Undernews For June 9, 2008
FROM THE PROGRESSIVE REVIEW
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Editor: Sam Smith
9 JUNE 2008
WORD
Woe to him inside a nonconformist clique who doe not conform with nonconformity - Eric Hoffer
SWAMPOODLE REPORT: NIGHTMARES & HANGOVERS
Sam Smith
Our long national nightmare is over. . . . at least until tonight.
The RBCB (Reagan-Bush-Clinton-Bush) era is apparently finished, although with this crowd you can never be sure. It was a
time when America lost power, respect, direction, jobs, integrity, its Constitution and an understanding of what
democracy was all about.
There are no signs that any of these will soon be restored, but at least, for the moment, the disintegration may have
been halted.
The Clintons went out like they came in, to a chorus of media enablers, assuring America that they were something they
weren't, that Hillary Clinton, for example, was the voice of the working class or that ordinary women's lives would
dramatically improve if she had been elected.
Echoes returned:
"If we could be one-hundredth as great as you and Hillary Rodham Clinton have been in the White House, we'd take it
right now and walk away winners . . . Thank you very much and tell Mrs. Clinton we respect her and we're pulling for
her." -- Dan Rather, talking with the Clintons via satellite at a CBS affiliates meeting
"Roger Clinton's life is in some ways the story of any younger sibling clobbered by the spectacular success of the one
who came before . . If your brother is Christ, you have a choice: become a disciple, or become an anti-Christ, or find
yourself caught somewhere between the two" -- Laura Blumenfeld, Washington Post
"In the midst of redesigning America's health care system and replacing Madonna as our leading cult figure, the new
First Lady has already begun working on her next project, far more metaphysical and uplifting.... She is both impersonal
and poignant -- with much more depth, intellect and spirituality than we are used to in a politician . . She has goals,
but they appear to be so huge and far off -- grand and noble things twinkling in the distance -- that it's hard to see
what she sees." -- Martha Sherrill, Washington Post
"The most interesting part of the story will come when the media have to acknowledge that there is nothing there . . .
Shall we write on our various blackboard 1000 times, 'The Clintons did nothing wrong?'" -- Columnist Molly Ivins
"Ridiculous" -- NPR's Diana Rehm on suggested similarities between Whitewater and Watergate
For balance, let's recall a few objective press comments at the same time about Clinton's primary opponent, Jerry Brown:
"Annoying" -Ted Koppel
"Weird" - Cokie Roberts, NPR
"A pain in the you-know-what"- Bemard Shaw
"Flailing about, spewing out charges like sparks from a Fourth of July pinwheel" - JW Apple, New York Times
"He's a chameleon, a character assassin and a first-class cynic" - Jonathan Alter, Newsweek
"Brilliant, self-absorbed, friendless, idealistic, erratic, opportunistic, cold, hypocritical" - New York Times
"Jerry Brown's more corrupt than the system" - Eleanor Clift, Newsweek
Said FAIR, the media watchdog, "There is so much of this kind of writing about Brown that it is difficult to remember
that journalists don't usually refer to candidates this way. Can anyone imagine Newsweek's senior political editor
talking about George Bush's 'typical hype' or his 'unfitness' -- and getting away with it?
Those of us who had looked even slightly closer at the Clintons had seen something quite different. Christopher Hitchens
wrote the other day:
"I have detested the Clintons ever since I covered the New Hampshire primary in 1992. The man I saw was not the
silver-tongued charmer who seems to have bewitched so many people. Up close, he seemed like a red-cheeked, piggy-eyed
bully with a mean streak a mile wide. And when he lied - which he more or less did for a living - he had a hard-faced
little spouse to step into the TV studios to cover up for him. This woman put up with a lot from Bill over the years but
could always tell herself it was worth it because in the long run the experience would give her the presidency she so
obviously deserved."
I stumbled upon the story, the way you do a lot of stories, partly by accident. I was prepared by having just read Sally
Denton's remarkable book, The Bluegrass Conspiracy, about how the drug trade corrupted Kentucky from the bottom up,
including the state police and governor's office.
I had followed political corruption my whole life. My first campaign - stuffing envelopes as a pre-teen - helped to end
69 years of Republican rule in Philadelphia. In Cambridge, Massachusetts, I covered the local city council as James
Michael Curley was nearing death in next door Boston. I remember councilor Joseph DeGuglielmo explaining that he didn't
know how to vote on an upcoming police and fire pay raise because each of those cops and firefighters were making, by
his guess, an extra five grand on the side. He described, for example, firemen removing expensive rugs from people's
homes as a spin off of their rescue efforts.
I helped Marion Barry with public relations when he was head of SNCC, boosted him for school board and mayor and then
distanced myself as he distanced himself from the cause that had gotten him where he was. Later I would compared him
with Clinton, two men who had used decency as a crash pad on their way to power.
I also read avariciously about every corrupt politician I could find from George Washington Plunkett of Tammany Hall to
the Daley machine, the Longs of Louisiana and Philadelphia's Frank Rizzo who started his climb as a district police
captain by going to the mob and telling them they could have numbers, whores or drugs, but they couldn't have murders.
The mob obliged and took their bodies elsewhere. Rizzo's murder rate dropped and a new mayor was born.
As I studied these stories, one thing stood out, which I discussed in what was the first critical book about Clinton, a
whole two year after he had been elected:
"It was, to be sure, a mixture of the good and the bad, but you at least knew whom to thank and whom to blame. As late
as the 1970s the tradition was still alive in Chicago as 25th Ward leader Vito Marzullo told a Chicago Sun-Times
columnist:
"'I ain't got no axes to grind. You can take all your news media and all the do-gooders in town and move them into my
25th Ward, and do you know what would happen? On election day we'd beat you fifteen to one. The mayor don't run the 25th
Ward, Neither does the news media or the do-gooders. Me, Vito Marzullo. that's who runs the 25th Ward, and on election
day everybody does what Vito Marzullo tells them. . .My home is open 24 hours a day. I want people to come in. As long
as I have a breathing spell, I'll got to a wake, a wedding, whatever. I never ask for anything in return. On election
day, I tell my people, 'Let your conscience be your guide.'"
"In the world of Plunkitt and Marzullo, politics was not something handed down to the people through such intermediaries
as Larry King. It was not the product of spin doctors, campaign hired guns or phony town meetings. It welled up from the
bottom, starting with one loyal follower, one ambitious ballplayer, twelve unhappy pushcart peddlers. What defined
politics was an unbroken chain of human experience, memory and gratitude.
"Sure, it was corrupt. But we don't have much to be priggish about. The corruption of Watergate, Iran-Contra or the S fed no widows, found no jobs for the needy or, in the words of one Tammany leader, "grafted to the Republic" no newly
arrived immigrants. At least Tammany's brand of corruption got down to the streets. Manipulation of the voter and
corruption describe both Tammany and contemporary politics. The big difference is that in the former the voter could
with greater regularity count on something in return.
"In fact, we didn't really do away with machines, we just replaced them. As Tammany Hall and the Crump and the Hague and
the Daley organizations faded, new political machines appeared. Prime among them was television but there were others
such as the number-crunchers, policy pushers and lawyers running Washington, as well as a new breed of political
professional, including campaign consultants, fundraisers and pollsters.
"The curious, and ultimately destructive, quality of some of these new machines -- particularly the media and the
political pros -- was that they had such little interest in policies or democracy; rather they were concerned with
professional achievement or television ratings or making a buck. When one of the most skilled of the new pros, James
Carville, was asked whether he would take a post in the Clinton administration, he admitted candidly that he only knew
about winning elections; he didn't know about governing. And his Clinton campaign side-kick Paul Begala once remarked,
'Someone says issue; I say gesundheit.'"
I had been a student of corruption and yet was really impressed by the Clintons and by the political ecology of
Arkansas. I didn't have time for moral outrage, I was too fascinated by it all. And I was encouraged, early on, by
material sent me by a progressive student group - yes, progressive - at the University of Arkansas.
And so I became part of a miniscule leftwing conspiracy that preceded the vast rightwing alternative. I wasn't out to
get the Clintons, but I wasn't - like so many reporters - going to just look the other way.
In February 1992, I wrote: "The media's protection of Clinton, of course, dates far before the current matter. He has
long been the Washington elite's designated alternative to Bush. During the current campaign, Clinton has gotten kid
glove treatment from the press"
By May 1992 I had come up with a list of about two dozen individuals and organizations that raised serious questions
about Bill Clinton. It wasn't hard to do and most of these names would become familiar when they became intertwined with
what would be known as Whitewater. The information was there for any reporter who wanted it, but most just didn't want
to spoil the fairy tale they were in. And the closeness to power it brought.
A few did and some of them lost their jobs or were transferred as a result. I was banned from a local NPR talk show and,
according to sources, from CSPAN and the Washington Post. The media treated those of us who wouldn't play the game with
the opprobrium designed for them by presidential spinsters: conspiracy theories and Clinton haters. One reporter, well
known in DC, told me in my own living room that I shouldn't be writing the way I was. "Even if it's true?:" I asked.
"Even if it's true," he replied.
But there were good moments, too. Like when I was introduced to a black White House staffer and she said, "I know who
you are" and with a big smile added, "You're b-a-a-d!"
By this time I had been in journalism for nearly forty years and had never run into anything like it. But the story
wouldn't stop and so I kept on the case.
It was the story of an unprincipled couple rising to power in a mini narco-republic, which had once been the western
boundary of the northern mobs, where Al Capone had a permanently reserved room in a hotel in Hot Springs, where Lucky
Luciano was nabbed by Thomas E Dewey, and where Clinton's mother was a heavy gambler with mob ties. According to FBI and
local police officials, his Uncle Raymond -- to whom young Bill turned for wisdom and support -- had been a colorful car
dealer, slot machine owner and gambling operator, who thrived (except when his house is firebombed) on the fault line of
criminality.
It was a story of a governor overseeing drug-driven political corruption, being the local facilitator for the Regan-Bush
Iran Contra operations, and where the local state development agency sent tens of millions to a Cayman Islands
depository.
It was a story about a state where a drug pilot brought a Cessna 210 full of cocaine into eastern Arkansas where he was
met by his pick-up: a state trooper in a marked police car. "Arkansas," the pilot would recall years later, "was a very
good place to load and unload."
It was a story where I got an email from Billy Bear Bottoms, the former pilot for Barry Seal, one of the nation's most
notorious drug runners, complaining about something I had written.
It was a story in which Arkansas Governor Jim Guy Tucker comes to Washington to see his old boss sworn in, leaving his
state under the control of the president pro tem of the senate, Little Rock dentist Jerry Jewell. Jewell uses his power
as acting governor to issue a number of pardons, one of them for a convicted drug dealer, Tommy McIntosh. It seems that
the elder McIntosh had worked for Clinton in his last state campaign and, according to McIntosh in a 1991 lawsuit, had
agreed not only to pay him $25,000 but to help him market his recipe for sweet potato pie and to pardon his son.
It was state in which a tractor trailer is stopped and police find millions in drug cash stowed in the cab.
And on and on. . . .
By the standards by which I was raised, any reporter who turned their back on such a tale should lose their press pass.
But it didn't work like that.
Instead, those who tried to tell the truth became the pariahs.
It was my introduction to a new journalism. And to a new politics because, with Clinton, establishment liberals dumped
their policies, their ideals and their standards. It wasn't like corruption back the in day, when liberals fought the
bad guy. Now they helped manage his campaign, crying "Move on" and things like that. They came aboard not just as
pragmatists, but as evangelical enthusiasts.
The Democratic Party would lose more seats at the state and local level under Clinton than with any Democratic incumbent
since Grover Cleveland. Programs of the New Deal and Great society would be eviscerated. America's "first black
president" would oversee an explosion of prison time for young black males.
But none of it mattered because liberals, especially the politically active upscale ones, had essentially abandoned what
was once their essential business: helping those being screwed by the system. Their interest, driven by their own place
in the economy, had turned to glass ceilings instead of hard floors and locked factory doors. And eventually they would
replace it all with the simple expediency of a black Jesus, never mind that Barack Obama reached his magic delegate
count the same week that the number of other black males, those in prison, hit a record level.
It's really not that surprising. The same mythological approach that created the Clintons was also used to justify the
Iraq war and is now being used to create the new Obama era.
Check it out. Try to discuss with liberals the effect of Obama's Iran and Israel positions on our future in that region
and in the world. Try complaining about his healthcare program or his support of the Patriot and No Child laws. Note
that nobody seems to know who got him where he is so fast and that you don't get there without owing someone a hell of a
lot. Try asking for just one new good idea that he has had. Try saying that Obama may be the best we're going to get,
but it isn't that much.
Come to think of it, don't try it. I have and have largely given up. Because to many of his supporters, as with the
supporters of Clinton and the Iraq War, facts just don't matter anymore. Faith is what counts. Anything else is heresy.
And the same media that didn't fairly report the rise of the Clintons, or the beginnings of the Iraq war, are now
engaged in the same error with Obama. It's bad enough to have liberals turn into a bunch of secular evangelicals, but at
least the press should have a little more self respect than to join in the shouting and the clapping.
Still, arguing with evangelicals - whether Christian, media or liberal - is a waste of time. Consider anything immutable
and argument becomes irrelevant.
You just have to save it for the agnostics, free thinkers and those who understand the difference between a press pass
and a bathroom pass, which is that the former allows you to disseminate information while the latter is for those who
just need to dump shit. It's a distinction much of the media has forgotten.
So, once again, we'll just have to wait for reality to intrude on faith and hope and spin.
Meanwhile, one long national nightmare is over, so party on.
Just don't be surprised if you wake up with a hangover.
SHOP TALK
SAM SMITH - I try to keep the bragging down to a minimum but some things are too good to let go by. Such as the fact
that John Halle, who teaches music at Bard and formerly at Yale, has not only put my essay, "Apology to a Younger Generation," to music
but has made a video of it. I believe I may be the only Washington journalist in Washington to have received such an
honor. "Apology" was originally performed in several cities by the Now Ensemble. Fortunately, Halle has moved on to nobler causes, including organizing a national general strike for next May.
PAGE ONE MUST
AIRPORT SCANNERS DO VISUAL STRIP SEARCHES OF PASSENGERS
THOMAS FRANK USA TODAY Body-scanning machines that show images of people underneath their clothing are being installed in 10 of the nation's
busiest airports in one of the biggest public uses of security devices that reveal intimate body parts. The
Transportation Security Administration recently started using body scans on randomly chosen passengers in Los Angeles,
Baltimore, Denver, Albuquerque and at New York's Kennedy airport. Airports in Dallas, Detroit, Las Vegas and Miami will
be added this month. Reagan National Airport in Washington starts using a body scanner . . .
The scanners do a good job seeing under clothing but cannot see through plastic or rubber materials that resemble skin,
said Peter Siegel, a senior scientist at the California Institute of Technology. "You probably could find very common
materials that you could wrap around you that would effectively obscure things," Siegel said.
Passengers who went through a scanner at the Baltimore airport last week were intrigued, reassured and occasionally
wary. The process took about 30 seconds on average. . .
Steinhardt of the ACLU said passengers would be alarmed if they saw the image of their body. "It all seems very clinical
and non-threatening - you go through this portal and don't have any idea what's at the other end," he said. . .
Passengers can decline to go through a scanner, but they will face a pat-down. Schear, the Baltimore security director,
said only 4% of passengers decline.
In Phoenix Sky Harbor International Airport, where scanners have been tested since last year as an alternative to
pat-downs, 90% of passengers choose to be scanned, the TSA says.
Well said Amy and Nancee - the only way to heal this community is to build these bridges and realize there is no "us"
and "them", but a community of people, most of which want the same things.
56 CONGRESS MEMBERS WANT SPECIAL PROSECUTOR FOR BUSH WAR CRIMES
JASON LEOPOLD THE PUBLIC RECORD House Democrats sent a letter to Attorney General Michael Mukasey Friday requesting that he appoint a special
prosecutor to investigate whether White House officials, including President Bush, violated the War Crimes Act when they
allowed interrogators to use brutal interrogation methods against detainees suspected of ties to terrorist
organizations.
The letter, signed by 56 Congressional lawmakers, including House Judiciary Committee Chairman John Conyers, who is
leading an investigation into the administration’s interrogation practices, says the International Committee of the Red
Cross conducted an independent investigation of interrogation practices at Guantanamo Bay and "documented several
instances of acts of torture against detainees, including soaking a prisoner’s hand in alcohol and lighting it on fire,
subjecting a prisoner to sexual abuse and forcing a prisoner to eat a baseball.". . .
Mukasey has defended the administration's interrogation policies, and with seven month to go before a new president is
sworn into office, it appears unlikely that Mukasey will act on the Democrats' request. Earlier this year, Mukasey has
appointed a special counsel to investigate the destruction of videotapes showing CIA interrogators subjecting detainees
to waterboarding.
GAS PRICES HIT THE SOUTH ESPECIALLY HARD
CLIFFORD KRAUSS, THE NEW YORK TIMES Across broad swaths of the South, Southwest and the upper Great Plains, the combination of low incomes, high gas prices
and heavy dependence on pickup trucks and vans is putting an even tighter squeeze on family budgets. Here in the
Mississippi Delta, some farm workers are borrowing money from their bosses so they can fill their tanks and get to work.
Some are switching jobs for shorter commutes.
People are giving up meat so they can buy fuel. Gasoline theft is rising. And drivers are running out of gas more often,
leaving their cars by the side of the road until they can scrape together gas money. . .
Nationwide, Americans are now spending about 4 percent of their take-home income on gasoline. By contrast, in some
counties in the Mississippi Delta, that figure has surpassed 13 percent.
Across Mississippi and the rural South, little public transit is available and people have no choice but to drive to
work. Since jobs are scarce, commutes are frequently 20 miles or more. Many of the vehicles on the roads here are old
rundown trucks, some getting 10 or fewer miles to the gallon.
PENTAGON RESISTED IRAN AIR ATTACKS
INTER PRESS SERVICE Pentagon officials firmly opposed a proposal by Vice President Dick Cheney last summer for airstrikes against Iranian
Revolutionary Guard Corps bases by insisting that the administration would have to make clear decisions about how far
the United States would go in escalating the conflict with Iran, according to a former George W. Bush administration
official.
J. Scott Carpenter, who was then deputy assistant secretary of state in the State Department’s Bureau of Near Eastern
Affairs, recalled in an interview that senior Defense Department officials and the Joint Chiefs used the escalation
issue as the main argument against the Cheney proposal. . .
According to Carpenter, who is now at the Washington Institute on Near East Policy, a strongly pro-Israel think tank,
Pentagon officials argued that no decision should be made about the limited air strike on Iran without a thorough
discussion of the sequence of events that would follow an Iranian retaliation for such an attack. Carpenter said the DoD
officials insisted that the Bush administration had to make "a policy decision about how far the administration would go
- what would happen after the Iranians would go after our folks."
The question of escalation posed by DOD officials involved not only the potential of the Mahdi Army in Iraq to attack,
Carpenter said, but possible responses by Hezbollah and by Iran itself across the Middle East.
Carpenter suggested that DOD officials were shifting the debate on a limited strike from the Iraq-based rationale, which
they were not contesting, to the much bigger issue of the threat of escalation to full-scale war with Iran, knowing that
it would be politically easier to thwart the proposal on that basis.
AIRLINES THINKING ABOUT PASSENGERS AS FREIGHT NOT CUSTOMERS
BLOOMBERG NEWS Imagine two scales at the airline ticket counter, one for your bags and one for you. The price of a ticket depends upon
the weight of both. That may not be so far-fetched.
"You listen to the airline CEOs, and nothing is beyond their imagination," said David Castelveter, a spokesman for the
Air Transport Association, a Washington, D.C.-based trade group. . .
He declined to say what any individual airline may be contemplating, including charging passengers based on weight.
With fuel costs almost tripling since 2000 -- and now accounting for as much as 40 percent of operating expenses at some
carriers, according to the ATA -- airlines are cutting costs and raising revenue in ways that once were unthinkable.
U.S. Airways Group Inc. has eliminated snacks. Delta Air Lines Inc. is charging $25 for telephone reservations. AMR
Corp.'s American Airlines last month became the first U.S. company to charge $15 for the first checked bag.
Even a cold drink may be harder to come by aloft.
Singapore Airlines Ltd. is "trying to eliminate unnecessary quantities of extra water" to save weight, Chief Executive
Officer Chew Choon Seng said in an interview.
U.S. airlines reported combined first-quarter losses of $1.7 billion and crude oil almost doubled in a year to a record
$133.17 a barrel on May 21. With those challenges, fares based on passenger weight may be a logical step, said Robert
Mann, head of R.W. Mann & Co., an aviation consultant based in Port Washington, New York.
"If you look at the air-freight business, that's the way they've always done it," he said. "We're getting treated like
air freight when we travel by airlines, anyway."
GITMO INTERROGATORS TOLD TO DESTROY HANDWRITTEN NOTES
BBC Guantanamo Bay interrogators were told to destroy handwritten notes in case they were called to testify on detainee
treatment, a military lawyer alleges. The lawyer, Lt-Cmdr William Kuebler, said the instructions were contained in a
Pentagon operations manual. He said this apparent destruction of evidence at the prison camp stopped him from
challenging alleged confessions in the case of his client, Omar Khadr.
He would use the document to seek a dismissal of the charges, he said.
The 21-year-old is accused of killing a US soldier and wounding another during a battle in Afghanistan in 2002. Mr Khadr
was 15 when he was captured during the firefight at a suspected al-Qaeda camp in Afghanistan. He faces a maximum
sentence of life in prison if convicted.
Two weeks ago, Canada's Supreme Court ruled the Canadian government had acted illegally by handing over documents from
an interview with the suspect by its own intelligence services a year after his capture.
OBAMA USING HOUSING BUBBLE BLOWER, HEDGE FUND EXEC LEAD SEARCH FOR HIS VEEP
We have previously reported on one member of the Obama Veep review team - Clintonista hack Eric Holder. Another member
is James A Johnson, vice president of a hedge fund, a former chair of Lehman Brothers and a member of the Trilateral
Commission and American Friends of Bilderberg. While one can rightfully wonder why a hedge fund exec is holding such a
prominent position in the politics of hope and change, even more interesting was Johnson's role in the disastrous
housing bubble.
BENJAMIN WALLACE-WELLS WASHINGTON MONTHLY 2004 What drives most appreciation in housing prices is the universal human desire to own a slightly larger and more
expensive place than one can really afford; a desire restrained in normal times by the universal desire of those who
lend money to get paid back.
Getting a home loan used to be a particularly nerve-wracking and unpleasant process. A stern loan officer behind a big
mahogany desk would pore over your income and credit, suspiciously probing your portfolio for weaknesses. And sensibly
enough: The bank that lent you the money would have to collect on the mortgage for the next 30 years and had to make
sure you were really good for it. It hired independent appraisers to make sure the price was in line. This process was a
little stingy, and meant some people on the low end of the income scale couldn't buy a home and many others got less
home than they might have wanted, but the system usually kept prices in check.
The one exception to this general process was mortgages sold on the secondary market. In the 1930s, Congress created the
Federal National Mortgage Corporation (Fannie Mae) to encourage banks to make loans to low-income Americans by agreeing
to purchase those mortgages from the banks. In 1970, Congress created a second agency, the Federal Home Loan Mortgage
Corporation (Freddie Mac), to do much the same thing. By the late 1980s, these two entities, which belong to the
category known as Government Sponsored Entities, were buying up and reselling 30 percent of new mortgages and packaging
the mortgages to be sold as securities.
Fannie and Freddie's market share was limited by their ability to attract investment capital. But in 1989, Congress
instituted some modest-seeming technical changes that made Freddie and Fannie much more attractive to investors, and
able to draw much more capital. Under the new rules, for instance, they were allowed to customize securities at
different levels of risk and return to meet more precisely the demands of different sectors of the capital market. Then,
too, bank regulators let pension funds and mutual funds class Fannie's debt as low-risk. As a consequence, during the
1990s, investors practically threw money at Fannie Mae and Freddie Mac, which became enormously, steadily profitable.
The GSEs used the new capital to buy up every mortgage they could, and banks were only too happy to sell off the
mortgage paper. The price cap on the mortgages Fannie and Freddie could insure was raised. As a result of all these
changes, Fannie and Freddie went from buying mostly mortgages for low-end homes to those of the middle- and upper-middle
class. And the share of the nation's conventional mortgage debt which they insure has swelled, to more than 70 percent
today, double its share in 1990.
This shift has had two crucial, if under-appreciated, consequences. First, in little more than a decade, Fannie Mae and
Freddie Mac have gone from handling one trillion dollars in mortgages to four trillion, with virtually no changes in
oversight. Second, their dominance of the mortgage market has profoundly undermined the discipline that once kept
housing prices in check.
Once banks knew they could automatically hand off the mortgages they wrote to Fannie and Freddie with basically no risk,
the old incentive system dissolved. "Banks and other mortgage lenders are not watching home prices carefully because
they rarely hold onto the mortgage paper they create--they just sell it upstream to mortgage investors," John R.
Talbott, a housing researcher at UCLA's Anderson School of Business, has argued. "It is a dangerous situation indeed
when neither home buyers nor the institutions that finance them are concerned with the ultimate price being paid for the
housing asset.". . .
It's not just the discipline of banks that keeps people from buying more than they can afford, but also the buyers' own
fear and guilt. But in an environment where home prices continue to spiral up, fear and guilt are replaced by a sense
that you're a fool not to buy the most house you can possibly get away with. . .
What makes the current frenzy especially dangerous is that every relevant institution has an incentive to play along.
Who, after all, is likely to say stop? Not the realtors. Not the banks, any longer. Not Fannie and Freddie or the
private secondary-mortgage operators, who are turning vast profits on the backs of the bubble. Certainly not the Federal
Reserve or the Treasury Department, while the economy depends on a sustained housing boom.
By 2000, some acute observers, like Jane D'Arista, a former chief economist for the House Financial Services committee
and now a federal funds researcher with the Financial Markets Center, had begun to warn that the situation was
untenable. By 2002, a few major players, like Steve Roach, Morgan Stanley's chief economist, had picked up on the
concerns about a bubble and Fannie and Freddie's sprawling influence. But Greenspan, Treasury, and GSE officials, in
interviews and testimony, denied that housing inflation posed a problem. And, sure enough, in the next year, not only
did the bubble fail to deflate, but it also expanded--the housing sector posted its best year ever. . .
Both political parties have bought into the idea that a vast, unfettered Fannie and Freddie are good for the country. .
. Republicans are still invested in the deregulation of Fannie and Freddie they helped engineer in the late 1980s.
Democrats, generally the party of more regulation, have historically been Fannie and Freddie's best friends, and the
GSEs' lush executive suites are packed with former Democratic staffers: Raines was Clinton's director of the Office of
Management and Budget, and his predecessor, James A. Johnson, a longtime aide to Walter Mondale, is now leading John
Kerry's search for a running mate. In the hearings on the Hill, neither Democrats nor Republicans have seemed favorably
disposed to strict regulation of Fannie and Freddie, and American Banker has concluded that the GSEs' lobbying power is
strong enough that no regulatory bill will pass without their okay.
ANNYS SHIN WASHINGTON POST, 2006 - When James A. Johnson walked out of his office as chief executive at Fannie Mae for the last time, in December 1998,
the longtime Democratic Party operative and investment banker could look back at his nearly decade-long tenure at the
helm knowing the company had lived up to his promises of double-digit earnings growth. The value of its assets had also
tripled, and its share price had risen sevenfold. . .
Good numbers kept Wall Street happy. They paid the light bills for more than 50 partnership offices that represented
Fannie Mae around the country. And they made top executives multimillionaires. Johnson received $21 million in his last
year as chief executive and a consulting contract worth $600,000 a year.
But when good numbers -- and the bonuses that came with them -- weren't possible anymore, the executives who came after
Johnson allegedly rearranged the math and, even after accounting problems were found, used the company's political clout
to fend off closer regulation. That was the conclusion of Fannie Mae's chief regulator, the Office of Federal Housing
Enterprise Oversight, in a 340-page report that determined the company's $10.6 billion accounting scandal was rooted in
a corporate culture that dates back 20 years.
Johnson, now a managing partner with Perseus, a private equity firm and merchant bank, has not been accused of
involvement in the accounting irregularities. During the 1990s, he shaped the company's management and culture, mixing a
Wall Street-like obsession with meeting earnings targets and the aggressive tactics of a political campaign. . .
To keep up with Wall Street expectations, . . . the company began holding onto more mortgages and mortgage-backed
securities for investment purposes. The same practice nearly drove the company into bankruptcy in the early 1980s, when
interest rates strayed into the double digits. Its smaller rival, Freddie Mac, copied the strategy. Around the time
Freddie Mac's accounting scandal broke in 2003, the companies' combined portfolios totaled $1.5 trillion.
Then-Federal Reserve Chairman Alan Greenspan and others came to fear that a sudden meltdown at one of the two companies
could bring down the financial markets with it -- an argument that Johnson and his successor, Franklin D. Raines, fought
at every opportunity. They assured investors and policymakers that no such thing could happen because the company was so
well managed.
Only after OFHEO uncovered accounting problems did it become clear that Fannie Mae hadn't adequately invested in
internal controls. The report said political power helped stave off closer scrutiny.
Fannie Mae's lobbyists "did a superb job," said Wright H. Andrews Jr., a partner at Butera & Andrews, a lobbying firm. "Politicians of both parties were afraid to give proper oversight."
CHENEY BEHIND PLOT TO MAKE IRAQ PERMANENT COLONY OF U.S.
GARY LEUPP, COUNTERPUNCH Dick Cheney wants the Iraqi government installed by the U.S. occupation to sign a "security pact" with Washington by the
end of July. (The pact, including a status-of-forces agreement, would be signed by the U.S. president but not constitute
a treaty requiring Congressional approval.) U.S. Ambassador Ryan Crocker has been feverishly struggling to meet the
deadline and to commit the next administration to the agreement’s terms. But that may be a tall order. Prime Minister
Nour al-Maliki says negotiations are only in a beginning stage; public opinion is opposed to the pact based on leaked
information about its content; and a majority of members of the Iraqi parliament have endorsed a letter to the U.S.
government demanding U.S. withdrawal as the condition for "any commercial, agricultural, investment or political
agreement with the United States."
Few Americans are familiar with the proposed treaty. If they were, they might be shocked at its provisions, ashamed
about its naked sadism. It:
grants the U.S. long-term rights to maintain over 50 military bases in their California-sized country
allows the U.S. to strike any other country from within Iraqi territory without the permission of the Iraqi government
allows the U.S. to conduct military activities in Iraq without consulting with the local government
allows U.S. forces to arrest any Iraqi without consulting with Iraqi authorities
extends to U.S. troops and contractors immunity from Iraqi law
gives U.S. forces control of Iraqi airspace below 29,000ft.
places the Iraqi Defense, Interior and National Security ministries, under American supervision for ten years
gives the U.S. responsibility for Iraqi armament contracts for ten years
Humiliating, right? The sort of conditions most Americans can’t imagine themselves accepting from a foreign occupying
power.. . .
Iranian political leader Ali Akbar Hashemi Rafsanjani hardly exaggerates in saying the proposed deal is designed "to
turn the Iraqis into slaves of the Americans" and to create "a permanent occupation." Many Iraqis use similar language.
"The agreement wants to put an American in each house," claimed a supporter of Shiite cleric and nationalist firebrand
Mutada al-Sadr. "This agreement is poison mixed in poison, not poison in honey because there is no honey at all." "Why,"
he asks, "do they want to break the backbone of Iraq?" . . .
POLITICS
OBAMA GETS IN TROUBLE WITH THE PRESS CORPS
RICHARD PRINCE, JOURNAL-ISMS The five television network Washington bureau chiefs and the Washington bureau chief of the Associated Press have
protested to Sen. Barack Obama's campaign after it tricked the press corps in order for Obama to meet secretly with Sen.
Hillary Clinton in Washington Thursday night.
Fox News' Chris Wallace told Fox viewers on Saturday about the letter of protest, and another source told Journal-isms
that it had been signed by the network bureau chiefs and the AP.
"What seemed to be a routine evening waiting for Barack Obama aboard his campaign plane turned into anything but when
the cabin doors closed and the passengers were informed the aircraft would be taking off immediately - without the
candidate," Chris Welch reported for CNN on Friday night.
As Wallace and viewers were waiting Saturday for Clinton to arrive at Washington's National Building Museum to deliver
her concession speech, Wallace explained that the Obama team violated the protocol of always having a press
representative near the candidate, as one is with the president.
He said the campaign responded to the letter and there will be "further discussions."
"The press soon noticed there were far too few people aboard for a standard campaign flight. Something was different.
It's fair to say that the term 'everyone' was used a bit loosely - especially when the presumptive nominee appeared to
be missing.
"As the plane taxied, communications director Robert Gibbs admitted that Obama was remaining behind because he 'wasn't
going to be back in D.C. for a while' and had 'scheduled some meetings' before he left.
"Obama staffers, including Gibbs and Linda Douglass, a newly appointed senior adviser and campaign spokeswoman, didn't
ask the reporters on board if they'd prefer to wait on the runway in Washington until the meetings concluded. They were
going to Chicago. Without Barack Obama.". . .
CLINTON SPEND $109K TO GET EACH DELEGATE
CELESTE KATZ, NY DAILY NEWS Eighteen million votes: $212 million. Some 1,926 delegates: $109,823 a pop. Blowing the biggest head start in
presidential history: priceless.
From anointed to also-ran, Hillary Clinton spent more money to lose a primary election than any candidate in Democratic
Party history.
"The Clinton campaign found itself without adequate money at the beginning of 2008," chief strategist Mark Penn wrote in
a published Op-Ed yesterday - but it was enough of a cash stash to fund the causes she championed.
The money raised could have been better spent. Instead of throwing it at a failed political bid, Clinton could have
achieved a lot of her goals.
The former First Lady, an outspoken proponent of family values, might have delivered a much-needed vacation to working
families: sending more than 76,000 families of four from New York to California to visit Mickey, Donald and Goofy.
And don't forget the economy.
Instead of throwing cash away, she might have better invested the $11 million she gave her campaign by buying everyone
in New York City a Mega Millions ticket.
And she could have bought 9,838 people a new hybrid Toyota Prius, or given out 70.7 million energy-efficient light
bulbs.
Remember that gas tax holiday plan? Nearly 53 million gallons of free gas could have been bought with that sum.
And think of Clinton's deep interest in health care: $212 million could've covered 705 artificial heart surgeries. Or,
presuming an average price of $20, she could have bought flu vaccines for 10.6 million people - not quite universal, but
a darn good start.
If the former First Lady really wanted to push women to the forefront, she could have equipped all 2,300 students at her
alma mater, Wellesley College, with a Porsche 911 Carrera.
ACTIVISM
COMMUNITY GETS CONTROL OF ITS WATER SYSTEM
ALTERNET Many of the 3,000 adult residents of the Felton Water District had been organizing for nearly six years to buy the
community's water system from California American Water. Cal-Am is a subsidiary of American Water, which, despite an
ongoing sell-off, remains under the ownership of German multinational energy and water titan RWE.
Surprisingly, less than a week before an eminent domain trial to decide the value of the water system, the announcement
came that the San Lorenzo Valley Water District would pay Cal-Am $10.5 million in cash for the system. Of course, Cal-Am
went for the deal to settle the eminent domain suit against it and avoid a jury trial, said Jim Mosher, who heads up the
legal committee for Felton FLOW -- Friends of Locally Owned Water.
This is a great victory for the citizens of Felton and should inspire other communities to challenge private water
utilities that are extorting huge, unjustified rate increases and failing to protect sensitive watershed properties. The
SLV Water District has done an excellent job representing us and we look forward to having them manage the Felton water
system."
MEDIA
A RUSSIAN NEWSPAPER'S UNPLANNED AUDIT
MARK AMES, RADAR Thursday morning, Moscow time, four Russian government officials came to the office of my English-language newspaper
The eXile, and conducted an "unplanned audit" of our editorial content. They are carrying out an inspection of my
paper's articles to see, in their words, if we have committed "violations." And they specifically asked to question me,
since I'm officially listed as the founding editor-in-chief.
I started up The eXile 11 years ago with a Russian publisher, and it grew into a kind of cult phenomenon with an online
readership of 200,000 visitors per month, launching the careers of Rolling Stone's Matt Taibbi and "The War Nerd" Gary
Brecher, but ensuring that anyone who sticks with the paper is condemned to a life of poverty and paranoia. . .
The insiders whom I contacted all said, "It's. . . strange." That's how my Russian lawyer reacted, it's how an American
official reacted, and it's even how the head of the Glasnost Defense Fund reacted, even though his NGO focuses on
problems between the Russian media and the Kremlin.
"As far as I know, there has never been a single Moscow-based media outlet which has been audited like this," Glasnost's
lawyer told me. "We've seen a few of these in the far regions, but never Moscow. But really, don't worry about it, Mark,
I don't think you're in any personal danger at this point."
Whenever a Russian tells me, "Don't worry, Mark" or "It's no problem," I start to sweat. I first learned of the
government audit last week while I was out in California dealing with a family illness. I was already in a heightened
state of paranoia at the time-one week in my native suburbia is all it takes to trigger panic attacks-so when the
government sent the notice of the "unplanned audit" to our office, my first thought was, "Can an American get political
asylum in his own country?" Then I remembered some of the articles I'd written from Moscow-for example, my post-2004
U.S. presidential election editorial titled "Gas Middle America" and how former U.S. Congressman Henry Bonilla (R-TX)
once used his office to pressure the Russian authorities into arresting me because of a prank I'd played-and the next
thing I knew, I was rifling through my mother's medicine cabinet looking for something strong to steal.
Eventually I calmed down and flew back to Moscow in time for the audit. At 11 a.m., four officials from the Federal
Service for Mass Media, Telecommunications and the Protection of Cultural Heritage arrived-the men in shabby Bolsheviki
suits, and a squat middle-aged woman with pudgy arms and hands that pinched the seams of her wrists. On the advice of a
Russian attorney, we greeted them with a box of dark chocolates. It was solid advice, and probably did more to protect
us than a hundred attorneys' briefs could have. . .
The varied emotional responses to the meeting were interesting. The Westerners, who until last week supported our paper
and kept it alive, immediately cut all ties with us, so they weren't there. The younger Russians on our staff were
relatively calm about it. But when our Soviet-era accountant opened the office door and saw the four squat figures in
bad official Soviet outfits, she turned white, and vanished, the door closing on its own. When our middle-aged courier
arrived, she too turned white, stopped, then put her head down and walked past us, crossing herself three hurried times
in the Orthodox Christian fashion, before locking herself in the design room. . .
What offends the Russian elite more than anything about The eXile is its aggressive refusal to play by the "serious"
rules. The authorities can deal with serious print-media criticism of the Kremlin. . so long as that media outlet makes
everyone look serious and respectable, with serious dull language quoting serious dull think tank analysts. These days,
Russia is all about getting serious and respectable. And it's also in the grips of a national persecution mania, in
which grievances and complexes about the West have exploded into a kind of mass grievance-obsession, a frenzied Easter
Egg hunt for evidence of Western disrespect or unfairness in order to feed this grievance jones. The fact that our paper
has also exerted a lot of bile in savaging the West's Russophobe industry is irrelevant to them, even annoying; all they
care about is sifting for evidence of humiliating Russia.
In the current climate, the authorities don’t need to jail or destroy you; all they need to do is notify you that you’ve
earned their attention. At one point in the three-hour audit, they started leafing through our February Barack Obama
issue, in which we posted a comparison chart between Russians and African-Americans in order to tweak Russian racism
(examples: "Blacks: Freed by Abraham Lincoln in 1863/Russians: Freed by Tsar Alexander II in 1861"; "Blacks: plastic
covering on furniture/Russians: plastic covering on remote control").
The lady-bureaucrat, who headed the audit team, leafed through the issue. . and stopped when she saw a bad drawing of a
semi-limp penis.
"What's this?" she asked, putting her glasses on.
"It's a column called 'The Recession Penis,'" I explained. "You see, the Recession Penis reacts to America's economic
crisis, so every time American banks default and housing prices collapse, the Recession Penis gets more excited. It's,
uh, humorous, you see."
She folded up the issue and handed it to her subordinate to bring back for the inspection. From there, much of the
meeting focused on all of the newspaper's petty administrative fuck-ups: missing addresses, missing license number,
something should be in Russian here, a registration number there. . . in all, the violations led to a $25 fine which was
levied on me personally as editor-in-chief.
The official with the mullet took over one of our computers and typed up a "protocol," which essentially summed up our
three-hour meeting. I signed it, only afterwards wondering if in fact I'd signed some sort of confession admitting my
role in a Trotskyite plot. . .
The Russians I consulted with before and after the audit all came to the same conclusion: the authorities are planning
to either tame us or shut us down. There's no more room for The eXile in the new serious/respectable Russia. . .
In the current climate, the authorities don't need to jail or destroy you; all they need to do is notify you that you've
earned their attention, and if you're on their radar screen, then you immediately comply with whatever you think they
want you to comply with, and you get abandoned by everyone around you who doesn't want to get sucked into your vortex. .
.
Now it's like I have the Ebola virus. Longtime friends won't call, contributors want their names expunged from the
online record. Even the American media is eerily silent about this story, despite the fact that one of their own is
being attacked-could it be because we've spent 11 years savaging the Western media here? Or because we once threw a pie
filled with horse sperm into the New York Times' bureau chief's face? . .
The biggest fear of every foreigner in Russia is becoming the focus of Kremlin attention. Any attention. Russians fear
it as well, but they've internalized it since birth and deal with it differently; foreigners operate here with a kind of
looter's mentality: on the surface, overconfidence derived from the general sense that there is no authority over them
because we think that the Russian authorities would never mess with a Westerner . . . but underneath that arrogance, a
constantly-bubbling terror of being stopped at the border, turned back, and subjected to Russia's arbitrary and brutal
state. . .
Meanwhile, I'm still here in Moscow, waiting for the Kremlin's experts to audit my dead newspaper's articles.
RELIGION & ITS ALTERNATIVES
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We have set up a system to send documents by the email, to the addresses you provide, 6 days after the "Rapture" of the
Church. This occurs when 3 of our 5 team members scattered around the U.S fail to log in over a 3 day period. Another 3
days are given to fail safe any false triggering of the system.
We give you 150mb of encrypted storage that can be sent to 12 possible email addresses, in Box #1. You up load any
documents and choose which documents go to who. You can edit these documents at any time and change the addresses they
will be sent to as needed. Box #1 is for your personal private letters to your closest lost friends and relatives.
We give you another 100mb. of unencrypted storage that can be sent to up to 50 email addresses, in Box #2. You can edit
the documents and the addresses any time. Box #2 is for more generic documents to lost family & friends.
The cost is $40 for the first year. Re-subscription will be reduced as the number of subscribers increases. Tell your
friends about You've Been left behind.
OTHER NEWS
MAYBE THIS IS WHY WE HAVE SO MANY ILLEGAL IMMIGRANTS
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In addition, there are 32 pages of reference text allowing you to examine the basis for the individual questions in more
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INTERNET SIGHTINGS
Why DID the chicken cross the road?
BARACK OBAMA: The chicken crossed the road because it was time for a CHANGE! The chicken wanted CHANGE!
JOHN MC CAIN: My friends-- that chicken crossed the road because he recognized the need to engage in cooperation and
dialogue with all the chickens on the other side of the road.
HILLARY CLINTON: When I was First Lady, I personally helped that little chicken to cross the road. This experience makes
me uniquely qualified to ensure -- right from Day One -- that every chicken in this country gets the chance it deserves
to cross the road. But then, this really isn't about me. . .
DR. PHIL: The problem we have here is that this chicken won't realize that he must first deal with the problem on 'THIS'
side of the road before it goes after the problem on the 'OTHER SIDE' of the road. What we need to do is help him
realize how stupid he's acting by not taking on his 'CURRENT' problems before adding 'NEW' problems.
OPRAH: Well, I understand that the chicken is having problems, which is why he wants to cross this road so bad. So
instead of having the chicken learn from his mistakes and take falls, which is a part of life, I ' m going to give this
chicken a car so that he can just drive across the road and not live his life like the rest of the chickens.
GEORGE W. BUSH: We don't really care why the chicken crossed the road. We just want to know if the chicken is on our
side of the road, or not. The chicken is either against us, or for us. There is no middle ground here.
COLIN POWELL: Now to the left of the screen, you can clearly see the satellite image of the chicken crossing the road...
ANDERSON COOPER - CNN: We have reason to believe there is a chicken, but we have not yet been allowed to have access to
the other side of the road.
JOHN KERRY: Although I voted to let the chicken cross the road, I am now against it! It was the wrong road to cross, and
I was misled about the chicken's intentions. I am not for it now, and will remain against it.
NANCY GRACE: That chicken crossed the road because he's GUILTY! You can see it in his eyes and the way he walks.
PAT BUCHANAN: That chicken crossed the road to steal the job of a decent, hardworking American.
MARTHA STEWART: No one called me to warn me which way that chicken was going. I had a standing order at the Farmer's
Market to sell my eggs when the price dropped to a certain level. No little bird gave me any insider information.
ERNEST HEMINGWAY: To die in the rain. Alone.
BARBARA WALTERS: Isn't that interesting? In a few moments, we will be listening to the chicken tell, for the first time,
the heartwarming story of how it experienced a serious case of molting, and went on to accomplish its lifelong dream of
crossing the road.
ARISTOTLE: It is the nature of chickens to cross the road.
JOHN LENNON: Imagine all the chickens in the world crossing roads together, in peace.
ALBERT EINSTEIN: Did the chicken really cross the road, or did the road move beneath the chicken?
AL GORE: I invented the chicken!
COLONEL SANDERS: Did I miss one?
BOOKSHELF
SPIES FOR HIRE
Tim Shorrock
PHIL MATTERA , DIRT DIGGERS DIGEST Tim Shorrock, a veteran investigative journalist has just come out with a book called Spies for Hire: The Secret World
of Intelligence Outsourcing. Shorrock describes how an activity that used to be handled by spooks on the federal payroll
has been steadily transformed into a $50 billion intelligence-industrial complex. . .
Since 9/11, Shorrock says, the Central Intelligence Agency has been spending 50-60 percent of its budget (or about $2.5
billion a year) on contractors-both individuals and companies. At the CIA and its sister spook agencies: "Tasks that are
now outsourced include running spy networks out of embassies, intelligence analysis, signals intelligence (SIGINT)
collection, covert operations, and the interrogation of enemy prisoners."
Shorrock devotes an entire chapter to Booz Allen Hamilton, known to most people as a management consultant for large
corporations but which pioneered the intelligence outsourcing industry (though it recently agreed to sell its federal
business to the Carlyle Group). When Mike McConnell, a former Booz Allen executive, was named by President Bush as
Director of National Intelligence, it was the first time, Shorrock notes, that a contractor was put in charge of the
country's entire spy apparatus.
THE MIX
IDAHO: EVEN GAY PARADE FLOATS ARE A PROBLEM
NATE POPPINO TIMES-NEWS, IDAHO Controversial float provokes limited reaction in Western Days parade The float was approved. The parade was held. And
the Southern Idaho Gay Lesbian Bisexual and Transgender Community Center's entry into the 27th annual Western Days
parade caused barely a ripple in the crowds who gathered to watch the event.
That, center spokesman Mitch Silvester said, was because no one knew who the controversial float belonged to. Rejected
last year, it was allowed this year under what center representatives called "fairly ridiculous" restrictions, including
no rainbows and no promotions or references to homosexuality, including T-shirts or fliers.
Silvester said that another reported requirement - shortening the group's name to the Southern Idaho Community Center -
was actually a typo the group made when it applied. But speaking to several media representatives after the parade, with
another center member waving an American flag in the background, he blamed the name change as one reason no one
recognized the group.
Another, he said, was the restrictions, which resulted in a float bearing a cowboy-and-Indian diorama, signs such as
"Who pays for school supplies?" and a giant question mark in the middle of it. Asked whether people understood the
question mark, he said he wasn't sure.
"That's the question," he said.
The float seemed to produce little response from parade-goers, even when the group's name was announced as it passed
City Park. At one point, attendees seemed to pay more attention to Democratic U.S. Senate candidate Larry LaRocco, who
had fallen behind his own red convertible in the course of courting voters on foot.
The most vocal group may have been a handful of high-school students set up a few blocks earlier with signs and T-shirts
in support of the group. As the parade wrapped up around noon, the students said they received a few "death glares" but
overall felt their morning had been a success, highlighting how unfairly they thought the center had been treated.
"It was good for our first protest, I think," Alisha Neal said.
Nearby parade-goers willing to give their names seemed to support the float, or at least have no strong feelings against
it.
"They can do whatever they want, long as they keep it away from me," said Twin Falls resident Stacy Randell.
Silvester said the center plans to submit for a float again next year, and that he hopes to sit down with someone from
the event's board well in advance to work out any problems before they occur. Lisa Cuellar, chairwoman of the Western
Days board, said she was happy with the outcome and wouldn't have a problem with the group next year as long as they
followed the same requirements - no rainbows, and nothing making it obvious who they are.
"That's all we would ask of them next year," she said.
THE PROGRESSIVE REVIEW
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