be settled for the crude Chilean winter, their kids back to school, and their minimum day-to-day survival needs resolved. Spartan but manageable conditions will probably be accepted grudgingly as long as there is clear hope for gradual improvements. Empty promises, however, are not going to satisfy much longer.