Two signs of shifting winds

Obama made a populist-sounding speech this week in Kansas, just down the way from the John Brown memorial. If Americans still studied history, this would not be the first figure one would expect a politician to be associating with, given that if the man were alive today, he’d be sitting in a 4 x 4 cell in Guantánamo.

But I digress. Obama had a lot to say about the unfairness of our current tax and income structure and even summoned the ghost of Teddy Roosevelt (not the conqueror, the trust-buster). He praised the ‘largest middle class’ the world had ever known, foreshadowing his prompt acknowledgment that the ‘basic bargain’ generated by the Depression and the war to create said middle class has ‘eroded’. So far, no earth-shaking novelties. His critique is red meat for the Democratic base: the benefits of growth have flowed to the top while ‘everybody else’ is struggling. OMG, the man is about to ‘mic check’ and carry his sleeping bag down to Zucotti Park.

It gets better: ‘breathtaking greed’, ‘hard work stopped paying off’, ‘those at the very top grow wealthier than ever before’. Obama’s rhetoric is back to 2008—would he perhaps be running for office?

The creepy part of Obama’s speech, however, is how mismatched his lofty words are from his own actions. This is the guy who held perhaps the most powerful cards since the 1930s to break the power of the financier class that he now criticizes when the banksters crawled to Washington pleading for a lifeline to save their institutions. Instead of extracting real concessions and curbing their power, what did he do? He permitted Geithner and Bernancke to pour cash into the largest banks virtually in secret (the details are coming out only now with Bernancke feverishly resisting); perpetrators like Goldman Sachs suffered no haircuts on AIG exposures; banker bonuses a year after the crisis were as obscenely huge as ever; no investigation has been conducted into the sneaky mortgage practices that Obama now dares to criticize, and the few serious attempts to do so (Schneiderman in new York, Coakley in Massachusetts, Masto in Nevada) face concerted Administration attempts to undermine them; no Justice Department prosecutions have been brought against any major players; Elizabeth Warren, the consumers’ advocate, was boxed into a corner and marginalized; mortgage relief for homeowners has been a fraud via easily-gamed programs like HAMP; and on and on.

Obama talks a good game, especially when he wants votes. Maybe he even believes that stuff, which some people will care about. (I don’t.) But in wielding vast executive powers at a time when the entire country would have supported actions to alleviate the gross unfairness embedded in our system, Obama buckled. He folded while holding a straight flush and now wants us to take his rhetorical flights at face value.

Meanwhile, here in New York State our governor has just shifted gears as well. After weeks of insisting that tax breaks for the state’s millionaires’ were sacrosanct, Andrew Cuomo announced yesterday that Albany’s huge budget deficit requires that the super-rich pay some, too. It’s not a great deal, but Cuomo saw the need to use the word ‘fair’ or ‘fairness’ three times in his 60-second sound bite.

This shows the impact of the Occupy movement and the growing consensus that the system is stacked against the 99%. But it’s far too early to crow victory. This is a tactical retreat by the Democratic accomplices of big money, not a change of heart. There is no rediscovery of the core value of a progressive tax system that provides social services, and public transport, education, environmental protection and infrastructure will continue to absorb the costs of the financial crisis and the radically resliced pie that is now becoming a permanent feature of our class society.

Meanwhile, the GOP circus makes it pathetically easy for ambitious Dems to don the heroic robes of people’s champion while doing very little. With a cariacature like Newt Gradgrind—er, I mean Gingrich leading the opposition and calling for the return of child labor, it’s pretty simple to look humane by contrast. But no one should expect praise for endorsing the Emancipation Proclamation or the abolition of foot-binding.

President of Ubeki-beki-beki-stan-stan mourns departure of Herman Cain from presidential race

My fellow Ubeki-beki-beki-stan-stanians:

It is with deep sadness and disappointment that I must announce to you that our much ignored and almost unperceived country has lost its greatest champion in its history: Herman Cain’s candidacy is no more. [gasps, weeping, lamentations, boos, cries of ‘No!’]

I know all of you thrilled with anticipation at the prospect of our tiny, forgotten, indeed pre-forgotten, entity being at long last recognized as a respected partner in the community of nations, despite our barely perceptible national territory on the sides of the world’s steepest mountains. While this accident of topography makes us invulnerable to attack, as almost-president Cain has astutely noted, it also makes it extremely hard to find us without a map. Even with a map. In fact, Ubeki-beki-beki-stan-stanians are notoriously hard to pin down about anything, including our own geography. This could have changed, but alas, our defender has bowed to the ruthless pressures of great power politics, and we have been shoved aside once again by other claimants on the world’s attentions, such as Sikkim, Nairu and the Solomon Islands [female ululations, chants of “9-9-9”]. Thank you, I completely understand your feelings.

While it is a bitter burden that we must bear, having come so close to our long-sought yearning to appear in Webster’s Gazeteer of the World, this meteoric but dazzling moment in the eyes—or at least the imaginations—of the entire world must inspire us to greater efforts in the pursuit of recognition. Or even perception. We must never waver in our determination, nor abandon our dream. Our dream of existing and being recognized as such, by trudging ever forward on the trail that Cain, our champion, has blazed. May the flag of Ubeki-beki-beki-stan-stan, once we invent it, flutter proudly over these virtually horizontal toeholds that we call home and may our descendents take up the challenge advanced so courageously by Herman Cain, to make our reality at long last, real.

Liberal new York, ah yes

We sail upon a sea of blue here in the Empire State, but underneath that satisfied self-image of diversity, tolerance and sophistication is a rather brutal class society and often a painfully corrupt one. Our new governor, Andrew Cuomo, reflects this paradox neatly in his highly ambitious person (2016 is only four years away, wink wink).

Cuomo pulled together diverse forces on the same-sex marriage fight and helped persuade some Republican state senators to break ranks and support it, a remarkable feat and a highly lucrative one as his campaign war-chest balloons with all that grateful gay cash. He was rightly lionized at the PRIDE events in June, but his achievement only demonstrates that rich people can be both open-minded and stingy.

The recession has clobbered the state’s accounts, and while Cuomo slashes spending on all fronts, he has refused so far to even contemplate extending the so-called ‘millionaires tax’ that would provide the state a sorely needed additional $5 billion, or just about enough to cover two years’ deficits. Cuomo trots out the lame excuse that higher taxes will cause the comfy to flee to neighboring Connecticut and New Jersey, which is just silly.

One area that is getting slammed, as usual, is public transport. The city’s subway system receives about half of its operating and capital budget from Albany, without which a ticket would be $5 instead of the current $2.50. After the collapse of the system during the bankruptcy of the 1970s, New York bounced back and made the trains safe and pleasant to ride again. It was a key element in the city’s renaissance, so often attributed solely to the get-tough policing associated with Giuliani.

My very hip bicycling/urban policy group, Transportation Alternatives, reports in this month’s magazine that Cuomo has barely spoken to transit authorities and seems wedded to the Clintonian-centrist idea that viable Democratic candidates for national office have to act like Republicans. That means refuse to tax rich people and to starve public services. This approach has made Obama so popular among his natural base that a worldwide Occupy movement sprang up comprised of indignant youth. But the blind faith in this failed strategy persists.

Across the Hudson, Governor Christie (the fat one) stirred up major poo by canceling the planned tunnel under the river that would have alleviated commuting for his residents. Some people hated it, some people loved it; but at least New Jersey residents now have a clear choice.

We should be so lucky. Now we have a cost-cutting, millionaire-coddling ‘liberal’ governor who will be opposed by cost-cutting, billionaire-coddling ‘conservatives’. The subway system and in the long run the city itself will suffer, but don’t expect these short-sighted pols to offer us a real alternative. Austerity is the new religion, and all must bow down before its mighty banker-popes.

Banks safe, millions to die

Economists and sometimes foreign policy wonks talk about ‘opportunity costs’, meaning the things one can’t do because of the decision to do something else. Crudely speaking, it refers to the fact that one can’t buy a product with cash already spent on other things. Nor can a state send its national guardsmen to put out a forest fire if they’re fighting a war halfway around the world. One can only buy a pencil or a gumdrop with the same nickel.

As World AIDS Day approaches (Dec. 1), the stark opportunity costs of a decade of war and the prioritization of banker profits can be observed with depressing clarity as the highly successful effort to slow down the epidemic is being systematically drained of support. The Global Fund to Combat AIDS, Malaria and Tuberculosis just announced that its Round 11 of grant funding to the hardest-hit countries must be canceled as donor governments fail to honor their replenishment pledges. The big European development agencies, funded largely by their respective states, cannot commit the promised money as everyone is scrambling to backstop the shaky euro.

As Fund official Stephen Lewis remarked in a ringing denunciation of the donor governments’ collective failure, political leaders have made sure that Wells Fargo could make $4.1 billion this quarter, Bank of America $6.2 billion and JPMorganChase $4.6 billion despite having blown up the world economy. And why stop at banks? Oil companies like BP, Exxon and Shell, hustling us to doom with fossil fuels made $5.1 billion, $10.3 billion and $7 billion respectively. But the measly $1.2 billion needed by the Global Fund cannot be found anywhere, and these same corporate behemoths haven’t contributed a penny either while simultaneously joining the political assault on all governments so as to starve them of cash.

Among those governments reneging on their pledges of support to the Global Fund is good old Obama’s, which can find $1.9 billion per day to fund military activities, but not the promised $1.33 billion per year he promised to fight the three scourge diseases. It’s a rather excellent summary of how the economic system has become our master, indifferent to the fates of peoples, replacing the savage pharaohs and insular monarchies of prior eras.

Lewis acidly quotes all the pious phrases mouthed by Blair, Obama, Bush and many others when making these fine promises to much praise and fanfare (and headlines). But when it comes time to pony up, they’re nowhere to be seen. Keep that in mind when the flood of cynical b.s. comes raining down from on high tomorrow.

Has Obama's next war already begun?

The story around the ‘accidental’ attack on a Pakistani border post emits a foul smell not just because two dozen theoretically allied troops were killed, possibly in their sleep but because it has the markings of a deliberate massacre.

The NATO command’s quick promise to launch a ‘thorough investigation’ is reminiscent of Kissinger’s similar vow once he ‘learned’ of the secret and illegal bombing of Cambodia, which in fact he and Nixon had ordered. While mistakes certainly can and do happen in war, the timing of this one immediately prompts a question, Is the U.S. at war in Pakistan or at war with Pakistan? Is all the breathless wanking about Iran just saber-rattling while the next front has already been opened?

The tone of comments from Washington about the state of affairs in that country has been increasingly belligerent. In September a top U.S. general said the so-called Haqqani network, responsible for many deadly attacks in Afghanistan, ‘acts as a veritable arm’ of the Pakistani intelligence service, and Obama’s spokesman didn’t contradict him. Hillary Clinton said during her October visit to Pakistan that the country had to shut down the ‘safe havens’ being used by this group in the border region, using language described as ‘unusually harsh’.

The usual anonymous State Department sources added that Clinton also had threatened that the U.S. would ‘act unilaterally’ against elements like the Haqqani network on the Afghan-Pakistan border. Did anyone assume such unilateral action included firing on the supposed allies’ own soldiers?

Clinton’s ringing statement of principles should win a prize for modernist irony with phrases like, ‘No one who targets innocent civilians of any nationality should be tolerated or protected’. The dozens of Afghan children wiped out in drone attacks should be grateful that they were not officially ‘targeted’ by the videogame drone runners at CIA headquarters. But lookout kids, Hillary’s patience has worn thin, said the commentariat, no doubt after the U.S. Embassy was besieged by the Taliban forces in downtown Kabul for nearly 24 hours. That would be annoying if you’d spent ten years and a trillion or so dollars ‘pacifying’ the place. But ignominious failure has not generated any enthusiasm for a wind-down of this endless and, with bin Laden dead, pointless war.

All these martial phrases recall the notorious threat reportedly issued by Bush-era official Richard Armitage just after 9/11, that the U.S. would gladly ‘bomb [Pakistan] back to the Stone Age’ if cooperation in the hunt for bin Laden were not immediately forthcoming. He denies it, but that’s less important than the constant citing of the apocryphal quote, which has the same intimidating effect. In any case, the message was pretty clear: do our bidding vis-à-vis Haqqani or else. Was two dozen soldiers bombed in their barracks the ‘or else’ part?

All this is nothing new. Obama distinguished himself during the 2008 campaign by taking a more warlike stance toward Pakistan even than hawkish Hillary, and his administration was barely a week in office when the drone attacks started up on Pakistani territory, an early sign of the Bush-Obama continuity on war.

Obama’s people always say that the Pakistani objections to the drone attacks are pro forma and understood by both sides as not to be taken seriously. That’s a convenient explanation. Another one is that Pakistan is too weak to do anything about it. India is more and more the U.S. favorite in the region—Obama visited Delhi in 2010 and snubbed Islamabad by not stopping by for tea—and the Chinese, Pakistan’s historical ally, don’t want trouble. Pakistan gets a billion and half dollars of aid annually from the U.S. and nowhere else to go for it.

Jeremy Scahill, who writes on military issues, says this about how Obama is ‘radically expanding’ the U.S. war in Afghanistan deeply into Pakistan’.

‘Whether it is through US military trainers (that’s what they were called in Vietnam too), drone attacks or commando raids inside the country, the U.S. is militarily entrenched in Pakistan. It makes Obama’s comment that “[W]e have no intention of sending U.S. troops into Pakistan” simply unbelievable’.

‘For a sense of how significant U.S. operations are and will continue to be for years and years to come, just look at the U.S. plan to build an almost $1 billion massive U.S. “embassy” in Islamabad, which is reportedly modeled after the imperial city they call a U.S. embassy in Baghdad. As we know very clearly from Iraq, such a complex will result in an immediate surge in the deployment of U.S. soldiers, mercenaries and other contractors’.

But there’s a big problem with this relentless expansion of the Afghan war into a country of 175 million increasingly hostile people. Although the U.S. can inflict a lot of pain, the long-term goals enunciated by Obama and Clinton may be impossible although we shouldn’t count on their uniformed advisors ever to admit it. In an era of non-stop budget slashing, we’ve already spent the farm on pacifying Afghanistan and succeeded in antagonizing 20 million people while propping up a corrupt nutcase president and his heroin-trafficking brother. Al-Qaeda and other like entities can be crushed, but new ones can also emerge. Does Obama plan for an even larger—and vastly more expensive—permanent occupation of Pakistan? Is that why our Social Security checks have to be slashed?

The limits of shamelessness

I saw Yves Smith of Naked Capitalism on the PBS News Hour Thursday, an unusual showcase for someone so defiantly critical of both Democratic and Republican postures on economic topics. (Outfits like PBS usually permit ‘debate’ only when strictly bounded by the two major parties such that their differences, while often real, just as often mask deeper agreement on core issues. It is probably not an accident that Smith was invited onto a show sponsored by Bank of America on perhaps the least-viewed day of the year. But I digress.)

The subject was the lack of criminal prosecutions for fraud emerging from the financial crisis of 2008, whose aftereffects remain with us. Four experts were invited to comment, limiting them to two substantial comments each in the ten-minute segment. Three of the four trotted out lame excuses: the cases are SO complicated; the regulatory agencies have SO few staff; the requirement to prove intent is SO high a bar. Smith demolished those arguments to the extent possible in three minutes (the evidence of fraud is massive, the Nevada attorney general is prosecuting with a tiny operation, the Sarbanes-Oxley Act requires CEOs to sign off on the company’s books and attest to their accuracy).

But more significant, to my mind, was what was left unsaid. No one argued that the accusations of fraud are false, that the bank execs should be left alone, that they’re ‘doing God’s work’, as the inimitable Blankfein said, that the prosecutions are a partisan Democratic attack, that free markets should be left alone to function according to their inherent perfection, that attacking banks is an expression of foolish, Luddite anarchy. One of the four was a former Republican congressional aide and certainly would have gladly poured on those arguments had he dared. But he didn’t.

Contrast that silence with the active defense of torture, indefinite detention, military tribunals, and the wholesale stripping of our Fourth, Fifth, Sixth, Seventh and Eighth Amendments. While many objections to these abuses continued to be voiced, whole presidential campaigns are being mounted to actively defend such worthy acts as waterboarding and all the rest of it. My conclusion is that the banker class is extremely isolated, and this should have interesting consequences if another financial panic ensues, as appears more than likely given the ill winds blowing in from Europe.

P.S. One comment on Yves’ blog referred to the ‘Petroleum Broadcasting Network’, which given the steady stream of insufferable bullshit from Chevron featured there, strikes me as very fair.

The MFs at MF Global

MF Global Investments is the name of a rather fly-by-night hedge fund operation established on Wall Street fairly recently. It collapsed a few days ago and has been tentatively found to have lost between $600 million and $1.2 billion of its clients’ money in the course of throwing good money after bad. It did so, the investigators now swarming around its chaotic bookkeeping now believe, by illegally shifting the cash from client accounts into its casino trading operation. In short, it is alleged to have committed the same kind of crimes as the so-called ‘rogue traders’ that cost Barings, UBS and SocGen vast sums.

One notable difference is that the guy in charge of this no-longer-shocking rip-off was until recently the Democratic governor of New Jersey, Jon Corzine [above]. Will he do time? After all, a billion bucks is rather more serious, you would think, than the three-dollar bottle of water looted by a guy in Britain during their recent riots—for which said thief received a six-month prison term. We need to resuscitate Victor Hugo and have him rework Les Misérables.

MF Global is another chapter in the ongoing destruction of the rule of law, but the bright side on this occasion is that certain powerful constituencies were ripped off. You know something is up when a leathery old dinosaur like Chuck Grassley is stirring his horny tail shingles over the latest debacle.

The Commodity Futures Trading Commission should ‘do everything possible’ to get to the bottom of this, said Grassley, a Republican senator from Iowa. Oh, you mean the Commission that you and your GOP buddies have done everything in your considerable power to intimidate, dismantle, starve, browbeat and harass into irrelevance since government cannot solve any problems, but rather is the problem? Good luck getting that entity moving on restoring the cash to your Iowa farmers who used MF Global to hedge future crop and livestock prices.

‘Unlike the big banks, the average farmer who lost money in this fiasco can’t afford to hire an attorney and attend proceedings in a Manhattan courtroom’, said Grassley in an insouciant display of cynicism.

Grassley’s Iowa is where a group of sell-out state attorneys-general periodically gather to find a way to give the TBTF banks a free pass over their looting and wrecking of the economy through mortgage chicanery. His state’s AG, Tom Miller, is at the heart of this scheme whereby the banks would pay a paltry fine in exchange for immunity from things like the robo-signing scandal, fraudulent foreclosures, document counterfeiting, and the mass crushing of homeowners now slipping into poverty. Obama and team are fully behind this plan to further entrench the 1% and reward criminality—the current White House version of ‘bipartisanship’.

Luckily, a few AGs are resisting, like our own Eric Schneiderman, whose election I am happy to have supported monetarily. Schneiderman and prosecutors from Delaware and Nevada are investigating and should be presenting some interesting civil and perhaps criminal cases in coming months. (Hilariously, Miller kicked Schneiderman off the negotiating team for objecting to the sell-out.)

Obama wants to bury all this fraud and ‘turn the page’ as he did with the torture scandal of the Bush era. Republicans are naturally silent because they’re fully complicit. But loyal capitalists, wherever they may be hiding, ought to be demanding a real clean-up with real consequences because, as the MF Global fiasco illustrates, the entire financial edifice requires trust. When clients cannot even be certain their cash deposits are protected from the Wall Streets gamblers, then the game is very close to up. I am already reading advice in the financial blogs that people should hoover up any assets they have and put them promptly into explicitly government-backed and -guaranteed securities because nothing is sacred, and nothing is safe.