Quotations on January 5, 2010
To Accompany the December 23, 2009 edition of Tidbits
http://www.trinity.edu/rjensen/tidbits/2010/tidbits100105.htm         
Bob Jensen at Trinity University

U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Video:  President Obama lectures China on its shortcomings
The Best One Yet from Saturday Night Live --- http://www.youtube.com/watch?v=yZorJZ5ixOo

Helping Each Other in Times of Need: Financial Help as a Means of Coping with the Economic Crisis ---  http://www.rand.org/pubs/occasional_papers/2009/RAND_OP269.pdf  

Climategate on Finnish TV --- http://climateaudit.org/2009/12/29/climategate-on-finnish-tv/

"Underreported Stories of 2009," by Michelle Malkin, Townhall, January 1, 2010 ---
http://townhall.com/columnists/MichelleMalkin/2010/01/01/underreported_stories_of_2009

Video:  Canadian Banks are Insolvent and Broke --- http://www.youtube.com/watch?v=U8woOuDjqas&feature=player_embedded

Brain Dead Conservatives --- http://www.cato.org/pub_display.php?pub_id=10603

The Top 10 Conservative Movies of the Last Decade ---
http://blogs.telegraph.co.uk/news/nilegardiner/100020772/the-top-10-conservative-movies-of-the-last-decade//

Just think how stupid the average person is, and then realize that half of them are even stupider!
George Carlin

U.S. loan relief program may have made things worse
The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good. Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.
Peter S. Goodman, "U.S. loan program may have made things worse," MSNBC, January 1, 2010 ---
http://www.msnbc.msn.com/id/34663078/ns/business-the_new_york_times/

I Just Can't Wait to Go Home and Hear My Constituents Tell Me How Awesome My Health Care Fiasco Is
Senate Majority Leader Harry Reid, December 24, 2009 --- http://ace.mu.nu/archives/296234.php

Why is this "dysfunctional"? I assume Krugman would praise the filibuster if a President Palin and Republican Congress were ramming bills through. Regardless of what senators in the 19th century had in mind, the filibuster is a wonderful antidote to the tyranny of the majority. It's no argument against it to say that the statists' favorite piece of legislation didn't fly through smoothly enough. They'll have to come up with a better case than that.
John Stossel, "Memo to the House: Adopt the Filibuster," Townhall, December 30, 2009 ---
http://townhall.com/columnists/JohnStossel/2009/12/30/memo_to_the_house_adopt_the_filibuster

Where We Are, Where We're Heading (2010) --- http://market-ticker.denninger.net/

"A Low, Dishonest Decade: The press and politicians were asleep at the switch.," The Wall Street Journal, December 22, 2009 ---
http://online.wsj.com/article/SB10001424052748703478704574612013922050326.html?mod=djemEditorialPage

Stock-market indices are not much good as yardsticks of social progress, but as another low, dishonest decade expires let us note that, on 2000s first day of trading, the Dow Jones Industrial Average closed at 11357 while the Nasdaq Composite Index stood at 4131, both substantially higher than where they are today. The Nasdaq went on to hit 5000 before collapsing with the dot-com bubble, the first great Wall Street disaster of this unhappy decade. The Dow got north of 14000 before the real-estate bubble imploded.

And it was supposed to have been such an awesome time, too! Back in the late '90s, in the crescendo of the Internet boom, pundit and publicist alike assured us that the future was to be a democratized, prosperous place. Hierarchies would collapse, they told us; the individual was to be empowered; freed-up markets were to be the common man's best buddy.

Such clever hopes they were. As a reasonable anticipation of what was to come they meant nothing. But they served to unify the decade's disasters, many of which came to us festooned with the flags of this bogus idealism.

Before "Enron" became synonymous with shattered 401(k)s and man-made electrical shortages, the public knew it as a champion of electricity deregulation—a freedom fighter! It was supposed to be that most exalted of corporate creatures, a "market maker"; its "capacity for revolution" was hymned by management theorists; and its TV commercials depicted its operations as an extension of humanity's quest for emancipation.

Similarly, both Bank of America and Citibank, before being recognized as "too big to fail," had populist histories of which their admirers made much. Citibank's long struggle against the Glass-Steagall Act was even supposed to be evidence of its hostility to banking's aristocratic culture, an amusing image to recollect when reading about the $100 million pay reportedly pocketed by one Citi trader in 2008.

The Jack Abramoff lobbying scandal showed us the same dynamics at work in Washington. Here was an apparent believer in markets, working to keep garment factories in Saipan humming without federal interference and saluted for it in an op-ed in the Saipan Tribune as "Our freedom fighter in D.C."

But the preposterous populism is only one part of the equation; just as important was our failure to see through the ruse, to understand how our country was being disfigured.

Ensuring that the public failed to get it was the common theme of at least three of the decade's signature foul-ups: the hyping of various Internet stock issues by Wall Street analysts, the accounting scandals of 2002, and the triple-A ratings given to mortgage-backed securities.

The grand, overarching theme of the Bush administration—the big idea that informed so many of its sordid episodes—was the same anti-supervisory impulse applied to the public sector: regulators sabotaged and their agencies turned over to the regulated.

The public was left to read the headlines and ponder the unthinkable: Could our leaders really have pushed us into an unnecessary war? Is the republic really dividing itself into an immensely wealthy class of Wall Street bonus-winners and everybody else? And surely nobody outside of the movies really has the political clout to write themselves a $700 billion bailout.

What made the oughts so awful, above all, was the failure of our critical faculties. The problem was not so much that newspapers were dying, to mention one of the lesser catastrophes of these awful times, but that newspapers failed to do their job in the first place, to scrutinize the myths of the day in a way that might have prevented catastrophes like the financial crisis or the Iraq war.

The folly went beyond the media, though. Recently I came across a 2005 pamphlet written by historian Rick Perlstein berating the big thinkers of the Democratic Party for their poll-driven failure to stick to their party's historic theme of economic populism. I was struck by the evidence Mr. Perlstein adduced in the course of his argument. As he tells the story, leading Democratic pollsters found plenty of evidence that the American public distrusts corporate power; and yet they regularly advised Democrats to steer in the opposite direction, to distance themselves from what one pollster called "outdated appeals to class grievances and attacks upon corporate perfidy."

This was not a party that was well-prepared for the job of iconoclasm that has befallen it. And as the new bunch muddle onward—bailing out the large banks but (still) not subjecting them to new regulatory oversight, passing a health-care reform that seems (among other, better things) to guarantee private insurers eternal profits—one fears they are merely presenting their own ample backsides to an embittered electorate for kicking.

Bob Jensen's Rotten to the Core of Government threads ---
http://www.trinity.edu/rjensen/FraudRotten.htm#Lawmakers

Adjustable Rate Mortgage --- http://en.wikipedia.org/wiki/Adjustable_Rate_Mortgage

Video:  Strong ARM of Mortgage Bubble is Building to Burst: 
"Second Financial Economic Crash Coming - Huge & Soon," CBS Sixty Minutes --- http://www.youtube.com/watch?v=JKlBJavw_X4

"Dear Bank of America, I'd Like to Schedule a Default," by Austin Hill, Townhall, January 3, 2009 ---
http://townhall.com/columnists/AustinHill/2010/01/03/dear_bank_of_america,_id_like_to_schedule_a_default

Dear Bank of America;

Hi, it’s me, your customer Austin. I’m writing to schedule my mortgage default.

That’s right, I’m ready to schedule my mortgage default. Does that sound strange?

Well, believe me, Bank of America, I had hoped that our relationship wouldn’t come to this. But after months of trying to do business with you, I’ve decided that it’s probably in my best interest to just, you know - “walk away” from my mortgage.

How could it ever be in anyone’s best interest to default on a mortgage? And why would anyone ever want to default on a mortgage?

Well, here’s the deal: I have one of those now-famous “Option ARM” loans on my residence – the interest rate is adjustable, and the loan provides optional payment plans. And yes, Bank of America, you inherited my loan when Countrywide Lending went down the tubes in 2008, and you merged your company with theirs.

And here are some other details about me, Bank of America: I am fortunate to have a great job with a solid income, and I work under a long term employment contract. While my full time occupation is being a daily talk show host, I am also a writer and a public speaker, so I have multiple streams of income. I own real estate in multiple regions of the U.S., and I’m a big believer in real estate as a long term investment. And perhaps most interesting for you, Bank of America, I have a great credit score, and I’m current on all my debt payments.

During the recent real estate “boom,” I took some equity out of my home. Now, in the aftermath of the real estate “bust,” my house is slightly “under water” – not by much, but a little. And the interest rate on my loan won’t begin to move upward for another two years, so I’m not in any crisis right now.

The value of my property has actually begun to move upward a bit in the past few months, but it’s going to be a few years before the value reaches parity with my debt. And that’s why I was thrilled to get that little note you sent me in the mail last summer, Bank of America. Remember? You sent me that nice letter asking if I’d like to have my loan modified to a 30 year, fixed rate mortgage.

I responded quickly to that letter, Bank of America. And I’ve called repeatedly for over half a year. But here’s the sad truth that I’ve discovered about you: you’re not really interested in working with me, because I’m not behind on my payments

With each and every call, Bank of America, I get the same treatment. Once your customer service representative checks the data base and realizes that I’m current on my payments, they “transfer my call” to “another department” – and from there, I’m left on hold. If another representative picks up, they want to transfer me again. And if I actually have a conversation with anybody, I’m treated to a person reading through a litany of “assessment questions” and surveys and evaluations. And then I’m transferred again.

After repeatedly being told that there is immediate help available to Bank of America customers who are delinquent, I finally started asking, “so will you talk to me about a loan modification if I stop making payments?” And to that question, I’ve repeatedly heard the same answer: “I could never advise you to not make your payments Mr. Hill” the representative will say, “I’m just telling you that if you become delinquent we have help available…”

I’m not the only person who has this disturbing kind of relationship with you, Bank of America. I discussed this on my talk show in Boise, Idaho, and was inundated with calls and email detailing the same sad story. I even addressed this over the holidays on a radio talk show where I was guest hosting in Phoenix, Arizona – one of the most tumultuous real estate markets in the country – and got the same response.

I’ve also talked with lots of personal friends about this, Bank of America. People from Los Angeles to Chicago to Washington, D.C., and from all walks of life. People with high school diplomas and M.D.’s and MBA’s and Ph.D’s and J.D.’s. We’re current on our payments, have great credit, and want to continue our relationships with you. But you’re not taking our calls.

It’s sad to realize that as you focus on your “troubled assets,” and ignore those of us with good credit, you’re likely creating more troubled assets in the process. But that’s the system you’ve put in place, Bank of America. It’s a system that rewards people’s bad behavior, while punishing other people’s good behavior.

So after spending half a year trying to take advantage of the offer you extended to me in the mail, I now understand what your actual system entails. And I’ve calculated the risks of working within the system you’ve put in place.

I’m ready to schedule my default. What would you like to do next?

Bob Jensen's threads on sleaze in granting mortgages ---
http://www.trinity.edu/rjensen/2008Bailout.htm#Sleaze

William D. Eggers is the Global Director of Deloitte's Public Sector research program. John O'Leary is a Research Fellow at the Ash Institute of the Harvard Kennedy School. Their new book is If We Can Put a Man on the Moon: Getting Big Things Done in Government (Harvard Business Press, 2009).

"Why the Success of "Obama Care" Could Be Riskier Than Failure," by William D. Eggers and John O'Leary, Harvard Business School Blog, December 23, 2009 --- http://blogs.hbr.org/cs/2009/12/why_the_success_of_obama_care.html?cm_mmc=npv-_-DAILY_ALERT-_-AWEBER-_-DATE

When President Obama launched his health reform effort, more than anything he wanted to avoid the mistakes of the 1993-1994 attempt at health care reform. His advisors have said repeatedly over these past months that they want something passed.

Now it appears they will get their wish. It's certainly true that one way "Obama Care" could fail — the one everybody has been worrying about — is by never being passed into law. Another way it can fail, however, is if a poorly designed bill passes and then wreaks havoc during implementation. Indeed, this sort of design and execution failure could do greater lasting damage to the goals of health care reform than mere failure to pass a bill.

The Obama administration, and all reform-minded public agencies and organizations, would do well to avoid some of the mistakes of 2004, when an all-Republican Congress and White House rammed through a Medicare prescription drug benefit. The messy, ill-considered implementation of what in essence was a massive giveaway program generated huge initial ill-will among seniors, the very group the benefit was designed to serve.

Ultimately, the GOP's Medicare prescription drug reform stands as a model for achieving short-term legislative success that creates an implementation nightmare. In more general terms, those pushing for change saw official approval as the finish line rather than, more accurately, as the starting line.

Here are some of the key risks that the 2004 Congress should have had in mind in their push to get Medicare reform done — and which should be front-of-mind for change-leaders now:

The risk of ramming it through. The process by which Medicare Part D became legislative reality wasn't pretty. It involved low-balled cost estimates, an unprecedented all-night vote, and high-pressure tactics from Republicans to sway votes that cost Tom DeLay an ethics rebuke. With all the high-stakes political gamesmanship, any actual review of the proposed policy for "implementability" was minimal to non-existent. A related lesson as the Democrats now drive health care and other reforms through Congress: political memory rarely fades. Cut-throat tactics lead inexorably to future in-kind retribution. Public leaders must stop the vicious cycle in which avenging political battle scars trumps practical lessons learned from prior missteps of execution.

Forgetting who you're designing the reform for. Seniors were totally confused by their new "benefit." "This whole program is so complicated that I've stayed awake thinking, 'How can a brain come up with anything like this?'" lamented a seventy-nine-year old, retired business manager. Americans do not normally lie awake pondering the design of a federal program. But the Medicare prescription drug program was something special. "I have a PhD, and it's too complicated to suit me," said a seventy-three-year old retired, chemist.

Giving the nation's elderly voters apoplexy was not what Republicans had intended. But lawmakers had designed the legislation primarily to curry favor with other "stakeholders" — big pharmaceutical firms, health plans, employers, rural hospitals, and senior advocates such as the AARP — instead of designing it to work in the real world for the "end consumer" of the reform, i.e. everyday senior citizens.

The number of plans the typical senior had to sort through depended on where he or she lived. In Colorado, retirees faced a choice of 55 plans from 24 companies. Residents of Pennsylvania selected from 66 plans.

"The program is so poorly designed and is creating so much confusion that it's having a negative effect on most beneficiaries," said one pharmacist. "It's making people cynical about the whole process — the new program, the government's help."

Unrealistic timeline and scale. "No company would ever launch countrywide a new product to 40 million people all at once," explained Kathleen Harrington, the Bush political appointee at the Centers for Medicare and Medicaid Services who led the launch of Medicare Part D. "No one would ever say that you have to get all of the platforms, all of the systems developed for this and working within six months." Nobody except Congress, who in fact tried to do this, giving scant consideration to implementation challenges and the inherent difficulty in changing a well-established system.

The launch from hell. The computer system cobbled together to support the new benefit crashed the very first day coverage took effect. System errors slapped seniors with excessive charges or denied them their drugs altogether. Computer glitches generated calls to the telephone hotlines, which quickly became overloaded.

While eventually the program was turned around thanks to some heroic efforts by senior federal executives, the days and weeks following the January 2006 opening of benefit enrollment were a disaster — caused primarily by a dysfunctional design process and lack of an implementation mindset.

Lessons learned. Both Medicare Part D, as well as what we have seen of the current, huge effort toward health care reform, highlight why government has such a hard time dealing with complex problems. But the basic truth is simple: ultimately, to be successful, a health reform bill has to do two things — it has to pass through Congress, and it has to actually work in the real world.

These two considerations often work against each other. For political reasons, artificial deadlines are introduced. To appease interest groups, regulations are altered, or goodies buried in the bill. These measures are almost always taken to secure passage, but with little (or not enough) thought given to how they might hinder implementation.

Given the problems that arose in the comparatively simple launch of a new drug benefit to seniors, policymakers should be examining every risk inherent in implementing any serious overhaul of one-seventh of our economy. The legislative process needs to produce health care reform that can work in the real world or the backlash from a failed implementation will be furious.

William D. Eggers is the Global Director of Deloitte's Public Sector research program. John O'Leary is a Research Fellow at the Ash Institute of the Harvard Kennedy School. Their new book is If We Can Put a Man on the Moon: Getting Big Things Done in Government (Harvard Business Press, 2009).

Bob Jensen's threads on health care are at
http://www.trinity.edu/rjensen/Health.htm

"Public Policy as Public Corruption," by Michael Gerson, Townhall, December  23, 2009 ---
http://townhall.com/columnists/MichaelGerson/2009/12/23/public_policy_as_public_corruption

Sometimes there is a fine ethical line between legislative maneuvering and bribery. At other times, that line is crossed by a speeding, honking tractor-trailer, with outlines of shapely women on mud flaps bouncing as it rumbles past.

Such was the case in the final hours of Senate Majority Leader Harry Reid's successful attempt to get cloture on health care reform. Sen. Ben Nelson of Nebraska, the last Democratic holdout, was offered and accepted a permanent exemption from his state's share of Medicaid expansion, amounting to $100 million over 10 years.

Afterward, Reid was unapologetic. "You'll find," he said, "a number of states that are treated differently than other states. That's what legislating is all about."

But legislating, presumably, is also about giving public reasons for the expenditure of public funds. Are Cornhuskers particularly sickly and fragile? Is there a malaria outbreak in Grand Island? Ebola detected in Lincoln?

Reid didn't even attempt to offer a reason why Medicaid in Nebraska should be treated differently from, say, Medicaid across the Missouri River in Iowa. The majority leader bought a vote with someone else's money. Does this conclusion sound harsh? Listen to Sen. Lindsey Graham of South Carolina, who accused the Senate leadership and the administration of "backroom deals that amount to bribes," and "seedy Chicago politics" that "personifies the worst of Washington."

This special deal for Nebraska raises an immediate question: Why doesn't every Democratic senator demand the same treatment for their state? Eventually, they will. After the Nelson deal was announced, Sen. Tom Harkin of Iowa enthused, "When you look at it, I thought well, God, good, it is going to be the impetus for all the states to stay at 100 percent (coverage by the federal government). So he might have done all of us a favor." In a single concession, Reid undermined the theory of Medicaid -- designed as a shared burden between states and the federal government -- and added to future federal deficits.

Unless this little sweetener is stripped from the final bill by a House-Senate conference committee in January, leaving Nelson with a choice. He could enrage his party by blocking health reform for the sake of $100 million -- making the narrowness of his interests clear to everyone. Or he could give in -- looking not only venal but foolish.

How did Nelson gain such leverage in the legislative process in the first place? Because many assumed that his objections to abortion coverage in the health bill were serious -- not a cover, but a conviction. Nelson, a rare pro-life Democrat, insisted in an interview he would not be a "cheap date." Republican leadership staffers in the Senate thought he might insist on language in the health care bill preventing public funds from going to insurance plans that cover abortion on demand, as Democratic Rep. Bart Stupak had done in the House.

Instead, Nelson caved. The "compromise" he accepted allows states to prohibit the coverage of elective abortions in their own insurance exchanges. Which means that Nebraska taxpayers may not be forced to subsidize insurance plans that cover abortions in Nebraska. But they will certainly be required to subsidize such plans in California, New York and many other states.

In the end, Nelson not only surrendered his own beliefs, he betrayed the principle of the Hyde Amendment, which since 1976 has prevented the coverage of elective abortion in federally funded insurance. Nelson not only violated his own pro-life convictions, he may force millions of Americans to violate theirs as well.

I can respect those who are pro-life out of conviction, and those who are pro-choice out of conviction. It is more difficult to respect politicians willing to use their deepest beliefs -- and the deepest beliefs of others -- as bargaining chips.

In a single evening, Nelson managed to undermine the logic of Medicaid, abandon three decades of protections under the Hyde Amendment and increase the public stock of cynicism. For what? For the sake of legislation that greatly expands a health entitlement without reforming the health system; that siphons hundreds of billions of dollars out of Medicare, instead of using that money to reform Medicare itself; that imposes seven taxes on Americans making less than $250,000 a year, in direct violation of a presidential pledge; that employs Enron-style accounting methods to inflate future cost savings; that pretends to tame the insurance companies while making insurance companies the largest beneficiaries of reform.

And, yes, for $100 million. It is the cheap date equivalent of Taco Bell.

Jensen Comment
Actually Nelson's corruption payoff is peanuts compared to what the the most liberal of all Senators, Bernie Sanders, is quietly hauling back to Vermont.
Bernie Sanders Home Page, December 24, 2009 --- http://sanders.senate.gov/newsroom/news/?id=4a23fdb5-abe9-4def-9a6e-314d629031b4

Health Care Sens. Patrick Leahy and Bernie Sanders said Monday in interviews that they will vote to pass health care reform legislation before Christmas, the Vermont Press Bureau and The Burlington Free Press reported. Neither is overly enthusiastic about the final Senate bill, but last-minute additions to the proposal - increased Medicaid funding for Vermont and additional funding for community health centers - brought them on board. "If we don't do this now, when will we do it?" Sanders asked. LINK and LINK

Health Centers For Sanders, the addition he argues could revolutionize health care across the country is a $10 billion investment in community health centers and primary care personnel. The funding would expand these health centers, which offer an array of primary and preventive care services, to an additional 10,000 communities, Sanders said. The funding will also pay off school loans for primary care doctors, dentists, nurses and other front-line medical staff who agree to work in medically underserved regions of the country, the Free Press and press bureau articles reported. LINK and LINK

Health Centers Windham County could be home to the state's newest community health center, after Sen. Bernard Sanders, I-Vt., was able to increase the health center funding in the final version of the Senate health care bill, the Brattleboro Reformer reported. "One of the reasons I voted for the Senate bill was that we were able to get in an ammendment for $10 billion over five years to expand community health centers and the National Health Service Corps," said Sanders on Monday. LINK

The Art of Compromise Republicans on Monday slammed provisions Democrats inserted in their far-reaching health-care overhaul bill to win over individual senators.Senate Majority Leader Harry Reid labored hard at the end of the process to keep liberals on board, and one of his biggest moves was inserting $10 billion for community health centers, a favorite cause of Sen. Sanders, a who at one point said he might vote no, The Wall Street Journal reported. "Sanders, the last liberal holdout, got $600 million in Medicaid help," ABC News reported on World News Tonight. "Even Bernie Sanders got something," Fox News reported. LINK, VIDEO and VIDEO

 

Health Centers "You're talking about a program that benefits people in 50 states. Actually it benefits my state less than most other states because we're far advanced in the community health center. We save taxpayers' money because we keep people out of the emergency room and we give them primary health care. Now you tell me why that's such a bad deal. It has support from Republicans," Sen. Sanders told CNN. VIDEO

Deal Sanders "was unhappy Democratic leaders dropped a public option and said this a few days ago. ‘It is not for sure that I will vote for that bill.' Suddenly his home state of Vermont got some extra help for Medicaid...But to clinch Sanders' vote, Democrats added his pet project, $10 billion for community health centers nationwide." Dana Bash concluded her report by saying  "Republicans mastered the art of backroom deal-making when they were in charge here, so this is very much bipartisan," according to CNN. VIDEO

 

The Deal Sen. Sanders "held out for larger Medicaid payments for his state," The Washington Post claimed. "Sanders threatened to vote against the Senate bill unless it included a public plan. He relented when Reid agreed to include an additional $10 billion for community health centers," Investors Business Daily reported. A right-wing LA Times columnist said Sanders was "leveraging his socialist principles for billions in special deals." Another falsely asserted that Sanders "finagled $10 billion worth of earmarked greenbacks for the funding of community health centers in his home state." And a Fox News online commentator asserted that "Vermont got $250 million in extra federal Medicaid funding to prevent Bernie Sanders from bolting from the left." LINK and LINK

Get up to a Federal $6,000 rebate on a $9,000 "golf cart"
"A Bailout ... for Golf Cars? Business Is Booming for Street-Legal Golf Cars Thanks to the Bush-Era Bailout," by Alice Gomstyn, ABC News, October 21, 2009 --- http://abcnews.go.com/Business/golf-car-sales-spike-08-bailout/story?id=8875161

Bob Jensen's Fraud Updates are at http://www.trinity.edu/rjensen/FraudUpdates.htm

What do you want to bet that Marvene got back into the action? ---
http://www.trinity.edu/rjensen/2008Bailout.htm#Sleaze

"Black Education," by Walter E. Williams (a black economics professor), Townhall, December 23, 2009 ---
http://townhall.com/columnists/WalterEWilliams/2009/12/23/black_education

Detroit's (predominantly black) public schools are the worst in the nation and it takes some doing to be worse than Washington, D.C. Only 3 percent of Detroit's fourth-graders scored proficient on the most recent National Assessment of Education Progress (NAEP) test, sometimes called "The Nation's Report Card." Twenty-eight percent scored basic and 69 percent below basic. "Below basic" is the NAEP category when students are unable to demonstrate even partial mastery of knowledge and skills fundamental for proficient work at their grade level. It's the same story for Detroit's eighth-graders. Four percent scored proficient, 18 percent basic and 77 percent below basic.

Michael Casserly, executive director of the D.C.-based Council on Great City Schools, in an article appearing in Crain's Detroit Business, (12/8/09) titled, "Detroit's Public Schools Post Worst Scores on Record in National Assessment," said, "There is no jurisdiction of any kind, at any level, at any time in the 30-year history of NAEP that has ever registered such low numbers." The academic performance of black students in other large cities such as Philadelphia, Chicago, New York and Los Angeles is not much better than Detroit and Washington.

What's to be done about this tragic state of black education? The education establishment and politicians tell us that we need to spend more for higher teacher pay and smaller class size. The fact of business is higher teacher salaries and smaller class sizes mean little or nothing in terms of academic achievement. Washington, D.C., for example spends over $15,000 per student, has class sizes smaller than the nation's average, and with an average annual salary of $61,195, its teachers are the most highly paid in the nation.

What about role models? Standard psychobabble asserts a positive relationship between the race of teachers and administrators and student performance. That's nonsense. Black academic performance is the worst in the very cities where large percentages of teachers and administrators are black, and often the school superintendent is black, the mayor is black, most of the city council is black and very often the chief of police is black.

Black people have accepted hare-brained ideas that have made large percentages of black youngsters virtually useless in an increasingly technological economy. This destruction will continue until the day comes when black people are willing to turn their backs on liberals and the education establishment's agenda and confront issues that are both embarrassing and uncomfortable. To a lesser extent, this also applies to whites because the educational performance of many white kids is nothing to write home about; it's just not the disaster that black education is.

Many black students are alien and hostile to the education process. They have parents with little interest in their education. These students not only sabotage the education process, but make schools unsafe as well. These students should not be permitted to destroy the education chances of others. They should be removed or those students who want to learn should be provided with a mechanism to go to another school.

Another issue deemed too delicate to discuss is the overall quality of people teaching our children. Students who have chosen education as their major have the lowest SAT scores of any other major. Students who have an education degree earn lower scores than any other major on graduate school admission tests such as the GRE, MCAT or LSAT. Schools of education, either graduate or undergraduate, represent the academic slums of most any university. They are home to the least able students and professors. Schools of education should be shut down.

Yet another issue is the academic fraud committed by teachers and administrators. After all, what is it when a student is granted a diploma certifying a 12th grade level of achievement when in fact he can't perform at the sixth- or seventh-grade level?

Prospects for improvement in black education are not likely given the cozy relationship between black politicians, civil rights organizations and teacher unions.

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.

Bob Jensen’s threads on higher education controversies are at
http://www.trinity.edu/rjensen/HigherEdControversies.htm

"Former President Carter Apologizes to Jews," by Greg Bluestein, Sphere, December 23, 2009 ---
http://www.sphere.com/nation/article/in-letter-former-president-jimmy-carter-apologizes-to-jews/19292813

Of course the fact that his grandson now is seeking votes from a heavily Jewish Congressional District of Georgia had nothing to do with the timing of Jummy Carter's apology --- http://ace.mu.nu/archives/296237.php

"Jewish group calls apology from Jimmy Carter a 'publicity stunt'," Chicago Sun Times, December 25, 2009 ---
http://www.suntimes.com/news/nation/1958631,jimmy-carter-jewish-group-apology-122509.article

A history of Carter's recent attacks on Israel ---
http://sistertoldjah.com/archives/category/clueless-wonders/jimmy-carter/

President Carter has had a tense relationship with the Jewish community since he authored a 2006 book, Palestine: Peace Not Apartheid.

"The Price for Fannie and Freddie Keeps Going Up:  Barney Frank's decision to 'roll the dice' on subsidized housing is becoming an epic disaster for taxpayers," by Peter J. Wallison, The Wall Street Journal, December 29, 2009 ---
http://online.wsj.com/article/SB10001424052748703278604574624681873427574.html?mod=djemEditorialPage

On Christmas Eve, when most Americans' minds were on other things, the Treasury Department announced that it was removing the $400 billion cap from what the administration believes will be necessary to keep Fannie Mae and Freddie Mac solvent. This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises (GSEs) will rank for U.S. taxpayers as one of the worst policy disasters in our history.

Fannie and Freddie's congressional sponsors—some of whom are now leading the administration's effort to "reform" the financial system—have a lot to answer for. Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, sponsored legislation adopted in 2008 that established a new regulatory structure for the GSEs. But by then it was far too late. The GSEs had begun buying risky loans in 1993 to meet the "affordable housing" requirements established under congressional direction by the Department of Housing and Urban Development (HUD).

Most of the damage was done from 2005 through 2007, when Fannie and Freddie were binging on risky mortgages. Back then, Mr. Frank was the bartender, denying that there was any cause for concern, and claiming that he wanted to "roll the dice" on subsidized housing support.

In 2005, the Senate Banking Committee, then controlled by Republicans, adopted tough regulatory legislation that would have established more auditing and oversight of the two agencies. But it was passed out of committee on a partisan vote, and with no Democratic support it never came to a vote.

By the end of 2008, Fannie and Freddie held or guaranteed approximately 10 million subprime and Alt-A mortgages and mortgage-backed securities (MBS)—risky loans with a total principal balance of $1.6 trillion. These are now defaulting at unprecedented rates, accounting for both their 2008 insolvency and their growing losses today. Since 2008, under government control, the two agencies have continued to buy dicey mortgages in order to stabilize housing prices.

There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.

In general, a subprime mortgage refers to the credit of the borrower. A FICO score of less than 660 is the dividing line between prime and subprime, but Fannie and Freddie were reporting these mortgages as prime, according to Mr. Pinto. Fannie has admitted this in a third-quarter 10-Q report in 2008.

An Alt-A mortgage is one in which the quality of the mortgage or the underwriting was deficient; it might lack adequate documentation, have a low or no down payment, or in some other way be more likely than a prime mortgage to default. Fannie and Freddie were also reporting these mortgages as prime, according to Mr. Pinto.

It is easy to see how this misrepresentation was a principal cause of the financial crisis.

Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007. Of the 26 million subprime and Alt-A loans outstanding in 2008, 10 million were held or guaranteed by Fannie and Freddie, 5.2 million by other government agencies, and 1.4 million were on the books of the four largest U.S. banks.

In addition, about 7.7 million subprime and Alt-A housing loans were in mortgage pools supporting MBS issued by Wall Street banks—which had long before been driven out of the prime market by Fannie and Freddie's government-backed, low-cost funding. The vast majority of these MBS were rated AAA, because the rating agencies' models assumed that the losses that are incurred by subprime and Alt-A loans would be within the historical range for the number of high-risk loans known to be outstanding.

But because of Fannie and Freddie's mislabeling, there were millions more high-risk loans outstanding. That meant default rates as well as the actual losses after foreclosure were going to be outside all prior experience. When these rates began to show up early in 2007, it was apparent something was seriously wrong with assumptions on which AAA ratings had been based.

Losses, it was now certain, would invade the AAA tranches of the mortgage-backed securities outstanding. Investors, having lost confidence in the ratings, fled the MBS market and ultimately the market for all asset-backed securities. They have not yet returned.

By the end of 2007, the MBS market collapsed entirely. Assets once carried at par on financial institutions' balance sheets could not be sold except at distress prices. This raised questions about the stability and even the solvency of most of the world's largest financial institutions.

The first major victim was Bear Stearns, the smallest of the five major Wall Street investment banks but one invested heavily in risky MBS. The government rescue of Bear Stearns in March 2008 signaled that the U.S. government, and perhaps others, would stand behind other large financial institutions. The moral hazard this engendered was deadly when Lehman Brothers' solvency came under challenge. Spreads in the credit default swap market for Lehman, despite massive short-selling, showed very little alarm by investors until just before the fateful weekend of Sept. 13 and 14, when they blew out on fears that the firm might not be rescued.

By that time it was too late for Lehman's counterparties to take the protective action that might have cushioned the shock. As it turned out, however, none of Lehman's largest counterparties failed—so much for the idea that the financial market is "interconnected"—but all market participants now realized they had to know the true financial condition of their counterparties. The result was a freeze-up in interbank lending.

For most people, that freeze-up is the beginning of the financial crisis. But its roots go back to 1993, when Fannie and Freddie began stocking up on subprime and other risky loans while reporting them as prime.

Why Fannie and Freddie did this is still to be determined. But the leading candidate is certainly HUD's affordable housing regulations, which by 2007 required that 55% of all the loans the agencies acquired had to be made to borrowers at or below the median income, with almost half of these required to be low-income borrowers.

Another likely reason for Fannie and Freddie's mislabeling of mortgages was their desire to retain congressional support by "rolling the dice" while making believe they weren't betting. With the Federal Housing Administration, Wall Street investment banks, and Fannie and Freddie all competing for these loans, the bottom of the barrel had long before been scraped and the financial system set up for a crisis.

"The World's District Attorney Legendary prosecutor Robert Morgenthau on his famous cases, his brawl with Mike Bloomberg, and why he's sounding alarm about Iran," by James Freeman, The Wall Street Journal, December 26, 2009 ---
http://online.wsj.com/article/SB10001424052748704039704574616433529879494.html?mod=djemEditorialPage

In the criminal justice system, the people of Manhattan have been represented for 35 years by New York County District Attorney Robert Morgenthau. This is his story.

Mr. Morgenthau, who inspired the original D.A. character on the television program "Law and Order," will retire on Thursday at age 90. Much of the barely fictitious drama is set in his office in Manhattan's Criminal Courts Building. This week, amid half-filled boxes and scattered personal mementos, he sat down to discuss his life's work.

Even though he knows I'm wearing a wire—actually an audio recorder placed on the table between us—America's D.A. speaks candidly, including about his public blowups with New York Mayor Michael Bloomberg. Mr. Morgenthau says this is the first mayor he hasn't gotten along with, and that the relationship went south when his office started investigating the city's role in the death of two of New York's bravest in an August, 2007 fire. Among other mistakes, city inspectors had failed to note that the water had been turned off at the old Deutsche Bank building opposite Ground Zero. The blaze resulted in 33 "mayday" calls from firefighters, and the D.A. is amazed that only two lost their lives.

Mr. Morgenthau soon got a call from a city lawyer telling him that "the mayor wanted me to tell you that he's surprised that you're looking at the Deutsche Bank case." Mr. Morgenthau says he told the mayor's minion, "You tell the mayor that I'm surprised that he's surprised."

Why would the mayor encourage such a call? Because, says Mr. Morgenthau, Mr. Bloomberg "thinks all lawyers work for him" and "doesn't want anybody around who doesn't kiss his ring, or other parts of his body."

The mayor has also recently gone after Mr. Morgenthau's budget, with city officials demanding that he stop sending some of the money forfeited by criminals to the state government, and instead send all of it to the city. The D.A. reports that both governments benefit handsomely from the work of his office—$300 million so far this year, with another $230 million coming soon.

These big criminal forfeitures support his $80 million budget, but they are also the product of Mr. Morgenthau's unique legacy among district attorneys: his national and global reach. Such resources have allowed him to prosecute complex international business cases. Combined with his jurisdiction in the world's financial capital, he has become in a sense the world's district attorney.

Thomas Jefferson would have liked this bastion of local power as part of a federal system, but it is not always celebrated by federal officials. "I'm sure it [annoys] the hell out of them," Mr. Morgenthau observes.

The feeling is mutual. The D.A. says that while he's had to deal with the federal bureaucracy for decades, "it has just gotten worse" and "they ought to burn it down and start all over again. It's extremely worrisome."

For example, he says, "We had a lot of trouble with the Treasury Department" in his recent case against Credit Suisse, in which the bank coughed up $536 million and admitted to aiding Iran and other rogue nations in violating economic sanctions. The feds, as they did in a similar settlement with the British bank Lloyds, wanted only civil penalties.

Mr. Morgenthau would have none of it. He says Credit Suisse had been "stonewalling us" and only struck a deal after he threatened to bring criminal charges to a grand jury. "We would have gotten an indictment," he says.

In 2006, Mr. Morgenthau's office began an investigation into New York's Alavi Foundation, which turned out to be an Iranian government front. Money from the foundation "was being used to pay Iranian agents around the world," he says. Last month the U.S. government seized $500 million of the foundation's assets, including a Fifth Avenue office tower.

Mr. Morgenthau lacked the statute to bring legal action so he referred the Alavi inquiry to the FBI, while continuing to track a larger financial web. Individuals associated with Alavi had received money from Iran's government-controlled Bank Melli, which has been sanctioned by our government, the United Nations and the European Union for its support of the regime's nuclear and missile programs. The D.A.'s investigators found a money trail leading from Melli and other Iranian state-controlled banks, through legitimate banks in London and other European cities and into correspondent banks in the United States.

Credit Suisse, Lloyds and "eight other banks that we know about," according to Mr. Morgenthau, were involved in "stripping." This means disguising that Iran is the origin of transactions routed through American banks.

What are the Iranians buying with their ill-gotten American currency? Mr. Morgenthau obtained a shopping list that includes tantalum, a hard metal used in roadside bombs. But the Iranians are thinking bigger. He reports that he showed the shopping list to an executive at Raytheon, which manufactures missiles for the American military. Mr. Morgenthau says that after reviewing Tehran's wish list, the Raytheon official was stunned at the sophistication that would be required to create it, and replied, "My hands went cold."

The Iranian finance investigation led him to evidence showing the destination of a North Korean cargo plane that was seized in Bangkok by Thai police on Dec. 12. Despite Iranian denials, Mr. Morgenthau says the massive weapons shipment was bound for Tehran.

After years of prosecuting world-wide financial cases, including bringing down the criminal enterprise known as the Bank of Credit and Commerce International, Mr. Morgenthau has assembled a formidable intelligence network. "When people trust you, you get a lot of information from all around the world."

Mr. Morgenthau says "It takes a long time to build the kind of network we have" and adds that he expects his successor, Cyrus Vance Jr., will continue to focus on international financial crimes and Iranian finance in particular. That's because these cases are effective.

Regarding Iran, the lifelong Democrat scores both parties in Washington for ignoring the gathering threat. His own concern flows in part from his experience as a newly minted ensign aboard a destroyer the day Pearl Harbor was attacked. Mr. Morgenthau later saw action in both the Atlantic and Pacific theaters, and was fortunate to survive one sinking when a convoy ship violated standing orders and picked him and fellow crew members out of the water. He doesn't want his country to be caught unprepared again.

***

'Everyone has dropped the ball on [Iran sanctions]. The president is smoking pot or something if he thinks that being nice to these guys is going to get him anywhere," Mr. Morgenthau says. He says economic sanctions can "have significant impact" because most of Iran's enablers are not terrorists, just people "trying to make a buck. . . . They don't enjoy being the focus of an investigation." The D.A. argues that more aggressive federal enforcement of existing sanctions, plus a new effort to restrict Iran's gasoline imports, could make life very difficult for a regime that is under increasing pressure from its own citizens.

"The president has to say this is a priority. We have sanctions and we ought to make them work," he says. "The boss," as he's known to Manhattan prosecutors, is particularly concerned about Iran's progress in missile development and its budding relationship with Venezuelan dictator Hugo Chávez. While the two countries have opened banks in each other's countries, the D.A. reports that they nonetheless are transacting business in dollars through New York.

Mr. Morgenthau says his habit is to "never look back," but he obliges when pressed to revisit some of his most famous wins and losses. Boss of mob bosses John Gotti evaded the long arm of Mr. Morgenthau for years but was ultimately convicted of murder by the feds. "The [FBI] didn't turn over key evidence they had to us," he says.

Asked whether he should have indicted board members along with Tyco Corporation CEO Dennis Kozlowski and CFO Mark Swartz, Mr. Morgenthau responds, "probably."

Of his recent prosecution of Anthony Marshall, convicted of stealing from his mother Brooke Astor, Mr. Morgenthau makes clear that the case had a significance beyond exposing the lifestyles of the rich and famous. He notes a disturbing trend of children ripping off their parents and grandparents. The case, he says, "sent a message all over the country: You can't steal from your elders."

Mr. Morgenthau notes that his office was the first in the country to "indict the footprint," which means securing indictments before finding a defendant. This has the practical effect of removing the statute of limitations.

Mr. Morgenthau is proudest of his victories in cases widely considered unwinnable. He notes that his office was the first in the country to successfully prosecute a murder case with no body and no witness. In 2000 he won convictions against Sante and Kenneth Kimes. The mother and son killed Irene Silverman when they believed she had caught on to their plot to swindle her out of her Upper East Side mansion. The son later admitted to disposing of the body in a dumpster.

Mr. Morgenthau took on another lost cause but finally prevailed, 15 years after the disappearance of Gail Katz-Bierenbaum. Discovering flight records at New Jersey's Essex County Airport led his team to conclude and ultimately prove that her husband had pushed her body out of a Cessna over the Atlantic.

Overall, it's hard to argue with the results. While he is quick to credit the police and other city officials, Mr. Morgenthau notes that when he became district attorney in 1975, Manhattan was suffering almost 650 murders annually. Last year, there were 62. From more than 39% of the city's murders, Manhattan's share has fallen to just 12%.

Manhattan's renaissance has allowed many New Yorkers to consider not just survival, but success, and more specifically how to keep more of what they earn from the tax collector. Mr. Morgenthau has aggressively pursued those who seek to preserve their capital in other jurisdictions, but that doesn't mean he favors the current system.

"I think taxes in New York City and State are much too high," he says. "But you're never going to see them reduced unless everybody pays what they're required to pay under the law."

Mr. Morgenthau's effort to go after citizens who park their money in tax havens has led to more frustration with the Mayor. The D.A. says Mr. Bloomberg "has never been any help. I've talked to him three times about it and each time the conversation is almost identical. I tell him how much money is offshore and in the underground economy and he always says, 'I'm paying my taxes.' And I always say, 'Mike, no one is suggesting you don't, but there are a lot of other people who don't.' And then he says, 'I'm glad I'm not a lawyer.'"

Before exiting the public stage, Mr. Morgenthau also wants to set straight the record on one of the most controversial episodes in the history of the United States Supreme Court. Justice Abe Fortas was denied a Senate vote in 1968 when President Lyndon Johnson sought to elevate him to chief justice to replace the retiring Earl Warren.

The following year, Fortas resigned his seat as an associate justice after it was revealed that he received money from the foundation of Louis Wolfson, who had been convicted of crimes related to a securities case.

But Mr. Morgenthau already knew about the payments from Wolfson. As a U.S. attorney appointed by John F. Kennedy, he had been investigating Wolfson for years, against the wishes of Wolfson's friends in the Kennedy and Johnson administrations. (To be fair, politicians seeking contributions were not the only defenders of Wolfson. More recently, Henry Manne has written in these pages that Wolfson invented the modern hostile tender offer, enhancing the power of shareholders and making the U.S. economy more competitive.)

***

In any case, Mr. Morgenthau believes that Attorney General Nicholas Katzenbach was fired by LBJ in 1966 because he refused to block Mr. Morgenthau's indictment and subsequent conviction of Wolfson. At the time, Mr. Katzenbach said disputes with FBI Director J. Edgar Hoover caused his resignation.

Knowing of the $20,000 per year "for life" that Wolfson's foundation was sending to Fortas, Mr. Morgenthau contacted Mr. Katzenbach's successor Ramsey Clark, told him of the deal, and suggested that he tell Chief Justice Earl Warren to consider delaying his retirement. Mr. Morgenthau says Mr. Clark never informed Warren. Wolfson had powerful friends.

Just like viewers at the end of a "Law and Order" episode, observers of the legendary D.A. are treated to one more twist in the tale.

Mr. Freeman is assistant editor of the Journal's editorial page.

"Avatar: the most expensive piece of anti-American propaganda ever made," by Nile Gardiner, London Telegraph, December 25, 2009 ---
http://blogs.telegraph.co.uk/news/nilegardiner/100020721/avatar-the-most-expensive-piece-of-anti-american-propaganda-ever-made/

There is no denying the breathtaking visual beauty of the $400 million 3-D sci-fi epic Avatar. It is already a global box office smash, taking in more than $200 million worldwide in its opening weekend. The special effects are simply stunning, and some of the action sequences are spectacular.

But Avatar is also a distinctly political work of art, with a strong anti-American and anti-Western message. It can be read on several levels – a critique of the Iraq War, an assault on the US-led War on Terror, a slick morality tale about the ‘evils’ of Western imperialism, a futuristic take on the conquest of America and the treatment of native Americans – the list goes on.

As I blogged earlier, director James Cameron has made it abundantly clear that the film is linked to both the war in Iraq and the War on Terror. In an interview with The Times he declared:

“We went down a path that cost several hundreds of thousands of Iraqi lives. I don’t think the American people even know why it was done. So it’s all about opening your eyes.”

“We know what it feels like to launch the missiles. We don’t know what it feels like for them to land on our home soil, not in America. I think there’s a moral responsibility to understand that.”

The story is set in the year 2154, and centres on an attempt by a US conglomerate to exploit valuable mineral wealth on the planet of Pandora. In the background, earth is dying with limited resources, no doubt because a climate change deal could not be finalized at Copenhagen.

The American firm employs an army of marines to fight on its behalf against the Na’vi, who seem to be modeled loosely on native American tribes. Slogans such as “shock and awe” and “fighting terror with terror” are deployed to give the film a more contemporary feel. The US forces are portrayed in one-dimensional terms and are led by a sadistic general, while the Na’vi are spiritual, nature-loving and peaceful tribesmen at one with the earth and creation. Humanity is ultimately redeemed by a paraplegic soldier (played by Sam Worthington) who goes native and sides with the locals against his own people.

In many respects, Avatar is a highly manipulative film. When I saw the movie last night in a packed theatre, I was disturbed by the cheering from the audience towards the end when the humans – US soldiers fighting on behalf of an American corporation – were being wiped out by the Na’vi. Washington is one of the most liberal cities in America and you come to expect almost anything here – but still the roars of approval which greeted the on-screen killing of US military personnel were a shock to the system, especially at a time when the United States is engaged in a major war in Afghanistan.

Avatar is more than just a 160 minute-long cinematic thrill-ride. It is an intensely political vehicle with a distinct agenda. In fact I would describe it as one of the most left-wing films in the history of modern American cinema, and perhaps the most commercially successful political movie of our time. While the vast majority of cinemagoers will simply see it as popcorn entertainment, Avatar is at its heart a cynical and deeply unpatriotic propaganda piece, aimed squarely against American global power and the projection of US economic and military might across the world.

Chinese mercantilism is a growing problem

Mercantilism --- http://en.wikipedia.org/wiki/Mercantilism

"Chinese New Year," by Paul Krugman, The New York Times, December 31, 2009 ---
http://www.nytimes.com/2010/01/01/opinion/01krugman.html

It’s the season when pundits traditionally make predictions about the year ahead. Mine concerns international economics: I predict that 2010 will be the year of China. And not in a good way.

Actually, the biggest problems with China involve climate change. But today I want to focus on currency policy.

China has become a major financial and trade power. But it doesn’t act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory.

Here’s how it works: Unlike the dollar, the euro or the yen, whose values fluctuate freely, China’s currency is pegged by official policy at about 6.8 yuan to the dollar. At this exchange rate, Chinese manufacturing has a large cost advantage over its rivals, leading to huge trade surpluses.

Under normal circumstances, the inflow of dollars from those surpluses would push up the value of China’s currency, unless it was offset by private investors heading the other way. And private investors are trying to get into China, not out of it. But China’s government restricts capital inflows, even as it buys up dollars and parks them abroad, adding to a $2 trillion-plus hoard of foreign exchange reserves.

This policy is good for China’s export-oriented state-industrial complex, not so good for Chinese consumers. But what about the rest of us?

In the past, China’s accumulation of foreign reserves, many of which were invested in American bonds, was arguably doing us a favor by keeping interest rates low — although what we did with those low interest rates was mainly to inflate a housing bubble. But right now the world is awash in cheap money, looking for someplace to go. Short-term interest rates are close to zero; long-term interest rates are higher, but only because investors expect the zero-rate policy to end some day. China’s bond purchases make little or no difference.

Meanwhile, that trade surplus drains much-needed demand away from a depressed world economy. My back-of-the-envelope calculations suggest that for the next couple of years Chinese mercantilism may end up reducing U.S. employment by around 1.4 million jobs.

The Chinese refuse to acknowledge the problem. Recently Wen Jiabao, the prime minister, dismissed foreign complaints: “On one hand, you are asking for the yuan to appreciate, and on the other hand, you are taking all kinds of protectionist measures.” Indeed: other countries are taking (modest) protectionist measures precisely because China refuses to let its currency rise. And more such measures are entirely appropriate.

Or are they? I usually hear two reasons for not confronting China over its policies. Neither holds water.

First, there’s the claim that we can’t confront the Chinese because they would wreak havoc with the U.S. economy by dumping their hoard of dollars. This is all wrong, and not just because in so doing the Chinese would inflict large losses on themselves. The larger point is that the same forces that make Chinese mercantilism so damaging right now also mean that China has little or no financial leverage.

Again, right now the world is awash in cheap money. So if China were to start selling dollars, there’s no reason to think it would significantly raise U.S. interest rates. It would probably weaken the dollar against other currencies — but that would be good, not bad, for U.S. competitiveness and employment. So if the Chinese do dump dollars, we should send them a thank-you note.

Second, there’s the claim that protectionism is always a bad thing, in any circumstances. If that’s what you believe, however, you learned Econ 101 from the wrong people — because when unemployment is high and the government can’t restore full employment, the usual rules don’t apply.

Let me quote from a classic paper by the late Paul Samuelson, who more or less created modern economics: “With employment less than full ... all the debunked mercantilistic arguments” — that is, claims that nations who subsidize their exports effectively steal jobs from other countries — “turn out to be valid.” He then went on to argue that persistently misaligned exchange rates create “genuine problems for free-trade apologetics.” The best answer to these problems is getting exchange rates back to where they ought to be. But that’s exactly what China is refusing to let happen.

The bottom line is that Chinese mercantilism is a growing problem, and the victims of that mercantilism have little to lose from a trade confrontation. So I’d urge China’s government to reconsider its stubbornness. Otherwise, the very mild protectionism it’s currently complaining about will be the start of something much bigger.

"Chinese official raps US banks on derivatives," AsiaLynx, December 4, 2009 ---
http://www.asialynx.com/2009/12/04/chinese-official-raps-us-banks-on-derivatives/

BEIJING (Agencies): A senior Chinese official criticized foreign banks for selling derivatives with “fraudulent characteristics” that led to heavy losses for state-owned airlines and other companies.

“Some international investment banks are the biggest villains,” said Li Wei, deputy chairman of the agency that oversees China’s biggest state companies, in a commentary in this week’s edition of the Study Times, a newspaper published by the school of the Communist Party’s Central Committee.

The comments were the Chinese government’s most pointed public criticism yet of foreign institutions. Li’s agency said in September it would support companies that want to challenge the contracts in court.
Li said Chinese companies were to blame for most of their losses but complained that derivatives tied oil prices and other matters were too complex and made potential risks too hard to identify.

“Of course, first of all we need to find problems in the companies themselves,” Li wrote in the front-page commentary. “But it also is largely related to international investment banks maliciously peddling high-leverage, complex products with fraudulent characteristics.”

Some 68 of the 136 major banks, airlines and other companies directly controlled by the Cabinet invested in derivatives and recorded book losses totaling 11.4 billion yuan ($1.7 billion) by the end of October 2008, according to Li.

Li made no specific accusations against individual banks. But he noted that airlines and shipping companies bought fuel contracts from Goldman Sachs Group, Merrill Lynch — now a unit of Bank of America Corp. — and Morgan Stanley, while banks bought derivatives from Merrill Lynch, Morgan Stanley and Citigroup.

Spokespeople in China for Goldman and Citigroup declined to comment. Spokespeople for Morgan Stanley and Merrill Lynch did not immediately respond to phone messages and e-mails. – read more at ChinaDaily.com

Bob Jensen's timeline for derivative financial instruments frauds ---
http://www.trinity.edu/rjensen/FraudRotten.htm#DerivativesFrauds

The Greatest Swindle in the History of the World ---
http://www.trinity.edu/rjensen/2008Bailout.htm#Bailout

"Unemployment taxes may double or even triple in 2010," AccountingWeb, December 17, 2009 ---
http://www.accountingweb.com/topic/tax/unemployment-taxes-may-double-or-even-triple-2010

Employers should anticipate increases in their unemployment taxes in 2010 and possibly beyond, whether or not their business is in a state like Virginia, where increases are automatic if the unemployment trust fund falls below a certain level, or in states like Michigan and Texas that have complex formulas based on "experience rates," or states that decide to levy some form of deficit surtax. State unemployment trust funds have fallen to such a low level that rate increases may be required to rebuild their balances even when employment improves. States that have borrowed money from the federal government under the Federal Unemployment Trust Act (FUTA) to cover their current obligations will need to pay this money back with interest.

According to the Journal of State Taxation, at least 12 states, including Michigan, Texas, and Virginia, with depleted trust fund balances had borrowed from the federal government under FUTA provisions of by the end of the summer, and others are expected to follow suit. States that accepted interest-free loans offered under ARRA (the Stimulus Act) will need to pay interest on these loans after two years.

Rate increases in states like Washington may seem small -- the average tax rate in 2010 will be 2.38 percent, up from 1.55 percent in 2009 -- but they are based on a much higher percentage of an employee's wages. Texas, where the minimum rate will nearly triple for 2010, taxes the first $9,000 in earnings while Washington taxes the first $36,000.

The Texas minimum tax, which is paid by nearly 255,000 employers, or 67 percent of those who have been in business for at least a year, according to the Texas Workforce Commission, will triple. It will be $65 per worker, up from $23 this year. The maximum rate is based on an experience formula, and is generally paid by companies if more of their employees who were laid off received benefits. The maximum rate in Texas will increase from 6.26 percent to 8.6 percent, from $563.40 per employee to $774.

Across the board, unemployment taxes in Texas will roughly double next year, the Commission says. But the $65 per worker minimum tax bill in Texas compares favorably with $81 in Illinois, $100 in Florida and $120 in Arkansas. Commission Chairman Tom Pauken said next year's average rates in Texas are only slightly higher than those charged in 2004 and 2005, the Dallas Morning News reports.

The state already has borrowed about $1 billion from the federal government to help keep the fund afloat. Texas declined loans from the Stimulus Act because accepting the money would have required changes to the state's eligibility rules.

The Nevada Employment Security Council has decided not to increase employment taxes this year because it would be a hardship for employers suffering through a recession. Instead, Nevada Employment Security Division Administrator Cindy Jones said her agency, which has already has borrowed $60 million from the federal government to keep paying benefits this year, will continue to borrow more, likely close to $1 billion, in 2010, the Las Vegas Review-Journal reports.

But employers in Nevada and other states that choose this option and then cannot repay their loans in the next two or three years will lose 0.3 percent of the 5.4 percent federal unemployment tax credit for every year that the loan goes unpaid. So businesses in states that can't repay the loans will end up paying more tax whether or not their rates are raised.

The FUTA tax is a flat tax on the first $7,000 of an employee's wages (6 percent plus a temporary surtax rate of 0.2 percent in 2009), but employers who file timely are eligible for a 5.4 percent credit against the gross FUTA tax to reflect state unemployment taxes, leaving a liability to the federal government of 0.8 percent. FUTA revenue supports the fund from which states borrow, among other things.

Michigan had to impose a "solvency tax" of $67.50 on 20 percent of the state's companies in order to repay federal loans in 2009, HubPages reports. The state borrowed about $1 billion in interest-free loans from the federal government under the Stimulus Act, but Michigan is not expected to be able to repay the loans in the two-year interest-free period says Lori Roberts writing for the Journal of State Taxation.

Continued in article

Jensen Comment
This is not surprising, but it is a job killer in the sense that higher unemployment taxes discourages expanding work forces and encourages more outsourcing. For example, Chrysler is building a new manufacturing plant in Mexico rather than Detroit.

Bob Jensen's taxation helpers are at http://www.trinity.edu/rjensen/BookBob1.htm#010304Taxation

The motto of Judicial Watch is "Because no one is above the law". To this end, Judicial Watch uses the open records or freedom of information laws and other tools to investigate and uncover misconduct by government officials and litigation to hold to account politicians and public officials who engage in corrupt activities.
Judicial Watch --- http://www.judicialwatch.org/

Judicial Watch Announces List of Washington's "Ten Most Wanted Corrupt Politicians" for 2009 ---
http://www.judicialwatch.org/news/2009/dec/judicial-watch-announces-list-washington-s-ten-most-wanted-corrupt-politicians-2009

Judicial Watch, the public interest group that investigates and prosecutes government corruption, today released its 2009 list of Washington's "Ten Most Wanted Corrupt Politicians." The list, in alphabetical order, includes:

1. Senator Christopher Dodd (D-CT): This marks two years in a row for Senator Dodd, who made the 2008 "Ten Most Corrupt" list for his corrupt relationship with Fannie Mae and Freddie Mac and for accepting preferential treatment and loan terms from Countrywide Financial, a scandal which still dogs him. In 2009, the scandals kept coming for the Connecticut Democrat. In 2009, Judicial Watch filed a Senate ethics complaint against Dodd for undervaluing a property he owns in Ireland on his Senate Financial Disclosure forms. Judicial Watch's complaint forced Dodd to amend the forms. However, press reports suggest the property to this day remains undervalued. Judicial Watch also alleges in the complaint that Dodd obtained a sweetheart deal for the property in exchange for his assistance in obtaining a presidential pardon (during the Clinton administration) and other favors for a long-time friend and business associate. The false financial disclosure forms were part of the cover-up. Dodd remains the head the Senate Banking Committee.

    

2. Senator John Ensign (R-NV): A number of scandals popped up in 2009 involving public officials who conducted illicit affairs, and then attempted to cover them up with hush payments and favors, an obvious abuse of power. The year's worst offender might just be Nevada Republican Senator John Ensign. Ensign admitted in June to an extramarital affair with the wife of one of his staff members, who then allegedly obtained special favors from the Nevada Republican in exchange for his silence. According to The New York Times: "The Justice Department and the Senate Ethics Committee are expected to conduct preliminary inquiries into whether Senator John Ensign violated federal law or ethics rules as part of an effort to conceal an affair with the wife of an aide…" The former staffer, Douglas Hampton, began to lobby Mr. Ensign's office immediately upon leaving his congressional job, despite the fact that he was subject to a one-year lobbying ban. Ensign seems to have ignored the law and allowed Hampton lobbying access to his office as a payment for his silence about the affair. (These are potentially criminal offenses.) It looks as if Ensign misused his public office (and taxpayer resources) to cover up his sexual shenanigans.

    

3. Rep. Barney Frank (D-MA): Judicial Watch is investigating a $12 million TARP cash injection provided to the Boston-based OneUnited Bank at the urging of Massachusetts Rep. Barney Frank. As reported in the January 22, 2009, edition of the Wall Street Journal, the Treasury Department indicated it would only provide funds to healthy banks to jump-start lending. Not only was OneUnited Bank in massive financial turmoil, but it was also "under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use." Rep. Frank admitted he spoke to a "federal regulator," and Treasury granted the funds. (The bank continues to flounder despite Frank's intervention for federal dollars.) Moreover, Judicial Watch uncovered documents in 2009 that showed that members of Congress for years were aware that Fannie Mae and Freddie Mac were playing fast and loose with accounting issues, risk assessment issues and executive compensation issues, even as liberals led by Rep. Frank continued to block attempts to rein in the two Government Sponsored Enterprises (GSEs). For example, during a hearing on September 10, 2003, before the House Committee on Financial Services considering a Bush administration proposal to further regulate Fannie and Freddie, Rep. Frank stated: "I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two Government Sponsored Enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury." Frank received $42,350 in campaign contributions from Fannie Mae and Freddie Mac between 1989 and 2008. Frank also engaged in a relationship with a Fannie Mae Executive while serving on the House Banking Committee, which has jurisdiction over Fannie Mae and Freddie Mac.

    

4. Secretary of Treasury Timothy Geithner: In 2009, Obama Treasury Secretary Timothy Geithner admitted that he failed to pay $34,000 in Social Security and Medicare taxes from 2001-2004 on his lucrative salary at the International Monetary Fund (IMF), an organization with 185 member countries that oversees the global financial system. (Did we mention Geithner now runs the IRS?) It wasn't until President Obama tapped Geithner to head the Treasury Department that he paid back most of the money, although the IRS kindly waived the hefty penalties. In March 2009, Geithner also came under fire for his handling of the AIG bonus scandal, where the company used $165 million of its bailout funds to pay out executive bonuses, resulting in a massive public backlash. Of course as head of the New York Federal Reserve, Geithner helped craft the AIG deal in September 2008. However, when the AIG scandal broke, Geithner claimed he knew nothing of the bonuses until March 10, 2009. The timing is important. According to CNN: "Although Treasury Secretary Timothy Geithner told congressional leaders on Tuesday that he learned of AIG's impending $160 million bonus payments to members of its troubled financial-products unit on March 10, sources tell TIME that the New York Federal Reserve informed Treasury staff that the payments were imminent on Feb. 28. That is ten days before Treasury staffers say they first learned 'full details' of the bonus plan, and three days before the [Obama] Administration launched a new $30 billion infusion of cash for AIG." Throw in another embarrassing disclosure in 2009 that Geithner employed "household help" ineligible to work in the United States, and it becomes clear why the Treasury Secretary has earned a spot on the "Ten Most Corrupt Politicians in Washington" list.

    

5. Attorney General Eric Holder: Tim Geithner can be sure he won't be hounded about his tax-dodging by his colleague Eric Holder, US Attorney General. Judicial Watch strongly opposed Holder because of his terrible ethics record, which includes: obstructing an FBI investigation of the theft of nuclear secrets from Los Alamos Nuclear Laboratory; rejecting multiple requests for an independent counsel to investigate alleged fundraising abuses by then-Vice President Al Gore in the Clinton White House; undermining the criminal investigation of President Clinton by Kenneth Starr in the midst of the Lewinsky investigation; and planning the violent raid to seize then-six-year-old Elian Gonzalez at gunpoint in order to return him to Castro's Cuba. Moreover, there is his soft record on terrorism. Holder bypassed Justice Department procedures to push through Bill Clinton's scandalous presidential pardons and commutations, including for 16 members of FALN, a violent Puerto Rican terrorist group that orchestrated approximately 120 bombings in the United States, killing at least six people and permanently maiming dozens of others, including law enforcement officers. His record in the current administration is no better. As he did during the Clinton administration, Holder continues to ignore serious incidents of corruption that could impact his political bosses at the White House. For example, Holder has refused to investigate charges that the Obama political machine traded VIP access to the White House in exchange for campaign contributions – a scheme eerily similar to one hatched by Holder's former boss, Bill Clinton in the 1990s. The Holder Justice Department also came under fire for dropping a voter intimidation case against the New Black Panther Party. On Election Day 2008, Black Panthers dressed in paramilitary garb threatened voters as they approached polling stations. Holder has also failed to initiate a comprehensive Justice investigation of the notorious organization ACORN (Association of Community Organizations for Reform Now), which is closely tied to President Obama. There were allegedly more than 400,000 fraudulent ACORN voter registrations in the 2008 campaign. And then there were the journalist videos catching ACORN Housing workers advising undercover reporters on how to evade tax, immigration, and child prostitution laws. Holder's controversial decisions on new rights for terrorists and his attacks on previous efforts to combat terrorism remind many of the fact that his former law firm has provided and continues to provide pro bono representation to terrorists at Guantanamo Bay. Holder's politicization of the Justice Department makes one long for the days of Alberto Gonzales.

    

6. Rep. Jesse Jackson, Jr. (D-IL)/ Senator Roland Burris (D-IL): One of the most serious scandals of 2009 involved a scheme by former Illinois Governor Rod Blagojevich to sell President Obama's then-vacant Senate seat to the highest bidder. Two men caught smack dab in the middle of the scandal: Senator Roland Burris, who ultimately got the job, and Rep. Jesse Jackson, Jr. According to the Chicago Sun-Times, emissaries for Jesse Jackson Jr., named "Senate Candidate A" in the Blagojevich indictment, reportedly offered $1.5 million to Blagojevich during a fundraiser if he named Jackson Jr. to Obama's seat. Three days later federal authorities arrested Blagojevich. Burris, for his part, apparently lied about his contacts with Blagojevich, who was arrested in December 2008 for trying to sell Obama's Senate seat. According to Reuters: "Roland Burris came under fresh scrutiny…after disclosing he tried to raise money for the disgraced former Illinois governor who named him to the U.S. Senate seat once held by President Barack Obama…In the latest of those admissions, Burris said he looked into mounting a fundraiser for Rod Blagojevich -- later charged with trying to sell Obama's Senate seat -- at the same time he was expressing interest to the then-governor's aides about his desire to be appointed." Burris changed his story five times regarding his contacts with Blagojevich prior to the Illinois governor appointing him to the U.S. Senate. Three of those changing explanations came under oath.

    

7. President Barack Obama: During his presidential campaign, President Obama promised to run an ethical and transparent administration. However, in his first year in office, the President has delivered corruption and secrecy, bringing Chicago-style political corruption to the White House. Consider just a few Obama administration "lowlights" from year one: Even before President Obama was sworn into office, he was interviewed by the FBI for a criminal investigation of former Illinois Governor Rod Blagojevich's scheme to sell the President's former Senate seat to the highest bidder. (Obama's Chief of Staff Rahm Emanuel and slumlord Valerie Jarrett, both from Chicago, are also tangled up in the Blagojevich scandal.) Moreover, the Obama administration made the startling claim that the Privacy Act does not apply to the White House. The Obama White House believes it can violate the privacy rights of American citizens without any legal consequences or accountability. President Obama boldly proclaimed that "transparency and the rule of law will be the touchstones of this presidency," but his administration is addicted to secrecy, stonewalling far too many of Judicial Watch's Freedom of Information Act requests and is refusing to make public White House visitor logs as federal law requires. The Obama administration turned the National Endowment of the Arts (as well as the agency that runs the AmeriCorps program) into propaganda machines, using tax dollars to persuade "artists" to promote the Obama agenda. According to documents uncovered by Judicial Watch, the idea emerged as a direct result of the Obama campaign and enjoyed White House approval and participation. President Obama has installed a record number of "czars" in positions of power. Too many of these individuals are leftist radicals who answer to no one but the president. And too many of the czars are not subject to Senate confirmation (which raises serious constitutional questions). Under the President's bailout schemes, the federal government continues to appropriate or control -- through fiat and threats -- large sectors of the private economy, prompting conservative columnist George Will to write: "The administration's central activity -- the political allocation of wealth and opportunity -- is not merely susceptible to corruption, it is corruption." Government-run healthcare and car companies, White House coercion, uninvestigated ACORN corruption, debasing his office to help Chicago cronies, attacks on conservative media and the private sector, unprecedented and dangerous new rights for terrorists, perks for campaign donors – this is Obama's "ethics" record -- and we haven't even gotten through the first year of his presidency.

    

8. Rep. Nancy Pelosi (D-CA): At the heart of the corruption problem in Washington is a sense of entitlement. Politicians believe laws and rules (even the U.S. Constitution) apply to the rest of us but not to them. Case in point: House Speaker Nancy Pelosi and her excessive and boorish demands for military travel. Judicial Watch obtained documents from the Pentagon in 2008 that suggest Pelosi has been treating the Air Force like her own personal airline. These documents, obtained through the Freedom of Information Act, include internal Pentagon email correspondence detailing attempts by Pentagon staff to accommodate Pelosi's numerous requests for military escorts and military aircraft as well as the speaker's 11th hour cancellations and changes. House Speaker Nancy Pelosi also came under fire in April 2009, when she claimed she was never briefed about the CIA's use of the waterboarding technique during terrorism investigations. The CIA produced a report documenting a briefing with Pelosi on September 4, 2002, that suggests otherwise. Judicial Watch also obtained documents, including a CIA Inspector General report, which further confirmed that Congress was fully briefed on the enhanced interrogation techniques. Aside from her own personal transgressions, Nancy Pelosi has ignored serious incidents of corruption within her own party, including many of the individuals on this list. (See Rangel, Murtha, Jesse Jackson, Jr., etc.)

    

9. Rep. John Murtha (D-PA) and the rest of the PMA Seven: Rep. John Murtha made headlines in 2009 for all the wrong reasons. The Pennsylvania congressman is under federal investigation for his corrupt relationship with the now-defunct defense lobbyist PMA Group. PMA, founded by a former Murtha associate, has been the congressman's largest campaign contributor. Since 2002, Murtha has raised $1.7 million from PMA and its clients. And what did PMA and its clients receive from Murtha in return for their generosity? Earmarks -- tens of millions of dollars in earmarks. In fact, even with all of the attention surrounding his alleged influence peddling, Murtha kept at it. Following an FBI raid of PMA's offices earlier in 2009, Murtha continued to seek congressional earmarks for PMA clients, while also hitting them up for campaign contributions. According to The Hill, in April, "Murtha reported receiving contributions from three former PMA clients for whom he requested earmarks in the pending appropriations bills." When it comes to the PMA scandal, Murtha is not alone. As many as six other Members of Congress are currently under scrutiny according to The Washington Post. They include: Peter J. Visclosky (D-IN.), James P. Moran Jr. (D-VA), Norm Dicks (D-WA.), Marcy Kaptur (D-OH), C.W. Bill Young (R-FL.) and Todd Tiahrt (R-KS.). Of course rather than investigate this serious scandal, according to Roll Call House Democrats circled the wagons, "cobbling together a defense to offer political cover to their rank and file." The Washington Post also reported in 2009 that Murtha's nephew received $4 million in Defense Department no-bid contracts: "Newly obtained documents…show Robert Murtha mentioning his influential family connection as leverage in his business dealings and holding unusual power with the military."

    

10. Rep. Charles Rangel (D-NY): Rangel, the man in charge of writing tax policy for the entire country, has yet to adequately explain how he could possibly "forget" to pay taxes on $75,000 in rental income he earned from his off-shore rental property. He also faces allegations that he improperly used his influence to maintain ownership of highly coveted rent-controlled apartments in Harlem, and misused his congressional office to fundraise for his private Rangel Center by preserving a tax loophole for an oil drilling company in exchange for funding. On top of all that, Rangel recently amended his financial disclosure reports, which doubled his reported wealth. (He somehow "forgot" about $1 million in assets.) And what did he do when the House Ethics Committee started looking into all of this? He apparently resorted to making "campaign contributions" to dig his way out of trouble. According to WCBS TV, a New York CBS affiliate: "The reigning member of Congress' top tax committee is apparently 'wrangling' other politicos to get him out of his own financial and tax troubles...Since ethics probes began last year the 79-year-old congressman has given campaign donations to 119 members of Congress, including three of the five Democrats on the House Ethics Committee who are charged with investigating him." Charlie Rangel should not be allowed to remain in Congress, let alone serve as Chairman of the powerful House Ways and Means Committee, and he knows it. That's why he felt the need to disburse campaign contributions to Ethics Committee members and other congressional colleagues.

"A Low, Dishonest Decade: The press and politicians were asleep at the switch.," The Wall Street Journal, December 22, 2009 ---
http://online.wsj.com/article/SB10001424052748703478704574612013922050326.html?mod=djemEditorialPage

Stock-market indices are not much good as yardsticks of social progress, but as another low, dishonest decade expires let us note that, on 2000s first day of trading, the Dow Jones Industrial Average closed at 11357 while the Nasdaq Composite Index stood at 4131, both substantially higher than where they are today. The Nasdaq went on to hit 5000 before collapsing with the dot-com bubble, the first great Wall Street disaster of this unhappy decade. The Dow got north of 14000 before the real-estate bubble imploded.

And it was supposed to have been such an awesome time, too! Back in the late '90s, in the crescendo of the Internet boom, pundit and publicist alike assured us that the future was to be a democratized, prosperous place. Hierarchies would collapse, they told us; the individual was to be empowered; freed-up markets were to be the common man's best buddy.

Such clever hopes they were. As a reasonable anticipation of what was to come they meant nothing. But they served to unify the decade's disasters, many of which came to us festooned with the flags of this bogus idealism.

Before "Enron" became synonymous with shattered 401(k)s and man-made electrical shortages, the public knew it as a champion of electricity deregulation—a freedom fighter! It was supposed to be that most exalted of corporate creatures, a "market maker"; its "capacity for revolution" was hymned by management theorists; and its TV commercials depicted its operations as an extension of humanity's quest for emancipation.

Similarly, both Bank of America and Citibank, before being recognized as "too big to fail," had populist histories of which their admirers made much. Citibank's long struggle against the Glass-Steagall Act was even supposed to be evidence of its hostility to banking's aristocratic culture, an amusing image to recollect when reading about the $100 million pay reportedly pocketed by one Citi trader in 2008.

The Jack Abramoff lobbying scandal showed us the same dynamics at work in Washington. Here was an apparent believer in markets, working to keep garment factories in Saipan humming without federal interference and saluted for it in an op-ed in the Saipan Tribune as "Our freedom fighter in D.C."

But the preposterous populism is only one part of the equation; just as important was our failure to see through the ruse, to understand how our country was being disfigured.

Ensuring that the public failed to get it was the common theme of at least three of the decade's signature foul-ups: the hyping of various Internet stock issues by Wall Street analysts, the accounting scandals of 2002, and the triple-A ratings given to mortgage-backed securities.

The grand, overarching theme of the Bush administration—the big idea that informed so many of its sordid episodes—was the same anti-supervisory impulse applied to the public sector: regulators sabotaged and their agencies turned over to the regulated.

The public was left to read the headlines and ponder the unthinkable: Could our leaders really have pushed us into an unnecessary war? Is the republic really dividing itself into an immensely wealthy class of Wall Street bonus-winners and everybody else? And surely nobody outside of the movies really has the political clout to write themselves a $700 billion bailout.

What made the oughts so awful, above all, was the failure of our critical faculties. The problem was not so much that newspapers were dying, to mention one of the lesser catastrophes of these awful times, but that newspapers failed to do their job in the first place, to scrutinize the myths of the day in a way that might have prevented catastrophes like the financial crisis or the Iraq war.

The folly went beyond the media, though. Recently I came across a 2005 pamphlet written by historian Rick Perlstein berating the big thinkers of the Democratic Party for their poll-driven failure to stick to their party's historic theme of economic populism. I was struck by the evidence Mr. Perlstein adduced in the course of his argument. As he tells the story, leading Democratic pollsters found plenty of evidence that the American public distrusts corporate power; and yet they regularly advised Democrats to steer in the opposite direction, to distance themselves from what one pollster called "outdated appeals to class grievances and attacks upon corporate perfidy."

This was not a party that was well-prepared for the job of iconoclasm that has befallen it. And as the new bunch muddle onward—bailing out the large banks but (still) not subjecting them to new regulatory oversight, passing a health-care reform that seems (among other, better things) to guarantee private insurers eternal profits—one fears they are merely presenting their own ample backsides to an embittered electorate for kicking.

Video: Fora.Tv on Institutional Corruption & The Economy Of Influence ---
http://www.simoleonsense.com/video-foratv-on-institutional-corruption-the-economy-of-influence/

Bob Jensen's threads on corrupt politicians can be found at http://www.trinity.edu/rjensen/FraudRotten.htm#Lawmakers

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

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